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Analysis the Risk Management on Maruti Suzuki

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Introduction of Risk Management

Definition

In the Oxford dictionary Risk refers to a chance or possibility of danger, loss, injury or other. Adverse consequences. In the general sense, Risk is the chance of losing something of value. Here, the value refers to physical health, social status, emotional wellbeing or financial wealth, the output can be seen as profit or loss.

According to APM (Association for Project Management) Risk— “an uncertain event or set of circumstances that, should it occur, will have an effect on the achievement of the project’s objectives”.

Risk Management

Risk management is attempting to identify and then manage the threats that could severely impact or bring down the organization

According to the UK Association of Project Management, “Risk management is defined as a structured process that enables risk to be identified, assessed, planned and implemented. Applied in the context of pre-determined objectives, threats and opportunities can be controlled or exploited to their best effect.”

Objectives

  • To study risk management strategies.
  • To study the impact of methods followed by the Maruti Suzuki in risk management.

Statement of Problem

Lack in the risk management committee, risk identification and risk mitigations

Research Methodology

In this study, the Academician has made use of varying sources of information. In this study, Secondary data are taken into consideration in the analysis of the cost-quality and Total Quality management. The data are taken from Newspaper, Magazine, articles, Annual Report, Audit report, published and unpublished research resources. The data is collected for 5 years that is 2013 to 2018.

Literature Review

Wideman (1992) Project risk and opportunity management. In this research paper, the main objective is to achieve the concept of risk and uncertainties and show how the risk can be identified, analysis, evaluation, a measure of risk in an organization. In the research paper, show the exploitation of opportunities by organizations. He also contributed the risk analysis – replica table with the possible likelihoods. He also suggested that multiple projects can create chaos in the mind of top-level management. This can be ranked based on risk analysis- a replica table.

David Hillson (2003), “Research paper using a Risk Breakdown Structure in project management”, the main objectives are to identify the risk management and the importance of probability of occurrence and its impacts. In his research paper, the hierarchical framework was created for identification of risk work Break down Structure (WBS) and Risk Break down Structure (RBS). Both are the technical tool for risk management to drill about the new sight of risk.

Diksha Kumari Choubey and Shambhavi Gupta (2017), in this research paper, the main motto is to identify the major risk and refineries work on risk management. The paper focused on how risk management is working in the operational hazard and necessary steps to mitigate the risk in the petroleum industries. It is also focused on the risk model practicality.

Fiona D Patterson, Kevin Neailey and David Kelley (1999), “Managing the Risks within Automotive Manufacturing”, in his paper, focused on the manufacturing industry adaptive of risk management in the Automobile industry. However, risk management methodologies, specially designed looking form points view industries. A framework has made a lot of impact on the activity by decreasing the development time of product and services.

Roque Rabechini Junior & Marly Monteiro de Carvalho (2013),” Understanding the Impact of Project Risk Management on Project Performance: An Empirical Study”. The main aim of of the study is to understand the effects of Risk management. The data is restricted to the risky practice in Brazilian companies. Various techniques of risk management have been applied to risk management. The output is demonstrated the effective impact of successful projects.

Stephen Ward& Chris Chapman (2001), “Transforming project risk management into project uncertainty management”. The research paper in focus on project risk management. It also suggested that the lack of attention to risk management trade-off. A new frame for the uncertainty management needs to understand the availability of project Lice cycle.

Overview of the Company

The company was started by the government of India as Maruti Udyog Ltd in the year 1981. In order to grow in the competitive market, a major decision was taken by the Maruti Udyog Ltd merge with the Japan Automobile maker. The manufacturing process was continued as same as traditional methods.

The company started producing the quality of the product like an automobile maker in India. Over a decade, it has gained more than 56% market share. The Maruti Suzuki has become a topmost preferred brand in India. In order to grow in the market, the main mantra is Innovation and creativity. It also started to provide the quality of products. The Maruti Suzuki is also a major manufacturer and popular seller in the Indian markets. Some of the products are Maruti Suzuki Baleno, Wagon R, Ertiga, Swift, Vitara Brezza, Alto 800 and Alto K10. The company is not only manufacturing for the particular in India but also for more than 125 countries in the world.

Risk Management Committee: Maruti Suzuki

Over the past decade, the company has taken the initiative about the risk management faced the company. Due to the negligence of an employee in an organization and the Maruti Suzuki Pvt Ltd had faced a lot of issues related to the perils of human-made disaster. Even the names are followed by the organization, as per Companies Act 2013. In order, to identify the problems, the company has started the risk management committee. This committee has started to work relating the risk faces of the day to day activities. The organisation also started collecting the data related to risk in the form of a conference, workshop, survey, Newspaper articles, and annual reports of competitors. In the management level, Executive Risk Management Committee has been introduced by the organisation. The follow up of the risk management is controlled by the ERMC.

Classification of Risk Management

The Risk Management Committee has collected the data from various sources such as primary data and secondary data. The following are risk faced by the organisation:

  • Competition Risk: Going back to 30 years, A few automobile makers are ruling the entire securities industry in India. But today it has more competitors such as Mahindra & Mahindra, Ford, Tata Motor, Isuzu Motors India, Honda car India, Toyota car, Hyundai Motor India Limited and goes on. The company has set sales of 669,064 million, a growth of 36.79% over 2016-2017. In order to keep up in the marketplace, the company has started to using mantra called innovates products in automobile industries to satisfy the ultimate customer
  • Investment Risk: The investment is also very risk factor from the point perspective of investors. Because of investor confidence has become the major factor for evolution and rapid expansion. The company is also investing a short term and long term plan needs for development. The company holds a broad plan to expand services to cover more than 4000 cities in the completion of 2020. The company has set a milestone to complete 2 million vehicle sales in domestic as well as foreign market. The company also working continuously to improve the investment strategy in the field of energy conversation, research and development, technology absorption and innovation, human resources E vehicles, safety improvements, Advanced re-engineering, facelift of existing vehicles. The influx of investment to the company as an FDI Continued to show rapid growth during 2017-2018. Even the global credit rating agency, Moody also stated rating the organization.
  • Interest Rate Risk: The Company is also facing the danger, as uncontrollable in the nature of the company. As the interest rate fluctuates in the stock market.
  • Salary Risk: With the growth of the company Human Policies, is also facing a serious problem related to the human policy, such as payment of earnings to the employee, perks, performance bonus sitting bonus, code of Conduct etc… Has the competition has become a stricter and more fixed in nature. Today, the company also faces trouble with the employee Association, which force the Company to follow the new rules and regulations. According to the MATA report, Around 11,000 employees have undergone training for more than 6, 00,000 hours. Extra facilities also provide to an employee as an impact on the increase in salary.
  • Longevity Risk: any product is purchased by the customer, longevity risk is also transferred to the potential customer. The benefit for the customer is also important for the company. But, company also facing some of issue related to durability of the product.
  • Credit Risk: The Company has begun providing a better credit facility under, the scheme of Maruti finance. The Maruti Suzuki company was granted the highest financial credit rating of AAA/stable (long term) and A1 (short term) on its bank facilities by CRISIL. This rating underscores the financial strength of the company is the highest safety and meeting its duties.
  • Liquidation Risk: As the company has begun to expand the business in the field of the banking sector, such as introducing the Maruti financial and Maruti insurance. The company is also facing the problem of liquidating, meeting the day to day expenses. The current condition of the company is stable not facing any kind of issues.
  • Commodity Price Risk or Foreign Exchange Management: As the company is dealing with more than 125 countries in the global marketplace. This has makes a mode of forcing the foreign exchange as to deal with a different currency. On 28 March 2018, the ministry of corporate affairs has given a new style for determining the foreign currency. The entire company risk is associated with the payment of royalties, import of raw materials and export of raw materials. In order to curb the risk, the company managing foreign risk with a tool called hedging instruments
  • Strategic Risk: In order to fulfil the demand of the customer in the market, a strategy was created by the Maruti Suzuki. In 2015, Nexa Experience was introduced in order to focus on the premium customer. Over a period of time, the company has initiated to introduce a new model in the dealership of premium vehicles. They are Baleno, Baleno RS, S Cross, ciaz and is. It’s a case of risk Maruti Suzuki Pvt Ltd has bifurcation the dealership with Nexa Experience.
  • Environment Risk: One major risk concern in the environment. In order to the sustainability of the company has popped out using the Suzuki Connect is a premium feature in Nexa Experience platform. Some of the interesting features are live tracking, emergency services drive behaviours analysis, live vehicle status; service due reminder and feature goes one. In the recent survey, Maruti Suzuki reveals that about 120 litres of water are required to wash the vehicles. With the overall 500cr of litres is used for the vehicle washing in this company. The harmful chemical was also used in the washing process.in order to overcome, the company has started using the bio deferrable chemical and also high quality of colour. With the help of these facilities, the company is saving 500cr litters were saved. Thus, with help new feature of this environment, risk can be moderated.
  • Fire Risk: Over a decade, the Risk Management Committee also recommendations that organisations in also facing the fire risk in the manufacturing unit. In order to educate the employee of the organization, a special program for the employee to mitigate the risk in a pathetic position. It also provides the breeding camp, workshop, seminar and value-added program for the employees.

The Process of Risk Management

This is also one important of risk management, how the company tackles the situation of the Company. Some of the important steps of risk management are:

  • Risk Searching: during the entire process of business, identification of risk has taken a major driving force of the automobile industry. Sometimes, the company also fails to identify the risk. In this stage, the company will be focused on searching the problems. Some of the problems are sales related, financial matters, employees, customer satisfaction on so on.
  • Risk scrutiny: In this second stage, the company also focused on the detailed scrutiny of the problem. The company must have certain committee called risk committee, detail analysis is need to done with the report.
  • Qualitative and quantitative data: in the third stage, the company have to collect the valuable data related to Qualitative and quantitative data have to be collected and analysed has to complete in stipulated time.
  • Risk Application: this is the most important stage of the process of risk management. After, analysis Qualitative and quantitative data, the risk committee has to look forward to applying the unique solution to risk. The company has to implement all the decision taken by the subordinate as per guidelines of risk committee. If any, mistake of subordinate, lead to big problem of the company.
  • Risk outcome: this is the last step in the process of risk management. The company have looked at the outcome of the risk analysis, this has led to reduction of the problem of the company or creating an extra problem for the company. In this process, the monitor can be done by the risk committee. If the outcome is positive, can be continued or need to more focused on the actual problem of the company.

Competitive Risk Analysis

Every company has undergone the process or competitive risk. Here competition includes within the domestic market of international markets. As the change among the taste and preference of the customer, simultaneously the company have to change the products as required to customer. Only if there is no competitor in the current market. If only one company in the market, there will no need to analyse the competitive risk analysis by the risk committee.

In the current trend, almost all the company has to passes through the stiff competition with other competitors. If the company has a mantra, “delivering the customer requirement”, definitively they will overcome the Competitions. In other words, A proper analysing the customer requirement of the product, ultimately the satisfaction of the customer needs.

Finding and Suggestion

With the growth in the market for many decades, the company has made a rapid change in the growing pattern in India. Some changer is:

  • The company has started growing in all the segment of automobile maker in India.
  • The company also focused on sustainable growth related to the electric market in India.
  • The change in customer preference can also make a huge impact on the company.Conclusion:

Bibliography

  1. Tomas Petravičius (2008) “PROJECT RISKS AND OPPORTUNITIES MANAGEMENT”, Journal knowledge society. Organisation.
  2. http://www.tksi.org/JOURNAL-KSI/PAPER-PDF-2008/2008-3-1-25.pdfDavid Hillson (2003), “Research paper Using a Risk Breakdown Structure in project management”, © HENRY STEWART PUBLICATIONS 1472–5967 Journal of Facilities Management VOL. 2 NO: 1 Page No: 85-97
  3. Diksha Kumari Choubey and Shambhavi Gupta (2017) “REVIEW ON RISK MANAGEMENT OF PETROLEUM OPERATION” International Journal of Engineering Applied Sciences and Technology, 2017 Vol. 2, Issue 5, ISSN No. 2455-2143, Pages 63-65
  4. Fiona D Patterson, Kevin Neailey and David Kelley (1999), “Managing the risks within automotive manufacturing” Vol. 1, No. 3 (1999), pp. 7-23 https://www.jstor.org/stable/3867803Roque Rabechini Junior & Marly Monteiro de Carvalho (2013),” Understanding the Impact of Project Risk Management on Project Performance: an Empirical Study” J. Technol. Manag. Innov. 2013, Volume 8, Special Issue ALTEC.
  5. Stephen Ward& Chris Chapman (2001), “Transforming project risk management into project uncertainty management”, International Journal of Project Management 21 (2003) 97–105
  6. https://www.managementstudyguide.com/importance-of-quality-management.htm

Cite this paper

Analysis the Risk Management on Maruti Suzuki. (2020, Nov 29). Retrieved from https://samploon.com/analysis-the-risk-management-on-maruti-suzuki/

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