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Submitted by: Aman Sethi (0611217) Karishma Athavia (0611234) Pradeep Shekhawat (0611241) Prasun Basu (0611244)
Introduction Maruti - Strategic Challenge Industry Analysis - 2001 Maruti - Resource View Sustainable Competitive Advantage Mapping Needs and Capabilities Maruti True Value Maruti Insurance Maruti Warranty & Financing Maruti Game plan Industry Analysis 2006 Conclusion
Company Snapshot Historical Perspective
Incorporated in May 1996, the groundbreaking ceremony for the Chennai plant was held in December in the same year, and the first pilot Santro was ready in a record 17 months. The Santro (which is available in three variants - the L2, GLS1 and GLS2) was launched in September 1998, and the company has targeted a production of 60,000 Santros per year. With sales of 30,000 vehicles in the last eight months HMIL seems to be fairly on target.
Liberalization (1992-93) Entry easier for new players in the passenger cars segment Change in government policy
Competition (1997-98) Introduction of new and better technologies in passenger cars More variety available to customers
2002 40%
Aim: Analyze Marutis strategy to regain market share in Segment A Focus: Segment A of passenger-car segment Limitation: New product development and other segments have been ignored for the purpose of this study
High capital costs High cost of setting-up distribution Low government protection New entrants can bring learning from other markets
Suppliers : Low
Extremely fragmented with over 500 players Credible threat of backward integration Supplier has high switching cost High fixed costs Capacity added in large increments High exit barriers Low switching costs
Buyers : Low
Products are differentiated Buyers are fragmented Each individual s sale forms a small component of overall sales
Substitutes : High
Low switching cost Close substitutes available
Cheap labor
Resource Customer Base Brand Equity Distribution Network Technology Supply Chain Location The
Valuable
Imitable
Substitutable
Returns
primeobjective of the company isto retain its customers and to bring in more customers into its fold
Needs
Capabilities
Outcome
Brand equity Excess capacity with dealers Customer base Brand equity Distributi on network
True Value
Customer can sell the car in just one day through a transparent process which entails
Customer is given Rs 10000 discount on buying new car, if they have turned in an old car Customer can buy a used car with 1 year warranty Stakeholders Maruti
Customers
Get guaranteed second hand products Easy mechanism to dispose off old vehicles
Helps Maruti retain its old customers Adds a new breed of customers who are just entering the market Increases the perceived value of Maruti cars
Customer interacts only with dealership for buying insurance and servicing claims
Maruti interacts with the insurance company for estimation and settlement of claims
Customer only has to pay the deductible and depreciation amounts Stakeholders Maruti
with the outside repair shops Dont have to put-in money initially for
Customers
To avail the warranty the customer has to get the car serviced at the Maruti service centers Customer also given financing options at the dealership where they can compare different options Stakeholders Maruti
Dealers get guaranteed business for repairs
Dont have to compete
Enhances customer
Increase Added value in the game Its the only player that has
the extensive service network to make these additional services really valuable
High capital costs High cost of setting-up distribution Low government protection New entrants can bring learning from other markets
Suppliers : Low
Extremely fragmented with over 500 players Credible threat of backward integration Supplier has high switching cost High fixed costs High strategic stakes High exit barriers Relatively high switching costs
Buyers : Low
Products are differentiated Buyers are fragmented Each individual sale forms small component of overall sales
Substitutes : Med
Relatively higher switching cost Close substitutes available in car functionality, but not in other services
Maruti
effectively managed to increase its market share from 40% in 2002 to 59% in 2006 by:
Leveraging its existing competencies Differentiating itself from the competitors Increasing the switching costs
Maruti
used the new business lines to change the scope of the game
Threat does not seem to be credible because: Might not compete in the same segment as Maruti 800
Expected to be a two-seater Even if its a four-seater, the engine capacity is
Maruti
might be better off in waiting and allowing Tata to explore the new market before exploring opportunities for itself