Case Study Description of Maruti Suzuki India Limited: Sustaining Profitability
The passenger car industry in India has witnessed intense competition since the Indian economy's liberalization in the early 1990s. Although Maruti Suzuki India Limited has been the most dominant player for the last three decades - with many Indians using "Maruti" as a synonym for "car" - it has been unable to raise the prices of its cars over the last ten years due to a price war among rivals. Though Maruti has been a profitable company, rising input costs and poor price maneuverability are making it very challenging for the firm to remain profitable in the future. In 2014, Maruti is contemplating a major investment in a new plant. The chairman of Maruti must determine whether investing in the new plant would reduce costs significantly and help the company remain profitable. Ramakrushna Panigrahi is affiliated with International Management Institute.
Swot Analysis of "Maruti Suzuki India Limited: Sustaining Profitability" written by Ramakrushna Panigrahi includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Maruti Suzuki facing as an external strategic factors. Some of the topics covered in Maruti Suzuki India Limited: Sustaining Profitability case study are - Strategic Management Strategies, and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Maruti Suzuki India Limited: Sustaining Profitability casestudy better are - – increasing household debt because of falling income levels, technology disruption, supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, increasing commodity prices,
wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Maruti Suzuki India Limited: Sustaining Profitability
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Maruti Suzuki India Limited: Sustaining Profitability case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Maruti Suzuki, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Maruti Suzuki 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 Maruti Suzuki India Limited: Sustaining Profitability can be done for the following purposes –
1. Strategic planning using facts provided in Maruti Suzuki India Limited: Sustaining Profitability case study
2. Improving business portfolio management of Maruti Suzuki
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Maruti Suzuki
Strengths Maruti Suzuki India Limited: Sustaining Profitability | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Maruti Suzuki in Maruti Suzuki India Limited: Sustaining Profitability Harvard Business Review case study are -
Ability to recruit top talent
– Maruti Suzuki is one of the leading recruiters in the industry. Managers in the Maruti Suzuki India Limited: Sustaining Profitability are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Maruti Suzuki digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Maruti Suzuki 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.
Sustainable margins compare to other players in Strategy & Execution industry
– Maruti Suzuki India Limited: Sustaining Profitability firm has clearly differentiated products in the market place. This has enabled Maruti Suzuki to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Maruti Suzuki to invest into research and development (R&D) and innovation.
Organizational Resilience of Maruti Suzuki
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Maruti Suzuki does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Maruti Suzuki in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Maruti Suzuki 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 Ramakrushna Panigrahi 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.
Low bargaining power of suppliers
– Suppliers of Maruti Suzuki in the sector have low bargaining power. Maruti Suzuki India Limited: Sustaining Profitability has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Maruti Suzuki to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Maruti Suzuki is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Maruti Suzuki India Limited: Sustaining Profitability 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.
Innovation driven organization
– Maruti Suzuki is one of the most innovative firm in sector. Manager in Maruti Suzuki India Limited: Sustaining Profitability Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Highly skilled collaborators
– Maruti Suzuki has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Maruti Suzuki India Limited: Sustaining Profitability HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Maruti Suzuki 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.
Weaknesses Maruti Suzuki India Limited: Sustaining Profitability | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Maruti Suzuki India Limited: Sustaining Profitability are -
Capital Spending Reduction
– Even during the low interest decade, Maruti Suzuki has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Low market penetration in new markets
– Outside its home market of Maruti Suzuki, firm in the HBR case study Maruti Suzuki India Limited: Sustaining Profitability needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki has relatively successful track record of launching new products.
Lack of clear differentiation of Maruti Suzuki products
– To increase the profitability and margins on the products, Maruti Suzuki needs to provide more differentiated products than what it is currently offering in the marketplace.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Maruti Suzuki India Limited: Sustaining Profitability, in the dynamic environment Maruti Suzuki has struggled to respond to the nimble upstart competition. Maruti Suzuki has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Maruti Suzuki is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Maruti Suzuki India Limited: Sustaining Profitability can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
No frontier risks strategy
– After analyzing the HBR case study Maruti Suzuki India Limited: Sustaining Profitability, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Products dominated business model
– Even though Maruti Suzuki 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 - Maruti Suzuki India Limited: Sustaining Profitability should strive to include more intangible value offerings along with its core products and services.
High operating costs
– Compare to the competitors, firm in the HBR case study Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki 's lucrative customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Maruti Suzuki needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Maruti Suzuki India Limited: Sustaining Profitability HBR case study mentions - Maruti Suzuki 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.
Opportunities Maruti Suzuki India Limited: Sustaining Profitability | 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 Maruti Suzuki India Limited: Sustaining Profitability are -
Loyalty marketing
– Maruti Suzuki 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Maruti Suzuki can use these opportunities to build new business models that can help the communities that Maruti Suzuki operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Maruti Suzuki to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Maruti Suzuki 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.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Maruti Suzuki to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Building a culture of innovation
– managers at Maruti Suzuki 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 Strategy & Execution segment.
Using analytics as competitive advantage
– Maruti Suzuki 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 Maruti Suzuki India Limited: Sustaining Profitability - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Maruti Suzuki to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Maruti Suzuki to increase its market reach. Maruti Suzuki 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Maruti Suzuki can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Maruti Suzuki India Limited: Sustaining Profitability, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Maruti Suzuki in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Buying journey improvements
– Maruti Suzuki can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Maruti Suzuki India Limited: Sustaining Profitability 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Maruti Suzuki in the consumer business. Now Maruti Suzuki can target international markets with far fewer capital restrictions requirements than the existing system.
Manufacturing automation
– Maruti Suzuki can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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 Maruti Suzuki India Limited: Sustaining Profitability External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Maruti Suzuki India Limited: Sustaining Profitability are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Maruti Suzuki can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Maruti Suzuki in the Strategy & Execution industry. The Strategy & Execution 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 Maruti Suzuki 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Maruti Suzuki with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Maruti Suzuki 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. Maruti Suzuki can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Maruti Suzuki is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High dependence on third party suppliers
– Maruti Suzuki high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
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.
Regulatory challenges
– Maruti Suzuki needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
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 Maruti Suzuki business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Maruti Suzuki will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Maruti Suzuki
– 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 Maruti Suzuki.
Stagnating economy with rate increase
– Maruti Suzuki can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Weighted SWOT Analysis of Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki India Limited: Sustaining Profitability 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 Maruti Suzuki needs to make to build a sustainable competitive advantage.
