General And Specific Environment Maruti Suzuki India Environment Marketing Essay

The environment is the of forces surrounding an organization that have the potential to affect the way it operates ad its access to scarce resources.

General Environment

The forces that shape the specific environment and affect the ability of all the organizations I a particular environment to obtain resources.

1 .Demographic and cultural forces

2. International forces

3. Political forces

4. Technological forces

5. Economic forces

6. Environment forces

Specific Environment

The forces from outside stake-holder groups that directly affect a organization’s ability to secure resources.

1. Customers

2. Distributors

3. Unions

4. Competitors

5. Suppliers

6. Government

General and specific environment

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Fig 1.1

About the company

Maruti Suzuki India Limited is a subsidiary of Suzuki Motor Corporation, Japan. MSIL has been the leader of the Indian car market for over two and a half decades. The company has two manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India.

Mission statement

The leader in the Indian Automobile industry.Creating customer delight and shareholders wealth.A pride of India.

Core Values

Customer obsession

Fast, flexible ad first mover

Innovation and creativity

Networking and partnership

Openness and learning

General and specific environment for Maruti

General environment

Demographic and Cultural Factor

India is one of the fastest growing economies among the emerging countries. The economic growth leading to creation of a large middle class with rising disposable incomes. The main reasons for this are:

Growth in urban population – Growth in urban population raises the demand for automotives in order to satisfy the needs of quicker transport.

Incomes shift towards middle and upper class – This leads to increase in demantd of cars which are considered as status symbol.

Younger population – Current average age of Indian population is approx. 28 years., and younger genre are more inclined towards purchasing cars to make a style statement. Thereby increasing market for cars like Swift, A-star etc…

Lower dependency ratio – This indicates greater income is in the hands of wage earners, due to the smaller number of dependents in population that requires support as a result of which spending and investing power increases

Changing Family Structure – India is moving towards the trend of having smaller family therefore the demand for smaller cars is on the rise

International forces

The downturn of automobile industry globally especially demand in cars has stressed the rest of the automobile industry except Maruti mainly because of its better competitive model line up & “value for money” pricing, lower segment offerings & the strong Indian vehicle market. In the international market there is a strong response for A-star, which was the 1st product from Maruti Indian Base that targeted international market.

In spite of that there can be a major hit in international market for vehicle in especially those markets, which have demanded for govt assistance over last 1 year.

There is a high competition in global market, which includes:

GM (General motors)

Honda

Toyota

Volkswagen (VW)

& not to forget the major Indian rival TATA with its Nano, a low cost car

The positive international force would be the usage of cars in abroad area which is more common than 2 wheelers

Political forces

Currently The United Progressive Alliance (UPA) rules India. UPA lead by the Indian National Congress (Congress) was re-elected to a second five-year term in 2009. The UPA succeeded in gaining a stronger electoral mandate in 2009 and therefore has had to rely less on left leaning coalition partners in contrast to the coalition formed in 2004. The opposition coalition led by the Bharatiya Janata Party (BJP) finished a distant second.

Technological forces

Maruti Suzuki India Ltd. (MSIL) has not only decided to boost its research and design capabilities to meet the growing demand and come out with new products.

As part of the efforts to build R&D capability, MSIL is coming up with a world-class R&D centre at Rohtak (Haryana). It invested Rs.173.30-crore in R&D in 2009-10 against Rs.91-crore in 2008-09.

Maruti Suzuki has decided to set up a Research and Development (R&D) centre at Manesar, near Gurgaon which would be on par with the Suzuki Motor Corporation’s (SMC) research centre in Japan.Maruti Suzuki India

(MSI) had outlined an investment outlay of Rs. 4,000 crore for the development of the next generation KB engine plant in Gurgaon, an R&D facility at Manesar.

Economic forces

Economic downturn – Because of recent economic downturn, the sales figures were low compared to previous years.

Less stringent export-import rules – As import and export rules are being relaxed in the face of globalization; it is able to get better deals from foreign suppliers as well as buyers.

Greater demand in the neighboring countries – Because of increased demand in the neighboring countries like Malaysia, its imports have increased and currently it holds around 60% market share of its low segment cars.

Rising economy and higher purchasing power – As the purchasing power is increasing for the consumer because of growing economy, now there is increased demand.

Better financing options available – As the financing options to buy a car is getting easier day by day, more people are opting for cars.

Environment forces

Pollution control norms

BSIV norms

The government adopted the BS IV in Apr 10. The previous BS I norms initiated a decade earlier and the subsequent BS II norm, ensured a shift from carburettors to fuel injection and other advanced technologies in the automobile sector at that time. The new norms are sure to bring emission norms close to that in Europe.

Emissions standards for gasoline vehicles (GVW ≤ 3,500 kg) are summarized in below. Ranges of emission limits refer to different classes of light commercial vehicles (compare the EU light-duty vehicle emission standards page). The lowest limit in each range applies to passenger cars (GVW ≤ 2,500 kg; up to 6 seats).

Vehicles (GVW ≤ 3,500 kg), g/km

Year

Reference

CO

HC

1991

–

14.3-27.1

2.0-2.9

1996

–

8.68-12.4

–

1998*

–

4.34-6.20

–

2000

Euro 1

2.72-6.90

–

2005†

Euro 2

2.2-5.0

–

* for catalytic converter fitted vehicles

ELV norms

Compliance with ELV norms means the car use ecologically harmful substances (such as Cadmium, Chromium, Mercury and Lead) only within the permissible limits as per European standards, thus ensuring recyclability of materials.

ELV ( End of Life ) norms are prevalent in Europe for making sure recyclability of material but are still to be enforced in India.

Specific environment

Customers

The driving factor for customers is the increase in the income levels and also the rising number of small cars. The number of customers is increasing as a result of the two factors and also the demographic structure of India. Fuel economy is one of the concern for the customers along with it is the awareness for green cars. Therefore rise in demand of for both CNGand electric vehicles. Few services that customers are keen on are:

Pre- sale customer service – the ability to service the during the purchase decision

Product support – the ability to service the customer in providing product support after the sale of the product to ensure continuing satisfaction

Responsiveness to customers – the ability to respond in a timely manner to the needs and wants of the company’s customers including potential customers.

Maruti won the 2000-2009 JD Power Customer Satisfaction Index Award – India for the tenth consecutive time, Maruti Suzuki ranked the highest in JD Power Customer Satisfaction Index.

Distributors

Supply chain & distribution plays a very important role on case of any industry. Right from supplying raw materials to manufacturing and distribution of cars, which is all about creation and delivery of premium quality of vehicles to its customers at a price affordable by the target customer, is what makes the industry popular and thus leads to its success. It demands for an effective management of its production processes, but also intelligent management of supply, distribution and service chains.

Maruti is best known for:

Its management in the transparent supply-chain, distribution & servicing sector.

Its dealer network is the largest for tiny car manufacturer in India.

Maruti has the best and a very strong supplier network which are established near to its production base thus giving them delivery time & thus lower cost advantages.

It has a very strong network of dealers and for service:

260 showrooms & 277 dealer workshops,

Authorized 1329 Service Stations across 656 cities, spread across the country,with servicing facilities also mainting customer relationship & satisfation.

“Just in Time” (JIT) supply implementation for its major suppliers

Large production capacity offering scale economics in procurement, production & distribution.

High volume of production leading to its bargaining power over its suppliers.

Trained & skilled workforce

Supplier’s credibility in the industry

Delivering quality vehicles, services and value for money

Maruti’s vehicles are now available in Australia, Europe and America

Unions

Nearly 75,000 people are employed directly by Maruti Suzuki and its partners. Its prominent unions are Maruti Udyog Employees Union (MUEU) affiliated to All India Trade Union Congress (AITUC) and MarutiKamgar Union. There has been a struggle between management of Maruti and its workers in 2000 and 2001. The workers movement in MSIL began on the issue of incentive wages. Later on because of the unity and pressures from the workers’ union Maruti Employees Union (MUEU), management was forced to withdraw the Good Conduct agreement. Subsequently one more union was formed MarutiKamgar Union which was set up in December 2000 with 28 members and now has expanded to 700 members.

Competitors

Similar technological advancements are taking place in other companies also .for example Tata Motors has a $1.36 billion or Rs. 6,000 crores on improving its R&D Competition There are over a dozen, including big guns like Toyota, Honda, Ford, GM and Hyundai. Maruti continues to be the leader, but is aware that it cannot take its position for granted.

Hyundai Motor India Ltd, the fully-owned subsidiary of Hyundai Motor Co of Korea, has been aggressively targeting the small car segment, the segment in which Maruti and its parent, Suzuki Motor Corporation of Japan, are also strong with a number of models. Not to be left behind is Tata Engineering, whose model, the Indica, is gaining in popularity. Fiat India Ltd, through its Palio, has attempted to carve a niche for itself in the upper-B segment of the market.

Competition is forcing Maruti to continuously cut costs and improve efficiencies Recently, Maruti Suzuki went into the depression mode after its market share in India went below 50 per cent for the first time in history.

India’s largest selling car maker, however, did not sit quiet. It instead worked harder and launched plenty of new cars. It launched a new Maruti Alto (the Alto K10), an automatic version of the A-Star and CNG variants of five of its most popular cars, the Alto, WagonR, SX4, Estilo and Eeco.

However According to the ‘JD Power Asia Pacific 2009 India Customer Service Index (CSI) Study’, Maruti Suzuki continues to top the list of Indian auto companies in customer service, even in the face of increasing competition. This is for the tenth consecutive year that Maruti has topped the list

Suppliers

Following are the major suppliers of MUL-

Asahi India Glass, Bharat Seats, Mark Auto Industries, Machino Plastics, Krishna Maruti

These suppliers also affect the environment in which MUL is competing.

To target more domestic suppliers in the sourcing of steel – As the domestic suppliers are cheaper compared to imported steel, MUL is targeting a savings of Rs 500 to 700Crores by switching to domestic suppliers.

Encouraging competition among suppliers for cost reduction – By encouraging competition among suppliers MUL is targeting a reduction of component costs by 3 percent amounting to savings of Rs 700crores a year.

Choosing competent suppliers who can match its growth – It should choose those suppliers who can match its growing demands and keep up with its growth and suppliers should not be deterrent in its growth.

Government

ARAI certification

The Ministry of Road Transport and Highways is the nodal agency for implementation of emission legislation in both its aspects of Type Approval and Conformity of Production. The Standing Committee on implementation of Emission Legislation has been constituted by the MORTH under the Chairman-ship of Joint Secretary-MORTH, to advise the Nodal agency in such implementation. The functions of Standing Committee are to advise the Nodal Agency on all matters pertaining to the implementation of Emission Legislation in general, and particularly

To formulate, monitor and control the policy and actions for Type Approval and Conformity of Production Testing System and Procedures.

To co-ordinate all such activities relating to implementation of the Emission Legislation

To deal with certification, withdrawal and restoration of Type Approval.

To deal with all other technical, administrative or legal matters in this regard.

Excise duty

The ownership of cars in India is just 6 per 1000 of population as against 500 in the developed economies. The contribution of the auto sector to the GDP and employment is likewise low. Expansion of local demand holds great potential and is vital to install scale volumes of production. Domestic demand mainly devolves around small cars not exceeding 3.80 The excise duty is set by government which impacts the final selling price of the vehicle.

Excise duty on small cars – 8%

Excise duty on big cars – 20%