maruti udyog limited-changing paradigms-14 mar 2007

8/6/2019 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)

maruti udyog limited-changing paradigms-14 mar 2007

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