Published by MBA Skool Team, Last Updated: December 22, 2019
PESTLE Analysis of Maruti Suzuki analyses the brand on its business tactics. Maruti Suzuki PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Maruti Suzuki, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Maruti Suzuki PESTLE Analysis can be explained as follows:
Political factors that affect the sale and revenue of automobile companies like Maruti Suzuki are rules and regulations formed by the government. The policies which are laid by the government for the automobile sector need to be followed by Maruti Suzuki. Taxation and labor laws, affect the overall revenue of the company if the taxes increase then the company has to increase its product price, and there is also an increase in labor laws by the government. High skilled labor finds it easy to get a job in the automobile sector due to these labor laws. According to the target market, the company manufactures small cars so that it can target economically low-income consumers. The company needs to abide by the rules and regulations while exporting or importing its counterparts from the international market.
Below are the economic factors in the PESTLE Analysis of Maruti Suzuki:
The economy of a country affects the sales and revenue of an automobile company like Maruti Suzuki.
As the economy of India currently, is facing a downfall so the automobile sector is facing an economic crisis. Maruti Suzuki is the leading automobile company in India but due to the economic downfall, its sales decreased by 32.7 percent in August 2019. An increase in interest and inflation rate will result in a negative impact on the growth if the company. The oil price is a major factor in determining the sale of the company, as the oil prices are rising people are not willing to buy the cars and thus the sale decreases. The manufacturing sector has grown by around 10 percent per annum in the last few years. But due to the economic slowdown this year, the company has curtailed its manufacturing.
Following are the social factors impacting Maruti Suzuki PESTLE Analysis:
Socially Maruti Suzuki has done a lot for the people, Maruti Suzuki believes in serving enhanced customer requirements, and perceived social value. Maruti has set up many welfare camps, took initiative for the education of the underprivileged, has adopted energy-saving technologies, reduced water wastage, taken care of road safety, etc. Maruti Suzuki has set up its driving schools to assure every person learns the right approach and to minimize the risk of accidents. Maruti has always fulfilled and delivered the needs of common people. Due to the cricket world cup, IPL, etc, the country attracts tourism so there is a great opportunity for a company like Maruti to increases its marketing and business. As Maruti has a strong brand value it attracts people easily. To cater to the needs of the youth, Maruti has also launched Maruti Genuine Accessories which extends stereo systems, carpets, body covers, and many other car care products for its huge customer base.
The technological factors in the PESTLE Analysis of Maruti Suzuki are mentioned below:
The automobile sector always needs to be updated in technologies to consider driving safety needs and innovations in the model. The company invests a lot in research and development to improve engine features. Maruti Suzuki is involved in the manufacturing of fuel-efficient and small car engines. For its highest selling car Alto it launched a CNG kit. The company applies next-generation KB series engine in its new hatchback car A-star. The company developed the LPG/CNG/Hybrid system for the MPI engine to use as the alternate fuel technology.
The company has included a virtual design review to its Research and development department to assure the virtual validation to reduce the cycle time and development cost of manufacturing.
Following are the legal factors in the Maruti Suzuki PESTLE Analysis:
Maruti Suzuki has to follow the highest standards of corporate governance. All the legal laws need to be followed by the company to take care of the safety of the consumers. The company has evolved a legal compliance scheduling and management software by which specific tasks are given to every individual. The customers can contact any time for their queries to the secretarial and legal department. Maruti Suzuki is involved in international trade, so it has to follow the trade laws of every country involved. Increased level of regulations and privatization of the automobile sector also affects the sale of Maruti Suzuki.
In the Maruti Suzuki PESTLE Analysis, the environmental elements affecting its business are as below:
The automobile industry follows international standards of emission and safety. There is a growing concern about the pollution caused by automobiles. Maruti Suzuki enables a continuous process of promoting recyclable and reusable car parts. Maruti is also practicing the 3 R model - Reuse, Reduce, Recycle for a long time.
Cars which are economical and eco-friendly are introduced by the company like hybrid cars. In August 2010, the company took an initiative to introduce environmentally friendly cars which are fitted with CNG option across the vehicle segment which included Eco, Alto, Estilo, Wagon R, and SX4. Thus Maruti became the first-ever automobile company to introduce and manufacture CNG fitted models of car.
To conclude, the above Maruti Suzuki PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
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