Maruthi Suzuki India Ltd | Analysis

Maruthi Suzuki India Ltd AnalysisMaruti Udyog Limited is a subsidiary of Suzuki Motor Corporation, the largest manufacturer of mini passenger vehicles in Japan in terms of sales volumes. Suzuki was in any case the eleventh largest vehicle manufacturer in the world and the fourth largest manufacturer in Japan in terms of world great sales volumes in 2000. Maruti was graded twentieth in terms of worldwide sales volumes amongst vehicle manufacturers, and has been the largest passenger gondola manufacturer in India. In fiscal 2002, it had the laid-backest sales volumes of 339,964 cars and a grocery store place place shargon of 58.6%. Maruti has a diverse product range that includes ten basic models with over 50 variants, of which nine models ar manufactured locally and bingle is import from Suzuki.The company offers a wide range of cars across different segments. It offers 14 brands and over 150 variants Maruti 800, people movers, Omni and Eeco, international brands Alto, Al to-K10, A-star, WagonR, spry, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4 and Swift DZire In an environment friendly initiative, in August 2010 Maruti Suzuki introduced factory fitted CNG option on 5 models across vehicle segments. These include Eeco, Alto, Estilo, Wagon R and Sx4. (Maruti, 2011)Maruti (2011), Maruti Suzuki Ltd website. useable athttp//www.marutisuzuki.com/ rough-us.aspx (Accessed 21 March 2011)Maruti Suzuki India Limited, the countrys largest car manufacturer today rolled out its 1 Crore (ten millionth) car on March 15th 2011.The historic 1 Crore car, a Metallic Breeze Blue coloured WagonR VXi (Chassis No 243899) rolled out from the associations Gurgaon jutt. With this landmark achievement, Maruti Suzuki becomes the only Indian car company that makes its entry into the select bludgeon of machinemobile manufacturers across the globe who ache crossed this milestone. (Maruti, 2011)Maruti (2011), Maruti Suzuki Ltd website. Available athttp//ww w.marutisuzuki.com/Maruti-Suzuki-rolls-out-its-1-Crore-Ten-Millionth-car.aspx(Accessed 21 March 2011)Over the seat century of its existence, Maruti Suzukis contribution as the developing engine for the Indian automobile constancy is widely acknowledged. Maruti Suzuki has impactioned the lifestyle and psyche of an entire generation of Indian middle kinsfolk through the timbre of its products and serve that are in direct sync with the needs of the Indian populace. (Maruti, 2011)Maruti (2011), Maruti Suzuki Ltd website. Available athttp//www.marutisuzuki.com/maruti-dna.aspx (Accessed 22 March 2011)Situational AnalysisMaruti Suzuki has a good market progress in automobile industry and has good sales performance from their own brand products. The current lineup is compromised of almost all Suzukis, including the Alto and the higher-end Swift and SX4.The company follows a partnership approach with its various s payoffholders, and believes that the prosperity and wellbeing of the st akeholders will fuel the growth of the company in the hereafter. (Maruti, 2011)Maruti (2011), Maruti Suzuki Ltd website. Available athttp//www.marutisuzuki.com/Stakeholders.aspxh4 (Accessed 21 March 2011)The company continue to enjoy a bearing growth with lucre gross sales up by 1.3%, Operating Income up by 0.8% and Net Income up by 3.8%. The companys consolidated profit exceeded those of previous divisions with 103.2% increase of operating income and 105.4% of net income. (Maruti, 2011)Maruti (2011), Maruti Suzuki Ltd website. Available athttp//www.marutisuzuki.com/suzuki-motor-corporation.aspx (Accessed 21 March 2011)Due to continual demand, the company is planning on expanding its production by come oning sweet plants to cater customer needs, to reduce waiting period and to meet export demands. (Maruti, 2011)Maruti (2011), Maruti Suzuki Ltd website. Available athttp//www.marutisuzuki.com/Maruti-expansion-plan-in-final-lap.aspx (Accessed 21 March 2011)Organizations Orient ationOrientationThe process of receiving and welcoming an employee when an employee when he head start joins a company and giving him the basic information to nail down down quickly and start work.-Armstrong, Micheal. A Handbook of human resource management practice. Kogan page limited, 1999.Types Of OrientationProduct OrientationProduction Orientation sales OrientationMarketing OrientationProduction OrientationProduction orientation is ofttimes a characteristic of organizations which have true specific skills or technologies. It often involves manufacturing products in large quantities in order to minimize the costs of production.For Eg The focus of the avocation is not the needs of the customer, but of reducing costs by bargain production. By reaching economies of scale the business will maximize profits by reducing costs.Pg 16Marketing Principles and work pen By Adcock, Dennis Halborg, Al Ross, Caroline taphouselished By Pearson Education UK Published In 2001Product Orient ationProduction orientation is often a characteristic of organizations which have developed specific skills or technologies. It often involves manufacturing products in large quantities in order to minimize the costs of production.For Eg- We produce excellent, well- be aftered, quality products which are great apprise for money. Customers are sure to want our products.Pg 17Marketing Principles and Practice Written By Adcock, Dennis Halborg, Al Ross, CarolinePublished By Pearson Education UK Published In 2001Sales OrientationSales orientation dictates that a business must aggressively promote its products. As the product already exists, sales staff are make responsible for identifying every potential customer. This does not mean that sales representatives are customer-orientated, as that would involve starting with customer needs and not the product.For Eg- The focus hither is to make the product, and then try to sell it to the target market. However, the problem could be that consu mers do not like what is being sold to them.Pg 18Marketing Principles and Practice Written By Adcock, Dennis Halborg, Al Ross, CarolinePublished By Pearson Education UK Published In 2001Marketing OrientationKohli and Jaworski (1990) defined market orientation in the following termsA market orientation entails(1) iodin or more departments engaging in activities geared toward developing an understanding of customers current and future needs and the factors guessing them(2) Sharing of this understanding across departments(3) The various departments engaging in activities designed to meet select customer needs. In other words, a market orientation refers to the organization-wide generation, dissemination, and responsiveness to market intelligence.Page no8 Book name Marketing Strategy and Competitive placementWrittenBy Hooley, Graham J. Saunders, John A. Piercy, Nigel F. Nicoulaud, BrigittePublished By Pearson Education UK in 2008MACRO ENVIRONMENT- EXTERNAL ANALYSISPESTELA technique f or analyzing the general environment is called Pestel Analysis.Page 126 instruction and Organisational behaviour, Written by Mullins, Laurie J.PublishedBy PearsonEducationUKPublishedIn 2005MILEAN/ISBN9786610601752Pub e-EAN/ISBN 9781405871716PoliticalPolitical FactorsImpact on the industry effect on exertion GrowthEmploymentNew suppuration and demand for more skilled laboursHigh skill job seekers whitethorn find it easy to get a jobTaxation and Labour jurisprudenceIncreasing changes in the Taxes and increased regulation in labour lawDue to increase tax, the company had to increase the product price and it needs legal labour lawE commerceThe Company opening up online purchasing opportunitiesBetter chance for increase business and customer satisfaction terrorist actIncrease in number of act of terrorism in recent yearsAffects the market growth and the economy of the company end point The political factor plays a vital role in the success of the organization. The political factor are the external issues which affect the growth of the organization. Factors like new government taxing and terrorism will have a drastic effect on growth of the organization.EconomicalEconomical FactorsImpact on the industryEffect on Industry GrowthOil PriceHigh import and export rateIt causes increase in the product priceCurrency TaxChange in the exchange rate.Reducing Tax ratesDue to constant change in the currency exchange rates, tax rates and the duty rates keeps changing. prudenceHigh economic growth rateIt influence and raise the demand and purchasing power.Interest and Inflation RatesInterest and Inflation rates are forecast to increaseHigh interest and inflation rates will have a negative impact on organization growthConclusion High economic growth may increase the buying power of the people, but the ever increasing oil price will have an impact on the export and import of product along with problems caused by varying currency exchange rate.SocialSocial FactorsImpact on t he industryEffect on Industry GrowthPopulationSecond most in populationSkilled labour, among the lowest in the world tarnish valueCompany has strong and well known brand nameIt attracts people easilyCricket World Cup, IPL etcIncrease in tourism.Good opportunity for marketing and for the business to boomConclusion Huge population and ongoing Cricket world cup provides an excellent opportunity for business development and having a brand value is an added advantage.TechnologicalTechnological FactorsImpact on the industryEffect on Industry GrowthTechnologyAbout 600,000 engineers pass out each yearEnough man power for new development and innovationSecure online transactionPurchase and payment can be done in a secure way.It will be easy for vendors, customers etc to buy and to make paymentsModernisationEmergence of Indian automobile market as a major hub for auto manufacturing and research more(prenominal) contribution to GDP, more profit, and brand valueConclusion Technological changes much(prenominal) as cutting edge design, eco friendly infrastructure and online aegis will be beneficial for both the company and the customers.EnvironmentalEnvironmental FactorsImpact on the industryEffect on Industry Growth befoulmentIndustry follows international standards on emission and safetyMore support from government.Waste ManagementFollowing industry normsOne of the highlights of the OrganizationConclusion More efficient and eco friendly changes needs to be done regarding pollution control, but at the same time maintaining industry norms is the highlights of the company.LegalFactorsImpact on the industryImplicationsInternational TradeCompany imports and exports products from different countries and overly does business in many countriesDifferent trade law in each country may affect the business.High import duty has to be paid.Government lawsThe company has to follow different rules in different countries to run businessSome laws in certain countries may affect the busine ssDeregulation/ PrivatisationIncreased regulation and privatisation of the industryIts an added advantage as it will give more growth opportunities on economic and technological frontMicro Environment External EnvironmentPORTERS Five ForcesThe five force model of Porter is an outside-in business unit strategy tool that is used to make an analysis of the attractiveness(value) of an industry structure.Competitive Forces model Porter Value Based Management website. Available athttp//www.valuebasedmanagement.net/methods_porter_five_forces.html ( Accessed on 21 March 2011)Porters Five Force ModelThreat to New EntrantsFactor take of baneImplicationBrandLowMaruti Suzuki has been in the industry for a long time, it commands most of the market share and has a strong brand name.Financial investmentLow in that respect is less chance of any new entrant to invest as much as Maruti Suzuki and perform well at the current market. Start up cost of new entrant is low.competencyLowCompany shares a respectable market in India, its rare for new entrant to catch upSalesLowNew entrants may sell their products at low prices but s cashbox Maruti Suzukis strong brand name attracts customersConclusion Maruti Suzuki has no or less nemesiss from new entrants, because Maruti has established itself as a well known recognisible brand. It has a huge brand value and gained a good market position than any other player in the market.Threat of SubstitutesFactorsLevel of threatImplicationSubstitutesMediumThere are many substitutes products but Maruti Suzuki products are efficient and cost telling.Importance of substitutesMediumThere are not many products that are very efficient so their importance goes downCost rateLowThere are some substitutes that are efficient or reputable, still Maruti Suzuki has a foot hold in that positionConclusion Though there are many Substitutes, Maruti Suzuki have gained a niche marketposition for itself but the product efficency in Maruti Suzuki is a concern.Barg aining power of the customersFactorLevel of threatImplication pure tone of the productMediumWhen people look for high Quality product, price is also considered important.CompetitionHighThere are many Automobile Companies competing with Maruti Suzuki are so high in competitionDifferentiation productsMediumCustomers always look for new and efficient productsConclusion Since Maruti Suzuki offers good quality and cost effective products with great services, customers usually dont consider features of the product so the level of threat is normally low when compared with other competitors in the market.Bargaining power of the suppliersFactorsLevel of threatImplicationPrice of suppliersMediumPrices of the product goes up as the demand increases.Power of suppliersLowSuppliers have to meet the customers needs to get orders in the futurePolitical issuesMediumPolitical issue are to be met by the suppliersConclusion There will be little or less threat as suppliers usually try to keep their cust omers happy.Competitive RivalryFactorsLevel of threatImplicationBrand identityHighAll Competitive companies such as TATA, Hyundai, Ford have good brand reputation in the marketCompany growthHighTough competition from other companies affect the growthCost structureMediumMost of the companies maintain their cost of profit accordingly to the other competitors.Conclusion There are products which may be considered as a competitor toMaruti Suzuki so the competitive rivalry among stores is highMARKET SEGMENTATIONDividing a market into distinct groups of buyers with different needs, characteristics or behaviour, who powerfulness require separate products or marketing mixes.Page 391, Principles of Marketing, Written by Kotler, Philip Wong, Veronica Saunders, John Armstrong, GaryPublished by Pearlson Education UKPublished In 2005Pub e-EAN/ISBN 9781405871358Consumer MarketThe variables used in segmenting consumer markets can be broadly grouped into three main classesBackground customer charac teristicsCustomer attitudesCustomer behaviourThe first two sets of characteristics concern the individuals predisposition to areas, where as the final set concerns actual behaviour in the market place.Page 274 Marketing Strategy and Competitive PositioningWritten By Hooley, Graham J. Saunders, John A. Piercy, Nigel F.Published By Pearson Education UK in 2004SegmentationProfilePsychographicSocialSingle , Married and TeenagerBehaviourOutlookFaithfulnessUsage rateCommon usersHigh faithfulness in the brandEnvironmentally concernedProductMaruti Suzuki has a very wide range of products from small passenger cars to varying segments like sport, sedan, luxury.These are flagship product they offerMaruti 800Maruti AltoMaruti Alto K10Maruti AstarMaruti EecoMaruti GypsyMaruti OmniMaruti RitzMaruti SX4Maruti DezireMaruti SwiftMaruti Grand VitaraMaruti EstiloCompetitorsMaruti Suzuki now faces absurd competition from about 3 to 4 major competitors in the market. Newly entered U.S auto makers like General Motors, Ford, Hyundai and local companies like Tata, Mahindra Mahindra are the main competitors of Maruti Suzuki. They also have a major portion in market share.High QualityLow QualityBrandMaruti Suzuki has been ranked Indias most Trusted Brand in Automobile Sector for the year 2010 by Indias take Business newspaper The Economic Times.Maruti Suzuki has its own brand portfolio of about 14 brands (such as 800, AStar, Alto, Omni, Ritz etc) and goop brands like Desire, Swift etcMaruti (2011), Maruti Suzuki Ltd website. Available athttp//www.marutisuzuki.com/customer-delight.aspx (Accessed 22 March 2011)Core CompetenceCore Competence of Maruti Suzuki is their famous brand value and their reputed products. Being one of the leading manufacturers in automotive industry, it has a strong national presence.INTERNAL AUDITResources AuditPhysical Resource-Three Production plant in INDIAOne plant in New Delhi.Two plants in Gurgoan.Financial ResourceMarch10 March09(Cr.) (Cr.)Total income 29,935.40 21,277.00Expenditure 25,579.80 18,825.70Operating get ahead 3,737.90 1,903.70EBITDA 4,355.60 2,451.30EBIT 3,530.60 1,744.80EBT 3,497.10 1,693.80Profit and losses ofthe year 2,402.20 1,236.70 whang 2,497.60 1,218.70DividendEquity Dividend 173.30 101.10Equity Dividend (%) 119.93 69.96Shares in Issue (Lakhs) 2,889.10 2,889.10EPS Annualized (Rs) 86.45 42.18Sourcehttp//economictimes.indiatimes.com/maruti-suzuki-indialtd/profitandlose/companyid-11890.cmsDifferentiation and CapabilitiesHere 5Ms can be used to analyze the Differentiation and Capabilities of Maruti Suzuki Limited.MarketMaruti is one of the leading retailer in INDIA and it is also expanding its market by reaching out the Global customer through its Quality of Service and Product.Men (Human resource)Maruti has employee strength of about 7,600 which is an inclusive of Manufacturing division, Marketing, Sales, Service and Customer support as of March 2010.Source http//www.marutisuzuki.com/about-us.aspxMoneyFinancial ResourceMarch10 March09(Cr.) (Cr.)Total income 29,935.40 21,277.00Expenditure 25,579.80 18,825.70Operating Profit 3,737.90 1,903.70EBITDA 4,355.60 2,451.30EBIT 3,530.60 1,744.80EBT 3,497.10 1,693.80Profit and losses ofthe year 2,402.20 1,236.70PAT 2,497.60 1,218.70DividendEquity Dividend 173.30 101.10Equity Dividend (%) 119.93 69.96Shares in Issue (Lakhs) 2,889.10 2,889.10EPS Annualized (Rs) 86.45 42.18MachinesPhysical Resource-Three Production plant in INDIAOne plant in New Delhi.Two plants in Gurgoan.MaterialsHas strong presence in materials like Metals for the frames, copper in the electrical wiring, aluminum for the radiator and platinum, palladium and rhodium in the catalytic converter, Glass, Plastic, Rubber for tiers and lead is used in the battery.SWOT ANALYSISA SWOT analysis gives a summary of the strengths and weaknesses of the company together with the opportunities and threats it faces.Referred from Principles of Marketing, Written By Kotler, Philip Wong, Veronica Saun ders, John Armstrong, Gary. Published By Pearson Education UK, Published In 2005MIL EAN/ISBN 9786610601332Pub e-EAN/ISBN 9781405871358STRENGTHSStrengthsHigh Brand LoyaltyStrong financial resources direct in niche marketLarger investmentLevel of implicationHighHighLowHighB) WEAKNESSWeaknessHigh movement costThreat from competitorsLevel of implicationMediumHighC) OPPURTUNITIESOpportunitiesMarket for all class peopleSupport for Sports ModelInternet salesLevel of implicationHighMediumMediumD) THREATSThreatsStrong competitionDecrease in salesLevel of implicationHighMediumConclusionThe strength of the organization lies in high quality products and the companys good financial resources. Though they do not have a particularly well suited market for their product, still they invest more on their products which is one of the strengths of Maruti. The weakness of Maruti lies in their high operations cost and the threat from the competitors. Maruti has to focus on the areas of product design an d quick service to the customers. The Threat lies in the Strong competition and the increase in the sale of the products due to the competition.7) MARKETING PLANTen steps to documenting your planBegin with certain inevitable preliminaries (contents, contacts, definitions).Provide an executive summary.Set the scene by describing the business.Review the market, your competition and your market positioning.excuse your vision, mission and objectives.Describe your strategy.Explain your plans for developing your products and/or services.Set out your financial projections.Highlight the risks and opportunities.Reach a conclusion.Referred by Definitive Business Plan, The The Fast-Track to Intelligent Business Planning for Executives and Entrepreneurs.Written By Stutely, Richard, Published By Pearson Education UK,Published In 2007 MIL EAN/ISBN 9786611157036Pub e-EAN/ISBN 97814058939787.1) COMPANYS OBJECTIVESShort term( 1 year)Long term (2-4 years)Increase the sale of high quality carsSpace an d product extensionIncrease the productivityTo expand the business in various countries.To build high range of Sports carTo build the world cheapest car.7.2) STRATEGIESMaruti has a clear strategy to increase the profit and grow in market share. The company has to plan, to achieve this by increase the sale with the breathing customer, attract the new customers and moving into the new market. They have also planned to enhance the offers available through the companys website. And the company has decided to expand the business in different split of the world with cost effective to sustain in the competitive world.7.3) MARKETING MIXPRODUCTProduct is an important term in business, where all company will produce product with better quality, but Maruti is concerned to produce products according to the demands of the customers, to make more efficient and effective in terms of fulfilling the customer needs.PRICEMaruti have high price for premium products and for Sports model, where there i s a range of products or services the pricing reflect the benefits of parts of the range. They also use value pricing during the times of recession and increased competition. Maruti also produces the low price products to attract the customers and for both upper middle class and middle class people.PROMOTION The endorsement is with simple video . Making customer comfortable through test drive. Targeting people of all class.PEOPLEIntroducing services in a way that suits all range of peoples. They attract people using good promotion and retain the customers with good customer service and support. pop outMaruti Suzuki had 802 dealerships across 555 towns and cities in India. It has 906 dealer workshops and 1,834 Maruti Authorised Service Stations in 1,335 towns and cities. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India.8) BUDGET BREAKDOWNCountrys largest car maker Maruti Suzuki India (MSI) said it would consider taking different measures after A pril to protect its margins due to fluctuation in Nipponese Yen, post the devastating earthquake and tsunami.For this month, we are completely protected. In fact, we are covered till April. Beyond that if Yen continues to appreciate, then we will have to take a call to counter it, MSI chief financial officer Ajay Seth said.The companys margins are affected whenever the yen appreciates, while it is beneficial if it depreciates. After the natural incident that struck the island nation on March 11, the Japanese currency is quoted at about 81 yen against a US dollar bill compared to that of about 83 yen earlier.There is strong volatility going on at present, with yen appreciating as much as to 76 yen against a dollar recently.Market analysts pointed out that currency hedging is a strong possibility. Usually, Maruti hedges yen against the euro instead of rupee to mitigate the impact, an analyst with a leading brokerage firm, who asked not to be identified, said.On the component sourci ng from Japan Of our total raw material procurement, about 25 per cent are imported.Out of those imported parts, about 80 per cent are purchased in yen. During the October-December period last year, MSI spent Rs 6,959.03 crore in consumption of raw materials and components. It also paid Rs 460 crore as royalty in the quarter to its parent company Suzuki, which is about 5.5 per cent of MSIs total sales.The impact of Japans natural disaster on MSIs production, it will remain unaffected for some time till next month as the company has enough inventory of components. Besides the stock at the plants, getting some supplies, which will reach from Japan that started navigation just before the earthquake.Last week, the company had said it was assessing the possible impact of the natural calamity on its components import from Japan. Earlier, MSI had cancelled the celebrations for rolling out its 1,00,00,000th car in view of the catastrophe. Shares of MSI were trading at Rs 1,170.05 on the Bo mbay Stock Exchange during late afternoon trade, up 3.42 per cent from its previous close.SOURCE http//profit.ndtv.com/news/ base/maruti-gears-up-to-counter-yen-impact-on-margins-145852?pfrom=home-BusinessBiblographyhttp//www.whatmakesagoodleader.com/macro-environment-analysis.html