Maruti Suzuki: Good Company or Good Stock Dilemma (A) SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Finance & Accounting
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Maruti Suzuki: Good Company or Good Stock Dilemma (A)
On January 28, 2014, the management of Maruti Suzuki India Limited (MSIL) surprised the market by announcing that its plant in Gujarat would be operated as a subsidiary of Suzuki Motor Company of Japan, MSIL's parent company, rather than by MSIL. The stock price fell by 8 per cent that day. The days following this announcement were marked by justifications by MSIL management about the benefits of the new structure and allegations by some analysts and fund managers that it was against the interests of minority shareholders. MSIL management took more than 20 months to send a letter to shareholders asking for their approval of the decision taken by the board. At that point, the shareholders needed to decide whether to support or oppose the decision. Pitabas Mohanty is affiliated with XLRI-Xavier School of Management. Supriti Mishra is affiliated with International Management Institute-Bhubaneswar.
Swot Analysis of "Maruti Suzuki: Good Company or Good Stock Dilemma (A)" written by Pitabas Mohanty, Supriti Mishra includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Msil Suzuki facing as an external strategic factors. Some of the topics covered in Maruti Suzuki: Good Company or Good Stock Dilemma (A) case study are - Strategic Management Strategies, Manufacturing and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Maruti Suzuki: Good Company or Good Stock Dilemma (A) casestudy better are - – increasing government debt because of Covid-19 spendings, banking and financial system is disrupted by Bitcoin and other crypto currencies, geopolitical disruptions, talent flight as more people leaving formal jobs, there is backlash against globalization, supply chains are disrupted by pandemic , increasing household debt because of falling income levels,
increasing inequality as vast percentage of new income is going to the top 1%, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Maruti Suzuki: Good Company or Good Stock Dilemma (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Maruti Suzuki: Good Company or Good Stock Dilemma (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Msil Suzuki, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Msil 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: Good Company or Good Stock Dilemma (A) can be done for the following purposes –
1. Strategic planning using facts provided in Maruti Suzuki: Good Company or Good Stock Dilemma (A) case study
2. Improving business portfolio management of Msil Suzuki
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Msil Suzuki
Strengths Maruti Suzuki: Good Company or Good Stock Dilemma (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Msil Suzuki in Maruti Suzuki: Good Company or Good Stock Dilemma (A) Harvard Business Review case study are -
Learning organization
- Msil Suzuki 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 Suzuki is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Maruti Suzuki: Good Company or Good Stock Dilemma (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Organizational Resilience of Msil Suzuki
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Msil Suzuki does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Msil 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: Good Company or Good Stock Dilemma (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Msil Suzuki 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 Maruti Suzuki: Good Company or Good Stock Dilemma (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Msil Suzuki in the sector have low bargaining power. Maruti Suzuki: Good Company or Good Stock Dilemma (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Msil Suzuki to manage not only supply disruptions but also source products at highly competitive prices.
Innovation driven organization
– Msil Suzuki is one of the most innovative firm in sector. Manager in Maruti Suzuki: Good Company or Good Stock Dilemma (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Strong track record of project management
– Msil 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.
Ability to lead change in Finance & Accounting field
– Msil Suzuki 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 Suzuki in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Finance & Accounting industry
– Maruti Suzuki: Good Company or Good Stock Dilemma (A) firm has clearly differentiated products in the market place. This has enabled Msil Suzuki to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Msil Suzuki to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Msil Suzuki in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Msil Suzuki is one of the leading recruiters in the industry. Managers in the Maruti Suzuki: Good Company or Good Stock Dilemma (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Msil Suzuki has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Msil Suzuki to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses Maruti Suzuki: Good Company or Good Stock Dilemma (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Maruti Suzuki: Good Company or Good Stock Dilemma (A) are -
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Maruti Suzuki: Good Company or Good Stock Dilemma (A), is just above the industry average. Msil Suzuki 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.
Increasing silos among functional specialists
– The organizational structure of Msil Suzuki is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Msil Suzuki needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Msil Suzuki to focus more on services rather than just following the product oriented approach.
High bargaining power of channel partners
– Because of the regulatory requirements, Pitabas Mohanty, Supriti Mishra suggests that, Msil Suzuki 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.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Msil Suzuki is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Maruti Suzuki: Good Company or Good Stock Dilemma (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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 Maruti Suzuki: Good Company or Good Stock Dilemma (A) can leverage the sales team experience to cultivate customer relationships as Msil Suzuki is planning to shift buying processes online.
Capital Spending Reduction
– Even during the low interest decade, Msil 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.
Skills based hiring
– The stress on hiring functional specialists at Msil Suzuki has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Msil Suzuki products
– To increase the profitability and margins on the products, Msil Suzuki needs to provide more differentiated products than what it is currently offering in the marketplace.
High operating costs
– Compare to the competitors, firm in the HBR case study Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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 Suzuki 's lucrative customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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 Suzuki has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Msil Suzuki has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Msil Suzuki even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Opportunities Maruti Suzuki: Good Company or Good Stock Dilemma (A) | 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: Good Company or Good Stock Dilemma (A) are -
Leveraging digital technologies
– Msil 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Msil Suzuki can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Msil Suzuki can use these opportunities to build new business models that can help the communities that Msil Suzuki operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Msil Suzuki 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.
Learning at scale
– Online learning technologies has now opened space for Msil 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Msil 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 Finance & Accounting segment, and it will provide faster access to the consumers.
Buying journey improvements
– Msil Suzuki can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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 Msil Suzuki in the consumer business. Now Msil Suzuki can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Msil Suzuki 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 Suzuki 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Msil Suzuki can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Msil Suzuki 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 Suzuki to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Msil 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.
Developing new processes and practices
– Msil Suzuki can develop new processes and procedures in Finance & Accounting industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Threats Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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: Good Company or Good Stock Dilemma (A) are -
Stagnating economy with rate increase
– Msil 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.
Environmental challenges
– Msil 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. Msil Suzuki can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Consumer confidence and its impact on Msil 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.
Regulatory challenges
– Msil 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 Finance & Accounting industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Maruti Suzuki: Good Company or Good Stock Dilemma (A), Msil Suzuki may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Increasing wage structure of Msil 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 Msil Suzuki.
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. Msil 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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Msil Suzuki 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 Maruti Suzuki: Good Company or Good Stock Dilemma (A) .
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Msil Suzuki can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Msil Suzuki is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Msil Suzuki has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Msil Suzuki needs to keep up with the evolution of technology in the Finance & Accounting sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Msil Suzuki in the Finance & Accounting industry. The Finance & Accounting 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.
Weighted SWOT Analysis of Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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: Good Company or Good Stock Dilemma (A) 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: Good Company or Good Stock Dilemma (A) 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: Good Company or Good Stock Dilemma (A) 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: Good Company or Good Stock Dilemma (A) 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 Suzuki needs to make to build a sustainable competitive advantage.