This is the detailed PESTEL Analysis of Maruti Suzuki of discover how political, economic, sociocultural, technological, environmental, and legal factors can influence the automotive company’s operations and strategy.
Background and Introduction
Maruti Suzuki is a consequence of collaboration between Maruti Udyog Ltd. and Suzuki Motors Corporation. It is probably the largest and most successful car companies in India. It was established in February 1981 in New Delhi, India, when parliament of India passed an act to meet the growing demands of private mode of transport due to inefficiency of public transport system. Maruti Suzuki engages with making, selling of cars and its components and spare parts in India and beyond. The company also deals with car financing and sales of used cars.
The company was founded to target the middle class of India but now it offers cars of every price range. The company offers 15 brands and over 150 different types of cars ranging from people’s car Maruti 800 to latest Life Utility Vehicle, Ertiga. The company employed over 9000 people in 2012.
According to JD Power survey, Maruti ranks first in customer satisfaction and the company has been able to secure this title for 12 consecutive years. Maruti Suzuki not only deals deals with local market but supplies its products to several countries in Europe, Asia, Latin America, Africa and Europe. Before 2007, 18.28% of the company’s shares were owned by Indian government and 54.2% by Suzuki Motors, Japan. But in 2007, the government made its shares public. (Arasu, 2013)
Political Factors
The company has to follow certain policies established by Indian government regarding automobile sector. The policies demand to make the company a source of generating new employment opportunities and to boost the industrial growth of the state. The company should be able to promote a healthy global automotive competition and should be productive to provide the automotive components to international markets.
The company is required to manufacture economical and small cars to target the market of low income users. The policies ask the company to promote open trade but with least threat to Indian economy. (SHARMA, 2012).The company has to deal with the increment in taxes which make them raise the prices of their products.
Economic Factors
Maruti Suzuki was ranked twentieth in terms of worldwide sales volumes amongst all automobiles manufacturers across the world. In the year 2002, the company had the highest sales of 339,964 cars and a market share of 58.6%. (Maruthi Suzuki India Ltd Marketing Essay, 2013)
However, Maruti faces the constant change in oil prices, import and export rate and exchange rates. The increase in economic growth may increase the buying potential of the users but the company’s import and export rate gets affected with the ever changing exchange and tax rates.
Maruti has outdone itself in car sales in India. It holds 55% of the automobile market of the country. The sales of cars have been increased 8.45% per annum. Maruti has plans to hit the rural market whose 60% is run on cash. The company has hired 2,000 sales executives to expand their market in rural area. As far as the manufacturing department of the company is considered, it has been growing 8-10% per annum since the last few years. More than 70% of the automobiles are being purchased on credit. (SHARMA, 2012)
Social Factors
The company has done much work to set up welfare camps. It has offered medical support and welfare to common people. Maruti took the initiative of establishing its own driving schools across the country which teaches road attitudes and behavior to minimize the possibilities of road accidents in India. Maruti has always aimed to design cars which satisfy the needs of its customers. Cars are taken as status symbols and Maruti has been working to define these status symbols according to the needs of its consumers.
The tourism has increased in India due to its strong cultural values and its cricket. Maruti has a lot of potential to increase its market due to afore mentioned social factors. The company has launched a brand called MARUTI GENUINE ACCESSORIES which offers stereo systems, body covers, carpets and other car care products to all its consumers throughout the country. (SHARMA, 2012)
Technological Factors
Maruti is famous for its designs of small and fuel-efficient cars. The company has launched CNG kit for ALTO which is its highest selling product. The company invests a lot in its R&D to increase the engine development work in India. The company has added Virtual Design Review (VDR) to its R&D to have practical substantiation to decrease the cost of development and cycle time. Maruti has developed many alternate fuels like LPG/CNG/HYBRID system for MPI engine. The government of India is promoting National Automotive Testing and R&D Infrastructure. ( (Arasu, 2013)
Environmental Factors
Maruti Suzuki has been practicing 3R for a long time which includes reduce, reuse and recycle. The company follows the laws set by the government on emission of fuels and safety. The company promotes the sales car parts which can be reused and recycled. With the technology of alternate fuels, Maruti has launched the Hybrid cars which are eco-friendly and economical as well. The company still has a long way to go to accomplish environmental friendly goals but at the same time it has to follow the industrial norms. (SHARMA, 2012)
The company took an environmental friendly initiative in August 2010 to introduce factory fitted CNG option across vehicle segments of 5 models including Eeco, Alto, Estilo, Wagon R and Sx4. Maruti became the first company in India to introduce CNG fitted engines. (Arasu, 2013)
Law/Legal Factors
The company follows the highest standards of Corporate Governance. The company has enabled its consumers to make contact with the Secretarial & Legal department anytime for any queries. The board of the company goes through the legal compliance reports periodically to check and rectify if there are any non compliances with the laws of the company. The company has even developed the software which assigns different compliance to each individual. The software helps in monitoring the compliances activities going throughout the company. (SHARMA, 2012)
The company deals with the international trade and has to follow the laws of the country with which it is trading, which consequently affects the business. (SHARMA, 2012)
Bibliography
Arasu, K. (2013, january 26). Maruti Udyog Limited Company Analysis. Retrieved from management paradise: http://www.managementparadise.com/knt.nallasamygounder/documents/6308/maruti-udyog-limited-company-analysis/
Maruthi Suzuki India Ltd Marketing Essay. (2013, NOVEMBER). Retrieved from Essays, UK: https://www.ukessays.com/essays/marketing/maruthi-suzuki-india-ltd-marketing-essay.php?cref=1
SHARMA, P. ( 2012, APRIL 25). Maruti Suzuki India ltd. Retrieved from Slideshare.