maruti udyog limited-changing paradigms-14 mar 2007
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14 March 2007
Competition & Strategy
Submitted by:
Aman Sethi (0611217)
Karishma Athavia (0611234)
Pradeep Shekhawat (0611241)Prasun Basu (0611244)
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Introduction Company Snapshot Historical Perspective
Maruti - Strategic Challenge
Industry Analysis - 2001 Maruti - Resource View Sustainable Competitive Advantage Mapping Needs and Capabilities Maruti True Value Maruti Insurance Maruti Warranty & Financing Maruti Game plan Industry Analysis 2006 Conclusion
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1942
Hindustan Motors
1981
Maruti Udyog
1995 Ford Motors1995 Daewoo Motors
1996
Hyundai MotorsIt is part of the Birla group of industries. It is the
producer of the famous Ambassador car, widely
used as a taxicab and as a government limousine.
One of the original three car manufacturers in
India, founded in 1942, it was a leader in car sales
until the 1980s, when the industry was opened up
from protection.
Maruti entered into this collaboration with Suzuki Motors, The
collaboration heralded a revolution in the Indian car industry
by producing the Maruti 800. The car went on sale on
December 14, 1983. It created a record by taking 13 months
time to go from design to rolling out cars from a production
line. By the year 1993 the company had sold up to 1,96,820
cars, mostly by selling its chief product the Maruti 800s.
Incorporated in May 1996, the groundbreaking ceremony for the Chennai
plant was held in December in the same year, and the first pilot Santro
was ready in a record 17 months. The Santro (which is available in three
variants - the L2, GLS1 and GLS2) was launched in September 1998, and
the company has targeted a production of 60,000 Santros per year. With
sales of 30,000 vehicles in the last eight months HMIL seems to be fairly
on target.
Launched in 1998, the Indica was a trailblazer in
more ways than one, and it set Tata Motors on the
path to reaching a leadership position in India's
passenger car segment. The original Indica
variants were followed by the outstanding Indica
V2, a runaway bestseller. This car is now also
available in the UK, under the label City Rover,following a tie up between Tata Motors and Rover,
the British carmaker.
1998
Tata Indica
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Liberalization (1992-93)Entry easier for newplayers in the passengercars segmentChange in governmentpolicy
Competition (1997-98)Introduction of new andbetter technologies inpassenger carsMore variety available tocustomers
1998 2002
Market Share(Segment A)
Approx 90% 40%
Aim: Analyze Marutis strategy to regain market share in Segment A
Focus: Segment A of passenger-car segment
Limitation: New product development and other segments have beenignored for the purpose of this study
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High capital costs High cost of setting-up distribution
Low government protection New entrants can bring learning
from other markets
Suppliers : Low Extremely fragmented with
over 500 players Credible threat of
backward integration
Supplier has highswitching cost
New Entrant : Med
Buyers : Low
Substitutes : High
High fixed costs Capacity added in large
increments High exit barriers Low switching costs
Products are differentiated Buyers are fragmentedEach individual s sale
forms a small component of
overall sales
Low switching cost
Close substitutes available
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Presencefor 20years
Customer loyalty
Highestpenetration
After-sales
service
Strongsupplierbase
SuzukisTechexpertise
Kaizen
JIT
Cheaplabor
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Resource Valuable Imitable Substitutable Returns
CustomerBase
Brand
Equity
DistributionNetwork
Technology
SupplyChain
Location The prime objective of the company is toretain its customers and to bring in more
customers into its fold
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Brandequity
Excesscapacitywithdealers
Customerbase
Brandequity
Distributionnetwork
Needs Capabilities Outcome
Warranties
MarutiInsurance
Car finance
True Value
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Customer can sell the car in just one daythrough a transparent process which entails Document verification and 120 point standard check
Customer is given Rs 10000 discount on buying
new car, if they have turned in an old car Customer can buy a used car with 1 year
warranty
Customers Get guaranteed secondhand products
Easy mechanism todispose off old vehicles
Opens additional
business avenue for thedealers
Helps Maruti retain itsold customers
Adds a new breed ofcustomers who are justentering the market
Increases the perceivedvalue of Maruti cars
Stakeholders Maruti
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Customer interacts only with dealership forbuying insurance and servicing claims Maruti interacts with the insurance company for
estimation and settlement of claims
Customer only has to pay the deductible anddepreciation amounts
Dealers get guaranteedbusiness for repairs Dont have to compete
with the outside repairshops
Customers
Dont have to put-inmoney initially for
Maruti can offerinsurance for discountpromotions Higher perceived value
as compared to CDswhile at lower cost to
company Additional Income from
Stakeholders Maruti
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Extended warranty provided for 1 or 2 years The warranty covers all mechanical and electrical parts
To avail the warranty the customer has to getthe car serviced at the Maruti service centers
Customer also given financing options at thedealership where they can compare differentoptions
Dealers get guaranteedbusiness for repairs Dont have to compete
with the outside repairshops
Additional value added
services for customers
Maruti can offerwarranty for discountpromotions Higher perceived value
as compared to CDswhile at lower cost to
company Enhances customer
Stakeholders Maruti
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Change the
Scope of the game
Customer not onlyevaluating the new car, but
also host of other services
along with it
Increase
Added value in the game
Its the only player that hasthe extensive service network
to make these additional
services really valuable
Create a
virtuous cycle
Creates a one-stop shop whichincentivizes doing business with
Maruti on all aspects due to discount
offers made available
Increase
switching cost
More loyal customers are
harder to break away
Other competitors unable to
meet Marutis service levels
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High capital costs High cost of setting-up distribution
Low government protection New entrants can bring learning
from other markets
Suppliers : Low Extremely fragmented with
over 500 players Credible threat of
backward integration
Supplier has highswitching cost
New Entrant : Med
Buyers : Low
Substitutes : Med
High fixed costs High strategic stakes High exit barriers
Relatively high switching costs
Products are differentiated Buyers are fragmentedEach individual sale forms
small component of overall
sales
Relatively higher switching cost Close substitutes available in car
functionality, but not in other services
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Maruti effectively managed to increaseits market share from 40% in 2002 to59% in 2006 by:
Leveraging its existing competencies
Differentiating itself from the competitors
Increasing the switching costs
Maruti used the new business lines tochange the scope of the game
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Threat does not seem to be credible because: Might not compete in the same segment as
Maruti 800
Expected to be a two-seater Even if its a four-seater, the engine capacity is
expected to be approx 600 cc, which will limit itsperformance
Maruti might be better off in waiting andallowing Tata to explore the new market beforeexploring opportunities for itself
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Marutis Sales Compact Car (2002-07)
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