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Submitted by:
Manu Rajput Sushmita Paul Abhishek Periwal Divya Bonagiri Anju Maurya Amarnath Kalyanram
ACKNOWLEDGEMENT
We are extremely grateful and remain indebted to our faculty Prof. C ANAND, IBS Hyderabad for being a source of inspiration and for his constant support in the preparation of this project. We are thankful to him for his constant constructive criticism and invaluable suggestions, which benefited us a lot while developing the project on the control systems of Maruti Suzuki. He has been a constant source of inspiration and motivation for hard work. He has been very co-operative throughout this project work. Through this column, it would be our utmost pleasure to express our warm thanks to him for his encouragement, cooperation and consent without which we mightnt be able to complete this project.
Finally, yet importantly, we would like to express our heartfelt thanks to our beloved parents for their blessings, our friends/classmates for their help and wishes for the successful completion of this project.
Regards, Sushmita Paul Manu Rajput Abishek Periwal Divya Bonagiri Anju Maurya Amarnath Kalyanram
TABLE OF CONTENT
1. Introduction........................................................................................... Pg 1
2. Organization Structure......................................................................... Pg 3
3. Management Style.................................................................................. Pg 5
5. Culture .................................................................................................. Pg 15
7. Rewards ................................................................................................ Pg 19
8. References ............................................................................................................. Pg 22
INTRODUCTION
India is multi-billion-dollar market for automobiles, accessories and components. Apart from being the worlds largest manufacturer of two wheelers and fifth largest manufacturer of commercial vehicles, India is the fourth largest passenger car market in Asia. In recent years there has been a marked rise in the number of international industrial concerns setting up a base in India. The automotive industry is well represented among them. In 2008 three million vehicles were manufactured in India. Maruti Udyog Ltd. (henceforth, MUL) has been the market leader. After the lifting of licensing in 1993, 16 new ventures of car manufacture have come up, which has put the market and car manufacturers in the country under unprecedented severe competition.
COMPANY BACKGROUND
Maruti Udyog Ltd. (MUL) was set up in 1980 by the government to produce automobiles. By collaborating with Suzuki Motor Company in 1982, it was hoped that the famed Japanese style of management would catalyze the small and backward car industry and some of the others to which it was linked. Maruti got off to an excellent start by public sector standards. However, by 1985, fiscal, balance of payments, and technology transfer problems began to surface.
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With current order books winding down by 1990, questions arise as to MUL's mission, its product-market strategies, its pricing policy, and the value of Japanese participation. Questions also arise regarding the coherence, long term stability, and developmental aims of government's policy towards the automobile industry. The leadership of the world's 100 year old car manufacturing industry passed from the extended monopoly of the US to far away Japan in 1980. In October that year, the Government of India nationalized a defunct car company and named it Maruti Udyog Ltd. Nearly two years later, MUL's Chief Executive, Mr V Krishnamurthy, signed up a Japanese collaborator, Suzuki Motor Company (SMC) which took a 26 per cent equity share and helped in commissioning a gleaming assembly line about 30 km. away from Delhi in 13 months' time. MUL made profits from the very first year, captured a 50 per cent market share by 1985, and crossed the 100,000 vehicle (cumulative) sales mark in September 1986, a year ahead of schedule. With over 50,000 customers (each of whom had made a 15 per cent down payment) still on its waiting list, the company reopened its order books in September/October 1986, for only the third time in the hope that another hundred thousand or so would sign up for its new model which had appeared just a couple of months earlier. But since early 1985, the company, which had sparked off the long overdue process of modernizing India's archaic car industry as well as triggering experimental changes in the government's cumbersome licensing policy, began to encounter bumpy conditions on both the supply and demand sides. Set up like a typical Japanese car company with a maximum 30 per cent in-house manufacturing share in the vehicle's overall value, MUL began to figure in some national forums with regard to the 1988-89 target of 90 per cent local content. The company's unexpectedly fast start as a volume car producer had left domestic parts suppliers flat-footed. The parts suppliers were having trouble meeting the company's Japanese-style quality, cost, and delivery standards, at what were unprecedented levels of car production for India. Oh the demand side, a combination of factors, including the sudden appreciation of the yen in 1985-86, and hikes in import tariffs as well as excise duties led to a 15 per cent price increase per car in a matter of months .This made it problematic for MUL to follow its low price, high volume strategy. The foregoing developments led Mr Krishnamurthy to declare that "the rules of the game" had changed. He was concerned about the future development of the Indian car industry.
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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. 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. Some other features of mechanistic organization structure are: High horizontal differentiation Rigid hierarchical relationships Fixed duties High formalization Centralized decision authority
Maruti follows A path to success, which is as follows: Emphasis on teamwork and recognition. Linking employees growth and prosperity to that of the company. Strict work discipline. Constant efforts to increase the productivity of labour as well as capital. Increase in quality. Reduction of costs. Customer orientation. Formation of long term objectives and policies for the attainment of companys goals. Respect of law, ethics and human beings.
A team of Supply Chain/ Engineering then visits & performs an assessment As per Marutis laid down criteria produced below
CRITERIA FOR VENDOR SELECTION:1. Vendor's Past Problem on Quality, Cost & Delivery. 2. Vendor technological Capability in Designing, Manufacturing, Testing 3. Management of company with respect to professionalism, Clarity in Org Structure. 4. Financial health 5. Tool making capability 6. Quality system in the Org 7. Proximity to enable JIT deliveries 8. Loyalty
VENDOR RATING
They have a system for evaluation of vendors. The vendor rating is based on the objective data compiled about the vendor which is used for defining the 1) Future Business Dealings 2) Share of Business 3) Vendor awards 4) Improvements
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QUALITY POLICY
To increase consumer satisfaction through continuous improvement of products andservices, this is achieved by following PDCA functions and levels of Maruti organizations..
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QUALITY TOOLS
1) 2) 3) 4) 5S 4M 3M 3G
What is 5S? SEIRI PROPER SELECTION SEITION ARRANGEMENT SEISO CLEANING SEIKETSO CLEANLINESS SHITSUKE DISCIPLINE What is 4M? The factory is essentially a mix of man, materials, machines and methods. These should move continuously and effectively to produce a quality product at low cost. The most essential work in quality control is to thoroughly investigate regarding the problems concerning quality, decide suitable counter measures and carry out improvemets accordingly. MAN MACHINE MATERIAL METHODS What is 3M? In Japanese Language 3M is: MURI INCONVENIENCE MUDA WASTAGE MURA INCONSISTENCY What is 3G? In Japanese Language 3G is: GENCHI GO TO ACTUAL PLACE GENBUTSU SEE THE ACTUAL THING GENJITSU TAKE APPROPRIATE ACTION
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Maruti Production System or MPS draws learning's from its parent company. Suzuki Motor Corporation's concepts which follows-Do it right the first time approach Under the Maruti Production System (MPS), Maruti engineers capture all aspects of operation on video and scrutinize the each process to identify wastage. Together with workers on the shop floor, layouts were altered, innovative equipment and processes were introduced and operations relentlessly
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made lean and efficient. According to MPS, there are eight types of wastages in any process namely, 1. Idle Time, 2. Inventory, 3. Over Production, 4. Production Defects, 5. Un-necessary man movement, 6. Un-necessary material movement, 7. Un-necessary inspection and 8. Un-necessary processing. However, if every employee tries to do the job right the first time, wastages due to un-necessary inspection and processing are eliminated from the system and it is a cost effective approach. A product of poor quality requires repeated inspections, entails wastage in terms of repairs and replacements and causes loss of time and morale. If we could 'do it right first time', wastage would automatically come down.
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ORGANISATION CULTURE
The Company has always striven to offer a positive, supportive, open and high performance work culture. Over the years its unique work culture has evolved with learning from Suzuki, Japan in terms of Japanese systems, processes and work practices and also from the experience of local context and expectations of its people. Some of the key constituents of the work culture are fairness, equal opportunity, participation and involvement and team work. The induction of a young workforce over the last five years and enabling their smooth settling down in the Company work culture has been a challenge. The emphasis has been on increased two way communication, stay interviews, creating job excitement, education and learning towards career development. The Company provides tremendous learning and development opportunities to its employees starting from induction and orientation when a new employee joins the Company. The Company believes that to have a sustainable competitive advantage in the new knowledge economy, learning would be the key catalyst for an organisations survival and success. The Companys extensive training calendar encompasses training programs for all categories of employees i.e. associates, supervisors and those at junior, middle, senior and top management level. To have a well rounded development of employees, the training calendar comprises of behavioral, functional and safety trainings. The training programmes vary according to the need of the employees at various levels and business requirements and are designed after doing a thorough process of three stage need identification. In 2011-12, a total of 47,000 mandays of training were conducted for employees across all the levels. This translates to an average of 5.15 days of training per employee. Functional and technical trainings form an important part of the Companys annual training calendar as they are directly linked with employees on the job performance. These trainings are imparted by in-house subject matter experts as well as by external trainers. Some of the functional trainings imparted internally are 3G, 3K, 5S, DFMEA and QC tools. Few functional trainings which are being done by external trainers are finance for non-finance, six sigma, project management, inventory & warehouse management, world class manufacturing practices, auto cad, MS excel, etc. Behavioral trainings also form a considerable portion of the training calendar and include trainings like negotiation skills, problem solving & decision making skills, presentation & communication skills, conflict
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management & resolution, assertiveness & self confidence, time management & multi tasking skills, leading effectively, inter personal relationships, etc. The Company also has higher education schemes for its employees. It helps not only to groom and retain high potential young managers but also enables employees to fulfil their career enhancement aspirations. The scheme includes programs like executive MBA (full time and part time) at select campuses. The scheme is available for employees at levels of assistant managers to managers and is guided by eligibility and selection criteria. The experience of handling the Manesar Plant labour issue during the last year further highlights the need for the management focus on effective induction, total involvement, training and mentoring of the young team members at the shop floor level. The new initiatives in this direction over the last six months have given positive results. One of them is the outbound training initiative where a diverse population of associates, supervisors, young managers and middle management team members are taken to mountains or areas of natural challenges and imparted learning through the experience of group exercises. Till now 14 such programmes have been conducted covering more than 300 employees. This initiative is planned to cover more shop floor employees of the Company. With strong growth and expansion of the business and more and more young new team members likely to join its team, the Company plans to lay the highest emphasis on reinforcing a positive work culture, internal communications and continuous training and mentoring. Retention of talent is a challenge as most automobile and engineering companies seek to recruit experienced professionals to augment their teams. In spite of an adverse external environment related to headhunting and easy poaching, the Company has been able to maintain an attrition loss of only 5.9 per cent in the year 2011-12 much below the manufacturing industry trends. While this is largely the result of a culture of fairness, transparency, team spirit and motivation, some concrete initiatives like an elaborate performance management system, an appraisal process to assess potential, job rotation, encouragement for higher education and a policy of career growth offering fast track, normal track and extended track opportunities have provided the right structure.
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COORDINATION
They have largest number of car dealers available in India throughout cities & towns. Even a local mechanic can repair the Maruti car as they have well developed service centre across the India which helps in delivering the finest service to their customers by way of coordinating various points of services. Authorized dealers of Maruti coordinate the work and make the customer delight by the services they offer. Maruti coordinated well with their suppliers like ceat for tyres, auto part makers from Ludhiana, Pune etc Coordinating well with their dealers through which they are able to be the number one car maker in the small & mid segment
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REWARD SYSTEM
Promotions based on performance. Productivity & Profit linked incentive schemes. Training including long term SMC Japan training. Highest paid work force in the industry.
APPRAISAL
1) A systematic, periodic and so far as humanly as possible, an impartial rating of an employees excellence in matters pertaining to his present job and to his potentialities for a better job. 2) New appraisal system based on KRAs (key result area) & targets 3) Review of targets at regular intervals 4) People development an important KRA
LEADERSHIP
1) Vision, value and team building workshops for top management 2) CFT (cross functional teams) of managers for major thrust areas 3) Managers sent to joint ventures to upgrade their practices to MUL (Maruti Udyog Limited) standards.
CAREER DESIGN
It is defined as the process of deciding on the content of a job in terms of its duties and responsibilities on the methods to be used in carrying out the job, in terms of techniques, systems and procedures and on the relationships that should exist between the job holder and his superiors, subordinates and colleagues. 1) 2) 3) 4) Performance & Potential based Appraisals Fast Track Option for High-performers Promotions after Managers Vacancy based Interviews for promotions above Managers
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SELECTION OF SUPERVISORS:
1) Performance / Attendance / Discipline record 2) Written Test & Interview 3) Job Rotation - including Inter-functional
OUTSOURCING HR:
4) Part of our Long-term Strategic Plan 5) Currently Trainers hired from outside
EMPLOYEE WELFARE:
1) Residential Colonies for Employees Chakkarpur & Bhondsi 2) Hospitalisation Reimbursement on actuals without Ceiling 3) Vehicle Loans 4) Household Equipment Loans 5) House Building Advance 6) Annual Advance 7) MUL PF Trust for better Mgt., Service & speedy redress 8) Proposed MUL Pension Scheme 9) Learning Opportunity - Benchmark in Auto Technology 10) Professional Value addition through Training 11) Opportunity for foreign training at SMC, Japan 12) Job Rotation & Job enrichment
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EMPLOYEE BENEFITS:
1) The Company has Defined Contribution Plans for post employment benefit namely the Superannuation Fund which is recognised by the income tax authorities. This Fund is administered through a Trust set up by the Company and the Companys contribution thereto is charged to revenue every year. The Company also maintains an insurance policy to fund a post-employment medical assistance scheme, which is a Defined Contribution Plan administered by The New India Insurance Company Limited. The Companys contribution to State Plans namely Employees State Insurance Fund and Employees Pension Scheme are charged to statement of profit and loss every year. The Company has Defined Benefit Plans namely Gratuity, Provident Fund and Retirement Allowance for employees and Other Long Term Employee Benefits i.e. Leave Encashment / Compensated Absences, the liability for which is determined on the basis of an actuarial valuation at the end of the year based on Projected Unit Credit Method and any shortfall in the size of the fund maintained by the Trust is additionally provided for in the statement of profit and loss. The Gratuity Fund and Provident Fund are recognised by the income tax authorities and are administered through Trusts set up by the Company.
2)
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REFERENCES
a. Satia, J K and Thomas, P S. Maruti Udyog Limited, The Diagnostic, Vol. 14, No.3, July-September 1989 b. Etsuro ISHIGAMI. Competition and Corporate Strategy in the Indian Automobile Industry with special reference to Maruti Udyog Limited and Suzuki Motor Corporation. c. http://www.marutisuzuki.com/sustainabilityreport/organizationalprofile.html d. http://www.scribd.com/doc/45198169/Maruti-as-an-Organizationproject-Report e. http://www.marutisuzuki.com/sustainabilityreport/sustainabilityapproach.html
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