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Maruti Case Analysis

Maruti Suzuki India Limited, the largest car manufacturer in India, was struggling with a labour strike at one of its manufacturing plants that was hampering revenue and market share. The strike was caused by underlying communication barriers like the hierarchical structure that pressured workers, an overloaded organizational structure, and the use of violence as a medium of communication rather than constructive dialogue. As a result of the strike and communication issues, Maruti Suzuki lost $550 million in revenue and one-fifth of its market share.

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Jai Srivastava
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827 views2 pages

Maruti Case Analysis

Maruti Suzuki India Limited, the largest car manufacturer in India, was struggling with a labour strike at one of its manufacturing plants that was hampering revenue and market share. The strike was caused by underlying communication barriers like the hierarchical structure that pressured workers, an overloaded organizational structure, and the use of violence as a medium of communication rather than constructive dialogue. As a result of the strike and communication issues, Maruti Suzuki lost $550 million in revenue and one-fifth of its market share.

Uploaded by

Jai Srivastava
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Case Analysis – Maruti Suzuki India Limited: Marketing

1.1 Case Background: -

Maruti Suzuki India Limited, India’s largest car manufacturer and the only company in the
country to have crossed the 10 million sales was struggling with labour problems in one of
its manufacturing units. Consequently, it was rapidly losing its market share to competitors
and its position as market leader was at stake. The strike vandalized property at the plant &
caused the death toll to rise. This not only hampered the revenue & market share but also,
rivals took undue advantage to promote their respective sales.

1.1.1 Key highlights:

1) Overutilization of resources: The company was producing 1.5 million units per year
against the installed capacity. Furthermore, they were replicating the Japanese
culture.
2) Huge market share: The company had a bodacious market share close to 45% and
was a leader in automobile industry due to incessant sales over last 25 years.

3) Extreme pricing/Marketing strategies: MSIL differentiated itself on the grounds of


fuel-efficient, & easy on the pocket cars. Moreover, they started with the price range
as low as INR 200,000 for Maruti 800 to INR 24,60,000.

1.2 Underlying communication barriers involved in the disaster


Some of the underlying barriers involved at various levels are listed below: -

1.2.1 Hierarchical barrier: - In this case, the management of the company tried to
pressurize the workers against the joining the new union and wanted them to sign
an agreement that would eventually, let them continue to be the members of the
pro-management union. The leaders mobilized the workers against signing such
agreements. This mis-communication to the workers led to sudden unrest among
them. Furthermore, this mis-communication led the workers to join the strike and
raised issues.

1.2.2 Organizational Structure Barrier: - The MSIL plant was working out of capacity and
resource scarcity. As a result, workers were over pressurized with the work. There
were huge irregularities during the work. However, the management failed to
cascade this information to the ground level workers and as a result, workers
resisted.
1.2.3 Incorrect choice of medium: - Workers choose wrong medium of communication to
convey their demands. Consequently, they retaliated and actively went on a flash
strike. Moreover, violence erupted and exacerbated the situation further. For
instance, one senior company official was burnt alive and around 100 officials and
policemen were badly injured. The company immediately declared the lockout of
Manesar plant and suspended 500 workers. Correct choice of medium on the
workers part might have avoided this situation.

1.2.4 Difference in Status: - Due to difference in status between the workers and the
management, the management preferred to remain adamant about the signing of
the good conduct bond and the suspension of the culprit employees.

1.2.5 Information overload: - MSIL did not maintain the transparency between the dealers
and the workers. MSIL used to sell more than 15000 cars and had a long waiting list.
Dealers were not involved about the crunch in the production and they were
indecisive regarding the waiting period. As a result, the rivals such as Ford, Nissan
took undue advantage and tried to attract the customers by providing incentives.

1.3 Conclusion / Justifications:

Post analysing the case, from the protagonist & the MSIL prospective, we can deduce the
facts very clearly. Some are listed below: -

 The company had a good network with the dealers and had a true value.
 They were a leader in customer satisfaction and penetrated the market diligently.
 However, despite all the success, they cannot be a true value to the workers as the
plant was operating out of capacity which led to the nightmare of the worker
violence.
 The effect of this strike or in other words, the communication barriers at several
levels led to the loss of 550 million dollars of revenue and decline in one-fifth of its
sales.

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