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Corporate Transformation Case Study
Maruti Udyog Ltd. to Maruti Suzuki Ltd.: Celebrating 25 Years of Corporate Transformation
Publication Year : 2009
Authors: Sai Prasanna Ragu, R Muthukumar
Case Code: COT0015
Teaching Note: Available
Structured Assignment: Available
The case study outlines the transformation of Maruti Suzuki India Private Ltd. (Maruti) from a state-owned company to a dominant market player (with protectionism all around) and also to an effective competitor (in the era of increased and intensified competition from domestic and foreign players). Beginning with its inception as Maruti Udyog Ltd. (MUL), the case study progresses towards its market entry, growth, expansion, turnaround and competitive strategies to establish and strengthen its presence in the Indian passenger car market. The case study also highlights Maruti�s strategies to counter intensified competition and external conditions like global economic recession, the resultant credit crunch and its impact on sales volume. Given its successful corporate transformation over the past 25 years, there arises the dilemma whether it can adopt proven strategies of the evolutionary phase to the new revolutionary phase of another 25 years or so? Further, amid challenging industrial and economic conditions, what are the growth options for Maruti Suzuki to ensure future growth sustenance and profitability?
- To understand the historical state-connections of MUL and to debate over the necessity of government to start an automobile company
- To examine and debate over Maruti�s competitive strategies during three different phases of its 25 years � (1981�1991), (1992�1999) and (2000�2008)
- To explore growth options available for Maruti
- To analyse all the impending challenges and suggest ways and means to overcome them.
Maruti, Suzuki, India, Asia, Corporate Transformation, New product introduction, global strategy, marketing; promotion, Growth Strategies, Automobile, new entrants, competition, market leader
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This is a case study on Competitive advantage of Maruti udyog Ltd. (Maruti Suzuki) which focuses on business level and generic business strategies. This study will be helpful to Management students to understand the concept of strategic and competitive advantage. In this ase study, India’s largest car manufacturer tries to formulate a combination of various business and generic strategies such as lower cost and business differentiation strategies.
Case study on Competitive Advantage of Maruti Udyog Ltd.
Maruti Udyog Ltd (MUL) is India’s largest car maker with more than 54 per cent share of the passenger car market, having cumulative sales of 6 million vehicles. It has ten products, with ten variants, catering to the mobility need of the passenger cars and utility vehicles customers ranging from the no-frills, entry-level competitively-priced Maruti 800 to the premium SX4. Customer groups in the Indian automobile industry are segmented on the basis of price. Technology for car manufacturing is fairly standardized and MUL sources it from Suzuki, its Japanese parent company. In recent years, Indian car manufacturers have had to undertake major technological upgradations to conform to the international emission norms codified as the Euro I and Euro II norms and the absorption of multipoint fuel injection technology.
The value chain in car manufacturing starts with the inbound logistics of steel coils as input, moving through the processes of blanking, pressing, welding, assembly and vehicle inspection. The value system of MUL in-dudes the ancillary units, vendors and suppliers mostly based in proximity to its manufacturing facilities at Gurgaon and Manesar, Haryana from whom it sources its components and parts. It also includes the after-sale service providers, who are dealers having service stations. MUL has an extensive distribution channel consisting of channel partners who own and manage over 400 sales outlets across 222 cities. The service network covers 1171 towns and cities, supported by 2421 authorized service outlets.
MUL positions itself as a provider of security, confidence, reassurance, value-for-money and good resale value. The customer benefits expected are of fuel efficiency, low maintenance costs and easy availability of genuine parts. The business strategies of MUL are a combination of lower cost and differentiation for different types of products.
The lower-cost strategy is followed by the usage of a reliable network of suppliers, efficient manufacturing, just-in-time inventory systems, extensive after-sale service support, realisation of economies of scale and stringent waste management and control. The competitive advantages for cost leadership flow from factors such as the economic size of operations, low initial investment, high level of indigenisation, fully depreciated manufacturing plants and high labour productivity.
The differentiation strategy is put into action by providing options to a customer by offering a car at each price point difference of Rs 25,000. This means that a car with a marginal price difference would be available to a customer looking for upgradation.
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M. Venkatesh & R. Povaiah, “Total Control”, A & M, May 31, 2000, pp. 32-38; S. Talatam, “Maruti Udyog Ltd.: Competing with cost advantage”, Spark Online Refereed Journal, October 2002, available at http://www.indiabschoo/s.cQmlstrategy_OO1.htm, Retrieved June 19, 2007; Company website at httpd/ www.marutiudyog.corni, Retrieved June 20, 2007.
Strategic Management and Business Policy, Third Edition, by Azhar Kazmi, Page No. 244, McGraw Hill Companies, New Delhi.