Modernization of the Automobile Industry of India - Essay Example

Strategic Analysis Contents Contents 2 Introduction 3 Main Analysis 4 The case study approach 4 The problems 5 The flaws 6 The recovery plan 7 Conclusion 9 Recommendation 10 References 12 Introduction To modernize the automobile industry of India, Maruti Udyog Limited was found in 1981. In 182 the company got license and came in joint venture with the Suzuki Motor Corporation of Japan. The company launched its first car in 1983 and named it as Maruti 800 which was been followed by its multi purpose vehicle Omni in 1984. The company kept growing from that point and in 1990 it launched its first sedan and also India’s first Sedan Maruti 1000 and in 1994 its most admired model Esteem was been launched in the country. The company has been awarded by the award for manufacturing the best car of the year. It also launched cars of different varieties and also targeted all the segments mainly the huge middle class segment present in India. It has huge manufacturing units in different parts of the country and also has a good supply chain. The company is always been known because of its high quality and also good after sales service that the company has always provided to the customers (Maruti Suzuki. 2014). The company has not only concentrated in the market of India but it has also expanded itself in other parts of world by exporting its vehicles across to different countries like UK, Srilanka, Nepal, Egypt, Italy, Germany etc. The automobile industry in India has grown at a very rapid pace and it is very difficult for all the companies to maintain their market share. Customers are looking to get better quality and high performance cars more as they have got a lot of variety. In this report it can be seen how a company like Maruti does face problems related to a particular car model that is been launched in the market. The specific strategy that the company needs to implement to get over the current issue is also been analysed and certain recommendations are been given to the company based on the study from various reports, theories and concepts. Main Analysis In the recent times with the increasing competition in the growing automobile industry in the global world and especially in the developing countries customers have got lot more choice to make between varieties, quality , performance and other factors which does affect the purchase decision of the customers. Because of this high competitive environment it has become very important for all the companies to maintain a good quality for their products and also provide high performance cars to the customers (Fitzroy and Herbert, 2007, pp. 34-38). The chances of launching a defective product in the market does create a lot of problem for the company as the company loses all its brand image in the market and also there is huge loss of resources. Thus the companies must look to launch only products which are perfect and don’t have any kind of defect in their quality or performance (Reuvid, 2012, pp. 56-64). The case study approach In case of Maruti Suzuki which is India’s largest car manufacturing company and is also known for its high performance and quality, a particular defect was been detected in one of their model which was been already launched in the market. This model is of the sedan class cars made by the company and in the hatchback category named as the Swift Dzire sedan (Kotler and Keller, 2006, pp. 23-28). The product had a problem in its fuel tank and the company was able to detect the defect only after more than 1.5 lakhs cars were been already sold in the market and many more were lying in the stores ready to get sold. Swift Dzire being one of the most popular sedan class cars in India was able to capture huge market in the country (OaShaughnessy, 1995, pp. 123-128). The problem was been found that in the car the lock for the fuel tank was not getting locked in a proper way as a result of which fuel gets evaporated and huge amount of fuel is been lost. Swift Dzire’s being one of the most popular model with such a defect has created a lot of problem for the company as customers after getting the information about the particular problem tend to shift their preference to other brands and buy other company cares rather than buying Swift Dzire. The price of the car ranges from Rs 4.85-7.32 lakhs and this model is the second largest selling car in the country (Abrams and Abrams, 2003, pp. 43-47). Such defects rising in the products do cause a lot of problem for the company. It was been heard that the company is looking to recall around 1.5 lakhs Swift desire back to company to solve the problem, but the management of the company denied with this news about recalling back the cars (Chauhan, 2014). But the showrooms were made to stop the sales of this model and the required changes for the model was been made in the stores only for the unsold product. The company has also faced such issuers in past when it had to recall back many units of its other cars due to certain defects that have been detected after the product is been sold in the market or have already reached the showrooms (Knapp, 2000, pp. 54-59). The problems Such type of problems arising for the company does affect the company’s market share and also brand image in a huge way for the company. It is more problem for the company because of the high increasing competition from many other companies like Tata, Toyota, and Hyundai etc and also from the exported cars which are of high quality and also high performance based (Doole and Lowe, 2005, pp. 39-45). Every company has got their products in the price range of its competitors so the customers get a lot of opportunity to choose between a huge numbers of choices. In present situation with the increasing spending power of customers with increasing income level customers prefer to take better quality and cars which have good service and also are of high performance rather than focusing more on the price of the cars (Pride and Ferrell, 2011, pp. 56-65). Continuous rise of such problems for the company is a big loss as customers tend to lose their faith over the products for the particular company and also get a bad image in their mind about the particular company products (The Times of India. 2014). This does affect a lot to the company as the customers do suggest to their relatives and also friends about not going for this particular product and a result of this word of mouth which does spreads at a fast pace the company loses a lot of customers and incurs a huge loss in the sales as the sales goes down by a huge margin (Witcher and Chau, 2010, pp. 113-118). With companies like Toyota and Hyundai which gives a lot of focus on the quality of the product and the way they look and emphasises in a huge way for providing best quality product to the customers, people tend to go for such products and are also ready to pay little more to get the high quality and reliable product. In the automobile industry even a small defect gives a bad image to the company and also affects its sales and market share in a huge way because of the huge decline in its sales (Pearce, 2009, pp. 53-58). The flaws Maruti Suzuki being such a huge brand and the largest car manufacturing company in India needs to have a good strategy to face such problems and also to eliminate such problems so that the company can have smooth business operations and also have a continuous rise in profit (Kozami, 2002, pp. 21-24). The company needs to have a good quality check process which must be very stringent and also specific so that the company can get to know about any defect that might be present in a particular product before the product is been launched in the market. Every stage in the production process of the company must have a strong quality check to prevent the company from producing defected products again in future. The company must have a good specifications been made at the time of designing the cars and the specifications of the particular car must be followed strictly (McLoughlin and Aaker, 2010, pp. 45-53). The standards must also satisfy the ISO standardisations. The company needs to have a good quality check teams and also specialised and highly experienced employees responsible for quality check and also use latest technologies available in the market to make the quality check more strong and also specific so that the products that are produced are been produced without any defect (Rossiter and Percy, 1987, pp. 23-34). It needs to implement various quality tools like Pareto chart, control chart, cause and effect diagram to see that the quality of the product is been maintained in proper way before it is been launched in the market (Jespersen and Skjott-Larsen, 2005, pp. 176-185). The recovery plan To come up with this problem that the company is facing with regard to its model of Suzuki Swift the company needs to take care that the problem in all the cars related to their fuel tank is been verified by each nearby service station and customers can get a good quality car with high performance (Kapferer, 2008, pp. 65-62). The company needs to build a strategy in such a way that the after sales service for the cars and also the quality of the cars is well maintained after the car is been sold in the market which will help the company to build a good relationship with the customers and also help the customers in maintain the condition of the car intact for many years on a continuous basis without any defect or problem rising (Verweire and  Berghe, 2004, pp. 98-105). The customer’s needs to get a good service for the cars they buy so that they can maintain its good condition. The company faces a huge loss if it recalls all the cars back and removes the defect in them as it will incur approximately the same amount as that was incurred in the overall production process (Underhill, 1996, pp. 11-15). Going into the root cause of the problem it can be found that the company JBM which supplies that particular part has supplied defective parts and those defective parts are been used by the company in their production process. Maruti Suzuki being such a huge car manufacturing company needs to have a good strategy to select their suppliers in a proper way and also make sure that they procure good quality raw materials form the suppliers (Hill and Jones, 2009, pp. 12-24). The vendor management technique for the company must be of high order and quality of every material that is been procured by the company should be checked thoroughly to see that they meet the specifications and the quality standards and there’s no defect in the materials. The supply chain management of the company must be taken care with lots of concentration so that the company can procure the best material form the best place and at the right time so that the production of the cars is been done successfully and also the quality of the products is been well maintained (Rogers, 2001, pp. 88-97). The biggest USP (Unique selling Point) of Maruti Suzuki that the company always looks to showcase is its high mileage for its cars. The biggest achievement for the company is that the company has been able to launch highly fuel efficient cars in the market, but in this case of Swift Dzire cars which are been manufactured in the year 2013-14 the company does loses its unique selling point as customers are not able to get the advantage of high mileage as the fuel gets evaporated because of the loose fuel tank cap. In the process of launching a sedan class car at low price the company didn’t focus too much over this point as a result of which the defect was been detected after it was been launched in the market (Abraham, 2012, pp. 156-165). The company needs to have a strategy by which it can launch cars with low price and also with the best of quality which is build to keep its USP in the market. The company needs to segment the market in a proper way so that right customers can be targeted and people don’t get wrong feeling about the car looking at its class. Swift Dzire in the sedan class is the second largest selling car in the country and the company needs to have good strategy to promote this product in the market and look to provide good after sales service to the customers across at different place so that the particular problem related to the brand is been solved (Goold and Luchs, 1996, pp. 147-153). After the problem is been solved it is important for the company to build a strategy in a way that it can again create a good bran image in the mind of the customers that might have got lost because of the rising problem in the model (West, 2001, pp. 24-27). The company needs to have a good promotional activity to show that the model is again launched in the market with no defect and the message must be communicated to the customers in a proper way so that the customers can be aware of the rectifications that are been made in the model and it will also help the company in creating a good image as this quality rectification will show the amount of commitment that the company has towards its customers and even after selling the cars the company looks to take care of the customers which have brought their cars (Henry, 2008, pp. 116-124). Customers in India look to buy more products based on the word of mouth influence from the relatives and friends, and when the customers who get the product rectified soon and that to in free of cost will influence other relatives and friends to buy cars under the brand of Maruti Suzuki because of its high commitment to the customers (Marr and Gray, 2012, pp. 23-27). Conclusion Thus looking at this case it can be seen that a huge company like Maruti Suzuki which is the largest car manufacturer in India also faces a lot of problems related to the quality of the product that is been manufactured in the company. Because of certain defect that might have arisen with realted to the quality of the product the customers tend to lose their faith over the company and it also creates a very impact in the brand image in the mind of the customers. The company needs to have a good strategy related to maintain a good quality of the products using various tools of quality and also have a good strategy in selecting the suppliers in a proper way so that the materials that are been procured by the company must be of high quality and it doesn’t cause any problem in the production process. Thus with good quality raw materials will lead to production of high quality of final product. The quality check process in every step is very important for the company to know the defect and make sure that the defect is been rectified then and there on the spot before it goes to the next step and there is no problem related to the quality of the final product that is launched in the market. The strategy involved in promoting the particular product in the market also creates a lot of impact in the amount of sales of that particular product. Good promotion activity can help the companies to create a good brand image and also remove the wrong thoughts about a particular product from the mind of the customers. Thus it can be see how much important is making a good strategy in each and every process for a company to launch a particular product in the market successfully and make sure there is no problems been faced by the customers and also for creating a good market share in the competitive market and also for getting good amount of sales. Recommendation Thus looking at this case and the current situation of Maruti Suzuki certain recommendations can be made to the top management of the company so that they can tackle properly with this problem and also to make sure that they don’t face such problems again in future. The company needs to have a strong strategy to see that they procure good raw materials for each of their cars and produce the cars in the best quality maintain their unique selling point so that the defects are not occurring again and again. They also need to have good strategy for promoting the product in a proper way so that customers don’t get carried away with the news about the defects and they d prefer to take Maruti Suzuki cars over other cars available in the market. The top management of the company must ensure good strategy so that the company can recover from the situation successful and in less time before it affects the market share and the brand image of the company too much. The company needs to rectify the defect by providing a good service and make sure that the defect is been rectified in their service station quickly so that customers need not face much problem because of it. Apart from this the company needs to conduct a cause and effect analysis to go into the root cause of the problem and make sure the problem is been rectifies from its roots and it doesn’t happens again. The top management must take care of the fact that the strategies are been made very strictly and also they are been followed at each level of the organization to maintain a good brand image of the company in the mind of the customers. References Abraham, S. C. 2012. Strategic Planning: A Practical Guide for Competitive Success. UK: Emerald Group Publishing. Abrams, R. and Abrams, R. M. 2003. The Successful Business Plan: Secrets & Strategies. Canada: The Planning Shop. Chauhan, C. 2014. Maruti Suzuki may recall 1-lakh Swift and DZire on faulty fuel pipe. [Online]. Available at: < http://articles.economictimes.indiatimes.com/2014-04-09/news/48999957_1_maruti-suzuki-india-dzire-ertiga>. [Accessed on: 11 April 2014]. Doole, I. and Lowe, R. 2005. 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