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Organizational

Aditya Krishnakumar B10064

Areshdeep Singh B10072

Structure, Design
Arjun Menon B10073

Shriya Kalra B10110

& Change
Vemuri Srikanth B10118

Mahindra Group

What goods and services does it


produce/provide? Describe the
Type Public company’s organizational mission.
Describe the way it has grown and
Industry Conglomerate
developed.
Automotive - It is a leader in the utility vehicle segment
Founded 1945
and has a growing global presence in the automotive
(acquired Ssangyong Motor Company) and the tractor
Founder KC Mahindra businesses; Recently forayed into the two wheeler
JC Mahindra segment by taking over the Kinetic Motors; Also
Ghulam Mohammad
acquired controlling stake in REVA Electric Car
Company;
HQ Mumbai, Maharastra Farm Equipment - It designs, develops, manufactures,
and markets tractors as well as farm implements;
Key Keshub Financial - The Kotak Mahindra Group was established
people Mahindra (Chairman) in1985 as a financial organization. In 2003, it was given
Anand Mahindra the license to operate in the banking sector, prior to
(Vice-Chairman & which it was Non-Banking Financial Company.
MD)
Organizational mission:
To enable people to Rise
Information Technology

 Tech Mahindra : Provides solutions for communications


industry
 Mahindra Satyam : Mahindra Satyam is a leading global
business and information technology services company
 Bristlecone : It provides a range of services focused on the
entire supply chain spectrum, including strategy and
process consulting, systems implementation and business
process outsourcing, to leading companies globally.
It was set up in 1945 as Steel
trading company. Soon Club Mahindra Holidays – Established in 1996. Offers Family
forayed into manufacturing Lifestyle holidays at various loactions across the world
general-purpose utility
Mahindra Defence – This vertical has further divisions, one
vehicles, assembling the
specializing in information security, the other a specialty
Willy’s Jeep. Established as
business, focussing on meeting the needs of the Indian defence
jeep manufacturers, then
and security forces
moved into tractors and
LCVs. Now the leader in the Mahindra Aerospace – Operates in the Civil aviation sector,
utility vehicle segment in specifically, the manufacture of smaller civil aircraft
India. Also manufactures
passenger cars. Infrastructure and Real Estate
Its tractors are sold in six
continents. It has acquired
plants in China and the How many employees does the
United Kingdom, and has organization employ? Who are the
three assembly plants in the
USA
organization’s major stakeholders? Do the
goals of various groups’ conflict? Which
Now, Inorganic growth forms
a key part of the group’s
stakeholder group’s goals receive priority
growth strategy. Mergers in your organization? Does the
and Acquisitions are a core organization do a good job in managing
part of its plans.
its stakeholders?
11200 employees

Major stakeholders – The promoters themselves, other shareholders, the employees across various
countries, their governments, the customers (UV, LCV, Passenger Car, Two wheeler, Farmers, Telecom
companies, Indian Military, etc.), the society at large (represented by environmental concern groups
and the like), and the suppliers and the creditors.

2 Organizational Structure, Design & Change: Mahindra Group


Aliquam
How do the
organization’s
managers judge dolor. its
effectiveness?
What goals,
standards, or
targets are they
using to evaluate
byline performance?
LoremHow Ipsumwell is the
organization doing
when judged by
the criteria of
Most of the groups have their goals well aligned in the long
term. Multiple interrelationships between itself and its control, innovation,
customers only serve to strenghten this bond. One example is and efficiency?
British Telecom’s (BT Group owns 31% in Tech Mahindra and
is also the largest customer, accounting for 46% of its
revenue). However, conflicts continue to exist, some of them
The organizational managers judge
seemingly irreconcilable, like those between the
its effectiveness by keeping tabs on
environmental groups and itself, and the launch of the Scorpio
the bottom of the pyramid and
in the US getting delayed with the government there filing
measuring the success directly
several legislations regarding the matter.
attributable to the young minds in
The customer is purportedly the group whose goals and the organization. The approach of
requirements receive priority in this organization, borne out incremental innovation and
by its Mission Statement, which is “To Enable people to rise”. serendipitous bursts of radical
Their purpose, as stated in their own words is “We exist and change relied upon by Anand
prosper only because of the customer” Mahindra means that the company
hardly follows any fixed or
It does manage its stakeholders fairly well, having consistently structured measures of
created value for its shareholders over the years while also organizational effectiveness, in
delivering on its promises of Social Responsibility through keeping with its decentralized
various initiatives in the fields of education (Nanhi Kali, Pride structure. The only apparent
Schools), environment (zero water waste automobile factory indicators of organizational
at Chakan, LEED-certified Mahindra Lifespaces residences), effectiveness are the successes that
health and numerous other CSR measures. Its long and come to symbolize the vindication
extensive collaboration with the government in key sectors of the company’s approach, a.k.a
like Defence and Security is further proof of its success. Years the Scorpio launch in 2002
of continuous growth and development while maintaining a following years of testing since
respectable image is the ultimate indicator of the company 1992.
having managed to strike a balance between its various
stakeholders.

3 Organizational Structure, Design & Change: Mahindra Group


Draw an organizational chart of the top management in your
organization. Write down the names of the top managers and the
positions they occupy. What is the span of control of the CEO? Is
this span appropriate, or is it too wide or too narrow?

4 Organizational Structure, Design & Change: Mahindra Group


C.P Gurnani : CEO Raghunath Murti : President
Zhooben Bhiwandiwala : Executive VP and Ruzbeh Irani : Executive VP
Managing Partner Bharat Doshi : Group CFO
Ramesh Iyer : Managing Director Anita Arjundas : CEO
Ramesh Ramanathan : Managing Director The span of control of the CEO of Mahindra &
Harsh Kumar : Managing Director Mahindra is 14. This is an acceptable width
Pawan Goenka : President considering that the subordinates themselves
Rajeev Dubey : President are very senior and are capble of taking their
Ulhas Yargop : President own decisions. It is in keeping with a
Hemant Luthra : President decentralized structure.

How differentiated is your organization? Is it Mahindra is a highly


differentiated organization
simple or complex? List the major roles, because of the technical
functions, or departments in your expertise required in the
manufacturing industry
organization. Does your organization have Mahindra exploits the
many divisions? If your organization division of labour to gain
engages in many businesses, list the major cost leadership in the
industry. It is a complex
divisions in the company. organization owing to the
multiple sectors that
Mahindra operates in and
Information Technology the wide variety of products
FUNCTIONS

DIVISIONS

Aerospace and services it offers.


Aftermarket
Agribusiness
Mahindra is a highly
differentiated
Automotive
organization
Strategy & Brand Components
Compliance Consulting Services
Department Defence
Finance Energy
Human Resources Farm Equipment
Management Financial Services &
Information Systems Insurance
Industrial Equipment
Leisure & Hospitality
Logistics
Real estate
Retail
Two Wheelers
5 Organizational Structure, Design & Change: Mahindra Group
How has your organization responded to the
design challenges? (a) Is it centralized or
decentralized? How do you know? (b) Is it
highly differentiated? Can you identify any
integrating mechanisms used by your
organization? What is the match between the
complexity of differentiation and the complexity
of the integrating mechanisms that are used?
(c) Is behavior in the organization very
standardized, or does mutual adjustment play an
important role in coordinating people and
activities? What can you tell about the level of
formalization by looking at the number and kinds
Creativity & of rules the organization use (d) Does the
informal organization play an important part in
Customer influencing the way members behave? How
Satisfaction can you tell?

Mahindra & Mahindra underwent a major business process restructuring in 1991 from a bureaucratic
structure to a highly decentralized & flexible one. This was done to improve efficiency in business, to
improve decision making. From interacting with current and former employees it was found that at
each level initiative and creativity are encouraged.

Also the employees are encouraged to take decisions regarding their own work responsibility which
makes them feel important and empowered. Mahindra has a federation structure, which has various
SBU’s under it. These SBU’s have decentralized decision making authority which makes these
organizations focussed on their individual goals, hence keeping them nimble and profit centric.

Mahindra is highly differentiated because of the sectors it operates in (aerospace, defence, energy)
require division of labour and depends upon the degree of specialization achieved by the employees.
With the use integrating mechanisms like cross functional teams and the shadow boards introduced
in 2003, a new circle in the organisation structure was added to Mahindra companies to give young
managers a voice at the highest levels of decision-making.
These boards were asked to think of themselves as another management committee. They were asked
to choose three to four subjects, deliberate on them for two years and make recommendations. Those
recommendations would be taken up by the senior management.

Many of the young managers who have spent time on shadow boards have seen their careers fast-
tracked. According to Anand Mahindra "They provide a fresh source of ideas from the 'front line' of
the businesses, they foster a feeling of participation in important decision-making, and they provide
top management with a periscope into the fresh and young talent in the group."
Years ago, Unilever and General Electric introduced the concept of shadow boards, but they found it
difficult to sustain it, as their senior managements didn't get involved. At the Mahindra group, the
chairman Keshub Mahindra and Anand Mahindra — threw their weight behind the concept, and got the
senior management involved.

Again Mahindra being a federation has a matrix structure with the use of cross functional teams. These
teams require Mutual adjustment from the team members. These CFT’s are used for the brainstorming of
every new project and also in the implementation phase. This mutual adjustment by various members
leads to serendipitous creative ideas. For example Mahindra was in the process of an incremental
innovation to create a vehicle that seated 15 passengers instead of 12.

In the process, a 26-year-old product designer came up with a concept for an entirely new vehicle called
"Scorpio," which has become one of India's best-selling vehicles. This invention came about without
direction or input from management; it was born solely from serendipity and creativity.

While taking a look at the level of formalization in Mahindra, we can divide Mahindra into two separate
blocks. The first block of production processes is highly standardized and has standard operating
procedures, the workman have high degree of formalization imposed on them.

On the other hand the managerial hierarchy have a more lenient code of conduct and there is an element
of informality observed in the interactions between managers of various levels. This informality leads to
a freedom to express ideas which reinforces the organizations focus on innovation and R&D. This has also
helped in fostering a culture of working towards the organization goal.

How many levels are There are 9 levels in the organizational hierarchy, starting from
level 0 and going upto level 8. The level 0 is the level of the CEO. As
there in the we go lower in the hierarchy the levels are divided into operation
organization’s and managerial bands. So it can be classified as a tall organization.
hierarchy? The three main problems associated with tall hierarchies are:
Communication problems, motivational problems and bureaucratic
Does the organization costs. One of the problems that Mahindra faces which can be
experience any of the attributed to its tall hierarchy is that if a person joins the
organization as a level 8 officer it is very tough to reach a level 2 or
problems associated level 1. Even though the promotion and other incentives are good in
with tall hierarchies? the organization but the promotional curve flattens after reaching a
certain level.
Which ones? What is
the span of control of This can be taken as a motivational problem associated with the
organization. The span of control of the CEO is 10.it is widely
the CEO? Is this span accepted that the span of control of the CEO should not exceed 6 top
appropriate, or is it executives, considering this rule the span of the CEO in Mahindra is
too wide or too wide.

narrow?

7 Organizational Structure, Design & Change: Mahindra Group


Does your analysis lead you to think that
your organization conforms more to the
organic or to the mechanistic model of
organizational structure? Why?

The organization Mahindra is present in a wide variety of


fields from machinery intensive fields like steel, automotive
and farm equipment, systech to service industry like the
financial services and the hospitability industry to IT sector
with Tech Mahindra Satyam. Mahindra cannot be classified
as an organic or a mechanistic organization because of the
diverse verticals it operates in, as it operates in many
In 2009, Forbes industries each one exerts its own influence on the
ranked Mahindra structure of the unit.

among the top 200 Though each of these units have separate decision making
and goal setting powers, which keeps these units agile and
most reputable receptive to external change, so on the whole Mahindra is
companies in the much more organic than other organizations of its size. The
verticals operating in services industry and the IT sectors
world. are more inclined towards an organic structure; these fields
require a business to have a small response time to outside
changes.

The Research & Development function across Mahindra has


an organic structure. Also the machinery intensive fields
are not typically mechanistic in structure, i.e. assembly line
manufacturing system. They are more of a continuous
marketing system known as cellular manufacturing, which
is an integral part of lean manufacturing systems. Cellular
Manufacturing is based upon the principals of Group
Technology, which seeks to take full advantage of the
similarity between parts, through standardization and
common processing.

The goal of lean manufacturing is the aggressive


minimization of waste to achieve maximum efficiency of
resources.

8 Organizational Structure, Design & Change: Mahindra Group


What type of structure (for example, functional, product division,
multidivisional) does your organization have? Draw a diagram
showing is structure, and identify the major subunits or divisions in the
organization. Why does the company use this kind of structure?
Provide a brief account of the advantages and disadvantages
associated with this structure for your organization. Can you suggest
a more appropriate structure that your company might adopt?
By 1994, the Group had become so diverse that it undertook a fundamental reorganization, dividing
into six Strategic Business Units: Automotive, Farm Equipment, Infrastructure, Trade and Financial
Services, Information Technology, and Automotive Components (known internally as Systech).

Strategic Business Units

As M&M became very large it restructured as a means of revitalizing the organization. Growth of a
business was accompanied by a growth in bureaucracy, as positions are created to facilitate
developing needs or opportunities. Continued changes in the organization or in the external business
environment made this bureaucracy a hindrance rather than a help, not simply because of the size or
complexity of the organization but also because of a sluggish bureaucratic way of thinking. One
approach to encourage new ways of thinking and acting was to reorganize parts of the company into
largely autonomous groups, called strategic business units (SBUs). Such units generally were set up
like separate companies, with full profit and loss responsibility invested in the top management of
the unit-often the president of the unit and/or a senior vice president of the larger corporation. This
manager was responsible to the top management of the corporation.

Minimizes problems Increased expenditure


ADVANTAGES

DISADVANTAGES

associated with sharing invited through doubling of


resources across functional operations, personnel, and
areas, investments,
Quick response to Difficulty in maintaining a
environmental change, uniform corporate image,
Increased focus on Dysfunctional antagonism
products and markets, amongst divisions might
Facilitates development if detract from in general
general managers, and corporate performance,
Increases operational and Over emphasis on short
strategic control, allowing term performance, and
corporate level executives Distortion of information.
to deal with strategic issues.

9 Organizational Structure, Design & Change: Mahindra Group


Concept - SBUs

A systematic technique of grouping the business of a multi-business company, which assists in strategic
planning. An SBU is a grouping of linked businesses that can be taken for strategic planning separate from
the rest of the businesses. Businesses/Products inside an SBU entertain similar strategic planning action and
priorities. The job of segregating and analyzing the group of the business assortments, and then
reorganizing them into separate independent entities. Products/business linked from the viewpoint of the
function are assembled as a separate SBU. Distinct products and businesses are alienated. Grouping of the
business on the SBU lines helps in strategic planning. In the basic factors like objectives, missions, etc, one
SBU is distinct from the other. SBU will have its own distinct strategy and will possess its own set of
competitors.

Analyze the effect of the forces on the complexity, and dynamism of


the environment. From this analysis, how would you characterize the
level of uncertainty in your organization’s environment? How has your
organization designed its structure to match the environment in
which it operates? For example, how do its degree of differentiation
and its use of integrating mechanisms reflect the uncertainty of its
environment?

10 Organizational Structure, Design & Change: Mahindra Group


The different Sectors of the Mahindra Group cover a wide
spectrum of industries from Tractors to Information
Technology, from Automobiles and Two Wheelers to
Airplanes, from Financial services and Holidays to Defence
and Infrastructure. An investor in M&M has the benefit of
the Group’s involvement in all these Industries.

Risks and Concerns

Automotive & Farm Sectors

 Competition
Given that the Indian Automobile Industry is expected to
be one of the fastest growing markets in the world,
many global players are significantly expanding their
presence in India. There is a concern that this will result
in an ever increasing level of competition and intense
“We are many pressure on the profit margins of all participants.
 Regulations
companies Stringent regulatory norms are being introduced to
safeguard the environment, especially in the area of
united by a emissions. Many of these measures are likely to result in
common an increase in costs that cannot always be passed on to
customers through price increases in a highly
purpose – to competitive market environment.
 Fuel prices and alternate fuels
enable people Fuel prices are an important element of the overall cost
to rise. of ownership for vehicles and tractors.

Mahindra Tech

 Revenues and profit could decline if there is a decline in IT services spending in the global
telecommunications industry.
 A small number of clients account for a large proportion of revenues, and the loss of any of these
clients could adversely affect business.
 Major events affecting our clients, such as bankruptcies and acquisitions, could adversely impact
business.
 Revenues and expenses are difficult to predict and can vary significantly from quarter to quarter,
which could cause the price of Equity Shares to fluctuate.
 International expansion in countries and regions where it has limited local experience may prove
to be challenging.
 Success depends in large part upon the management team and the loss of any member of this
team could negatively impact business.

11 Organizational Structure, Design & Change: Mahindra Group


Mahindra Financial Services

 The growth prospects of the Company’s business, including the quality of assets and the ability to
grow asset portfolio are influenced by the growth rate of the agricultural sector and the
development of rural infrastructure. The level of loans made, recovery of loans and demand for
vehicles and tractors are all affected by these factors. Any slow down in the Indian economy, the
growth of vehicle and tractor sales and in the agricultural sector (particularly due to abnormal
monsoons), coupled with inflationary pressures or any change in Government policy could
adversely impact the performance of the Company.
 The Company is exposed to interest rate risk principally as a result of lending to customers at fixed
interest rates and in amounts and for periods, which may differ from our funding sources (bank
borrowings and debt offerings). Interest rates are highly sensitive to many factors beyond the
Company’s control, including the monetary policies of the RBI, deregulation of the financial sector in
India, domestic and international economic and political conditions, inflation and other factors.

Mahindra Hospitality

 Macroeconomic Risks - The global economic slowdown affected India and the hospitality industry.
Although the situation has improved considerably, such cyclical downturns may continue to
resurface in the future. Besides, inflation continues to be on the high side. If the situation persists, it
might adversely affect consumer confidence and impact the ability of people to spend on
discretionary items, affecting the growth of the industry.
 Operational Risks - Given the inherent nature of the product - which offers flexibility in terms of
usage across various resorts and seasons - the Company may not be able to make available the
choice of location/dates desired by the customers on every occasion, which could result in
dissatisfaction. To mitigate these risks, the Company invests significant resources in systems and
processes to ensure quality of service and overall experience of the customers.
 Financial Risks - The Company’s business involves significant investments in building resorts for its
operations. These expose the Company to risks in terms of timely and adequate availability of funds
at competitive rates to finance its growth.

Multidivisional Structure: SBU Form


• Strategic business unit (SBU) form is a structure consisting of three levels:
o Corporate headquarters
o Strategic business units (SBUs)
o SBU divisions
• Divisions within SBUs share
o Products, or markets, or both
• Divisions within SBUs develop economies of scope and/or scale by sharing product or market
competencies.
o Each SBU is a profit center controlled and evaluated by the headquarters office.
• Used by large firms

12 Organizational Structure, Design & Change: Mahindra Group


o Can be complex due to an organization’s size and diversity in products and markets.
• Divisions are independent and separate for financial evaluation purposes
• Divisions retain strategic control, but cash is managed by the corporate office
• Divisions compete for corporate resources

• A structure in which there is complete independence among the firm’s divisions


o Divisions do not share common corporate strengths.
o Because strengths aren’t shared, integrating devices aren’t developed.
o Organizational arrangements emphasize divisional competition rather than cooperation.
• Three benefits from the internal competition
o Flexibility—corporate headquarters can have divisions working on different technologies to
identify those with greatest future potential.
o Challenges the status quo and inertia.

Cooperative M-Form SBU M-Form

Structural (Related Linked / Diversified


(Related Constrained Strategy)
Characteristics Strategy)

Centralization of Centralized at
Partially centralized
operations Corporate office

Use of integration
Extensive Moderate / Low
mechanisms
Divisional Use a mixture of subjective
Emphasize subjective (strategic)
Performance (strategic) and objective
criteria
Appraisals (financial) data
Mixed linkage to corporate, SBU,
Divisional incentive Linked to overall corporate
and divisional performance
Compensation performance

MAHINDRA BUILDS THREE THINGS:


PRODUCTS, SERVICES, AND POSSIBILITIES.

13 Organizational Structure, Design & Change: Mahindra Group


A US $7.1 billion
multinational
group based in
Mumbai, India,
we are more
than 112,000
people in 79
countries.

Draw a chart of the main inter-organizational linkage


mechanisms (for example, long-term contracts, strategic
alliances, mergers) that your organization uses to manage its
symbiotic resource interdependencies. Do you think the
organization has selected the most appropriate linkage
mechanisms? Why or why not?

According to Mahindra & Mahindra, Mergers and Acquisitions (M&A) form the basic growth mantra.
With greater exposure to markets abroad and increased competitiveness, Corporates have
successfully faced the challenges of competing on foreign front and have achieved success and self-
confidence.

Inorganic growth forms a key part of the Group’s basic philosophy of enhancing global reach and
competitiveness. For the Mahindra Group, which is fast establishing its international footprint,
Mergers & Acquisitions are at the core of the growth strategy, they have now become a continuous
process.

In order to respond to these challenges, a special Merger & Acquisition Cell has evolved in the last
two years. It is notable that most organizations use the services of Investment Bankers, who are
specialists in arranging M&A transactions. However, with its in-house expertise, M&M’s M&A Cell
itself most often carries out such activities traditionally carried out by Investment Bankers
themselves, thus saving millions of dollars for the organization.

Mahindra and Mahindra Limited - Telecom and software

Take the case of Tech Mahindra’s acquisition of Axes Technologies, which has brought in
complementary capabilities, deep domain knowledge and access to two large clients in an
unexplored segment in the Telecom industry. This acquisition enables M&M to enhance their
offerings to leading Telecom Equipment Manufacturers, which is a major segment of their chosen
market.

14 Organizational Structure, Design & Change: Mahindra Group


Mergers and Acquisitions at M&M

M&M’s acquisition of 51% of SAR Automotive Transmission Products Private Ltd., Gujarat to form a
joint venture Demerging of the Chakan Division of Amforge Industries Ltd. and its subsequent
merger with Mahindra Automotive Steel Ltd. M&M’s acquisition of 88.41% stake in Plexion
Technologies (India) Pvt. Ltd. Ongoing International deals include acquisitions in China, Germany,
Poland and the US.

Many studies have aimed to contrast the value of a pure organic business growth strategy versus
the more recent trend of growth through mergers/acquisitions. What has been revealed
demonstrates that M&A is only becoming a more attractive route; currently alliances account for 15
– 26% of median company value. Additionally, they represent over 41% market value for up to 25%
of companies.

As markets consolidate, competition for market share and thus profit margins become tighter and
there become fewer opportunities for high rates of return with organic business growth. 72% of
M&A transactions are geared towards enabling market expansion or diversification strategies. The
M&A route is a much lower risk and far speedier solution compared with building an equivalent
significant position in a new region or market through internal growth mechanisms.

By its’ very nature organic growth is becoming less and less attractive to companies, with it’s high
internal investment and slow return. In addition, the company becomes more highly geared, as debt
is normally used to finance growth activities. By contrast, the majority of acquisitions are
complementary expansions, closely aligned to the acquiring party’s existing business operations -
therefore any risk is greatly reduced. In fact a major portion of the M&A process comprises the
analytics of optimizing integration and suitability of business functions and cultures of the two
parties.

15 Organizational Structure, Design & Change: Mahindra Group


What core competences give the organization a competitive
advantage? What is your organization’s principal business-level
strategy: low cost or differentiation? How successfully is the
organization pursuing this strategy? In what ways does it need to
improve its core competences to improve its competitive
position? Is it pursuing one of the other business-level strategies,
such as product development or market development? In what
ways do your organization’s structure matches its strategy? Is
there a good match? In what ways could the match be
improved? Is the organization experiencing any problems with its
structure?
Around the world, there is a very conventional view of conglomerates and their strengths and
fragilities. The basic problem with a conglomerate is that it has multiple businesses under one legal
entity. Mahindra & Mahindra does not view itself as a conglomerate. There is a financial theory
behind why conglomerates are not meant to be optimum structures; it has to do with capital asset
pricing. When investors get more sophisticated, their essential tenet is: we do not need
management to diversify for us; we can create our own portfolio.

M&M said that it was going to give investors a federation of focused companies, so they created six
sectors. Because some of these companies are fledgling, as they grow, they shall be will listed; that
is a commitment.

According to Mahindra Group, there is logic for groups to exist. What then constitutes a federation?
It is a common way of doing business… the whole logic that (Tarun) Khanna and (Krishna) Palepu
talked about. The goal is to convert the conglomerate discount that people talk about into a
federation premium.

To develop “Federation Premium” M&M believes in developing leaders for tomorrow. Given the
large and intensely competitive domestic market with discerning and value-conscious customers,
most of modest means, M&Ms business leaders have of necessity learned to be highly creative in
developing their value propositions. M&M’s business leaders are trained to invent entirely new
product and service concepts to satisfy the needs of demanding consumers and to do so with
extreme efficiency.

We believe that the following are Mahindra & Mahindra’s competitive strengths:

Leadership development

– Global Leadership Program: International Consortium

– Senior Leadership Program: Domestic Consortium

– Mahindra Way: Lateral Recruit Induction Program

– Action Leadership Program

– Global Program for Management Development: Michigan Business School

16 Organizational Structure, Design & Change: Mahindra Group


Towards Mahindra Corporate University

Harnessing the Power of IT

17 Organizational Structure, Design & Change: Mahindra Group


What international strategic alliances is your organization engaged
in? Draw a diagram showing these relationships. What advantages
does your organization obtain from these inter-organizational
arrangements? How important are these arrangements to its global
expansion strategy? What management problems are associated
with maintaining these strategic alliances?
Mahindra group, due to its diverse business interests in different geographies, has inked several strategic
alliances in varying business verticals. These alliances vary from contractual agreements to joint
ventures. The important international strategic alliances that have presented Mahindra group with a
comprehensive strategic advantage have been listed below.

Alliance Details
Partner
WIN Tech Mahindra inked a formal contract with WIN, a mobile content provider based in
the UK. The deal will allow Tech Mahindra access to WIN’s capabilities in the mobile
platform that will be leveraged in the Asian markets.

CA Mahindra Satyam and CA associates forged a partnership to combine the different


Technologies focuses of the two companies to offer customer integrated IT solutions.

Celona The alliance with Celona Technologies allowed Tech Mahindra access into the
Technologies telecom industry space of developed markets.

HZPC The deal inked with HZPC allowed Mahindra to go beyond farm equipment and begin
production, marketing and supply of branded seeds.

Nippon Steel Mahindra Intertrade in alliance with Nippon Steel, set up a steel distribution centre
in Sharjah. This was the first venture of Mahindra Intertrade to be set up outside
India.
East India Although an equity stake in the East India Company does not further the strategic
Company interests of the Mahindra group, it can be considered more of a ‘prestige’ buy

Servista Tech Mahindra’s minority stake in Servista, a European Systems Integrator, will
allow the company a foothold in European markets. It will also enable Mahindra to
nominate a director to the board of directors of Servista

Motorola CanvasM, was the result of a joint venture between Tech Mahindra and Motorola.
The newly formed entity will develop applications for telecom subscribers. It was the
first foray for Mahindra group into the highly competitive US telecom space.

Cisco The most recent deal of the Mahindra group (8th March, 2011) will allow Tech
systems Mahindra technical competencies to develop innovative internet based products as
well as implement go-to-market strategies for any jointly designed product.

18 Organizational Structure, Design & Change: Mahindra Group


19 Organizational Structure, Design & Change: Mahindra Group
Do managers and employees use
certain words and phrases to
describe the behaviour of people in
the organization? Are any stories
about events or people typically used
to describe the way the organization
works? Do you have any other
impressions of the organization’s
culture and norms and values that
seem to explain the way the
organization operates?
From interactions with employees of Mahindra & Mahindra (past as well as current), it was found
that one cultural artifact that is common throughout the group, in all business divisions is the
absence of the ‘Sir/Madam’ culture. All employees are encouraged to address their superiors on a
first name basis. Although this is common in most modern organisations, it merits special mention
especially in the case of Mahindra & Mahindra. This is due to the fact that the organization is an
extremely diverse one with a focus on the manufacturing sector. Most organisations in the
manufacturing sector do not follow this system and subordinates still address their superiors with
the appropriate title. However, Mahindra is an exception where even young Graduate Engineer
trainees are encouraged to address their superiors on a first name basis.
A common story that is told in the Mahindra automotive division tells the story of how employees
in the organization come together in a time of crisis in order to achieve seemingly impossible goals.

The incident occurred sometime in the late 90’s. There was an acute shortage for engines and the
production was running at its lowest setups. There was a sudden requirement that came up – an
export order. The head of the sector committed on the order without taking into consideration the
crisis situation. By the time he realized this, it was too late. The problem was that the order was
very critical for the company and pulling out after committing would hit hard on the reputation
factor. Thus the sector head apparently requested the plant in charge to satisfy the order at any
cost. This was taken up by the plant with full vigor and was decided that this order will be fulfilled
no matter what. Time was also a constraint as they had a limited timeframe in which to complete
the manufacturing. With a lot of help from the officers and employees, the plant was able to meet its
demand. It is said that officers were even stationed at various suppliers in order to make sure that
the plant receives the material as soon as it was ready. Due to the lack of time in their hands,
employees, officers and even mid level managers were involved in assembling engines day in and
day out. The major positive out of the whole scenario was that the employees had a feeling of
personal responsibility to successfully complete this task. With the untiring efforts of the
management and employees of the plant, the company was able to export the vehicles well in time.
This feat is considered as one of the defining moments of the organizational culture that exist in
Mahindra & Mahindra, where the management and employees were able to work together towards
a goal that seemed impossible in the beginning, and successfully complete it.

20 Organizational Structure, Design & Change: Mahindra Group


How does the organization socialize employees? Does it put them
through formal training programs? What kind of programs is used,
and what is their goal? What beliefs and values seem to characterize
the way people behave in the organization? How do they affect
people’s behavior?
Due to the diverse business sectors that Mahindra and Mahindra is present in and due to the large
number of companies that the group operates through, there will be multiple induction programmes
in operation in various companies.

For instance, the automotive division of Mahindra & Mahindra conducts a 3 month induction
programme for all its recruits annually at its plant in Nasik, Maharashtra followed by 9 months of on-
the-job training at various production facilities across the country.

On the other hand, Tech Mahindra conducts a 3 month training programme for various batches of
students every year in different cities.

Due to the diverse nature of the various induction programmes, for the purpose of this study, focus
shall be given to the induction programme conducted for the international management trainees that
are recruited for the Mahindra Group companies. This is the most intensive and detailed training
programme for any recruit in any Mahindra group Company, and is open only for students of select
Ivy league institutes of the USA.

Employees are recruited with the designation of “Global Management Recruit”. All GMRs undergo
training together in a single batch. The programme extends for 24 months, with a possibility of
extension.
The training consists of three stages, namely :

Since recruits of this programme eventually enter middle management positions in one of the
various group companies, they are put through a rigorous process that tests their theoretical
knowledge and creates avenues for its application. Throughout the programme, the recruits are
assigned a mentor who is a business graduate from an Indian business school. The primary aim of
this is to instill the tenets of Indian corporate culture in the recruits. The two goals that the
organization aims to inculcate in its recruits through this programme are innovation and
independent thinking.

21 Organizational Structure, Design & Change: Mahindra Group


What advantages and There are several facets of the culture at Mahindra &
Mahindra that have enabled the organization to reach it’s
disadvantages are current position as a global conglomerate. However, it is not
associated with the always possible to classify the aspects of the culture as
advantages or disadvantages. From the interactions with the
organization’s culture? employees of the organization, one aspect of the corporate
How could the culture be culture that really stood out is the unity that exists between
improved? the management and employees when it comes to achieving
goals, however impossible they may be, especially in a time of
crisis. A classic example of this is the instance mentioned earlier, when, during a crisis even the mid-
level managers were on the shop floor assembling engine blocks. Another aspect of the culture is the
penchant for innovativeness and creativity. Employees are encouraged to express their ideas and
suggestions freely. In the automotive division of Mahindra, it is common knowledge that the
development of the Mahindra Scorpio was done by an independent cross-functional team of just 12
people. This would have been impossible to implement had the organization disapproved of
employees managing high level decisions and using their own creative input.

One of the aspects of the culture, which although cannot be considered a disadvantage, has led to
problems for Mahindra in the past, especially in its manufacturing facilities, is the informal nature of
relationships between superiors and subordinates. There have been instances of labour unrest in
production plants, which may be attributed to employees not taking their superiors seriously. This is
especially true of the automotive division factories in Nashik, Maharashtra.

This aspect of the culture may be improved by increasing the power distance in the lower levels of
the organizational hierarchy, especially in a manufacturing set-up. Although this is classically
considered a negative attribute, it is our opinion that a certain degree of power distance is necessary
in the lower levels of any organisation’s hierarchy.

22 Organizational Structure, Design & Change: Mahindra Group


In Mahindra, both people as well as the organizational What do you think has
structure play their share in impacting the organization’s
culture. But on the whole the part played by people the strongest impact on
outweighs the other. A major trend that we see in the the organization’s culture:
organization is the way people interact with each other, the
type of relation that bosses have with their sub-ordinates
the people,
etc. There is always an element of informality in the organizational structure?
interactions and it is found that this virtue is transferred to Explain. What is the
the new employees when they join. A very good example of
this could be the Induction programs that are organized for relationship between the
the Graduate Engineer Trainees and Management trainees. organization’s structure,
These programs are so designed that the new recruits get to
understand the way the organization functions and also
which you analyzed
instill these ways into their own. before, and the
organization’s culture?
According to an ex-employee of the organization who is now working with another firm : “ It is not
that Mahindra has a great structure, but the impressive culture that they have been able to maintain is
mainly due to the way people have been able to cultivate and carry it forward. This difference can be
seen very evidently in my current organization where even though the structure is more appealing, the
culture has not been able to develop as it has in Mahindra.”

As far as the organization structure is concerned, Mahindra has its shortcomings. The structure is
designed such that it does not create much room for horizontal development. Work is very
much confined to a particular department or project. In addition to this certain flaws in the
recruitment processes were also pointed out by some senior managers. An eg. of this is the R&D of
the Auto sector. Even though this is a very important function as far as the sector is concerned, there
is no separate recruitment process for this function. Employees are recruited from the normal
batches and possess basically the same competency as the shop floor officer in most cases. These
incidents have had their effects on the culture aspect, especially in the concerned departments. Thus
it can be clearly seen that people have more of an impact on the culture of the organization.

23 Organizational Structure, Design & Change: Mahindra Group


As mentioned before, the organization has more of an organic structure than mechanistic.
There is de-centralization of decision making power wherever possible. This has helped a lot in
shaping the very pleasant culture that exists, both work and otherwise. Each division is
independent and takes care of only their own business. Most of the operational and functional
decisions in each division are taken by the concerned managers and the top management involves
primarily only in the group level decision making. The freedom and the flexibility that middle level
managers enjoy in this sort of a structure improve their efficiency and this efficiency is directly
transferred to their respective department. The structure also improves the boss – subordinate
relation to a large extent.

Analyze the sources of power of the principal subunits, functions,


or divisions in the organization. Which subunit is the most
powerful? Identify any ways in which the subunit has been able
to influence decision-making in its favor. To what degree are the
organization’s strategic and operational decisions affected by
conflict and politics?
The various divisions or businesses that Mahindra group is into have already been mentioned
before. Of these the Auto sector and Farm equipment sector are the major businesses and
maximum profits are derived from them.

Auto Sector : Mahindra is one of the biggest auto manufacturers in the country and a market
leader in the UV segment. As a result this business is very important for the group as such. Their
main source of power is the way the sector has been performing, the growth rate and the profits
from the segment. The biggest competency of this business is its classy manufacturing facilities
and processes that have incorporated practices like frugal engineering that has enabled the
production of quality, low cost automobiles. Cost effectiveness is a very important aspect in this
segment and the Mahindras have been able to work everything to their advantage.

Farm Equipment Sector : Mahindra is the world leader in the farm equipment sector. The brand
value that is tagged with Mahindra products in this market is huge. The sector has been able to
leverage on this and extent their presence, globally as well as in the domestic market on a large
scale. FES as it is popularly known as within the organization is aware of the dependency that
Mahindra group has on it and thus have been able to use this as a major source of power.

The Auto sector is the most powerful among all the divisions in Mahindra.

Auto sector has been able to influence decision making to a large extent. Technology up
gradations, new manufacturing facilities etc are areas where these influences can be seen very
predominantly. Because of the growth that is being achieved and the future prospects that is in
store for the sector, it has been able to allure the top management and influence decisions in its
favour. The recent merging of the two sectors and the new sector (AFS) being headed by the Auto
sector President reinforces this conclusion.

24 Organizational Structure, Design & Change: Mahindra Group


Conflict and politics have played their part in the decision
making processes. There have been many instances where
certain sector level decisions had to be changed and
modified. The launch of Mahindra Maxximo is one such
instance where the project got delayed by almost a year just
because of the ego clashes that the design head had with the
project lead. On a positive note even though such incidents
pop up once in a while, from an overall perspective, it can be
found that the level to which conflict and politics affect the
strategic and operational decisions in very low and to a
minimum.

What major changes The organization has been changing rapidly right from the
time of its founding. What started as a steel trading company
has your organization in 1945 expanded into manufacturing general-purpose
been pursuing over utility vehicles. Today, M&M is the leader in the utility
vehicle segment in India. Over the past few years, M&M has
time? What resources expanded into new industries and geographies, the latest
and capabilities has it being the two-wheeler segment by taking over Kinetic
been trying to Motors in India, stake in REVA Electric Car Company and
South Korea's SsangYong Motor Company in 2011.
improve?
Like any other organization, managing key resource
requirements, performance management systems, career
and succession planning have all been re-aligned to form
synergy with the company’s overall business strategy. The
objective was to grow leadership positions in the UV
and tractor market and developing successful
businesses in relatively new business areas like IT,
financial services, realty and infrastructure
development and also service industries like Club
Mahindra and also the early identification of potential
successors, and both formally and informally, beginning
to provide expanded responsibilities so that there is an
on-the-job development of a larger perspective and
understanding.

is an on-the-job development of a larger perspective


and understanding.

For the group, organizational restructuring posed the


greatest challenge keeping in mind the changing dynamics
in the business especially the tractor and automotive

25 Organizational Structure, Design & Change: Mahindra Group


division. The process of restructuring began by changing internal benchmarks of excellence to
global standards. To achieve these objectives the company began a full reassessment of
organization and management structure with the help of consultants like Mckinsey’s, Arthur
Anderson and Korn Ferry. A full-fledged assessment on competency Vs requirement was carried
out throughout the organization. The restructuring also led to the pruning of the staff. In 2001,
there were 3970 officers in 13 grades and levels which was brought down to 3400 officers in five
responsibilities namely strategic, executive, department/unit head, managerial and operational in
2003. This re-structuring also led to the birth of certain smaller business that concentrated on
certain competencies that could be utilized by the various businesses as well as by other firms,
one such example being Mahindra Engineering.

What this also resulted in was that it made a few gaps in the organization, which had to be filled at
the earliest. Most of these gaps were tried to be filled through promotions internally, but this
alone could not help the cause. This led the company to go in for a large scale recruitment of both
fresh managers right out of B-schools as well as roping in senior managers from other
organizations, enabling the company to induct a talent pool with rich background which was
suitable to the changing business requirements of the group.

Mahindra Satyam

Especially in recent times, most of the changes in organization have been due to the large number
M&A related activities that the company was into. Mahindra Satyam is an important case in this
context. Initially Satyam’s organizational structure was based on the system of silos. Each division
acted like a separate division. This system was capable of motivating leaders but made sure that
no one had a complete picture of everything that happened in the organization. Tech Mahindra is
trying to bring in a structure that is more transparent, which is the basis of any company structure
in the Mahindra family. An additional post called Chief Compliance Officer was also introduced.
Removing the element of formality between the employee and their bosses was also part of
Tech Mahindra’s plan. They wanted to de-centralize the decision making power, wherever
possible. The whole scheme was to bring in a level of confidence and comfort-ness in the minds of
the employees.

Merging of Auto and Farm Equipment sector

Another major change that the organization has witnessed is the merging of its Auto and Farm
Equipment sector into what is now called AFS (Automotive & Farm equipment Sector). The main
purpose of this merger was to remove the duplication of resources. It was observed that there
were a lot of common features in the functioning of the two sectors and that it would be much
more profitable and efficient to have a common pool of resources for both these businesses
under one management. Thus it was decided to unite the two sectors that, till then, were
functioning as two separate businesses of the group.

26 Organizational Structure, Design & Change: Mahindra Group


With the information that you have at your disposal, discuss (a) the
need for change, (b) obstacles to change, and (c) the strategy for
change in your organization. Does revolutionary or evolutionary best
describe the changes that have been taking place in your
organization? How successful have these change efforts been?
From the above analysis of the organizational dynamics of Mahindra, we have found a lot of good
practices as well as shortcomings that have helped the company become what it is, today. In this
section the focus will mainly be on the shortcomings. These can be broadly characterized with
regard to three major attributes.

1) Organizational structure: From the organizational chart of the top management, a fair idea
of the dimensions of the structure can be obtained. As such the span of control is well within
efficient levels considering the size of the group, the various businesses that they are into.
The only major concern here can be related to the height of the structure. As mentioned
before, the organization has an 8 level hierarchy; hence for someone joining in the lowest
level, it would impossible to reach to the top management in a life time. What stresses on
this concern is that often we find that not all the levels are relevant in every business. There
is thus a scope for combining a couple of these levels , thereby effectively reducing the
number of levels.
Some sectors have also had issues related to the workforce. Changes in the structure will
also need to address these areas. The management might have to bring in more transparency
with regard to the communications with the employees and union. This is very essential
because directly and indirectly, the company is dependent on them for each and everything.
Structural changes along with the necessary training for the employees and managers most
certainly look like the way forward.

27 Organizational Structure, Design & Change: Mahindra Group


2) Organizational strategy: The various strategies that the groups as well as each business units
have taken have been mentioned before. This included the strategy for new products as well as
markets. Here Mahindra has been able to identify very precisely what their core competency is.
They have been able to accept the fact that they are more of a cost player than a differentiator
and this realization has actually helped them in focusing on their strengths, involving
resources wherever required and keeping the customer requirements at the forefront. Though
the business level strategies will differ from business to business, the top management has
been able to keep the corporate level strategies clean and simple. One major concern that the
organization is having is that most of the strategies follow a fire-fighting approach. Though
there are standard processes and methods defined, they are not always followed. The
management itself maintains its focus on achieving results and the methodology is often
neglected. This can lead to inherent troubles like quality issues, process deviation, training
related discrepancies etc.

3) Organizational culture: As discussed earlier, the culture in Mahindra is very conducive for
personal development of the employees. The only concerns in this aspect could be the negative
side of informality among the employees and the management. Though informality to an extent
is very much essential, beyond a point the purpose gets defeated.

The biggest obstacle to these changes could be:

1. Ineffective change sponsorship from senior leaders


2. Resistance to the change from employees
3. Poor support and alignment with middle management

28 Organizational Structure, Design & Change: Mahindra Group


4. Lack of change management resources and planning

Of these the biggest, most certainly would be the resistance to the change from employees.

The implementation could follow a three level strategy.

 Situational awareness: It is very essential to understand the nature and depth of the
change. Questions like scope, who, what when etc. will have to be addressed. Along with
this we will also need to have a thorough understanding of the organization, its attributes
such that we can predict the impact of the change beforehand. Knowing the target group is
also important as this facilitates the knowledge of the nature of impact .

 Supporting structure : During the process of the change it is extremely essential for the
management to have a supporting effect on the changing dimensions. It is expected that the
leaders would build support mechanisms during the changeover phase and that
communications regarding the same is done effectively.

 Strategy analysis : This level would include activities like risk assessment, anticipated
resistance etc which also has to be taken care of by the change inducing authority.

On the whole it can be said that the organizational changes that have happened have followed an
evolutionary approach rather than a revolutionary one. The evolution from what had started as a
steel trading company to its current position as a global conglomerate is highly appreciable. The
leaders have been able to do a commentable job in this regard. They were able to foresee a lot in
to the future, analyse these readings and come up with strategies that ensured the survival and
growth of this organization. Though not all the change efforts have been received in a positive
manner, most of them could be implemented successfully resulting in its present stature. But all
said, it is equally essential to continue its path of bringing about changes according to the
dynamics of the environment to attain sustainability and positive growth.

29 Organizational Structure, Design & Change: Mahindra Group


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30 Organizational Structure, Design & Change: Mahindra Group