Maruti Recession Strategy

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Strategy adopted during recession Robust financial and operational resilience Maruti had virtually no debt and healthy cash flows which helped the company fund growth from internal sources. Its engagement with dealers and vendors was financial prudent and helped it build strong relationships with two vital stakeholders. This strong foundation helped Maruti capitalize on two strategies – capturing new markets and innovating in existing markets - turning recession into a huge opportunity for the company. Capturing new markets and sources of growth • Shift to rural markets With the mainstream urban consumers suffering the consequences of recession (rising commodity & fuel prices), Maruti Suzuki decided to target niche segments to drive growth…show more content…
Hard-hit private banks were in dire straits meaning that these loans would dry up. Maruti mitigated this by forging long-standing relationships with PSU banks in the country. Not only were they better shielded from the recession than global-private banks, they had a far better reach into rural markets than private banks did. Also, Maruti made its cars available to rural consumers at discounts of Rs. 3000 to Rs. 8000. • Shift from sales mindset to service mindset From a business model where topline mainly depended on revenues generated by sales, Maruti started generating revenues by concentrating on servicing. They deployed mobile vans in cities & villages all over the country which would go door to door offering car service and advice at a very nominal fee. While the recession meant that consumers were tight fisted when it came to spending large amounts of money to buy new vehicles – they were more than ready to spend money to service the vehicles they already own so as to get them in better shape and make them last longer. Figure 3: Mobile service…show more content…
So, to capitalize on their demand, Maruti implemented flexible production schedules that helped to produce more of these units in the same facility. Maruti had been working on a flexible manufacturing programme and had designed built-in software that could aid the transition and help add shifts and sub-shifts to both diesel engine and petrol engine production. There was also a sense of ownership among employees and workers that helped them in successful execution of such a complex shuffle of manpower and machinery. Maruti reaped the benefits of this change in strategy by posting highest ever domestic and total sales in January 2009, even as the auto industry reeled under recession. The process improvement initiative made Maruti stay ahead in industry best practices. Some crucial data supports a similar story

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