Organization Structure Of Maruti Suzuki Business Essay

It is basically a subsidiary company of Japanese automaker Suzuki Motor Corporation which has a market share of 44.9 of the Indian car market. Maruti offers a large number of cars from the entry level Maruti car to the Sports Utility vehicle Grand vitara. It is basically a first company in India who sells more than one million cars in India. It may be renamed as in India as Maruti Suzuki India limited. It was formed in February 1981and the original production was started mainly in 1983 with the car Maruti 800. The company basically exports more than 50,000 cars and has the excessive selling in the domestic market with more than 750,000 cars per year.

The company headquarters are on Nelson Mandela Rd, New Delhi. The term Maruti is mainly used for the compact car model as large number of compact cars is sold by Maruti. It has manufacturing facilities located at Gurgaon and Manesar south of Delhi.

Maruti has face some problems with the labor force as it was established 1983. There was a one recent incidence on 18th July 2004 at Manesar plant. Manesar plant was hit by violence as one of the worker as one of the auto factories attacked supervisors and started a fire that killed a company official and injured 100 managers, including two Japanese expatriates.

The violent mob also affects nine policemen. The company’s General Manager of Human Resources had both arms and legs broken by his attackers, unable to leave the building that was set ablaze, and was charred to death.

Organization structure of Maruti Suzuki

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Organization Structure Design At Maruti Suzuki

Maruti has a functional organizational structure with horizontal linkages. The activities are divided based on the following functions finance, marketing, engineering and sales, spares, production, material, parts inspection, quality assurance, human resource development, information technology, new business and administration, The centralization is very low in Maruti as the decision-making authority is quiet decentralized and disturbed across all levels. it is a very big organization and further divided into smaller divisions. There are 29 divisions in Maruti and are headed by one divisional head which is a functional post. These divisions are divided into 132 departments and which are headed by one departmental head which is again a functional post. In Maruti the formalization is very high all the methods, procedures, standards are written down formally. All the departments have department procedures which describe the role of work of the department as well as their responsibilities and work flow. The procedures are approved by divisional head and are also available for the concerned departments. In production shops the standard operating procedures are displayed on the workstations and are known as Maruti Operations standards.

Changes in structure

In view of increasing competition the automotive sector Maruti has tried to use a project based structure to handle the problems effectively. Around two year back in meeting of senior and middle level executives to form teams which would focus on specific goals. Around 30 teams of about 8-10 members are formed. These teams have specific mandates in terms of cost reduction and new product development and were given resources and authority in order to implement the project.

For example-

One team worked on value analysis and value engineering for specific components for cost reduction. Another team worked on improving JD power ratings that Maruti secured for IQS (initial quality service). These teams were working on a high priority and all the departments would likely 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 rewarded handsomely.

Organization structure at Maruti

The organization structure of Maruti is somewhat inclined towards a mechanistic structure but it cannot be called absolutely because of presence of high degree of decentralization. It has a functional structure with horizontal linkages. The functional divisions finance, marketing, sales focus on their respective functions. These divisions are further divided into 29 divisions. The hierarchy consists of a divisional head and then a departmental head.

Mechanistic structure is suitable for those organizations which do not require frequent changes in their processes and the environment is stable.

Features Of Organization Structure at Maruti

The division of employees at six functional levels and their further hierarchical divisions in different divisions mean that the company wants to achieve perfection at each functional level.

Their production is car and production occurs on a large scale , it includes assembly line in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product.

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

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

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

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

Main decisions are taken by directors in respective functional divisions.

All these feature are in line with the mechanistic structures which are economies to scale, and are designed to induce people to behave in accountable ways.

Maruti has a Flat and Decentralized structure

Structural elements

Specialization

As the Maruti have functional structure and division of labour so there is high degree of specialization.

Centralization

Power is distributed within the hierarchy because there are various persons who play a very crucial role in the organization.

Formalization

The instructions, procedures are written down formally in the organization and on the other hand departments have their own formal procedures of doing work in an organization so that they can achieve their objectives on time.

Complexity

Complexity arises because of structural complexity as there is goal incompatibility between different departments.

Span of control

The span of control is generally at the top level is 3-6, 4-8 at the middle level management and 0-8 at the lower level management. In production level at lower level the span of control is at40-50.

Problems faced by Maruti in the organization structure

Lower level managers take decisions understanding the big picture. While the top level managers have low information about the local operations as compare to lower level managers.

In decentralization organization there is lack of co-ordination among the managers. This can be reduced by defining the company policy and communicating throughout the organization.

Lower level managers have objective that are different from the objectives of the entire organization. For example some mangers are interested in increasing the size of departments as compare to profits. This problem can be overcome by defining the performance appraisal which helps the managers in defining their problems.

It may be difficult to tell about innovative ideas in a decentralized organization. Someone in the organization have the great idea which provide benefit to the organization but without a strong central direction the idea cannot be shared with and adopted by others in the organization.

Flaws in the organization structure

The main flaw is that the employees are facing inter departmental friction in many areas-

Parts inspection vs. engineering

The Parts inspection department would consider the quality of existing and new products. On the other hand managers in the Engineering department want to reduce cost by localizing the resources or parts. The process of localization requires the sanction of parts inspection department and this causes a conflict between both departments.

Marketing vs. others

The Marketing department mainly focuses on that the customer expectations with the company are met or not. However the recommendations that it suggests are not communicated to the other departments that is engineering. For Example- After analyzing the data from the customers surveys the marketing department suggests that the audio systems in Maruti would be of the Blaupukt barnd. This was turned down however Suzuki had formed a tie up with Pioneer to use its audio systems.

Quality vs. Others

The role of the quality department mainly brings this department into conflict with other departments mainly production and engineering departments. When the quality department declares that the certain product or process is not matching with the quality requirements, the concerned department who has not maintains quality will always protest against it as most of the times such tests are marginal.

Changes in structure

Rewards

Rewards and compensation should be evaluated on a regular basis so that and which leads to greater linkage to the employee performance and which also leads to increase the goodwill of the company.

People

Frequent interactions with the different departments helps to resolve the problems if any in the organization.

Processes

There should be more focus on quality assurance as they only focus on very stringent other techniques.

Strategy

There strategy should be focused on more on changing needs of the customers and also the changing scenario of the industry.

Structure

As the Maruti is following presently functional structure which has various conflicts in it so Maruti has to change its structure according to their requirements so that there is no conflicts in future and so that they will able to achieve organizational objectives efficiently and effectively.

One major point is that there is a need of horizontal integration between the various departments at departmental level is required .The hierarchical level is is to be reduced because the level of employees are quiet diversified which created a complicated hierarchy.

Conclusion

Maruti has been successful if the company will be able to get the comparative advantage .the flat decentralized structure and the importance given to the employees go a long way in creating harmonious and good working environment where everyone focuses on achieving the objectives of the organization efficiently and effectively so the company can able to achieve profits in future.

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