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List the strategic issues underlying the following controversial strategic decisions of recent times:


Bajaj chetak to Bajaj Pulser

Strategic Issues1. Declining sales graph for chetak. 2. Shift of consumer preference in favour of bike. 3. Changing moods of generation next. 4. Established and marketing supply chain network.

b) Stop production for Maruti 800. c) Launching Tata Nano.

2) Evaluate the following two car models from the view point of the generic strategies; Maruti Alto vs Tata Indica.

Cost leadership- Cost Leadership Strategy calls for being the low cost producer in an industry for a given level of quality. The firm sells its products either at average industry prices to earn a profit higher than that of its rivals, or below the average industry prices to gain market share. Some of the key reasons for MUL being able to maintain cost leadership status in this industry may be listed as under: Size Being one of the very first entrant in the market MUL has been able to raise its capacity levels in a phased manner. Today its capacity is to the tune of 4.5 Lakh units per annum.

Low Initial investment The cost of installation and maintenance of an assembly line was much lower than what its competitors might have paid. This definitely has an impact on the cost of the final product to the extent of the fixed cost portion.

Unique concessions from the government Being the company promoted by the government, MUL have received a lot of protection and also financial help early on which made it possible for MUL to fund its internal operational costs.

Indigenous sourcing of components Over the years MUL had tried to use the built in capacities to produce the inputs indigenously and also trained its suppliers for producing almost all its requirements. Today 80% of the components are produced indigenously while MULs competitors import products from abroad and end up paying more.

Fully depreciated plants Most of the plant capacity has been installed over 15 years ago, which means products coming out of such plants need not incur any fixed cost element. High labour productivity MULs effective HR policies and use of quality circles and employee suggestion schemes have made employee more dedicated to the organisation.

Furthermore, MUL follows a two-way cost-reduction strategy to maintain cost advantage Partnering its vendors into business to cut excess costs and margins to suppliers; Implementing aggressive strategic operational adjustments in all its divisions.

But on the other hand Tata was not able to maintain cost leadership status in this industry, due to which it could not maintain the cost leadership effectively.

Differentiation- Here we have seen that Maruti has differentiated its product from other automobile division (Tata) with the introduction of K-Series engine, which Tata has not come up with. This strategic push has paved way for Maruti automobiles a slight competitive advantage over the Tata automobile division.

Focus- Here in this case we have seen that Tata has specifically targeted a particular buyer group before catering their products in the market. They have come up with various models especially to fit with a particular segment of target customers. Like in case of Tata Indica, the product line comprises of Tata Indica V2, Tata Indica dls, Tata Indica ev2, Tata Indica Vista, But Maruti on the other hand did not came up with such strategic move, Production of Maruti Alto or any other light vehicle in the same category serve the purpose for a particular family as a whole & not a particular segment.