Professional Documents
Culture Documents
Business Policy and Srategic Management: (Batch 2011-13)
Business Policy and Srategic Management: (Batch 2011-13)
PGDM
(Batch 2011-13)
GROUP 3
BATCH - Finance 2
A Project Report
On
TABLE OF CONTENT
SR. NO.
SECTION
PAGE NO.
1
Executive Summary
2
2
Define the Industry
2
3
Portfolio Analysis of Industry
4
Attractiveness of Industry
5
5
Value Chain of Maruti Suzuki
6
6
Porters generic Strategy
8
7
Added Value Concept
9
8
Cost Component
10
9
Willingness to Pay Component
11
10
Overcome the Threats
12
11
Scope of Further Growth of Company
12
12
Conclusion and Learning
13
Page | 1
1. EXECUTIVE SUMMARY
Maruti Suzuki a leading car maker in India is a subsidiary of Suzuki Motor
Corporation of Japan. Maruti is a market leader in mid-size segment of
cars and has a market share of around 42% in mid-size segment cars.
Best selling cars of Maruti include Swift, Swift Dzire, Alto, and Ertiga.
They have production on economies of scale and works on cost
effectiveness. Maruti has manufacturing plant in Manesar and Gurgaon
and they are coming up with plant in Gujarat to make India a hub for
mid-size cars. They also have a research and design center at Haryana.
Maruti has threat from imitations, Substitute, slack and Holdup which
has proven problems for the company in recent past but still they had
Page | 2
hatchback Ritz, A-Star, Swift, Wagon-R, Estillo and sedans Dzire, SX4, in
the 'C' segment Maruti Eeco, Multi-Purpose vehicle Ertiga and Sports
Utility vehicle Grand Vitara. It was the first company in India to massproduce and sell more than a million cars. It is largely credited for having
brought in an automobile revolution to India.
Maruti Suzuki India Limited logged 9.2 percent increase in sales for July
2012 at 82,234 units as against 75,300 units in the same month last
year, riding back on the humungous sales of its compact sedan, Swift
Dzire, clocking an almost four-fold increase, according to a company
statement.
According to the carmaker, its domestic sales during July stood at 71,024
units, compared to 66,504 units in July last year, up 6.8 percent. The
sales were driven mostly by its compact sedan Dzire, which clocked
11,413 units.
Sales of small cars, including the M800, Alto, A-Star and Wagon R, however,
declined by 23.7 percent to 28,998 units. The company's other best-selling
model Swift along with Estillo and Ritz together clocked 15,759 units in July
this year, up 73.2 percent from last year.
MSIL's sales of its mid-sized sedan SX4 plunged by 70.5 percent to just
679 units in the month, the company said in a statement, adding that it
managed to sell just two units of the luxury Kizashi sedan. Exports
during the month stood at 11,210 as compared to 8,796 in July last year,
up 27.4 percent.
Page | 3
The MSIL 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 mans 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.
The Maruti Suzuki India has a strong knowledge of the Indian market
which has helped them to grow their sales and market share in India.
Page | 4
STAR: The Company has long run opportunity for growth and
profitability. They have high relative market share and high growth rate.
SWIFT, SWIFT DEZIRE AND ZEN ESTILO is the fast growing and has
potential to gain substantial profit in the market.
QUESTION MARK: These are also called as wild cats that are new
products with potential for success but there cash needs are high and
cash generation is low. MARUTI SX4, GRAND VITARA, RITZ fall in the
category of question mark
CASH COW: It has high relative market share but compete in low growth
rate as they generate cash in excess of their needs. ALTO AND WAGNOR
have fallen to ladder 3 & 4 due to introduction of ZEN ESTALIO and A
STAR.
DOG: The dogs have no market share and do not have potential to bring
in much cash. Business of SX4, OMINI, and VERSA has liquidated and
trim down.
GE MATRIX OF MSIL
GE MATRIX
INDUSTRY ATTRACTIVENESS
HIGH
MEDIUM
LOW
Investment &
Investment & growth
Selectivity/
HIGH
earnings A-
growth SWIFT
ALTO
STAR
BUSINESS
Investment &
Selectivity/earnings
STRENGTH
MEDIUM
growth SWIFT
Harvest ECO
DEZIRE
SX4
Selectivity/
Harvest
LOW
earnings
Harvest OMNI
VERSA
WAGON R
Michael Porter identified 5 forces that determined the long run attractiveness of a business.
We would analyze Porters five forces in context of the Maruti Suzuki.
Page | 5
Although most of the major global players are present in the Indian market; few more are
expected to enter due to the welcoming government policies and expected retaliation.
Maruti Suzuki faces serious threat from consumer shifting to hybrid or electric cars.
Currently, the electric car market in India is dominated by sole player Reva Electric Car
Company. However brands like Tata Motors, Chevrolet and Nissan are also planning to
launch their electric car this year.
Automakers are the key to the supply chain of the automotive industry. Maruti Suzuki has
manufacturing units where engines are manufactured and parts supplied by first tier
suppliers and second tier suppliers are assembled. There are a large number of automobile
component suppliers whose switching costs are very high. Thus reducing the bargaining
power of the suppliers
Today, consumers are considered kings in the automobile market. There is an increasing
awareness among them and they are given a humongous number of choices. Buyers get
incentives in the form of cost discounts and better after sales services. This further increases
the bargaining power of the buyers.
Competition in certain segments is very high e.g., small and mid-car segment. Brands like
Hyundai, Chevrolet, Tata and Skoda have given huge competition to Maruti Suzuki. In the
recent past Volkswagen, Honda, Ford has also given competition to the premium car
segment.
Page | 6
1) Inbound Logistics
2) Operations
3) Outbound Logistics
Are the activities required to get the finished product to the customer,
including collecting, storing, physically distributing, material handling,
delivery vehicle operation, order processing and scheduling.
Provide means by which buyers can purchase the product and inducing
them to do so, such as advertising, promotion, sales force, quoting,
channel selection, channel relations, and pricing. Marutis marketing
Service
1) Procurement
The function of purchasing raw materials and other inputs used in the
firms value creating activities
Page | 7
2) Technology Development
4) Firm Infrastructure
The Acquisition Cost Is Unfortunately Not The Only Cost You Face When
Buying A Car. Although a Car May Be Affordable To Buy, It May Not
Necessarily Be Affordable To Maintain, As Some Of Its Regularly Used
Spare Parts May Be Priced Quite Steeply. Not So In The Case Of a Maruti
Suzuki. It Is In The Economy Segment That The Affordability Of Spares Is
Most Competitive, And It Is Here Where Maruti Suzuki Shines.
Page | 8
World Strategic Models Swift, A-star, SX4 and swift Dzire. The plant at Manesar
is the company's fourth car assembly plant and has a capacity of 300,000 cars
per year.
Maruti Suzuki scored the highest across all 7 parameters: least problems
experienced with vehicle serviced, highest service quality, best in-service
experience, best service delivery, best service advisor experience, most
user-friendly service and best service initiation experience. About 92% of
Maruti Suzuki owners feel that work gets done right the first time during
service and 97% of Maruti Suzuki owners would probably recommend the
same make of vehicle, while 90% owners would probably repurchase the
same make of vehicle.
At Maruti Suzuki, you will find your entire car related needs met under
one roof. Whether it is easy finance, insurance, fleet management
services, exchange- Maruti Suzuki is set to provide a single-window
solution for all your car related needs.
Page | 9
8. COST COMPONENTS
The cost components are basically the group of cost origins for the
organization. Cost Components of any Automobile Company like Maruti
Suzuki include Prime Cost, Works Cost, and Cost of production and Total
Cost.
Prime Cost
Works Cost
Cost of Production
It is the sum total of works cost and office and administrative overheads
(Cost of indirect material, indirect labour and indirect expenses related
to office works). This cost is known as office cost. Costs involved in this
are the Office and Administrative Expenses i.e. the salaries of the office
employees and managers.
Prime Cost component is the one which can be improved and is the one
on which the company is taking steps to improve because of the foreign
exchange fluctuations and higher input costs. The company has initiated
measures to step up localization levels and to pare the number of tier-I
suppliers over the next two-three years, cutting down component
imports, improving yield and enhancing the usage of raw materials.
Page | 10
9. WILLINGNESS TO PAY
Customers prefer and give value to the convenience provided by one
stop shopping as it gives broad scope. It gives the customer the
experience of one single point of contact for sales service and other
support which they can provide. Maruti Suzuki is providing the same with
so many features mentioned below:
In one shop stop you get many thing at one place, this is a growing trend
among the automobile industry:
Customize the vehicles: Customize the wheel and the colour of the
car.
Maruti Driving School (MDS): Maruti has established this with the
goal to capture the market where there is inhibition in buying cars due to
inability to drive the car. This brings that customer to Maruti showroom
and Maruti ends up creating a customer.
Page | 11
Maruti Suzuki to reducing the weight of the vehicle and cost which
enables the company to achieve the economies of scale. Maruti Brand
loyalty is very high in small cars so, it very difficult for the competitor to
imitated the brand loyalty and customer satisfaction.
Slack - The silent killer of small business, theft, absenteeism, nonengagement and waste or ineffective use of current resources. The
companies facing a problem of innovation because company is still focus
on old cars and upgraded models
MSIL to fast track its New alto launch which is priced about 2 lakhs,
Suzuki making MSIL a small car manufacturing hub, Volume growth of
10.8% for FY2012
Net sales grew by 27.5% yoy to Rs.10,778cr in 1st quarter FY13, EPS
Estimates to be INR 66.87 and ROE of 12.1% for FY2013, Expected
significant volume growth of 15% for FY13
Coming up with new plant and Skill development center in Gujarat and
R&D center in Haryana
Page | 12
Maruti Suzuki is far behind in luxury and SUV car, the other player like
GM, TATA, Mahindra, Honda and Toyota are already established in the
market, so replacing them would not be easy
Page | 13