Expert answer:Research Problem Statement and Research Question
Expert answer:In Module One, we will explore the concept of business research and why it is an important skill for operations management professionals. With the advancement of technology, prominence of the internet, and the vast expansions of data sources within and outside the organization, managers are now being expected to gather this data and subsequently analyze the data to ultimately drive valid business decisions. Business research is a systematic process to identify an organizational problem or opportunity, collect appropriate data, analyze the data, and summarize the findings. From these findings, actions are implemented that improve an organizational process, solve an organizational problem, and contribute to organizational performance.Possessing knowledge of business research methods provides a distinct advantage over those managers who are unfamiliar with formal business research. According to Sekaran and Bougie (2016), these advantages include:The ability solve organizational problemsThe knowledge to conduct systematic research and arrive at data-based conclusionsThe awareness to identify bias and influences on a particular organizational problemThe ability to estimate risk in decision making by fully understanding the implications of various outcomesThe ability to present a solution to organizational problems to all stakeholders in a concise, fact-based fashionUltimately, you will possess the ability to systematically dissect a problem, analyze the data, and present fact-based, valid decisions. This differs from those who use intuition, bias, and “gut feel” to make decisions and solve problems. In the Module One discussion forum, you and your peers will be discussing your varied experience with business research. This will provide insight into how business research is applied to various disciplines and industries. The module readings provide an overview of the basic concepts in business research and introduce the criticality of developing a clear, concise problem statement and associated research questions. Business research fundamental concepts—research questions—will form the initial phase of the final course project.ReferenceSekaran, U. & Bougie, R. (2016). Research methods for business: A skill-building approach (7th ed.). Chichester, West Sussex: Wiley.*************Review the attached case study Maruti Suzuki India: Defending Market Leadership in the A-Segment and identify a problem that can be addressed by a research report. Draft a preliminary description of the problem and a research question based on the problem identified. For this journal and the first final project milestone, you will not need to reference the data sets provided, but you may want to review the data briefly to help inform the development of your research question. Note: You will notice that there are both qualitative and quantitative data sets accompanying the case study. While both can be used to address a business problem, you will be using quantitative data sets for the purpose of the final project in this course. Use the questions posed in the summary of the case study on page 8 to inform your ideas for your research problem.*****************
qso_500_module_one_journal_guidelines_and_rubric.pdf
defending_market_leadership.pdf
Unformatted Attachment Preview
QSO 500 Module One Journal Guidelines and Rubric
For this journal, you will review the final project case study and begin drafting ideas for your research problem and research question.
Review the case study Maruti Suzuki India: Defending Market Leadership in the A-Segment (see your syllabus for information about purchasing this required
case study) and identify a problem that can be addressed by a research report. Draft a preliminary description of the problem and a research question based on
the problem identified. For this journal and the first final project milestone, you will not need to reference the data sets provided, but you may want to review
the data briefly to help inform the development of your research question.
Note: You will notice that there are both qualitative and quantitative data sets accompanying the case study. While both can be used to address a business
problem, you will be using quantitative data sets for the purpose of the final project in this course.
Use the questions posed in the summary of the case study on page 8 to inform your ideas for your research problem.
This is a private conversation between you and the instructor. Use the journal as an opportunity to familiarize yourself with the final project requirements and
case study.
Rubric
Guidelines for Submission: Submit assignment as a Word document with double spacing, 12-point Times New Roman font, and one-inch margins.
Critical Elements
Problem
Proficient (100%)
Describes a problem that can be
addressed by a research report
Research Question
Develops a research question to
address the business problem
identified
Needs Improvement (75%)
Describes a problem, but
problem cannot be addressed
by research report
Develops a research question,
but question will not adequately
address problem identified
Not Evident (0%)
Does not describe a problem
Value
50
Does not develop a research
question
50
Total
100%
For the exclusive use of M. Phillips, 2017.
W15582
MARUTI SUZUKI INDIA: DEFENDING MARKET LEADERSHIP IN THE
A-SEGMENT
Jaydeep Mukherjee, Gaurav Mathur and Nikhil Dhar wrote this case solely to provide material for class discussion. The authors do
not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain
names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.
Copyright © 2015, Richard Ivey School of Business Foundation
Version: 2015-12-17
Maruti Suzuki India Ltd. (MSIL), a subsidiary of Suzuki Motor Corporation Japan, had dominated the Indian
automotive industry with an unchallenged leadership position in the “A-segment” since its inception in 1983. The
Indian car market was normally divided into four product categories: hatch, sedan, sport utility vehicle (SUV)/multiutility vehicle (MUV) and van. The hatch segment could be further divided into entry-hatch, mid-size-hatch and
premium-hatch segments. The overall hatch segment was known as the A-segment (see Exhibit 1). Growth of the
Indian car market was driven primarily by growth in this segment.
From 2008 to 2013, MSIL’s competition had made inroads in the A-segment with cars like the Hyundai Eon, the
Hyundai i10, the Tata Nano, the General Motors Beat and the Honda Brio. During this period, MSIL’s A-segment
market share declined from 61 per cent to 49 per cent. Industry sources estimated that the Indian car market would
grow to annual sales of 4.7 million units — and the A-segment to 2.4 million units — by 2017/18. A continued drop
in market share in the A-segment could jeopardize MSIL’s competitive advantage in the Indian car market. The
company needed to reassess its strategy to sustain its market position (see Exhibit 2).
Among other initiatives planned in March 2013, the MSIL board had sought a product roadmap to sustain its
dominance in the A-segment. Typically, new product development and introduction required four to five years to
design, develop, test and produce with a budgeted spend of approximately ₹6 billion,1 apart from associated
opportunity costs; hence, it was an important activity for MSIL. The general manager of the product planning
department was entrusted with the assignment.
THE INDIAN CAR MARKET
India’s total passenger vehicle industry (including passenger cars and commercial vehicles) was the sixth largest in
the world, with annual production of more than 3.9 million units in 2011, while the country’s passenger car market
was the seventh largest in the world, with sales of almost 2.7 million units in 2011. As a car manufacturer, India was
growing at an exceptional speed; in 2003, for the first time, national production exceeded the 1 million mark, going
on to exceed the 2 million mark in 2006.2
1
All figures are in ₹ (INR or Indian rupee) unless stated otherwise; ₹1 = US$0.02 on May 5, 2015.
Society of Indian Automotive Manufacturers, “Industry Performance in 2014-15,” www.siamindia.com/statistics.aspx?
mpgid=8&pgidtrail=9, accessed July 30, 2015.
2
This document is authorized for use only by Matthew Phillips in QSO-500 Business Research 17TW2 taught by Lindsay Conole, Southern New Hampshire University from October 2017 to
February 2018.
For the exclusive use of M. Phillips, 2017.
Page 2
9B15A016
MSIL utilized the findings of several macroeconomic studies to draw up its future plans. It also had a research wing
that provided information to its planning, marketing and legal departments. Apart from that, it initiated its own
research related to competition, dealership health, sales figures and market potential as well as consumer insights.
Reports indicated a significant opportunity in the Indian passenger car market, in the form of growing gross
domestic product (GDP), increasing income (i.e., more disposable income among consumers), increasing bank
networks and credit facilities, and low car penetration (18 car owners per 1,000 people, whereas Brazil and China
had figures of around 200 per 1,000). Major global players like General Motors, Ford and Toyota had initially
offered only sedan cars and SUVs, but had eventually introduced products in the A-segment — typically, the most
compact cars from their international portfolios. Most of these compact cars were in the premium-hatch category of
the Indian market. Thus, the sedan, SUV and premium-hatch segments witnessed higher competition. These
segments were also supported with some high-profile advertisements and consumer promotions from the car
manufacturers, which fuelled growth.
As a consequence, the entire A-segment also became very competitive for well entrenched players like MSIL,
Hyundai and Tata Motors. Stakes for the entry- and mid-hatch segments also increased among these competitors.
Competition was expected to intensify with more multinational companies entering the Indian market, in addition to
existing players introducing India-specific products (targeting the entry- and mid-hatch segment) (see Exhibit 3).
The Indian market saw increased proliferation of features from the luxury segment becoming available in the lowerend car segments. Features such as air conditioning, power steering and power windows were aspirational for the
hatch segment in 2009, but became standard features in the hatch models by 2012/13. Similarly, features available in
the luxury sedan segment during 2008, such as touch-screen audio, electric- and auto-foldable mirrors, and
automatic air conditioning, were standard across the sedan segment in 2012/13.
The used car market in India grew at a compound annual growth rate (CAGR) of 22 per cent from a volume of 1
million units to 2.6 million units from 2007 to 2012. The market was projected to grow at a rate of 22 to 24 per cent
from 2012 to 2017. Within the used car market, small cars accounted for 67 per cent of the total sales in 2011/12.
The ratio of new car sales to used car sales in India was expected to reach 1:1.8 by 2016/17 (from 1:1.3 in 2011/12).
However, even with this increase, India’s ratio would be low compared to developed markets, where the ratio was
1:3.
COMPANY BACKGROUND
MSIL, formerly known as Maruti Udyog Limited, started operations in 1983, when the Government of India and
Suzuki Motor Corporation established a joint venture company to sell small cars in India. Suzuki increased its equity
from 26 per cent to 40 per cent in 1987, and further, to 50 per cent in 1992, and 56.21 per cent in 2012 (the
remainder was owned by public and financial institutions). The company was listed on the Bombay Stock Exchange
and the National Stock Exchange of India.
MSIL’s vision statement was: “The leader in the Indian automobile industry. Creating customer delight and
shareholders’ wealth: A pride of India.” Its core values were “customer obsession, fast, flexible and first mover,
innovation and creativity, networking and partnership, and openness and learning.”
By 2013, the company had established a strong brand image by offering solid, reliable products. MSIL’s corporate
communications emphasized emotional connection, using the message, “India comes home in a Maruti Suzuki.”
MSIL products enjoyed a sturdy, reliable and economical image in the minds of consumers, and A-segment
consumers were proud to own a Maruti Suzuki car. The company’s market share reached 85 per cent in 1997, before
gradually reducing due to intense competition. By February 2012, the company had sold 10 million vehicles in
India. In addition, it was ranked number one in consumer satisfaction for an unprecedented 13th time in a row in the
J.D. Power India customer satisfaction index in 2012.3
3
J. D. Power, 2012, “Customer Expectations of Convenience during Vehicle Service Rises Significantly in India,”
http://india.jdpower.com/press-releases/2012-india-customer-service-index-csi-study, accessed November 17, 2015.
This document is authorized for use only by Matthew Phillips in QSO-500 Business Research 17TW2 taught by Lindsay Conole, Southern New Hampshire University from October 2017 to
February 2018.
For the exclusive use of M. Phillips, 2017.
Page 3
9B15A016
Indian consumers generally spent two times the cost of acquisition on repairs and maintenance over the lifecycle of
a car, as per the research conducted by MSIL. MSIL products had lower overall costs of ownership. This was
achieved by reducing product cost through localization, value analysis and value engineering (VAVE), and
improved quality. The company had developed ancillary industries in and around its factory, indigenized the
necessary components and increased the local content in its products.
In 2012/13, MSIL achieved revenue of ₹426 billion and a profit of ₹23.9 billion. The company had two state-of-theart factories. In 2010, it rolled out 1 million vehicles in a year, which was a remarkable landmark for an automobile
company in India.
The depth of MSIL’s distribution channels played a key role in helping the company to maintain its leadership
position in the Indian passenger car industry. By the end of 2012, it had a sales network spread across 878 cities
nationwide and a service network spanning 1,422 cities and towns. However, establishing and maintaining
distribution outlets in rural markets remained a key challenge for MSIL. Initiatives to maintain constant dealership
motivation — through hefty trade promotions, attractive foreign trips and corporate recognition for smaller
dealerships — were crucial to success. MSIL dealerships were confident of brand pull, good sales and service
support, and fair dealings. Dealerships located in cities that were not in the top 50 cities of India (in terms of car
sales) took great pride in being part of the Maruti Suzuki family and this association gave them greater recognition
in their own business and social circles.
COMPETITION
With its aggressive tactics, broad product range, appropriate price points, attractive promotions and wide
distribution, Hyundai was MSIL’s greatest competitor in the A-segment. Its product range comprised the Eon, the
i10 and the i20, which were designed to cater to the changing requirements of Indian consumers. Hyundai had the
added advantage over MSIL of having successful products like the Verna in the premium car segment, which helped
in building brand image and improving profit potential.
Tata Motors posed a different type of competition to MSIL. The brand was trusted across different consumer
products and had good presence in the transport vehicle segment. Most A-segment consumers had travelled in Tata
buses and experienced the sturdiness and ubiquity of the company’s vehicles. Tata entered the hatch market with the
Indica, which was an indigenously developed car and hence, had an emotional connection with many consumers.
The product was a success in the hatch segment and it catered to personal and commercial segments. With its
spacious interiors, sturdy structure and relatively cheap operating costs, the Indica was a preferred product for both
short- and long-distance travel. The vehicle was very popular in the taxi segment, as well as with consumers who
used it for their own businesses.
The Nano was Tata’s most innovative product and had enjoyed a high-profile launch. It was conceptualized as a
product that bridged the gap between two-wheeled vehicles and the entry-level A-segment car. It was expected to be
a game changer in that it was completely designed in India using the frugal engineering4 methodology to provide an
affordable alternative to two-wheeled vehicles, which constituted a huge market in India. Despite these selling
points, the product was not as well accepted in the Indian market as was expected, which was reflected in the sales
figures (see Exhibit 4).
Hyundai and Tata Motors had plant capacities of 600,000 and 1.1 million vehicles, respectively. Hyundai designed
its vehicles in Korea and established a global image for its products. Tata motors had its design centres in India and
Europe. MSIL had its research and development centre in India, which was Suzuki Motor Corporation’s main
research and development centre in Asia (apart from Japan). This gave MSIL an edge over its competitors, as it had
4
“The central tenet behind every frugal engineering decision is maximizing value to the customer while minimizing
nonessential costs. The term frugal engineering was coined in 2006 by Renault chief executive Carlos Ghosn to describe
the competency of Indian engineers in developing products like Tata Motors’ Nano, the pint-sized, low-cost automobile.”
PwC, “The Importance of Frugal Engineering,” May 25, 2010, www.strategy-business.com/article/10201?gko=24674,
accessed July 8, 2015.
This document is authorized for use only by Matthew Phillips in QSO-500 Business Research 17TW2 taught by Lindsay Conole, Southern New Hampshire University from October 2017 to
February 2018.
For the exclusive use of M. Phillips, 2017.
Page 4
9B15A016
access to Japanese technical support but the autonomy to design and develop new products in line with local
requirements.
DEALER NETWORK
Buying a car was a high-involvement purchase that required quality selling. MSIL operated through an exclusive
network of dealerships, which provided sales, service and spares. Every sale had the potential to start a regular
stream of revenue for the subsequent decade for the dealership and the car manufacturer. Sales and service support
was critical for managing customer expectations, experiences and relations, apart from the initial sale.
Car dealerships relied intensely on infrastructure and working capital. Each required an investment of around ₹85
million (in rural areas) to ₹175 million (in major cities, excluding the cost of land). With such large capital
investments and low margins in the small car segment, dealers were finding it increasingly difficult to break even,
even after two to three years of operations. For these reasons, dealerships were appointed only after assessing longterm commercial viability (see Exhibit 5).
Since the cars could be located in any part of the country and reliable service was a basic necessity (human life
could be at risk in case of product malfunction), all car manufacturers had a large network of authorized service
stations to provide quality service. Sales and service channel development and maintenance were therefore major
costs; hence, companies aligned their distribution strategies with their market realities and business strategies. MSIL
enjoyed high network penetration with 1,009 dealerships and 2,946 authorized service centres. Market intelligence
data for MSIL showed that Hyundai had 340 dealerships and 935 authorized service centres, while comparable
figures for Tata passenger cars were 217 and 874, respectively (though it enjoyed considerably greater reach and
presence in the commercial vehicle segment).
The dealer margin on A-segment cars was shrinking in 2013. The Maruti sales team had been tracking the data from
the dealerships across the country and found that this drop was more pronounced for the entry-level than the
premium-hatch category. Based on market intelligence by the MSIL sales team, while gross margins varied from 3.5
to 5 per cent, depending on the manufacturer and the product, net margins remained around 2 to 3 per cent across the
industry. MSIL management expected the net margins to remain low across the segment because dealerships had to
share part of the ever increasing consumer promotion expenses with the manufacturers. These expenses were
typically much higher for the premium hatches as compared to the rest of the A-segment.
Considering the low sales margin in A-segment cars, dealership viability in new car sales remained problematic.
With high sales requirements for channel viability, penetration in rural markets was a challenge for most
manufacturers, since reaching break-even volumes on a regular basis was very difficult in these markets. Even
companies like Maruti Suzuki and Hyundai had struggled to penetrate beyond the district level. The largest 20 cities
in India in terms of car sales had dealerships of 21 car manufacturers, while the figure for the next 30 cities was 17.
MSIL internal reports indicated that only nine manufacturers had dealerships beyond the top 100 cities (with respect
to industry sales), and just two had dealerships outside the top 200 cities.
Dealerships had to develop their used car businesses, as many consumers were now buying a replacement car. These
consumers typically wanted the dealership to also buy back the old car, which could act as a consumer retention
strategy for the dealerships. Dealerships had to set up additional infrastructure for this business; however they also
enjoyed double gross margins in the used car business as compared to new car sales. For instance, a four-year-old
compact car could fetch a gross margin of 6 to 8 per cent, as compared to a similar new car that would fetch only 2
to 4 per cent.
There was intense competition in the used car business, as it included independent used car dealerships as well as
the dealerships of other car manufacturers. MSIL had done its own internal research, which showed that independent
used car dealerships were selling around 75 per cent of the total market. Their main value proposition was that they
offered consumers the choice of switching their original brands as well as a 2 to 5 per cent price advantage as
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