Content Introduction Michael Porter’s 5 Forces Model for Industry PESTLE Analysis Glance on Maruti’s Strategies
Introduction( Brief) Maruti Udyog Limited (MUL) was established in February 1981, though the actual production commenced in 1983 with the Maruti 800 Maruti Suzuki is Indias number one leading automobile manufacturer and the market leader in the car segment, both in terms of volume of vehicles sold and revenue earned Until recently, 18.28% of the company was owned by the Indian government, and 54.2% by Suzuki of Japan. Later Indian Govt. Sold its shares to F.I.I.’s .
Fig.Michael Porter’s 5 NewForces Model for EntrantsIndustry Threat of NewCompetitiveness Entrants Industry Bargaining Competitor Bargaining Power s Power Suppliers Buyers of Rivalry among of Suppliers existing firms Buyers Threat of Substitutes Substitutes
Threat from the new players: Increasing• Most of the major global players are present in the Indian market; few more are expected to enter.• Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital. Rivalry within the industry: High• There is keen competition in select segments. (compact and mid size segments).• New multinational players may enter the market.
Market strength of suppliers: Low• A large number of automotive components suppliers• Automotive players are rationalizing their vendor base to achieve consistency in quality Market strength of consumers: Increasing• Increased awareness among consumers has increased expectations. Thus the ability to innovate is critical• Product differentiation via new features, improved performance and after-sales support is critical• Increased competitive intensity has limited the pricing power of manufacturers
Threat from substitutes : Low to medium•Consumer preference is changing (Mini cars are beingreplaced by compact or mid sized cars)•Setting up integrated manufacturing facilities mayrequire higher capital investments than establishingassembly facilities•India is also likely to increasingly serve as the sourcingbase for global automotive companies, and automotiveexports are likely to gain increasing importance over themedium term•competition is likely to intensify in the SUV segment inIndia following the launch of new models at competitiveprices
The policies & objectives laid down by the Indian Government regarding the automobile sector are: Exalt the sector as a lever of industrial growth and employment and to achieve a high degree of value addition in the country Promote a globally competitive automotive industry and emerge as a global source for auto components Establish an international hub for manufacturing small, affordable passenger cars and a key center for manufacturing Tractors and Two-wheelers in the world Ensure a balanced transition to open trade at a minimal risk to the Indian economy and local industry
Sales of Passenger car has been increased to 8.45% peryear. Maruti now plans to tap the rural market, 60 per cent of which runs on cash . Maruti has appointed 2,000 sales executives to target customers in the rural areas. The manufacturing sector has grown at 8– 10 per cent per annum in the last few years. More than 70 per cent of the VEHICLES purchase is on credit.
Welfare CampsMedical support & welfare Education tounderprivilegedRoad SafetyMaruti Driving SchoolsGreening of Supply ChainAdopting energy savingtechnologiesReducing water wastageGreen Growth
Launched CNG kit for Alto, its highest selling small car. The company as a proactive move is all set to make its entire fleet of cars adhere to ‘end of life vehicles’ (ELV). The company is involved with the development of small and fuel-efficient car engines. In future, the company has high plans to increase the engine development work in India along with other R&D operations
The company uses next generation KB series Engine in its new Hatchback car A-star. The company added Virtual Design Review to its R&D activity to enable virtual validation to reduce cycle time and development cost. In the field of alternate fuel technology, the company developed LPG/CNG/HYBRID system for MPI engine.
3R- reduce, reuse, and recycle. Continuous process of promoting 100% recyclable and reusable car parts. Targets reducing fresh water consumption and implement rain water harvesting. Physical infra structure such as roads and bridges affect the use of automobiles. If there is good availability of roads or the roads are smooth With the development or evolution of alternate fuels, hybrid cars have made entry into the market.
Follows highest standards of Corporate Governance Customer can contact the Secretarial & Legal Department for any questions/clarifications. Legal compliance reporting The board periodically reviews reports of compliance with all laws applicable to the Company, as well as steps taken by the Company to rectify instances of non-compliances. The Company has developed comprehensive legal compliance scheduling and management software by which specific compliance tasks are assigned to each individual. The software enables in planning and monitoring all compliance activities across the Company.
Major Restructuring Exercise. The company focused on improving its OPERATIONAL EFFICIENCY by upgrading manufacturing using new manufacturing techniques INCREASING CAPACITY, using information technology in manufacturing Focus on NEW PRODUCTS at regular intervals Venturing into OTHER RELATED BUSINESSES like car finance , insurance , buying and selling of used Maruti cars
New Strategy UPGRADED its manufacturing facilities to meet the foreign challenge. ( CRDI, VVTI engines) BROADENED its product portfolio( LUV - ERTIGA) EXPANDED its sales and service network to reach all over India. VENTURED into new associated businesses.
New Strategy PROMOTIONAL strategies including price cuts, promotional offers, launching campaigns VALUE ADDED SERVICES offering to its customers
Upgrading manufacturingfacilities The company started its new car plant & diesel engine facility at Manesar In 2008,Maruti increased its manufacturing capacity from 800,000 to one million units annually. The company inaugurated the new fuel efficient KB engine plant at Gurgaon. In April 2009 Maruti launched K12M engine. In addition, it also increased its diesel engine manufacturing capacity by 100,000 units annually.
Large product portfolioMaruti decided to cater all the segments of Indian car market.The company launched new models and also upgraded its existing model at a faster pace.Maruti launched Alto in 2000.In 2001,it launched a new model Maruti Versa.In 2003 ,New Zen and New Esteem were launched.
Large product portfolio Maruti’s strategy to offer product at every price point meant it had a product whenever a customer wanted to upgrade his car. The consumer did not have to buy a competitor’s product , as Maruti already a product at the relevant price
Expanding business portfolioMaruti also expanded its business portfolio by starting new but related businesses such as -Maruti Driving School -Maruti True Value -Maruti Finance -Maruti InsuranceMaruti plans to invest Rs-700 million by 2010 in the institute of Driving Training & Research.In 2001 Maruti established Maruti True
Promotional StrategiesIn 2000, in an effort to regain its market share, maruti slashed the prices of three ot its models Maruti 800 ,Omni , Wagon R.The company also offered vehicle Insurance for Rs one only.The company also started rewarding its customers by giving them loyalty bonus between Rs 8000 & Rs 25000 if they exchange their cars for Zen,Wagon R,Alto or Baleno.
Promotional strategesMaruti started marketing Maruti 800 in small towns targeting two wheeler owners who could upgrade their two wheelers to cars.In 2004 Maruti started ‘2599’offer in which consumers could buy Maruti 800 by paying an EMI of Rs 2599 for seven years.
Distribution Network In 2001 it started an initiative called ‘Non stop Maruti express highway’. Maruti developed 250 customer service outlets along 20 highway routes by 2001- 02The company also started ‘express service facility’ to ensure service in minimum time.It also offered a shuttle service and pick & drop facility when the car was given for servicing.
Distribution Network….. ( contd) it was the distribution network of Maruti which set the company ahead from its competitors.In 2008-09,the service network of Maruti covered 1314 cities across India.Maruti has plans to cover 1700 cities by 2010,and also to increase the number of service stations & workshops to over 3800 by 2010.