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Economical and Affordable Green Automotive Technology

Although hybrid cars are the rage, and there are all kinds of alternative energy sources on the horizon, hybrids are cost prohibitive, usually ranging $3000 to $7000 more than the gas only version of that model. However, instead of changing fuel sources, some automotive companies have been using a new type of transmission to improve fuel economy, lower emissions, and actually make vehicles faster without adding to the sticker price.

These companies are using a continuously variable transmission (CVT) and instead of having set gear ratios (or gears), it constantly varies the gear ratios, as well as engine performance, so that they both operate at their most efficient level in any driving scenario.

Because these key components of the power train are at their peak performance at all times, fuel economy is improved by 6-8% and carbon dioxide emissions are reduced by 10%.

Although these figures may not sound impressive, the gas savings increase the highway mileage of most vehicles by 4 to 6 mpg, which adds up pretty quickly at $3/gallon.

The CVT’s potential for reducing emissions is also significant. As Carlos Ghosn, CEO of Nissan Motor Company, said, achieving his goal of selling one million CVT equipped vehicles by the end of 2007 will have “the same effect in terms of reducing CO2 emissions as selling 200,000 hybrid electric vehicles.”

Since there is no shifting between fixed gears, there is no ‘shift shock’ or jerking sensation, which makes them exceptionally smooth to drive. CVTs also do well in hilly terrain since there is no ‘gear hunting’ or bogging down on a hill, followed by a loud, violent downshift, which also contributes to its superior acceleration.

You may be wondering why this isn’t in every car if it is so great. Well, every year, more vehicles in the American market add CVTs as an option, though it has happened quietly, as many people are leery of new technology, especially in cars.

The CVT is actually quite old although it is new to American automobiles. The concept was developed by Leonardo DaVinci and was first patented in the late 1800’s for industrial applications. The CVT has been used in Asian and European vehicles since the 1950’s, but until recently CVTs could not handle the power that American drivers demand from their cars. However, CVTs have seen widespread use in snowmobiles and Formula 500 racing where they have a reputation for extending engine life and being much easier to rebuild than either a manual or automatic step transmission.

So where can you test drive a CVT-equipped vehicle? Well you can go to dealerships selling Ford, Dodge, Audi, or Mini-Cooper, to name a few, although a Nissan dealership may be the best place to go. In order to hit their goal of one million CVT sales in 2007, they have installed CVTs in nearly every sedan in their lineup, including the best selling Altima, Maxima, and economical Versa (as a side note, Nissan has also made side curtain airbags standard in these models, improving safety and reducing insurance costs).

Although you may not have the budget for a hybrid vehicle or cannot wait for that miracle fuel to hit the market, you can take it easy on the environment, as well as your checkbook, by checking out a few cars with a CVT.

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Environmental Leadership ? the New Leadership Style of the not so Distant Future

In the changing face of business with mixed cultures, mass communication and social networks…

…will your current leadership skills be enough to still be effective?

In a world where information travels faster than ever, the expectations of work and leaders have changed significantly in just a few years, and with those expectations, the emotions and motivations that move us to greatness also affect our effectiveness and our longevity in a job.

When people’s emotional needs are being met on outside of work on diverse plains of social networking, productivity tools, and fast, easy interaction and information transfer across the globe, a new form of leadership must be applied. A psychological form of leadership called “Environmental Leadership”.

Each individual has various environments that bring out different facets from their own Identity, and each facet is driven by emotionally charged perceptions within each environment… The Environmental Leader creates a platform through education and awareness where individuals fill each other’s emotional needs and become more conscious of when, and how they affect personal and team emotional gratifications. This is accomplished by knowing Why people “react” to their environment instead of act intelligently.

Environmental Leadership is not about changing the mindset of the group or individual, but in the cultivation of an environment that brings out the best and inspires the individuals in that group. It is not the ability to influence others to do something they are not committed to, but rather to nurture a culture that motivates and even excites individuals to do what is required for the benefit of all. It is not carrying others to the end result, but setting the surrounding for developing qualities in them to so they may carry each other.

The role of a Leader has been transformed to an individual or group who can instill passion and direction to a group and the dynamics of that group. This leader implements a psychological support system within a group that fills the emotional and developmental needs of the group.

The path to becoming an Environmental Leader however, is founded on a bed of self discovery and laid with the tiles of group psychology. Only when we have an understanding of how “we”, as a leader, affect the “system” of a group, and how that system affects us, then can we evolve to Environmental Leadership.

At a glance it may seem a daunting journey, yet this path has a structure, a structure in the application of Directive Communication Psychology to influence the group’s system. And as with any structure, it can be followed to create a specific result.

The first step is to realize that every action you take, every decision you make, no matter how small, will affect the group. Whether it is positive or negative, there will be an effect.

Second thing is that when any individual in a group reacts, it will affect you and each of the other members of that group.

Since a leader’s actions and reactions not only affect the psychology of individuals, but affect the entire culture of the organisation or group, an Environmental leader manages 7 key psychological influences (2 keys of personal awareness and 5 pillars of Transformation) to cultivate a group and culture that effectively supports the greater abilities and fulfillment, even passion, of the members of that group, workforce or team.

A fundamental of any leadership has always been trust. And while there are many facets of trust and how to build it, one crucial area is in sharing what you know. First, start with this article. The “group” dynamics are best suited by getting the “group” involved. The Environmental leader does not develop followers but nurtures leaders and leadership in their group or organisation. To facilitate this, the knowledge of how to be an Environmental Leader must be disseminated throughout. The more people know, the easier it becomes to cultivate a Leadership enriched environment, and the better results everyone will attain.

2 keys of personal awareness:

It is Self awareness that leads to the recognition of the keys, which must be accepted before the Environmental Leader can build the final 5 Pillars of a transformational environment. The first step is the ability to realize that we will consciously or subconsciously make others wrong to support our ego, which leads to blame and away from growth. *Learning about our “Encoded Assumptions”, our “Rules of Engagement”, and our “Circle of Tolerance” helps us recognize the reactions that are preventing a speedier growth for ourselves and those around us.

Key number 1 is: Concentrate on growth and results, do not blame or make others wrong.

The next step is making others right, making leadership decisions and taking actions that help others to succeed and develop their abilities. And when they do succeed, the specific acknowledgment of their success and why they were successful. *Learning the “Colored Brain” and how our genetic processing affects the way we perceive the world and approach tasks and decisions and what that means in manifesting our “natural” talents not only makes this easier, but gives us a better platform to understand, cooperate, and communicate with others.

Key number 2 is: Create opportunities to make others successful and positively acknowledge their specific actions that lead to that success.

Building the 5 pillars of Transformation:

The 5 pillars are the cornerstone of a leader’s ability to modify group dynamics, to nurture an environment that inspires and brings out the best in others. And, it is the process of constructing the five pillars themselves that facilitates the leader, and his team, the ability to embrace the two keys of personal awareness. This course of creation acts as a leadership catalyst to the keys implementation and the modification the leaders own behavior that advances that leader into a more powerful, Environmental Leader.

You must have a Greater Purpose

The team must have a purpose that is greater or nobler that the personal goals of each individual. Yet realization of this greater purpose, would be equally fulfilling to the individual.

Consider the human condition, what is it that we all want and yet struggle with every day? We want to be good at what we do, we want to be successful! But trying to work in perfect harmony with multiple people and systems, and additional internal and external influences, in order to complete a task without any difficulty is seldom achieved. And thus, we as human beings, get frustrated with our environment and intermittent failures and setbacks from our success, form being our greater selves. We KNOW that change must happen, frequently we point to others and say they must change, yet, one thing remains constant, we all want to be in a work environment that supports and nurtures the our success. And this is a greater purpose that most would consider noble.

The role of an Environmental Leader is to inspire this noble idea. To make the group or team want it, and be willing to take action to achieve it for the cause, for the promise of a greater working environment and a greater self.

You must have a Methodology you believe can make a Change

The team must believe that change can happen, and that they as a group, can make it happen. They must believe that their own behavior can be improved, that they, as human beings can be better people. They must believe that there is a way, through a common wisdom in the group, they can be powerful enough to change organizational culture to a more fulfilling environment for the betterment of their own life.

But to believe any of this, the people must have, and recognize a psychological methodology that can effectively make change happen. If change for the better seems like an impossible dream, few will take the effort. So the first pillar is having and demonstrating a methodology that can make change happen, a methodology that affects the environment to give everyone a greater sense of fulfillment and growth in their work. While many methodologies exist such as Peter Senge’s Learning Organisation or Stephen Covey’s 7 Habits, the one specifically designed for corporate culture change and environmental leadership is Directive Communication (DC).

The personal and organisational awareness components of DC such as the *Colored Brain, Encoded Assumptions, Emotional Drivers, the 5 Postures, and the Force multiplication System, unite individuals with a greater understanding of how and why their work environment is the way that it is while opening the door to the real possibility of change. The role of the Environmental Leader is first to know the methodology, and second to coach key individuals in the methodology so they can in turn coach others.

Through the awareness process, change begins to be apparent and perpetuate the cultivation of the desired environment.

You must speak a Common Language

The methodology carries with it a specific language. The language reinforces the learning and the higher purpose. It enables greater communication with fewer words. It allows emotions to be expressed without being expressive. It sets a foundation to understand and explain awareness, change, and a higher level of living in a concise and effective way.

The role of the Environmental Leader is to use and reinforce the use of the language in the group. To set the example of applying communication that supports the greater cause.

You must have a Unified Identity

There is already a greater purpose that the team wants, a methodology everyone is applying (or at least aware of) to achieve that greater purpose, and a common language that the team is speaking to reinforce that methodology, so a common identity already exists.

The role of the Environmental Leader is to solidify that identity, to facilitate the group or team to associate themselves with that identity and everything it represents. To distinguish those who are a part of the greater purpose and give them a group vision.

In a case where Emirates Hotels and Resorts applied the Directive Communication methodology to evolve its leaders and its culture with a “Corporate Culture Revolution” program, the 300+ staff embraced the identity of “Patriots” for the Revolution. The “Patriots” improved productivity and service quality by over 32% in an Emirates assessment.

You must maintain an internal Supportive Environment

As an elite team with its unique identity that shares and applies a methodology for the development and benefit of each other, a Supportive environment will emerge as a byproduct of the process. And when it is lead by an Environmental Leader who focuses on the continuous progress and perpetuation of that environment, the ultimate success as a Leadership Enriched Culture emerges.

The role of the Environmental Leader becomes to nurture and develop environmental leaders within the teams and the organisation.

At this stage, the environment created will fulfill much of the constantly expanding emotional gratifications of security, diversity, belonging, personal growth, significance and achievement. This environment will compete and surpass the allure of the modern world. Yet it cannot be developed without the right leadership. And, an environmental leader must go in to this knowing, that as the process matures, he will no longer be as essential as when he started.

 

Arthur F Carmazzi is the founder of the Directive Communication Psychology and a renowned author and Speaker in the Asian Region and has been awarded as one of the top 30 Leadership gurus in the world by Leadership Gurus International and written best selling books “Identity Intelligence”, “The 6 Dimensions of Top Achievers” and “Lessons from the Monkey King”.. More at: www.carmazzi.net and www.directivecommunication.com

Himfr.com reports Chinese e-commerce has resumed a rapid growth in the third quarter

October 12 ~ 15, from the Ministry of Commerce, the Ministry of Public letter co-sponsored the Second China International Expo e-commerce applications. The exhibition has been held away from the last ten years show.

The exhibition, China Mobile, China Telecom have been involved, but because from the September International Telecommunications Exhibition held in Beijing less than in January, this trade show, the two display-related business operators and communications show not much difference. However, the Expo was held over the same period “2009APEC economies, officials Forum and global economic growth China Summit,” From a news perspective, operators are in no knowledgeable person, telephone and navigation integrated information service platform as its main e-commerce, and banking, the first to pay three companies, businessmen to discuss cooperation, pay channels and means, integral system and other key aspects of the construction work is also accelerated.

E-commerce back to faster growth

E-commerce is currently booming in China do not need to repeat the degree, e-commerce is becoming the strategy to achieve a convergence of two main elements. “

According to the Ministry of Public letter to run the pre-trade information to monitor and affect the development of China’s e-commerce technology, market demand, infrastructure, security, and other factors, which is being constantly improved: network production and management and consumption patterns are forming; industrialized and third-party-oriented e-commerce transactions are becoming the main way of e-commerce for SMEs; countries are stepping up to the e-commerce transactions, online product information management, security, electronic cash management, research and development of key technologies; network infrastructure, security, authentication, online payment, modern logistics, credit system, such as e-business support environment standards and norms continue to improve.

It is worth mentioning that the financial turmoil sweeping the globe against the backdrop of some of our e-commerce service platform for business only in the fourth quarter of last year by the more obvious impact of growth has slowed or even declined, while a quarter of this year, has been The rebound in the second quarter and third quarter has quickly resumed rapid growth.

Focus combined with the 3G

Public letter to Chief Engineer Su Jinsheng, introduced at the fair this year, the Department of Engineering has completed the letter on e-commerce development “Eleventh Five-Year Plan” of the initial assessment, and our next step in the development of e-commerce the formation of the corresponding ideas.

Among them, e-commerce development will be the development of the emerging focus on the deployment of 3G, and “to promote the development of innovative applications for mobile e-commerce,” the letter will also be the public focus of the work undertaken by the Department direction.

Operators: access, payment and integration go hand in hand

During the Expo, China Telecom to further the number of knowledgeable explicit form for their own e-commerce.

“China Telecom’s number of knowledgeable, we understand in a broad sense of e-commerce business model, which consists mainly of the media management, cluster communication and electronic commerce, which three elements.” China’s vice president of electrical signal 100 information services company, said the high Hongliang. He further explained that currently the number of knowledgeable, China Telecom is fully focused on access, payment and integral working together for three aspects. The reporter called the China Unicom’s stakeholders, he revealed the company for their own similar platform have the same orientation and planning.

“So far, China Telecom may be in China and the world has the most extensive, relatively speaking media, including telephone, mobile phone, Internet, POS terminals, chip cards, etc., this is a good means of access.” Gao Hongliang that “Since the media means so easy, then such as China Telecom has good credibility, and easily accessible in all areas of business, we feel that we should jointly relatively large number of banks and third-party payment companies together to do paid work. Of course, of which including through the bank account access means and China Telecom’s own way, I think we can do to explore. “

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Civilization and its importance

This article is about human society.

A civilization is a society or culture group normally defined as a complex society characterized by the practice of agriculture and settlement in towns and cities. Compared with other cultures, members of a civilization are commonly organized into a diverse division of labor and an intricate social hierarchy.

Definition

Civilization is often used as a synonym for the broader term “culture” in both popular and academic circles. Every human being participates in a culture, defined as “the arts, customs, habits… beliefs, values, behavior and material habits that constitute a people’s way of life”.However, in its most widely used definition, civilization is a descriptive term for a relatively complex agricultural and urban culture. Civilizations can be distinguished from other cultures by their high level of social complexity and organization, and by their diverse economic and cultural activities.

In an older but still frequently used sense, the term “civilization” can be used in a normative manner as well: in societal contexts where complex and urban cultures are assumed to be superior to other “savage” or “barbarian” cultures, the concept of “civilization” is used as a synonym for “cultural (and often ethical) superiority of certain groups.” In a similar sense, civilization can mean “refinement of thought, manners, or taste”.

In his book The Philosophy of Civilization, Albert Schweitzer one of the main philosophers on the concept of civilization, outlined the idea that there are dual opinions within society; one regarding civilization as purely material and another regarding civilization as both ethical and material. He stated that the current world crisis was, then in 1923, due to a humanity having lost the ethical conception of civilization. In this same work, he defined civilization, saying:

It is the sum total of all progress made by man in every sphere of action and from every point of view in so far as the progress helps towards the spiritual perfecting of individuals as the progress of all progress.

In the sixth century, the Roman Emperor Justinian oversaw the consolidation of Roman civil law. The resulting collection is called the Corpus Juris Civilis. In the 11th century, professors at the University of Bologna, Western Europe’s first university, rediscovered Corpus Juris Civilis, and its influence began to be felt across Western Europe. In 1388, the word civil appeared in English meaning “of or related to citizens”. In 1704, civilization began to mean “a law which makes a criminal process into a civil case.” Civilization was not used in its modern sense to mean “the opposite of barbarism” — as contrasted to civility, meaning politeness or civil virtue — until the 18th century.

According to Emile Benveniste (1954), the earlist written occurrence in English of civilization in its modern sense may be found in Adam Ferguson’s An Essay on the History of Civil Society (Edinburgh, 1767 – p.2):

Not only the individual advances from infancy to manhood, but the species itself from rudeness to civilization.

It should be noted that this usage incorporates the concept of superiority and maturity of “civilized” existence, as contrasted to “rudeness”, which is used to denote coarseness, as in a lack of refinement or “civility”.

Before Benveniste’s inquiries, the New English Dictionary quoted James Boswell’s conversation with Samuel Johnson concerning the inclusion of Civilization in Johnson’s dictionary:

On Monday, March 23 (1772), I found him busy, preparing a fourth edition of his folio Dictionary… He would not admit civilization, but only civility. With great deference to him I thought civilization, from to civilize, better in the sense opposed to barbarity than civility, as it is better to have a distinct word for each sense, than one word with two senses, which civility is, in his way of using it.

Benveniste demonstrated that previous occurrences could be found, which explained the quick adoption of Johnson’s definition. In 1775 the dictionary of Ast defined civilization as “the state of being civilized; the act of civilizing, and the term was frequently used by Adam Smith in An Inquiry into the Nature and Causes of the Wealth of Nations (1776). Beside Smith and Ferguson, John Millar also used it in 1771 in his Observations concerning the distinction of ranks in society.

As the first occurrence of civilization in French was found by Benveniste in the Marquis de Mirabeau’s L’Ami des hommes ou traité de la population (written in 1756 but published in 1757), Benveniste’s query was to know if the English word derived from the French, or if both evolved independently — a question which needed more research. According to him, the word civilization may in fact have been used by Ferguson as soon as 1759.

Furthermore, Benveniste notes that, contrasted to civility, a static term, civilization conveys a sense of dynamism. He thus writes that…

It was not only a historical view of society; it was also an optimist and resolutely non theological interpretation of its evolution which asserted itself, sometimes at the insu of those who proclaimed it, and even if some of them, and first of all Mirabeau, still counted religion as the first factor of ‘civilization.[5]HYPERLINK \l “cite_note-5″[6]

Another source of the word may relate to chivalry: a set of rules of engagement, originally for knights in warfare, but later expanded to cover conduct of knighthood or nobility. The English ‘chivalry’ comes from the French ‘chevalier’: a horseman. England and France would therefore have given rise to the terms at similar times.

Civilizations have distinctly different settlement patterns from other societies. The word civilization is sometimes defined as “a word that simply means ‘living in cities'”. Non-farmers gather in cities to work and to trade.

Compared with other societies, civilizations have a more complex political structure, namely the state. State societies are more stratified than other societies; there is a greater difference among the social classes. The ruling class, normally concentrated in the cities, has control over much of the surplus and exercises its will through the actions of a government or bureaucracy. Morton Fried, a conflict theorist, and Elman Service, an integration theorist, have classified human cultures based on political systems and social inequality. This system of classification contains four categories:

Highly stratified structuresCivilizations,

with complex social hierarchies and organized, institutional governments. or chiefdoms, with several inherited social classes: king, noble, freemen, serf and slave. Horticultural/pastoral societies in which there are generally two inherited social classes; chief and commoner. Hunter-gatherer bands, which are generally egalitarian.

Economically, civilizations display more complex patterns of ownership and exchange than less organized societies. Living in one place allows people to accumulate more personal possessions than nomadic people. Some people also acquire landed property, or private ownership of the land. Because a percentage of people in civilizations do not grow their own food, they must trade their goods and services for food in a market system, or be receive food through the levy of tribute, redistributive taxation, tarrifs or tithes from the food producing segment of the population. Early civilizations developed money as a medium of exchange for these increasingly complex transactions. To oversimplify, in a village the potter makes a pot for the brewer and the brewer compensates the potter by giving him a certain amount of beer. In a city, the potter may need a new roof, the roofer may need new shoes, the cobbler may need new horseshoes, the blacksmith may need a new coat, and the tanner may need a new pot. These people may not be personally acquainted with one another and their needs may not occur all at the same time. A monetary system is a way of organizing these obligations to ensure that they are fulfilled fairly.

Cultural identity

“Civilization” can also describe the culture of a complex society, not just the society itself. Every society, civilization or not, has a specific set of ideas and customs, and a certain set of items and arts, that make it unique. Civilizations have even more intricate cultures, including literature, professional art, architecture, organized religion, and complex customs associated with the elite. Civilization is such in nature that it seeks to spread, to have more, to expand, and the means by which to do this.

Nevertheless, some tribes or people remained uncivilized even to this day (2009). These cultures are called by some “primitive,” a term that is regarded by others as pejorative. “Primitive” implies in some way that a culture is “first” (Latin = primus), and as all cultures are contemporaries today’s so called primitive cultures are in no way antecedent to those we consider civilized. Many anthropologists use the term “non-literate” to describe these peoples. In the USA and Canada, where people of such cultures were the original inhabitants before being displaced by European settlers, they use the term “First Nations.” Generally, the First Nations of North America had hierarchical governments, religion, and a barter system, and oral transmission of their traditions, cultures, laws, etc. Respect for the wisdom of elders and for their natural environment (7th Generation decision-making) sustained these cultures for over 10,000 years.

The civilized world has been spread by invasion, religious conversion the extension of bureaucratis control and trade, and by introducing agriculture, and writing to non-literate peoples. Some non-civilized people may willingly adapt to civilized behaviour. But civilization is also spread by force: if a non-literate group does not wish to use agriculture or accept a certain religion it is often forced to do so by the civilized people, and they usually succeed due to their more advanced technology, and higher population densities. Civilizations often use religion to justify its actions, claiming for example that the uncivilized are “primitive,” savages, barbarians or the like, which should be subjugated by civilization.

The intricate culture associated with civilization has a tendency to spread to and influence other cultures, sometimes assimilating them into the civilization (a classic example being Chinese civilization and its influence on Korea, Japan, Vietnam and so forth, all of them sharing the fact that they belong to an East Asian civilization, sharing Confucianism, Mahayana Buddhism, a “Mandarin” class an educated understanding of Chinese ideograms and much else). Many civilizations are actually large cultural spheres containing many nations and regions. The civilization in which someone lives is that person’s broadest cultural identity.

Whereas the etiology of civilization is Latin or Roman, defined above as the application of justice by “civil” means, one may also examine and reflect upon Jewish or Hebrew civilization. A Hebrew “civilization” is defined not as an expression or extension of the subjective trappings of culture and society, but rather as a human society and/or culture being an expression of objective moral and ethical moorings as they are known, understood and applied in accordance with the Mosaic Covenant.[citation needed] A “human” civilization, in Hebrew terms for instance, may contrast sharply with conventional notions about “civilization.” A “human” civilization, therein, would be an expression and extension of the two most basic pillars of human “civilization.” These two pillars are, honest standardized weights and measures and a moral and healthy constitution. Everything else, whether technology, science, art, music, etc., is by this definition considered as commentary. Indeed, to the degree the surface terrain of a human society, i.e., culture is “civilized,” is to the degree the internal terrain (characteristics, personality or substance) of the people and leadership must also have been inoculated by, and inculcated with a moral foundation. The Biblically described Sodom, for instance, while being a society of people with a culture, would by Jewish or Biblical standards of “civility” have been uncivilized. And while the Roman sentiment is largely focused upon how justice must “appear” to be done in a “civil” manner, the Hebrew or Biblical approach to justice, in principle, is never limited to subjective pretenses or appearance, but more importantly, justice must be predicated upon objective principles. Ultimately, there is no true or lasting “civility” for any man in the absence of moral composure.[citation needed]

Many historians have focused on these broad cultural spheres and have treated civilizations as single units. One example is early twentieth-century philosopher Oswald Spengler,even though he uses the German word “Kultur,” “culture,” for what we here call a “civilization.” He said that a civilization’s coherence is based around a single primary cultural symbol. Civilizations experience cycles of birth, life, decline and death, often supplanted by a new civilization with a potent new culture, formed around a compelling new cultural symbol.

This “unified culture” concept of civilization also influenced the theories of historian Arnold J. Toynbee in the mid-twentieth century. Toynbee explored civilization processes in his multi-volume A Study of History, which traced the rise and, in most cases, the decline of 21 civilizations and five “arrested civilizations.” Civilizations generally declined and fell, according to Toynbee, because of the failure of a “creative minority”, through moral or religious decline, to meet some important challenge, rather than mere economic or environmental causes.

Samuel P. Huntington similarly defines a civilization as “the highest cultural grouping of people and the broadest level of cultural identity people have short of that which distinguishes humans from other species.” Besides giving a definition of a civilization, Huntington has also proposed several theories about civilizations, discussed below.

Complex systems

Another group of theorists, making use of systems theory, looks at a civilization as a complex system, i.e., a framework by which a group of objects can be analyzed that work in concert to produce some result. Civilizations can be seen as networks of cities that emerge from pre-urban cultures, and are defined by the economic, political, military, diplomatic, and cultural interactions among them. Any organization is a complex social system, and a civilization is a large organization. Systems theory helps guard against superficial but misleading analogies in the study and description of civilizations.

For example, urbanist Jane Jacobs defines cities as the economic engines that work to create large networks of people. The main process that creates these city networks, she says, is “import replacement”. Import replacement is the process by which peripheral cities begin to replace goods and services that were formerly imported from more advanced cities. Successful import replacement creates economic growth in these peripheral cities, and allows these cities to then export their goods to less developed cities in their own hinterlands, creating new economic networks. So Jacobs explores economic development across wide networks instead of treating each society as an isolated cultural sphere.

Systems theorists look at many types of relations between cities, including economic relations, cultural exchanges, and political/diplomatic/military relations. These spheres often occur on different scales. For example, trade networks were, until the nineteenth century, much larger than either cultural spheres or political spheres. Extensive trade routes, including the Silk Road through Central Asia and Indian Ocean sea routes linking the Roman Empire, Persian Empire, India, and China, were well established 2000 years ago, when these civilizations scarcely shared any political, diplomatic, military, or cultural relations. The first evidence of such long distance trade is in the ancient world. During the Uruk phase Guillermo Algaze has argued that trade relations connected Egypt, Mesopotamia, Iran and Afghanistan. Resin found later in the Royal Tombs of Ur it is suggested was traded northwards from Mozambique.

Many theorists argue that the entire world has already become integrated into a single “world system”, a process known as globalization. Different civilizations and societies all over the globe are economically, politically, and even culturally interdependent in many ways. There is debate over when this integration began, and what sort of integration – cultural, technological, economic, political, or military-diplomatic – is the key indicator in determining the extent of a civilization. David Wilkinson has proposed that economic and military-diplomatic integration of the Mesopotamian and Egyptian civilizations resulted in the creation of what he calls the “Central Civilization” around 1500 BC. Central Civilization later expanded to include the entire Middle East and Europe, and then expanded to a global scale with European colonization, integrating the Americas, Australia, China and Japan by the nineteenth century. According to Wilkinson, civilizations can be culturally heterogeneous, like the Central Civilization, or relatively homogeneous, like the Japanese civilization. What Huntington calls the “clash of civilizations” might be characterized by Wilkinson as a clash of cultural spheres within a single global civilization. Others point to the Crusades as the first step in globalization. The more conventional viewpoint is that networks of societies have expanded and shrunk since ancient times, and that the current globalized economy and culture is a product of recent European colonialism.

Future

Political scientist Samuel HuntingtonHYPERLINK \l “cite_note-13″[14] has argued that the defining characteristic of the 21st century will be a clash of civilizations. According to Huntington, conflicts between civilizations will supplant the conflicts between nation-states and ideologies that characterized the 19th and 20th centuries. These views have been strongly challenged by others like Edward Said and Mohammed Asudi. Ronald Inglehart and Pippa Norris have argued that the “true clash of civilizations” between the Muslim world and the West is caused by the Muslim rejection of the West’s more liberal sexual values, rather than a difference in political ideology.

Currently, world civilization is in a stage that has created what may be characterized as an industrial society, superseding the agrarian society that preceded it. Some futurists believe that civilization is undergoing another transformation, and that world society will become a so-called informational society.

Some environmental scientists see the world entering a Planetary Phase of Civilization, characterized by a shift away from independent, disconnected nation-states to a world of increased global connectivity with worldwide institutions, environmental challenges, economic systems, and consciousness.[17]HYPERLINK \l “cite_note-17” In an attempt to better understand what a Planetary Phase of Civilization might look like in the current context of declining natural resources and increasing consumption, the Global scenario group used scenario analysis to arrive at three archetypal futures: Barbarization, in which increasing conflicts result in either a fortress world or complete societal breakdown; Conventional Worlds, in which market forces or Policy reform slowly precipitate more sustainable practices; and a Great Transition, in which either the sum of fragmented Eco-Communalism movements add up to a sustainable world or globally coordinated efforts and initiatives result in a new sustainability paradigm.

The fall of civilizations

There have been many explanations put forward for the collapse of civilization. “The decline of Rome was the natural and inevitable effect of immoderate greatness. Prosperity ripened the principle of decay; the cause of the destruction multiplied with the extent of conquest; and, as soon as time or accident had removed the artificial supports, the stupendous fabric yielded to the pressure of its own weight. The story of the ruin is simple and obvious; and instead of inquiring why the Roman Empire was destroyed, we should rather be surprised that it has subsisted for so long.”Jeffrey A. McNeely has recently suggested that “A review of historical evidence shows that past civilizations have tended to over-exploit their forests, and that such abuse of important resources has been a significant factor in the decline of the over-exploiting society.”Peter Heather argues in his book The Fall of the Roman Empire: A New History of Rome and the BarbariansHYPERLINK \l “cite_note-20″[21] that this civilization did not end for moral or economic reasons, but because centuries of contact with barbarians across the frontier generated its own nemesis by making them a much more sophisticated and dangerous adversary. The fact that Rome needed to generate ever greater revenues to equip and re-equip armies that were for the first time repeatedly defeated in the field, led to the dismemberment of the Empire. Although this argument is specific to Rome, it can also be applied to the Asiatic Empire of the Egyptians, to the Han and Tang dynasties of China, to the Muslim Abbasid Caliphate, and others. Bryan Ward-Perkins, in his book The Fall of Rome and the End of CivilizationHYPERLINK \l “cite_note-21” shows the real horrors associated with the collapse of a civilization for the people who suffer its effects, unlike many revisionist historians who downplay this. The collapse of complex society meant that even basic plumbing disappeared from the continent for 1,000 years. Similar Dark Age collapses are seen with the Late Bronze Age collapse in the Eastern Mediterranean, the collapse of the Maya, on Easter Island and elsewhere. Arthur Demarest argues in Ancient Maya: The Rise and Fall of a Rainforest CivilizationHYPERLINK \l “cite_note-22” using a holistic perspective to the most recent evidence from archaeology, paleoecology, and epigraphy, that no one explanation is sufficient but that a series of erratic, complex events, including loss of soil fertility, drought and rising levels of internal and external violence led to the disintegration of the courts of Mayan kingdoms which began a spiral of decline and decay. He argues that the collapse of the Maya has lessons for civilization today. Thomas Homer-Dixon in “The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization”, considers that the fall in the energy return on investments; the energy expended to energy yield ratio, is central to limiting the survival of civilizations. The degree of social complexity is associated strongly, he suggests, with the amount of disposable energy environmental, economic and technological systems allow. When this amount decreases civilizations either have to access new energy sources or they will collapse. Peter Turchin in his Historical Dynamics and Andrey Korotayev et al. in their Introduction to Social Macrodynamics, Secular Cycles, and Millennial Trends suggest a number of mathematical models describing collapse of agrarian civilizations. For example, the basic logic of Turchin’s “fiscal-demographic” model can be outlined as follows: during the initial phase of a sociodemographic cycle we observe relatively high levels of per capita production and consumption, which leads not only to relatively high population growth rates, but also to relatively high rates of surplus production. As a result, during this phase the population can afford to pay taxes without great problems, the taxes are quite easily collectible, and the population growth is accompanied by the growth of state revenues. During the intermediate phase, the increasing overpopulation leads to the decrease of per capita production and consumption levels, it becomes more and more difficult to collect taxes, and state revenues stop growing, whereas the state expenditures grow due to the growth of the population controlled by the state. As a result, during this phase the state starts experiencing considerable fiscal problems. During the final pre-collapse phases the overpopulation leads to further decrease of per capita production, the surplus production further decreases, state revenues shrink, but the state needs more and more resources to control the growing (though with lower and lower rates) population. Eventually this leads to famines, epidemics, state breakdown, and demographic and civilization collapse (Peter Turchin.

Criticism

Civilization has been criticized from a variety of viewpoints and for a variety of reasons. Some critics have objected to all aspects of civilization; others have argued that civilization brings a mixture of good and bad effects.

Some environmentalists like Derrick JensenHYPERLINK \l “cite_note-24” criticize civilizations for their exploitation of the environment. Richard Hienberg argues that through intensive agriculture and urban growth, civilizations tend to destroy natural settings and habitats, and deplete the resources on which it depends. This is sometimes referred to as “dominator culture”. Proponents of this view believe that traditional societies live in greater harmony with nature than civilizations; people work with nature rather than try to subdue it. The sustainable living movement is a push from some members of civilization to regain that harmony with nature.

Primitivism is a modern philosophy totally opposed to civilization. Primitivists accuse civilizations of restricting human potential, oppressing the weak, and damaging the environment. They wish to return to a more primitive way of life which they consider to be in the best interests of both nature and human beings. Leading proponents are John Zerzan and Derrick Jensen, whereas a critic is Roger Sandall.

However, not all critics of past and present civilization believe that a primitive way of life is better. Some have argued that many negative aspects of current ‘civilized’ nations can be overcome. Karl Marx, for instance, argued that the beginning of civilization was the beginning of oppression and exploitation, but also believed that these things would eventually be overcome and communism would be established throughout the world. He envisioned communism not as a return to any sort of idyllic past, but as a new stage of civilization. Conflict theory in the social sciences also views the present form of civilization as being based on the domination of some people by others, but does not judge the issue morally.

Given the current problems with the sustainability of industrial civilization, some, like Derrick Jensen, who posits civilization to be inherently unsustainable, argue that we need to develop a social form of “post-civilization” as different from civilization as the latter was with pre-civilized peoples.

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Markets Soar/ Aust Economy Sliding

Oh how it all turns around, and how quickly.

World markets have soared overnight; the Australian dollar has surged against the yen and the US dollar and our market is forecast to jump sharply this morning.

The Standard & Poor’s 500 Index jumped 91.56 points, or 10.79%, to 940.48 after sliding to the lowest level since March 2003 yesterday.

The Dow surged 889.35 points, or 10.88%, to 9,065.12 and the Nasdaq finished up 9.53%, or more than 140 points. Hong Kong’s benchmark index added 14%, its best advance in 11 years, while Germany’s climbed 11% and struggling Brazil’s jumped 13%.

London was up less than 2%: the surge in Germany was due to a sharp rise in the shares of Volkswagen as Porsche surprised the market by revealing it had assembled a controlling 7%% by market buying and playing the derivatives markets.

Hedge funds lost heavily as they had been shorting VW shares and got trapped as the value of the shares soared to the point where the car maker was the most highly valued company in the world a

The overnight futures market was signalling a 6% rise in the ASX 200, or more than 240 points..

That was after one of the most explosive last couple of hours trading ever seen on Wall Street. Therre was a gain of 500-600 points in the last hour.

The Dow posted its second-best point gain ever as the cheapest valuations in 23 years lured investors and increased commercial paper sales signaled credit markets are thawing.

In addition, there’s now a belief the Fed will announce a 0.50% rate cut after its current meeting ends tomorrow morning, our time.

The yen fell the most against the dollar since 1974 and posted its biggest decline versus the euro ever as global stocks rallied and speculation increased that the Bank of Japan will cut interest rates.

There were reports in Tokyo overnight of a plans to cut the key rate 0.25%, which would halve the Bank of Japan’s key rate. The central bank meets Friday in Tokyo.

That saw the yen crash, suffering its biggest loss against the greenback since 1974. It dropped 5% against the US currency in New York. It dropped 11% to 62.70 yen against the Aussie and 10.% to 55.19 against the New Zealand dollar.

The Aussie surged 7% to 64.28 US cents after touching 60.09 cents yesterday, the weakest level since April 2003.

The Reserve Bank of Australia bought dollars for a third day yesterday to stem losses and is now sitting on some nice profits as some of the first day’s intervention Friday night was around 55 Yen..

Sales of longer-term commercial paper soared 10-fold after the fed revealed that two days of backing the slumping US corporate commercial paper market, had revitalised it.

The Fed began buying the corporate paper and on Monday alone the market saw companies yesterday sold 1,511 issues totaling a record $US67.1 billion of the debt due in more than 80 days.

That compared with a daily average of 340 issues valued at $US6.7 billion last week. Dealers said the Fed accounted for $US60 billion of the total.

The Dow’s only larger point gain in a day was on October 13, when the 30-stock gauge jumped 936 points on the government’s plan to buy stakes in banks. We know it plunged several times after that, so this could be a one day wonder.

Now for the Fed’s rate cut, but as that is priced in, will markets fall again?

………….

Business confidence continues to fall, according to the latest survey from the National Australia Bank of monthly business conditions.

While that’s gloomy news, there were a couple of other worrying portents from the NAB survey and from other announcements yesterday.

Residential property prices are looking stretched and the NAB and Merrill Lynch see falls of 5% to 10% coming over the next couple of years, and not much joy after that.

That will be bad news for the likes of Boral, Wattyl, Brickworks, the banks, especially Suncorp and the CBA, and for retailers like Harvey Norman.

Retailing is definitely hurting more than it seems from the outside: even the likes of Billabong, a big name locally and internationally for high margin, very successful sportswear, is seeing fewer items sold, although the slumping Australian dollar is helping offset the slowdown.

Mining companies are reviewing operations because of sliding metal prices, and importers like McPhersons Ltd, are doing the same because of the sliding currency, which bounced around 60 USc after a third successive day of Reserve Bank intervention. (It got up to just under 63 US cents overnight).

Furniture retailer, Nick Scali cut its earnings forecast yesterday because of slumping demand.

According to the NAB, the slump in activity next year will see a surge in unemployment and a blow-out in the federal budget by a massive $30 billion “over the next couple of years”, and force residential house prices to fall by 5% to 10% over the next two years, according to the forecast from the bank, and from analysts at Merrill Lynch (See story below).

And while interest rates will fall further and inflation will follow next year, the slide in house prices will see them stagnating for three to five years: up to 2013 or longer, according to one of those forecasts.
The NAB reckons the Australian economy has slowed to 2001 levels (when we almost tipped into recession after the GST boost and the US slump). It sees the Reserve Bank cutting interest rates to 4.5% next year, but has forecast a $10 billion budget deficit for the 2010 financial year.

“While the Government’s Mid-Year Economic and Financial Outlook is due in a couple of weeks, fiscal expansion together with the negative impacts of slower economic growth may well see the Federal Budget turn to small deficit of say around $10bn during the next couple of years.”

It was around $21.7 billion in the year to June 2008, so the turnaround would be of the order of $30 billion.

The NAB also forecast the unemployment rate to rise to 6% during 2009/10) compared with the current rate 4.3%) and “core inflation will return to the RBA’s 2%-3% range’ despite another “near term surprise”, and then fall further in 2010.

The NAB’s forecasts, contained in its latest survey of monthly business conditions, comes as analysts at Merrill Lynch in Sydney have forecast a 10% fall in house prices over the next two years, followed by three to five years of flat or no growth.

The NAB supported the Merrill Lynch contention that residential property prices will fall, but not by quiet as much as 10%.

“Our macro forecasts suggest that as the unemployment rate rises sharply through late 2009, the residential property market may deteriorate further into 2010 – notwithstanding improved affordability associated with significantly lower interest rates. Our forecasts are broadly based on unchanged housing prices in 2009 with a moderate further fall of around 5 per cent into 2010.”

And leading retailer, Harvey Norman, revealed for a third week in a row that it is experiencing ‘negative’ same store sales growth: in the seven days to Sunday October 26, same store sales across Harvey Norman’s Australian stores fell 3.6%, after falls of 5.7% and 4.8% in the preceding three weeks.

Harvey Norman’s experience was supported by an update from a smaller Melbourne-based competitor, Clive Peeters, which told the market last Friday that same store sales were off 10% to 14% in the three months of the September quarter and things are not improving. The company will provide a fuller update at its AGM later in the week.

And Nick Scali’s annual meeting in Sydney heard yesterday that the company first half sales and profit for 2009 will be affected by the slowing economy and weakening Australian dollar.

CEO, Anthony Scali said while there been encouraging signs over the past three months in “sales order intake”, sales for the first half were expected to be about $2 million below the corresponding period last year.

“The recent weakening of the Australian dollar in a very short period will cause a substantial one-off decline in our gross profit for the first half of 2008/09 and is expected to reduce earnings by $0.9 million to $1.4 million,” Mr Scali told the AGM.

“Our net profit after tax for the first half of the current financial year is now likely to be between $2.3 million to $2.8 million, against the $4.62 million earned in the December half of 2007.”

Harvey Norman has already revealed an 18% drop in earnings for the first two months of this financial year because of a slump in Ireland. But it hasn’t upgraded that forecast because of the slump over the past month to six weeks in Australia.

The NAB said it expects Australian economic growth to slow to 1.25% next year as the ” full effects of falls in share and key commodity prices fall and slow global growth weigh on prospects, notwithstanding expectations of stimulatory policy responses from both Governments and RBA.’

It said its local forecasts remain “unchanged on the bearish side of “consensus” view. Downside risks remain – at home & abroad – with much dependent on success of global financial rescue underway”.

The NAB said it expects the RBA cash rate cut from 6% to 4.5% by mid 2009 as well as aggressive cuts by central banks elsewhere;

It said the “Federal Budget is likely to go from surplus to deficit of around $10 billion”, which would be a $31 billion turnaround!

“Global GDP growth (on a broader definition) forecast lowered to only 2.5% in 2009 – including recessions in US, UK, Japan and Europe, together with slower growth in emerging economies;

“Business conditions to weaken significantly to mid 2001 levels – consistent with subdued current activity & annual growth in non-farm GDP slowing to 2% in Q3 2008; • Business confidence steadies for now – well above levels of 1990 recession.”

The NAB said its index of business conditions dropped 11 points to -4 index points in the three months to September, one of the biggest quarterly falls in the past two decades,

“The proportion of firms reporting the availability of labour as a constraint on current output has fallen from a recent record of 72% in early 2008 to 66% in the September quarter,” said NAB group chief economist Alan Oster in a statement.

“While the proportion of employers nominating labour shortages as the main constraint on their 12 month profit outlook has fallen from a recent record of 33% to 13% in the latest survey.”

Slumping consumer demand and slower lending activity pushed down all of the components of the gauge to levels seen in 2001, when business conditions stood at -11 index points.

Trading conditions contracted 11 points to -4 points, profits have also lost 10 index points to rank -8point, and employment – which was flat in the June quarter – edged down 3 points to -3 points.

Business confidence, a forward looking indicator, increased 1 index point to -7 index points for the December quarter, below their mid-2000 levels.

“Businesses expect conditions to slow significantly further in the December quarter of 2008,” Mr Oster said.

The bank said major economies would slow further “due to lags associated with negative wealth effects from lower equity and house prices”.

“Recessions are forecast for the US, Europe, Japan and UK, while growth moderates in developing economies,” the bank said in the statement.

Australasian Investment Review (AIR) is a free daily news service covering global financial markets with a focus on Australia, New Zealand and Asia. Each day our team of experienced journalists presents you with a concise digest of expert opinions and analysis on trends and backgrounds that matter in these markets. Subscriptions are free at aireview.com.au

World Bank to start agri fund in developing nations


The World Bank will start a trust fund to boost agriculture in developing nations in response to the rising risk of another global food price crisis.

Social entrepreneurs set to change India

Social entrepreneurs set to change India
Social entrepreneurship is expected to be the next big thing to influence India as the country juggles to achieve a balance between a growing GDP growth, ensuring inclusive growth and attempting to address issues ranging from education, energy efficiency to climate change.

Read more on rediff.com

Shenyang Economic Zone District approved the new-type industrialization test

Liaoning provincial government held a press conference yesterday, announced by the State Council, National Development and Reform Commission has officially approved by the Shenyang Economic Region for the state of New Industrialization comprehensive reform pilot area.

    Shenyang Shenyang Economic Zone is centered within a radius of 100 kilometers, covers Shenyang, Anshan, Fushun, Benxi, Yingkou, Fuxin, Liaoyang, Tieling eight provincial cities of the city group. Regional area of 75,000 square kilometers, with a total population of 2359 people, urbanization rate of 65%.

    Through an integrated package of reform experiment, Shenyang Shenyang economic zone will be completed Guojia New Type Industrial Bases important growth areas, old industrial base of system and mechanism innovation leader in area, resource-based cities of economic restructuring demonstration zones, new industrialization drive of modern agricultural development in the pioneer zone of saving resources, protecting environment, the harmonious development of areas of ecological civilization. The Shenyang Economic Zone approved by the national comprehensive reform pilot area of the theme of “new industrialization.” Aimed at the gradual establishment of high technology, good economic returns, low resource consumption, little environmental pollution and human resources into full play the new industrialization model of development in key areas and key links reform to forge ahead, to make new breakthroughs. Through comprehensive reform experiment, Shenyang Economic Zone will be fully inter-city connections with mass effect, focused on building “a nuclear, five belts, 10 group.” That is the core of Shenyang, development and construction of five inter-city connections with, and in five inter-city connections with the carrier, creating 10 main businesses, the key industry clusters have obvious advantages.

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Maruti Udyog Limited ? Managing Competition Successfully

MARUTI UDYOG LIMITED – Managing competition successfully

Maruti Udyog Limited (MUL) was established in Feb 1981 through an Act of Parliament, to meet the growing demand of a personal mode of transport caused by the lack of an efficient public transport system. It was established with the objectives of – modernizing the Indian automobile industry, producing fuel efficient vehicles to conserve scarce resources and producing indigenous utility cars for the growing needs of the Indian population. A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as Japanese management practices. Suzuki was preferred for the joint venture because of its track record in manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzuki’s equity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-government organization managed on the lines of Japanese management practices.

Maruti created history by going into production in a record 13 months. Maruti is the highest volume car manufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti is one of the most successful automobile joint ventures, and has made profits every year since inception till 2000-01. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, high depreciation on new model launches resulted in a book loss.

COMPANY HISTORY AND BACKGROUND

The Evolution

Maruti’s history of evolution can be examined in four phases: two phases during pre-liberalization period (1983-86, 1986-1992) and two phases during post-liberalization period (1992-97, 1997-2002), followed by the full privatization of Maruti in June 2003 with the launch of an initial public offering (IPO).The first phase started when Maruti rolled out its first car in December 1983. During the initial years Maruti had 883 employees, a capital of Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. From such a modest start the company in just about a decade (beginning of second phase in 1992) had turned itself into an automobile giant capturing about 80% of the market share in India. Employees grew to 2000 (end of first phase 1986), 3900 (end of second phase 1992) and 5700 in 1999. The profit after tax increased from Rs 18.67 mn in 1984 to Rs. 6854.54 mn in 1998 but started declining during 1997-2001.

During the pre-liberalization period (1983-1992) a major source of Maruti’s strength was the wholehearted willingness of the Government of India to subscribe to Suzuki’s technology and the principles and practices of Japanese management. Large number of Indian managers, supervisors and workers were regularly sent to the Suzuki plants in Japan for training. Batches of Japanese personnel came over to Maruti to train, supervise and manage. Maruti’s style of management was essentially to follow Japanese management practices.

The Path to Success for Maruti was as follows:

(a) teamwork and recognition that each employee’s future growth and prosperity is totally dependent on the company’s growth and prosperity (b) strict work discipline for individuals and the organization (c) constant efforts to increase the productivity of labor and capital (d) steady improvements in quality and reduction in costs (e) customer orientation (f) long-term objectives and policies with the confidence to realize the goals (g) respect of law, ethics and human beings. The “path to success” translated into practices that Maruti’s culture approximated from the Japanese management practices.

Maruti adopted the norm of wearing a uniform of the same color and quality of the fabric for all its employees thus giving an identity. All the employees ate in the same canteen. They commuted in the same buses without any discrimination in seating arrangements. Employees reported early in shifts so that there were no time loss in-between shifts. Attendance approximated around 94-95%. The plant had an open office system and practiced on-the-job training, quality circles, kaizen activities, teamwork and job- rotation. Near-total transparency was introduced in the decision making process. There were laid-down norms, principles and procedures for group decision making. These practices were unheard of in other Indian organizations but they worked well in Maruti. During the pre- liberalization period the focus was solely on production. Employees were handsomely rewarded with increasing bonus as Maruti produced more and sold more in a seller’s market commanding an almost monopoly situation.

INDUSTRY ANALYSIS

GLOBAL FOUR WHEELER INDUSTRY

Evolution

The automobile industry has undergone significant changes since Henry Ford first introduced the assembly line technique for the mass production of cars. Production concepts, processes and the associated technologies have changed dramatically since the first cars were built. Some 70 years ago, car assembly was primarily manual work. Today, the process of car assembly is almost fully automated. In the old days, firms attached importance to the production of virtually every part in a single plant, while today, carmakers concentrate on only a few specific production stages (i.e. car assembly). Parts and module production, services and related activities have been shifted to other, specialised firms (outsourcing of production steps).Since the 1980s, it has become clear that further productivity gains to retain competitiveness can be possible only by outsourcing and securing greater flexibility. For example, firms, especially small car producers whose markets have been threatened by imports, have diversified their production programmes (e.g. by building off-road cars or convertibles) thereby introducing greater flexibility in the production process. Also, firms and their production have become more internationalized in lieu of outsourcing.

Current Scenario

The global passenger car industry has been facing the problem of excess capacity for quite some time now. For the year 2002, the global capacity in the automotive industry was 75 million units a year, against production of only 56 million units (excess capacity estimated at 25%). Efforts to shore up capacity utilization have prompted severe price competition, thus affecting margins and forcing fundamental changes in the industry. The pressure on sales and margins is driving players to emerging markets in pursuit of better growth opportunities and/or access to low-cost manufacturing bases.

• The concept of selling in the passenger car industry is changing from original sales towards lifecycle value generation, encompassing financing, repairs & maintenance, cleaning, provision of accessories, and so on.

• Vehicle manufacturers are moving into completely new materials and technologies—partly guided by environmental legislation—in striving to come up with radically different products. Some of these new technologies involve parts that can be bolted on to an existing vehicle with relatively few implications for the rest of the vehicle. Others are much more fundamental, and are likely to have a profound impact throughout the supply chain. The examples include battery, electric or hybrid power trains, and alternatives to the all-steel body. Carmakers are increasingly outsourcing component production, and focusing on product design, brand management and consumer care, in contrast to the traditional emphasis on manufacturing and engineering.

• The increasing need to attain global scales underscores the importance of platform sharing among carmakers. All original equipment manufacturers (OEMs) are trying to reduce the number of vehicle platforms, but raise the number of models produced from each platform. This means producing a number of seemingly distinct models from a common platform. 

• As in manufacturing, distribution in the automobile industry is undergoing significant changes, involving Internet use, retailer consolidation, and unbundling of services provided by retailers.

INDIAN FOUR WHEELER INDUSTRY

Evolution

The Indian automobile industry developed within the broader context of import substitution during the 1950s. The distinctive feature of the automobile industry in India was that in line with the overall policy of State intervention in the economy, vehicle production was closely regulated by an industrial licensing system till the early 1980s that controlled output, models and prices. The cars were built mostly by two companies, Premier Automobiles Limited and HM. However, the Indian market got transformed after 1983 following the relaxation of the licensing policy and the entry of MUL into the car market. In 1991, car imports were insignificant, while component imports were equivalent to 20% of the domestic production, largely because of the continuing import of parts by MUL. The liberalization of the Indian automotive industry that began in the early 1990s was directed at dismantling the system of controls over investment and production, rather than at promoting foreign trade. Multinational companies were allowed to invest in the assembly sector for the first time, and car production was no longer constrained by the licensing system. However, QRs on built-up vehicles remained and foreign assemblers were obliged to meet local content requirements even as export targets were agreed with the Government to maintain foreign exchange neutrality. The new policy regime and large potential demand led to inflows of foreign direct investment (FDI) by the mid-1990s. By the end of 1997, Daewoo, Ford India, GM, DaimlerChrysler and Peugeot had started assembly operations in India. They were followed by Honda, HMIL, and Mitsubishi. 

Current Scenario

Major Players

Bajaj Tempo Limited, DaimlerChrysler India Private Limited, Fiat India Automotive Private Limited, Ford India Limited, General Motors India Limited, Hindustan Motors Limited, Honda Siel Cars India Limited, Hyundai Motor India Limited, Mahindra & Mahindra Limited, Maruti Udyog Limited, Skoda Auto India Limited, Tata Motors Limited, Toyota Kirloskar Motors Limited.

Current scenario in Passenger Car Category

The dominant basis of competition in the Indian passenger car industry has changed from price to price-value, especially in the passenger car segment. While the Indian market remains price sensitive, the stranglehold of Economy models has been slackening, giving way to higher-priced products that better meet customer needs. Additionally, a dominant trend in the Indian passenger car segment is the increasing fragmentation of the market into sub-segments, reflecting the increasing sophistication of the Indian consumer.  With the launch of new models from FY2000 onwards, the market for MUVs has been redefined in India, especially at the upper-end. Currently, the higher-end MUVs, commonly known as Sports Utility Vehicles (SUVs), occupy a niche in the urban market, having successfully shaken off the tag of commercial vehicles attached to all MUVs till recently. Domestic car manufacturers are now venturing into areas such as car financing, leasing and fleet management, and used-car reconditioning/sales, to complement their mainstay-business of selling new cars.

COMPETITIVE FORCES IN INDIAN PASSENGER CAR MARKET

Critical Issues and Future Trends

The critical issue facing the Indian passenger car industry is the attainment of break-even volumes. This is related to the quantum of investments made by the players in capacity creation and the selling price of the car. The amount of investment in capacities by passenger car manufacturers in turn depends on the production

Threat from the new players: Increasing

·         Most of the major global players are present in the Indian market; few more are expected to enter.

·         Financial strength assumes importance as high are required for building capacity and maintaining adequacy of working capital.

         Access to distribution network is important.

         Lower tariffs in post WTO may expose Indian companies to threat of imports.

Rivalry within the industry: High

·         There is keen competition in select segments. (compact and mid size segments).

·         New multinational players may enter the market.

Market strength of suppliers: Low

         A large number of automotive components suppliers.

         Automotive players are rationalizing their vendor base to achieve consistency in quality.

Market strength of consumers: Increasing

·         Increased awareness among consumers has increased expectations. Thus the ability to innovate is critical.

·         Product differentiation via new features, improved performance and after-sales support is critical.

·         Increased competitive intensity has limited the pricing power of manufacturers.

Threat from substitutes: Low to medium

         With consumer preferences changing, inter product substitution is taking place (Mini cars are being replaced by compact or mid sized cars).Setting up integrated manufacturing facilities may require higher capital investments than establishing assembly facilities for semi knocked down kits or complete knocked down kits. In recent years, even though the ratio of sales to capacity (an important indicator of the ability to reach break-even volumes) of the domestic car manufacturers have improved, it is still low for quite a few car manufacturers in India. India is also likely to increasingly serve as the sourcing base for global automotive companies, and automotive exports are likely to gain increasing importance over the medium term. However, the growth rates are likely to vary across segments. Although the Mini segment is expected to sustain volumes, it is likely to continue losing market share; growth in the medium term is expected to be led largely by the Compact and Mid-range segments. Additionally, in terms of engine capacity, the Indian passenger car market is moving towards cars of higher capacity. This apart, competition is likely to intensify in the SUV segment in India following the launch of new models at competitive prices.

COMPETITOR ANALYSIS

HYUNDAI MOTOR INDIA LIMITED

Hyundai Motor India Limited (HMIL) is a wholly owned subsidiary of Hyundai Motor Company, South Korea and is the second largest and the fastest growing car manufacturer in India . HMIL presently markets over 25 variants of passenger cars in six segments. The Santro in the B segment, and Getz in the B+ segment.

HYUNDAI SANTRO

We are mainly going to concentrate on the various marketing and positioning strategies of Hyundai Santro as against  that of Maruti Zen and Alto and Hyundai Getz as against Maruti Swift.

POSITIONING OF SANTRO

The old positioning of the Santro was that pf a ‘family car’, this positioning strategy was changed in around 2002 and Santro was repositioned as to that of ‘a smart car for young people.’ The target age group for the car had now shifted from 30-35 years to 25-30 years. The repositioning followed the face-lifts the car has been getting from time to time in the form of engine upgradation, new power steering, automatic transmission, etc, to keep the excitement around it alive in the highly competitive small car market. The repositioning also comes ahead of the possible launch of a new design Santro, and the super B-segment car ‘Getz’, sometime in 2003.

The Santro  was given a fresh new positioning — from a ‘complete family car’ to a ‘sunshine car’ denoting a fresh new attitude and a ‘changing your life’ positioning.As the average age of a car owner has declined from around 30-35 three years ago to 25-30, primarily because of changing lifestyles, cheap and easily available finance, etc. the company thought that instead of promoting the Santro as a family car, it should be promoted as a car that can change the life of a young person since many of the buyers were young buyers.

HYUNDAI’S PRICING STRATEGY

With the launch of  Maruti Swift recently  a price war was expected to kick in . Immediately after maruti raised prices on its debutante Hyundai Motor India hit back  with a Rs 16,000-19,000 markdown on three new variants of Santro Xing.

The company has introduced the XK and XL variants at a lower tag of Rs 3,26,999 and Rs .3,45,999 respectively.The new price variants are likely to give Maruti’s existing B-segment models, Zen and WagonR a run for their money. Hyundai has also launched a new non-AC variant of the Santro at Rs 2.79 lakh, a tad higher than what the existing non-Ac Santro costs. The next offensive is due from Maruti. With the Santro’s new price positioning, Zen and particularly WagonR may be due for a correction, or at least a limited-period subvention. If that happens the domino effect will kick in across the B-segment.

Hyundai is positioning its new variants on the tech platform. Strapped with 1.1 litre engine with eRLX Active Intelligence technology, the new variants also come with new colour-coordinated interiors, a new front grill and a 4-speed AC blower that makes the air conditioning more efficient.

TATA MOTORS

Established in 1945, Tata Motors is India’s largest and only fully integrated automobile company. Tata Motors began manufacturing commercial vehicles in 1954 with a 15-year collaboration agreement with Daimler Benz of Germany.

TATA INDICA – Tata motors flagship brand

The company’s passenger car range comprises the hatchback Indica, the Indigo sedan and the Marina, its station wagon variant, in petrol and diesel versions.The Tata Indica, India’s first indigenously designed and manufactured car, was launched by Tata Motors in 1999 as part of its ongoing effort towards giving India transport solutions that were designed for Indian conditions. Currently, the company’s passenger cars and multi-utility vehicles have a 16-per cent market share.

POSITIONING OF INDICA

Tata has positioned Indica as `more car per car’. The new car offers more space, more style, more power and more options. Emphasizing the delivery of world class quality. They have tried to redefine the small car market as it has been understood in India.True to its “More car per car” positioning, the Indica CNG offers all the core benefits of the Indica combined with the advantage of CNG. One of the most popular advertisements on television currently, is the one where the guy portrayed as the ‘loveable liar’, gets socked everytime he lies ; but not when he speaks about the Indica thus implying- “ must be true”. Elaborating on the campaign, the new ad was launched with the intention of giving the Indica V2 brand a touch of youthfulness.

TATA’S PRICING STRATEGY

After the price war being triggered off by Hyundai being  the first company to introduce what came to be known as, pricing based on customer’s value perceptions , all others followed suit.Telco’s Indica came in the range of Rs 2.56 lakh to Rs 3.88 lakh with 4 models. The price-points in the car market were replaced by price-bands. The width of a price-band was a function of the size of the segment being targeted besides the intensity of competition. The thumb rule being ‘the higher the intensity, the wider the price-band.’

KEY STRATEGIC INITIATIVES BY MARUTI

A) TURNAROUND STRATEGIES MARUTI FOLLOWED

Maruti was the undisputed leader in the automobile utility-car segment sector, controlling about 84% of the market till 1998. With increasing competition from local players like Telco, Hindustan Motors, Mahindra & Mahindra and foreign players like Daewoo, PAL, Toyota, Ford, Mitsubishi, GM, the whole auto industry structure in India has changed in the last seven years and resulted in the declining profits and market share for Maruti. At the same time the Indian government permitted foreign car producers to invest in the automobile sector and hold majority stakes.

In the wake of its diminishing profits and loss of market share, Maruti initiated strategic responses to cope with India’s liberalization process and began to redesign itself to face competition in the Indian market. Consultancy firms such as AT Kearney & McKinsey, together with an internationally reputed OD consultant, Dr. Athreya, have been consulted on modes of strategy and organization development during the redesign process. The redesign process saw Maruti complete a Rs. 4000 mn expansion project which increased the total production capacity to over 3,70,000 vehicles per annum. Maruti executed a plan to launch new models for different segments of the market. In its redesign plan, Maruti, launches a new model every year, reduce production costs by achieving 85-90% indigenization for new models, revamp marketing by increasing the dealer network from 150 to 300 and focus on bulk institutional sales, bring down number of vendors and introduce competitive bidding. Together with the redesign plan, there has been a shift in business focus of Maruti. When Maruti commanded the largest market share, business focus was to “sell what we produce”. The earlier focus of the whole organization was “production, production and production” but now the focus has shifted to “marketing and customer focus”. This can be observed from the changes in mission statement of the organization:

1984: “Fuel efficient vehicle with latest technology”.

1987: “Leader in domestic market and be among global players in the overseas market”.

1997: “Creating customer delight and shareholders wealth”.

Focus on customer care has become a key element for Maruti. Increasing Maruti service stations with the scope of one Maruti service station every 25 km on a highway. To increase its market share, Maruti launched new car models, concentrated on marketing and institutional sales. Institutional sales, which currently contributes to 7-8% of Maruti’s total sales. Cost reduction and increasing operating efficiency were another redesign variable. Cost reduction is being achieved by reaching an indigenization level of 85-90 percent for all the models. This would save foreign currency and also stabilize prices that fluctuate with exchange rates. However, change in the mindset was not as fast as required by the market. Maruti planned to reduce costs, increase productivity, quality and upgrade its technology (Euro I&II, MPFI). In addition, it followed a high volume production of about 400,000 vehicles / year, which entailed a smooth relationship between the workers and the managers.

Post 1999, the market structure changed drastically. Just before this change, Maruti had wasted two crucial years (1996-1998) due to governmental interventions and negotiation with Suzuki of Japan about the break-up of the share holding pattern of the company. There was a change in leadership, Mr. Sato of Suzuki became the Chairman in June 1998, and the new Mr.J. Khatter was appointed as the new Joint MD. Khatter was a believer in consensus decision making and participative style of management.As a result of the internal turmoil and the changes in the external environment, Maruti faced a depleting market share, reducing profits, and increase in inventory levels, which it had not faced in the last 18 years.

After their fall in market share they redesigned their strategies and through their parent company Suzuki they learned a lot.The organizational learning of Maruti was moderately successful, the cost was relatively inexpensive as Maruti had its strong Japanese practices to fall back upon. With the program of organizational redesign, rationalization of cost and enhanced productivity, Maruti bounced back to competition with 50.8% market share and 40% rise in profit for the FY2002-2003.

B) CURRENT STRATEGIES FOLLOWED BY MUL

I.       PRICING STRATEGY – CATERING TO ALL SEGMENTS

Maruti caters to all segment and has a product offering at all price points. It has a car priced at Rs.1,87,000.00 which is the lowest offer on road. Maruti gets 70% business from repeat buyers who earlier had owned a Maruti car. Their pricing strategy is to provide an option to every customer looking for up gradation in his car. Their sole motive of having so many product offering is to be in the consideration set of every passenger car customer in India. Here is how every price point is covered.

II. OFFERING ONE STOP SHOP TO CUSTOMERS OR CREATING DIFFERENT REVENUE STREAMS

Maruti has successfully developed different revenue streams without making huge investments in the form of MDS, N2N, Maruti Insurance and Maruti Finance. These help them in making the customer experience hassle free and helps building customer satisfaction.

Maruti Finance: In a market where more than 80% of cars are financed, Maruti has strategically entered into this and has successfully created a revenue stream for Maruti. This has been found to be a major driver in converting a Maruti car sale in certain cases. Finance is one of the major decision drivers in car purchase. Maruti has tied up with 8 finance companies to form a consortium. This consortium comprises Citicorp Maruti, Maruti Countrywide, ICICI Bank, HDFC Bank, Kotak Mahindra, Sundaram Finance, Bank of Punjab and IndusInd Bank Ltd.( erstwhile-Ashok Leyland Finance).

Maruti Insurance : Insurance being a major concern of car owners. Maruti has brought all car insurance needs under one roof. Maruti has tied up with National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram to bring this service for its customers. From identifying the most suitable car coverage to virtually hassle-free claim assistance it’s your dealer who takes care of everything. Maruti Insurance is a hassle-free way for customers to have their cars repaired and claims processed at any Maruti dealer workshop in India.

True Value – Initiative to capture used car market

Another significant development is MUL’s entry into the used car market in 2001, allowing customers to bring their vehicle to a ‘Maruti True Value’ outlet and exchange it for a new car, by paying the difference. They are offered loyalty discounts in return.This helps them retain the customer. With Maruti True Value customer has a trusted name to entrust in a highly unorganized market and where cheating is rampant and the biggest concern in biggest driver of sale is trust. Maruti knows its strength in Indian market and has filled this gap of providing trust in Indian used car market. Maruti has created a system where dealers pick up used cars, recondition them, give them a fresh warranty, and sell them again. All investments for True Value are made by dealers. Maruti has build up a strong network of 172 showrooms across the nation. The used car market has a huge potential in India. The used car market in developed markets was 2-3 times as large as the new car market.

N2N: Car maintenance is a time-consuming process, especially if you own a fleet. Maruti’s N2N Fleet Management Solutions for companies, takes care of the A-Z of automobile problems. Services include end-to-end backups/solutions across the vehicle’s life: Leasing, Maintenance, Convenience services and Remarketing.

Maruti Driving School (MDS): Maruti  has established this with the goal to capture the market where there is inhibition in buying cars due to inability to drive the car. This brings that customer to Maruti showroom and Maruti ends up creating a customer.

III. REPOSITIONING OF MARUTI PRODUCTS

Whenever a brand has grown old or its sales start dipping Maruti makes some facelifts in the models. Other changes have been made from time to time based on market responses or consumer feedbacks or the competitor moves. Here are the certain changes observed in different models of Maruti.

Omni has been given a major facelift in terms of interiors and exteriors two months back. A new variant called Omni Cargo, which has been positioned as a vehicle for transporting cargo and meant for small traders. It has received a very good response from market. A variant with LPG is receiving a very good response from customers who look for low cost of running.

Versa prices have been slashed and right now the lowest variant starts at 3.3 lacs. They decreased the engine power from 1600cc to 1300cc and modified it again considering consumers perception. This was a result of intensive survey done all across the nation regarding the consumer perception of Versa.

Esteem has gone through three facelifts. A new look last year has helped boost up the waning sales of Esteem.

Baleno was launched in 1999 at 7.2 lacs. In 2002 they slashed prices to 6.4 lacs. In 2003 they launched a lower variant as Baleno LXi at 5.46 lacs. This was to reduce the price and attract customers.

Wagon-R was perceived as dull boxy car when it was launched. This made it a big failure on launch. Then further modifications in engine to increase performance and a facelift in the form of sporty looking grills on the roof. Now it’s of the most successful models in Maruti stable.

Zen has been modified four times till date. They had come up with a limited period variant called Zen Classic. That was limited period offer to boost short term sales.

Maruti 800 has so far been facelifted two times. Once it came with MPFi technology and other time it came up with changes in front grill, head light, rear lights and with round curves all around.

IV. CUSTOMER CENTRIC APPROACH

Maruti’s customer centricity is very much exemplified by the five times consecutive wins at J D Power CSI Awards. Focus on customer satisfaction is what Maruti lives with. Maruti has successfully shed off the public- sector laid back attitude image and has inculcated the customer-friendly approach in its organization culture. The customer centric attitude is imbibed in its employees. Maruti dealers and employees are answerable to even a single customer complain. There are instances of cancellation of dealerships based on customer feedback.

Maruti has taken a number of initiatives to serve customer well. They have even changed their showroom layout so that customer has to walk minimum in the showroom and there are norms for service times and delivery of vehicles. The Dealer Sales Executive, who is the first interaction medium with the Maruti customer when the customer  walks in Maruti showroom, is trained on greeting etiquettes. Maruti has proper customer complain handling cell under the CRM department. The Maruti call center is another effort which brings Maruti closer to its customer. Their Market Research department remains on its toes to study the changing consumer behaviour and market needs.Maruti enjoys seventy percent repeat buyers which further bolsters their claim of being customer friendly. Maruti is investing a lot of money and effort in building customer loyalty programmes.

V. COMMITTED TO MOTORIZING INDIA

Maruti is committed to motorizing India. Maruti is right now working towards making things simple for Indian consumers to upgrade from two-wheelers to the car. Towards this end, Maruti partnerships with State Bank of India and its Associate Banks took organized finance to small towns to enable people to buy Maruti cars. Rs. 2599 scheme was one of the outcomes of this effort.

Maruti expects the compact cars, which currently constitute around 80% of the market, to be the engine of growth in the future. Robust economic growth, favorable regulatory framework, affordable finance and improvements in infrastructure favor growth of the passenger vehicles segment. The low penetration levels at 7 per thousand and rising income levels will augur well for the auto industry.

Maruti is busy fine-tuning another innovation. While researching they found that rural people had strange notions about a car – that the EMI (equated monthly instalments) would range between Rs 4,000 and Rs 5,000. That, plus another Rs 1,500-2,000 for monthly maintenance, another Rs 1,000 for fuel (would be the cost of using the car). To counter that apprehension, the company is working on a novel idea. Control over the fuel bill is in the consumer’s hands. But, maintenance need not be. Says Khattar: “What the company is doing now is saying how much you spend on fuel is in your hands anyway. As far as the maintenance cost is concerned, if you want it that way, we will charge a little extra in the EMI and offer free maintenance.”

VI. DISINVESTMENT AND IPO OF MARUTI UDYOG LIMITED

It was a long and tough journey, but a rewarding one at the end. A reward worth Rs 2,424 crore, making it the biggest privatization in India till date. The size of Maruti’s sell- off deal is proof of its success. On the investment of Rs 66 crore it made in 1982, when Maruti Udyog Limited (MUL) was formally set up, the sale represents a staggering return of 35 times The best part of the deal is the Rs 1,000 crore control premium the Government has been able to extract from Suzuki Motor Corporation for relinquishing its hold over India’s largest car company. Now looking at the strategy point of it – for Suzuki, of course, complete control of MUL means a lot. Maruti is its most profitable and the largest car company outside Japan. Suzuki will now be in the driver’s seat and will not have to mind the whims and fancies of ministers and bureaucrats. “Decisions will now become quicker. The response to changing market conditions and technological needs will be faster,” says Jagdish Khattar, managing director, MUL. After the disinvestment Suzuki became the decision maker at MUL. They flowed fund in India for the major revamp in MUL. Quoting from the report that appeared in The Economic Times, 4th April 2005, –

The Indian car giant Maruti Udyog Limited has finalized its two mega investment plans — a new car plant and an engine and transmission manufacturing plant. Both the projects will be implemented by two different companies. At its meeting the company’s board approved a total investment of Rs3,271.9 crore for these two ventures, which will be located in Haryana.

The above signifies when GOI was a major stakeholder in the MUL strategies which lead to investment have had a bureaucracy factor in it but after the disinvestment strategy followed is a TOP DOWN approach with a fast implementation.

Suzuki’s proposed two-wheeler facility in India, would start making motorcycles and scooters by the end of 2005 through a joint venture, in which Maruti has 51 per cent stake. The two-wheeler unit will have a capacity of 250,000 units a year.

The disinvestment followed by IPO gives the insight in the fact that now all the strategic decisions are taken by Maruti Suzuki Corporation. Disinvestment had helped by removing the red tape and bureaucracy factor from its strategic decision making process.

VII. REALISATION OF IMPORTANCE OF VEHICLE MAINTENANCE SERVICES MARKET

In the old days, the company’s operations could be boiled down to a simple three-box flowchart. Components came from the ‘vendors’ to the ‘factory’ where they were assembled and then sent out to the ‘dealers’. In this scheme, you know where the company’s revenues come from. The new scheme is more complicated. It revolves around the total lifetime value of a car.

Work on this began in 1999, when a MUL team, wondering about new revenue streams, traveled across the world. Says R.S. Kalsi, general manager (new business), MUL: “While car companies were moving from products to services, trying to capture more of the total lifetime value of a car, MUL was just making and selling cars.” If a buyer spends Rs 100 on a car during its entire life, one-third of that is spent on its purchase. Another third went into fuel. And the final third went into maintenance. Earlier, Maruti was getting only the first one-third of the overall stream. As the Indian market matured, customers began to change cars faster. Says Kalsi: “So the question was, if a car is going to see three users in, say, a life span of 10 years, how can I make sure that it comes back to me each time it changes hands ? So Maruti has changed gears to take a big share of this final one-third spent on maintenance. Maintenance market has a huge market potential. Even after having fifty lakh vehicles on road Maruti is only catering to approximately 20000 vehicles through its service stations everyday.

For this they are conducting free service workshops to encourage consumers to come to their service stations. Maruti has increased its authorized service stations to 1567 across 1036 cities. Every regional office is having a separate services and maintenance department which look after the growth of this revenue stream.

VIII. PLAYING ON COST LEADERSHIP

Maruti is the price dictator in Indian automobile industry. It’s the low cost provider of car. The lowest car on road is from Maruti stable i.e. Maruti 800. Maruti achieves this through continuous improvements in operational efficiency and productivity.

The company has set itself (and its vendors) the target of a 50% improvement in productivity and a 30% reduction in costs in three years. The ability to keep lowering the prices sets Maruti apart from other players in the league. Maruti spread the overheads over a larger base.

The impressive sales and profits were the result of major efforts within the company. Maruti also increased focus on vendor management. Maruti consolidated its vendor base. This has provided its vendors with higher volumes and higher efficiencies. Maruti does that by working with vendors, assuring them that for every drop in price, volumes will go up. Maruti is now encouraging its vendors to develop R&D capability for specialized components. Based upon such activities, product competitiveness in the market will further increase.

Maruti also made strides in applying IT to manufacturing. A new Vehicle Tracking System improved efficiency on the shop floor and enhanced quality control. The e Nagare system, adopted from Suzuki Motor Corporation, smoothened Maruti’s Just In Time operations.

C) MAJOR FUTURE STRATEGIES

I. PHASING OUT ZEN IN 2007

The launch of Swift and phasing out Zen is a strategic move. Alto was launched keeping in mind that it will take over Maruti 800 market in future. Perhaps being the flagship product phasing out of Maruti 800 faced lots of resistance from dealers all over. Another reason behind not phasing out Maruti 800 was the fear of brand shift of customers to other competitor’s product. Swift was launched in May, 2005 in the price band starting from 4 lacs. Before launch of Swift Maruti management had decided that they will phase out Zen since it had already came up with two modifications. The major reason behind this decision was cannibalization of Wagon R and Swift due to overlapping of price band. It is a rational decision to kill a product before it starts facing the decline stage in product cycle. Maruti is offering Rs. 3000.00 more margins to dealer on the sale of Wagon-R as compared to Zen. This is to let dealer push Wagon R instead of Zen.

II. MARUTI PLANS FOR A BIG DIESEL FORAY

The new car manufacturing company, called Maruti Suzuki Automobiles India Limited, will be a joint venture between Maruti Udyog and Suzuki Motor Corporation holding a 70 per cent and 30 per cent stake respectively.  The Rs1,524.2 crore plant will have a capacity to roll out 1 lakh cars per year with a capacity to scale up to 2.5 lakh units per annum. The new car manufacturing plant will begin commercial production by the end of 2006.

Maruti would set up a diesel engine plant at Gurgaon in line with its plan to become a major player in diesel vehicles in a couple of years. This has been done in the wake of major competition from Tata Indica and meets the growing demand of diesel cars in India. While the annual growth in the diesel segment was 13 per cent in the last three years, it was 19-20 per cent in the first quarter (April-June) of the current fiscal. Maruti has currently an insignificant presence in diesel vehicle. It will manufacture new generation CRDI (common rail direct injection) engines in collaboration with Fiat-GM Opel and engines will be of 1200 cc. The plant with a capacity to produce one lakh diesel engines would be operational in 2006. At present, Peugeot of France, supplies diesel engines for Maruti’s Zen and mid-sized Esteem models. This will further reduce the imported component in Maruti vehicles, making them more competitive in the Indian market. 

III. MARUTI PLANS FOR A NEW ENGINE AND TRANSMISSION PLANT

The engine and the transmission plant will be owned by Suzuki Powertrain India Limited in which Suzuki Motor Corporation would hold 51 per cent stake and Maruti Udyog holding the balance. The ultimate total plant capacity would be three lakh diesel engines. However, the initial production would be 1 lakh diesel engines, 20,000 petrol engines and 1.4 lakh transmission assemblies. Investment in this facility will be Rs.1,747.7 crore. The commercial production will start by the end of 2006.

IV. INDIA AS EXPORT HUB FOR MARUTI

Three years back as an experiment, based on the increasing design capabilities of suppliers in countries like India, McKinsey did an exercise to figure out just how much money could be saved if automobiles were to be made in overseas locations like India, Mexico and South Africa — an automobile BPO, so to speak. The result was staggering: the industry stands to gain $ 150 billion annually in cost savings, and an additional $ 170 billion annually in new revenues once demand shoots up following the drop in prices, and the combination of which means a 25 per cent increase in existing revenue levels.

According to the study, over 90 per cent of automobiles today are sold in the countries they are made in, so there’s a lot of money to be made by shifting the production overseas. Till recently, just 100,000 cars produced in low-cost countries were exported to high-cost ones — presumably this figure is going up now that Altos from Maruti, Santros from Hyundai, Indicas from Tata Motors, and Ikons from Ford, among others, are being regularly exported out of India.

Yet, as McKinsey points out, since it just costs $ 500 and just three weeks (and both figures are falling) to ship out a car to anywhere in the world, why produce cars in high-wage islands? If a car was produced in India instead of in Japan, the study says, it will cost 22-23 per cent less, after factoring in higher import duties for components/steel, lower levels of automation, and transport costs.

In August, 2003 Maruti crossed a milestone of exporting 300,000 vehicles since its first export in 1986. Europe is the largest destination of Maruti’s exports and coincidentally after the first commercial shipment of 480 units to Hungary in 1987, the 300,00 mark was crossed by the shipment of 571 units to the same country. The top ten destination of the cumulative exports have been Netherlands, Italy, Germany, Chile, U.K., Hungary, Nepal, Greece, France and Poland in that order.

The Alto, which meets the Euro-3 norms, has been very popular in Europe where a landmark 200,000 vehicle were exported till March 2003. Even in the highly developed and competitive markets of Netherlands, UK, Germany, France and Italy Maruti vehicles have made a mark. Though the main market for the Maruti vehicles is Europe, where it is selling over 70% of its exported quantity, it is exporting in over 70 countries.

Maruti has entered some unconventional markets like Angola, Benin, Djibouti, Ethiopia, Morocco, Uganda, Chile, Costa Rica and El Salvador. The Middle-East region has also opened up and is showing good potential for growth. Some markets in this region where Maruti is, are Saudi Arabia, Kuwait, Bahrain, Qatar and UAE.

The markets outside of Europe that have large quantities, in the current year, are Algeria, Saudi Arabia, Srilanka and Bangladesh. Maruti exported more than 51,000 vehicles in 2003-04 which was 59% higher than last year. In the financial year 2003-04 Maruti exports contributed to more than 10% of total Maruti sales.

V. MARUTI EMERGING AS R&D HUB FOR SUZUKI MOTOR CORPORATION

Japanese auto major Suzuki is all set to convert Maruti Udyog Ltd’s research and development (R&D) facility as its Asia hub by 2007 for the design and development of new compact cars, according to a top official of the firm. The country’s leading car manufacturer will make substantial investments to upgrade its research and development centre at Gurgaon in Haryana for executing design and development projects for Suzuki. This includes localisation, modernisation and greater use of composite technologies in upcoming models.

The company will be hiring more software engineers and technocrats to handle Suzuki’s R&D projects. Investment would be more in terms of manpower than in infrastructure, which is already in place. Apart from working on innovative features, the R&D teams will focus on latest technologies using CAD-CAM tools to roll out new models that will meet the needs of MUL’s diverse customers in the future.

The reasons as to why it can be good for R&D is that

Ø  Firstly the cost involved in R&D and infrastructure is low in India as compared to other countries. Also the technical skills are abundantly available; again at a cheaper cost.

Ø  Secondly, India is growing as an export hub along with the Indian market growing aggressively into becoming an attractive one for investors.

Ø  Thirdly, Suzuki’s investment in India, is also important as it has completely divested now as a result MUL will now become a 100% subsidiary of Suzuki in the coming year.

KEY SUCCESS FACTORS

(1)The Quality Advantage

Maruti Suzuki owners experience fewer problems with their vehicles than any other car manufacturer in India (J.D. Power IQS Study 2004). The Alto was chosen No.1 in the premium compact car segment and the Esteem in the entry level mid – size car segment across 9 parameters.

(2)A Buying Experience Like No Other

Maruti Suzuki has a sales network of 307 state-of -the-art showrooms across 189 cities, with a workforce of over 6000 trained sales personnel to guide MUL customers in finding the right car.

(3)Quality Service Across 1036 Cities

In the J.D. Power CSI Study 2004, Maruti Suzuki scored the highest across all 7 parameters: least problems experienced with vehicle serviced, highest service quality, best in-service experience, best service delivery, best service advisor experience, most user-friendly service and best service initiation experience.

92% of Maruti Suzuki owners feel that work gets done right the first time during service. The J.D. Power CSI study 2004 also reveals that 97% of Maruti Suzuki owners would probably recommend the same make of vehicle, while 90% owners would probably repurchase the same make of vehicle.

(4)One Stop Shop

At Maruti Suzuki, customers will find all car related needs met under one roof. Whether it is easy finance, insurance, fleet management services, exchange- Maruti Suzuki is set to provide a single-window solution for all car related needs.

(5) The Low Cost Maintenance Advantage

The acquisition cost is unfortunately not the only cost customers face when buying a car. Although a car may be affordable to buy, it may not necessarily be affordable to maintain, as some of its regularly used spare parts may be priced quite steeply. Not so in the case of a Maruti Suzuki. It is in the economy segment that the affordability of spares is most competitive, and it is here where Maruti Suzuki shines.

(6)Lowest Cost of Ownership

The highest satisfaction ratings with regard to cost of ownership among all models are all Maruti Suzuki vehicles: Zen, Wagon R, Esteem, Maruti 800, Alto and Omni.

(7) Technological Advantage

It has introduced the superior 16 * 4 Hypertech engines across the entire Maruti Suzuki range. This new technology harnesses the power of a brainy 16-bit computer to a fuel-efficient 4-valve engine to create optimum engine delivery. This means every Maruti Suzuki owner gets the ideal combination of power and performance from his car.

FUTURE CHALLENGES

Ø  Maruti has always been identified as a traditional carmaker producing value-for-money cars and right now the biggest hurdle Maruti is facing is to shed this image. Maruti wants to change it for a more aggressive image. Maruti Baleno has failed due to one of the major reasons being that customers could not identify Maruti with a car as sophisticated as Maruti Baleno. Maruti is looking forward to bring about a perception change about the company and its cars. Maruti started the exercise with the new-look Zen, and Suzuki’s decision to pick India as one of the first markets for this radically different-looking car gave this endeavor a new thrust. Maruti has also changed its logo at the front grill. It has replaced the traditional Maruti logo on grill ‘stylish ‘M’ with S’. The major thrust in the facelift endeavour is with the launch of 1.3 litre Swift. It’s a style statement from Maruti to Indian market.

Ø  The next threat Maruti faces is the growing competition in compact cars. Companies like Toyota, Ford, Honda and Fiat are planning to come out with small segment cars in near future.Ford is launching Focus and Fiesta, GM is launching Aveo in 2006, Chevrolet is launching Spark in 2006, Hyundai is launching its new compact car in 2006, Honda is launching Jazz in 2006, GM is has reduced prices of its Corsa, Fiat is coming up with Panda and new Fiat Palio, Skoda is launching Fabia. All this will pose a major threat to Maruti leadership in compact cars.

Ø  New emission norms like Bharat Stage 3 which has come into effect from April 2005 has increased car prices by Rs.20000 and Bharat Stage 4 which is coming into force in 2007 will contribute in increasing car prices further. This could be of concern to Maruti which is low cost provider of passenger cars.

Ø  Rise in petrol prices and growing popularity of other substitute fuels like CNG will be another threat to Maruti. There is also a threat to Suzuki from R&D investment by Toyota and Honda in Hybrid cars. Hybrid cars could run on both petrol and gaseous fuels.

Ø  There is a threat to Maruti models ageing. Maruti models like Maruti 800 which is in market for the last twenty years and others like Zen and Esteem which have also entered the decline phase are the other threats. Maruti is planning phasing out Zen in 2007 and there were rumors of phasing out Maruti 800 also. This all makes Suzuki to replace these brands with new launches . As Swift and Wagon R are replacing the Zen market. Maruti will have to keep on making modifications in its present models or its models will face extinction.

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Image taken on 2009-10-04 12:02:30 by C-Ali.