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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 Page 1


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

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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.

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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

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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:

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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 old-
house 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:

• 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 user-
friendly 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, exchange-
Maruti 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 de-
centralized and distributed across all levels.

As, it is a very big organization, these are further divided into smaller divisions, based on

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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.

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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.

• 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.

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

• 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.

• Each function is separate at functional level and communication and cooperation


among functions are responsibility of someone at the top of the hierarchy.

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

• 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.

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Organization Chart

Managing
Director

Finance

Marketing

Production

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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 Department Department


Manager Manager Manager

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Supervisors
Workers
Section
Executives
Manager
and
technicians
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
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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:-

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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.

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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:-

• Open office

• Common canteen

• In-house Quaterly journal

• MD’s letter to the employees

• Common uniform

• Morning Exercises

• Discipline

• Performance orientation

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• Daily morning meetings @ 9

• Daily production meetings

• Weekly management committee meetings

• Bimonthly product committee meetings

• Union management meetings

• 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

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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 inter-
department 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


• Handbook of Strategic Human Resource Management - Armstrong Michael and
Baron Angela
• Organization Design and Development - Bhupen Srivastava
• www.marutisuzuki.com
• http://economictimes.indiatimes.com/news/news-by-
industry/auto/automobiles/Indias-largest-carmaker-Maruti-fights-falling-market-
share/articleshow/6193776.cms

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