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Maruti Suzuk

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  • Company Analysis

    of

    Maruti Suzuki

    By,

    Pavan Subhash Tirumalasetti

    PGP (2012-14)

    Indian Institute of Management Raipur

  • Introduction:

    Maruti Suzuki is a subsidiary company of Japanese automaker Suzuki Motor Corporation. Initially it

    was called as Maruti Udyog Limited (MUL), which was established in Feb 1981 through the act of

    parliament. The main objective behind its inception was to meet the growing demand of personal

    means of transport caused due to the lack of efficient public transport system.

    It has a market share of 44.9% in passenger car market as of March 2011. Maruti Suzuki offers a

    complete range of car starting from Entry Level, Hatchbacks to sedans and Sport Utility vehicles

    (SUV). It was the first company in India to mass-produce and sell more than a million cars, In

    February, 2012 it sold 10th

    million vehicle in India.

    Maruti Suzuki has two manufacturing facilities in India: Gurgoan and Manesar. Both

    manufacturing facilities combined have an production capacity of 14,50,000 vehicles annually.

    During a recent meeting with Narendra Modi, Gujarat Chief Minister, The chairman of Suzuki Motor

    Corporation said that the work to establish a manufacturing unit in Gujarat would be started soon.

    Maruti Suzuki has 933 dealerships across 669 towns and cities in India. It has 2,946 service stations

    in 1,395 towns throughout India. It has 30 Express Service Stations on 30 National Highways across

    1,314 cities in India. Major revenue comes from these service stations; Other Automaker giants in

    India were unable to reach this benchmark setup by Maruti Suzuki.

    Maruti Suzuki launched its first car Maruti800 on December 18, 1983, followed by other models like

    Gypsy etc. MUL became a market leader holding a major market share. But, it depended mainly on

    Maruti800, So in late 1990s new global players like Daewoo Matiz, Hyundai Santro entered the

    market with more space and comfort, at same price, then market lost a major share of the market. To

    gain back its market share Maruti launched models like Zen, Alto, WagonR. These models gained

    ahuge response from consumers. Maruti Launched Alto800 in October, 2012 which is receiving

    tremendous response from the market. Its Core Competencies are Post sale service, Mileage, Maruti

    Insurance, Maruti Finance.

    Companys Product Portfolio:

    The company offers a portfolio of 14 brands, ranging from the peoples car, Maruti800, to the luxury

    sedan, Kizashi. It must be thinking to restructure its product portfolio in the Indian market in the

  • current circumstances of dip in market share because of foreign players like Honda, Volkswagen,

    Skoda entered into small car segment with Brio, Polo, Fabia respectively .

    With the current growth in Indian economy and increased exposure to global market, consumer are

    very conscious about reliability, post sale service, mileage, style, comfort, price as well. They are

    expecting a mode of transport which satisfies all the above stated features in an affordable price

    range. Since, Maruti Suzuki has positioned itself as a company that offers a Total Value Proposition

    (TVP) to its customers. So, it is going to be challenging for Maruti Suzuki to manage its very old

    brand name peoples car (affordable price and maintenance) by offering attractive models like its

    competitors.

    Maruti Suzuki Portfolio

    Maruti800 (A1

  • Kizashi (A4 4501 4700mm) Ertiga (Life Utility Vehicle) Grand Vitara (Multi Utiity Vehicle)

    Gypsy (Multi Utility Vehicle) Omni (Multi Purpose Vehicle) Eeco (Multi Purpose Vehicle)

    From the above set of products we can see that Maruti800 as the Traffic Master, Grand vitara as the

    Prestige Builder. A-star aspires to become the Flagship Product of Maruti Suzuki after Alto and

    WagonR. In 1990 Maruti Suzuki Introduced Maruti1000, Maruti Esteem an upgraded version to

    Maruti1000 was launched in 1994. Maruti1000 is in production till 2000, but later it was taken out of

    market due to sales. Esteem was in market till 2007 later it was replaced by Swift DZire. Due to the

    launch of Esteem, Maruti1000 lost its market share this can be termed as Product Cannibalisation.

    Maruti-Suzuki's launch of Suzuki Alto in the same sub-category as Maruti 800, which was the leader

    of the small-car segment to counter the competition from Hyundai is seen to be a classic case of

    cannibalization strategy. In the year 2000 Maruti Suzuki launched Alto. This product price was

    between Maruti 800 and Maruti Zen. Here company was trying to fill the gap existed in the segment

    by introducing ALTO i.e. line filling. Subsequently, company had deleted some of its failure

    products, Line Deletion, and launched them with some upgrades. Maruti Suzukis leadership in small

    car segment is undisputable, but company has failed to grab high end (i.e. price range above 5 lakhs)

    market. For example, Maruti so far launched sedans like Baleno, DZire, SX4, Kizashi above that

    price range, among them only DZire became successful. This clearly shows that Maruti has been

    perceived as small car manufacturer only.

  • The Ansoff Matrix of Maruti Suzuki is as follows:

    From the above matrix we can see that Maruti has offered new products like Maruti True value,

    Maruti Finance, Maruti Insurance etc. to its existing markets. These services are offered to only

    Maruti cars, where Maruti competitors literally failed to implement and follow. In addition, Maruti

    exporting its passenger cars to many developing countries like Latin America and Asia, Maruti800

    which was so popular in Indian market is no longer as it used to be. But, this small car is now

    attracting African markets. In 2012 over 4,600 units were shipped to Algeria alone. It has started

    shipping out sedan DZire to Africa. Apart from the Maruti 800, it also sells small cars such as the

    Alto, the Alto K10 and the A-Star there. Large markets in the continent are Algeria, Angola,

    Mozambique, Nigeria and Egypt. The company has a similar story to tell of Latin America, where it

    has grown sales fourfold to 21,000 units over the past four years. Unfortunately or fortunately Maruti

    Suzuki restrained from experimenting new products.

    Poland, Hungary,

    Indonesia, and Algeria.

    (Market Development)

    Maruti800, Alto,

    WagnoR, Gypsy

    (Market Penetration)

    Alto800, Maruti

    TrueValue, Maruti

    Finance.

    (Product Development)

    NA

    (Diversification)

    Existing

    Markets

    New

    Market

    s

    Existing Products New Products

  • BCG Matrix of Maruti Suzuki can be shown as follows:

    STAR: These products have large market share as well as high market growth; the company has high

    growth rate and profitability. Company earns large revenue from these products.

    Question Mark: Products in this category has high growth but low market share. Company needs to

    put some effort to convert these into STAR category products; they have potential to become

    successful.

    Cash Cows: Products in this category has high market share but without any further growth. So,

    company needs to invest revenues earned, from Cash Cows, into question mark category.

    Dogs: These products have neither of them. So, it is better to liquidate those products. The market

    strategy for this particular type is harvest, divest and drop.

    M

    A

    R

    K

    E

    T

    G

    R

    O

    W

    T

    H

    M A R K E T S H A R E

    STAR

    DZire, Swift, Estilo ? SX4, Vitara, Kizashi

    Cash Cows

    Alto, 800, WagonR

    Dogs

    Baleno, Maruti 1000,

    Omni, Versa.

  • Pricing and STP:

    Maruti Suzuki has 16 products in its current portfolio. Following table shows the price ranges of

    each product. We can observe that Maruti has offered most of its products in the price range of

    21,00,000 to 5,50,000 Rs.( Lowest Price ), Whereas, Maruti has very few products above the price of

    1 Million Rupees.

    Model Lowest Price(Rs) Highest Price(Rs)

    Maruti800 217760.32 242884.58

    Alto800 282914.67 366907.75

    Estilo 359539.61 445425.29

    A-Star 393461.49 476395.97

    Omni 235546.17 273445.22

    Gypsy 571032.82 624125.32

    Eeco 324362.81 422888.60

    Grand Vitara 2394953.00 2594757.00

    Alto K10 327606.99 344365.78

    Ritz 445948.04 646300.41

    WagnoR 369767.41 455360.71

    Swift 463718.70 704028.94

    SX4 750079.14 982356.71

    DZire 497464.71 752948.70

    Ertiga 624722.24 904186.50

    Kizashi 1699171.00 1800758.00

    Maruti Suzuki offers EMI facility for many its products, even for Alto800. It offers exclusive

    discount rates to customers during festival period and particular group of customers like government

    employees. To promote its bottom line growth Maruti has launched Maruti Finance in 2002. Prior to

    start off own finance, Maruti has two joint venture with Citigroup and GE. In addition, it has tied up

    with many banks like ABN Amro, HDFC Bank, ICICI Limited, Kotak Mahindra Bank etc. Again

    the company entered into a strategic partnership with SBI in March 2003. Since March 2003, Maruti