Professional Documents
Culture Documents
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
Centralization ........................................................................................................................
............ 9 Organization Structure in a
Nutshell ........................................................................................................................ 9
Organizational
Design ...................................................................................................................................
.............. 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 ...........................................................................................................................
........... 14
General
Environment...........................................................................................................................
........................ 14
Political
Environment........................................................................................................................1
4
December 4, 2010
Economic
Environment.....................................................................................................................15
Socio Cultural
Environment .............................................................................................................. 15
Technological
Environment ..............................................................................................................16
Environmental
Forces ....................................................................................................................... 17
Legal
Environment ..........................................................................................................................
.. 18 International
Environment................................................................................................................18
Strategy..................................................................................................................................
............................................ 19
Yamahas Breadth
Strategy...............................................................................................................21
4
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.
5
Organisational Culture at Yamaha
To start with, lets define culture in an organisational context- the philosophy that guides
an organisations 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:
6
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 in spite 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 Favoritism 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
Direction:
Even after acquiring Escorts 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:
The management resolves all conflicts with the unions as well as internal conflicts in a
manner so as to maintain harmony in the organisation. Employees are rotated across
departments to ensure that any personal rivalry or grudges do not affect the working of an
individual employee or the company.
A culture of fair dealings:
The organisation highly encourages a culture of fair dealing with all internal and external
stakeholders and has very low tolerance towards any deviation from the prescribed
ethical standards.
7
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.
Complexity
Horizontal Differentiation
Vertical Differentiation
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
organizations hierarchy, and the extent to which the organizations units are dispersed
geographically. YMI has a complex structure.
Horizontal Differentiation
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).
The Japanese people have acquired every big post. They are very punctual about
the performance quality and rigidity in the work schedule, which creates problems
for the subordinates many times.
Spatial Differentiation
It refers to the degree to which the location of an organizations offices, plants, and
personnel are dispersed geographically.
YMI initially started their production at Surajpur plant in Greater Noida. Escorts plant
was in Faridabad. 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 vendors
cost. Spatial Differentiation is very high because:
It refers to the degree to which jobs within the organization are standardized. The
formalization level is different at different positions:
In YMI, the formalization level is low at managerial levels because managers are
given targets from the top management, which he was 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 division head and managers monitor supervisors and workers. 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
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.
Accounts
Corporate Finance
Time Shop
Employees Compensation
Vendors and Distributors Accounting
Services
Sales and Marketing
Warranty
Health and Insurance
Research and 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
Paint Shop
Welding Shop
Maintenance Department
India Yamaha Motors Private Limited has broadly six divisions. Each division has
various departments working under it. All the top management posts are held by Japanese
people. The structure of the organization is very vast but at the same time very simple
also.
Hierarchy
There are many departments in the organization. After having the organization structure
analysis, YMI can be categorized as the Machine Bureaucracy because:
Specific Environment
Customers
The company primarily targets Indias burgeoning middle class by providing a resort
from the insufficient public transport system in the form of an economical and reliable
personal transport.
Yamahas 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.
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 Indias population is below the age of 35 Years and 150 million people.
Yamaha continues with its efforts to enhance consumer confidence by organizing
customer specific championships
Market Penetration
The growth witnessed by the Indian two wheeler industry indicates the growing demand
for low cost personal transportation solutions amongst the 300 million Indian middleclass
consumers.
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.
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.
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 (Faridabad being the hub).
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. Yet, the
vendors fail to deliver as per order leading Yamaha in a situation of inefficient fulfillment
of market demand.
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
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
Political Environment
Under the UPA rule most of the business from across all industries try and win over as
much political support. When the UPA government was formed, among many
businessmen who went to meet Sonia Gandhi, one of first few was Mr. Bajaj. The
increasing interaction between the congress and Mr. Bajaj has been a cause of worry for
the other players in the two-wheeler segment. It is slated that political influence and not
business acumen has helped Bajaj in winning many deals which otherwise were not very
achievable. The core competitors viz. Yamaha and Honda 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 competitors models, thereby minimizing his loss of market share.
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 RBICombined 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.
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 poolof stylish and
quality bikes which can suit young generations personality. Below are few of the TV
commercials that were aired to catch the attention of the young generation
To target common commuters, Yamaha Motor India launched 3 new bikes namely YBR
125,Yamaha SZ, Yamaha SZ-X. It also launched sporty bikes like Yamaha Fazer 250 to
cater young Indian population.
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 conventional
aluminum cylinder with a steel liner Yamaha "DiASil Cylinder" that needs no liner or
cylinder wall plating
Yamaha has been able to involve many of these technology trends in its latest bikes i.e.
FZ & FZS.
Yamaha also developed CF Aluminium Die Casting Technology for mass production of
Aluminium. This helped in reducing the weight of the parts.
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.
Pollution/Energy Efficiency
Because of Euro II, there will be a lot of pressure on the two-wheeler industry to come up
with greener technologies.
In light of this Yamaha educates its employees about hazardous materials in products, and
implemented LCA methodologies for measuring the environmental impact of Yamaha
products.
It eliminated the use of CFCs and HCFCs from manufacturing processes. It has cut its
CO2 emissions volume by 26% compared to FY1990 in the year 2008.
Yamaha improved its production and air conditioning equipment to reduce greenhouse
gas emissions
.
Legal Environment
Due to the steep fuel prices in India, the sector is driven by demands for fuel efficient
automobile systems. 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 two-wheeler, should be offered by all
the insurance firms. All insurance firms accepted this after much deliberation.
Also, Supreme Court stated that the two-wheeler manufacturers will have to sell a helmet
along with their bikes and scooters.
International Environment
The two wheeler industry is currently growing at a CAGR of 9.45% from, and has
thereby drawn the interest of a number of international players. Suzuki Hayabusa,
Kawasaki Ninja, Suzuki Zeus, are some of the bikes which are already launched in India.
These players cater to a very specific customer segment but due to the high margins make
a profitable venture for players like Harley Davidson, BMW etc. However, for long term
sustainability in India every player will have to enter in the market in the low and
medium cc range.
Strategy
For a long time till 2007-08, Yamaha has been following the cost control strategy
by focusing on the low end 100cc bikes like Crux and Alba. This kept it market
share to below 5%. In lieu of the growing Indian economy and the need for
differentiator products, Yamaha revamped its strategy and shifted its focus to
premium bikes. It plans to gain 20% market share in the premium segment by
2010.
The 100cc bikes are supplied only if there is a pull, but the company has clearly
indicated that it sees its future in the mid-market and premium segments.
The company is not just willing to limit itself to just prestige pricing. It will
provide more value to the customer in terms of attributes like great technology,
superior design, ergonomics for long distance travelling etc. For example the
company will be launching its new superbike in the 1000cc segment. Apart from
this, it is also optimistic about the FZ-16 series it has launched in the mid-market
segment (150 cc) bikes. So hence, we can see that the aim is to provide niche
products for the diverse customer segments. This is its market differentiation
strategy.
Apart from providing niche products in the motorcycle segment, Yamaha is also foraying
into the gearless scooter segment, according to a recent media report. Yamaha Motor
racing is a sort of surrogate marketing for the high end 800cc and 1000cc bikes.
In order to strengthen its market differentiator position, Yamaha also aims to provide
maximum value at a cost-effective price. So recently it has aimed to reduce its expenses
by 10%, and by integrating its design, procurement and manufacturing functions to
reduce waste.
The rural market accounts for 70% of the sales of the motorcycle industry. An extensive
dealer network would be set up to finance and educate the rural customers. Many bikes in
the standard segment like the Crux and the YBR-110 are having a strong demand in the
rural market and are crucial for the company to expand its market share, whereas the
premium segment which is still in a nascent stage is crucial for the company to expand its
bottom- line.
Yamahas 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
Yamaha can be described as a prospector (especially after the year 2007) as it has been
constantly trying to explore new markets and opportunities. It provides bikes for almost
every market segment ranging from the 100cc Crux to the 1000cc FZ1. It aims at
providing a diversified product range to satisfy a wide variety of customer preferences. 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.
Technology
Three levels exist for technology: individual, personal skills & individual knowledge;
functional or departmental, techniques to perform work and create value in a group; and
organizational, conversion of inputs into outputs (i.e., mass production and craftwork).
Mass-production technology involves conveyor belts usage and a standardized assembly
process for production of goods. Crafts work involves skilled workers interacting to make
a customized product.
Technology is used at all three stages in the value creation processinput, conversion,
and output. Since each function develops technologies that finally create value, the
organizational structure in place must maximize the effectiveness of technology.
Technology influences the structure of an organization. Three theories consider the
relationship between technology and design. Managers should understand the concept of
technical complexity, the differences between complex and routine tasks, and the way
tasks are dependent on each other.
Complexity
Formalization
Centralization
Yamahas plant has 3 vehicle assembly lines and 4 engine assembly lines which includes
one line dedicated for export engines. The engine and vehicle assembly lines are
synchronized which incorporate concepts of Unit Assurance. The plan produces 1200
bikes daily with 4 types of bikes produced on an average. The finished raw material is
procured from a multiple of suppliers, which is then assembled in the plant.
The employees are organized into 4 teams:
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 management. Workers are also expected to state
a minimum level of productivity- per day or per week and any deviation from this
standard is analyzed and corrected by the workers and the management.
Perrows Classification
In this model, the technology is defined as the action that an individual performs upon
an object, with or without the aid of mechanical devices, in order to make some changes
in that object. As discussed above, 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 labour to improve productivity and minimize wastage. Like any other assembly line,
the Yamahas manufacturing process is marked by:
Low Task Variability:The main features are High Division of Labour, High
vertical differentiation, Highly Repetitive duties and task specialization.High
Problem Analysability:Yamaha employs mostly unskilled workers since the
problems faced during the assembly process are easily analysable and therefore
Standard Operating Procedures are in place to take care
Based on the Perrows matrix as shown above, Yamaha will land in the Routine
technology quadrant. It is a well-structured organization with its rigidity and standardized
coordination and control processes. The decision making is centralized and managers
have wider span of control due to the formalization processes already in place.
Woodwards Framework
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. Thus the
status of the various parameters concerned in Woodwards model stand as follows:
Thompsons Classification
Yamaha India, as an assembling plant, is more focused on the supply chain management
rather than anything else. Procurement of individual parts, assembling them, and final
distribution to the end users is what it is concerned with. As a result, management tends
to respond to these uncertainties by controlling inputs and outputs.One of the best means
for achieving this objective is to integrate vertically.
References
www.wikipedia.orghttp://www.scribd.com/doc/2165100/Yamaha
http://www.scribd.com/ORGANIZATIONAL-THEORY-DESIGN-AND- CHANGE-
Chapter-09/d/7974307 http://www.yamaha-motor-india.com/about/profile/index.html
http://www.scribd.com/doc/41422071/YAMAHA-TRAINING- REPORTDiscussion with
EmployeesReports Published in Economic Times and Financial Express
http://www.financialexpress.com/news/yamaha-phases-out-three- bikes-on-low-
demand/656112/ http://www.scribd.com/doc/27342657/Financial-Analysis-Indian- 2-
Wheeler-Industry www.scribd.com/.../Yamaha-Sales-promotion-and-Customer-
satisfactionwww.docstoc.com Business Sales & Marketing
www.global.yamaha.com/about/csr/report/data/csr_repo2009- e.pdf