Organisational Behaviour -II A Project Report on India Yamaha Motors

Organisational Behaviour -II A Project Report on India Yamaha Motors

Submitted to: Prof. Jeyavelu

Indian Institute of Management Kozhikode Date of submission: 2 December, 2010

Submitted by: Group IV

HEERAL BHATIA(PGP14/274) | NITESH K GUPTA(PGP14/260)) MAHTAAB KAJLA(PGP14/280) | PRACHI CHAWLA(PGP14/287 | RAHUL MITTAL (PGP14/290) VINNY ARYA(PGP14/313) | VISHAD DUBEY(PGP14/315)

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Organisational Behaviour -II

Contents Foreword: ........................................................................................................................................................................... 3 Introduction:....................................................................................................................................................................... 4 Orgaization Culture at Yamaha: .................................................................................................................................. 5 A culture of safety: ........................................................................................................................................................... 5 Individual Initiative: ........................................................................................................................................................ 5 Reward System: ................................................................................................................................................................. 6 Direction: ............................................................................................................................................................................. 6 Management Support: .................................................................................................................................................... 6 Conflict Management: ..................................................................................................................................................... 6 A culture of fair dealings: .............................................................................................................................................. 6 Dimensions of Organizational Sturcture ................................................................................................................. 7 Components of Organizational Structure ............................................................................................................... 7 Complexity ................................................................. ....................................................................................................................................... ........................................................................ .. 7 Horizontal Differentiation ............................................................................................................... ............................................................................................................... 7 Vertical Differentiation ................................................................................................................. ................................................................................................................... .. 8 Spatial Differentiation .......................................................................................... ..................................................................................................................... ........................... 8

Formalization............................................................. ................................................................................................................................... ........................................................................ .. 8 ............................................................................................................................... ........................................................................ ..... 9 Centralization ............................................................

Organization Structure in a Nutshell ........................................................................................................................ 9 Organizational Design ................................................................................................................................................. 10 Divisions and Departments in India Yamaha Motors ......................................................... ....................................................................... .............. 10 Hierarchy........................................................................................................................................... ........................................................................................................................................... 11

YMI- A Machine Bureaucracy ................................................................................................................................... 11 Environment .................................................................................................................................................................... 12 Specific Environment ................................................................................................................................................... 12 Customers ................................................................... ......................................................................................................................................... ...................................................................... 12 Competitors ................................................................ ...................................................................................................................................... ...................................................................... 13 Suppliers............................................................................................................................................ ............................................................................................................................................ 13 Distributors ................................................................. ....................................................................................................................................... ...................................................................... 13 Labour Unions ................................................................................................................................... ................................................................................................................................... 14 Government........................................................................................................................

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Organisational Behaviour -II Economic Environment ....................................................................................................... ..................................................................................................................... .............. 15 Socio Cultural Environment .............................................................................................................. .............................................................................................................. 15 Technological Environment .............................................................................................................. 16 Environmental Forces ....................................................................................................................... ....................................................................................................................... 17 Legal Environment ................................................................................................... ............................................................................................................................ ......................... 18 International Environment............................... Environment..................................................................................................... ................................................................................. ........... 18

Strategy .............................................................................................................................................................................. 19

Yamaha’s Market Differentiation Strategy - Porter’s competitive strategies and Miller’s Integrative framework ................................................................................................................................................ 19 From Cost Control to Market Differentiation ................................................................................... ................................................................................... 19 ............................................................................................................... ................................................ 21 Yamaha’s Breadth Strategy ...............................................................

Prospector- Miles and Snow’s strategic types ................................................................................................... 21 Technology ....................................................................................................................................................................... 22 Technology and Organizational Effectiveness ................................................................................................... 22

Perrow’s Classification ................................................................................................................................................ 23 ........................................................................................................................................... 24 Woodward’s Framework ............................................................................................................................................. ..................................................................................................................... ............................................... 25 Thompson’s Classification......................................................................

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Foreword 2 am , 4th December 2010..

“Just a final review and then we can mail it’.. announced Mahtaab as we all compiled our research gathered in bits and pieces in the past one month on this project. This work has been a combined effort of our team and all of us have tried our best to gather the most accurate data and information about the organisational aspects of India Yamaha Motor Pvt. Ltd. The analysis has been based on the available facts and news gathered from various sources as well as our intuitive understanding of the various aspects of the two wheeler industry. Our special thanks to Mr. Pankaj Dubey, National Business Head at Yamaha and Mr. N.K Gupta (Department Head, Stores) Stores) at Yamaha for for providing their their valuable insights. We thank Prof. Jeyavelu for introducing us to the various aspects of Organisational Behaviour. We tried to incorporate the elements of our learning on our own approach of working as a team so as to eliminate inefficiencies and bank upon the competencies of each individual member while allowing everyone to explore the marches of their comprehension and creativity. This project has been a wholesome learning experience for us and we would be glad to extend the learning process by welcoming criticism and suggestions on our work.

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Introduction – About Company India Yamaha Motor Private Limited is an Indian subsidiary of Yamaha Motor Company, formed in 2008 as a joint venture with Mitsui. It produces a range of motorcycles for domestic consumption and export. Yamaha motors in India have been present in the market of low range economy bikes for a long time. All bikes in their store were designed for mass market, but with the introduction of FZ-16, FZ-S, Fazer, and R15 they have made an impression on the mid-range bike market in India. The market for these sorts of bikes was very small that there were only two major players in the market: Hero Honda and Bajaj. The introduction of the earlier mentioned bikes by Yamaha has provided the 2-wheeler market with more choices.

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Organisational Culture at Yamaha To start with, let’s define culture in an organisational context - ‘ the philosophy that guides an organisation’s policy towards employees and customers’ or ‘basic assumptions and beliefs that are shared by the members of the organisation.’ We have analysed the culture at Yamaha by analysing the following key characteristics-

A culture of safety: Yamaha is committed to safety and health of its employees and other stakeholders who may be affected by its operations. It believes that healthy work practices lead to better business performance, a motivated workforce and higher productivity. They create a safety culture in the organization by: Integrating safety concerns in all activities while improving safety performance Ensuring compliance with applicable legislative requirements Empowering employees to observe safety in their respective work places. Promoting safety awareness amongst employees, contractors and suppliers Individual Initiative: At higher levels the management is controlled by Japanese employees ( Division Head and above) who own a sufficient degree of freedom in their operation. At the manager level, there is sufficient space for individual initiatives though no significant signs of promoting creativity in employees. At the worker/ supervisor level, very less scope for individual initiative. Half of the lower level workforce is contractual by nature so freedom of work is low.

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Reward System: Yamaha gives the best salaries and rewards to its employees which is a notch above the industry standards. As such, there are levels of job satisfaction amongst the employees inspite of the low degree of freedom awarded. The company gives increments after every three years and awards educational scholarships to the wards of the employees. A transparent system. NO Favouritism and equal opportunity to all employees. An unusual clause of obtaining no references from employees for filling a vacant post. As long as the father is employed in the organisation, the son/daughter cannot be employed. The reward system at Yamaha is a lot influenced by the Japanese Reward Culture. Eg. KAIZEN reward for discouraging absenteeism absenteeism Direction:

Even after acquiring Escort’s stake in Yamaha and combing the workforce, Yamaha has been able to maintain and give its employees a common direction. As far as the individual job direction is concerned the employees have sufficient clarity and any given ambiguities can be resolved by referring to the Company Rule Book. Management Support: The management offers full support to employees however, due to high levels of formalisation, the process is slow. Conflict Management:













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DIMENSIONS OF ORGANISATIONAL STRUCTURE Organization Structure defines how tasks are to be allocated, who reports to whom, and the formal coordinating mechanisms and interaction patterns that will be performed. Components of Organizational Structure Complexity o Horizontal Differentiation o Vertical Differentiation Differentiation o Spatial Differentiation Formalization Centralization Complexity Complexity refers to the degree of differentiation that exists within an organization. This includes the degree of specialization or division of labor, the number of levels in the organiza tion’s hierarchy, and the extent to which the organization’s units are dispersed geographically. YMI has a complex structure. Horizontal Differentiation It refers to the degree of differentiation between units based on the orientation of members, the nature of the tasks they perform, and their education and training. Horizontal Differentiation in Yamaha is neither very high nor very low













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The number of departments in the company is very high. This leads to chaos and confusion, conflict of interests among the managers of different departments. As company has not recruited since 2001, the professionals are hardly seen in the organization. But employees in the organization acquire functional specialization through their experience. Vertical Differentiation It refers to the depth in the structure. Differentiation increases, and hence complexity, as the number of the hierarchical levels in the organization increases. The degree of vertical differentiation is high in Yamaha because: Span of control is high under each department head. Every department head monitor the activities of 30-40 subordinates (including managers, staff members and workers). Every big post has been acquired by the Japanese people. They are very punctual about the performance quality and rigidity in the work schedule which creates problems for the subordinates manytimes. Spatial Differentiation It refers to the degree to which the location of an organization’s offices, plants, and personnel are dispersed geographically. YMI initially started their production at Surajpur plant in Greater Noida. Escorts plant was in Faridabad. F aridabad. When YMI acquired Escorts fully, YMI made Faridabad plant for the purpose of making engine and small parts for the Assembly line to reduce the vendor’s cost. Spatial Differentiation is very high because: Difference in the salaries of two plants by around Rs.3000. Employees in Faridabad feel unsecured for their jobs as they think that













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supposed to attain with the help of human resources he has allotted in his department. In short, managers are incumbent only to ‘what is to be done’. But supervisors and workers are monitored by division head and managers. Employees are incumbent not only to what is to be done, but also for when it is to be done, and how he should do it. So, there is a high level of formalization at operation level. Centralization It refers to the degree to which decision making is concentrated at a single point in the organization. Company employs Casual workers and contract labors for their production and assembly line operations. Workers are hardly encouraged to take the immediate decisions. They have to take permission from their immediate boss for each and every requirement. So, all the decisions are always in the hands of the department head within the department. Managers and supervisors play a culprit role for their superiors. Organization Structure in a Nutshell













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Organizational Design It is concerned with constructing and hanging an organization’s structure to achieve the organization’s organization’s goals. Divisions and Departments in India Yamaha Motors Accounts  Corporate Finance  Time Shop  Employees Compensation  Vendors and Distributors Accounting Services  Sales and Marketing  Warranty  Health and Insurance Research and Development Development Human Resources Management  Recruitment  Training  Grievance Redressal  Appraisal Product Planning and Material Control (PPMC)  Stores  Purchases  Production (Engines and small parts)  Assembly Line  Quality Check Manufacturing Engineering















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Hierarchy













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ENVIRONMENT Specific Environment

Customers

The company primarily targets India’s burgeoning middle class by providing a resort from the insufficient public transport system in the form of an economical and reliable personal transport. Yamaha’s core target market lies between the age group of 18 to 30 and it is increasingly targeting the youth with the introduction of sports bikes. However, with the introduction of Yamaha V-max, now it also caters to the top niche segment of the economic classes of India. Rise in India’s Young Working Population With the rising levels of per capita income of people, the Indian two wheeler market offers a huge potential for growth. This growth is relevant in the light of the fact that 70 per cent of India’s population is below the age of 35 Years and 150 million













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Despite this spectacular growth rate, the two wheeler penetration (number of two wheelers per 1000 inhabitants) in India remains lower than other Asian countries such as Taiwan, Thailand, Malaysia, Vietnam etc.

Figure: break-up industry in India

of

two

wheeler

Competitors Big players such as Hero Honda and Bajaj (as shown in the figure above) have exercised a huge bargaining power over suppliers as well as buyers. As such, Yamaha receives heavy competitive pressures especially on grounds of the cost as well as distribution leadership assumed by these players.













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influence on its distributors in terms of stocking and display. Yamaha has adopted the concept of “3S” - SALES SERVICE and SPARE PARTS for meeting the customer requirements. Yamaha India also serves to foreign markets such as Argentina, Mexico, Philippines, and Bangladesh etc. Credit PolicyPolicy- Yamaha does not offer any credit terms to its dealers except in discretional cases. This is an aberration to the industry trend of an average of 2 month credit period. However, the industry has also been converging towards reducing credit periodsperiods - Hero Honda has brought down its vendor payment period from 52 days to 45 days Labour Unions Birth of labour union during its joint venture with Escorts- All Escorts Employees Union (AEEU) 1996 Formation of All Yamaha Employees Union under the purview of AEEU after acquiring full control and becoming a 100% subsidiary of Yamaha Motor Co., Ltd, Japan. The Labour Union possesses a very strong bargaining power especially post the 72 day strike in 2000 which led to institution of a binding increment in allowances at the operational-supervisory level every three years Government The Government of India approved a comprehensive automotive policy in













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acumen has helped Bajaj in winning many deals which otherwise were not very achievable. The core competitor’s viz. Yamaha and Ho nda have been coming up with new higher models while the Bajaj industry has been upgrading its bikes model by only varying the cc engine. It is believed that Mr. Bajaj has used his political influence to raise the prices of the minimizing his loss of market share. competitors’ models, thereby minimizing Economic Environment The Indian Economy is marked by high growth with an expected GDP growth of 8.5%. There has been an increasing inflow of foreign capital in the country. Following are few of the factors that have helped surging the market growth: Tightening of the interest rates by the RBI Combined Goods and Services Tax is expected by 2011 which is expected to remove the cascading effect caused due to multiplicity of taxes. Deregulation of petrol has led to increase in prices and increase in commission to petrol pump owners and will continue the spiral. Socio Cultural Environment Populations can be divided















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To target common commuters, Yamaha Motor India launched 3 new bikes













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Yamaha also developed CF Aluminium Die Casting Technology for mass production of Aluminium. This helped in reducing the weight of the parts.

Fig: The YZF-R6's aluminum frame

Environmental Forces Demand for two wheelers is increasing and thereby overcrowding the roads. Another problem is the adherence to emission norms because of the lack of infrastructure for inspection.













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Legal Environment Due to the steep fuel prices in India, the sector is driven by demands for fuel efficient automobile systems. Hence Hence , the regulations on fuel efficiency are less. The vehicular emission regulations are taken care by Society of Indian Automobile Manufacturers (SIAM). In 2007, the Supreme Court made it compulsory to wear helmets (which meet Bureau of Indian Standards requirements) for drivers and pillion drivers. In 2008, Madhya Pradesh high court had banned the registration of two-wheelers which had the hand grip above the tail light to ensure a protection system for pillion riders. Delhi High Court came out with a ruling that a comprehensive insurance policy for vehicles which also covered the pillion rider on a













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Strategy We would be explaining Yamaha India’s business strategy with respect to Porter’s competitive strategy, Miller’s Integrative framework and Miles and Snow’s strategic types. Yamaha’s Market Differentiation Strategy Strategy - Porter’s competitive strategies and Miller’s Integrative framework

According to Porter’s competitive strategies and Miller’s Integrative framework, Yamaha is a market differentiator. From Cost Control to Market Differentiation For a long time till 2007-08, Yamaha has been following the cost control strategy by focussing on the low –end 100cc bikes like Crux and Alba.













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Yamaha’s Breadth Strategy Breadth Strategy Yamaha has globally forayed into an extensive range of products like motorcycles, scooters, boats, sail boats, watercrafts, outboard motors, music instruments ,racing karts etc Prospector- Miles and Snow’s strategic types Yamaha can be described as a prospector (especially after the year 2007)













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Technology Technology refers to the information, equipment, techniques and processes required to transform inputs into outputs in the organization. organization. Three levels exist for technology: individual , personal skills & individual knowledge; functional or departmental , techniques to perform work and













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1st team works on conveyor line 2nd , 3rd and 4th team carry raw materials from storage department Stress on planning and involvement Rather than communicating the instructions downward, floor workers are encouraged to plan their work schedule on their own. Then the schedule and resources are finalized through direct interaction of workers and













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References

Organisational Behaviour -II A Project Report on India Yamaha Motors

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