1. Marketing Strategy Analysis ............................................................. 2 A. Boston Growth Share Matrix .................................................................. 2 B. GE/ Mckinsey Matrix - Multi factor Attractiveness/strength matrix .................... 4 2. Existing/possible value chain for its product(s)/service(s) considering both "upstream" & "downstream" activities? ..................................................... 6 C. Primary activities at Maruti Suzuki .......................................................... 7 i. Inbound Logistics ............................................................................ 7 ii. Operations ..................................................................................... 8 iii. Outbound Logistics .......................................................................... 8 iv. Marketing and Sales ......................................................................... 9 v. Service ....................................................................................... 10 D. Secondary activities at Maruti Suzuki ...................................................... 10 vi. Procurement ................................................................................ 10 vii. Technology Development ............................................................... 11 viii. Human Resource Management ......................................................... 11 ix. Firm Infrastructure ......................................................................... 12 E. MARUTI SUZUKI SUPPLY CHAIN MANAGEMENT ............................................. 12 x. UPSTREAM: SUPPLY CHAIN DESCRIPITON & ROLE ...................................... 13 xi. MIDSTREAM: Automakers/Vehicle Manufacturers/Original Equipment ............. 14 xii. DOWNSTREAM: LAST PHASE OF SUPPLY CHAIN ...................................... 14 F. KEY FACTS OF NEW SCM ...................................................................... 15 3. Recommendations ...................................................................... 16
1. Marketing Strategy Analysis
A. Boston Growth Share Matrix
Business portfolio matrix that uses market growth rate and relative market share as the indicators of the firms strategic position- Market growth rate: A measure of the annual growth percentage of the market in which the business operates. Relative market share: The firms market share divided by the market share of its largest competitor. This model classifies SBUs into either: Question marks (high growth + low market share). Stars (high growth + high market share). Cash cows (low growth + high market share). Dogs (low growth + low market share).
STARS Zen Estilo,Swift,Dzire QUESTION MARKS Ertiga,Celerio Cash Cows Wagon R, Alto Dogs SX4,Zen Estilo,Omni,A Star Ritz, Strengths of the BCG Model: The BCG Matrix allows for a visual presentation of the competitive position of all units in a business portfolio. The BCG model allows companies to develop a customized strategy for each product or business unit instead of having a one-size-fits-all approach. It works well for companies with multiple divisions and products. It is used to identify how corporate cash resources can be best allocated to maximize a companys future growth and profitability. Useful for the development of investment, marketing and operating decisions: a) Investment in the business unit in order to build its market share b) Sufficient investment to maintain the business unit's market share at the current level c) Determine which business unit/product will function as a cash cow to provide necessary cash flow for the other business units/products d) Divest a business unit Weaknesses of the BCG Model: The BCG model assumes that high market share and market growth are the only success factors. Based on numerous real life examples, we can conclude that high market share does not always lead to profitability. Businesses with low market share can be highly profitable as well. Relative market strength is also determined by the following factors which the BCG does not take into account: a) Technological competence b) Ability to maintain low manufacturing costs c) Financial strength of competition d) Distribution capabilities e) Human resources The BCG model focuses on major competitors when analysing the relative market share of a company. However, it neglects some small competitors with fast growing market shares. It is a rather short-term model that doesnt fully show how characteristics of business units change over the long term.It does not take into consideration other important factors such as: market barriers/restrictions, market density, profitability, politics with this or any other such analytical tool, ranking business units has a subjective element involving guesswork about the future, particularly with respect to growth rates.
B. GE/ Mckinsey Matrix - Multi factor Attractiveness/strength matrix
It is a form of portfolio analysis used for classifying product lines or strategic business units within a large company It was developed by McKinsey for the US General Electric Company It assesses areas of the business in terms of two criteria: The attractiveness of the industry/market concerned The strength of the business Market attractiveness is measured through questions like- Is the industry growth rate high? Is the market size large enough to sustain many competitors? Are industry sales susceptible to cyclical, seasonal or other fluctuations? Is the rate of product obsolescence high? Does extensive government regulation cause problems? Is the industry demand high/low compared to industry capacity? Is there a risk or raw material or component shortage? Are there a large number of well financed competitors?
Business Strength is measured through questions like- Are our production facilities modern & efficient? Do we possess competitive technology? Do customers have a positive image of our products? Are we cost competitive? Are our distributors well established & supportive? Do we have stable and reliable suppliers
The GE/McKinsey Matrix, as an extension of the BCG framework, shares the aforementioned advantages of the BCG model. Though the GE/McKinsey Matrix is more sophisticated than the BCG matrix and can provide higher value information for the executive management, it has several flaws and limitations: No proven relationship between market attractiveness and business position. The relationships between different units are not taken into account. The core-competencies that lead to value creation are not taken into consideration. The approach requires extensive data gathering. Scoring is personal and subjective (risk of bias) There is no hard and fast rule on how to weight elements. The GE/McKinsey Matrix offers a broad strategy and does not indicate how best to implement it. For the above limitations and issues, the GE/McKinsey Matrix can serve more as a quick strategic visual framework rather than as a resource allocation tool.
2. Existing/possible value chain for its product(s)/service(s) considering both "upstream" & "downstream" activities?
Value Chain of Maruti Suzuki
The term value chain was coined by Michael Porter. The value chain is a comprehensive set of activities that are required to bring a product from a concept stage to marketing and consumption of end products. In competitive terms, value is the amount buyers are willing to pay for what a firm provides them. A company is profitable if the value it commands exceeds the costs involved in creating the product. Porter distinguishes between primary activities and support activities. Primary activities are directly concerned with the creation or delivery of a product or service. Each of these primary activities is linked to support activities which help to improve their effectiveness or efficiency.
Production Management System MARGIN Team building activities Variable- pay e-learning Electronic Data Processing Data Management Software Product Life Cycle Management Solution Vendor quality system audits Maruti Center for Excellence Supplier Club MARGIN Partnership approach with all stakeholders
JIT Effective Material Handling Presence in 500 cities with 1500+ distributors
True Value model Maruti Finance Anytime Maruti Maruti on road
Sales operating Standards
Motor training Schools
Cashless insurance Lean Manufact- uring Value Added Value Engg. (VAVE) Focus on Cost, Quality & Safety
Maruti Suzuki vendors: 1) BIMETAL BEARINGS LTD., COIMBATORE They manufacture Engine Bearings, Bushes and Thrust Washers. 2) AMALGAMATION VALEO CLUTCH LTD., CHENNAI Leading manufacturer of Clutch Assemblies in India for the new generation vehicles. 3) I.P. REPCO LTD., CHENNAI A member of Amalgamations Group. Manufacturing Flywheel Ring Gears for entire range of vehicle 4) KALYANI BRAKES LTD, PUNE Manufacturers of complete brake systems for automotive applications 5) LUMAX INDUSTRIES LTD Biggest manufacturers of Automotive Lights in India 6) PRICOL LTD, COIMBATORE Automotive instruments & speedometer cables in India. 7) FENNER INDIA LTD, CHENNAI Largest manufacturer of Belts and OIL Seals in India
C. Primary activities at Maruti Suzuki
i. Inbound Logistics
Inbound Logistics i.e. the receiving and warehousing of raw materials, and their distribution to manufacturing. Maruti Suzukis inputs primarily comprise raw materials and purchased components. Raw material includes rubber, glass, steel, plastic, aluminum. Tyre, windshields, and airbags are example of parts or components. The company has implemented tierization of suppliers and Just in Time supply logistics.
In order to improve quality and generate economies of scale, MUL has reduced the number of vendors of components in India from 370 as of March 31, 2000 to about 100 as in 2005. By lowering the time and cost involved in dealing with more vendors, they have increased their supply chain efficiencies In case of repair and replacements, costs of defective components supplied are borne by the vendor. Information systems - Vendors are linked through the Internet-based information network, which maintains online information regarding order status and delivery instructions. These have helped in reducing both inventory levels and lead times required for the supply of various components. The Company worked hard along with its vendors on cost reduction initiatives. The key initiative was a raw material yield improvement program with a micro focus on each component on the lines of Suzuki philosophy. Called One Component One Gram, this program calls for weight reduction of one gram for every component. Over 76% of the companys 246 suppliers are located within 100 kilometers of radius. This has facilitated cost reduction in supply chain. Maruti-Suzuki gets involved in establishing suppliers, supplier JVs with local suppliers and asks Japanese suppliers to do the same. For instance, Maruti Suzuki formed a joint venture with 'Futaba Industrial Co., Ltd.' (Futaba) for manufacture of Exhaust Systems Components (ESCs). ii. Operations
Transform inputs into final product form through machining, packaging, assembly, equipment maintenance, testing, printing and facility operations. Production process at Maruti Suzuki: Maruti Suzukis manufacturing facility consists of fully integrated plants with flexible assembly lines located at Gurgaon. The scale and complexity of the Company's manufacturing operations have now moved to a different league. The Company reached a capacity of one million cars annual production in 2008. Maruti Suzuki has implemented Production Management System, which is a strategy to achieve Manufacturing Excellence evolved through participative approach
iii. Outbound Logistics
Are the activities required to get the finished product to the customer, including collecting, storing, physically distributing, material handling, delivery vehicle operation, order processing and scheduling. The Company has jointly developed with the Indian Railways, special Auto Wagons, to support a high capacity, high speed and safe car transportation system. To support its export shipments, the Company commissioned a dedicated Roll-on Roll-off car terminal at Mundra sea port in partnership with MPSEZL (Mundra Port and Special Economic Zone Limited).
iv. Marketing and Sales Provide means by which buyers can purchase the product and inducing them to do so, such as advertising, promotion, sales force, quoting, channel selection, channel relations, and pricing. Marutis marketing objective is to continually offer the customer new products and services that: Reduce the customers cost of ownership of our cars; and Anticipate and address the customers needs and preferences in all aspects and stages of car ownership (MARUTI SUZUKI refers to this as the 360 degree customer experience Maruti Suzuki has been aggressively cutting prices of its models. The rationale behind the price cuts is the focus on offering new upgraded vehicles at a low price. Maruti Suzuki offers a two-year warranty on all the vehicles at the time of sale. The dealers are required to address any claim made by a customer, in accordance with practices and procedures prescribed by MARUTI SUZUKI, under the provisions of the warranty in force at that time. Maruti car for a new Maruti car or upgrade to a new Maruti car. True Value Solutions Limited (TVSL), which was incorporated on January 14, 2002 as a wholly owned subsidiary of Maruti, provides value-added services to owners and users of motor vehicles on matters relating to manpower services with regard to recruitment, training and development. The company also intends to promote the business in the areas of pre-owned cars, lease and fleet management, finance and insurance. MARUTI SUZUKI has the largest network of dealers amongst car manufacturers in India. Sales network is linked with the MARUTI SUZUKI through the secure extranet based information network The performance of the dealers is followed and improvements are suggested frequently. In order to assist the dealers in enhancing their performance and capabilities, MARUTI SUZUKI has introduced a concept of Balanced Scorecard. Using this tool, the performance of a dealership in several areas of operations, including sales, service, spares and accessories, financial management and management systems is measured.
v. Service
Aims to enhance or maintain the value of the product, such as installation, repair, training, parts supply, and product adjustment. Maruti Suzuki is one of the companies in India which has a huge distribution network. Today it has 802 dealerships across 555 towns and cities in India. To ensure proper after sales service Maruti Suzuki has 2,740 workshops (including dealer workshops and Maruti Authorized Service Stations) in 1,335 towns and cities. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. Over the last few years, the company strengthened the existing practices and experimented with many new initiatives by way of kaizens (continuous improvements) to delight its customers. These initiatives ranged from product design and quality to network expansion, and included new service programs to meet unsaid needs of customers As a benchmark for dealers with respect to service quality and infrastructure facilities, MARUTI SUZUKI has launched service stations under the brand Maruti Service Masters or MSMs. MARUTI SUZUKI also has service stations on highways in India under the brand Express Service Stations. To promote sales of spare parts and the availability of high quality, reliable spare parts for its products, spares are sold under the brand name Maruti Genuine Parts, or MGP. In recent years, the Company has used IT to enhance interface with the customer. It has deployed a world class Dealer Management Solution across its vast network of dealers throughout the country.
D. Secondary activities at Maruti Suzuki
vi. Procurement
About three fourth of the car, by value, is outsourced. Any improvement in the car in terms of technology and design, quality or cost has to essentially include the Company's vendors and their support. In the year 2007-08, the Company signed two joint venture agreements with global component manufacturers for cost reduction through localization of components for Maruti Suzuki cars. The Company has set up a Suppliers Park in Manesar, close to its car plant on an area of 100 acres for Just-In-Time supplies.
The second focus area for component cost reduction is raw material yield improvement across all manufacturing processes, like sheet metal, castings, forgings and machining. Every component is studied in detail and innovative ideas are tried, to reduce the input material weight for the same component output. The total cost of raw material as a percentage of net sales ranges from 15% to 20%.
vii. Technology Development
Technology development includes research and development, process automation, and other technology development used to support the value chain. Specific areas in which R&D has been carried out by the company: Building Full Mode Change Capability Vehicle Design and Development Technology absorption, adaptation and innovation : Localization, development and testing of parts for existing and new models. Capabilities strengthened in component and vehicle evaluation, benchmarking and design optimization Global sourcing and advanced sourcing to get the advanced technologies into India at lower costs. (Efforts made towards technology absorption, adaptation and innovation by either local vendors or helping world-leading component suppliers to set up shop in India).
viii. Human Resource Management
Activities associated with recruiting, training, development and compensation of employees. The Company's key strength is its human capital. The Company has, during 2012-13, spent about Rs.10 crores on training of its employees. The Company conducts programs such as "Bulandi" and "Chunauti" for the workmen and technicians to enhance pride in being an employee of the Company and also to create team synergy. The Company goes further and trains its dealers' and vendors' workforce. 3200 programs have been conducted covering more than 13000 dealers' sales persons. The Company's "Maruti Centre of Excellence" (MACE) is a team dedicated to the development of vendors' employees. In programs like "Family Connect" and "Parivar Milan", family members of the employees are invited to interact with top management to get a feel of the workplace and environment The Company strengthened the concept of Stay Interviews (as opposed to exit interviews); to understand employee aspirations, delight factors and areas for improvement.
ix. Firm Infrastructure
Firm infrastructure consists of general management, planning, finance, accounting, legal, government affairs and quality management The Company has again been awarded ISO: 27001 Certification by STQC Directorate (Standardization, Testing & Quality Certificate), Ministry of Communications and Information Technology, Government of India after re-assessment. The Company is thus certified to meet international standards for maintaining information security.
Maruti Suzuki has two manufacturing facilities in India. Both manufacturing facilities have a combined production capacity of 14,50,000 vehicles annually. During a recent meeting of the Gujarat chief minister with Suzuki Motor Corp chairman & CEO Osamu Suzuki,the Chairman had said that the work on car manufacturing plant at Mandal near Ahmedabad would be started soon. Maruti Suzuki to set up second plant in Gujarat; acquires 600 acres.
Maruti Suzuki was certified with ISO: 9001:2000 in 2001 and aim to achieve the TS- 16949 certification.
E. MARUTI SUZUKI SUPPLY CHAIN MANAGEMENT
Maruti Suzuki is one of the most successful stories in supply chain management in the Indian automobile market. The company has 246 local suppliers and 20 global onesThey all function in a seamless manner
MARUTI SUZUKI SUPPLY CHAIN PROCESS
x. UPSTREAM: SUPPLY CHAIN DESCRIPITON & ROLE
xi. MIDSTREAM: Automakers/Vehicle Manufacturers/Original Equipment
Manufacturers (OEMs) Researching consumers wants and needs, automakers begin designing models. Companies have manufacturing units where engines are manufactured and parts supplied by first tier suppliers and second tier suppliers are assembled. Automakers are the key to the supply chain of the automotive industry.
xii. DOWNSTREAM: LAST PHASE OF SUPPLY CHAIN
Dealers: Vehicles after ready are shipped to the authorised dealers of the companies. The dealers then sell the vehicles to the end customers.
Parts and Accessory: These companies provide products like tires, windshields, and air bags etc. to automakers and dealers or directly to customers.
Service Providers: Services to the customers include servicing of vehicles, repairing parts, or financing of vehicles. Many dealers provide these services but, customers can also choose to go to independent service providers.
Third Tier Suppliers Companies provide basic products like rubber, glass, steel, plastic and aluminium to the second tier suppliers. Second Tier Suppliers: These companies design vehicle systems or bodies for First Tier Suppliers and OEMs. & Services which include welding, fabrication, shearing, etc. First Tier Suppliers: These companies provide major systems directly to assemblers. First tier suppliers are responsible management of second-tier suppliers MARUTI SUZUKI NEW SUPPLY CHAIN To support the growing business, Maruti needed a transparent system to interact with its partners abroad. Started using a combination of Unix Shell programming, Oracle forms, .Net, and Windows FTP technology. The project covers the entire process from when a distributor orders a vehicle to production to shipment. Provided all stakeholders complete visibility of an order's progress. Updated distributors' systems to facilitate their dispatch planning. Facilitates electronic transfer of orders and acknowledgements. Communicates the daily progress of a production plan, and dispatch status to the distributor
F. KEY FACTS OF NEW SCM
The entire process is IT driven and any exception during production, planning, and factory dispatch can be traced and corrective action made with no delay. The new supply chain has helped it achieve substantial cost reduction, from production to distribution. Prime driver with the supply chain project was to increase customer base in the current economic downturn.
3. Recommendations
Most B2B decision makers turn to social media, particularly Facebook and LinkedIn to chat with/exchange information with other individuals rather than to access links to published content, says the Buyersphere survey report 2012 by Base One, which polled 800 B2B decision makers. On the other hand, Twitter seems to be popular for both purposes.
1. Aligning itself to the Governments vision of adopting and strengthening usage of solar power, car market leader Maruti Suzuki India Limited has commissioned its 1- MW mono-crystalline photovoltaic solar power plant at its Manesar facility. Built with an investment of INR 10.3 crore, the 1-MW photovoltaic solar power plant will help the company offset CO2 emissions to the tune of over 1200 tonnes annually. a. Showcasing such an initiative on social media will help Maruti increase awareness among its stake holders that not only it is one of the huge automobile producer but also an organization which cares about the environment.
2. To develop a meaningful and commercially rewarding social media enterprise, B2B companies have to move away from the departmentalization of social media as just marketing for PR exercises, and embrace the social networks right across their businesses. Social media today needs to be part of the DNA of every B2B organization
3. No need for third party vendors: Martell Home Builders is an Atlantic Canadian custom homebuilder. In the past, Martell relied heavily on realtors to keep their business moving forward. However, once they embraced social media, they were able to create a direct-to-consumer model where they were no longer reliant on a middleman to bring them business
4. Ford communicates directly with retailers via marketing and sales, making social media an easy fit.
5. Other areas in which social media is typically used are human resources, investor relations. Maruti Suzuki can certainly take advantage of these two areas.
o I nvestor relations: The task of investor relations is essentially to provide company information to current and potential investors. Social media is quickly adapted as another way for such executives to accomplish their goals. The medium allows for succinct, real- time posts on quarterly earnings, stock prices, and strategic moves. The 140- character limit on Twitter forces experts to post concise statements about the financial state of the company, benefiting investors who want just the highlights, not pages of formal reports. The format also helps provide simpler translations for newcomers to investing.
Another asset for both investors and investor relations executives is StockTwits, which was named one of the Top 50 best websites by Time in 2010. The site aims to organize information related to stocks and markets to be used by investors, analysts, and media.
6. Avoid post or tweets which are SALES CENTRIC It is definitely frustrating to see a Maruti Suzuki constantly promoting its products or services rather than really taking efforts to engage with the fans or followers through a good story. It isnt a crime to promote your product or services but its a crime if it is right in the face of a reader. Build a nice story and then subtly promote their brand. The impact would be 2x than a normal sales post. Key point: Maruti Suzuki will be noticed more if it is promoted through a nice story. 7. Explore an Integrated Campaign Idea and not social media specific idea.
Addition:
The other challenge manufacturers face in adopting social media is the very distributed, complex nature of manufacturing itself. If a manufacturer has 500,000 parts that end up in thousands of OEM products, how does it craft global messages to encompass all of those products? To overcome this challenge, manufacturers can use social media to tell "stories" that indirectly promote their businesses, without getting into the details of individual parts or products