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 - – talent flight as more people leaving formal jobs, increasing government debt because of Covid-19 spendings, increasing energy prices, wage bills are increasing, supply chains are disrupted by pandemic , increasing transportation and logistics costs, increasing inequality as vast percentage of new income is going to the top 1%,
there is backlash against globalization, there is increasing trade war between United States & China, 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 -
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.
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.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Msil 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.
Training and development
– Msil Suzuki has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Maruti Suzuki: Good Company or Good Stock Dilemma (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
Diverse revenue streams
– Msil Suzuki is present in almost all the verticals within the industry. This has provided firm in Maruti Suzuki: Good Company or Good Stock Dilemma (A) 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.
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.
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.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Msil Suzuki digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Msil 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.
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 -
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 Suzuki supply chain. Even after few cautionary changes mentioned in the HBR case study - Maruti Suzuki: Good Company or Good Stock Dilemma (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Msil Suzuki vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Msil Suzuki has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
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.
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.
Interest costs
– Compare to the competition, Msil Suzuki has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Maruti Suzuki: Good Company or Good Stock Dilemma (A), in the dynamic environment Msil Suzuki has struggled to respond to the nimble upstart competition. Msil Suzuki has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Products dominated business model
– Even though Msil 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: Good Company or Good Stock Dilemma (A) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Maruti Suzuki: Good Company or Good Stock Dilemma (A) HBR case study mentions - Msil 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.
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.
High cash cycle compare to competitors
Msil Suzuki has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
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 -
Building a culture of innovation
– managers at Msil 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 Finance & Accounting segment.
Better consumer reach
– The expansion of the 5G network will help Msil Suzuki to increase its market reach. Msil 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.
Creating value in data economy
– The success of analytics program of Msil Suzuki has opened avenues for new revenue streams for the organization in the industry. This can help Msil Suzuki to build a more holistic ecosystem as suggested in the Maruti Suzuki: Good Company or Good Stock Dilemma (A) case study. Msil Suzuki can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Msil 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: Good Company or Good Stock Dilemma (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Msil Suzuki to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Msil 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: Good Company or Good Stock Dilemma (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
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.
Manufacturing automation
– Msil Suzuki can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
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.
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.
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.
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.
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 -
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.
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.
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.
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.
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.
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.
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.
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 Suzuki in the Finance & Accounting sector and impact the bottomline of the organization.
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 Suzuki needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
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.
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 Suzuki.
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 .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Msil Suzuki with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.