Maruti Suzuki India Limited - Competitive Strategies of the Market Leader
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Case Code: BSTR351 Case Length: 19 Pages Period: 1991-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.400 Organization: Maruti Suzuki Industry: Automobile Countries: India Themes: Competitive Strategies, Differentiation |
Abstract Case Intro 1 Case Intro 2 Excerpts
"The Government of India had entrusted the company a responsibility of building low cost, fuel efficient cars for the people of India as also building firm foundation for the modernization and growth of Indian automobile industry. Thanks to the support of our stakeholders, we have successfully led the automobile revolution in India. We are positioning India as the global small car manufacturing hub, in line with the government's vision."
- Shinzo Nakanishi, Managing Director and CEO, Maruti Suzuki India Limited, in December 2008.
"The car market is growing increasingly competitive. This is not surprising as global manufacturers are bound to come where they see a growing market. Maruti has a strategy for the future."
- RC Bhargava, Chairman, Maruti Suzuki India Limited, in August 2008.
Introduction
In the first quarter of fiscal 2009-10, Maruti Suzuki India Limited (Maruti), a subsidiary of Japan based Suzuki Motor Corporation (Suzuki), reported an increase of 34 percent in its net sales to Rs. 63.4 billion as compared to the corresponding quarter of the previous year. During the same period, the net profit of the company also increased by 25.3 percent to Rs 5.83 billion.
Founded in 1981, Maruti was India's leading car manufacturer. Since the late 1980s, the company had been the market leader in the passenger car industry in India. However, the liberalization of the Indian economy in 1991 changed the dynamics of the Indian passenger car industry.
From the mid 1990s, foreign automobile companies started entering the Indian passenger car market. Maruti started losing market share as competitors began taking over their space with the launch of models that proved very popular with Indian buyers. Between the financial years 1997-98 and 1999-2000, Maruti's market share declined from 83.1 percent to 60.8 percent.
To counter the competition, Maruti started a major restructuring exercise. The company focused on improving its operational efficiency by upgrading manufacturing using new manufacturing techniques, increasing capacity, using information technology (IT) in manufacturing, focus on new product launches at regular intervals and venturing into other related businesses like car finance, insurance and buying and selling used Maruti cars. Maruti's restructuring exercise paid off as the company was able to hold its market leadership position with a 55 percent market share in 2008-09. The new products launched by the company were well accepted by the market. However, there was no room for complacency and so the company formulated a careful plan for its future direction. The company decided that it would upgrade all its products with its new KB series engine.....
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