Organization Design and Change

A Project Report on Yamaha Motors

Submitted to: Prof. Poornima Gupta

Submitted by : Group 9 – The Ferrari Monks

Yamaha Motors- Organization

For over 50 years, Yamaha Motor group has endeavored to create diverse value through products and services since its founding.Yamaha has always worked based on three ideas which constitute their Corporate Philosophy. These are as follows:

1. Corporate Mission: The core identity, values, purpose and visionary goals.

2. Management Principles: The guiding management principles for achieving corporate mission. The management principles are as follows :

Creating value that surpasses customer expectations Establishing a corporate environment that fosters self-esteem Fulfilling social responsibilities globally

3. Action Guidelines: The guidelines each individual should follow to realize corporate mission. The three guidelines are as follows :

Acting with Speed Spirit of Challenge Persistence

Yamaha desires to be Kando creating company.

Yamaha’s Goal: To offer new excitement and a more fulfilling life for people all over the world. Yamaha strives to use their ingenuity and passion to realize peoples' dreams and always be the ones people look up to for the next Kando.

Dimensions of Organization StructureOrganization Structure defines how tasks are to be allocated, who reports to whom, and the formal coordinating mechanisms and interaction patterns. A structure depends on the organization's  objectives  and strategy.

What Comprises of the Organizational Structure? Hierarchical Size and height Differentiation Formalization Centralization

Hierarchical: The flow of authority and responsibility among various positions in an organization. In Yamaha there is a well defined hierarchy.

Size and Height: The structure is tall with a rigid control over the operations by top management. The hierarchy is as follows:

Differentiation The degree of specialization or division of labor, the number of levels in the organization’s hierarchy, and the extent to which the organization’s units are dispersed geographically. Yamaha has a complex structure.

Horizontal DifferentiationIt 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 high because people specialize in a task they perform.

Vertical DifferentiationIt 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 typically 30 workers.

Formalization: It refers to the degree to which jobs within the organization are standardized. The formalization level is moderate to high. It varies in accordance to the hierarchy with highest at operational level at moderate at managerial positions.

Centralization: It refers to the degree to which decision making is concentrated at a single point in the organization. In Yamaha motors centralization is high. Workers are hardly encouraged to take the immediate decisions. Decisions are taken by the top management.

Organization Design

At Yamaha motors the organization follows a Bureaucracy model, given by Max Weber. This can be characterized by the following three properties:

Hierarchy of Structure: At Yamaha the tasks are well defined by the organization hierarchy.

Rules and Regulations: At Yamaha there is no scope of flexibility in the routine operations.

Impersonalization : The standardization principle is followed.

Technology: At YamahaTechnology is used at all three stages in the value creation process—input, conversion, and output. Technology influences the structure of an organization. Three theories consider the relationship between technology and design. The three theories are as follows:

Per row Classification :In this model, the technology is defined as the action performed by an individual upon an object, with or without the aid of mechanical devices, in order to make some changes in that object or add value to the pre existing object. The assembly line in Yamaha is a semi-automated one with every worker assigned specific tasks to be done. It relies on high levels of Division of labor to improve productivity. Like any other assembly line, the Yamaha’s manufacturing process is marked by:

Low Task Variability: The main features are High Division of Labor, High vertical differentiation, Highly Repetitive duties and task specialization.

High Problem Analyzability: Yamaha employs mostly unskilled workers since problems faced during the assembly process are easily analyzable and therefore Standard Operating Procedures are used

Woodward’s Technology:Woodward categorized the firms into three types of technologies i.e. Unit, Mass, or Production. She treated these categories as a scale with increasing degrees if technological complexity, with unit being the least complex and process the most complex. The model established a link between technology, structure and effectiveness. As far as Yamaha is concerned the manufacturing process would most closely resemble to Mass production technology which is most commonly used for large batches of bikes

Thompsons Technology:According to Thompson’s classification, Yamaha should be categorized as long linked Technology due to the nature of individual tasks which have sequentially dependency with each other.Yamaha’s assembly line technology is characterized by a fixed sequence or repetitive steps which is one of the most important features of long linked technology.

Strategy at YamahaWe would be explaining Yamaha India’s business strategy with respect to

Porter’s competitive strategy and Miles and Snow’s strategic types.

Porter’s competitive strategy: According to Porter’s competitive strategies, Yamaha is a market differentiator. Initially Yamaha was aligned as a low cost leader with the producer of 100 cc bikes. But with the dynamic demands in the sector it made a move in the

Task Variability

Problem

Analyzability

Few exceptions Many Exceptions

Un analyzable Craft Non Routine

Analyzable Routine Engineering

premium bikes which not only had a higher price but had an edge with the superior technology and design which made them a differentiator.

Mills and snow :Yamaha can be described as a prospector as it has been proactive in exploring new markets and opportunities. It provides bikes for almost every market segments. It aims to satisfy a wide variety of customer preferences from the mass to the niche markets. It has come up with several innovations like improving fuel efficiency of the bikes, introducing environment friendly engines, reducing the size of the engines and introducing light weight and compact metals for its bikes. It serves all the market segments with its diversified products.

Culture at YamahaTo start with, let’s define culture in an organizational context- ‘basic assumptions and beliefs that are shared by the members of the organization.’

The culture at Yamaha has the following key characteristics-

Safety at work :Yamaha is committed to safety and health of its employees and other stakeholders who are integrated with its operations. It is a firm believer that healthy people and safe environment at work lead to better business performance, higher productivity and low turnover. They create a safety culture in the organization by:

Integrating safety practices at all levels of operational activities Ensuring compliance with applicable legislative requirements Promoting safety awareness amongst employees by empowering

them and following safety practices at workplace

Reward System : Yamaha offers salaries and rewards above the industry standards. Increments after every three years and awards educational

scholarships to the wards of the employees. Transparency in the system. The reward system at Yamaha is a lot influenced by the Japanese

Reward Culture. Eg. KAIZEN reward for discouraging absenteeism

Ethics are the base:The organization follows a culture of fair and just with all its internal and external stakeholders and maintains little or no deviation from the ethical standards. This promotes harmony and leads to less conflicts. It also enhances the trust in the organization.

Culture and Structure

The culture followed at Yamaha is Bureaucratic as holds the following characteristics:

1. Internal Strategic focus : their major focus lies in the core competencies

2. External environment needs is stable

Environment at Yamaha Specific environment

Customers The company primarily targets India’s burgeoning middle class by providing a resort from insufficient public transport system in 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 introduction of sports bikes. However, with the introduction of Yamaha V-max, it also caters to the top niche segment.

Competitors Big players such as Hero Honda and Bajaj have exercised a huge bargaining power over suppliers as well as buyers. Yamaha receives heavy competitive pressures especially on grounds of cost as well as distribution leadership by these players.

Suppliers Yamaha procures the heavy components from its vendors in Japan and Thailand. However, a motorcycle comprises of over 2000 components which are locally sourced. The two wheeler industry largely sources its parts and components from common vendors in North India.As such, the supply side is marked by a lot of politics between the vendors and bigger players who have a large appetite to place orders beyond capacity thus creating an artificial scarcity in the market.Yamaha has a policy of ordering for the parts at least three months in advance.

Distributors Yamaha has a smaller range of models in comparison with its counterparts in India like Hero Honda and Bajaj. As such, it exercises a relatively lesser 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 Policy- 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 periods- Hero Honda has brought down its vendor payment period from 52 days to 45 days

Labor Unions Birth of labor union during its joint venture with Escorts- All Escorts Employees Union (AEEU) 1996Formation 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 Labor 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 March 2002. GOI has imposed certain rules and regulations regarding the emissions and imports of components. As per government notification all the two wheelers had to upgrade to Bharat Stage III norms by April 2010. Yamaha, however, decided against upgrading Alba and G5 because of its low demand, but they are going to concentrate in the 150cc category to drive up sales.

General environment

Economic o The Indian Economy is marked by low growth with an outflow of

foreign capital in the country. Following are few of the factors that have helped surging the market growth:

o Tightening of the interest rates by the RBIo Combined Goods and Services Tax is expected by 2015 which is

expected to remove the cascading effect caused due to multiplicity of taxes.

o 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 according to the demographic and cultural factors of the society. Regions can differ in their social and cultural values and therefore, marketing strategy of the company can vary owing to the differences in values. Yamaha tries to implement the philosophy of Kando wherein it tries to provide customer value in each of

Its products. Since India has a young population; Yamaha launched a pool of stylish and quality bikes which can suit young generation’s personality.

Technological Environment Bikes with higher engine capacities have done commendably well on the Indian roads. Bike styling and fuel efficiency has also seen major developments.The new technologies including the mono shockers, back and front disc brakes, the magnum wheels, DiASil Cylinder etc. are some things that many companies are looking forward to.Yamaha has been able to involve many of these technology trends in its latest bikes i.e. FZ & FZS.

Environmental 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.