Assignment I Group 19

Group Project (Part 1)

Organisation Structure, Design and Change

Prof. Gloryson R B Chalil

Group No. 19Group Members:

2221586(Nishant Sinha)2221215(Vinay Unni)2221450(Kamal Saxena)2221589(Roopak Sharma)2221945(Arpana)2221477(Rohit Behl)2221475(Priyanka Gulati)

Q 1. What is the name of the organization? Give a short account of the history of the company. Describe the way it has grown and developed.

Answer: The Company’s name is Maruti Suzuki India Limited (MSIL). A subsidiary of Suzuki Motor Corporation, Japan, it was launched in India in 1982, this was a time when there were very few players were operating in the Indian passenger car industry like Fiat and Ambassador. It penetrated the market and became one of the biggest car producing company mainly because of their strategy to produce fuel efficient environment friendly "people's car".

When it entered the Indian market, the auto market was facing critical entry barriers such as high tax levels, stagnant market, high import duty, limited component industry and closed economy.

Despite that the company was floated as a joint venture between the Indian government (74 percent stake) and Suzuki Motor Corporation, Japan (26 percent) with the following objectives:

·Make a small, fuel efficient, environment friendly “people’s car”

·Modernize India’s car industry

·Boost domestic manufacturing

Suzuki Motor Corporation was zeroed on as technological-financial partner amongst the other global players due to the below mentioned main reasons:

·Leading compact car and SUV manufacturer

· Strong emphasis on quality, reliability, fuel efficiency, technology and value for money

·Suzuki was also keen to invest in India

Currently the company has two manufacturing units in Gurgaon and Manesar in the NCR region. Both the units together produce over a 1.5 million cars in a year.

By 2013, the company plans to expand its manufacturing capacity to 1.75 million.

Currently it is offering as many as 15 brands and over 150 variants that ranges from the people's car Maruti 800 to Alto, Alto K10, A-star, Estilo, WagonR, Ritz, Swift, Swift DZire, SX4, Omni, Eeco, Kizashi, Grand Vitara, Gypsy and Ertiga.

To continue with its environment friendly efforts, in 2010 it introduced factory fitted CNG option on five models and with this initiative it became the first company in India to introduce factory fitted CNG vehicles.

It's growth and development:

Maruti Suzuki’s first step was to deploy backward integration to strengthen the base of its value chain hence they facilitated 110 technical collaborations and joint ventures over a period of time.

Within the organization, new management practices were introduced such as open office culture, common canteen facility (Staff and line operators), uniform for employees, and improvising on production through productivity tools like Suzuki Production Systems, Quality circles & suggestion scheme, Kaizen, 3G, 5S, 3K.

The next step was to get the forward integration, and hence the company started the expansion of its dealers and service networks. With such steps the company achieved complete vertical integration.

The company also capitalized on providing superior value proposition to its customers and it is reflected in low cost of acquisition and operation for the buyers and it is supported by higher residual value for the products.

It also penetrated the rural market by setting up dealership in those areas where it was next to impossible to do so.

Reports suggest that today Maruti Suzuki enjoys the largest distribution and service network comprising of over 400 sales showrooms, over 600 dealer workshops, and 1900 Authorized Service Stations spanning across over 1190 cities in the country.

FINANCIAL RESULTS

The Company’s performance during 2010-2011:

(Rs.in Million)

2010-11 2009-10Gross total income 375,224 301,232Profit before tax 31,088 35,925Tax expense 8,202 10,949Profit after tax 22,886 24,976Balance brought forward 100,499 80,042Profit available for appropriation 123,385 105,018

Appropriations:General reserve 2,289 2,498Proposed dividend 2,167 1,733

Corporate dividend tax 351 288

Balance carried forward to balance sheet 118,578 100,499

Q.2 What does the organization do? What goods and services does it produce/provide? What kind of value does it create? If the company has an annual report, what does the report describe as the company's organizational mission?

Answer:

Maruti Suzuki India Limited (MSIL) is a car manufacturing company that produces passenger cars. It has been reported that India is expected to grow to become the world’s third largest car market by 2020. With about half the market, Maruti Suzuki is said to be participating in and contributing to this growth by providing technology excellence in its cars.

According to its annual report, keeping in view the strong possibility of increasing the export of small cars to world markets, particularly Europe, the company needs to reduce risk of production disruptions, the logistical and infrastructural imperatives and the availability of an industrially friendly environment.

The future success of the Company critically depends on its ability to meet the customer aspirations and needs.

Technology, design skills and creativity and quality have to be combined in a manner where the customer gets the best value for money.

Suzuki Motor Corporation is actively helping Maruti Suzuki to achieve this goal. A R&D facility is being established in Rohtak is a major step towards this end. The R&D engineers in Japan and India are working in close cooperation with each other and we are now a part of the integrated development of cars which was earlier all done in Japan. The company hopes that with the knowledge that their engineers are acquiring will give it a competitive edge in the coming years.

With K-series engines, developed by Suzuki. These engines are lighter, give better fuel efficiency and are cleaner than the engines used earlier. Joint efforts with Suzuki are being made to make vehicles lighter, and to give better value to customers.

The term ‘technological’ has been coined. It is the combination of technology and logic, from the customer’s view point, so as to produce cars which best meet the needs of all segments of society.

Engineers are conscious of the changing environment and its impact on customer needs and they will use this approach to keep the ‘value for money’ edge.

Maruti Suzuki is an integral part of Indian economy and will continue to participate in accelerating economic growth and manufacturing, and giving customers and stakeholders the benefits of the technology and the values which have been our driving force.

In short, to be the leader in the Indian Automobile industry, creating customer delight and shareholder's wealth.

Q.3. Draw a model of the way the organization creates value. Briefly describe its inputs, throughputs, outputs and environment.

Answer: Value creation chart for Maruti

Q.4 Do an initial analysis of the organization's major problems or issues. What challenges confront the organization today - for example, in its efforts to attract customers, to lower costs, to increase operating efficiency? How does its organizational design relate to these problems?

Maruti’s Inputs:

- RM: (Metal, sub assemblies, components, paint, accessories, interiors, wheels etc.)

- HR: (trained workers, managers, support function staff, sales team etc.)

- I&K: (training & knowledge of various sub-processes and automated assembly operations, quality checking etc.)

- M&C: (shareholder investments)

- Customers

Maruti’s Conversion Process:

- Plant & Machinery: (blanking, stamping, welding, painting, assembly etc)

- Computers: (computerized PPC system)

- Human skill & abilities: (work force trained on welding, painting, automated assembly operations, quality testing)

Maruti’s Output:

- Wide range of quality products.

- Strong Dealer and Service center network.

- Direct and Indirect employment.

- Foreign exchange earnings.

- Local area economic development

- Satisfied customers

- Satisfied shareholders.

Maruti’s Environment:

- Satisfied existing and potential customers

- Satisfied shareholders.

- Local residents

- Stable and financially sound suppliers.

- Local administration

- Stable and financially sound distributors

Answer:

The organization is facing more issues than the business environment challenges due to its organizational structure and internal partnership differences.

Maruti Suzuki posted bleak performance for Q1FY12 on account of worker’s strike and plant maintenance shut down in the month of June. However, it was supported by higher other income, which helped the company to post a strong bottom-line.

The Q1 result is a clear indication of the companies rising cost of productions, slow down of growth rate and raising questions on its sustainability.

Sustainability is central to the Company’s operations and its business strategy. Making a humble beginning with the launch of Maruti 800 in 1983, Maruti Suzuki has grown to become the largest passenger car manufacturer in India offering customers 14 models. The Company’s presence can be seen across the length and breadth of the country. The Company has sustained its leadership position in the passenger vehicle market despite tough competition and market conditions.

This has been achieved through high focus on all the aspects of sustainability - economic, environmental and social. The Company has established a robust risk identification and mitigation framework. All risks and mitigation plans are deliberated and compiled by the Executive Risk Management Committee (ERMC) and reviewed by the Audit Committee on a regular basis.

Economic sustainability

The Company believes in financial prudence and refrains from investments for quick gains. Investments for business expansion projects are met from internal accruals. The Company has a healthy balance sheet and adequate reserves to meet its requirements of funds for future expansion. The Company is investing over ` 60,000 million in new manufacturing facilities, expansion of R&D facilities and vehicle stockyards. The Company has institutionalized a robust system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly. The Company is exposed to risks associated with fluctuations in foreign exchange rates mainly on import of components, raw materials, royalty payments and export of vehicles. It has a well-structured exchange risk management policy. The Company manages its exchange risk by using appropriate hedge instruments depending on the market conditions and the view on the currency. To reduce this risk further, the Company has been focusing on localizing the vendor-imported components. This will help reduce cost, bring immunity against foreign exchange fluctuations and at the same time, provide a boost to small and medium scale local industries.

The Company’s market share increased from 44.6% in 2009-10 to 44.9% in 2010-11. However, the market share took a plunge in 2011-12 due to increased competition and internal production problems due to strikes and disruption. Maruti Suzuki market share was 39% in fiscal 2012 and the company was present only in 85% of the auto market.

This year with the launch of Ertica, Maruti attempts to regain overall market share and expand its product portfolio into budget MUV segment.

The Company follows SMC’s basic philosophy of Smaller, Fewer, Lighter, Shorter and Neater in its manufacturing facilities.

MD Speech for Q4 & Full Year FY12 Financial results

The year 2012 was a very challenging year for the passenger vehicle industry. After two years of high growth rate, the industry faced a demand slowdown in the market. Inflation was high for the second continuous year and the Reserve Bank raised interest rates to control inflation. At the same time, petrol prices shot up to very high levels. All three factors raised the cost of owning a car by a big amount and customers started postponing their car purchase. The smaller car is the more cost-sensitive segment and sales in this segment got impacted more than other segmentsThe difference between market-linked petrol prices and government-controlled diesel prices also shot up. With this the petrol car sales in Industry declined by 14% and diesel car sales grew by above 37% along with a waitlist of un-serviced demand. There was a capacity constraint in diesel engine production. The result was our petrol cars had slow sales and diesel cars had high demand but supply constraint.

Our efforts to develop non-European markets helped and they contributed 55% of the total exports, up from 20% last year. We, however, closed the year with a decline of 6% over the last year.

In the medium to long term, the Indian economy growth path is fundamentally strong. However in the short term, there is uncertainty on factors like rising fuel prices, interest rates and commodity prices.

Performance Analysis

Maruti Suzuki sales were broadly in line with estimates. Maruti Suzuki reported net Sales at Rs 8,320 crs which was up 3.3% on YoY basis while declined by 15.7% on a QoQ basis.

The company's production at Manesar plant was shut down for ~11 days due to the strike and maintenance shutdown. Consequently, volumes were down 18% QoQ and 1% YoY to 281526 units in Q1FY12. However, Average realisation was up 3% YoY. On a QoQ basis EBITDA margin fell 40bps.

Conclusion

Overall, for the company to sustain this period it will need to restructure its vertical hierarchy system and approach to competition.

In my personal opinion, there is an absence of the complete organizational life cycle theory. None of the Models of Life Cycle development explores the continuous evolution of the organizational structure. Let it be Katz and Kahn, Grainer, Tobert or any of them; none have spoken beyond epitome of the cycle.

The fact is that there is no end to evolution in organizational life cycle. Post maturity of the most suitable organizational structure within a particular company (which may sustain for the longest period as compared to other stages of the organizational evolution), follows the Choas Stage. The cycle begins again to adapt to the changing needs of the company and the external environment.

Maruti too must undergo the same evolution.

Q.5 Draw a stakeholder map that identifies the organization's major stakeholder groups. What kind of conflicts between its stakeholder groups would you expect to occur the most?

Answer:

Stakeholder Map

Conflicts between the Stakeholder Groups

Conflict between Suppliers and Maruti (Manufacturer)

Due to weakening Rupee, Supplier’s cost is increasing as many car components & parts are imported from Japan. This has almost increased by 75% in the recent past due to worsening economic situation. The Supplier seeks help from Maruti but they can’t increase the price as they will lose their competitive edge and also this will cause lot of inconvenience to customers. As a result, suppliers have been incurring huge losses. Due to increased cost, Supplier’s Profit margins have reduced and they are incurring losses also in many cases. In fact out of 14 cars, 9 cars are making losses due to the increased costs.

With the rising input cost for the raw material, Maruti’s profitability has also taken a hit.

Managers, Employees and their families

Maruti Suzuki India Ltd.Local Community and Society

Environment & Regulatory authorities

Dealers and Suppliers Customers and their families

Shareholders and investors

Government

Trade Unions

Conflict between Government, Suppliers, Dealers, Customers and Manufacturer (Maruti)

Ever since Govt. has deregulated Petrol Prices, Oil companies have been increasing Petrol Prices due to the rising Crude Oil Prices. While the Govt. and states earn revenue by way of taxes, this has caused great amount of inconvenience to Customers as Petrol Prices not only increases the running cost but also has a spiraling effect.

There are many Maruti Suppliers/Vendors who have invested heavily in capacity for vehicles which run on Petrol but due to increase in petrol prices, the shift in demand happens from Petrol vehicles to Diesel Vehicles. This hampers the interest of Suppliers and has a negative effect on their profitability.

While it causes inconvenience to customers as the initial cost of Diesel Cars is higher as compared to Petrol vehicles, it also hampers interest of manufacturer as they have a huge inventory of Petrol cars and have to offer heavy discounts in order to clear their inventory.

Conflict between Shareholders & Customers

Shareholders evaluate an organization by the return that they receive on their investment and customers by the reliability & value of its product relative to their price. Customers naturally want lower prices but shareholders may feel that higher prices would generate greater profits. This creates conflict.

Q 6. Using information from the company's website, draw a picture of its hierarchy or authority. Try to identify the members of its top management team. Is the CEO also the chair of board of directors?

Answer:

Members of Top Management Team

Managing Director & CEO, Sr. MEO’s and MEO’s (Managing Executive Officer), EO’s (Executive Officer) are all part of the Top Management Team

The Chairman of MSIL is Mr. R. C. Bhargava and the Managing Director & CEO is Mr. S. Nakanishi. Chairman is also the chairman of Board of Directors which consists of MD & CEO, Sr. MEO’s, EO’s, Directors,

MSIL Organization Structure

Q 7.Does the company have divisional managers? What functional managers seem to be most important to the organization in achieving competitive advantage? What is the functional background of the top management team?

Answer:

INTRODUCTION

Maruti Udyog has a multitier management structure comprising of Board of Directors at the top, followed by MD and five Business Vertical Heads called Divisional Managers who report to MD. These Divisional Heads further have various Functional Mangers reporting to them.

Managing Director & CEO

S. Nakanishi

Production (Production/PE/SQA)T. Ohashi, MEO & Board MemberMM Singh Sr. MEO

Engineering (Engineering/QA/PI/Service)K Asai, MEO & Board MemberRao, Sr. MEO

Administration (HR/Finance/IT)S. Siddiqui, Sr. MEO

Supply ChainS Maitra, Sr. MEOK Ayabe, MEO & Board Member

Marketing & SalesM Pareek, MEOT Hashimoto, EO

HIERARCHY AND MANAGEMENT STRUCTURE

As brought out in the introduction the company does have the concept of Divisional Managers who head independent divisions and report to the MD. There are total five divisions in the company as under:

Marketing and Sales.

1. Engineering.2. Production.3. Administration.4. Supply Chain.

Each of these divisions is headed by a team of two divisional/vertical managers, one of whom is a Japanese Divisional Manager and the other is an Indian Divisional Manager. The Japanese Divisional Manager is also the Executive Director of the board. The Indian Divisional Heads are designated as Managing Executive Officers (MEOs ) and they attend all board meetings. The Divisional Heads are supported by the functional managers.

Following are the functional managers reporting to each Divisional Head and they are the most important to the organization in achieving the competitive advantage:

1. DIVISIONAL HEAD MARKETING AND SALES Functional Manager Sales ( Domestic and Exports ) Functional Manager Pre Owned Cars. Functional Manager Spares. Functional Manager Marketing Strategy Development. Functional Manager Marketing. Functional Manager Road Safety.

2. DIVISIONAL HEAD ENGINEERING Functional Manager Research and Development. Functional Manager Quality Assurance. Functional Manager Service.

3. DIVISIONAL HEAD PRODUCTION Functional Manager Manufacturing. Functional Manager Facilities Planning. Functional Manager Production and Services. Functional Manager Supply Quality Assurance.

4. DIVISIONAL HEAD ADMINISTRATION. Functional Manager Finance. Functional Manager IT. Functional Manager HR.

5. DIVISIONAL HEAD SUPPLY CHAIN Functional Manager Component Sourcing. Functional Manager Vendor Management. Functional Manager Consumables.

BACKGROUND OF THE TOP MANAGEMENT TEAM

Top management of Maruti Udyog consists of thorough professionals from the field of management, technology and engineering having an experience of more than two and half decades in their field. In their successful and long innings they have held various appointments like GMs, VPs, Sr VPs and finally achieving the prestigious roles of MEOs. The detail of few of them is as under:

1. Mr. Mayank Parikh is heading the marketing and sales division. He is an alumni of IIT Delhi and IIM Bangalore.

2. Doctor IV Rao is the Head of engineering division. He is a B Tech, M Tech and a PHD.3. Mr. MN Singh is heading the production department and is an engineer by profession.4. Mr. S Mitera is the Head of supply chain division and an engineer and MBA by profession.5. Mr. SY Sidique is the Head of administration division. He is a business management graduate

from XLRI.

CONCLUSION

The above system of hierarchy and management structure has ensured regular flow of strategic direction from the board to the operational management, effective implementation of strategy, clear delegation of decision making with accountability, timely risk identification and mitigation, adequate controls and reporting of the company’s operation and a healthy financial performance.

Q.8. Draw a chart of the organization's domain. List the organization's products and customers and the forces in the specific and general environments that have an effect on it. Which are the most important forces that the organization has to deal with?

Answer:

Maruti Products-

Kizashi Grand Vitara

Ertiga

Dzire

Sx4

Swift

Ritz

A-star

Eeco

Wagon R

Gypry

Omni

Estile

Alto K10

Alto

M 800

Maruti Customers

Maruti was introduced targeting the middle class Its target segments are well depicted in its Product Pyramid profit model Targeting was based on a variety of factors such as style, color, price preference, features etc 3 – 5 lakhs 5 – 10 lakhs 15 – 30 lakhs < 3 lakhs Maruti 800, Alto, Omni Maruti Zen, Wagon R, Versa, Esteem, Swift Maruti Baleno, SX4 Maruti Suzuki Grand Vitara,

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

Maruti provides Full range of cars- from entry level Maruti 800 & Alto to stylish hatchback A- star, Swift, Wagon R, Estillo and sedans DZire, SX4 and Sports Utility vehicle Grand Vitara.Along with it score products, the industry has also taken a new initiative under the brand name Maruti Genuine Accessories to offer accessories like alloy wheels, body cover, carpets, door visors, fog lamps, stereo systems, seat covers and other car care products. The industry has been incorporating various services like driving schools, Maruti true value, fleet management facility etc. to ensure a competitive advantage and sustainability

Maruti caters to all segments and has a product offering at all price points. It has a car priced atRs.1,87,000.00 which is the lowest offer on road. Maruti gets 70% business from repeat buyers who earlier had owned a Maruti car. 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. Every price point is covered. Despite the rigorous market situation ,Maruti remains a trustworthy name among the users. We can see below the coverage that Maruti has in terms of its price and taking that into consideration we can say that Maruti’s customers base is all customers who wish to purchase a case -

Sl.No. BRAND VARIANTS PRICE IN DELHI (Rs.)

1 GRAND VITARA XL7 16,97,000.00

2 MARUTI BALENO LXi 5,72,000.00

VXi 6,42,000.00

3 MARUTI ESTEEM LX 4,66,000.00

VX 5,39,000.00

4 MARUTI VERSA DX 4,19,000.00

DX2 4,58,000.00

5 MARUTI SWIFT LXi 3,95,000.00

VXi 4,05,000.00

ZXi 4,85,000.00

6 MARUTI WAGON-R LX 3,35,000.00

LXi 3,62,000.00

AX 4,63,000.00

VXi 3,87,000.00

VXi ABS 4,20,000.00

7 MARUTI GYPSY ST 5,06,000.00

HT 5,29,000.00

8 MARUTI ZEN D 3,58,000.00

LX 3,41,000.00

LXi 3,68,000.00

VXi 3,93,000.00

9 MARUTI OMNI CARGO 2,05,000.00

CARGO LPG 1,83,000.00

5 SEATER 2,27,000.00

8 SEATER 2,21,000.00

XL 5 SEATER 2,19,000.00

XL 8 SEATER 2,31,000.00

10 MARUTI ALTO STANDARD 2,38,000.00

MARUTI ALTO LX 2,74,000.00

LXi 2,94,000.00

11 MARUTI 800 STD. MPFI 2,14,000.00

A/C MPFI 2,37,000.00

Environmental factors

Economic Factors

Customers buy on basis of income, aspiration levels, and lifestyles-

Increasing disposable income in service sectors Easy availability of finance options.

Easy Finance Options

76% of Maruti cars are financed 44% through Maruti Finance, 12 % through SBI and associate banks

In year 2006-07, it added Mahindra Finance,Magma Leasing , Cholamandalam and AxisBank.

Environmental factors and how Maruti deals with them-

Material

Maruti Suzuki is conscious of the limited availability of natural resources and its responsibility to use them judiciously. Maruti Suzuki has taken various initiatives to reduce material consumption. Yield improvement is one such activity.

The Company has undertaken various initiatives to reduce consumption of raw material. The scrap generated from press operations is used for producing child parts for maximising steel sheet utilisation. Metal scrap is sent to vendors for making small components. The Company also sends back the leftover sealer in paint shops to the authorised units for refining and reprocessing.

The suppliers are also involved in the yield improvement activities and share our own best practices with them for better resource utilization, cost reduction and productivity improvement. Maruti Suzuki engineers guide them on how to adopt better operating practices, improve operating efficiency, increase automation, introduce advance control systems, minimize scrap and increase capacity utilization

Products and Services

Maruti Suzuki is concerned about the environment and is keenly working towards enhancing the fuel efficiency and minimizing the CO2 emission of its products.

Some of the initiatives taken by Maruti Suzuki towards the same

Fuel Efficient Cars Maruti Suzuki is making all its efforts towards improving the fuel efficiency of its cars. The efforts to improve fuel efficiency lead to reduction in usage of raw material, consumables etc. The engineers also work on engine modifications and body weight reductions with a view to increase efficiency. New technologies in the brake system are evolved to make Maruti Suzuki cars more fuel efficient.

K-series Engine Technology The new K - series light weight aluminum engine, has been designed to be an environment friendly and a fuel efficient engine. The K-series engine plant uses state of the art technology and energy efficient equipments to manufacture engines that save fuel, thereby protecting the environment.

The K-series engine introduced in the A - star is a significant initiative towards offering the latest technology to our customers.. The K108 engine, mounted on 'A- star', brings environment friendly technologies of the future to the Indian automobile market. The K-series engine is progressively being introduced in other Maruti Suzuki models.

TransportMaruti Suzuki has initiated alternate means of transportation through railways, in order to reduce GHG emissions during transportation of finished cars. This initiation has been taken in participation with Indian Railways. Double decker rail wagons have been developed for transporting export cars from Manesar (Haryana) manufacturing facility to Mundra Port

Water

Maruti Suzuki is conscious about their responsibility towards water conservation. Maruti Suzuki aims towards 100% recycling of water waste. Through concerted efforts, Maruti Suzuki has achieved zero waste water discharge status since 2003-04 at its Gurgaon facility. Similarly, the Manesar facility has also achieved zero waste water discharge status since 2006-07

Maruti Suzuki also does rainwater harvesting at the manufacturing facilities (Gurgaon and Manesar), corporate office and Driving

Other initiatives are

Installation of closed cycle cooling towers to minimize water loss due to evaporation. Recovery of de-mineralized water and industrial waste used in paint shops.

Installation of solenoid valves across Maruti Suzuki to regulate optimum water flow.

Rationalization of water spray in paint shops.

Review of bath change frequency in the paint shops.

Use of JIT principle for supply of water in various processes e,g sensors installed in the vehicle cleaning process in paint shop, to prevent wastage of water.

Emissions Effluents and Waste

Maruti Suzuki is a zero waste discharge company. The major sources of air emissions in the manufacturing process are power generation and furnace operations in the casting shop. Maruti Suzuki has installed clean fuel based captive gas turbines for power generation and complies with all Environment Clearance conditions. The waste heat of the gases from the gas turbine is used for the generation of steam and compressed air. The steam requirement in manufacturing process is met without any additional power.

In keeping with the 3R concept, solid waste such as metal scrap, glass etc is sold to approved recyclers and reusers. The hazardous waste like the paint sludge is incinerated and the others are stored in secured landfills. These landfills comply to all necessary environment regulations.

Energy

Marui Suzuki owns captive power plants to meet its power requirements. The power generated is also shared with JV partners located in the vicinity of the plant. Maruti Suzuki consciously adopts energy efficient technologies at the time of new project planning and existing equipments are modified to reduce energy consumption.

Some initiatives taken by Maruti Suzuki Energy Efficient Furnaces in Casting Plant

Maruti Suzuki has installed State of the art energy efficient furnaces at its newly built K-series casting engine plant in Gurgaon. In these furnaces, the waste heat generated from the melting furnace is used to preheat Aluminum ingots thus improving energy efficiency.

Use of Variable Frequency Drivers in painting Booths has cut down energy consumption

Rationalisation of natural gas input by installation of air fogger in gas turbines

Energy efficient lightings

Down sizing and commonisation of electrical motors

Environment friendly concepts have been integrated not just in the engines but in buildings as well. As in the new K-series engine casting shop. The shop has practically eliminated the use of electric lights in the shop floor during day time. Such initiatives conceived of building design have helped in reduction of energy requirements and GHG emissions.

Similarly, Maruti Suzuki's new corporate office and brand centre at Vasant Kunj are designed considering the green building concept and Energy Conservation Building Code (ECBC). Following are the main features of the building:

Solar lighting system for landscape and basement lighting, Energy efficient compact fluorescent lamp (CFL) lighting and fans.

VFD for motors to optimize power consumption.

Double layered glass wall to reduce heat penetration inside the building

Thermal insulation of roof etc.

Q.9. Analyze the effect of the forces on the complexity dynamism and richness of the environment. From this analysis how would you characterize the level of uncertainty in your organizations environment?

Answer:

Organizational complexity is defined as the amount of differentiation that exists within different elements constituting the organization. This is often operationalised as the number of different professional specialisations that exist within the organization.

For example, a school would be considered a less complex organization than a hospital, since a hospital requires a large diversity of professional specialties in order to function. Organizational complexity can also be observed via differentiation in structure, authority and locus of control, and attributes of personnel, products, and technologies.

Organizations are more or less complex as a reaction to environmental complexity. An organization’s environment may be complex because it is turbulent, hostile, diverse, technologically complex, or restrictive. An organization may also be complex as a result of the complexity of its underlying technological core.

For example, Maruti Udyog Ltd is likely to have a more complex organization than a cycle manufacturer since underlying technology is relatively more difficult to understand and control.

There are numerous consequences of environmental and organizational complexity. Organizational members, faced with overwhelming and/or complex decisions, omit, tolerate errors, queue, filter, abstract, use multiple channels, escape, and chunk in order to deal effectively with the complexity. At an organizational level, an organizational will respond to complexity by building barriers around its technical core; by smoothing input and output transactions; by planning and predicting; by segmenting itself and/or becoming decentralized; and by adopting rules. Complexity science offers a broader view of organizational complexity—it maintains that all organizations are relatively complex, and that such complexity arises that complex behavior is not necessarily the result of complex action on the behalf of a

single individual’s effort; rather, complex behavior of the whole can be the result of loosely coupled organizational members behaving in simple ways, acting on local information. Complexity science posits that most organizational behavior is the result of numerous events occurring over extended periods of time, rather than the result of some smaller number of critical incidents More typically, organizational complexity is considered a response to complexity within the internal or external environment. The internal environment consists of the processes and

technologies that constitute the core operations of the organization. The external environment includes customers, markets, suppliers, competitors, and

institutions that shape what the organization must respond to. The complexity of the internal and external environment can be described along three dimensions: its differentiation or variety, its dynamic properties, and the complexity of its underlying causal mechanisms. In the case of Maruti Udyog, market needs are multiple and varied, and always dynamically changing. Second, the supply chain is also varied and dynamic; standards may not be adopted quickly enough to maintain pace with the markets and technologies, therefore compatibility is always an issue. Finally, causal mechanisms related to the external market are not simple, because adoption and diffusion processes are complex and unpredictable in the industry.

The forces, mentioned in Q8, are dynamic and constantly evolving. While change cannot be contained, Maruti Udyog has attempted to limit the extent of dynamism among the variables, so as to be in control. Whether it is in terms of achieving zero waste water discharge in its Gurgaon and Manesar plants; installing clean fuel based captive gas turbines for power generation and complies with all Environmental Clearances; owning captive power plants to meet its power requirements; roping in finance providers to provide easy finance options as 76% Maruti cards are financed.

Maruti Udyog has clearly been able to consolidate its position by internalizing and strengthening its Locii of Control, thereby giving it a competitive edge.

.

Q 10.Draw a chart of the main inter-organizational linkage mechanisms ( eg long term contracts, strategic alliances, mergers) that the organization uses to manage its symbiotic resource inter-dependencies . Using resource dependence theory and transaction cost theory, discuss why the organization chose to manage its inter-dependencies this way. Do you think the organization has selected the most appropriate linkage mechanisms? Why or why not?

Answer: Below mentioned are symbiotic resource independencies for Maruti Suzuki:

Informal Formal

Linkage between Maruti’s Symbiotic Interdependencies and Resource Dependence theory:

Per the Resource Dependence Theory, every organization aims at reducing its dependence on other organizations for supply of scarce resources and find ways of influencing them to make available the resources. To manage its dependence on supplies, it has set up JVs with some key suppliers Like –Krishna Auto, JJ Impex etc. Further it has minority interest in some companies (Associates) Like Caparo Maruti, Asahi India and then it has some 60-70 strategic suppliers. Together all these vendors supply more than 80% requirements to Maruti. This arrangement with them not only ensure supplies for large chunk of requirements but owing to significant

Reputation:

Good brand name, large market share, Linkage with Indian Govt (earlier) and Suzuki attract both suppliers (in fact been a Maruti Ancillary is considered prestigious) and Distributors. So much so both type of parties approach Maruti for relationship rather vice versa.

Cooptation:

Giving employment to local residents in around Gurgaon plant was strategic move to manage its cheap manpower needs and resistance locals on such type of endeavors (like Singur). Recent strikes need a revisit to this strategy.

Strategic Alliances:

Please see below

Merger & Take over:

Maruti did not do any specific M&A activity. But in order to get operational synergies it participated in an Indian operations consolidation initiative of Suzuki in 2006 -07.It acquired holdings in Maruti Suzuki from Suzuki to augment and consolidate Suzuki’s operations.

Network:

Maruti’s Dealer and service network is unmatched, so much so that it became theme of their ad campaign.

Minority Ownership:

Suppliers – Top 100 of them supply 80% items. Of these 15 parties are Associates (2010). – JIT, localization

Joint Ventures:

Suppliers – Top 100 of them supply 80% items. Of these 8 parties are JV partners (2010) – JIT, localization

Long term Contracts:

Suppliers – Top 100 of them supply 80% items. Of these 60 -70 parties are strategic partners with long term

involvement in their operations give Maruti greater maneuverability in their day to day to operations. This type of relationship also helps Maruti in ensuring smooth implementation and execution of its operational strategies like JIT, localization etc.

From Distribution perspective, Maruti has perhaps the strongest and vast dealer network, which gives it envious reach to the remotest market segment in India. Also, due to ties ups with Suzuki group companies it can reach export market using their network. For any auto company its service network is equally or may be more important. Through dealer network, it has established a robust service network across India for not only servicing but also authorized reseller of Maruti genuine spare parts. This model helps in not only increasing the reach and but to reduce maneuvers by strong dealers.

Linkage between Maruti’s Symbiotic Interdependencies and Transaction cost theory

Per Transaction Cost Theory, every organization aims to minimize the cost of exchanging the resource internally and with environment. As mentioned above due to supplier management policy followed by Maruti, they have significant influence over more 80% of supplies due to various arrangements it has with these vendors. Owing to this influence which Maruti has over these vendors they can pursue their localization (important due to high cost of imports) and JIT system (to reduce their inventory cost) with much more ease. The benefit of this model is without losing much control; Maruti can reduce the cost of transactions.

In respect of distribution of finished goods, Maruti does not have to invest in set up and inventory (held by dealers) and gives it scalability.

Owing to above mentioned rationale, the current strategy seems to be appropriate for Maruti.

11. In view of the analysis you have just made, do you think your organization is doing a good or a not so good job of managing its environment? What recommendations would you make to improve its ability to obtain resources?

Answer:

Maruti Suzuki strives to minimize the environmental impact of its manufacturing facilities, products and supply chain operations, and explores all possible means for improving its environmental performance. Environment is one of the key drivers of innovation at Maruti Suzuki. The Company believes that investment in environment friendly technologies makes sustainable business sense as it caters to the needs of environment-conscious customers.

The Environment Policy of the Company promotes energy conservation, 3R (Reduce, Reuse and Recycle), green procurement, environment friendly mobility and environment consciousness among its direct stakeholders. In addition to strengthening its own environmental systems, the Company also reaches out to its suppliers and dealers to make them conscious about environment protection.

Every year, the Company celebrates June as Environment Month to spread environmental awareness among employees and other stakeholders. In 2010-11, Environment Month activities included quizzes, visual displays with energy saving tips, screen savers on biodiversity, tree plantation, internal portal with messages from the Company directors and awareness training. The environmental parameters are monitored by the management in the Management Committee Meeting (MCM) every month

We can see below the various measures that Maruti takes –

Material

Maruti Suzuki is conscious of the limited availability of natural resources and its responsibility to use them judiciously.

Maruti Suzuki has taken various initiatives to reduce material consumption. Yield improvement is one such activity.

The Company has undertaken various initiatives to reduce consumption of raw material. The scrap generated from press operations is used for producing child parts for maximising steel sheet utilisation. Metal scrap is sent to vendors for making small components. The Company also sends back the leftover sealer in paint shops to the authorised units for refining and reprocessing.

The suppliers are also involved in the yield improvement activities and share our own best practices with them for better resource utilization, cost reduction and productivity improvement. Maruti Suzuki engineers guide them on how to adopt better operating practices, improve operating efficiency, increase automation, introduce advance control systems, minimize scrap and increase capacity utilization

Products and Services

Maruti Suzuki is concerned about the environment and is keenly working towards enhancing the fuel efficiency and minimizing the CO2 emission of its products.

Some of the initiatives taken by Maruti Suzuki towards the same

Fuel Efficient Cars Maruti Suzuki is making all its efforts towards improving the fuel efficiency of its cars. The efforts to improve fuel efficiency lead to reduction in usage of raw material, consumables etc. The engineers also work on engine modifications and body weight reductions with a view to increase efficiency. New technologies in the brake system are evolved to make Maruti Suzuki cars more fuel efficient.

K-series Engine Technology The new K - series light weight aluminum engine, has been designed to be an environment friendly and a fuel efficient engine. The K-series engine plant uses state of the art technology and energy efficient equipments to manufacture engines that save fuel, thereby protecting the environment.

The K-series engine introduced in the A - star is a significant initiative towards offering the latest technology to our customers.. The K108 engine, mounted on 'A- star', brings environment friendly technologies of the future to the Indian automobile market. The K-series engine is progressively being introduced in other Maruti Suzuki models.

A-starThe global compact car from India, 'A - star' is positioned as an environment friendly car in Europe. This is a world strategic model of Maruti Suzuki and the most fuel efficient car of Maruti Suzuki. The 'A - Star' has been conceived and designed keeping in mind aspirations of the urban economy conscious customers, who seek fuel efficient, high quality vehicles. It meets the European ELV norms, which implies that 85% of the car is recyclable. The vehicle is produced in over 100 variants and sold in over 50 countries.

TransportMaruti Suzuki has initiated alternate means of transportation through railways, in order to reduce GHG emissions during transportation of finished cars. This initiation has been taken in participation with Indian Railways. Double decker rail wagons have been developed for transporting export cars from Manesar (Haryana) manufacturing facility to Mundra Port

Water

Maruti Suzuki is conscious about their responsibility towards water conservation. Maruti Suzuki aims towards 100% recycling of water waste. Through concerted efforts, Maruti Suzuki has achieved zero waste water discharge status since 2003-04 at its Gurgaon facility. Similarly, the Manesar facility has also achieved zero waste water discharge status since 2006-07

Maruti Suzuki also does rainwater harvesting at the manufacturing facilities (Gurgaon and Manesar), corporate office and Driving

Other initiatives are

Installation of closed cycle cooling towers to minimize water loss due to evaporation. Recovery of de-mineralized water and industrial waste used in paint shops.

Installation of solenoid valves across Maruti Suzuki to regulate optimum water flow.

Rationalization of water spray in paint shops.

Review of bath change frequency in the paint shops.

Use of JIT principle for supply of water in various processes e,g sensors installed in the vehicle cleaning process in paint shop, to prevent wastage of water.

Emissions Effluents and Waste

Maruti Suzuki is a zero waste discharge company. The major sources of air emissions in the manufacturing process are power generation and furnace operations in the casting shop. Maruti Suzuki has installed clean fuel based captive gas turbines for power generation and complies with all Environment Clearance conditions. The waste heat of the gases from the gas turbine is used for the generation of steam and compressed air. The steam requirement in manufacturing process is met without any additional power.

In keeping with the 3R concept, solid waste such as metal scrap, glass etc is sold to approved recyclers and reusers. The hazardous waste like the paint sludge is incinerated and the others are stored in secured landfills. These landfills comply to all necessary environment regulations.

Energy

Marui Suzuki owns captive power plants to meet its power requirements. The power generated is also shared with JV partners located in the vicinity of the plant. Maruti Suzuki consciously adopts energy efficient technologies at the time of new project planning and existing equipments are modified to reduce energy consumption.

Some initiatives taken by Maruti Suzuki Energy Efficient Furnaces in Casting Plant

Maruti Suzuki has installed State of the art energy efficient furnaces at its newly built K-series casting engine plant in Gurgaon. In these furnaces, the waste heat generated from the melting furnace is used to preheat Aluminum ingots thus improving energy efficiency.

Use of Variable Frequency Drivers in painting Booths has cut down energy consumption

Rationalization of natural gas input by installation of air fogger in gas turbines

Energy efficient lightings

Down sizing and commonisation of electrical motors

Environment friendly concepts have been integrated not just in the engines but in buildings as well. As in the new K-series engine casting shop. The shop has practically eliminated the use of electric lights in the shop floor during day time. Such initiatives conceived of building design have helped in reduction of energy requirements and GHG emissions.

Similarly, Maruti Suzuki's new corporate office and brand centre at Vasant Kunj are designed considering the green building concept and Energy Conservation Building Code (ECBC). Following are the main features of the building:

Solar lighting system for landscape and basement lighting, Energy efficient compact fluorescent lamp (CFL) lighting and fans.

VFD for motors to optimize power consumption.

Double layered glass wall to reduce heat penetration inside the building

Thermal insulation of roof etc.

In light of the above we can say that Maruti is already doing a very good job by taking these into consideration and all Maruti should now do it to ensure consistency

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