maruti case study for stretegic management
Post on 17-Jul-2016
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DESCRIPTIONMaruti Suzuki India Case Study of Strategy
Questions:1 From the 'five most frequently used and dependable strategic approaches' [See Ch 1], which of these has the company [MARUTI] been using? Why?ANS:Liberalization of Indian market brought many changes in automobile industry of India. Competition increased and customers behavior also changed a lot. This whole scenario was an alarming situation for a conventional automobile maker like Maruti. They have to change their strategies and practices to stay relevant in rapidly changing Indian Market of liberalization era. To meet the challenges of new era, Maruti radically changed their strategy. The adopted The Best Cost-Provider Strategy for rapidly changing Indian Market. Indian market has always been price sensitive but the increasing awareness of consumers and induction of new competitors increased the quality and versatility standards for consumers. Now customers demand best value for their money. So the Maruti introduced this hybrid strategy to offer maximum value of money to their customers while keeping themselves profitable. They made a strategy to improve their quality of vehicles with innovative techniques, providing new ways of customer care and keep their cars affordable by decreasing costs in their production line and improving vendors system.Adaptation of their strategy is evident from their mission statement. Before liberalization when there was very little competition and Maruti was enjoying the mighty automobile company of India, its main focus was upon more and more production but now it is shifted to market and customer focused. There new mission statement Creating Customer Delight and shareholders wealth clearly indicates their customer focused strategy. As customer wants best value for their money, so Maruti also shifted their strategy to provide their customer what they want. They have started financing, insurance and enhanced their customer care systems. Also keeping in view the cost of running and maintain a car for average Indian consumer, they introduced new ideas like adding a small amount in monthly installment as maintenance fee thus providing customer peace of mind and savings. They introduced vehicles for every price range from lowest with most basic specifications to the highest with most luxurious specifications in the best value price to gain attention of all types of customers belong to any age or socio-economic group of people.
Question No 2. How successful has their strategy been [ie the one you identified in your answer to Question 1] ?
ANS: New hybrid strategy of Maruti proved very successful in competitive new liberalized market era. Before adopting new strategy, Maruti was in dilemma of changing market dynamics, interference of government forced them to work in a conventional style. They lose their market share in early years of liberalization. But Maruti learned very quickly. By incorporating new strategies, the stopped their sloppy decline and even increased their production numbers and regained bit of their market share back. In 1992 Maruti was a big giant of automobile industry with 80% share but new market situation abruptly brought decrease in market share of Maruti. Implementing new strategies and redesigning the processes help Maruti to gain back their market share with 50.8% share and 40% rise in profits in 2003. They increased their production numbers, introduction of new models like Swift and Baleno added versatility in their product range. Their customer care service and after sale support raised the bar for competition. All these factors made Maruti once again darling of Indian automobile industry.
Question No 3.In relation to 'The three tests of a winning strategy' [Ch 1/Pg 9], if you apply the three tests to Maruti , [or ask the three questions to Maruti, which are in fact the three tests ], what are the replies according to you,to these questions, based on the evidence / data from the case?To simplify this question,if you are the CEO of Maruti and someone asks you the 'three tests' questions, what would be your replies to these questions? Please provide a separate answer to each question.ANSThere are three tests of judging either a strategy is producing success or not. Let us evaluate Marutis strategy against the tests.1. How the strategy does fits in the companys situation?
New hybrid strategy perfectly fits with the company situation. New strategy of Maruti includes many challenges including technological, financial, staff and dealership network challenges. Maruti is backed by the one of worlds largest automobile manufacturer Suzuki of Japan and they have vast experience of automobile manufacturing, research and development. Technically Maruti was ready to meet any technological challenge, ranging from new models to automated and innovative production techniques. So they faced now issue in adopting new strategies. Financially, after becoming an IPO, Maruti had enough fund needed for their redesigning systems and techniques. Being a market leader they already have enough skilled employees to take over new challenges. They have vast network of dealers already so they dont find much difficulty in opening further customer care centers.
2. Is the strategy helping the company in achieving sustainable strategic advantage? New strategy indeed helping company in achieving sustainable advantage. Their diversity of models and inclusion of new technology with great pricing and dependable customer service, they are hard to beat for their competitors. Their experience of Indian automobile market also added strategic advantage to them over others. Their price mechanism and value for money attracted new customers and loyal customers remained loyal with companys subsidy to loyal customers. 3. Is strategy producing good company performance? It is evident from their growing market share and increasing production numbers that new strategy is producing great results for the company. In small and midsized cars company successfully gained the market share but only problem was there with Baleno, their high end offering. Maruti has been perceived as a low and budget rigid car manufacturer but Baleno was a sophisticated model which fails to get attraction due to companys perception. Otherwise strategy went very well.
Question No 3: [Answers from Ch 2] are you able to identify the 'Vision, Mission, Values, Objectives and the strategy itself, of Maruti?Vision:Although vision statement of Maruti is not given in case study, from the thorough reading, I concluded that vision of MHL is to lead the automobile industry of the region with innovative products at competitive price.Mission Statement:Mission Statement of Maruti is: "Creating customer delight and shareholders wealth". This mission statement clearly shows the direction of a company as a customer caring company which can provide enough profits to its share holders.Values:The required information to answer this question is unavailable from within the case material.Objectives:Objectives of Maruti may differ from time to time but from this case study it is revealed that objective of Maruti in new era of market liberalization is to sustain their market leadership with new product range, innovation and dynamic organizational and marketing strategy.Strategy:Maruti adopted a hybrid strategy that cover all of its departments to work for successfully transforming from an old school company to new, innovative and customer focused company. Their strategy was to implement new design and models, improvement of their customer care, improvement and modernization of their manufacturing capabilities, cutting costs via new process and vendors cannibalization and finally by developing a perception in customers mind about Marutis excellence in changing competitive era through aggressive marketing and affordable pricing.