07-11-2012, 12:01 PM
BUSINESS STARTEGY OF MARUTI SUZUKI
BUSINESS STARTEGY.pdf (Size: 762.92 KB / Downloads: 82)
INTRODUCTION
Maruti Suzuki India Limited (NSE: MARUTI, BSE: 532500) is a partial subsidiary of Suzuki Motor Corporation of Japan. It has been the leader of the Indian car market in the passenger car segment for over two decades accounting for over 45% of the market share. The company offers a wide range of cars across different segments. It offers 15 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and Kizashi. In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company's headquarters are located in New Delhi.
A BRIEF HISTORY
In February 1981 Maruti Udyog Limited (MUL) was incorporated under the provisions of the Indian Companies Act, 1956.
A license and Joint Venture Agreement was signed between Government of India and Suzuki Motor Company (now Suzuki Motor Corporation of Japan) in October 1982. It manufactured India's first affordable cars though the actual production commenced in 1983. On 14th December, 1983, first Maruti 800, India's iconic car rolled-off the assembly line at company's Gurgaon plant. Late Mrs. Indira Gandhi, the then Prime Minister of India, handed over keys for this car to the first Maruti customer. By 1992 SMC had acquired a majority stake in MUL (increases to 54.2%). In 1990's when the economy was liberalized and foreign investment allowed into India, the auto component companies, set up and nurtured by Maruti Suzuki, became the foundation for global car companies as well. These new players on the Indian automobile scene found an accomplished and experienced auto component industry, which encouraged further foreign direct investment into India. With the entry of foreign players into the automobile sector MUL was forced to become more competitive and aggressive in its marketing strategy in order to maintain its market share. What followed was a series of successful product launches and by 2003 it got listed on the BSE and NSE. In 2007 the Board of Directors of the company gave approval to change the name MUL to Maruti Suzuki India Limited. In 2008 M-800 crossed the 25 lakh mark and MSIL celebrated its Silver Jubilee. By 2009 MSIL‘s Capacity to manufacture expanded from 800,000 to a million units (Gurgaon plus Manesar plants) annually.
POLITICAL ENVIRONMENT
• Indian government auto policy aimed at promoting an integrated, phased and conducive growth of the Indian automotive industry.
• Allowing automatic approval for foreign equity investment up to 100 per cent, with no minimum investment criteria.
• Establish an international hub for manufacturing small, affordable passenger cars as well as tractors and two wheelers.
• Ensure a balanced transition to open trade at minimal risk to the Indian economy and local industry.
• Assist development of vehicles propelled by alternate energy sources.
• Laying emphasis on R&D activities carried out by companies in India by giving a weighted tax deduction of up to 150 per cent for in-house research and R&D activities.
• Plan to have a terminal life policy for CV along with incentives for replacement for such vehicles.
• Promoting multi-modal transportation and the implementation of mass rapid transport systems.
LEGAL ENVIRONMENT
Legal provision relating to environmental population by automobiles.
Legal provisions relating to safety measures.
Confirms the government‘s intention on harmonising the regulatory standards with the rest of the world.
Indian government auto policy aimed at promoting an integrated, phased and conductive growth of the Indian automobile industry.
Establish an international hub of manufacturing small, affordable passenger cars.
CUSTOMER CENTRIC APPROACH
Maruti‘s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI Awards. Focus on customer satisfaction is what Maruti lives with. Maruti has successfully shed off the public- sector laid back attitude image and has inculcated the customer-friendly approach in its organization culture. The customer centric attitude is imbibed in its employees. Maruti dealers and employees are answerable to even a single customer complain. There are instances of cancellation of dealerships based on customer feedback.
Maruti has taken a number of initiatives to serve customer well. They have even changed their showroom layout so that customer has to walk minimum in the showroom and there are norms for service times and delivery of vehicles. The Dealer Sales Executive, who is the first interaction medium with the Maruti customer when the customer walks in Maruti showroom, is trained on greeting etiquettes. Maruti has proper customer complain handling cell under the CRM department. The Maruti call center is another effort which brings Maruti closer to its customer. Their Market Research department remains on its toes to study the changing consumer behaviour and market needs.Maruti enjoys seventy percent repeat buyers which further bolsters their claim of being customer friendly. Maruti is investing a lot of money and effort in building customer loyalty programmes.
COMMITTED TO MOTORIZING INDIA
Maruti is committed to motorizing India. Maruti is right now working towards making things simple for Indian consumers to upgrade from two-wheelers to the car. Towards this end, Maruti partnerships with State Bank of India and its Associate Banks took organized finance to small towns to enable people to buy Maruti cars. Rs. 2599 scheme was one of the outcomes of this effort.
Maruti expects the compact cars, which currently constitute around 80% of the market, to be the engine of growth in the future. Robust economic growth, favorable regulatory framework, affordable finance and improvements in infrastructure favor growth of the passenger vehicles segment. The low penetration levels at 7 per thousand and rising income levels will augur well for the auto industry.
Maruti is busy fine-tuning another innovation. While researching they found that rural people had strange notions about a car - that the EMI (equated monthly instalments) would range between Rs 4,000 and Rs 5,000. That, plus another Rs 1,500-2,000 for monthly maintenance, another Rs 1,000 for fuel (would be the cost of using the car). To counter that apprehension, the company is working on a novel idea. Control over the fuel bill is in the consumer's hands. But, maintenance need not be. Says Khattar: "What the company is doing now is saying how much you spend on fuel is in your hands anyway. As far as the maintenance cost is concerned, if you want it that way, we will charge a little extra in the EMI and offer free maintenance."