Maruti Suzuki India Limited
Maruti Suzuki India Limited (MSIL) has been the leader in the Indian automobile for since 1983. MSIL has built an excellent reputation for producing dependable and reliable cars. Since its creation, it has dominated the overall hatch segment also known as A ¬segment, which includes entry-¬hatch, mid¬size-¬hatch, and premium-¬hatch by increasing its equity from 50 percent in 1992 to 56.21 percent in 2012. However, some factors such as the competitive innovations brought by Hyundai and Tata Motors in the A ¬segment have eaten into the company’s market share, and these new realities have affected the company’s market share. And the change in regulations, in buyers’ income and taste, the generational differences, petrol and diesel price difference, and currency fluctuation has actively led to a significant decline between 2008 to 2013 from 61 percent to 49 percent drop within the A¬ segment.
Problem Statement
Problem: The major business problem facing MSIL is the loss of market share in its A¬ segment due to the influx of other competitors such as Hyundai and Tata in this segment. Since growth in the Indian’s automotive industry is driven by growth in the A¬segment, the continuous decline of MSIL’s market share in the A¬segment is directly proportional to the loss of volume of sales in this segment. That hurts the profitability of MSIL.
The stakeholders in the business problem
The situation at MSIL involves some stakeholders. It is important to note that when the company was in robust performance, it was the pride of India. It brought respect to the country in the global automobile industry. The primary stakeholders in MSIL are the shareholders of the company. When the company excels economically, they benefit, when the company starts going south regarding financial performance, again the shareholders will experience the hit. The government of the Republic of India is another stakeholder in the problem. The government is responsible for the creation of an environment that allows a business to thrive. All over the world, governments play pivotal roles in enabling local industries to thrive. For instance, through different tax policies, the state may either promote or kill an industry. Finally, the customer’s MISL are also stakeholders in the business problem. As has always been said, any business venture depends on its customers to thrive. If customers shift their allegiance their allegiance to other manufacturers, the company would be in deep problems. The customers, thus, are central to the whole idea.
Research Objectives
Identify the factors and features that contribute to the increase in sales of the A ¬segment cars. Investigate the situational variables that play a role in the customers’ buying decisions. Most importantly, the study aims at finding out the factors that have changed with regards to the company which has in return led to the reduction of its performance in the automobile industry.
Research Question
1. What are the factors that drive growth in the A¬ segment of the Indian’ Automotive industry?
2. What are the factors that lead to a decline in the MSIL market share in the A ¬segment from 2008 to 2013?
3. What situational variables affect the buying decision of customers?
4. What is the importance of MSIL to break into a new smaller and more rural area?
Qualitative data to be used
a. The efficiency of Suzuki cars
b. The comfort of the vehicles
c. The suitability of the vehicles to the environment
How will the qualitative data be used to answer the research question?
There are various ways in which the qualitative data will be useful in answering the research questions. Firstly, the qualitative data will be essential in determining if the Suzuki cars are responsive to the needs of the customers. The data will be useful in determining if the problems affecting Suzuki are from within the organization are brought by external factors. Finally, the qualitative data will play a critical role clarifying the various issues about the products that have contributed to the situation facing the company.
Ethical issues for consideration
In the process of conducting this study, there are some ethical considerations that must be made. Firstly, there are various sources of information that may not be true and misleading. While investigating the issues behind the apparent decline of MSIL, it is important to note that different people and scholars would have different versions with regards to the problems that are troubling the once-upon-a-time Indian automobile giant. The internet is awash with all sorts of information that seek to explain the forces behind the situation. It is essential to make sure that all the statements that are being used to describe the situation at the company are verifiable and defendable. Additionally, personal bias may affect the derivation of objective conclusions regarding the situation. It is important that there are individuals who have disdain against some companies, out of various reasons, and these issues may prevent an objective analysis of the situation.
Literature review
Theories
Competition is one of the business trends that are accused to have contributed to the drastic decline in the market share of MISL. Between 2008 and 2013, it is recorded that the company experienced a decline in market share from 61% to 49%. By any standards, this is a huge figure, and it is critical to have explanations for this kind of a decline. In a paper titled “Firm innovativeness and business performance: The joint moderating effects of market turbulence and competition,” Tsai and Yang (2013) have demonstrated the manner in which market completion affects the performance of an organization. From the beginning, the authors indicate that almost all businesses in the world have one form of competition or another. The manners in which the businesses respond to these competitions have a bearing on the overall success of the business. According to the writers, the remedy to competition in any industry is innovation. If a firm is experiencing stiff completion in any market, it needs to adjust its activities to remain relevant in the industry (Lai et al., 2014). At the end of the work, the authors suggest that it is necessary for companies to study the direction of the market and make wise decisions concerning the nature of activities that they would want to undertake. In this regard, it would be possible to mitigate the changes that may be brought by competitors.
Ford and Hakansson (2013) are in agreement with the position adopted Tsai and Yang (2013). In their paper, “Challenges and business networks” the authors indicate that it is during intense competitions that most businesses collapse. When competition sets in, a lot of institutions usually do not know how they may respond to the situations. Most of the decisions are erroneous and may not help them overcome the new environment. That is one of the issues that might have happened with Suzuki. The company found it difficult to cope with the new situation since it had never gone through it since it was created in 1983. That fact could have led to the failure of the company to handle the situation properly.
Bias and limitations
As was indicated in the ethics segment, it was demonstrated that not all pieces of literature might be trusted since some of them are extremely biased and are not based on factual information. Phillipo et al. (2016) in a paper, “Quantifying the Effects of Bias: Decision-Invariant Bias Intervals for Bayesian Network Meta-Analysis” indicates that being biased in research affects the objectivity of researchers. Even in circumstances when the facts are clear, individual bias affects the ability of individuals to focus on the issues. In that manner, when pieces of literature are biased, it becomes difficult to rely on them to make actionable conclusions in a given study. While it is always difficult to determine whether a piece of work is full of bias in an investigation, some signs are indicative of bias. For instance, when there are statements that are unsubstantiated and indefensible, the conclusion is that the work is biased. Additionally, when the work is inconsistent with the others, it is arguable that the work may be biased.
Another research study
Jagadeesh (2014) in an article, “Are Indian Car Buyers Not Serious About Safety? A Case Study of Maruti Suzuki India Limited” describes some of the issues that may potentially be troubling the organization. One of the issues that the author raises in his presentation is safety. The writer indicates that most authors take little or no interest on matters regarding the safety of the Suzuki motor vehicles. Probably, when the new vehicles from other manufacturers got into the market, the customers realized that they were much more secure than the Honda vehicles. In the face of these circumstances, it is evident that the safety issues might have contributed to the problems with Suzuki. Customers have received cars that appear to be much more secure than the ones for Suzuki.
Other organization
General Motors is another company that underwent the same challenges that Suzuki is currently experiencing. In a Paper, “Management practices, relational contracts, and the decline of General Motors,” Helper and Henderson (2014) indicate that there were some factors that acted in concert to the detriment of the company. Ordinarily, for a company with robust performance such as General Motors to collapse, it is difficult for a single cause to cause the challenges. Normally, it is a combination of managerial challenges and the external environment which contribute to the decline of the business. Just as was the case with GM the case of Suzuki in India needs the participation of all the stakeholders to determine the best approaches to make sure that the company is functioning optimally.
References
Ford, D., & Håkansson, H. (2013). Competition in business networks. Industrial Marketing Management, 42(7), 1017-1024.
Helper, S., & Henderson, R. (2014). Management practices, relational contracts, and the decline of General Motors. The Journal of Economic Perspectives, 28(1), 49-72.
Jagadeesh, R. (2014). Are Indian Car Buyers Not Serious About Safety? A Case Study of Maruti Suzuki India Limited.
Lai, Y. L., Hsu, M. S., Lin, F. J., Chen, Y. M., & Lin, Y. H. (2014). The effects of industry cluster knowledge management on innovation performance. Journal of Business Research, 67(5), 734-739.
Phillippo, D., Welton, N., Dias, S., & Ades, T. (2016, August). Quantifying the Effects of Bias: Decision-Invariant Bias Intervals for Bayesian Network Meta-Analysis. In 37th Annual Conference, International Society for Clinical Biostatistics.
Tsai, K. H., & Yang, S. Y. (2013). Firm innovativeness and business performance: The joint moderating effects of market turbulence and competition. Industrial Marketing Management, 42(8), 1279-1294.
