MARUTI FOR EBM 645

8/8/2019 MARUTI FOR EBM 645

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28th November, 2010 EBM-645, GEOPOLITICS 1

MARUTI SUZUKI INDIA LIMITED

Bibhushan Gautam

Hasib MohmandHelenPasang R. SherpaRajnish Pandey


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Maruti is a Sanskrit wordreferring to Hanuman,

son of Marut, the HinduWind God Vayu


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VISION

The leader in Indian

Automobile Industry,creating customer

delight, shareholderswealth; A Pride of India


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PROFILE

Maruti Udyog Limited (MUL) wasestablished in February 1981

Actual production commenced in 1983(Maruti 800),

The then only modern car in India basedon the Suzuki Alto kei car

Competitors- the Hindustan Ambassadorand Premier Padmini (25 years out of date)


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Partial subsidiary of Suzuki MotorCorporation of Japan India's largest passenger carcompany,

over 45% of the domestic car market.

It is largely credited for having brought inan automobile revolution to India.

On 17 September 2007, Maruti UdyogLimited was renamed Maruti SuzukiIndia Limited.

The company's headquarters are locatedin Delhi.


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SHARES Until recently, 18.28% -The Indian

government, and 54.2% -Suzuki ofJapan.

The BJP-led government held aninitial public offering of25% of thecompany in June 2003.

As of 10 May 2007, Govt. of Indiasold its complete share to Indianfinancial institutions.


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PLANT Manufacturing facilities - Gurgaon

and ManesarMaruti Suzukis

Gurgaon have a combinedcapability to produce over700,000 units annually


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NETWORK 178 authorized dealers with 243 salesoutlets in 161 cities (March, 2003) 342 dealerworkshops (March, 2003)

1,545 Maruti Authorized ServiceStations, which covered 898 cities inIndia backed by Express ServiceCenters on 30 highways across the

country (March, 2003) 299 vendors all over the country(supply of raw materials, components andspare parts) (March, 2003)


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An average two vehicles roll out of the

factory in every single minute. The company takes approximately 14hours to make a car.

Rated first in customer satisfaction amongall car makers in India (1999-2009 by J D PowerAsia Pacific) I

Globally the first automobile company to

be honored with an ISO 9000:2000certificate (2001)

Revenue- US$4.8 billion (2009)


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Created history by going intoproduction in a record 13 months

One of the most successfulautomobile joint ventures, and

has made profits every yearsinceinception till 2000-01


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PRODUCE The company offers a complete range

of11 models in 50 variants of cars fromentry level Maruti 800 and Alto, to

stylish hatchback Ritz, A star, Swift,Wagon-R, Estillo and sedans DZire,SX4 and Sports Utility vehicle Grand

Vitara.


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TARGET

< 3 Lacs

3-5 Lacs5-10 Lacs

15-30 Lacs


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HUMAN RESOURCE 6,903 employees, including 614

engineers, 84 MBA graduates and 24chartered accountants (2009)

Nearly 75,000 people are employeddirectly by Maruti Suzuki and its partners(2009)


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MARKET SHARE


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KEY COMPETITORS

Tata Motors Hyundai

FordFIAT

General MotorsHonda


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KEY EXPORTS Angola Benin Djibouti Ethiopia Europe Kenya, Morocco Sri Lanka Uganda

Chile Guatemala Costa Rica El Salvador


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POLITICAL EFFECTS Sanjay Gandhi Maruti in 1976, company fails

and its conversion by an Act of the Indianparliament into a Public Limited Company inthe 1981

Suzukis involvement in Maruti in 1982 andlast until 1992 when Maruti-Suzuki ceases tobe a Government of Indian company

Patronized by the Indian Government andsupported by Suzuki, Maruti-Suzuki isshielded from international competition andable to outperform domestic competition.


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Janata Party-led government launchedinvestigation report into the Maruti scandal'

indicates a host of irregularities among themviolations of Indias Foreign ExchangeRegulation Act.

Yet, Sanjay Gandhi is spared from anyconsequences by his mothers return to power in1980 and his timely death in a plane crash in thesame year.

Trying to rehabilitate her family name, IndiraGandhi tackles the unresolved Maruti problem.

Eventually the Maruti Scandal comes to aclose when in October 1980 the Government ofIndia takes over Maruti limited and incorporatesit in February 1981 by an Act of parliament


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(1992 -2001) Emerging internationalcompetition following comprehensivereforms and liberalization, conflictbetween the JV partners and the

companys first labor unrest. Companys governance compromise

is for the first time seriously

challenged. Suzuki, after a long battle for control,

finally acquires the majority in the JV.


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In MUL the control and power is mostly inthe hands of management.

During the workers strike in 2000 themanagement refused to agree to theworkers demands.

The officers ran the plant by supervising

the operations of the plant and hiringcontractual labour.

This made it difficult for workers to sustain

the strike. They had to call off the strike and were infact forced them to agree to somechanges laid down by the management.


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The power of Japanese has always beenthere in an implicit manner.

The Japanese have acted as conflictresolver whenever there have been anyconflicts within or between departments.

Many times the departments play politicswith other departments by trying to usethe referent poweravailable due tocloseness with Japanese management.

With the increase in stake of SuzukiMotor Corp. the legitimate power of theJapanese management has furtherincreased.


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MARUTI AND THE

GOVERNMENT The Government of India has been ashareholder in Maruti Udyog Ltd. from thebeginning.

Government had a majority stake in Marutiwhich was reduced recently. At present itsshare in Maruti is 18.28%.

The relationship between Maruti andgovernment has always involved a third

player, the Suzuki Motor Corp. Government has never been involved in day

to day working of Maruti. But it had beeninvolved in the strategic decisions in the past.


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For example introducing new models ofcars required the prior approval ofProject Approval Board which is underthe Ministry of Industry.

In 1998 the Government signed a

contract with SMC under which theappointment of Chairman and ManagingDirectors would be made only aftermutual consultation.

This was a result of a bitter quarrelbetween Government and SMCregarding management succession.


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SUCCESS FACTORS Factory Lay out of MUL is similar to

Suzuki

Machinery and equipment are identical

The organization structure and staffingare entirely in Suzukis style

Quality circles has been introduced

The entire forces are well-informed onthe organizations emphasis on highquality and productivity as in Suzuki


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Efforts are initiated to develop a sense ofcommitment of the employees to work

and company goals through posters,speeches, literature and meetings, as inSuzuki

The feeling of oneness that all areequal and equally important to thecompany, is instilled through common

canteen, common uniform, commonworkplace, common transport-nohierarchy anywhere.


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People are sent to Japan tolearn the Japanese way ofworking more than thetechnology and the details ofactual job

Japanese experts are called todo the actual job for longdurations (Up to 2 years) in allthe areas of work in MUL


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The sense of job security that theworkers enjoyed at Maruti diminished.

In subsequent years a number ofnon-performers were asked to opt fora voluntary retirement.

The disciplinary checks in the systemwere strengthened. For example, theattendance system which was manual

earlier was changed to a more foolproof mechanism based on swipecards.


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Engineers were required to acquire cross-

functional skills. A system of job rotationwas introduced were engineers weretransferred from one department to theother.

The company started relying more oncasual (contractual) labor to decrease itscosts.

The proportion of variable performancebased pay out of the total increasedsignificantly


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