Case-Maruti Udoyg Ltd

What is the Mission of MUL?
What the company is and what its goals or objectives are…. “MUL is a government controlled automobile company which while focusing on the small car strives to achieve the excellence of modern technology and work culture”


To go for the “mass market” with a quality product and a foreign collaboration. Capture a dominant market share, and then try to capture additional market segment through introduction of new products.

Maruti has not achieved its Mission
• Market Segment (Smaller car middle class consumer market as per mission statement) • However it catering upper strata society. • Govt. lifted concessions • With rise of price there is no substantial difference between Maruti, Ambassador and Premier.

Unfair Disadvantage
An automotive factory to produce a small, low cost car economically has to meet some fundamental requirements, viz: • Access to lowest cost components and materials of the best quality in the world • Incur minimal logistical costs (Location disadvantage) • Proximity to an engineering infrastructure • A production volume of at least 250-3-0 thousand per year to enjoy full economics of scale

The Generic Value Chain(Porter)

What Maruti has achieved
• The record of completing the plant in 13 months and achieving 50% share by 1985 is commendable. • Consistent Profit from 1983-84 to 1986-87 • Our put: Cars per employee Maruti (30:1) Indian automobile Industry(12:2) Suzki (70:1)

Difficulty in achieving Japanese Management Style
Page 61 “Though Mr O Suzi stronly believes maruti must be prepared to accept Japanese management style……….but at the stage of implementation..”. Absenteeism was a cause of concern.. Malpractices for reimbursement…

Learn from Japanese Management style….
• More people oriented management style. • Consider workers as long-term Corporate asset. • Training to Employees

Holistic Marketing Dimensions

Competitive Strategy
Should position itself for younger age group, small family. Maruti started with 100,000 vehicle capacity. With 50% capacity utilization it can become market leader. Capacity output of other cars-30,000-50,000 units

Manufacturing Strategy
• By adopting a policy of keeping in house manufacturing limited to 30%, fixed cost is low so breakeven point is low. • Quality and timely supply of components since 30% self manufacturing. • By laying emphasis on quality and delivery by vendors , it is able to reduce inventory levels (with material at times supplied directly to shops just-in-time)

Foreign Collaboration
• Rapid Indigenization of components More no. of ancillary manufacturing units for making quality and critical components • Low Productivity of Indian Labor

Impact of Maruti on Competitors
• Maruti’s target segment –Household user segment: Competitors- Institutional Buyers • Now more Competitors: Hyundai

Future Strategy
• In India purchasing power of small luxury car is very limited • Should follow strategies of South Korea and Taiwan: (Local Demand less) • Should follow strategy of export-led growth • Seller’s to Buyer’s Market • Should take measures to reduce cost • Complete indigenization to get out of the effects of import duties.

Future Strategy
• Managing Human Resources • Redefining automobile policy in terms of cost of importing components. “Is the car a vehicle of development of country’s economy?”

Suzuki-Nissan seek port for carsBusiness Standard: October 11, 2006
• Car manufacturer Maruti Suzuki is planning to team up with multinational automobile major Nissan Motor Company for developing a greenfield dedicated port to ship out vehicles. • The cost of a greenfield facility will go up to Rs 3,500 crore as port operators will have to dredge up to 15 metres depth for a shipping channel. The cost may come down if a major port extends a terminal to these players,” port experts said. • “The coming together of Maruti Suzuki and Nissan makes sense as the latter has a tie-up with Maruti for design of cars in India. A common automobile port will cut down the cost for both players,” • At present, automobile majors are shipping their cars primarily from Mumbai and Chennai. • Mahapatra said the idea behind such a port was to cut down the logistics cost and streamline the export operations of these companies.

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