A Pr oj ect R e

p
or t
On
Mar ut i Suz uki
Lt d.
TABLE OF CONTENT
SR. NO. SECTION PAGE NO.
1 Executive Summar
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2
2 Deine t!e "ndu#tr
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2
$ Porto%io Ana%
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#i# o "ndu#tr
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&
& Attractivene## o "ndu#tr
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' (a%ue )!ain o Maruti Suzuki *
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Porter# +eneric Strate+
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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. !est selling cars of Maruti include S"ift# S"ift $zire#
%lto# and &rtiga. 'hey ha(e production on economies of scale and "orks on cost
effecti(eness. Maruti has manufacturing plant in Manesar and )urgaon and they are coming
up "ith plant in )u*arat to make India a hub for mid-size cars. 'hey also ha(e a research
and design center at +aryana.
Maruti !elongs to an %utomobile Industry "hich has tough competition from other ma*or
players after liberalization "hen companies like +yundai# +onda# Skoda# 'oyota#
,olks"agen ha(e started selling cars in India. 'he core competencies of Maruti include
strong customer base and brand image# "ell de(eloped sales and ser(ice net"ork and
strong kno"ledge of Indian markets. %nalysis based on !C) matri- and )& matri- is also
performed in order to understand brand marketing and product management to help a
company decide "hat products to add to its product portfolio# and "hich market
opportunities are "orthy of continued in(estment.
%ttracti(eness of the Industry is analyzed through .orters /i(e forces and also ,alue Chain
to get idea about ho" the operational acti(ities and production acti(ities are performed in
compliance to ha(e cutting market competition. .orter )eneric strategy to understand about
cost# differentiation and focus strategy and the added (alue so that customer can
differentiate Maruti product "ith the other leading company0s product and its competiti(e
ad(antage.
Maruti0s leadership is market is due to its cost ad(antage "hich is least among all the other
players in market and its lo"er maintenance cost. 'he "illingness to pay is also (ery high
because customers can easily pay re1uired cost because they are getting "hat they are
e-pecting and also cost is lo".
Maruti has threat from imitations# Substitute# slack and +oldup "hich has pro(en problems for
the company in recent past but still they had o(ercome them to pro(e there cost leadership
and market leader. /urther companies future gro"th and prospects is discussed to get clear
picture ho" companies e-pands and "hich ne" products company is launching to maintain
and retain market share.
2. DEFINE THE INDUSTRY
Maruti Suzuki India 2imited is a subsidiary company of Japanese automaker Suzuki Motor
Corporation. It has a market share of 42.3 of the Indian passenger car market as of March
2432. Maruti Suzuki offers a complete range of cars from entry le(el Maruti 544 and %lto# to
hatchback 6itz# %-Star# S"ift# 7agon-6# &stillo and sedans $zire# 894# in the 0C0 segment
Maruti &eco# Multi-.urpose (ehicle &rtiga and Sports :tility (ehicle )rand ,itara. It "as the
first company in India to mass-produce and sell more than a million cars. It is largely credited
for ha(ing brought in an automobile re(olution to India.
INDIAN AUTO INDUSTRY
;ne of the ma*or industrial sectors in India is the automobile sector. Subse1uent to the
liberalization# the automobile sector has been aptly described as the sunrise sector of the
Indian economy as this sector has "itnessed tremendous gro"th.
'he Indian auto industry is sho"ing signs of slo"do"n. :tility (ehicles are gro"ing strong#
clocking 8< gro"th o(er last year. 'he cumulati(e production data for %pril-July 2432 sho"s
production gro"th of =.34 o(er same period last year.
'he industry produced 3#=4>#544 (ehicles in July 2432 as against 3#>8>#434 in July 2433. 'he
o(erall gro"th in domestic sales during the period "as ?.<4 o(er same period last year.
.assenger ,ehicles segment gre" 34.24 during %pril-July 2432 o(er same period last year.
.assenger cars gre" 8.8 "hile utility (ehicles gre" 8<.>> during %pril-July 2432 as
compared to same period last year.
$uring %pril-July 2432 o(erall automobile e-ports registered negati(e gro"th at @-4.4<A
percent. 7hile passenger (ehicles and commercial (ehicles both gre" by ?.34 percent. '"o B
three "heelers declined by @-3.44A and @<?.2<A percent respecti(ely in %pril-July 2432
compared to the same period last year.
MARUTI SUZUKI GROWTH ANALYSIS
Maruti Suzuki India 2imited logged ?.2 percent increase in sales for July 2432 at 52#2<4 units
as against =8#<44 units in the same month last year# riding back on the humungous sales of its
compact sedan# S"ift $zire# clocking an almost four-fold increase# according to a company
statement.
%ccording to the carmaker# its domestic sales during July stood at =3#424 units# compared to
>>#844 units in July last year# up >.5 percent. 'he sales "ere dri(en mostly by its compact
sedan $zire# "hich clocked 33#43< units.
Sales of small cars# including the M544# %lto# %-Star and 7agon 6# ho"e(er# declined by
2<.= percent to 25#??5 units. 'he company0s other best-selling model S"ift along "ith &stillo
and 6itz together clocked 38#=8? units in July this year# up =<.2 percent from last year.
MSI20s sales of its mid-sized sedan 894 plunged by =4.8 percent to *ust >=? units in the
month# the company said in a statement# adding that it managed to sell *ust t"o units of the
lu-ury Cizashi sedan. &-ports during the month stood at 33#234 as compared to 5#=?> in July
last year# up 2=.4 percent.
CURRENT STRATEGIES OF MSIL
A. /ocus on small market segment to beat the stiff competition.
B. $e(elop capabilities B internal resources to finance its e-pansion and gro"th.
.age I 8
C. 'o stay a"ay from ultra-lo" cost segment.
4. 'o make India an e-clusi(e small car manufacturing base to le(erage frugal engineering. &.
'o establish 6B$ facility in India to produce cars in India# starting from design till
production
CORE COMPETENCI ES OF MSI L:
Core competencies of an organization can be simply defined as a set of 1ualities# "hich are
uni1ue to that particular organization that cannot be easily imitated by its competitors. Core
competencies are factors "hich gi(e competiti(e ad(antage to the organization in its chosen
market. Core competencies may be of (arious types- technical kno"-ho"# relationship "ith
customers# employee-dedication# manufacturing process etc.
%n analysis of the Maruti Suzuki India 2td. sho"s three core competenciesD
1. Strong Customr !"s B !r"n# $m"g %
'he MSI2 has a market share of about 88 in the Indian passenger car segment and is the
largest manufacturer of small cars in India. 'he company has been (oted as first by Indian
customers for le(el of customer ser(ice and customer satisfaction. 'he company
manufactures affordable small cars "hich ser(e the needs of an a(erage Indian customer
faithfully and hence ha(e a strong brand image as the common man0s car in India# "hich an
a(erage Indian customer identifies "ith. Such a strong brand image and huge customer base
can sustain the position of the company as the market leader in the Indian small car
segment.
2. W&&%#'&o(# s"&s "n# sr'$) nt*or+ t,roug,out In#$" %
'he Maruti Suzuki India has a strong dealership net"ork comprising more than 484 cities
across India and a huge ser(ice net"ork of more 2=84 franchises of ser(ice outlets
spreading about 3<44 cities throughout India. Such a "idely distributed sales and ser(ice
net"ork can help the company to relate "ith its customers across India and also facilitates
bargaining po"er "ith suppliers and increase profitability.
3. Vr- Strong +no*&#g o. In#$"n m"r+t %
'he Maruti Suzuki India has a strong kno"ledge of the Indian market "hich has helped them to
gro" their sales and market share in India.
3. PORTFOLIO ANALYSIS OF THE COMPANY
BCG Matri x for MSI L
Maruti Suzuki# one of India0s leading automobile manufacturer and the market leader in the
car segment# both in terms of (olume of (ehicles sold and re(enue earned.
.age I >
PORTERS FIVE FORCES MODEL
Mic!ae% Porter identiied ' orce# t!at determined t!e %on+ run attractivene## o a 5u#ine##.
0e 4ou%d ana%
y
ze Porter6# ive orce# in context o t!e Maruti Suzuki.
a) Threat of New Entrants: Increasing
A%t!ou+! mo#t o t!e major +%o5a%
p
%a
y
er# are
p
re#ent in t!e "ndian market7 e4 more are
ex
p
ected to enter due to t!e 4e%comin+ +overnment
p
o%icie# and ex
p
ected reta%iation.
b) Threat of S!st"ttes: Low to Medium
Maruti Suzuki ace# #eriou# t!reat rom con#umer #!itin+ to !
y
5rid or e%ectric car#.
)urrent%
y
8 t!e e%ectric car market in "ndia i# dominated 5y #o%e
p
%a
y
er Reva E%ectric )ar
)om
p
an
y
. 9o4ever 5rand# %ike 1ata Motor#8 )!evro%et and :i##an are a%#o
p
%annin+ to
%aunc! t!eir e%ectric car t!i#
y
ear.
c) Bar
#


a"n"n
#



$


ower of S
$$


%"er: Low
Automaker# are t!e key to t!e #u
pp
%
y
c!ain o t!e automotive indu#tr
y
. Maruti Suzuki !a#
manuacturin+ unit# 4!ere en+ine# are manuactured and
p
art# #u
pp
%ied 5y ir#t tier
#u
pp
%ier# and #econd tier #u
pp
%ier# are a##em5%ed. 1!ere are a %ar+e num5er o automo5i%e
com
p
onent #u
pp
%ier# 4!o#e #4itc!in+ co#t# are ver
y
!i+!. 1!u# reducin+ t!e 5ar+ainin+
p
o4er o t!e #u
pp
%ier#
d) Bar
#


a"n"n
#



$


ower of !
&


ers: Increasing
1oda
y
8 con#umer# are con#idered kin+# in t!e automo5i%e market. 1!ere i# an increa#in+
a4arene## amon+ t!em and t!e
y
are +iven a !umon+ou# num5er o c!oice#. ;u
y
er# +et
incentive# in t!e orm o co#t di#count# and 5etter ater #a%e# #ervice#. 1!i# urt!er
increa#e# t!e 5ar+ainin+
p
o4er o t!e 5u
y
er#.
e) Co'
$


et"t"(e R"(a%r
&


: High
)om
p
etition in certain #e+ment# i# ver
y
!i+! e.+.8 #ma%% and mid<car #e+ment. ;rand# %ike
9
y
undai8 )!evro%et8 1ata and Skoda !ave +iven !u+e com
p
etition to Maruti Suzuki. "n t!e
recent
p
a#t (o%k#4a+en8 9onda8 2ord !a# a%#o +iven com
p
etition to t!e
p
remium car
#e+ment.
of these primary acti(ities is linked to support acti (ities "hich help to impro(e their
effecti (eness or efficiency.
@%A .rimary acti(ities at Maruti Suzuki @;perationalA
1) In/oun# Lo
g


$st$)s
I nbound 2ogistics i .e. the recei (i ng and "arehousing of ra" mat er i al s# and t hei r
di st r i but i on to manuf act ur i ng. Mar ut i Suzuki0 s i nput s pr i mar i l y comprise ra"
materials and purchased components. 6a" mat er i al includes r ubber# glass# st eel #
pl ast i c# al umi num# l y r e # "i ndshi el ds# and airbags are e-ample of parts or
components. I h e company has i mpl ement ed t i er i zat i on of suppliers and Just in
l i me supply l ogi st i cs.
2) O
(


r"t$ons
I r ansf or m i nput s i nt o f i nal pr oduct form t hr ough machi ni ng# packaging#
assembly# e1ui pment mai nt enance# t est i ng# pr i nt i ng and f aci l i t y operat i ons.
3) Out/oun# Lo
g


$st$)s
%re the acti(ities re1uired to get the finished product to the customer# including collecting#
storing# physically distributing# material handling# deli(ery (ehicle operation# order
processing and scheduling.
4) M"r+t$n
g


"n# S"&s
.ro(ide means by "hich buyers can purchase the product and inducing them to do so# such
as ad(ertising# promotion# sales force# 1uoting# channel selection# channel relations# and
pricing. Maruti0s marketing ob*ecti(e is to continually offer the customer ne" products and
ser(ices thatD
1. 6educe the customer0 s cost of o"nership of our carsE and
2. %nticipate and address the customer0 s needs and preferences in all aspects
and stages of car o"nership @M%6:'I S:F:CI refers to this as the G<>4 degree
customer e-perienceG
5) Sr'$)
%ims to enhance or maintain the (alue of the product# such as installation# repair# training#
parts supply# and product ad*ustment
@!ASecondary acti(ities at Maruti Suzuki @Supporti(eA
01 2ro)urmnt
'he function of purchasing ra" materials and other inputs used in the firm0s (alue creating
acti (ities
2) Technolo
g


y Develo
p


ment
Technology development includes research and development, process
automation, and other technology development used to support the value
chain.
a) Research & Development (R&D)
b) Technology absorption, adaptation and innovation
3) Human Resource Mana
g


ement
Activities associated with recruiting, training, development and compensation of
employees.
4) Firm Infrastructure
irm infrastructure consists of general management, planning, !nance, accounting,
legal, government a"airs and #uality management.
Kaizen - $aruti had adopted the %apanese management concept of &ai'en, or
continuous improvement. The &ai'en activities had resulted in the improvement
of the in(house capabilities. or e)ample, they had manufactured *+ multi(a)is
robots and ,- multi(spot welders.
6. PORTERS GENERIC STRATEGY
The Low ost Maintenance !"vantage
The Ac#uisition .ost /s 0nfortunately 1ot The 2nly .ost 3ou ace 4hen 5uying A
.ar. Although a .ar $ay 5e A"ordable To 5uy, /t $ay 1ot 1ecessarily 5e A"ordable
To $aintain, As 6ome 2f /ts Regularly 0sed 6pare 7arts $ay 5e 7riced 8uite 6teeply.
1ot 6o /n The .ase 2f a $aruti 6u'u9i. /t /s /n The :conomy 6egment That The
A"ordability 2f 6pares /s $ost .ompetitive, And /t /s ;ere 4here $aruti 6u'u9i
6hines.
Lowest ost of #wnership
The ;ighest 6atisfaction Ratings 4ith Regard To .ost of 2wnership among All
$odels Are All $aruti 6u'u9i <ehicles= :stillo, 4agon R, :steem, Alto and 2mni. 4e
Are 7roud to ;ave the >owest .ost of 2peration?&m (Among 7etrol <ehicles) ( The
Top + models Are All $aruti 6u'u9i $odels= $aruti @AA, Alto, Ben, 2mni and 4agon
R.
To achieve cost lea"ership --- upfront capital investment in state(of(the (art
e#uipment?plant is re#uired. e.g. ((( $aruti 6u'u9i has two state(of(the(art
manufacturing facilities in /ndia. The !rst facility is at Curgaon spread over DAA acres
and the other facility is at $anesar, spread over -AA acres in 1orth /ndia. $aruti
6u'u9iEs facility in Curgaon houses three fully integrated plants. Together the three
.age I 33
plants have an installed capacity of around FAA,AAA units. & 6eries 7lant. The Curgaon
facilities also house the E&E :ngine 7lant. .ommissioned in *AA@, the &(series engine
plant has an installed capacity of +AA,AAA units. $anesar acility At present the
$anesar plant rolls out
.age I 32
7orld Strategic Models S"ift# %-star# 894 and s"ift $zire. 'he plant at Manesar is the company0s
fourth car assembly plant and has a capacity of <44#444 cars per year.
D$..rnt$"t$on % creating something that is percei(ed industry "ide as uni1ue. $ifferentiation can
take many forms - !rand name- Maruti Suzuki 'echnology- 'he highly fuel efficient# technologically
ad(anced C series engines ha(e been (ery "ell appreciated by our customers for their performance.
Ser(ice- !est Ser(iceHhighest no. of ser(ice centers $ealer Iet"ork - +ighest Juality- ,alue for
money .erformance Mileage !est match "ith Indian road conditions 2ess Maintenance cost 6esale
price
7. ADDED AL!E CONCEPT
T, 3u"&$t- A#'"nt"g
Maruti Suzuki ;"ners &-perience /e"er .roblems 7ith 'heir ,ehicles 'han %ny ;ther Car
Manufacturer In India. 'he %lto 7as Chosen Io.3 In 'he premium Compact Car Segment
across ? .arameters. 7agon 6 Io. 3 in the premium compact car Segment and S7I/' as
best hatch back car. 'his study measures o"ner In terms of design# content# layout and
performance of (ehicles across (arious parameters.
A !u-$ng E4(r$n) &$+ No Ot,r
Maruti Suzuki +as a sales net"ork ;f <4= state-of-the-art sho"rooms across 35? Cities# "ith a
"orkforce of ;(er >444 trained sales personnel to guide Customers in finding the right Car.
'he high sales and customer care standards led us to achie(e the no.3 name.
3u"&$t- Sr'$) ")ross 0567 C$t$s
Maruti Suzuki scored the highest across all = parametersD least problems e-perienced "ith
(ehicle ser(iced# highest ser(ice 1uality# best in-ser(ice e-perience# best ser(ice deli(ery# best
ser(ice ad(isor e-perience# most user-friendly ser(ice and best ser(ice initiation e-perience.
%bout ?2 of Maruti Suzuki o"ners feel that "ork gets done right the first time during ser(ice
and ?= of Maruti Suzuki o"ners "ould probably recommend the same make of (ehicle# "hile
?4 o"ners "ould probably repurchase the same make of (ehicle.
On Sto( S,o(
%t Maruti Suzuki# you "ill find your entire car related needs met under one roof. 7hether it is
easy finance# insurance# fleet management ser(ices# e-change- Maruti Suzuki is set to pro(ide
a single-"indo" solution for all your car related needs.
.age I 3<
". COST COMPONENTS
'he cost components are basically the group of cost origins for the organization. Cost
Components of any %utomobile Company like Maruti Suzuki include .rime Cost# 7orks Cost#
and Cost of production and 'otal Cost.
2r$m Cost
It consists of costs of direct material# direct labour and direct e-pense specifically attributable
to the *ob. 'his is also kno"n as flat# direct or basic cost. Costs in(ol(ed in this are the main
costs "ith the help of "hich the core products that the company is indulged in are produced.
&gg.D- costs in procuring ra" materials for production of the cars# payment to labour in(ol(ed in
production acti(ities etc.
Wor+s Cost
It comprises of prime cost and factory o(erheads# @cost of indirect material# indirect labour
and indirect e-penses related to factory "orksA. 'his cost is also kno"n as factory cost#
production or manufacturing cost. Costs in(ol(ed in this are Complementary to the .rime
costs of the business and includes those things "hich directly doesn0t in(ol(e in production of
the goods. &gg.D- .ayment of "ages to employees such as super(isors# guards etc.
Cost o. 2ro#u)t$on
It is the sum total of "orks cost and office and administrati(e o(erheads @Cost of indirect
material# indirect labour and indirect e-penses related to office "orksA. 'his cost is kno"n as
office cost. Costs in(ol(ed in this are the ;ffice and %dministrati(e &-penses i.e. the salaries of
the office employees and managers.
Im(ro'mnt $n Cost Com(onnt
.rime Cost component is the one "hich can be impro(ed and is the one on "hich the
company is taking steps to impro(e because of the foreign e-change fluctuations and higher
input costs. 'he company has initiated measures to step up localization le(els and to pare
the number of tier-I suppliers o(er the ne-t t"o-three years# cutting do"n component imports#
impro(ing yield and enhancing the usage of ra" materials.
Consolidating its supplier base to increase sourcing from a smaller and more stable base of
tier-I (endors to bring do"n logistics costs and to le(erage economies of scale "hile inking
sourcing pacts.
Maruti Suzuki sources 34 per cent of components directly from foreign markets# "hile
another 38 per cent are imported by its (endors. 'o reduce e-posure to fore- fluctuations# the
company has decided to cut direct and indirect imports of components by half o(er the ne-t
three years.
.age I 34
9. WILLINGNESS TO 2AY
Customers prefer and gi(e (alue to the con(enience pro(ided by one stop shopping as it
gi(es broad scope. It gi(es the customer the e-perience of one single point of contact for
sales ser(ice and other support "hich they can pro(ide. Maruti Suzuki is pro(iding the same
"ith so many features mentioned belo"D
O..r$ng on s,o( sto(8
In one shop stop you get many thing at one place# this is a gro"ing trend among the
automobile industryD
M"rut$ F$n"n)8 In a market "here more than 54 of cars are financed# Maruti has
strategically entered into this and has successfully created a re(enue stream for Maruti. 'his
has been found to be a ma*or dri(er in con(erting a Maruti car sale in certain cases. /inance is
one of the ma*or decision dri(ers in car purchase. Maruti has tied up "ith 5 finance
companies to form a consortium. 'his consortium comprises Citicorp Maruti# Maruti
Country"ide# ICICI !ank# +$/C !ank# Cotak Mahindra# Sundaram /inance# !ank of .un*ab
and Induslnd !ank 2td. @erst"hile-%shok 2eyland /inanceA.
M"rut$ Insur"n)8 Insurance being a ma*or concern of car o"ners. Maruti has brought all car
insurance needs under one roof. Maruti has tied up "ith Iational Insurance Company# !a*a*
%llianz# Ie" India %ssurance and 6oyal Sundaram to bring this ser(ice for its customers.
/rom identifying the most suitable car co(erage to (irtually hassle-free claim assistance it0s
your dealer "ho takes care of e(erything. Maruti Insurance is a hassle-free "ay for
customers to ha(e their cars repaired and claims processed at any Maruti dealer "orkshop in
India.
Custom$9 t, ',$)&s8 Customize the "heel and the colour of the car.
Tru V"&u8 .ro(iding customers "ith second hand (ehicles for purchase "ith the assurance of
Maruti and "arranty and guarantee by the company itself for fe" years.
M"rut$ Dr$'$ng S),oo& :MDS18 Maruti has established this "ith the goal to capture the
market "here there is inhibition in buying cars due to inability to dri(e the car. 'his brings that
customer to Maruti sho"room and Maruti ends up creating a customer.
10. THREATS OF SU!STITUTION
Im$t"t$on % It refers to struggle for e-istence. :se of high grade plastics in areas like door
trims# fuel hoses# and fuel railings etc.# and ne" light-"eight >-layer polymer fuel tank helps
.age I 38
.age I 3>
0;< CONCLUSION AND LEARNING
% detail analysis on the business of Maruti Suzuki is done based on the (arious theories laid
do"n under business strategy. 'he analysis included applying (arious concepts and theories
"hich include .orters fi(e forces to understand portfolio analysis# (alue chain of the
company# cost component# "illingness to pay and gro"th prospects of the company in near
future.
It can be concluded that Maruti Suzuki is e-panding its product basket by offering (alue
@s"ift# s-4A at different income le(el. Maruti Suzuki stands for (alue as much as it stands for
performance. In spite of rising input costs# Maruti Suzuki al"ays tries to pro(ide cars at
reasonable cost. 'heir running costs and resale (alues are unbeatable too. 'his enabled
Maruti to become Market leader. Suzuki gaining globally on back of small car portfolio.
&conomies of Scale make India attracti(e destination for Maruti Suzuki. 7ith the passenger car
sales o(er spiraling fuel prices and high interest rates# India0s largest car manufacturer#
Maruti Suzuki India# is "orking on customer specific marketing strategy to increase its sales
among the first time buyers. 'he company ha(e ma-imum 4= per cent market share among the
first time buyers.
Maruti Suzuki is far behind in lu-ury and S:, car# the other player like )M# '%'%# Mahindra#
+onda and 'oyota are already established in the market# so replacing them "ould not be
easy
2earning can be put as understanding of (arious theories of business strategy and practically
using them to comprehend on economic# industry and financial details.