MARUTI: VISION VISION,, MISSION MISSION,, SWOT ANALYS ANALYSIS IS AND APPLICATION OF MICHAEL PORTER’S FIVE FORCE MODEL Maruti History : Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. It was was esta establ blis ishe hed d with with the the obje object ctiv ives es of - mode modern rniz izin ing g the the Indi Indian an automob automobile ile indust industry, ry, produc producing ing fuel fuel effici efficient ent vehic vehicles les to conser conserve ve scarce resources and producing indigenous utility cars for the growing need needs s of the the Indi Indian an popu popula lati tion on.. A lice licens nse e and a Join Jointt Ventu enturre agreement were signed with the Suzuki Motor Company of Japan in Oct 1983 19 83,, by whic which h Suzu Suzuki ki acqu acquir ired ed 26 26% % of the the equi equity ty and agree agreed d to prov provid ide e the the late latest st tech techno nolo logy gy as well well as Japa Japane nese se mana manage geme ment nt practices. Suzuki was preferred for the joint venture because of its track record in manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzuki’s equity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki further increa increased sed its equity equity to 50 50% % turnin turning g Maruti Maruti into into a non-go non-gover vernme nment nt organization managed on the lines of Japanese management practices. Maruti created history by going into production in a record 13 months. Maruti is the highest volume car manufacturer in Asia, outside Japan and Korea, Korea, having having produc produced ed over over 5 millio million n vehicl vehicles es by May 2005. 2005. Maruti is one of the most successful automobile joint ventures, and has made made prof profit its s ever every y year year sinc since e ince incept ptio ion n till till 20 2000 00-0 -01. 1. In 20 2000 00-0 -01, 1, although Maruti generated operating profits on an income of Rs 92.5 billion, high depreciation on new model launches resulted in a book loss.
The Evolution
Maruti’s history of evolution can be examined in four phases: two phases during pre-liberalization period (1983-86, 1986-1992) and two phases during post-liberalization period (1992-97, 1997-2002), followed by the full privatization of Maruti in June 2003 with the launch of an initial public offering (IPO).The first phase started when Maruti rolled out its first car in December 1983. During the initial years Maruti had 883 employees. From such a modest start the company in just about a decade (beginning of second phase in 1992) had turned itself into an automobile giant capturing about 80% of the market share in India. Employees grew to 2000 (end of first phase 1986), 3900 (end of second phase 1992) and 5700 in 1999. During the pre-liberalization period (1983-1992) a major source of Maruti’s strength was the wholehearted willingness of the Government of India to subscribe to Suzuki’s technology and the principles and practices of Japanese management. Large number of Indian managers, supervisors and workers were regularly sent to the Suzuki plants in Japan for training. Batches of Japanese personnel came over to Maruti to train, supervise and manage. Maruti’s style of management was essentially to follow Japanese management practices. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India. On 17 September, 2007, Maruti Udyog was renamed to Maruti Suzuki India Limited. The company's headquarters remain in Gurgaon, near Delhi.
The Path to Success for Maruti was as follows: (a) teamwork and recognition that each employee’s future growth and prosperity is totally dependent on the company’s growth and prosperity (b) strict work discipline for individuals and the organization (c) constant efforts to increase the productivity of labor and capital (d) steady improvements in quality and reduction in costs (e) customer orientation (f) long-term objectives and policies with the confidence to realize the goals
(g) respect of law, ethics and human beings. The “path to success” translated into practices that Maruti’s culture approximated from the Japanese management practices.
Maruti adopted the norm of wearing a uniform of the same color and quality of the fabric for all its employees thus giving an identity. All the employees ate in the same canteen. They commuted in the same buses without any discrimination in seating arrangements. Employees reported early in shifts so that there were no time loss in-between shifts. Attendance approximated around 94-95%. The plant had an open office system and practiced on-the-job training, quality circles, kaizen activities, teamwork and job- rotation. Near-total transparency was introduced in the decision making process. There were laid-down norms, principles and procedures for group decision making. These practices were unheard of in other Indian organizations but they worked well in Maruti. During the pre- liberalization period the focus was solely on production. Employees were handsomely rewarded with increasing bonus as Maruti produced more and sold more in a seller’s market commanding an almost monopoly situation.
Business Portfolio: The Group's principal activity is to manufacture, purchase and sale of Motor Vehicles and Spare parts. The other activities of the Group comprises of facilitation of Pre-Owned Car Sales and Car Financing. The Group also provides services like framing of customized car policies, economical leasing of car, maintenance management, registration and insurance management, emergency assistance and accident management. The product range includes 14 basic models with more than 150 variants. The company has a sales network of 802 centers in 555 towns and cities, and provides service support to customers at 2,740 workshops in over 1,335 towns and cities (as on March 31, 2010). The company is focused on rapidly expanding the sales and service further across the country. MSIL has been the leader of the Indian car market for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of
New Delhi, India. Both the facilities have a combined capability to produce over a 1.2 million (1,200,000) vehicles annually. The company plans to expand its manufacturing capacity to 1.75 million by 2013. The company offers a wide range of cars across different segments. It offers 15 brands and over 150 variants - Maruti 800, people movers, Omni and Eeco, international brands Alto, AltoK10, A-star, WagonR, Swift, Ritz and Estilo, off-roader Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and Kizashi. 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.
Vision: Visions of any company are those values on which company works. As the MUL is started by Governmental initiatives it tends to be more consumer oriented and hence cost effective, but on the other hand Suzuki’s participation ensures not only need of the profit, but of the need of maximum profit. The only way for this Nora’s dilemma of selecting principals for company’s working vision ,was to maximize profit and reducing cost by maximizing output and sales Hence MUL declared its Vision as-
“The Leader in the Indian Automobile Industry, Creating Customer Delight1 and Shareholder's Wealth2; eventually become a pride of India” Customer Delight1 is making sure that performance, after sales service and customer support are best and beyond expectation. Shareholder’s wealth2 is the prime concern for running business smoothly. MUL knows this and understands “customer is king”, he can change the
fortune of any company, hence goes company’s brand line: COUNT ON US!
Mission: Mission is the statement of an organization’s purpose, what it want to accomplish in the larger environment and its goals which are specific, realistic and motivating. Missions are described over visions and visions demand certain objectives. The main objectives/Missions of MUL are: - Modernization of the Indian Automobile Industry. - Developing cars faster and selling them for less. - Production of fuel-efficient vehicles to conserve scarce resources. - Production of large number of motor vehicles which was necessary for economic growth. - Market Penetration, Market Development and Diversification.
Development
Similarly
Product
- Partner relationship management, Value chain, Value delivery network .
SWOT ANALYSIS: Consists of analysis of internal environment (Strength and weakness) and external environments (Opportunity and Threat).
STERNGHTHS: 1. Contemporary technology. Japanese Management practices (that
had captured Japan over USA to the status of top Auto manufacturing country in the world) 2. Early mover advantages.
3. Recruitment is done in very tedious manner ensuring talent and
best professionals, Working, culture. 4. after sale services, distribution, R&D.
5. Is considered to be the most fuel efficient cars producing company in the industry
WEAKNESS: 1. Still
depends upon SUZUKI COPORATION, Japan For tech. support, 10% components are manufactured outside India.
2. Though MUL has launched luxury cars as well it’s still considered as poor man’s brand. 3.
Bureaucracy, Technological disadvantages, Decades of isolation, are still having a negative impact on the company.
4. Have to import there diesel engines from Fait.
OPPURTUNITY : 1. first company to roll out suitably designed cars before 2008 as
per Govt.’s Proposal of new ethanol (renewable) mixed fuel. 2. Other companies lacks economy of scale, so market is still open. 3. Demand is rising 4. Growing market as there is a considerable increase in the demand levels.
THREAT: 1. Numbers of new Technology driven players and manufactures are in market. 2. Government reducing support and cutting down the Gas supply
quota. 3. Rapid technological changes
4. New players coming in India 5. Fuel prices are increasing at a very fast rate resulting in slowing down the growth rate of the market 6. Increase in interest rates has inverse result on car sales and is a great threat to the company.
MICHAEL PORTER’S FIVE FOURCE MODEL:
Michael Porter described a concept that has become known as the "five forces model". This concept involves a relationship between competitors within an industry, potential competitors, suppliers, buyers and alternative solutions to the problem being addressed. We used the five-forces model as a basic structure and built on it with concepts from the works of many other authors. The result was a model with over 5,000 relational links.
porter's five forces 1. Existing competitive rivalry in industry:
2. Threat of new market entrants 3. Bargaining power of buyers 4. Power of suppliers 5. Threat of substitute products (including technology change)
MARUTI: VISION,MISSION, SWOT ANALYSIS AND APPLICATION OF MICHAEL PORTER’S FIVE FORCE MODEL
SUBMITTED BY: AARIF RATHER [ROLL NO.0 2] SOUOD FAROOQ [ROLL NO. 13] AYESHA MIRZA [ROLL NO. 11]
SUBMITTED TO: MISS FEYONA
