Questions:1 From the 'five most frequently used and dependable

strategic approaches' [See Ch 1], which of these has the company

[MARUTI] been using? Why?
ANS:
Liberalization of Indian market brought many changes in automobile
industry of India. Competition increased and customers behavior also
changed a lot. This whole scenario was an alarming situation for a
conventional automobile maker like Maruti. They have to change their
strategies and practices to stay relevant in rapidly changing Indian Market of
liberalization era. To meet the challenges of new era, Maruti radically
changed their strategy.
The adopted The Best Cost-Provider Strategy for rapidly changing
Indian Market. Indian market has always been price sensitive but the
increasing awareness of consumers and induction of new competitors
increased the quality and versatility standards for consumers. Now
customers demand best value for their money. So the Maruti introduced this
hybrid strategy to offer maximum value of money to their customers while
keeping themselves profitable. They made a strategy to improve their quality
of vehicles with innovative techniques, providing new ways of customer care
and keep their cars affordable by decreasing costs in their production line
and improving vendors system.
Adaptation of their strategy is evident from their mission statement.
Before liberalization when there was very little competition and Maruti was
enjoying the mighty automobile company of India, its main focus was upon
more and more production but now it is shifted to market and customer
focused. There new mission statement Creating Customer Delight and
shareholders wealth clearly indicates their customer focused strategy. As
customer wants best value for their money, so Maruti also shifted their
strategy to provide their customer what they want. They have started
financing, insurance and enhanced their customer care systems. Also
keeping in view the cost of running and maintain a car for average Indian
consumer, they introduced new ideas like adding a small amount in monthly
installment as maintenance fee thus providing customer peace of mind and
savings. They introduced vehicles for every price range from lowest with
most basic specifications to the highest with most luxurious specifications in
the best value price to gain attention of all types of customers belong to any
age or socio-economic group of people.

Question No 2. How successful has their strategy been [ie the one
you identified in your answer to Question 1] ?

ANS:
New hybrid strategy of Maruti proved very successful in competitive
new liberalized market era. Before adopting new strategy, Maruti was in
dilemma of changing market dynamics, interference of government forced
them to work in a conventional style. They lose their market share in early
years of liberalization. But Maruti learned very quickly. By incorporating new
strategies, the stopped their sloppy decline and even increased their
production numbers and regained bit of their market share back.
In 1992 Maruti was a big giant of automobile industry with 80% share
but new market situation abruptly brought decrease in market share of
Maruti. Implementing new strategies and redesigning the processes help
Maruti to gain back their market share with 50.8% share and 40% rise in
profits in 2003. They increased their production numbers, introduction of new
models like Swift and Baleno added versatility in their product range. Their
customer care service and after sale support raised the bar for competition.
All these factors made Maruti once again darling of Indian automobile
industry.

Question No 3.In relation to 'The three tests of a winning strategy'

[Ch 1/Pg 9], if you apply the three tests to Maruti , [or ask the three
questions to Maruti, which are in fact the three tests ], what are the
replies according to you,to these questions, based on the evidence /
data from the case?
To simplify this question,if you are the CEO of Maruti and someone
asks you the 'three tests' questions, what would be your replies to
these questions? Please provide a separate answer to each
question.
ANS
There are three tests of judging either a strategy is producing success
or not. Let us evaluate Marutis strategy against the tests.
1. How the strategy does fits in the companys situation?
New hybrid strategy perfectly fits with the company situation.
New strategy of Maruti includes many challenges including
technological, financial, staff and dealership network challenges.
Maruti is backed by the one of worlds largest automobile
manufacturer Suzuki of Japan and they have vast experience of
automobile manufacturing, research and development.
Technically Maruti was ready to meet any technological
challenge, ranging from new models to automated and
innovative production techniques. So they faced now issue in
adopting new strategies. Financially, after becoming an IPO,
Maruti had enough fund needed for their redesigning systems
and techniques. Being a market leader they already have enough
skilled employees to take over new challenges. They have vast
network of dealers already so they dont find much difficulty in
opening further customer care centers.
2. Is the strategy helping the company in achieving sustainable strategic
advantage?
New strategy indeed helping company in achieving sustainable
advantage. Their diversity of models and inclusion of new technology with
great pricing and dependable customer service, they are hard to beat for

their competitors. Their experience of Indian automobile market also added

strategic advantage to them over others. Their price mechanism and value
for money attracted new customers and loyal customers remained loyal with
companys subsidy to loyal customers.
3. Is strategy producing good company performance?
It is evident from their growing market share and increasing production
numbers that new strategy is producing great results for the company. In
small and midsized cars company successfully gained the market share but
only problem was there with Baleno, their high end offering. Maruti has been
perceived as a low and budget rigid car manufacturer but Baleno was a
sophisticated model which fails to get attraction due to companys
perception. Otherwise strategy went very well.

Question No 3: [Answers from Ch 2] are you able to identify the 'Vision,

Mission, Values, Objectives and the strategy itself, of Maruti?
Vision:
Although vision statement of Maruti is not given in case
study, from the thorough reading, I concluded that vision of MHL is to
lead the automobile industry of the region with innovative products at
competitive price.
Mission Statement:
Mission Statement of Maruti is: "Creating customer delight
and shareholders wealth". This mission statement clearly shows the
direction of a company as a customer caring company which can
provide enough profits to its share holders.
Values:
The required information to answer this question is
unavailable from within the case material.
Objectives:
Objectives of Maruti may differ from time to time but from
this case study it is revealed that objective of Maruti in new era of
market liberalization is to sustain their market leadership with new
product range, innovation and dynamic organizational and marketing
strategy.
Strategy:
Maruti adopted a hybrid strategy that cover all of its
departments to work for successfully transforming from an old school
company to new, innovative and customer focused company. Their
strategy was to implement new design and models, improvement of

their customer care, improvement and modernization of their

manufacturing capabilities, cutting costs via new process and vendors
cannibalization and finally by developing a perception in customers
mind about Marutis excellence in changing competitive era through
aggressive marketing and affordable pricing.