Maruti Suzuki India Ltd

Ajith S PGP/14/191 Amit Singh PGP/14/194

Group 7, Section D Ambica Prasad PGP/14/192 Chaitra Jagannath PGP/14/207
Amit Sansi PGP/14/193 Chandramohan Nayak PGP/14/209
Agenda

• About the company

• External environmental analysis
• Internal environment analysis
• Strategic groups (A4-segment)
– Attractiveness of industry
• Recommendations
Maruti Suzuki India Ltd

• Established in 1983
• Subsidiary of Suzuki Motor Corporation Japan
• Manufacturing plant at Gurgaon and Manesar
• Largest market share in passenger car
segment (>50%)
• 15 models of cars and UV’s
• Recently launched “Kizashi” in A4 segment
 External environment
analysis

Porters 5
PEST
force
analysis
analysis
P E

T S
 • The custom duties and excise duties
announced by the central government
greatly affects the financial performance of
the company
Political • Excise duty is levied on all the cars
produced in India and Custom Duty is
levied on KD parts, CKD parts and CBU
units brought by MSIL

• The Union budget -2011 is neutral towards

automobile sector
Economi • There is no reduction in excise duty and
custom duties
c • The per capita disposable income is
expected to grow at a faster rate
 • An uncomfortable and inadequate
public transport system has led to
the trend of many Indians opting for
personal forms of transport
Social • Rising disposable income and a wide
array of choice , has made India the
second fastest growing auto market
in the world

• Auto makers are investing in R & D

to develop hybrid vehicles, duel fuel
vehicles and electric vehicles
Technologica • Government of India has drafted an
l Auto policy which states to establish
a globally competitive automotive
industry in India in which
technology will play a decisive role
Porters 5 force analysis

Rivalry
Threat of Bargaining Bargaining
Threat of between
new power of power of
substitutes existing
entrants suppliers buyers
players
 Threat of new entrants
The break-
The cost of The cost to even is Very large Presently BS
setting up a set up R &D achieved sales and IV norms are
plant to facilities or only when service prevalent in
manufacture transferring the network is India, and
passenger the latest production required to this , which
cars is very technologies volumes, meet the increases
high in is very high this is due customer the
passenger in passenger large demand and production
car segment car segment amount of expectations costs
fixed cost

Low Low Low Low Low

Threat of New Entrants is Low
Bargaining power of Suppliers

Suppliers Pressure
Large no of Increase in
cannot from OEMs
suppliers international
forward to reduce
(600+) vendors
integrate price

Low Low Low Low

Bargaining Power of Suppliers is Low
 Bargaining power of buyers
With very
broad choice
in each car
segment the Various
end consumer
Buyer cannot Brand Loyalty Buyers are
customers preferences
do backward for a car price
play an like comfort,
integration brand sensitive
important mileage,
role in service, etc.
growth of the
OEMs market
share
High Low Low High High
Bargaining Power of Buyers is increasing
 Threat of substitutes
The sale of two
Introduction of wheelers in India
The mode of Rapid Transit is higher than
transport for the System in major those of
common people is cities, this include passenger cars
still bus, trains and bus corridors, and the sales
other means monorail and city trend is increasing
metros over the years

High High High

Threat of Substitutes is increasing
 Rivalry between existing
players
The existing The domestic
The firms are
The current players in the and
launching new
Indian market are international
variants every 2
automobile fighting to gain players have
quarters, which
market is market share by invested heavily
is leading to
crowded with introducing in addition of
immense
both domestic new models new plants to
competition in
and and also by manufacture
terms of price
international slashing prices cars especially
and new
global giants to attract the catering to A2-
technology
customers A3 segments
High High High High
Rivalry between existing players is increasing
 Rivalry between
existing players Bargaining
power of
suppliers
Low
Threat of HHH
LNot
io
ig
igw
h
new entrant
g hh
Attractive

Bargaining
Threat of power of
substitutes buyers
 Internal Environment
Analysis

Resources Capabilities
 RESOURCES
• Maruti has net assets worth of Rs 12,656.5 Cr.

Tangible as on Mar 2010.

• Maruti has very strong borrowing capacity, its
current shareholding pattern is 54.21% owned
resources by Suzuki, 38% by financial institutions and
remaining by public

• The company is planning to introduce full body

change vehicle by 2012 designed by Indian
Intangible engineers
• Maruti is viewed as value for money cars; this
resources image is slowly changing towards more of
family and trendy car

• The current head count at Maruti is over 7600

permanent employees and more than 5000
Human contract workers
• The HR department is currently working on people-

resources oriented strategy

• Training is given to each employee who joins
Maruti.
 CAPABILTIES
Innovation, Creativity, Networking Corporate
and Partnership
The IT system at Maruti is very robust, Information
It uses ERP to run all the businesses management

The research and development Research and

division of Maruti is expanding Development

Maruti has 4 car manufacturing plants Manufacturing

The in-house product design team is Product

well trained Design

The marketing team at Maruti is divided into Marketing

different product groups

The passenger car sales has increased over the years for Sales
Maruti, it has able to capture over 50% of the market share
 Strategic Groups

A-1 A-2 A-3 A-4

Segment Segment Segment Segment
 Porters 5 force analysis
A-4 Segment

Rivalry
Threat of Bargaining Bargaining
Threat of between
new power of power of
substitutes existing
entrants suppliers buyers
players
 Threat of new entrants

Cost of CBU
The cost of The cost to
setting up attracts
setting up a set up R &D Economies
of scale is exclusive 110%
plant is facilities is
low showrooms custom
high high
is high duty

Low Low High Low Low

Threat of New Entrants is Low
Bargaining power of Suppliers

Pose a
Dominated The
threat of
by few products
forward
companies are unique
integration

High Low Low Low Low

Bargaining Power of Suppliers is high
Bargaining power of buyers

The Brand Buyers

The
product Loyalty are not
demand
is not for a car price
is low
standard brand sensitive

Low Low Low High

Bargaining Power of Buyers is Low
 Threat of substitutes
Introduction of
Rapid Transit
Two wheeler Consumers in this
System in major
segment sales cities, this include segment goes for
doesn’t affect the luxury rather than
bus corridors,
sales of A-4 price
monorail and city
Segment metros

Low Moderate Low

Threat of Substitutes is Low
 Rivalry between existing
players
The existing The domestic
The firms are
The current players in the and
launching new
Indian market are international
variants every 2
automobile fighting to gain players have
quarters, which
market is market share by invested heavily
is leading to
crowded with introducing in addition of
immense
both domestic new models new plants to
competition in
and and also by manufacture
terms of price
international slashing prices cars especially
and new
global giants to attract the catering to A2-
technology
customers A3 segments
High High High High
Rivalry between existing players is increasing
 Rivalry between
existing players Bargaining
power of
suppliers
Low Not
Threat of HLHLoioiggw
h
h
new entrant Attractivew
Bargaining
Threat of power of
substitutes buyers
 SWOT Analysis
Strength Weakness
Large sales and Dependence on
service network Suzuki for R&D
Low cost of Less experience in
ownership luxury segment cars
Availability of spare Still many parts are
parts at low cost bought as KD
 SWOT Analysis
Opportunities Threat
Market share of A4- A4-segment is crowded
segment is 3% and is with international
expected to grow players
Maruti has very strong The custom duty on
vendor base, which can CBU is very high (110
be utilised for Kizashi %)
 To continue in A4 or exit?
For
Maruti has very vast dealer
network and service centers
Maruti is expanding its R&D
facilities and the intake in R&D
division is on a rise, thus more
manpower can be diverted for
design and development of
supplier base to cater the auto
component supply for Kizashi
Maruti should exit from the A4 segment
Against
The A4-segment car industry is not
attractive
it has no expertise in A4-segment
or higher segment vehicles
Maruti brand is associated with
value for money car and people’s
car
The A-4 segment accounts for only
3% of total car sales, and A2
segment has 74% market share,
Thank You
References
• http://360.datamonitor.com/
• https://www.crisilresearch.com
• http://marutisuzuki.com/our-network.aspx
• http://www1.euromonitor.com/india/country-factfile
• http://www.euromonitor.com/consumer-lifestyles-in-india/report
• http://acmainfo.com/docmgr/Status_of_Auto_Industry/Status_Indian_Auto_Industry.pdf
• http://mystrategicplan.com/resources/internal-and-external-analysis/
• http://www.carfreaks.info/porters-five-forces-analysis-indian-automobile-industry
• http://www.moneycontrol.com/financials/marutisuzukiindia/ratios/MS24
• “How competitive forces shape strategy” –Michael E. Porter