TERM PAPER

ON
STRATEGIC MANAGEMENT
(BCG Matrix of Maruti Suzuki)

Submitted to Lovely Professional University

In partial fulfillment of the requirements for the award of degree of
MASTER OF BUSINESS ADMINISTRATION

Submitted by: Supervisor:

VISHAL SOOD Mr. Ajay Chandel
10811577 Lect in LSB

DEPARTMENT OF MANAGEMENT
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA
(2010)
 INDEX

S NO. PARTICULARS

INTRODUCTION
1. Stretegies Of Maruti Suzuki

a. Product
b. Price
c. Place
d. Promotion

2. SWOT Anaylisis

3. BCG Matrix Of Maruti Suzuki – An Anaylisis

4. GE Matrix

5. Key strategies By Maruti

6. Business Strategies

7. Conclusion

8. Bibliography
 ACKNOWLEDGEMENT

I hereby take this opportunity to thank all those people including our friends and colleagues who have helped
me for the successful completion of this Term Paper.
I would also like to thanks Mr. AJAY CHANDEL (LECT. IN LSB) for his continuous support and guidance
he have rendered for the successful completion of this project.
I express my gratitude’s towards my parents for their encouraging support, incandescent sprit and endurance
towards the making of this project.
In the ends a special thanks to all members who are directly or indirectly associated with the project.
 INTRODUCTION

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
established with the objectives of - modernizing the Indian automobile industry, producing fuel efficient
vehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian
population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in
Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as
Japanese management 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 increased its equity to 50%
turning Maruti into a non-government 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, having produced over 5 million vehicles by May 2005. Maruti
is one of the most successful automobile joint ventures, and has made profits every year since inception till
2000-01. In 2000-01, 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 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.

COMPANIES VISSION
The leader in the India Automobile Industry, Creating Customer Delight and Shareholder’s Wealth; A pride of
India”

Mission

To provide maximum value for money to their customers through continuous improvement of products and
services.

Maruti has a network of 391 sales outlets across 230 cities all over India. The service network covers 1,113
towns and cities, bolstered by 2,142 authorized service outlets.The company's change in strategy and emphasis
on developing effective marketing communications was their highlights
MARKET SCENERIO (2008-09)

The company vouches for customer satisfaction. For its sincere efforts it has been rated (by
customers)first in customer satisfaction among all car makers in India for ten years in a row in annual survey.
Maruti Suzuki India Limited, a subsidiary of Suzuki Motor Corporation of Japan, has been the leader of the
Indian car market for over two decades.

During 2007-08, Maruti Suzuki sold 764,842 cars, of which 53,024 were exported. In all, over
six million Maruti cars are on Indian roads since the first car was rolled out on 14 December 1983.
 MARUTI UDYOG LIMITED

PRODUCT PROFILE OF MARUTI SUZUKI INDIA LIMITED LTD.

 Strategies of Maruti Suzuki

 PRODUCT STRATEGY

• Portfolio of 12 products
• Five product lines

Product Line Products

A1 800

A2 Alto, Zen ,Wagon –R, Swift, A-star

A3 Swift DZiRE, Sx4

SUV Grand Vitara, Gypsy

C - Class Omni, Versa

 PRICE STRETEGY

• The price of the Maruti car is between Rs. 210000 to Rs. 1500000. Maruti – 800 is the lowest
price car of this company. Alto, Omni, Wagon R, are also the low price car of the company, Zen &
Esteem are the mid price car of the company.
• But Vitara is the high price model of the company. The price of car is decided according to its
product variety, quality, design etc.
 Place strategy

• 600 New car sales outlets covering 393 cities.

• 265 ‘Maruti True Value’ outlets spread across 166 cities.
• 2628 Maruti Authorized Service Stations, covering 1220 cities.
• Tie up with Adani group for exporting 200,000 units through Mnudra port Gujarat

 Suggested Place strategy

• 400 new car sales outlets in next three years.

• S150 new true value shops in next three years.
• 1200 new Maruti Authorized Service Stations in next three years. Tie up with other distributors for
Exports.

 Promotion Strategy

• Advertising

¨ TV Ads

¨ Print Ads
¨ Radio Ads

“Ghar Aa Gaya Hindustan”

“India Comes Home in Maruti Suzuki.”

• Information Advertising, alternative Advertising Options

• BTL - Sponsorships
• TV shows - India’s Got talent
• Place Advertising – Bill boards
• Sales Promotions
• Product warranties
• Premiums (gifts)
 SWOT Analysis

STRENGTHS

• Bigger name in the market

• They have introduced the superio1* 4 Hypertech engines across the entire Maruti
Suzuki range. This new technology harnesses the power of a brainy 16-bit computer to a fuel-
efficient 4-valve engine to create optimum engine delivery. This means every Maruti Suzuki owner gets
the ideal combination of power and performance from his car.
• Our other innovation has been the introduction of Electronic Power Steering
(EPS) in select models. This results in better and greater maneuverability. In other words, our
cars have become even more pleasurable to drive.
• Trust of People
• Maruti Udyog Ltd. is the market leader rather than a decade.
• Has a great dealership chain in the market
• Better after sales service
• Low maintenance cost of vehicle

WEAKNESSES

• Exports are not that good.

• Lesser diesel models in the market compare to others
• Global image is not that big

OPPURTUNITIES

• Great opportunities to go global with success of Swift and SX4 allover

• Introduction of more diesel models. The diesel car segment is growing
• Opportunity to grow bigger by entering into bigger car markets
• Already a market leader so great opportunity to be the king of market in every stage of industry
THREATS

• Foreign companies entering market; so a bigger threat from MNCs.

• To the market share, as many big names are coming in the industry
• There is hardly any diesel models Rs. 1 lakh – Rs. 1.5 lakh car
 Portfolio Analysis

ANAYLISIS OF BCG MATRIX OF MARUTI SUZUKI

BEFORE ANAYLISING THE BCG MATRIX OF MARUTI SUZUKI WE SHOULD

KNOW SOME FACTS ABOUT WHAT IS BCH MATRIX ACTUALLY IS?

“The Boston Consulting Group (BCG) Matrix is a simple tool to assess a company’s position in
terms of its product range. It helps a company think about its products and services and make
decisions about which it should keep, which it should let go and which it should invest in
further.”
Question Marks

Question marks are products that grow rapidly and as a result consume large amounts of cash,
but because they have low market shares they don’t generate much cash. The result is a large net
cash consumption. A question mark has the potential to gain market share and become a star, and
eventually a cash cow when the market growth slows. If it doesn’t become a market leader it will
become a dog when market growth declines. Question marks need to be analysed carefully to
determine if they are worth the investment required to grow market share.

Dogs
Dogs have a low market share and a low growth rate and neither generate nor consume a large
amount of cash. However, dogs are cash traps because of the money tied up in a business that has
little potential. Such businesses are candidates for divestiture.

Stars

Stars generate large sums of cash because of their strong relative market share, but also consume
large amounts of cash because of their high growth rate. So the cash being spent and brought in
approximately nets out. If a star can maintain its large market share it will become a cash cow
when the market growth rate declines.

Cash Cows

As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market
growth rate – so they generate more cash than they consume. These units should be ‘milked’
extracting the profits and investing as little as possible. They provide the cash required to turn
question marks into market leaders.
 MARUTI SUZUKI’S BCG MATRIX

STAR
• The Company has long run opportunity for growth and profitability. They have high
relative market share and high growth rate.
• SWIFT, SWIFT DESIRE AND ZEN ESTILO is the fast growing and has potential
to gain substantial profit in the market.
• The upcoming models of Swift desire and Zen Estilo would have a positive impact
on the market share of the company.

QUESTION MARK
• There are also called as wild cats that are new products with potential for success but
there cash needs are high and cash generation is low.
• In auto industry of MARUTI SX4, GRAND VITARA, ASTAR there has been improve
the organization reputation
• As they want successful not only in Indian market but as well as in global market.

CASH COW
• It has high relative market share but compete in low growth rate as they generate cash
in excess of their needs.
• MARUTI 800, ALTO AND WAGNOR have fallen to ladder 3 & 4 due to
introduction of ZEN ESTILO and A STAR.
• These models have the market share because they are generally categorize in mid
segment car. Hence these models are affordable to capture the market
DOG
• The dogs have no market share and do not have potential to bring in much cash.
• BALENO, OMINI, VERSA there business have liquidated and trim down thus the
strategies adopted are that are harvest, divest and drop.

BCG matrix can serves as a simple tool for viewing a corporation’s business portfolio at a glance
and may serves as a starting point for discussing resource allocation among strategic business
units.
 MARUTI SUZUKI’S GE MATRIX

“The GE screen matrix is essentially a derivation of the Boston Consulting Group’s Boston
growth matrix. It was developed by McKinsey and Co. for General Electric as it had been
recognized that the Boston Consulting Group matrix was not flexible enough to take broader
issues into account.
The GE matrix cross-references market attractiveness and business position using three criteria
for each – high, medium and low. The market attractiveness considers variables relating to the
market itself, Including the rate of market growth, market size, potential barriers to entering the
market, the number and size of competitors, the actual profit margins currently enjoyed, and the
technological implications of involvement in the market. The business position criteria look at
the business’s strengths and weaknesses in a variety of fields. These include its position in
relation to its competitors, and the business’s ability to handle product research, development
and ultimate production.”
HIGH GROWTH

• Models like SWIFT have their high growth rate because of their pricing strategies,
power of engine and its unique features.
• The top end version is priced below that of a three-box car like the Indigo. that is
smart - if the Swift would cost more than an Indigo, that would have most looked good to the
value conscious Indian.

MEDIUM GROWTH

• Models like SWIFT DESIZE AND SX4,have their medium term growth in near
future.
• Reason being some mid segment cars with good features like TATA MANZA has
come up with too good interiors which make the sales of these Maruti cars bit slow.

LOW GROWTH

• Talking about some basic models like BALENO,VERSA AND OMNI have their low
market share.
 KEY STRATEGIC INITIATIVES BY MARUTI

A) TURNAROUND STRATEGIES MARUTI FOLLOWED

Maruti was the undisputed leader in the automobile utility-car segment sector, controlling about
84% of the market till 1998. With increasing competition from local players like Telco,
Hindustan Motors, Mahindra & Mahindra and foreign players like Daewoo, PAL, Toyota, Ford,
Mitsubishi, GM, the whole auto industry structure in India has changed in the last seven years
and resulted in the declining profits and market share for Maruti. At the same time the Indian
government permitted foreign car producers to invest in the automobile sector and hold majority
stakes.

B) CURRENT STRATEGIES FOLLOWED BY MUL

II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT REVENUE STREAMS

Maruti has successfully developed different revenue streams without making huge investments in the form of
MDS, N2N, Maruti Insurance and Maruti Finance. These help them in making the customer experience hassle
free and helps building customer satisfaction.

Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this
and has successfully created a revenue stream for Maruti. This has been found to be a major driver in converting a
Maruti car sale in certain cases. Finance is one of the major decision drivers in car purchase. Maruti has tied up
with 8 finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide,
ICICI Bank, HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.
( erstwhile-Ashok Leyland Finance).
III. REPOSITIONING OF MARUTI PRODUCTS

Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in the models. Other
changes have been made from time to time based on market responses or consumer feedbacks or the competitor
moves. Here are the certain changes observed in different models of Maruti.
Omni has been given a major facelift in terms of interiors and exteriors two months back. A new variant called
Omni Cargo, which has been positioned as a vehicle for transporting cargo and meant for small traders. It has
received a very good response from market. A variant with LPG is receiving a very good response from
customers who look for low cost of running.

Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs. They decreased the engine
power from 1600cc to 1300cc and modified it again considering consumers perception. This was a result of
intensive survey done all across the nation regarding the consumer perception of Versa.

Esteem has gone through three facelifts. A new look last year has helped boost up the waning sales of Esteem.

IV. CUSTOMER CENTRIC APPROACH

Maruti’s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI
Awards. Focus on customer satisfaction is what Maruti lives
with. Maruti has successfully shed off the public- sector laid back attitude image and has inculcated the customer-
friendly approach in its organization culture. The customer centric attitude is imbibed in its employees. Maruti
dealers and employees are answerable to even a single customer complain. There are instances of cancellation of
dealerships based on customer feedback.

Maruti has taken a number of initiatives to serve customer well. They have even changed their showroom layout
so that customer has to walk minimum in the showroom and there are norms for service times and delivery of
vehicles. The Dealer Sales Executive, who is the first interaction medium with the Maruti customer when the
customer walks in Maruti showroom, is trained on greeting etiquettes. Maruti has proper customer complain
handling cell under the CRM department. The Maruti call center is another effort which brings Maruti closer to its
customer. Their Market Research department remains on its toes to study the changing consumer behaviour and
market needs.Maruti enjoys seventy percent repeat buyers which further bolsters their claim of being customer
friendly. Maruti is investing a lot of money and effort in building customer loyalty programmes.
C) MAJOR FUTURE STRATEGIES

I. PHASING OUT ZEN IN 2007

The launch of Swift and phasing out Zen is a strategic move. Alto was launched keeping in mind that it will take
over Maruti 800 market in future. Perhaps being the flagship product phasing out of Maruti 800 faced lots of
resistance from dealers all over. Another reason behind not phasing out Maruti 800 was the fear of brand shift of
customers to other competitor’s product. Swift was launched in May, 2005 in the price band starting from 4 lacs.
Before launch of Swift Maruti management had decided that they will phase out Zen since it had already came up
with two modifications. The major reason behind this decision was cannibalization of Wagon R and Swift due to
overlapping of price band. It is a rational decision to kill a product before it starts facing the decline stage in
product cycle. Maruti is offering Rs. 3000.00 more margins to dealer on the sale of Wagon-R as compared to Zen.
This is to let dealer push Wagon R instead of Zen.

II. MARUTI PLANS FOR A BIG DIESEL FORAY

The new car manufacturing company, called Maruti Suzuki Automobiles India Limited, will be a joint venture
between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30 per cent stake respectively.
The Rs1,524.2 crore plant will have a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5
lakh units per annum. The new car manufacturing plant will begin commercial production by the end of 2006.

Maruti would set up a diesel engine plant at Gurgaon in line with its plan to become a major player in diesel
vehicles in a couple of years. This has been done in the wake of major competition from Tata Indica and meets
the growing demand of diesel cars in India. While the annual growth in the diesel segment was 13 per cent in the
last three years, it was 19-20 per cent in the first quarter (April-June) of the current fiscal. Maruti has currently an
insignificant presence in diesel vehicle. It will manufacture new generation CRDI (common rail direct injection)
engines in collaboration with Fiat-GM Opel and engines will be of 1200 cc. The plant with a capacity to produce
one lakh diesel engines would be operational in 2006. At present, Peugeot of France, supplies diesel engines for
Maruti's Zen and mid-sized Esteem models.
 BUSINESS STRATEGY

They intend to continue to focus on the small car segment, while offering products in most segments of the Indian
passenger car market. They aim to achieve their principal objectives by pursuing the following business
strategies:

• Maintain and enhance their product range: They intend to utilize Suzuki’s expertise in small car
technology to produce new variants of their existing models and to upgrade their products with
contemporary technology and features.
• Increase reach and penetration: They plan to continue to utilize their extensive sales and service network
to increase the reach, in terms of geographical spread, and penetration, in terms of sales volumes, of their
products across India.
• Increased availability of automobile finance: They continue to seek opportunities to expand the size of the
Indian passenger car market, especially in the small car segment, through facilitating easy availability of
automobile finance. To that end, they have recently entered into an agreement with the State Bank of
India.
• Secure repeat purchases by offering a “360 degree customer experience”: On the basis of their belief that
securing repeat purchases from an existing customer requires less expenditure than acquiring a new
customer, they aim to provide customers with a “one-stop shop” for automobiles and automobile-related
products and services.
• Continue to benchmark their manufacturing capabilities: They plan to continue to benchmark our
manufacturing capabilities with the most efficient car manufacturing facilities of Suzuki and its
subsidiaries.
• Continue to reduce costs to offer more competitive products:
• Cost competitiveness has been, and continues to be, central to their strategy as the leading manufacturer in
the small car segment to expand the size of the market by offering competitively priced, high quality
products.
 CONCLUSION

The price of a car is just one-third of what it cost you over its lifetime. Running and maintaining it make up the
other two-thirds. Take into account resale value and its real cost becomes clear. Maruti Suzuki stands for value as
much as it stands for performance. In spite of rising input costs, we try our best to keep prices down. Their
running costs and resale values are unbeatable too. Nothing matches the delight their cars deliver. In the JD
Power CSI study 2005, 85% of Maruti Suzuki owners stated that they would definitely recommend the car they
drive to someone else. Infect, you don’t buy a Maruti Suzuki. You invest in it.

By analyzing the current market scenario the upcoming models of maruti Suzuki are well being established in
Indian as well as in global market too. By Analyzing the BCG Matrix of the company it was cleared that the
company is following there strategies to meet the customer need and hence it is being cleared that which model
are going in STARS, which turns into DOGS etc.
 BIBLIOGRAPHY

BOOKS

Strategic Management and Business Policy by

· Thomas L. Wheelen

· J. David Hunger

· Krish Rangarajan

NEWS PAPERS

THE ECONOMIC TIMES THE TIMES OF INDIA

MAGAZINES

BUSINESS INDIA INDIA TODAY

INTERNET WEBSITE

• www . marutisuzuki . com

• http://www.gaadi.com/cars/bcg-matrix-of-maruti-suzukiGurgaon.nic.in/maruti.htm
• blogs.siliconindia.com/.../BCG_matrix-bid-T4U0Soiz50298632.html
• www.carazoo.com/newcars/make/Maruti_Suzuki
• Auto.indiamart.com\
• Economictimes.indiatimes.com