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This provides a compact study of organizational changes at Maruti

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  • POD Assignment Prof. S. K. Ghosh

    MARUTI SUZUKI INDIA

    Ltd.

    Prepared By,

    Abhishek Shah (001EPGP2014)

    Ashis Lamba (005EPGP2014)

    Jagtap Deshamukh Pravin Arun (000EPGP2014)

    Suman Saurabh (023EPGP2014)

  • INTRODUCTION Organizational structure represents the manner in which responsibility and authority are distributed as well as how work procedures are executed within organizational arms. There are several variables dictating the most suitable structure, which is going to meet organizational mission and vision at the log run. Centralization of power, hierarchy design and horizontal incorporation are factors to consider while putting up an organizational structure. Another factor of paramount importance in the design of optimal organizational structure is the core processes of a firm. The structure must be able to reflect key processes of an organization starting from source material to delivery of finished products. For any organization to achieve optimum results possible, it is crucial to select structures, which match predetermined objectives, features of necessary processes and means of controlling those processes. Processes are very fundamental to every organizational structure model. For example, information and decision process are available in almost all subsections of the entire structure. Based on underlying roles and purposes, organizational structure can be seen as body framework of the firm while processes represents mental capability. Therefore there are two elements of any organizational structures namely: processes and structure. It is therefore implicit that any structure makes sense if it is based on required processes. This essay is an example of a student's work A process-based organizational structure as this paper is going to explore needs a number of processes to complement one another so as to function as a unit. Despite process teams and owners autonomy in inculcating high level of self-management, there has to be a mechanism within the structure, which bring together different processes. Due to the fact that process-based organizations are designed to have independent processes managed by autonomous units, emphasis should be put in place to facilitate formulation of logical objectives and performance parameters of every unit. These features must be obtained from the strategy through connecting strategic options to production and consumer processes. Semi-autonomous units are constructed in such a way that there would be minimal daily coordination. This is only possible if management take upon itself to define units objectives geared towards sustainable business control. Global manufacturing organizations are experiencing several challenges resulting from fluctuations in demand profiles, irregular supply profiles and high customers expectations.

  • As a result of this, there is an ever-rising need to develop factory performance, which is the sole means of creating value for consumers. Among many others channels of improving performances is the design of a structure which just fit manufacturing processes in the best manner possible. The ultimate result of optimal structure should gather for core processes through labor capacity maximization, reduction of run times and general minimization of liabilities. This analysis will focus on organizational structure of Maruti Udyog Limited and how best it fits to its conversion of raw materials to finished goods. It is a subsidiary company of Suzuki Motor Corporation, which is one of the global leaders in automobile manufacturing and distribution. Maruti was chosen due to its readily available information and global market share. For over two and half decades, Maruti Suzuki India Limited (MSIL) has led the India Car Market with two Manufacturing facilities located at Gurgaon and Manesar, south of New Delhi, India, Whose combined capacity is over a 1500000 vehicles annually. BACKGROUND OF MSIL In 1971, Prime Minister Indira Gandhi's Cabinet proposed the production of a "People's Car"an efficient indigenous automobile that middle-class Indians could afford. Though Sanjay Gandhi had no experience, design proposals or tie-ups with any corporation, he was awarded the contract and the exclusive production license. The criticism that followed this decision was mostly directed at Indira Gandhi, but the 1971 Bangladesh liberation war and victory over Pakistan drowned out the issue. Indira's Gandhi's victory and the Congress's landslide victory in the 1971 Indian General Election only left Indira Gandhi more powerful. Maruti Udyog (MSIL today), though was founded by Sanjay Gandhi, it did not produce any vehicles during his lifetime. However a test model put out as a showpiece of progress was criticized. Sanjay Gandhi then contacted Volkswagen AG from West Germany for a possible collaboration, transfer of technology and joint production of the Indian version of the "People's Car", to emulate Volkswagen's worldwide success with the Beetle. At that time, Indian Passenger Car Manufacturing Industry had only two players: Premier Automobiles Limited and Hindustan Motors Limited.

  • A license and a Joint Venture agreement were signed with the Suzuki Motor Company of Japan in Oct 1983, by which Suzuki acquired 26% of the equity and agreed to provide the latest technology as well as Japanese management practices. Suzuki was preferred for the joint venture because of its track record in manufacturing and selling small cars all over the world. There was an option in the agreement to raise Suzukis equity to 40%, which it exercised in 1987. Five years later, in 1992, Suzuki further increased its equity to 50% turning Maruti into a non-government organization managed on the lines of Japanese management practices. Maruti created history by going into production in a record time of 13 months. Maruti is the highest volume car manufacturer in Asia, outside Japan and Korea, having produced over 5 million vehicles by May 2005. Maruti is one of the most successful automobile joint ventures, and has made profits every year since inception till 2000-01. In 2000-01, although Maruti generated operating profits on an income of Rs 92.5 billion, high depreciation on new model launches resulted in a book loss. ORGANIZATIONAL STRUCTURE Maruti is characterized by functional organizational structure having Horizontal linkages. Based on automotive engineering operations, the firms organizational structure has several divisions. These encompass the following functions: Engineering, Sales, Finance, Spares, Administration, New Business, Information Technology, Human Resource Development, Maintenance, Quality Assurance and Parts Inspection. Being a large organization it is Marutis organizational chart is further subdivided in to smaller sub sections depending on other criteria like location, plant, product etc. Maruti has a total of 29 divisions operating under one Divisional Head who is serving as Functional post in the structure. The structure further reveals that within these divisions are 132 departments under stewardship of one departmental head. These Department Head are also functional posts. This structure is designed on the same pattern as that of Japanese Suzuki Motor Company which is Marutis partner. Human resource planning, plant layout and installation of production facilities are intrinsic in nature to Suzuki Motor Companys structure. Organizational chart at Maruti is functionally flat. A functionally flat organizational structure means that there are few levels of administration hierarchy. It is a desirable kind of structure, since problems related to information delays, misinterpretations and

  • corruption gets minimized. This is possible because information will go through few hierarchy levels before getting to intended recipient. There are only six functional levels in which employees can be divided in to. It implies then that every employee must fall in either of the following level: Division Manager, Department Manager, Section Manager, Executives, Supervisors or Workers and Technicians. However, hierarchically, these are divided into the following levels: 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) IDPM (In charge Department Manager) DPM (Department Manager) DDVM (Deputy Division Manager) 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. The below figure shows a quick snapshot on how does it look currently.

  • HISTORY OF EVOLUTION The first phase started when Maruti rolled out its first car in December 1983. During the initial years Maruti had 883 employees, a capital of Rs. 607 mn and profit of Rs. 17 mn without any tax obligation. From such a modest start the company in just about a decade (beginning of second phase in 1992) had turned itself into an automobile giant capturing about 80% of the market share in India. During the pre-liberalization period (1983-1992) a major source of Marutis strength was the wholehearted willingness of the Government of India to subscribe to Suzukis technology and the principles and practices of Jap