R. C. Bhargava, Chairman of Maruti Suzuki talks to B&E’s Pawan Chabra about competitve threats from foreign players launching better technology cars and the high royalty payment issue.The secret to profits has, and always will remain competitive pricing and satisfied employees, says a Least Worried Bhargava.
When R. C. Bhargava (the topper of the Civil Services Examinations of 1956) wanted to join Maruti Udyog Limited in 1981 as the Director (Marketing), people advised him against leaving BHEL (Bharat Heavy Electrical Ltd.), where he was serving as the Director of commercial operations for about three years. Maruti was then perceived to be a political project with a dull present and a lifeless future. He chose to try out Maruti for three years. What followed changed his life. He gave up IAS and chose to live the Maruti dream. He’s seen it all, from the launch of India’s first People’s car (the Maruti 800), to the entry of foreign competitors in India. Undoubtedly, he has an emotional connect with Maruti Suzuki that dates back to about three decades. Today, he’s the Chairman at Maruti, and the carmaker is under great threat of losing dominance in India. And of course, he hates to lose!
B&E: Amidst JVs in the Indian automobile industry that have gone sour, the JV between Maruti and Suzuki has proven to be different and fruitful. What as per you are the factors that are responsible for the success of your JV?
R. C. Bhargava (RCB): For any JV to be successful, both the parties should look at bringing their respective expertise on the table. It is extremely important that both the parties work for the benefit of the JV rather than looking at getting the other party out of the picture. It is like a marriage, wherein you will have to trust your partner if you are looking at a fruitful and long relationship. It’s the trust that has made the JV between Maruti & Suzuki such a long and beneficial relationship.
B&E: The company has grown hand-in-hand with the Indian automotive industry. And for ever, you’ve focussed on differentiating your offerings on the basis of prices. Your comments...
RCB: When we entered the Indian automotive market, there was practically no competition. In a way, there were products like the Padmini and the Ambassador that were selling in the Indian market. But they had an outdated technology and we entered with the latest technology that set a new standard. Maruti Suzuki clearly took the market by storm and being a market leader with over 50% market share there is obviously a price advantage that the company enjoys. The formula to deal with competition in the Indian market is very simple – if you can’t match the price levels of the market leader, it will be very difficult to succeed in the Indian market.
B&E: With so many new launches in the small car segment, Maruti is presently under great threat. There are also doubts whether Maruti can defend its market share. What’s your next move?
RCB: It’s not exactly true that we are under any threat. The new entries will surely make the competition more intense in the small car segment, but we are confident of our strategies. The scenario was similar even before during the 1990s when Hyundai and Daewoo entered India. We were able to defend our market share then too and we believe we will be able do it even this time. The strategy to do so will be as simple as introduction of new models and aggressive pricing.
When R. C. Bhargava (the topper of the Civil Services Examinations of 1956) wanted to join Maruti Udyog Limited in 1981 as the Director (Marketing), people advised him against leaving BHEL (Bharat Heavy Electrical Ltd.), where he was serving as the Director of commercial operations for about three years. Maruti was then perceived to be a political project with a dull present and a lifeless future. He chose to try out Maruti for three years. What followed changed his life. He gave up IAS and chose to live the Maruti dream. He’s seen it all, from the launch of India’s first People’s car (the Maruti 800), to the entry of foreign competitors in India. Undoubtedly, he has an emotional connect with Maruti Suzuki that dates back to about three decades. Today, he’s the Chairman at Maruti, and the carmaker is under great threat of losing dominance in India. And of course, he hates to lose!
B&E: Amidst JVs in the Indian automobile industry that have gone sour, the JV between Maruti and Suzuki has proven to be different and fruitful. What as per you are the factors that are responsible for the success of your JV?
R. C. Bhargava (RCB): For any JV to be successful, both the parties should look at bringing their respective expertise on the table. It is extremely important that both the parties work for the benefit of the JV rather than looking at getting the other party out of the picture. It is like a marriage, wherein you will have to trust your partner if you are looking at a fruitful and long relationship. It’s the trust that has made the JV between Maruti & Suzuki such a long and beneficial relationship.
B&E: The company has grown hand-in-hand with the Indian automotive industry. And for ever, you’ve focussed on differentiating your offerings on the basis of prices. Your comments...
RCB: When we entered the Indian automotive market, there was practically no competition. In a way, there were products like the Padmini and the Ambassador that were selling in the Indian market. But they had an outdated technology and we entered with the latest technology that set a new standard. Maruti Suzuki clearly took the market by storm and being a market leader with over 50% market share there is obviously a price advantage that the company enjoys. The formula to deal with competition in the Indian market is very simple – if you can’t match the price levels of the market leader, it will be very difficult to succeed in the Indian market.
B&E: With so many new launches in the small car segment, Maruti is presently under great threat. There are also doubts whether Maruti can defend its market share. What’s your next move?
RCB: It’s not exactly true that we are under any threat. The new entries will surely make the competition more intense in the small car segment, but we are confident of our strategies. The scenario was similar even before during the 1990s when Hyundai and Daewoo entered India. We were able to defend our market share then too and we believe we will be able do it even this time. The strategy to do so will be as simple as introduction of new models and aggressive pricing.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
