Business in Europe: Analysis of Maruti Suzuki's EU Manufacturing Plant

This report analyzes Maruti Suzuki India Ltd's strategic expansion into the European Union market, focusing on establishing a manufacturing and distribution plant. It assesses the EU business environment, including institutional and policy changes, such as Brexit and youth empowerment initiatives, and their potential impact on the automotive industry. The report evaluates suitable countries for plant location, recommending Germany due to its strong automotive sector and economic stability, while also considering France and the UK. Key factors for setting up production and distribution, such as market demand, location, and financial considerations, are discussed. Finally, the report recommends a market entry strategy for successful operation in the EU, providing an actionable plan for Maruti Suzuki to achieve its expansion goals. The report considers various factors, including demand, location, and financial aspects, providing recommendations for successful market entry and operation within the EU.

Business in Europe

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Question 1. Choosing EU company for setting up manufacturing plant................................1
Question 2. Discussing institutional and policy changes and advantages within EU that will
affect organisation in operating in EU....................................................................................2
Question 3. Assessing suitable countries which will be fruitful for business and
recommending the best of these locations for the firm..........................................................3
Question 4. Factors to be considered by company in setting up the production and distribution
and how it will deal with it.....................................................................................................4
Question 5. Recommending market entry strategy to successfully operate in EU market by
providing action plan..............................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................7

INTRODUCTION
Business should be set up by considering factors so that it may succeed quite effectively.
Present report deals with Maruti Suzuki India Ltd which is engaged in automotive sector and is
planning to expand and set up its manufacturing and distribution plant in EU market to attain
benefits. Germany is recommended as market to set plant to extract benefits. Furthermore,
current issues in EU, political and institutional changes are evaluated. Furthermore, three
countries are assessed the best suitable for manufacturing purpose. The firm will be able to attain
profits by manufacturing good quantum of products to satisfy customers.
Question 1. Choosing EU company for setting up manufacturing plant
EU market is one of the biggest one which is suitable for the business to establish its
production and distribution plant in market. It may be able to earn profits as cost of producing
automotive may be reduced up to a high extent. This would help company to easily expand its
operations in EU market and earn desired profits quite effectually. Maruti Suzuki India Ltd
which is the largest auto-mobile manufacturer headquartered in India can expand manufacturing
plant in EU so that it may be able to garner good quantum of revenue by providing quality goods
to customers and thus, imparting them greater satisfaction and developing its market share by
targeting people of Europe (The business environment in the EU. 2011).
The European market has several issues which are to be taken in account by the company
before its expansion in the Europe. In order to run smooth operations, EU is planning to
complete single market in order to remove hindrances and obstacles to effectively cross-border
activities. This will help organisations to take advantage out of it as commercial opportunities
would be generated in markets and thus, union business environment would become productive
and economically sound as well. European legislation is required to be taken in account so that
business may freely operate and earn profits. The institutions have taken into consideration the
issues and problems to enhance business operations. On the other hand, Brexit influence is
prevailing in EU by which transitional arrangements have been made to start new relationship
between EU and UK. The council is planning to adopt guidelines issued by EFTA (European
Free Trade Association) which will have constructive relationship between countries in the
Europe.
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Youth empowerment is another current business environment issue prevailing in EU
which means that policies, tools and these dedicated to empower youth so that employment
opportunities may be generated in effective manner. In this way, power of leverage will be
significant in the market. Hence, Maruti Suzuki India Ltd. needs to take into consideration on
such issues for setting up manufacturing plant. Organisation should chose manufacturing and
distribution plant in EU as there are various relaxations to it which would be beneficial for
company in cost reduction and then maximising production level up to a high extent. Local
manufacturing will be helpful for company as delivery of vehicles may be streamlined in that
way which firm would easily deliver goods to customers' within the shortest possible time. The
priorities and preferences of consumers can be ascertained quite effectually and thus, suitable
model can be produced for them to cater their requirements with ease. Better cars will be built
specifically pertaining to individual needs and in return higher profits may be garnered. Hence, it
is suitable for organisation to establish the manufacturing and distribution plant in EU market for
enlarging its customer base (García-Peñalvo, Cruz-Benito, Conde and Griffiths, 2014).
Question 2. Discussing institutional and policy changes and advantages within EU that will
affect organisation in operating in EU
Organisation is required to meet various institutional requirements so that it may be able
to expand its international plant in EU market and take all the legal framework in order to run
smooth operations in the nation. Political, legal and economic are the main pillars which are
needed to be explored so as to attain clarity in the EU market for injecting production level up to
great heights. The policies provided by European Council, European Commission and European
Central Bank play a crucial role to business so that it will abide by the rules and regulations and
thus, carry operations uninterruptedly. This is essentially required to meet the requirements of
institutions and abide legal framework for continuing business for long run (Keeble and
Wilkinson, 2017).
Political environment is one of the important issues which might affect organisation's
operations in the EU. It is evident from the fact that Brexit is being for a while impacting
businesses and thus, firm needs to take into account its consequences to achieve efficiency and
enhance its productivity in new market. Political issues are also related to migration of people
leading to affect business operations. On the other hand, firm can set up its manufacturing plant
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to cater needs of people as purchasing power of EU countries are quite good and so, organisation
can produce vehicles in order to satisfy customers and gain high market share.
The economic issues are also crucial one which affect business operations to a high
extent. Interest rate and taxes levied by taxation authorities are important consideration in this
context. The EU tax rate stands at 21.30 % and this, it needs to be assessed by company that it
will have to pay on profits. Other than that, firm will be able to enhance its profits in an effective
manner. It can be analysed that firm has an advantage of manufacturing all models of automotive
and this will have benefits to company to run production process in EU and successfully attain its
operations.
The legal issues are required to be undertaken by the business so that it may adopt legal
framework imparted and governed by institutions with regard to corporate sector. The factors
such as employment law, consumer law, import and export law and other related are there which
will affect operations of organisation. It is required that these should be taken into consideration
so that it may be able to enhance its productivity by expanding its operations in EU market. On
the other hand, it would be cost-effective for the company as it will be able to cater preferences
of customers and deliver goods accordingly. Thus, these institutional changes would be crucial
for business to abide to successfully operate in the EU market and gain productivity (Mahoney,
2013).
Question 3. Assessing suitable countries which will be fruitful for business and recommending
the best of these locations for the firm
There are various EU countries which will be useful for selecting that one much fruitful
for the business. This means that country have to selected on the basis from where manufacturing
can be done in appropriate manner, low cost of distribution and thus, maximising overall
production in the best possible manner. The nations that are much reliable for Maruti Suzuki
India Ltd are Germany, France and UK which will be beneficial for organisation to select any of
the country for setting manufacturing plant in effective way. These nations are biggest one in the
context of auto-mobile manufacturing which would be suitable for company to set up plant in
order to attain benefits quite effectually (Zikmund, Babin, Carr and Griffin, 2013).
Germany is feasible and one of the biggest market for the organisation as it is leading
economy of EU. It is also said that economic engine for Europe is Germany as investors invest
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their money in the industries generating good quantum of profits in the best possible way. The
nation is solely engaged in manufacturing sector of automotive and related sector having stake of
nearly 40 % share in this sector. Foreign investors also provide greater investment in the sector.
Furthermore, productivity is higher labour costs are decreasing leading to enhancement in overall
production and thus, Germany is one of cost-effective location for company for production and
distribution purpose (Wever and Keeble, 2016).
On the other hand, France is also biggest EU nation which would be feasible for
organisation to effectively set up manufacturing plant in the country. The main reason for setting
up plant in France is that cheap labour and logistics expenses are cost-effective for an
organisation. This is essentially needed to maximise production and minimising costs up to great
heights and satisfy customers with much ease. Furthermore, market of France will be beneficial
for Maruti Suzuki India Ltd as it will be able to enhance productivity by reducing expenses
leading to more production of cars. Hence, it would be appropriate for company to establish
plant in the nation.
UK is another biggest producing nation of various goods which is desired to be used by
company for enhancement in production activities in foreign factory. The main advantage of
expanding production in UK is that quicker turnaround of manufacturing can be found as
finished goods can be produced within short time frame which is beneficial for organisation. The
regular audits and inspections can be seen as flaws in production can be found out. Furthermore,
greater productivity may be achieved significantly (Ayadi and De Groen, 2014).
It is recommended after seeking benefits of setting production and distribution plant in
EU countries that Germany is better option for manufacturer as automotive industry of the
country is large enough and as such, by reducing costs, greater production may be attained by
company in effective way.
Question 4. Factors to be considered by company in setting up the production and distribution
and how it will deal with it
The factors are to be taken into account for setting plant are numerous and it is required
that company may deal with them so that it may not hamper activities of organisation. The
factors are to be considered are as follows-
Demand in the market-
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The demand is required to be analysed by manufacturer whether customers would buy
goods in the targeted market. This would be helpful in determining in relation to manufacturing
plant whether it would be cost-effective or not. Extensive research has to be conducted by firm
so that German market could bring higher profits in effective manner. Hence, by conducting
research, demand and preferences can be analysed and products can be manufactured
accordingly.
Location-
The location of organisation is Germany and will be able to inject operations by
enhancing production. This would be helpful as workforce of the nation is good and labour
relations are promoted as well. Hence, location of setting plant should be feasible as it should
have facilities such as nearby proximity in the market and related amenities should be available
for easing off production process (Storey, 2016).
Financial factor-
The finance and budget plays crucial role as if more finance is available, then plant can
be set up in the best possible way. If flexible budget is adopted, then modifications can be made
and appropriate location in Germany may be attained. This means that Maruti Suzuki India Ltd is
required to analyse requirements of finance to be incurred in setting up manufacturing plant. This
would be helpful for company as costs may be clarified and no extra expenses might be incurred.
Set up cost in nation
The cost of set-ups are vital as manufacturing and distribution plant requires deemed
attention so that business may be able to purchase specific machinery and equipments for
attaining production. The staff to be hired is also set up cost of organisation. Thus, it is needed
that these expenditures may be accounted for. This is required so that costs may not exceed then
volume of production (Canova, Ciccarelli and Ortega, 2012).
Productive team-
Next is to recruit efficient team of staff having specialisation in respective fields.
Furthermore, it is required that break even sales is achieved by team to enhance profits in the
future course of action. It is needed that workers expectations must be accounted for and efforts
should be made to reach the same. This would be helpful in attaining desired goals and future
productivity may be excelled in a better way.
Legal rules-
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The legal rules of German government enacted should be followed as different nation
have different rules and regulations relating to manufacturing plant. Most of them are considered
with health and safety of workers, environmental rules and many more. This would be helpful in
attaining legal framework for setting plant in Germany by Maruti Suzuki India Ltd.
Question 5. Recommending market entry strategy to successfully operate in EU market by
providing action plan
The step-by-step action plan is listed below-
Elements Detailed analysis Time Frame
Choice of market The choice of market is Germany as it has several benefits to
set up plant in the nation.
2 weeks
Objectives The main objective of setting manufacturing plant is that
providing quality goods to customers to meet their demand.
Furthermore, to reduce manufacturing cost and quicker
delivery of products to customers and enhancing satisfaction
level.
1 week
Entry strategy
chosen
The firm would choose joint venture as a market entry
strategy by collaborating with other company that will be
helpful in lowering cost of transportation of raw materials to
the production site. Hence, it would be beneficial for
organisation to enter into German market and extract
benefits of increased production at lower cost.
2 weeks
Designing
Marketing Plan
The marketing plan is required so that production can be
enhanced in a better way. This would be required to attract
suppliers so that they may provide raw materials at least
cost. Furthermore, tactics will be developed to attain
materials at nearby location to reduce transportation cost of
the company. This would be helpful in gaining suppliers'
attention quite effectually. Furthermore, choosing site of
setting up plant for manufacturing and then distributing
4 weeks
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finished goods are needed as well. Moreover, purchase of
equipments and machineries are required to be made to
achieve production at least possible cost.
Target Market The target market of company are customers of middle class
to provide them vehicles at affordable price. High quality
goods will be provided by Maruti Suzuki India Ltd to
customers and enhance their satisfaction level to great
extent.
2 weeks
Total time The activities will be achieved in total time of 11 weeks and
manufacturing set up would be done by the company.
11 weeks
CONCLUSION
Hereby it can be concluded that organisation has to make better decision regarding
expansion of operations to other nation in effective manner. Manufacturing plant and distribution
in foreign country requires lot of market research and only after feasible study is obtained, then
only, decision should be made so that maximum benefits can be attained quite effectively. EU
country such as Germany will be suitable for Maruti Suzuki India Ltd as it is one of the largest
manufacturer of goods particularly in automotive sector. Hence, it can be said that firm would be
able to produce more by setting plant in Germany and as such, benefits will be gained in a better
way.
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REFERENCES
Books and Journals
Ayadi, R. and De Groen, W. P., 2014. Banking business models monitor 2014: Europe.
Canova, F., Ciccarelli, M. and Ortega, E., 2012. Do institutional changes affect business cycles?
Evidence from Europe. Journal of Economic Dynamics and Control, 36(10), pp.1520-
1533.
García-Peñalvo, F. J., Cruz-Benito, J., Conde, M. Á. and Griffiths, D., 2014, October. Virtual
placements for informatics students in open source business across Europe. In Frontiers in
Education Conference (FIE), 2014 IEEE (pp. 1-5). IEEE.
Keeble, D. and Wilkinson, F., 2017. High-technology clusters, networking and collective
learning in Europe. Routledge.
Mahoney, J., 2013. Teaching business ethics in the UK, Europe and the USA: A comparative
study. Bloomsbury Publishing.
Storey, D.J., 2016. Understanding the small business sector. Routledge.
Wever, E. and Keeble, D., 2016. New firms and regional development in Europe. Routledge.
Zikmund, W. G., Babin, B. J., Carr, J.C. and Griffin, M., 2013. Business research methods.
Cengage Learning.
Online
The business environment in the EU. 2011 [Online] Available Through:
<http://www.europedia.moussis.eu/books/Book_2/6/17/02/02/?all=1>
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