strategic management project on Maruti Suzuki udhog limited
BRCM COLLEGE OF BUSINESS ADMINISTRATION
LIBRARY ASSIGNMENT 2013-14
ELEMENTS OF STRETEGIC MANAGEMENT-I
TOPIC NAME- PROJECT REPORT ON VARIOUS TOPIC OF STRETEGIC
NAME OD THE ORAGANISATION: MARUTI SUZUKI
115- GANDHI SANI B.
SUBMITTED ON -17TH OCTOMBER, 2013
SUBMITTED TO – DR.PRATIK PATEL
Question -1 Organization name – MARUTI SUZUKI
Question -2 Visions, mission and objectives
The leader in Indian automobile industry, creating customer delight and share holder’s
wealth; A pride of India.
To create exceptional automotive value for our customers by harmoniously blending
safety, quality and efficiency. With our diverse team, we will provide responsible
stewardship to our community and environment while achieving stability and security
now and for future generations.
Modernization of the Indian Automobile Industry.
Developing cars faster and selling them for less.
Production of fuel-efficient vehicles to conserve scarce resources.
Production of large number of motor vehicles which was necessary for economic
Market Penetration, Market Development Similarly Product Development and
Partner relationship management, Value chain, Value delivery network.
Criteria for evaluating vision mission and goals
2. Specification about Product and services
5. Concern for survival, growth and profitability
7. Self concept
8. Concern for Public image
9. Concern for employee.
If I am there to write vision and mission statement then I would write them in following way:
To become one of the respected automobile companies of Asia and to enhance
customer value and delight.
To create superb automotive cars for our customers by focusing on safety, quality and
efficiency. With innovations and technology we would try to bring new experience to
customers and to produce environment friendly cars while achieving stability and
security now and for future generations.
Question -3 Identification of various General and specific environmental
factors affecting the performance of Maruti Suzuki and impact of these
factors on Maruti Suzuki
1. General environment
This environment generally includes those indirect action environments which generally
affects the whole business of a country or an industry.
Which are as following……
1) Natural factors
Availability of natural raw materials is the major issue for auto mobile industry and it
affects all the firms in the industry.
Apart from it increasing global warming is also a major problem and All car
manufacturing have to take into account all pollution related regulations of government
which applies to all firms.
Apart from it, Anti Pollution Pressure and implementation of euro norms and Bharat
norms have created problems in auto mobile industry.
Many technologies have been developed and due to natural factors following new ways
are developed which firms may have to adapt with passage of time, which are as
Use of eco friendly cars
Use of alternate bio fuels and CNG and Electricity run automobiles.
2) Economical factors
Economic conditions prevailing in India will affect the entire firm in the industry.
Here for a car manufacturing company, as a costlier product and target is higher income
family and middle class family with high income, income level of India, income and
assets distribution will determine the customer base for each car making company.
Apart from it various economic policy of Indian government and RBI will also affect all
the firms in the industry in same way.
3) Political- legal factors
Political climate in different countries producing buying automobiles regarding policies
on import, export and manufacture of automobiles and automobile components. This
will also include policies on allowing setting up of manufacturing plants by foreign
Stability of governments. This may affect the future conditions in a country.
Taxation policies will also affect all the firms.
Industrial policy, tariff policy will also determine the strategy of each firms in industry.
Political and legal environment could be understood as pre liberalization and post
liberalization of economy.
a. Pre-liberalization period
Government protection by use of license
Heavy excise duty on cars
Price discrimination by government
High import duty
Liberal policy on foreign participation
b. post-liberalization period
foreign direct investment
reduction on import duty
continues rationalization of excise duty regime
the license raj is cease to be exist
So with liberalization price discrimination of government, import duty and high excise
got reduced after liberalization.
4) Technological factors
Increasing innovations in technology will always going to affect whole industry. Some
innovations are as following…
a. Fuel efficiency
b. Hybrid cars
If one company in the industry comes up with above two then it will Crete pressure for
other firms in the industry.
Greater emphasis on research and development
Increasing role of innovations and improved technology is important and this can be
gained through research and development and it will affect most firms in the industry.
Increased regulation of technological change
Anti Pollution Pressure and implementation of euro norms and Bharat norms have
made firms to change their technologies to which are fuel efficient and concerned for
5) Socio cultural factors
Lifestyle and preferences of people that impact their choice of types of cars.
Social norms that impact the decision to own and use automobiles versus other means
Socio cultural environment will have impact on the marketing Mix of the firms also.
6) Demographic environment
Changing income level: changing income level shall affect all the car manufacturers
in the industry as it will directly affect the pricing strategy of firms.
Changing family structure: changing family structure will also affect many firms in
industry as it will have impact on the size, design and type of car means if size of the
family is decreasing then they have to make small car and vice-versa.
2. Specific environment
These factors are task, operating, micro or direct-action environment which affects
differently to Maruti Suzuki and other automobile making company.
Which are as following….
Competition is the biggest affecting factor in any industry.
Maruti has competition mainly from Hyundai ford, tata and toyata.
Here in automobile whenever Maruti comes up with any new car model or certain
features, it will be soon copied by the competitors.
As Maruti’s focus is mainly related with price and competitors are always providing
price competition to Maruti.
Intermediaries include distributors of Maruti car who provide services and delivers
cars to final customers.
Attitude, viability, reliability, trusts worthiness of distributors is most important for
the Maruti because Maruti itself not deal with these customers but these
Apart from it transporters are also important for Maruti because timely delivery
from Maruti plant Gurgoan (Hariyana) to whole country depends only on
For the smooth functioning of Maruti Suzuki it requires reliable source of supply.
Because without raw materials production cannot be carry forwarded.
For example if Maruti is purchasing tyres from MRF or Ciet and if they don’t supply
tyres in time, Maruti would have to face a problem.
Apart from it price of the car will also depends upon, price at which Maruti are
getting the raw materials, and distance for the transportation cost.
As in every industry, here customers are most important for Maruti .here Maruti is
targeting upper middle class family with medium family sized cars.
And hence relative profitability, sustainability of Maruti is dependent upon these
middle class families only to whom they are targeting.
Question 4 porter’s five forces analysis for Maruti Suzuki
The threat of new entrants.
The bargaining power of buyers/customers.
The threat of substitute products.
The amount of bargaining power suppliers have.
The amount of rivalry among competitors
1. The threat of new entrants
In most markets, the capital and expertise needed to setup an auto or parts manufacturing
facility would be a great enough barrier to entry to prevent many new entrants from setting
And as new government rules one foreign country can directly enter into the market which
now creating new threats for Maruti Suzuki.
However, given India's incredible growth forecasts, infrastructure progress (especially new
and better roads), and ever-expanding financing options to rural residents, the market is
attractive. As such, we expect the threat of new entrants to be high.
2. The bargaining power of buyers/customers
Buyers in India have a wide variety of choice. There are more than 20 foreign manufacturers
selling in India (including ultra high-end such as Rolls-Royce and Lamborghini). Of course
there are also a plethora of incredibly cheap choices, like the famous Tata Nano.
So large numbers of sellers are there with more or less little differentiated car but not at all
unique car provider is there.
Most important is that switching cost is very low from customer’s side.
While Maruti is targeting middle income familiies and they focus more on price rather than
additional feature of cars and hence Maruti may have to face bargaining power based on
price from customers.
3. The threat of substitute products
Maruti Suzuki is car manufacturer but in India, there are too many two wheelers making
companies are also available which can be a substitute to Maruti cars especially for small
family sizes target customers.
Apart from it if one company brings about a new car model with new features then it is
immediately substituted by another car making company in the industry and this can be a
huge problem to Maruti Suzuki.
4. The amount of bargaining power suppliers have
In automobile industry if supplier of engine or tyres has the possibility and opportunity of
doing Forward integration and entering into car market then it may happen that supplier do
have much bargaining power.
If supplier for Maruti has inbuilt switching cost for changing supplier then supplier may have
If supplier is supplying most important component of car for example engine of the car then
supplier may have too much bargaining power.
It is likely that the suppliers to the manufacturers have considerable bargaining power. They
are not held ransom by one single manufacturer as they can market their products to any of
the others car manufacturer in India.
5. The amount of rivalry among competitors
The rivalry among firms is very intense because of entry of foreign companies in the market.
Every new innovation that one company brings is immediately copied or imitated by the
other companies in the market.
While Maruti, Hyundai and Tata always have price competitions in the market.
The industry is not yet in its shake-out phase and is still struggling to find the up-and-coming
stars and possibly topple the leaders.
Question 5 Identification of Category of the automobile industry of
Maruti Suzuki (Industrial setting)
Industry setting here deals with the pattern of automobile industry in terms of their
stage of evolution and maturation as well as geographical dimension.
Here automobile industry is Global industry.
Automobile industry is global industry because strategic positions of competitors are in
major geographical or national markets and such markets are heavily affected by overall
In this automobile industry many firms such as Toyota, Nissan, General motors, ford are
multinational national and transnational companies and operates in more than one
country and in large companies almost all countries of the world.
And hence a firm in automobile industry can expand his business to more and more
countries and hence automobile is a global industry.
Question 6 Identification structure of the automobile industry under
which Maruti Suzuki falls (Industrial structure)
Industry structure essentially deals with underlying economic and technical forces
operating in an industry. It consists of the nature of competition based on number of
competitors and their roles and product differentiation.
Industry structure of automobile industry is Differentiated Oligopoly under which
Maruti Suzuki falls.
In automobile industry, number of sellers (that is in India around 20) are limited in
number but those all companies offers differentiated cars from each others. Here Audi,
BMW, Mercedes etc produce high class cars which something unique in each of their
models while Maruti, Hyundai, Nissan produce middle income group cars and having
different positioning from each other and hence they make differentiation on
technology, pricing, styling and design, after sales services etc. and hence competitors
are there in automobile industry but each has its own differentiation strategy.
So automobile industry is considered as a differentiated oligopoly because number of
competitors is limited but each has its own unique selling propositions.
Question 7 : comment about overall attractiveness of automobile
Industry attractiveness consists of factors prevailing in the industry affecting the
profitability of an organization favourabaly and unfavorabaly.
Attractiveness of automobile industry
Nature of Demand
Here the analysis is done on market size which is Indian automobile market which is one
the biggest automobile markets in the world.
Market size will determine demand of the market while population, income etc also
India is an attractive market because…..
a. Population of India is increasing Day by Day and industry demand of automobile
industry will also increase.
b. India is a huge market for automobile industry.
c. In past decade per capita income has increased by manifold and improvement in
income distribution will result into increase in demand and hence attraction of more
and more automobile firms.
It deals with scope of business that it offers at present and in future. This is mainly
concerned with the total auto mobile industry sale potential.
As India is a large market and having more potential of sales in the industry, it will
attract more and more car companies in India.
Profit potential is concerned with the degree to which differentiation or standardization
is there in industry.
In automobile sector in India with if one company enters with some innovation then
that firm will have uniqueness in their car and hence through innovation one can earn
In automobile industry profit potential is substantially high because through
technological changes and research and development one can have differentiated car
model and can earn high profit.
Entry and exit barriers
In automobile industry entry barriers are in the form of economies of scale of
operations, investment requirement, degree of product differentiation, cost
disadvantage etc. However, given India's incredible growth forecasts, infrastructure
progress (especially new and better roads), and ever-expanding financing options to
rural residents, the market is attractive. As such, we expect the threat of new entrants
to be high in automobile industry of India.
While there is huge investment done for stating automobile company, existing may be
very costly as technology is very costly, land and distribution outlay were also purchased
at high cost and withdrawal is very difficult from Automobile industry.
And hence automobile industry has many entry and exit barriers which reduces the
Question 8: comment about performance of automobile (industry
Industry performance is related to the following factors…..
In automobile industry profitability is measured through either sales or investment
But as automobile industry is a highly capital intensive industry sales may be very high
which creates difficulty to evaluate performance and hence investment should be taken
This part operational efficiency is dependent on input-output relations, inputs like
availability of raw materials like steel, fuel, machinery components etc, huge
infrastructure facilities like huge production plant, distribution outlets and service
stations, large number of manpower and so on.
And in automobile industry operational efficiency is very high because output with
respect to input is very high.
Innovation refers to any product or idea that is perceived by someone as new.
In auto mobile industry car innovations are very high that is addition of new features in
car, fuel efficient technologies, new design or different marketing channel innovations
etc are possible.
And through innovations differentiation is possible in automobile industry.
In automobile industry technological advancement refers to new ways and technologies
for making cars, and immediate adoption of new technology creates entry barriers to
entry of new firms.
Adoption of Technological advancement creates competitive advantage in automobile
industry to a firm in the form of cost benefits and differentiation of features.
Question 9: strategic group analysis
A strategic group is in a country consists of those firms which has similar combination of
strategies to compete.
Strategic Group is likely to be more in auto mobile industries where there is a great
difference between product lines of firms, especially in terms of pricing.
The rivalry among the firms within a Group is far greater than the inter-group rivalry.
On the customers’ part, there can be a shift from one group to another, especially when
upgrading to a more expensive automobile, the firms effectively compete for customers in
different market segments on their parts.
In automobile industry following strategic groups can be formed.
Strategic groups based on price competition.
Here mainly competition in same market segment takes place where customers are more
For example, Maruti-Suzuki competing with Ford, Fiat & Chevrolet because their target
customers in the Indian market are broadly similar and they focus mainly upon the
Strategic groups based on comfort and luxury with high pricing.
For example, Ford does not compete with Ferrari, but it does, in some segments, with
BMW, Audi & Mercedes.
This is because Ford’s more expensive and less mass-market range of cars are in similar
segments with BMW’s lesser expensive, more mass-market cars. So a Ford Focus would
compete with a BMW 1-Series and not a BMW 7-Series as the target customers.
Benefits to Maruti Suzuki through strategic analysis
Maruti can come to know that who are their close and direct competitors in terms
price and targeting middle income group families.
What can be the strategic problem for Maruti needed to be improved?
Maruti can easily analyze whether they opportunity to enter into high premium
segment and what is the favouribility.
Question 10: competitor approach analysis
Competitor analysis includes the following steps……
Assessing the strength and weakness of all automobile manufacturing firms.
Prices of competitors and Maruti.
Product differciation of competitors on the basis of price, product positioning
and distribution channel.
Cost advantage and disadvantage of Maruti’ s competitors
Car positioning of competitors.
Car performance of competitors and car design, engine etc.
Here in this question swot analysis for all competitors Is not possible as more then 20
car companies are there in India.
Question 11: ETOP for Maruti Suzuki
Environmental threats and opportunity profile of Maruti Suzuki
Political and legal
2. industrial policy
3. import duty
Degree of strength Degree of
importance for Maruti (+)
(out of 5)
4. export promotion
5. stability of government
1. Size of family
2. Income of family
3. Population increase in
1. availability of raw
2. anti pollution controls
3. new technology for eco
2. Fiscal policy
3. Economic policies of
1. Lifestyle and
preferences of people
2. Social norms
2. Research and
3. Cost efficient
technologies for cars
4. Emergence Fuel
1. No of competitors
2. Entrance of foreign
3. Chinese manufacturers 4
Grand total score of
From above ETOP analysis we can say that Maruti has its own advantages from external
environment but competition, economical factors are largely unfavorable to them.
Question 12: identification of following for Maruti Suzuki
a. Strength and weakness in various areas
Huge and well spread distribution network and after sale service network.
Knowledge of Indian market.
Good support from government and ability to liaison with government.
Ability to design product with diffenciating feature.
Well established brand image of Maruti.
Huge product line.
55% market share in India.
Technological advancement from Japan through Suzuki.
Demotivated human resources. And negative attitude of employee towards Maruti.
High import duty and tariffs to be paid on exports from the Japan.
Entry of foreign competitors with heavy pocket while Maruti has limited financial
Frequent strikes due to HR problem and stoppage of production.
Long waiting time for customer to get delivery of new cars, especially newly
launched car model.
b. Core competences
Core competencies of an organization can be simply defined as a set of qualities, which
are unique to that particular organization that cannot be easily imitated by its
Core competencies are factors which give competitive advantage to the organization in
its chosen market. Core competencies may be of various types- technical know-how,
relationship with customers, employee-dedication, manufacturing process etc.
An analysis of the Maruti Suzuki India Ltd. shows three core competencies:
Strong Customer Base and brand Image
The Maruti Suzuki has a market share of about 55% in the Indian passenger car
segment and is the largest manufacturer of small cars in India.
The company has been voted as first by Indian customers for level of customer
service and customer satisfaction. The company manufactures affordable small
cars which serve the needs of an average Indian customer faithfully and hence
have a strong brand image as the common man’s car in India, which an average
Indian customer identifies with.
Such a strong brand image and huge customer base can sustain the position of
the company as the market leader in the Indian small car segment.
Well developed sales and service network throughout India.
The Maruti Suzuki India has a strong dealership network comprising more than
450 cities across India and a huge service network of more 2750 franchises of
service outlets spreading about 1300 cities throughout India.
Such a widely distributed sales and service network can help the company to
relate with its customers across India and also facilitates bargaining power with
suppliers and increase profitability.
Very Strong knowledge of Indian market.
Maruti Suzuki is the India’s one of the oldest car manufacturers and Maruti has
been dealing in huge customer base can sustain the position of the company as
the market leader in the Indian small car segment and hence Maruti has strong
c. Competitive advantage
The firm has competitive advantage from a high market share and well knows
The high volumes drive economies of scale for the company in manufacturing,
purchasing, distribution and such scale driven activities.
In addition the company has increased the lead by expanding its distribution
networks (more dealers), opening new service centers and by expanding into
allied services such as insurance and used car sales. All this results in higher
customer loyalty and more repeat business.
Question 13: preparation of OCP for Maruti Suzuki
Organizational Threats and opportunity profile of Maruti Suzuki
Degree of strength Degree
importance for Maruti (+)
(out of 5)
A. Production factors
Quality of technology
5. Supply of raw
6. R& D facilities
B. Marketing Factors
1. Competitive advantage
2. Market share
3. Product life cycles
4. Distribution outlets
5. Promotional efforts
6. Market research
7. Competitive pricing
C. Finance factors
Cost of capital
Ease in raising fund
Use of financial
5. Tax advantages
D. Human resources
1. Quality of managerial
2. Quality of operatives
3. Employee attitude
4. Employee motivation
5. Employee absenteeism
6. Employee turnover
1. Company image
2. Information and
3. Willingness to bring
Total score for Maruti
Question: 14 preparation of SAP for Maruti Suzuki
Huge product line and wide Varity of cars but problem is that they are facing
competition in each category.
55% market share in India and turnover is about two million cars a year.
Maruti is market leader in India because of two reasons
a. Plant is very old and established long ago so fixed cost is very low in terms of
investment outlay and depreciation.
b. As a large setup they have the advantage of low operating cost per unit.
Huge and well spread distribution network and after sale service network. The
Maruti Suzuki India has a strong dealership network comprising more than 450 cities
across India and a huge service network of more 2750 franchises of service outlets
spreading about 1300 cities throughout India.
Knowledge of Indian market.
Ability to design product with diffenciating feature.
Well established brand image of Maruti.
Technological advancement from Japan through Suzuki.
Question: 15 value chain analysis for Maruti Suzuki
Value Chain A value chain is a chain of activities. Products pass through all activities of the
chain in order and at each activity the product gains some value. The goal of these activities
is to offer the customer a level of value that exceeds the cost of the activities so that the
company can charge a premium price for the product hereby resulting in a profit margin.
Value chain analysis includes two activities viz…
a. Primary activities
Primary activities are those that are involved in creation of cars which are as
The receiving and warehousing of raw materials, and their distribution to
MUL’s inputs primarily comprise raw materials and purchased components. In order
to improve quality and generate economies of scale, MUL has reduced the number
of vendors of components in India.
Manufacture of products and services. The way that the resource inputs convert to
outputs that is cars.
Operations Includes machining, assembly of various components of cars etc.
Required to get the finished goods and services to the customer.
It includes warehousing, order fulfillment, transportation, distribution, distribution
management of cars.
Marketing and sales
Associated with getting buyers to purchase the product.
This Includes channel selection, advertising and promotion of cars, selling, final
pricing, retail management, etc. related with cars.
Maintain and enhance the product performance after the car has been sold.
Includes customer support, repair services, installation, training, spare parts
management, upgrading, etc.
b. Supportive activities
Supportive activities are those that are provide provide effective performance of
primary activity which are as following…
This includes Maruti’s production plant, service stations and distribution channel
Human resources management
Concerned with managing information processing and the development and
protection of knowledge in business, specially Maruti’s knowledge about Indian
This Includes technology development to support the value chain activities such
as research and development.
Concerned how resources are acquired for a business.
Procurement of raw materials, servicing, spare parts, buildings, machines in
which car assembling technology, service and repair components etc are
Question 16 Functional analysis for Maruti Suzuki
It evaluates the strengths and weaknesses of various functional areas. The areas are
Production, Marketing, Finance, Human Resources and general management.
Allocation and use of resources: before starting up of production firstly the
company has to allocate the resources properly and use it and that too with high
ii. Location pattern: here the MARUTI will select Hariyana location where it got all
the raw material available.
iii. Production capacity and its uses: In future if company wants then it can
increase its capacity and use it optimally.
iv. Cost structure: The Company has to do cost analysis for the product. And if it
increase than the company have to take steps.
v. Cost volume profit analysis: It suggest the profitability of the organization at
various levels of production.
vi. Operation procedures: Here the production design, scheduling, output, quality
control, etc. are taken into consideration and then the process takes place.
vii. Raw material availability: The planning for various raw materials are also
takes place in production area. If the materials are scare than they can order it
before scarcity arises.
Inventory Control system: Here they consider that the wastage of resource
does not take place. Besides it can control and regulated the procurement of
materials in such a way its cost is minimum and it should be available on time.
ix. Research and Development: It is the most important part of the production
area as many advantages are associated with it like the company can bring new
flavour coffee, can change its packaging, etc. Besides it may create competitive
environment by introducing new things.
x. Patent right: the MARUTI have the patent right so no one can copy the cars and
car features and no one can start the company by their name.
Favourable vocational pattern of plant.
Optimum use of production capacity.
Effective inventory control,
Adequate and efficient use of R&D.
Low cost of production.
Scare and limited resources.
Defective allocation and use of resources.
The cost may get high.
Marketing / Service:
MARUTI advertises through TV, websites, etc.
1. Competitive competence:
Business organizations have to operate in a competitive field. The organization’s
competitive competence can be appraised on the basis of trends in market shares
for which the information can be made available from various outside sources as
well as through the MARUTI own marketing research department.
2. Market research:
Marketing research offers the information for taking various marketing decisions in
the light of the environmental demand.
3. Channel of distribution:
The Maruti Suzuki India has a strong dealership network comprising more than 450
cities across India and a huge service network of more 2750 franchises of service outlets
spreading about 1300 cities throughout India.
4. Promotional efforts:
Effective promotional efforts are strength for the organization and their absence a
Favourable image of the company.
High market share.
Effective and efficient selection of channels.
Efficient promotional efforts.
Proper product positioning.
Best marketing research.
Market share may get decreased.
Declining product life cycle of cars.
Ineffective sales forces.
Stagnant marketing strategy.
Finance area deals primarily with raising, administering and distributing financial
resources to various activities.
1. Capital cost:
The various sources through which the MARUTI raises its financial funds determine
the capital cost. While determining the sources for funds, debt/equity norm, capital
market position, etc. are taken into consideration.
2. Financial planning:
It is the determination, in advance, of the quantum of capital requirement and its
forms. What type of assets will be required to run the business and how much
capital will be required for this.
3. Tax benefits:
When governments seek to develop or change tax policy, they invariably seek input
from a wide range of interested stakeholders, including business advocacy groups
and a large number of individual companies.
Sound capital structure.
Sound financial planning.
Efficient and effective accounting system and procedures.
High capital cost.
Human Resources :
In analysing human resources, following factors are taken into consideration:
1. Quality of personnel:
Quality of a personnel employed by an organization is a key determinant of its
success. MARUTI has to be careful while choosing the employees. Quality of
personnel includes their knowledge, skills, attitudes, and motivation to work.
2. Personnel turnover and absenteeism:
It is a big problem for organization in today’s context. To the extent, an organization
is not able to retain its key personnel.
Highly skilful labourers.
High motivation of top management
High personal turnover.
Negative attitude of employee
Frequent strike by employees.
The worker may not like to learn new technology.
Associated with recruiting, development
compensation of employees and managers.
Motivation and training to employees.