Maruti-Suzuki Organizational Structure as a Good Basis for Student Research

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Updated Oct 21, 2021
Maruti-Suzuki Organizational Structure as a Good Basis for Student Research

You are a student studying marketing, business, management or accounting, and you need to write an essay, research, case study or get accounting homework help. You may need statistics homework help or any other kind of homework help. If this is about you - you have come to the right resource. The example of the operation of the Indian company Maruti-Suzuki is perfect for studying the successful organizational structure of the enterprise.

In 1982, the Indian economy began to explode, and the country's huge population was in dire need of inexpensive cars that could improve the country's living standards. However, 90% of all cars sold in the Indian domestic market in those years were British and Japanese brands.

In the same year, the government of the country turned to the company "Maruti" with a request to conclude a contract for the production of cars with one of the foreign brands. After lengthy negotiations, in 1983 the company "Maruti-Suzuki" was registered, which began to produce cars of the Japan brand in India. In 1984, sales of the Maruti 800 model, built on the basis of the Suzuki Alto, began. Under the hood of this car is a 37 horsepower Suzuki engine.

Today Maruti-Suzuki is a subsidiary company of the Japanese automaker Suzuki Motor Corporation. Maruti includes almost 50% market share of the Indian car market. Maruti offers a huge volume of cars from the entry level Maruti car to the Sports Utility vehicle Grand Vitara. It is truly a startup company that sells over one million cars in India. It can be renamed India as Maruti Suzuki India limited. 

The headquarters of Maruti Suzuki India Limited (MSIL, formerly Maruti Udyog Limited) can be found on Nelson Mandela Street in New Delhi. The main manufacturing facilities are concentrated south of Delhi - in Gurgaon and Manesar. The first managing director since the establishment of the company's joint venture was Bhargava.

History of the Implementation of the Maruti-Suzuki Organizational Structure

In 1980s, India's car industry suffered from a crisis. This was facilitated by low levels of capacity utilization and productivity, high prices and low product quality. So the authorities decided to turn to the experience of Japanese managers. The management of Maruti LTD was tasked with modernization of production and organization of production of economical modern cars at affordable prices. 

Production was focused on cooperation with leading companies in developed countries: USA, France, Germany and others. As a result of joint activities with specialists of the Japanese company "Suzuki", the use of techniques of labor organization and production of the best Japanese companies, taking into account the working conditions of the Indian company "Maruti LTD" and the nature of human relations, Indian managers managed to develop an effective organizational system. The main provisions were as follows:

  • The embodiment of the culture of the organization is the manager. It is from him that the ability to create an atmosphere of enthusiasm in the team ultimately depends. Therefore, the manager must be a leader in his field.
  • The condition for a creative, interested attitude of employees to work - compliance with the principle of equality in the team. To do this, managers and employees should wear the same uniform at the company, eat in the common dining room, use company cars, work in a common room (without separate offices), etc.
  • A permanent committee is set up to constantly exchange information (opinions) and discuss emerging issues. It includes representatives of all departments and services of the enterprise. If, as a result of the exchange of views, recommendations are developed, they are implemented by the company's management.
  • Employees are involved in innovative and inventive activities, "quality clubs" are created. Proposals received are registered and considered: they are either implemented or rejected. In the second case, the reasons are reported to the author of the idea. Innovators and inventors are encouraged morally and materially.

As a result of compliance with all these basic provisions of organization and management of production, Maruti LTD managed to produce the first Maruti-Suzuki cars in less than two years, and in four years - to control 60% of the national car market and export to a number of countries, despite high the level of competition in the global automotive market.

Fundamentals of the Organizational Structure of Maruti-Suzuki

Maruti's functional structure is characterized by horizontal linkages. The multilevel management structure of the company includes Board of Directors and 5 heads of business verticals, which are directly managed by the director of the company. The activity takes place in several areas:

  • marketing;
  • finance;
  • quality assurance;
  • engineering and sales;
  • parts inspection;
  • material;
  • information technology;
  • spares;
  • production;
  • human resource development;
  • administration;
  • new business.

Maruti is a huge company with numerous divisions. The divisional head leads 29 departments, which in turn are divided into 132 departments. They are headed by the departmental head. The positions of divisional head, as well as the head of the department, are functional.

The organizational structure of the company can be described by the following characteristics:

  • low centralization of power: decision-making authority is disturbed at all levels and is quite decentralized;
  • high formalization: standards, procedures and methods are formally written. The work flow, roles and responsibilities of each department are set out in departmental procedures. Each department works according to the procedure approved by the head of the department. Maruti Operations standards can be found on workstations. Regulation of work allows to achieve the purposes in time;
  • high degree of specialization due to the division of labor;
  • targeted incompatibility of different departments creates a certain complexity of the enterprise structure;
  • all employees of the company can be divided into six functional managers: workers and technicians, supervisors, executives, section, department and division managers.

Features of Organizational Structure

  • The company strives to achieve excellence in the work of each functional level. Automotive production is characterized by large scale. Planned logistics are used to create a new product. Due to the operation of the assembly line, parts are added to the product sequentially.
  • Communication takes place in a vertical pattern, from department to department, then to the directors. Cooperation and communication between functions at each functional level occurs through cross-functional groups and the department coordinator (he also reports on the progress of his department). Someone from the highest hierarchy is responsible for this.
  • Organization structure does not need design flexibility, because the automotive sector has an almost stable environment.
  • Directors of relevant departments are responsible for making the most important decisions.
  • The company's employees are accountable due to the mechanistic structure with economies of scale.
  • Span of control: 3-6 at the upper level, 4-8 at the middle level and 0-8 at the lower level. The figure of 40-50 corresponds to a lower level of production.

Problems of Maruti Suzuki Organization

There is no organizational structure without gaps. Maruti Udyog LTD also has its mistakes. Next we talk about some problems of the enterprise.

  1. Top managers do not have enough information about everything that happens in the company. This is due to the fact that lower-level managers make most decisions independently.
  2. The company has a problem of coordination between managers. This problem can be solved by exchanging information and defining company policy.
  3. Sometimes the goals of the entire organization differ from the goals of individual lower-level managers. For example, some managers may require you to increase the size of departments according to profits. Assessing the company's performance can help managers identify their problems and overcome the problem.
  4. A decentralized organization can make it difficult to present innovative ideas. Some employees may have a really useful idea, however, due to the lack of a strong central direction, it will not be heard and accepted in the organization.

Suggestions for Improving the Organizational Structure

Due to certain changes, the company's performance can be improved.

People and communication. Any problems can be solved through communication. Therefore, it is necessary to increase the interaction between the departments of the enterprise and individual employees. 

Processes. The main thing that you need to focus on all production is product quality, not strict production methods.

Strategy. Changing consumer needs and the industry scenario should be the main vectors of the company's strategy.

Structure. Maruti Suzuki's functional structure has faced various conflicts, so the company must change according to the requirements of the time and situations. This will allow to work effectively in the future and achieve the company's goals. Two years ago, Maruti made an attempt to implement a project structure to solve problems effectively. Today, 30 teams with specific goals (cost reduction, new product development) are working to improve the company's performance.

Rewards. Rewards motivate people to do better. Therefore, the company must take care of regular compensation and remuneration to employees to improve the work of the entire organization.

Connections. Redundancy of hierarchical connections. Horizontal integration can help different departments at the departmental level.

Conclusions

Today, Maruti can be called a pioneer of the Indian automobile industry. It has a decentralized flat structure, which generally contributes to a harmonious work environment. Each employee focuses on a global goal - product development and the company's profits. At the same time, all employees do their own work, achieve their goals and communicate effectively with each other and with department heads and managing directors.

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