2. Agenda
1. General Environmental Analysis
2. Industry Environment Analysis
3. Indian Automobile Industry
4. Competitor Analysis
5. Value Chain Analysis
6. Business Level Strategy
7. Conclusion

3. General Environmental Analysis
PESTLE
Political • Government promoting foreign investment (FDI’s)
• Stable political environment
(Attractive)
Economic • Good access of funds due to availability of cheap loans
• Persistent high growth rates for past few years
(Attractive)
Social • Rise of middle class leading to improved purchasing power
• Mass transportation due to increase environment consciousness
(Moderate)
Technology • Capital intensive
• Huge investment required to achieve economy of scales
(Unattractive)
Legal • Need to comply with ever evolving emissions standards
• Need to comply various safety and technical standards
(Unattractive)

4. Industry Analysis
Porter’s Five Forces
• Not very high due to proprietary knowledge, patents and
Threat of New Entrants government policies
(Low) • Huge investment required hence not easy to enter into
automobile market
Bargaining Power of Buyers • Incentives to buyers in form of price discounts, accessories, after-
sales services
(Moderate) • Lot of options available because of lot of competition.
Bargaining Power of Suppliers • Presence of many substitute inputs
(Moderate) • Cost of switching of suppliers high
Threat of Substitute Product • High risk as there are many competitors offering similar products
• Rapid Development of new technologies and hence constant
(High) threat
• High Industry concentration & fixed costs so competition among
Rivalry Among Competitors existing players
(High) • Low switching cost from different kind of automobiles after initial
investment by minor changes, facelift etc.

6. Growth Trajectory of Indian Auto
Industry

8. COMPETITOR ANALYSIS
Hyundai
• Debut in 1998 with launch of Santro
• By 2004 had 5 models, Santro, Accent, Sonata
and Elantra and Getz
• In 2007 launched i10
• Wide range along with alternate fuel options
• 2nd largest car manufacturer in India

9. COMPETITOR ANALYSIS
Tata
• 3rd Largest in Passenger Cars
• Launched Indica in 1998
• Acquired Jaguar and Land Rover brands ( 2008)
• Launch of Nano in 2009
• High Market share in diesel market
• Labor Cost -9% of profit Through its
subsidiaries, machine tools and metal producing
plants

10. COMPETITOR ANALYSIS
Volkswagen
• Tagline- Das Auto meaning ‘The Car’ but luxury
models for the upper class in India
• Entered with Skoda Brand in 2001 with current
range of Fabia , Laura, Octavia etc.
• VW in India in 2007 with Passat and Jetta
• Launched Polo in 2009
• 120 dealerships across the country today
• Focus on service and Customer satisfaction

11. COMPETITOR ANALYSIS
Chevrolet
• Chevrolet :“For a Special Journey Called Life.”
with Optra in 2003
• Launched Aveo, Optra SRV and Aveo U-VA
• Chevrolet Spark in 2007 and Beat in 2010
• Innovative schemes like the ‘Chevrolet Promise’
-Maintenance at a fixed cost for three year
period
• Affordability at every stage

12. COMPETITOR ANALYSIS
Ford
• Started in 1995 : JV with M&M
• Launched Ikon in 1999
• Entered the hatchback with Figo in 2010
• Keen to take what they can from the positive
market conditions

13. COMPETITOR ANALYSIS
Emerging Trends
• Focus on indigenization and Lower
Costs
• Increase dealer network
• Target to tap growing middle class-4th Largest in
Purchasing Power Parity(PPP)
• By 2050 Top Spot in Car Volumes
• Local Manufacturing Plants
• World class features at affordable prices

14. VENDOR MARUTI SUZUKI DEALER CUSTOMER

15. FIRM
INFRASTRUCTURE Partnership approach with Production Management
all stakeholders System
HUMAN
RESOURCE
MANAGEMENT
Team building activities Variable- pay e-learning
MARGIN
TECHNOLOGY Electronic Data Processing Data Management Software
DEVELOPMENT
Product Life Cycle Management Solution
PROCUREMENT Vendor quality system audits Maruti Center for Excellence Supplier Club
Lean
Manufact-
uring Maruti
Presence in Sales operating Standards
500 cities Finance
Value
JIT Added with 1500+ Anytime MARGIN
Value distributors Maruti Motor training
Effective Engg. Schools
Material (VAVE) Maruti on
Handling road
True Value
Focus on Cashless
model
Cost, insurance
Quality &
Safety
INBOUND OPERATIONS OUTBOUND MARKETING SERVICES
LOGISTICS LOGISTICS & SALES

16. INBOUND OUTBOUND
OPERATIONS
LOGISTICS LOGISTICS
• Just-In-Time (pioneered by • Eliminates unnecessary costs • Presence in 500 cities
Toyota) using Lean Manufacturing • 300+ distributors
• Huge savings on inventory • Maintains constant prices by • 1600+ service stations
management costs using Value Added Value
Engineering • 16 warehouses
• Sound demand management
system • K-Engine (fuel efficient) Plant • True value dealership model
• Implementation of Logistics used in many models & well • Decent margins to dealers
improvement systems received by customers
• Manufacturing supremacy
rests on ideals of
Cost – each employee works as
Costs Manager
Quality - ‘Do it right first time’
Safety- ‘Home or Work place:
Safety takes first place’

17. MARKETING & SALES SERVICE
• Anytime Maruti - 24*7 toll-free helpline • Sales Operation Standards (SOS) -
to attend to customer grievances Requirements in terms of infrastructure
• Maruti On road- Maintenance & Repair and workflow processes to be met at
services dealership
• Maruti Finance – Car finance in 166 • Excellent after-sales service- 1600+
cities in partnership with SBI centers with detailed information on
• Free test drive to customers website
• Motor training schools
• Cashless insurance- Inception of two
subsidiaries- Maruti Insurance
Distributors Services Pvt. Ltd. & Maruti
Insurance Brokers Pvt. Ltd.

18. • IT network links vendors across the country & keeps track
of order and delivery status.
TECHNOLOGY • Electronic Data Processing (EDP) Dep't. manages post-
sales process & sales analysis.
• Styling & Engineering functions done in UGS’ NX
DEVELOPMENT solutions
• Data Management Software maintains record of all
enquiries & provides timely reports on demand.
• Reduced no. of vendors from 370 (2000) to 100 (2005)
• Quality maintained by periodic quality system audits
• Maruti Centre for Excellence (MACE) to share best
practices & increase competitiveness among suppliers
PROCUREMENT • Guidance to suppliers on financial matters pertaining to
fund management, Basel III norms etc.
• Supplier Club used as platform to discuss operational &
social issues between suppliers and top management

19. • Plants at Manesar & Gurgaon; 7600 employees
• Partnership approach with all stakeholders
FIRM • Annual General Meetings
INFRASTRUCTURE • IR Cell
• Production Management System aimed at achieving manufacturing
supremacy through Japanese principles of 5S, 3G & 3K
• Major component of variable pay ensures alignment of employees
with organization
HUMAN • Innovation forms a core value & is highly encouraged
• Company is treated as family with events like Parivar Milan & Family
RESOURCE Day
• Maruti Recruitment System (MARS) comprising technical aptitude test
MANAGEMENT followed by technical & HR interview.
• Classroom training is reinforced through e-learning modules
• MSPIN issued to all employees

20. How a Business level strategy is built
Core Business Level
Capabilities
Competencies Strategy

21. CAPABILITIES OF MSIL
• Manufacturing and production technology
• Understanding customer’s needs
• Developing new designs and models of cars
which are fuel-efficient
• Quality focus
• Prompt service and customer satisfaction

22. CORE COMPETENCIES
• Most extensive
network in India
• Greater customer
• Pioneer in latest • Alliances with
satisfaction
technology suppliers
• Lean Mfg • Alliances with dealers
• PMS STRONG
DISTRIBUTOR
• Quality Control NETWORK
FORWARD AND
MANUFACTURING BACKWARD
EXCELLENCE • True Value INTEGRATION
• Anytime Maruti
• Authorized service
centers
• Insurance
OTHER CRM
INITIATIVES

23. BUSINESS
LEVEL
Whom STRATEGY
to serve
How to
What
serve
needs to
these
serve
needs

24. COMMON BUSINESS LEVEL STRATEGIES
FOLLOWED BY FIRMS
Competitive Advantage
Cost Uniqueness
Broad Target
Audi
Cost Leadership Differentiation
Competitive Scope
Maruti Volkswagon
Tata Motors Integrated Cost
Leadership/Differen
tiation
Honda
Hyundai
Narrow Target
Toyota
Focus cost leadership Focus differentiation

25. CHANGING TIMES…

26. PRE-LIBERALIZATION ERA – 1981- EARLY
1990S
• Initial growth phase
• World’s cheapest cars at just $5500
• “Realize your dreams”
• Maruti 800
• Fuel efficient – 12-18 kmpl
• 80% market share
POST LIBERALIZATION ERA – EARLY
1990S TO LATE 1990S
• Entry of Tata Indica, Hyundai Santro
and Daewoo Matiz
• Liberalization woes – declining market
share - < 50%
• Lawsuit on non-conformance to
emission norms
• Labour strike
• Stock prices fell drastically

27. THE REAWAKENING - EARLY 2000S TO 2009
• Challenge 50 plan - Restructuring
• IT in manufacturing, newer models at regular
intervals, increasing capacity
• Related diversification car
finance, insurance, reselling
• Grand success of Alto
• 25.2% increase in sales, 200% increase in PAT
• 55% market share
• Move towards Integrated cost
leadership/differentiation starts
RECENT TIMES – 2009 ONWARDS
• Rs 18 billion investment - launching new
models and upgrading plants
• Largest passenger car company – 53% of
total car market
• Complete range of cars from entry level
Maruti 800 and Alto, to hatchbacks Ritz, A
star, Swift, Wagon-R, Estillo and sedans
DZire, SX4 and Sports Utility vehicles Grand
Vitara, Kizashi
• Move towards Integrated cost
leadership/differentiation almost complete
• Multiple price ranges - low cost to luxury
models

28. CONCLUSION
• MSIL, through its cost leadership approach –
market leader for 3 decades , 50% market share.
• Constant innovation to its processes, hence
helping it achieve efficiency.
• Cost advantage by maintaining long term contracts
with its suppliers - reliable supply of materials
• Moving towards Integrated cost
leadership/differentiation strategy to cater to
changing demands of customers and changing
environment
• Sustainability of this strategy in the long run