Case Study Description of Nexa: Maruti Suzuki's Premium Dealership Network
In July 2015, the largest automobile company in India, Maruti Suzuki India Limited (MSIL), took the initiative to improve its market penetration in a particular category of the passenger car market-the premium segment. Although MSIL was the current market leader in India's entry-level car segment, the company had not been successful in establishing itself as a dominant player in the premium segment-a segment that had seen intense competition since 2008. By launching Nexa, a new nationwide premium dealership, through its existing dealer network, MSIL was attempting to create a differentiated car buying experience. MSIL planned for all-new premium models to be launched exclusively from Nexa outlets. Would the launch of Nexa help MSIL attain its desired objective of becoming a major player in India's premium car market? Boishampayan Chatterjee is affiliated with Institute of Management Technology, Ghaziabad. Manas Paul is affiliated with Institute of Management Technology, Ghaziabad. Parijat Upadhayay is affiliated with Institute of Management Technology, Ghaziabad. Neel Das is affiliated with Appalachian State University.
Authors :: Boishampayan Chatterjee, Manas Paul, Parijat Upadhyay, Neel Das
Swot Analysis of "Nexa: Maruti Suzuki's Premium Dealership Network" written by Boishampayan Chatterjee, Manas Paul, Parijat Upadhyay, Neel Das includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Msil Nexa facing as an external strategic factors. Some of the topics covered in Nexa: Maruti Suzuki's Premium Dealership Network case study are - Strategic Management Strategies, Customer service, Manufacturing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Nexa: Maruti Suzuki's Premium Dealership Network casestudy better are - – central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, wage bills are increasing, increasing government debt because of Covid-19 spendings, there is increasing trade war between United States & China,
talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Nexa: Maruti Suzuki's Premium Dealership Network
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Nexa: Maruti Suzuki's Premium Dealership Network case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Msil Nexa, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Msil Nexa operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Nexa: Maruti Suzuki's Premium Dealership Network can be done for the following purposes –
1. Strategic planning using facts provided in Nexa: Maruti Suzuki's Premium Dealership Network case study
2. Improving business portfolio management of Msil Nexa
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Msil Nexa
Strengths Nexa: Maruti Suzuki's Premium Dealership Network | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Msil Nexa in Nexa: Maruti Suzuki's Premium Dealership Network Harvard Business Review case study are -
Organizational Resilience of Msil Nexa
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Msil Nexa does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Learning organization
- Msil Nexa is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Msil Nexa is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Nexa: Maruti Suzuki's Premium Dealership Network Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Sales & Marketing industry
– Nexa: Maruti Suzuki's Premium Dealership Network firm has clearly differentiated products in the market place. This has enabled Msil Nexa to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Msil Nexa to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Msil Nexa has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Msil Nexa digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Msil Nexa has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Sales & Marketing field
– Msil Nexa is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Msil Nexa in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Strong track record of project management
– Msil Nexa is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Msil Nexa is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Boishampayan Chatterjee, Manas Paul, Parijat Upadhyay, Neel Das can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Cross disciplinary teams
– Horizontal connected teams at the Msil Nexa are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Nexa: Maruti Suzuki's Premium Dealership Network Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Msil Nexa has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Nexa: Maruti Suzuki's Premium Dealership Network - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Msil Nexa is present in almost all the verticals within the industry. This has provided firm in Nexa: Maruti Suzuki's Premium Dealership Network case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Nexa: Maruti Suzuki's Premium Dealership Network | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Nexa: Maruti Suzuki's Premium Dealership Network are -
Low market penetration in new markets
– Outside its home market of Msil Nexa, firm in the HBR case study Nexa: Maruti Suzuki's Premium Dealership Network needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Nexa: Maruti Suzuki's Premium Dealership Network, is just above the industry average. Msil Nexa needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Msil Nexa supply chain. Even after few cautionary changes mentioned in the HBR case study - Nexa: Maruti Suzuki's Premium Dealership Network, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Msil Nexa vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Msil Nexa is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Msil Nexa needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Msil Nexa to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Boishampayan Chatterjee, Manas Paul, Parijat Upadhyay, Neel Das suggests that, Msil Nexa is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Nexa: Maruti Suzuki's Premium Dealership Network, in the dynamic environment Msil Nexa has struggled to respond to the nimble upstart competition. Msil Nexa has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Nexa: Maruti Suzuki's Premium Dealership Network HBR case study mentions - Msil Nexa takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Nexa: Maruti Suzuki's Premium Dealership Network HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Msil Nexa has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Nexa: Maruti Suzuki's Premium Dealership Network has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Msil Nexa 's lucrative customers.
Products dominated business model
– Even though Msil Nexa has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Nexa: Maruti Suzuki's Premium Dealership Network should strive to include more intangible value offerings along with its core products and services.
Aligning sales with marketing
– It come across in the case study Nexa: Maruti Suzuki's Premium Dealership Network that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Nexa: Maruti Suzuki's Premium Dealership Network can leverage the sales team experience to cultivate customer relationships as Msil Nexa is planning to shift buying processes online.
Opportunities Nexa: Maruti Suzuki's Premium Dealership Network | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Nexa: Maruti Suzuki's Premium Dealership Network are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Msil Nexa is facing challenges because of the dominance of functional experts in the organization. Nexa: Maruti Suzuki's Premium Dealership Network case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Msil Nexa has opened avenues for new revenue streams for the organization in the industry. This can help Msil Nexa to build a more holistic ecosystem as suggested in the Nexa: Maruti Suzuki's Premium Dealership Network case study. Msil Nexa can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Msil Nexa can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Buying journey improvements
– Msil Nexa can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Nexa: Maruti Suzuki's Premium Dealership Network suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Building a culture of innovation
– managers at Msil Nexa can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Msil Nexa can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Msil Nexa has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Nexa: Maruti Suzuki's Premium Dealership Network - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Msil Nexa to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Msil Nexa to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Msil Nexa to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Msil Nexa has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Msil Nexa can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Msil Nexa can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Msil Nexa can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Better consumer reach
– The expansion of the 5G network will help Msil Nexa to increase its market reach. Msil Nexa will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Manufacturing automation
– Msil Nexa can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Nexa: Maruti Suzuki's Premium Dealership Network External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Nexa: Maruti Suzuki's Premium Dealership Network are -
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Msil Nexa.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Msil Nexa in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Msil Nexa demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Msil Nexa business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Msil Nexa in the Sales & Marketing sector and impact the bottomline of the organization.
Increasing wage structure of Msil Nexa
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Msil Nexa.
Environmental challenges
– Msil Nexa needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Msil Nexa can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Msil Nexa needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Msil Nexa is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Msil Nexa with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Msil Nexa can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Nexa: Maruti Suzuki's Premium Dealership Network .
Weighted SWOT Analysis of Nexa: Maruti Suzuki's Premium Dealership Network Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Nexa: Maruti Suzuki's Premium Dealership Network needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Nexa: Maruti Suzuki's Premium Dealership Network is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Nexa: Maruti Suzuki's Premium Dealership Network is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Nexa: Maruti Suzuki's Premium Dealership Network is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Msil Nexa needs to make to build a sustainable competitive advantage.