Explain the research design and methods that will be used to address the business problem you identified in Milestone

Overview: For Milestone Two, you will explain the research design and methods that will be used to address the business problem you identified in MilestoneOne, justifying why they are appropriate for your research study. To support your research design, describe the methods you will use, the key variables, and ethical considerations involved in using the research design.Prompt: Explain how you will carry out your research. Remember that your business problem should be able to be addressed using action research.Specifically the following critical elements must be addressed:Research Design:A. Explain the research design and methods you will use, justifying why they are appropriate for your research study.B. Describe the key variables from primary and/or secondary data sources that you will use to analyze your research problem.C. Explain the key dependent and independent variables. In other words, how would the independent variables predict, explain, or prove thedependent variable?D. Explain the key ethical considerations for using these data sources, including how they meet legal and professional standards.RubricGuidelines for Submission: Your milestone must be submitted as a 5- to 7-page Microsoft Word document with double spacing, 12-point Times New Roman font,one-inch margins, and at least three sources cited in APA format.https://research-methodology.net/research-methods/…AttachmentsMilestone 1
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Running Head: MSIL CASE STUDY
Maruti Suzuki India LTD (MSIL) Case Study QSO 500 Milestone One
Carmen Hendrickson
Southern New Hampshire University
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MSIL CASE STUDY
2
Business Problem
Introduction
Maruti Suzuki India LTD (MSIL) influenced the Indian industry with its
reliable and affordable automobile. It is a subdivision of Suzuki Motor Corporation and is
considered to be very competitive with low-cost vehicles. The company has been a leading
automotive company in more than 800 cities for many years, but recently the company has
witnessed a decrease in sales and a big decline especially in the financial year 2011/2012.
Since 1983, the company’s leading product, the A-segment or hatch had dominated the
Indian market giving several options of the hatch (entry-hatch, mid-hatch, and premiumhatch). Despite the high competition from other brands, MSIL continues being the most
favorable vehicle on the market. Although the sales are favorable to the company the
entry-hatch, a compliance issue emerged adding more cost to the consumer, and the sales
for the premium-hatch has not ranked as successful. The reduction in sales for the Asegment cars and the compliance issue caused buyers to become more vigilant. The entryhatch was no longer available with extra futures for the low cost as it was before it is no
longer appealing to a first-time buyer.
Research Problem and Impact to Stakeholders
Proper segmentation of the Indian vehicles is vital as it allows automobile
manufacturers to plan and position their models for succeeding in the targeted consumer
section precisely (Car Segmentation in India, n.d.). Although the sales for the entry-hatch
have been great, the emergence of the compliance issue that increased the cost for the
consumer, and the premium-hatch has not ranked as successful. With the decline in the Asegment sales, the manufacturers can no longer offer expensive features in the underlying
models. Therefore, consumers became more cautious about what futures they are receiving
MSIL CASE STUDY
with the low priced vehicles that they have been used to. Therefore the entry-level vehicles
like the entry-hatch have become less appealing to the first time car buyers. According to
the research study, the entry –level hatch segment was a “consumer pull driven product,” in
2003, but by 2013, it had evolved into a “channel push driven product.” Consumers did not
have a thorough understanding of the segments technological complexity. (Jaydeep
Makuherjee).
Improving the company sales is important, however, stakeholders need to be
kept in mind when implementing any changes that might directly affect them. MSIL
internal stakeholders are the MSIL employees and executives, and the external
stakeholders are the MSIL customers, which will be affected by changes made by MSIL.
Maruti Suzuki India LTD’s goal is to generate a quality product. A product that will
consistently and continuously generate profit; The company need to attract new consumers
as well as having previous buyers come back, maintain their reputation, to ensure the
company success and keep stakeholders happy. Buyers/external stakeholders want an
affordable price for a high-quality product that holds its value.
According to MSIL’s team, targeting the appropriate market segment and
designing the right features and benefits are vital components for the success of any
product. (Jaydeep Makuherjee) MSIL development team created qualitative research
describing the target audience for the A-segment vehicles. First-time buyers are cost
conscious when it comes to price, and with all the issues with the entry-level and the midlevel segment, buyers will oppose to purchase those vehicles, those no longer being most
appealing.
Research Question and Objective
The purpose of this research is to identify if MSIL should reconsider the
design of their A-segment options to prevent a future decline in the sales. This could profit
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MSIL CASE STUDY
4
the first-time consumer, offering an A-segment vehicle with extra features, keeping it
affordable but desirable at the same time. Due to the compliance issues with the entrylevel hatch, should MSIL offer a mid-hatch/entry-hatch option? We know that each of
option caters to different markets this new model should positively affect first-time
consumers. How will this change influence their current target consumer? The design
approach is a quantitative one; this research will provide us with analyzing data gathered
from surveys and dealer polls, we will get an understanding of the most popular models
based on numerical and gathered data.
Ethical Consideration
When using company information, we want to make sure that the information is
not shared, and that the consumer personal information is not shared. Although the
research requires pulling the company information, it is vital that consumer’s information
is kept confidential and will not share it with other similar companies to avoid violating
any legal and professional standards. Because of the information being public, written
consent is not needed, no names will be mentioned in the research to remain information
confidential. All information is being used for research purpose only.
Literature Review
Brand Perception
The Indian automotive market is a maturing market, the car manufacturers have
been developing new models, and several new segments are arising. The Indian consumers
have very specific buying need, much different than other parts of the world. On the Indian
market, the sedans and SUV’s are generally considered premium vehicles. Station wagon, a
concept that is a hit in the European and American market seems to not work well for India
(Rachit, n.d.) In the year 2012/2013, India recorded a GCI score of 4.32 o a scale of 17
MSIL CASE STUDY
which was a great improvement from the previous score of 4.30. In terms of each
component of the index, India has significantly improved its performance (Atul Mittal).
The automotive industry has its interest in eight competitive priorities which
include consumer perspective, innovation, product technology, delivery, sustainability,
cost, quality, and flexibility. According to Tugal Nauhria (2011), MSIL has to stay
competitive and stand out to be ahead of its competition. Although MSIL has been
recording favorable trend throughout the years against its competition, it is important for
MSIL to keep up with the consumers’ needs keeping the vehicles affordable and the everchanging world of technology. Moreover, Nauhria (2011) suggests that manufacturing
capacities of companies are a representative of a set of tasks which ought to be carried out
by the manufacturing function to back up the business strategy. The manufacturing
competitive priorities are represented by the emphasis that is placed in each of the
functions. The competitive priorities constitute the industry’s future focus for the next five
years and beyond.
Bias and Limitation
MSIL research and the research study done by Yougal Nauhria are limited only to
the Indian car manufacturers and because of that might be seen as bias, but are still see
relevant in the current car manufacturing businesses. Competition is unavoidable in any
business especially in the car manufacturing. Consumers research the vehicles before
buying and look for the futures that are important to them, the price, safety futures,
reliability, gas per millage, and the style of the vehicle, that’s why the competition will
always try to make their product more appealing to the buyer. Furhana (2015) argues that
there are several ways in which a product can bring a message to the market such as its
aesthetic appearance which satisfies the customer.
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MSIL CASE STUDY
Correlation
MSIL faced a different kind of competition from Tata Motors who are one of
the main competitors. The brand enjoyed a good market presence in the vehicle segment
and consumer trust across all their products. Many of these A-segment clients had
experienced the firmness and ubiquity of Tata’s buses. Initially, Tata had indicated when
they entered the hatch market which had an emotional connection with many customers
due to its indigenous make. The product catered to personal segments which were a huge
contributor to its success in the hatch segment. With its spacious interiors, sturdy structure
and relatively cheap operating cost, the Indica were preferred product for both short- and
long-distance travel. The vehicle was very popular in the taxi segment, as well as well
consumers who used it for their businesses [Atu].
Building a strong connection with the consumer can help MSIL build a
model that not only caters to the consumer needs but something that they can emotionally
connect to. According to the research done, most consumers have grown up with MSIL
vehicles. Based on the research it’s important that when making modifications to current
vehicles we are not drastically making changes. Currently, MSIL had a 65.6% rating
compared to Tata who has a 48.5% rating based on good reputation and reliability.
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MSIL CASE STUDY
7
References
Atul Mittal, P. M. (n.d.). Global Competivieness: World Passengers Car industry. SCMS
Journal of India Management , 75-85.
Car Segmenatation in India. (n.d.). Retrieved from Prokeraia.com:
http://www.prokerala.com/automobile/cars/
Jaydeep Makuherjee, G. M. (n.d.). MARUTI SUZUKI INDIA:DEFENDING MARKET
LEADERSHIP IN THE A-SEGNMENT. Ivey Plublishing .
Miranda, L. (n.d.). Forbes India. Retrieved from Is the Indian Auto Industry Ethically
Blind?: http://www.forbesindia.com/blog/accidental-investor/is-the-indian-autoindustry-ethically-blind/
Mosarrat Farhana, E. B. (2015). Design Driven Innovation as a Differentiation Strategy- in
the Context of Automotive Industry. Journal of Technology Managment &
Innovation .
Rachit, H. (n.d.). Different segments in Indian auto industry. Retrieved from
cardekho.com: https://www.cardekho.com/features-stories/different-segments-inindian-auto-industry.htm
Yugal Nauhria, S. P. (2011). Competivie Priorities for indian Car Manufactureing Industry
(20112020) for Global Competitiveness. Global Journal for Flexible Systems
Managment , 9-20.
For the exclusive use of L. Diaz, 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 Lillian Diaz in QSO-500 Business Research 17TW5 taught by Lindsay Conole, Southern New Hampshire University from May 2017 to September
2017.
For the exclusive use of L. Diaz, 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 Lillian Diaz in QSO-500 Business Research 17TW5 taught by Lindsay Conole, Southern New Hampshire University from May 2017 to September
2017.
For the exclusive use of L. Diaz, 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 remaine …
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