Maruti as an Organization-project Report

PGDM 2010-12 SECTION A GROUP 3

Atreya Chakroborty(010) Avishek Tarun(011) Monica Dhiman(031) Subhadeep Basu(051) Varun Ahooja(059)

[ORGANISATIONAL BEHAVIOUR] Maruti Suzuki India Limited

SUBMITTED TO: Dr. Richa Awasthy

Maruti Suzuki India Limited

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Table of Contents

Contents ................................................................................................. 1 Table of Contents...................................................................................................2 Contents................................................................................................................ 2 Introduction........................................................................................................... 3 Maruti Suzuki India Limited....................................................................................4 Vision/Objectives .................................................................................................. 5 Physical Environment.............................................................................................6 Value creation at Maruti........................................................................................7 A Model of Organizational Effectiveness for Maruti................................................8 Core Competencies at Maruti................................................................................9 Design Structure at Maruti...................................................................................10 Organization Structure ........................................................................................12 Organization Chart...............................................................................................13 Maruti’s Step for Future.......................................................................................16 Contextual dimensions of the Organizational Design..........................................18 Culture at Maruti..................................................................................................20 Flaws in Present Organization Structure..............................................................21 Proposed Structure..............................................................................................21 Recommendations ..............................................................................................22 Conclusion........................................................................................................... 23 References........................................................................................................... 24

Maruti Suzuki India Limited

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Introduction The aim of this report is to study the structure, process, competency, values, culture and mission of an organization and analyze these different aspects taking a holistic view of the company. In this regard, we chose Maruti Suzuki Limited as it is the leader in Indian Automobile industry and moreover it has a majority share by the Japanese car-maker Suzuki, so the intermingling of both Japanese and Indian culture is an interesting aspect from a behavioral point of view. Our approach initially was to firstly get ourselves acquainted with the company and its functioning through secondary sources before approaching Mr.G.S. Bhargava (Sr. Manager , Quality Assurance) ,Ms Sheetal Dhiman(Deputy Manager,EN1T Dept)and Mr. Manoj Kumar Singla(Assistant Manager -Inspection) for further information. We also managed to have a small talk with the other employees at the end of the day. We received valuable insight into the functioning of the organization and how it “cares for its people and the customers” “The organization not only works on paper but has also implemented its policies effectively undertaking timely evaluation and control of its functioning”. For example, the flat structure and the equality have been maintained throughout organization at every single level which has been reviewed in the subsequent pages.

Maruti Suzuki India Limited

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Maruti Suzuki India Limited Company Vital Stats Type-Public Industry-Automotive Founded-1981(as Maruti Udyog Ltd.) Headquarters-New Delhi Key people-Mr. Shinzo Nakanishi(MD & CEO) Products-Automobile Employees-6903 Parent-Suzuki Motor Corporation

Maruti Suzuki India Limited is a partial subsidiary of Suzuki Motor Corporation of Japan and is India's largest passenger car company, accounting for over 45% of the domestic car market(Oct.2010). It was the first company in India to mass-produce and sell more than a million cars. It is largely credited for having brought in an automobile revolution to India. It is the market leader in India and on 17 September 2007, Maruti Udyog Limited was renamed Maruti Suzuki India Limited. The company's headquarters are located Kasturba Gandhi Marg in New Delhi.

History In 1970, a private limited company named 'Maruti technical services private limited' (MTSPL) was launched on November 16. The purpose of this company was to provide technical know-how for the design, manufacture and assembly of "a wholly indigenous motor car". Sanjay Gandhi owned the Maruti Technical Services Limited, which ran into trouble and was liquidated. After the death of Sanjay Gandhi, the Indira Gandhi government assigned a delegation of Indian technocrats to hunt for a collaborator for the project. Initial rounds of discussion were held with the giants of the automobile industry in Japan including Toyota, Nissan and Honda. Suzuki Motor Corporation was at that time a

Maruti Suzuki India Limited

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small player in the four wheeler automobile sector and had major share in the two wheeler segment. Suzuki's bid was considered negligible. Suzuki in return received a lot of help from the government in such matters as import clearances for manufacturing equipment (against the wishes of the Indian machine tool industry then and its own socialistic ideology), land purchase at government prices for setting up the factory Gurgaon and reduced or removal of excise tariffs. This ensured that Suzuki conscientiously nursed Maruti Suzuki through its infancy to become one of its flagship ventures. In 1983, the Maruti 800 model was released in the market and came to be known as the people’s car. This was followed by the launch of Omni, Gypsy and then a flurry of car models followed. In 1987, the company’s first export reached Hungary. In 1989, they released the first sedan in the Indian market. In 2000, it became the first car company in India to launch a Call Center for internal and customer services. In the same year, they also launched IDTR (Institute of Driving Training and Research) jointly with the Delhi government to promote safe driving habits. In 2005, they rolled out their 5 millionth car in April.

Facilities and Products Maruti Suzuki has two state-of-the-art manufacturing facilities in India at Gurgaon and Manesar, both manufacturing facilities having a combined production capacity of 1,250,000 vehicles annually. It is one of the companies in India which has unparalleled sales and service network. As of March 2010 it has 802 dealerships across 555 towns and cities in India. To ensure the vehicles sold by them are serviced properly, Maruti Suzuki has 2,740 workshops in 1,335 towns and cities. It has 30 Express Service Stations on 30 National Highways across 1,314 cities in India. Service is a major revenue generator of the company. They offer 14 brands and over 150 variants ranging from people’s car Maruti 800 to the stylish hatchback Ritz. The range of cars include people movers - Omni and Eeco, international brands - Alto, Alto-K10, A-star, WagonR, Swift and Estilo, off-roader - Gypsy, SUV - Grand Vitara, sedans - SX4 and Swift DZire.

Vision/Objectives “To become an internationally competitive company in terms of production volume, costs

and profits. We must not only maintain leadership in India but should aspire to be amongst the global players”.

Mission: Maruti Suzuki India Limited

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The leader in the Indian automobile industry, creating customer delight and shareholder’s wealth; a pride of India

Core Values:    

Customer Obsession Fast, flexible and fast mover Innovation and creativity Networking and partnership Openness and Learning

Physical Environment The Gurgaon facility at Maruti is a huge complex in itself. From the outside it gives the feel of a traditional manufacturing facility. The offices are housed in grey colored buildings and the production facility is covered by sheds. The office complex is colored lemon green, is centrally air-conditioned and has cubicles for all the employees. All the employees have desktops and steel racks provided with the top management having laptops. The flat structure remains true to its identity as all levels of employees’ share the same working environment. There is a separate computer lab for trainees. All the employees of Maruti wear the same uniform, light green shirts, cascade green trousers and jerseys , which further establish the equality in the treatment of all the employees. Even Mr. R.C. Bhargava , the Chairman wears the same uniform. It is mandatory for the employees to start the day with a 5 minute exercise routine on arrival at the plant. The mess area is also common and resembles a well laid out hall where food is served at specific timings. However there’s a small pantry which is open through the day. Entry to the company premises is highly secured and is only allowed after taking proper permissions. We were allowed to visit Mezzanine 2, the building which houses the finance and quality assurance department, among others. The ambience gives you a feel the oldhouse PSU companies i.e. a mixture between the traditional and modern .It consists of a huge hall with cubicles, which look a bit compact. But overall, according to us, it looks far from being a modern office like those of present MNC’s .

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Value creation at Maruti "Focus on customer satisfaction is what Maruti thrives upon”. 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. 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 programs. The various ways in which Maruti creates value for its customers are as follows: •

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Maruti caters to all segments and has a product offering at all price points. 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 Maruti Suzuki owners experience fewer problems with their vehicles than any other car manufacturer in India Maruti Suzuki has scored highly across most parameters: least problems experienced with vehicle serviced, highest service quality, best in-service experience, best service delivery, best service advisor experience, most userfriendly service and best service initiation experience. At Maruti Suzuki, customers find all car related needs met under one roof. Whether it is easy finance, insurance, fleet management services, exchangeMaruti Suzuki is set to provide a single-window solution for all car related needs.

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A Model of Organizational Effectiveness for Maruti Strategy: 1) Counter increasing competition and falling market share in the small car segment 2) Increase yearly manufacturing capacity by 200,000 units to 1.2 million cars by 2011 3) Build a new research and development facility at Rohtak, which will be Suzuki’s R&D hub for Asia operations 4) Increase annual production capacity to a two million mark in five years, setting a precedent for automakers countrywide. 5) Increase penetration in the rural segment by tying up with ventures like ITC e-choupal and Hariyali Kissan Bazaar of DCM Shriram group 6) Increased availability of automobile finance

Rewards: The promotions are based on performance, with a round feedback system for contoinious improvement for its employees. Salary of employees has three major components: 1) Basic Pay: Increments to the basic pay were based on his/her performance as judged by his/her superiors. 2) Perquisites: Perquisites available to the employee depended on the performance of the employee in the previous year. 3) Profit Share: This component of the remuneration package depended on the performance of the company, the division and the department in which the employee worked.

Structure: 1) Maruti has a Functional organizational structure with Horizontal Linkages. 2) Activities are divided broadly based on following functions Finance, Marketing, Engineering, Sales, Spares, Production, Materials, Production Engineering, Parts

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Inspection, Quality Assurance, Maintenance, Human Resource Development, Information Technology, New Business, Administration 3) Functions further divided into smaller divisions, based on various criteria (product, plant, location etc) 4) Flat structure 5) Employees are divided in just six functional levels, namely Workers & Technicians, Supervisors, Executives, Section Managers, Department Manager, and Division Manager 6) Technicians are divided in 7 levels (L-1 to L-7), Supervisors in 3 levels (L-8 to L-10), Executives and Managers in 4 levels

People: 1) Positive, supportive and transparent work culture. 2) People at Maruti Suzuki have high levels of ownership and an element of pride that is

commitment. Capability comes from functional and technical skills; commitment comes from identification with the company & ownership of its vision, core Values and goals. 3) Low attrition rate of 9.5% as against industry average of 19.5% 4) Recruitment from top engineering and management institutes across the country 5) Japanese Management philosophy of team spirit promoted through common uniform

for all employees, open office system, common canteen, morning meetings , morning exercises

Processes: 1) Control and power is mostly in the hands of management 2) Sound IT infrastructure with the aim to provide accurate and timely information for good decision-making.

Core Competencies at Maruti

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MSIL believes that they are well positioned to maintain and enhance their leadership position in the small car segment in India, while continuing to offer products in most segments of the Indian market, on account of their competitive strengths, which include the following: Expertise in small car technology: As a subsidiary of Suzuki, they have access to globally respected technology in the small car segment. They have the advantage of Suzuki’s expertise in all aspects of small car technology and design, with respect to their products, their manufacturing processes and business practices, the development of their supply chain and the training of their personnel. Brand strength: They have been present in the Indian market for almost twenty years and have built their brand on the basis of the values of trust and reliability. Most of their principal competitors have been present in the Indian passenger car market for a significantly shorter period. Certain manufacturers have ceased to manufacture certain products shortly after introducing them, or have left the market altogether. In contrast, they continue to support the maintenance of their products. This has contributed to the strength of their brand. Integrated manufacturing facility: Their manufacturing facility comprises three integrated plants with flexible assembly lines located at Gurgaon and Manesar. The facility has advanced engineering capability and each plant is upgraded on an ongoing basis to improve productivity and quality. They believe that they are one of the most efficient among the vehicle manufacturing facilities of Suzuki’s subsidiaries outside Japan in terms of productivity measured as the ratio of number of vehicles produced to number of employees. Skilled labor and experienced management: The highly skilled labor force has become increasingly productive in terms of vehicles produced per employee and receives training on an ongoing basis, including training by Suzuki. They have been present in the Indian passenger car market for a significantly longer period than most of their principal competitors. As a result, they have been able to build a highly experienced management team that is familiar with conditions in the Indian passenger car market. Capital resources: They have cash and bank balances and current investments amounting to Rs.1260 crore. As of the same date, they had relatively low levels of outstanding indebtedness. As a result, they have relatively low interest expense and flexibility to raise funds, if necessary, for their working capital and capital expenditure in the future.

Design Structure at Maruti Maruti has a Functional organizational structure with Horizontal Linkages. The activities are divided broadly based on following functions Finance, Marketing, Engineering, Sales, Spares, Production, Materials, Production Engineering, Parts Inspection, Quality Assurance, Maintenance, Human Recourse Development, Information Technology, New Business, Administration The Centralization is very low in Maruti, as the decision making authority is quite decentralized and distributed across all levels. As, it is a very big organization, these are further divided into smaller divisions, based on Maruti Suzuki India Limited

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various criteria (product, plant, location etc). There are total 29 divisions in Maruti, and are headed by one Divisional Head, which is a Functional post. Then these Divisions are further divided into 132 Departments, which are headed by one Department Head, which again is a functional post. The automobile industry is a process driven industry. In Maruti also, the formalization is very high, all the operation procedures, standards, methods, instructions are written down formally. Apart from the Company-wide Procedures all Departments have their Department Procedures. These Department Procedures define the scope of work for the department as well as the roles and responsibilities and work flows. These procedures are approved by the Division heads, and are available to all concerned (mostly in the form of electronic copy), and also available for other departments for reference. In production shops, the standard operating procedures are documented, and displayed on the work stations. They are called “Maruti Operations Standards” or MOS. Similarly Maruti Engineering Standards (MES), Maruti Inspection Standards for Parts (MIS-P), Maruti Inspection Standards for Testing (MIS-T) etc are also available. Changes in all these documents are recorded for the purpose of back-tracking. Functionally, the structure of Maruti is very flat. The employees are divided in just six functional levels, namely Workers & Technicians, Supervisors, Executives, Section Managers, Department Manager, and Division Manager. Division Managers then report to Directors. However, hierarchically, these are divided into different levels, like, Technicians are divided in 7 levels (L-1 to L-7), Supervisors in 3 levels (L-8 to L-10), Executives and Managers in 4 levels (L-11 to L-14). Above this the Levels are designated as IDPM (Incharge Department Manager), DPM (Department Manager), DDVM (Deputy Division Manager), and DVM (Division Manager). The Section Manager, Department Manager and Division Manager are all Functional posts, which means anybody from levels L-11 to L-14 can be a Section Manager, an IDPM or a DPM can head a Department, and an DDVM or DVM can head a Division.

Changes in Structure In view of increasing competition in the automotive sector Maruti has tried to use a project based structure to tackle specific problems effectively. Around two years back in a meeting of middle and senior level executives it was decided to form teams which would focus on specific goals. Around thirty teams comprising of 8 to 10 members were formed. These teams had specific mandates in terms of cost reduction, new product development and were given resources and authority in order to implement their projects. For example, one team worked on value analysis and value engineering for specific components for cost reduction. Another team worked on improving the JD Power ratings that Maruti secured for IQS (Initial Quality Service). These teams were working on a high priority and all departments were expected to co-operate. Also they reported to the JDM directly and this helped them to sort out any problems they encountered. The best performing teams were awarded handsomely.

Maruti Suzuki India Limited

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Organization Structure The organization structure of Maruti is somewhat inclined towards a mechanistic structure, but it cannot be called absolutely so owing to the presence of a high degree of decentralization. It has a functional structure with horizontal linkages. The functional divisions finance, marketing, engineering, sales focus on their respective functions. These divisions are further divided in 29 divisions. The hierarchy consists of a divisional head and then a departmental head. The employees are divided in just six functional levels, namely workers and technicians, supervisors, executives, sectional managers, department manager, and division Manager. Mechanistic structure is suitable for organizations which do not require any frequent changes in their processes and environment is stable. The key features of the mechanistic structure at Maruti are:•

The division of employees at six functional levels and their further hierarchal division in different levels indicate that the company wants to achieve perfection at each functional level considering various products simultaneously.

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Their product is car and its production occurs on a large scale, it includes assembly lines in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods. This ensures standardization of product and for fixed steps in a process to be followed a no of fixed rules and standard operating procedures need to be followed.

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The environment in the automobile market is almost stable and hence flexibility in the structure is not required.

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Each functional department tends to achieve perfection at its level. At the horizontal level it involves cross functional teams and sometimes direct contact in the form of a coordinator from each department who can communicate the developments in their respective department.

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Each function is separate at functional level and communication and cooperation among functions are responsibility of someone at the top of the hierarchy.

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Communication is mostly vertical from department to division and then directors.

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Main decisions are taken by directors in respective functional divisions.

All these characteristics are in line with the mechanistic structure which are economies of scale, and are designed to induce people to behave in predictably accountable ways.

Maruti Suzuki India Limited

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Organization Chart

Managing Director Finance

Marketing

Production

Maruti Suzuki India Limited

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Sales

29 Divisions

Spares

Divisional QA 132 Departments Maintenance

Departmental

IT

Administratio n

Note: - Mr. G.S. Bhargava specifically maintained that the organization chart is an internal company document and cannot be shared with people outside the organization. The above representation is an indicative of our conclusions from the interactions.

Division of employees There are six functional levels, namely Workers & Technicians, Supervisors, Executives, Section Managers, Department Manager and Division Manager. Division Manager

Department Manager Maruti Suzuki India Limited

Department Manager Page 14

Supervisors Workers Section Executives Manager and technicians

Department Manager

The following structure depicts the chart and further sub-divisions for the finance department in particular.

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Maruti’s Step for Future “Maruti uses the above structure in order to give enough freedom to its employees to take decisions” at different levels in the best interests of the company and at the same time the “management has a direct control over the working of the system and has a final say in matters that directly affect the company reputation.” Maruti uses a structure that is completely in sync with its core values and its culture. At Maruti, people feel that this structure is completely synergistic with its core values of building a continuously improving, change adaptive organization, providing value and satisfaction to the customer, maximizing shareholder’s value, Aligning and fully involving all our employees, suppliers and dealers to face competition and above all, being a responsible corporate entity.

Advantages Maruti Suzuki India Limited

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1. Top management is relieved of much day-to-day problem solving and is left free to

concentrate on strategy, on higher level decision making, and coordinating activities. 2. Decentralization provides lower level managers with vital experience in making

decisions. Without such experience, they would be ill-prepared to make decisions when they are promoted into higher level positions. 3. Added responsibility and decision making authority account for increased job satisfaction and in turn, the low attrition rate of Maruti. Responsibility and the authority, that goes with it makes the job more interesting and provides greater incentives for Maruti employees to put out their best efforts. 4. Lower level managers generally have more detailed and up to date information about local conditions than top managers. Therefore the decisions of lower level management are often based on better information. 5. It would be difficult to evaluate a manager's performance if the manager is not given much latitude in what he or she can do.

Disadvantages 1. Lower level managers may make decisions without fully understanding the "big

picture." While top level managers typically have less detailed information about local operations than the lower level managers, they usually have more information about the company as a whole and should have a better understanding of the company's strategy. 2. In a truly decentralized organization, there may be a lack of coordination among autonomous managers. This problem can be reduced by clearly defining the company's strategy and communicating it effectively throughout the organization. 3. Lower-level managers may have objectives that are different from the objectives of the entire organization. For example, some managers may be more interested in increasing the sizes of their departments than in increasing the profits of the company. To some degree, this problem can be overcome by designing performance evaluation system that motivate managers to make decisions that are in the best interests of the organization. 4. In a strongly decentralized organization, it may be more difficult to effectively spread innovative ideas. Someone in one part of the organization may have a traffic idea that would benefit other parts of the organizations, but without strong central direction the idea may not be shared with, and adopted by other parts of the organization.

Q.Why does Maruti use a flat, decentralized and functional structure ?

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“Maruti decided to benchmark itself against Suzuki’s Kosai plant in Japan in terms of productivity, cost and quality. It wanted to imbibe the same Japanese culture where equal treatment of every employee is of utmost importance.” Another recent example of the above stated philosophy is Maruti’s recent initiative ‘Challenge 50’, which includes increasing the all round productivity and quality of our products. The strengths of Maruti - Cost and Quality-have converged across the models. the aims of Challenge 50, by raising productivity by 50% and bringing down the cost per vehicles by 30%, to bring Maruti on par with some of the best car companies worldwide. Maruti also decided to adopt Suzuki’s global customer audit index to enhance customer focus. Maruti officials say that car companies, which have entered the Indian market are regularly benchmarking against Maruti products, costs and quality. In this situation, Maruti has decided that rather than confining itself to the standards and parameters of the Indian industry, it would benchmark itself against the best in the global car industry. This exercise of benchmarking against the global best is internally referred to as Challenge 50.

Contextual dimensions of the Organizational Design The contextual dimensions can be studied as paradigm, factors and structural elements.

Paradigm elements:1. Individual and collective paradigm – The collective paradigm includes the mission

and vision of MSIL through which the organization creates values and a culture and the individuals adhere to it. The paradigms of both the individual and company are collaborated and aligned and hence project a perception of unity. 2. Perception – The perception of the people and customers is of utmost importance to

the organization. The employees of the organization make the perception which is carried out to the outside world and is what determines the image of the company. The image of the company is built by the employees of Maruti. 3. Aspirations – The aspirations of the individual and the company has to be aligned in

a manner beneficial to both. The company and the management takes good care to make sure that these match during recruitment, policy formations and compensation. The aspirations of an individual are extremely important and the human resource executives pay particular attention to it. 4. Values and beliefs – The values and beliefs of the company are passed down from

the higher management to the bottom layer worker through various modes and channels. The values are repeatedly ingrained amongst its employees and are adhered to strictly.

Factor Elements:Maruti Suzuki India Limited

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1. Perception of the environment – It is worthwhile to take a deeper look into the

environmental factors that severely affect the organization due to its close entanglement with various issues. The political is probably the most unstable factor as the government decides to continuously slash tax rates on various commodities and the debate rages on the approval of FDI in the automobile sector. The economic scenario has been highly volatile with easy availability of finance, incentives from the government, policies and duties and taxes. The technological factor deeply affects the organization as this is a highly technically influenced product and has a direct effect on the productivity of the firm and its workers. In the legal environment, the country has relatively high import duties and has a weighted tax reduction of upto 150% on in-house RnD activities. 2. Choice of Strategy - The strategy includes to counter increasing competition and

falling market share in the small car segment, increase yearly manufacturing capacity, build new research and development facility, increase annual production capacity to two million mark in five years, setting a precedent for automakers countrywide and increasing penetration in the rural segment are some of the strategies adopted by the organization. 3. Selection of technology - In order to face the onslaught of increasing competition

managers today look for ways to use information technology as a strategic weapon to gain advantage over their competitors. Today various systems have begun to merge into an overall information technology system that can be used as a strategic weapon. Applications such as extranets, e-commerce, and network structures redefine and support relationships with customers, suppliers and other organizations. 4. Growth of size – The size of the company has grown manifold in the last few years

owing to the surge in demand of the product across the country and also the demand in international markets. 5. Distribution of power and control – The power and span of control becomes a very

interesting dimension in Maruti because most of the posts are functional in nature. If we look at the Section Manager in some department, then there might be 4-8 people of different levels directly reporting to him without any level-wise hierarchy amongst themselves. The span of control is generally in the order of 3~6 at the top management level, 4~8 at the middle management level, and 0-5 at lower management levels (other than production).

Structural elements:1. Specialization- The functional structure and further division of labor makes high

degree of specialization in Maruti. 2. Centralization- It is a moderately centralized organization where power is distributed

within the hierarchy and each person has more or less specific roles. Maruti Suzuki India Limited

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3. Formalization- Formalization is very high, all the operation procedures, standards,

methods, instructions are written down formally. Apart from the company-wide procedures, all departments have their department procedures. These Department Procedures define the scope of work for the department as well as the roles and responsibilities and work flows. 4. Span of control - The span of control is generally in the order of 3-6 at the top

management level, 4-8 at the middle management level, and 0-5 at lower management levels (other than production). In production departments, the span of control at lower management level goes up to 40-50, as those many workers and technicians directly report to a line supervisor/ shift in-charge. 5. Complexity- Structural complexities arise because of goal incompatibility between

the various departments like Engineering, Quality, and Parts Inspection, and more so because Maruti is an organization of very large proportions. 6. Stability and Change- Maruti has seen a lot of changes in its task environment over

the years and it has also tried to adapt to them. Its focus and strategy has also changed from one of a monopoly player in a sellers market to a small car production and R&D hub for European and African markets for its parent Suzuki Motor Corporation. In the domestic market its strategy has been mainly to defend its market share of late. However, its basic organizational structure has remained more or less the same over the years and it is this stability that has helped it grow into the biggest car manufacturer in India.

Culture at Maruti The culture adopted by Maruti can be inferred from the following activities that are practiced widely in the organization:-

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Open office

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Common canteen

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In-house Quaterly journal

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MD’s letter to the employees

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Common uniform

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Morning Exercises

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Discipline

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Performance orientation

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•

Daily morning meetings @ 9

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Daily production meetings

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Weekly management committee meetings

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Bimonthly product committee meetings

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Union management meetings

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Maruti Sahyog Samiti

Flaws in Present Organization Structure Through our interactions with our contacts at Maruti and other employees we observed that since it is a large organization, it faces inter-departmental friction in many areas which are listed below 1) Parts Inspection vs. Engineering The Parts Inspection Department sees to it that existing and new parts conform to the levels of quality desired. On the other hand managers in the Engineering Department are encouraged to reduce costs by localizing the sourcing of parts. The process of localization requires the sanction of the Parts Inspection Department and this is a cause for conflict. This conflict is intensified if the Parts Inspection Department is headed by a Japanese manager who reports to Suzuki and would want that parts be sourced from Japan. 2) Marketing vs. Others The marketing department which operates in a boundary spanning role is entrusted with the responsibility of ensuring that the customers’ expectations are met. However, very often the recommendations that it suggests are not well received in other departments like engineering. For example, some time back after analyzing data from customer surveys the marketing department recommended that the audio systems in Maruti Cars should be of the Blaupunkt brand. This was turned down however as Suzuki had formed a tie up with Pioneer to use its audio systems. 3) Quality vs. Others The nature of the responsibility of the Quality department frequently brings it into conflict with other departments like Engineering and Production. Whenever the Quality Department declares that a certain product or process is not clearing the quality requirements, the corresponding department may protest against it as most of the time such tests are marginal.

Proposed Structure According to the star model , we propose the following Maruti Suzuki India Limited

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Rewards Rewards and compensation of the company should be evaluated more frequently and should have greater linkage to employee performance, added incentives like all paid expense trips and more ESOPs should be incorporated People Frequent interaction among different divisions through outbound learning programmes. Frequent stand-up meetings and activities should be a part of their culture.

Processes Although they follow very stringent JIT, TQM and Kaizen principles there should be increased and reinforced focus more on quality assurance, less defects specially keeping in mind the escalating competition in the small car segment in India Strategy Their strategy should be more focused on the changing customer demands and trends in the industry and modify their product lines in accordance with the consumer preferences. Structure Analyzing the current structure we have observed that it is more of functional structure with vertical communication and integrating force is the top management. In the current structure there are conflicts between different departments. Maruti has some examples of interdepartment friction which are outlined here:

Recommendations We think that there is need for more of horizontal integration between departments at departmental level is required. Another factor is that the levels of employees are quite diversified which creates a complicated hierarchy and thus complicated structure. The hierarchic levels should be reduced. Currently they have direct contact with a person from a particular department playing the role of a liaison but this system is still resulting in conflicts. The structure they are following is multigrouping structure where employees share a common supervisor and common resources and are jointly responsible for performance. This structure is often a type of matrix or hybrid. But to improve the structure the need of the hour is to increase horizontal integration, to do that we can appoint a full time integrator. Full time integrator has a title such as product manager, project manager, or brand manager. Unlike liaison as appointed earlier this person will not report to functional department. This person is located outside the department and has responsibility for coordination several

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departments. He can also suggest changes in the project. They don’t have authority over team members with respect to giving pay, hiring or firing. Integrator need excellent people skills and has to use expertise and persuasion to achieve coordination, should be able to get people together and resolve conflicts. Thus conflicts between various departments can be handled by full time integrator and the decisions taken by integrator would not be biased towards any department and hence it would be easily accepted by the departments in conflict and in turn it will take less time to resolve the existed conflicts.

Conclusion The success or failure of an organization primarily depends on its ability to sustain its comparative advantage. We believe that MSIL has been able to achieve its goal of “providing the consumers with cars at the least possible prices than its competitors, while assuring the quality and service that is best in the industry” purely on the basis of a highly efficient structure, design and adherence to its core values. As a group we felt a certain sense of the “satisfaction vibes” emanating from the employees .The way they emphasized upon the morning exercise regime or the fact that even the “Chairman, Mr. Bhargava has lunch with them on the same tables and wears the same uniform as them” creates a sense of equality and respect in the eyes of all the employees. Maruti truly has been a pioneer in providing the common Indian man with four wheels to drive around and the employees feel a great sense of pride in this fact. The flat, decentralized structure and the importance given to all the employees go a long way in creating a harmonious working environment where everyone focuses towards achieving the macro objectives.

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References •

Oasis – Maruti’s intranet

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Handbook of Strategic Human Resource Management - Armstrong Michael and Baron Angela

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Organization Design and Development - Bhupen Srivastava

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www.marutisuzuki.com

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http://economictimes.indiatimes.com/news/news-byindustry/auto/automobiles/Indias-largest-carmaker-Maruti-fights-falling-marketshare/articleshow/6193776.cms

Maruti Suzuki India Limited

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