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Arjun Menon Shriya Kalra Vemuri Srikanth
B10073 B10110 B10118
Organizational Structure, Design & Change
What goods and services does it produce/provide? Describe the company’s organizational mission. Describe the way it has grown and developed.
Automotive - It is a leader in the utility vehicle segment and has a growing global presence in the automotive (acquired Ssangyong Motor Company) and the tractor businesses; Recently forayed into the two wheeler segment by taking over the Kinetic Motors; Also acquired controlling stake in REVA Electric Car Company; Farm Equipment - It designs, develops, manufactures, and markets tractors as well as farm implements; Financial - The Kotak Mahindra Group was established in1985 as a financial organization. In 2003, it was given the license to operate in the banking sector, prior to which it was Non-Banking Financial Company.
KC Mahindra JC Mahindra Ghulam Mohammad
Keshub Mahindra (Chairman) Anand Mahindra (Vice-Chairman & 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 forayed into manufacturing general-purpose utility vehicles, assembling the Willy’s Jeep. Established as jeep manufacturers, then moved into tractors and LCVs. Now the leader in the utility vehicle segment in India. Also manufactures passenger cars. Its tractors are sold in six continents. It has acquired plants in China and the United Kingdom, and has three assembly plants in the USA Now, Inorganic growth forms a key part of the group’s growth strategy. Mergers and Acquisitions are a core part of its plans.
Club Mahindra Holidays – Established in 1996. Offers Family Lifestyle holidays at various loactions across the world Mahindra Defence – This vertical has further divisions, one specializing in information security, the other a specialty business, focussing on meeting the needs of the Indian defence and security forces Mahindra Aerospace – Operates in the Civil aviation sector, specifically, the manufacture of smaller civil aircraft Infrastructure and Real Estate
How many employees does the organization employ? Who are the organization’s major stakeholders? Do the goals of various groups’ conflict? Which stakeholder group’s goals receive priority in your organization? Does the organization do a good job in managing its stakeholders?
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
Most of the groups have their goals well aligned in the long term. Multiple interrelationships between itself and its customers only serve to strenghten this bond. One example is 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 seemingly irreconcilable, like those between the environmental groups and itself, and the launch of the Scorpio in the US getting delayed with the government there filing several legislations regarding the matter. The customer is purportedly the group whose goals and requirements receive priority in this organization, borne out by its Mission Statement, which is “To Enable people to rise”. Their purpose, as stated in their own words is “We exist and prosper only because of the customer” It does manage its stakeholders fairly well, having consistently created value for its shareholders over the years while also delivering on its promises of Social Responsibility through various initiatives in the fields of education (Nanhi Kali, Pride Schools), environment (zero water waste automobile factory at Chakan, LEED-certified Mahindra Lifespaces residences), health and numerous other CSR measures. Its long and extensive collaboration with the government in key sectors like Defence and Security is further proof of its success. Years of continuous growth and development while maintaining a respectable image is the ultimate indicator of the company having managed to strike a balance between its various stakeholders.
How do the Aliquam organization’s dolor. managers judge its effectiveness? What goals, standards, or targets are they using to evaluate performance? byline LoremHow well is the Ipsum organization doing when judged by the criteria of control, innovation, and efficiency?
The organizational managers judge its effectiveness by keeping tabs on the bottom of the pyramid and measuring the success directly attributable to the young minds in the organization. The approach of incremental innovation and serendipitous bursts of radical change relied upon by Anand Mahindra means that the company hardly follows any fixed or structured measures of organizational effectiveness, in keeping with its decentralized structure. The only apparent indicators of organizational effectiveness are the successes that come to symbolize the vindication of the company’s approach, a.k.a the Scorpio launch in 2002 following years of testing since 1992.
Organizational Structure, Design & Change: Mahindra Group
Draw an organizational chart of the top management in your organization. or is it too wide or too narrow? 4 Organizational Structure. Design & Change: Mahindra Group . 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.
functions. This is an acceptable width considering that the subordinates themselves are very senior and are capble of taking their own decisions. It is in keeping with a decentralized structure. How differentiated is your organization? Is it simple or complex? List the major roles. or departments in your organization.P Gurnani Zhooben Bhiwandiwala Managing Partner Ramesh Iyer Ramesh Ramanathan Harsh Kumar Pawan Goenka Rajeev Dubey Ulhas Yargop Hemant Luthra : CEO : Executive VP and : Managing Director : Managing Director : Managing Director : President : President : President : President Raghunath Murti : President Ruzbeh Irani : Executive VP Bharat Doshi : Group CFO Anita Arjundas : CEO The span of control of the CEO of Mahindra & Mahindra is 14.C. Does your organization have many divisions? If your organization engages in many businesses. It is a complex organization owing to the multiple sectors that Mahindra operates in and the wide variety of products and services it offers. list the major divisions in the company. FUNCTIONS DIVISIONS Information Technology Aerospace Mahindra is a highly differentiated organization because of the technical expertise required in the manufacturing industry Mahindra exploits the division of labour to gain cost leadership in the industry. Design & Change: Mahindra Group . Aftermarket Agribusiness Automotive Components Consulting Services Defence Energy Farm Equipment Financial Services & Insurance Industrial Equipment Leisure & Hospitality Logistics Real estate Retail Two Wheelers Strategy & Brand Compliance Department Finance Human Resources Management Information Systems Mahindra is a highly differentiated organization 5 Organizational Structure.
According to Anand Mahindra "They provide a fresh source of ideas from the 'front line' of the businesses. With the use integrating mechanisms like cross functional teams and the shadow boards introduced in 2003. which has various SBU’s under it. These SBU’s have decentralized decision making authority which makes these organizations focussed on their individual goals. Also the employees are encouraged to take decisions regarding their own work responsibility which makes them feel important and empowered. hence keeping them nimble and profit centric. they foster a feeling of participation in important decision-making. 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. From interacting with current and former employees it was found that at each level initiative and creativity are encouraged. and they provide top management with a periscope into the fresh and young talent in the group." .Creativity & Customer Satisfaction 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. They were asked to choose three to four subjects. deliberate on them for two years and make recommendations. This was done to improve efficiency in business. Mahindra is highly differentiated because of the sectors it operates in (aerospace. Mahindra has a federation structure. defence. Many of the young managers who have spent time on shadow boards have seen their careers fasttracked. 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 of rules the organization use (d) Does the informal organization play an important part in influencing the way members behave? How can you tell? Mahindra & Mahindra underwent a major business process restructuring in 1991 from a bureaucratic structure to a highly decentralized & flexible one. Those recommendations would be taken up by the senior management. These boards were asked to think of themselves as another management committee. to improve decision making. energy) require division of labour and depends upon the degree of specialization achieved by the employees.
This can be taken as a motivational problem associated with the organization. While taking a look at the level of formalization in Mahindra. As we go lower in the hierarchy the levels are divided into operation and managerial bands. a 26-year-old product designer came up with a concept for an entirely new vehicle called "Scorpio. The span of control of the CEO is 10. 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. These teams require Mutual adjustment from the team members. Unilever and General Electric introduced the concept of shadow boards. These CFT’s are used for the brainstorming of every new project and also in the implementation phase. The first block of production processes is highly standardized and has standard operating procedures. This informality leads to a freedom to express ideas which reinforces the organizations focus on innovation and R&D. and got the senior management involved. So it can be classified as a tall organization.Years ago. The level 0 is the level of the CEO. One of the problems that Mahindra faces which can be 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 level 1. This mutual adjustment by various members leads to serendipitous creative ideas.it is widely accepted that the span of control of the CEO should not exceed 6 top executives. the chairman Keshub Mahindra and Anand Mahindra — threw their weight behind the concept. In the process. starting from level 0 and going upto level 8. or is it too wide or too narrow? There are 9 levels in the organizational hierarchy. Design & Change: Mahindra Group . Again Mahindra being a federation has a matrix structure with the use of cross functional teams. it was born solely from serendipity and creativity. as their senior managements didn't get involved. The three main problems associated with tall hierarchies are: Communication problems. At the Mahindra group." which has become one of India's best-selling vehicles. considering this rule the span of the CEO in Mahindra is wide. but they found it difficult to sustain it. For example Mahindra was in the process of an incremental innovation to create a vehicle that seated 15 passengers instead of 12. How many levels are there in the organization’s hierarchy? Does the organization experience any of the problems associated with tall hierarchies? Which ones? What is the span of control of the CEO? Is this span appropriate. This invention came about without direction or input from management. This has also helped in fostering a culture of working towards the organization goal. Even though the promotion and other incentives are good in the organization but the promotional curve flattens after reaching a certain level. the workman have high degree of formalization imposed on them. we can divide Mahindra into two separate blocks. motivational problems and bureaucratic costs. 7 Organizational Structure.
The verticals operating in services industry and the IT sectors are more inclined towards an organic structure. Cellular Manufacturing is based upon the principals of Group Technology. through standardization and common processing. Forbes ranked Mahindra among the top 200 most reputable companies in the world. as it operates in many industries each one exerts its own influence on the structure of the unit. which seeks to take full advantage of the similarity between parts. which is an integral part of lean manufacturing systems. 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. Though each of these units have separate decision making and goal setting powers. In 2009. so on the whole Mahindra is much more organic than other organizations of its size. 8 Organizational Structure. assembly line manufacturing system. these fields require a business to have a small response time to outside changes.e. They are more of a continuous marketing system known as cellular manufacturing. which keeps these units agile and receptive to external change. Design & Change: Mahindra Group . The Research & Development function across Mahindra has an organic structure. i. automotive and farm equipment. The goal of lean manufacturing is the aggressive minimization of waste to achieve maximum efficiency of resources. Also the machinery intensive fields are not typically mechanistic in structure.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.
Quick response to environmental change. Over emphasis on short term performance. and identify the major subunits or divisions in the organization. Information Technology. multidivisional) does your organization have? Draw a diagram showing is structure. and Automotive Components (known internally as Systech). Increased focus on products and markets. the Group had become so diverse that it undertook a fundamental reorganization. Trade and Financial Services. Difficulty in maintaining a uniform corporate image. called strategic business units (SBUs). 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. Infrastructure. Facilitates development if general managers. 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. 9 Organizational Structure. allowing corporate level executives to deal with strategic issues.What type of structure (for example. Increases operational and strategic control. Increased expenditure invited through doubling of operations. Design & Change: Mahindra Group . and DISADVANTAGES ADVANTAGES Minimizes problems associated with sharing resources across functional areas. and investments. product division. Strategic Business Units As M&M became very large it restructured as a means of revitalizing the organization. as positions are created to facilitate developing needs or opportunities. Farm Equipment. Growth of a business was accompanied by a growth in bureaucracy. and Distortion of information. Such units generally were set up like separate companies. This manager was responsible to the top management of the corporation. functional. dividing into six Strategic Business Units: Automotive. not simply because of the size or complexity of the organization but also because of a sluggish bureaucratic way of thinking. Can you suggest a more appropriate structure that your company might adopt? By 1994. personnel. Continued changes in the organization or in the external business environment made this bureaucracy a hindrance rather than a help. Dysfunctional antagonism amongst divisions might detract from in general corporate performance. One approach to encourage new ways of thinking and acting was to reorganize parts of the company into largely autonomous groups.
Products/business linked from the viewpoint of the function are assembled as a separate SBU. and dynamism of the environment. Grouping of the business on the SBU lines helps 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.SBUs A systematic technique of grouping the business of a multi-business company. Businesses/Products inside an SBU entertain similar strategic planning action and priorities. Design & Change: Mahindra Group . one SBU is distinct from the other. etc. and then reorganizing them into separate independent entities. Distinct products and businesses are alienated. 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. In the basic factors like objectives.Concept . missions. which assists in strategic planning. SBU will have its own distinct strategy and will possess its own set of competitors. Analyze the effect of the forces on the complexity. The job of segregating and analyzing the group of the business assortments. From this analysis.
A small number of clients account for a large proportion of revenues. Regulations Stringent regulatory norms are being introduced to safeguard the environment. especially in the area of emissions. could adversely impact business. from Automobiles and Two Wheelers to Airplanes. “We are many companies united by a common purpose – to enable people to rise. many global players are significantly expanding their presence in India. and the loss of any of these clients could adversely affect business. Major events affecting our clients. 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. There is a concern that this will result in an ever increasing level of competition and intense pressure on the profit margins of all participants. 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. An investor in M&M has the benefit of the Group’s involvement in all these Industries.The different Sectors of the Mahindra Group cover a wide spectrum of industries from Tractors to Information Technology. Success depends in large part upon the management team and the loss of any member of this team could negatively impact business. from Financial services and Holidays to Defence and Infrastructure. 11 Organizational Structure. Mahindra Tech Revenues and profit could decline if there is a decline in IT services spending in the global telecommunications industry. Fuel prices and alternate fuels Fuel prices are an important element of the overall cost of ownership for vehicles and tractors. such as bankruptcies and acquisitions. Design & Change: Mahindra Group . Revenues and expenses are difficult to predict and can vary significantly from quarter to quarter. Many of these measures are likely to result in an increase in costs that cannot always be passed on to customers through price increases in a highly competitive market environment.
Operational Risks . • 12 Used by large firms Organizational Structure. it might adversely affect consumer confidence and impact the ability of people to spend on discretionary items. Design & Change: Mahindra Group . recovery of loans and demand for vehicles and tractors are all affected by these factors. To mitigate these risks.which offers flexibility in terms of usage across various resorts and seasons . 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. Mahindra Hospitality Macroeconomic Risks .The Company’s business involves significant investments in building resorts for its operations.Mahindra Financial Services The growth prospects of the Company’s business. the Company invests significant resources in systems and processes to ensure quality of service and overall experience of the customers. Financial Risks . or markets. 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. or both • Divisions within SBUs develop economies of scope and/or scale by sharing product or market competencies.the Company may not be able to make available the choice of location/dates desired by the customers on every occasion. inflation and other factors. coupled with inflationary pressures or any change in Government policy could adversely impact the performance of the Company. Any slow down in the Indian economy. which may differ from our funding sources (bank borrowings and debt offerings). 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. Besides.The global economic slowdown affected India and the hospitality industry. domestic and international economic and political conditions. Interest rates are highly sensitive to many factors beyond the Company’s control. the growth of vehicle and tractor sales and in the agricultural sector (particularly due to abnormal monsoons). o Each SBU is a profit center controlled and evaluated by the headquarters office. affecting the growth of the industry. Although the situation has improved considerably. deregulation of the financial sector in India. These expose the Company to risks in terms of timely and adequate availability of funds at competitive rates to finance its growth. If the situation persists.Given the inherent nature of the product . such cyclical downturns may continue to resurface in the future. The level of loans made. inflation continues to be on the high side. including the monetary policies of the RBI. which could result in dissatisfaction.
integrating devices aren’t developed. SBU. AND POSSIBILITIES. o Challenges the status quo and inertia. • • • • Divisions are independent and separate for financial evaluation purposes Divisions retain strategic control. 13 Organizational Structure. • 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 Because strengths aren’t shared. o Organizational arrangements emphasize divisional competition rather than cooperation. Design & Change: Mahindra Group . 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. SERVICES. and divisional performance Centralization of operations Use of integration mechanisms Divisional Performance Appraisals Divisional incentive Compensation Centralized at Corporate office Extensive Emphasize subjective (strategic) criteria Linked to overall corporate performance MAHINDRA BUILDS THREE THINGS: PRODUCTS.o Can be complex due to an organization’s size and diversity in products and markets. Cooperative M-Form Structural Characteristics (Related Constrained Strategy) SBU M-Form (Related Linked / Diversified Strategy) Partially centralized Moderate / Low Use a mixture of subjective (strategic) and objective (financial) data Mixed linkage to corporate.
A US $7. Mahindra and Mahindra Limited . India. which is a major segment of their chosen market. For the Mahindra Group. we are more than 112. who are specialists in arranging M&A transactions.000 people in 79 countries. Mergers and Acquisitions (M&A) form the basic growth mantra. M&M’s M&A Cell itself most often carries out such activities traditionally carried out by Investment Bankers themselves. they have now become a continuous process.Telecom and software Take the case of Tech Mahindra’s acquisition of Axes Technologies. In order to respond to these challenges. which has brought in complementary capabilities. which is fast establishing its international footprint. Corporates have successfully faced the challenges of competing on foreign front and have achieved success and selfconfidence. It is notable that most organizations use the services of Investment Bankers. With greater exposure to markets abroad and increased competitiveness.1 billion multinational group based in Mumbai. mergers) that your organization uses to manage its symbiotic resource interdependencies. a special Merger & Acquisition Cell has evolved in the last two years. 14 Organizational Structure. deep domain knowledge and access to two large clients in an unexplored segment in the Telecom industry. strategic alliances. Design & Change: Mahindra Group . Do you think the organization has selected the most appropriate linkage mechanisms? Why or why not? According to Mahindra & Mahindra. with its in-house expertise. This acquisition enables M&M to enhance their offerings to leading Telecom Equipment Manufacturers. long-term contracts. thus saving millions of dollars for the organization. Draw a chart of the main inter-organizational linkage mechanisms (for example. Inorganic growth forms a key part of the Group’s basic philosophy of enhancing global reach and competitiveness. Mergers & Acquisitions are at the core of the growth strategy. However.
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. as debt is normally used to finance growth activities.Mergers and Acquisitions at M&M M&M’s acquisition of 51% of SAR Automotive Transmission Products Private Ltd. Ongoing International deals include acquisitions in China. Poland and the US. the company becomes more highly geared. closely aligned to the acquiring party’s existing business operations therefore any risk is greatly reduced. Ltd. Additionally. Design & Change: Mahindra Group . As markets consolidate. 72% of M&A transactions are geared towards enabling market expansion or diversification strategies. they represent over 41% market value for up to 25% of companies. Gujarat to form a joint venture Demerging of the Chakan Division of Amforge Industries Ltd. 15 Organizational Structure.41% stake in Plexion Technologies (India) Pvt.. By contrast. By its’ very nature organic growth is becoming less and less attractive to companies. and its subsequent merger with Mahindra Automotive Steel Ltd. 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. Germany. 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. with it’s high internal investment and slow return. In addition. competition for market share and thus profit margins become tighter and there become fewer opportunities for high rates of return with organic business growth. the majority of acquisitions are complementary expansions. 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. M&M’s acquisition of 88.
there is a very conventional view of conglomerates and their strengths and fragilities. it has to do with capital asset pricing. their essential tenet is: we do not need management to diversify for us. There is a financial theory behind why conglomerates are not meant to be optimum structures. 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. Because some of these companies are fledgling. The basic problem with a conglomerate is that it has multiple businesses under one legal entity.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. The goal is to convert the conglomerate discount that people talk about into a federation premium. there is logic for groups to exist. 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. most of modest means. To develop “Federation Premium” M&M believes in developing leaders for tomorrow. Design & Change: Mahindra Group . we can create our own portfolio. that is a commitment. When investors get more sophisticated. M&M said that it was going to give investors a federation of focused companies. 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. What then constitutes a federation? It is a common way of doing business… the whole logic that (Tarun) Khanna and (Krishna) Palepu talked about. According to Mahindra Group. they shall be will listed. as they grow. Given the large and intensely competitive domestic market with discerning and value-conscious customers. so they created six sectors. Mahindra & Mahindra does not view itself as a conglomerate.
Towards Mahindra Corporate University Harnessing the Power of IT 17 Organizational Structure. Design & Change: Mahindra Group .
Design & Change: Mahindra Group .What international strategic alliances is your organization engaged in? Draw a diagram showing these relationships. The most recent deal of the Mahindra group (8th March. The newly formed entity will develop applications for telecom subscribers. Mahindra Satyam and CA associates forged a partnership to combine the different focuses of the two companies to offer customer integrated IT solutions. These alliances vary from contractual agreements to joint ventures. This was the first venture of Mahindra Intertrade to be set up outside India. 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. Motorola Cisco systems 18 Organizational Structure. a mobile content provider based in the UK. has inked several strategic alliances in varying business verticals. 2011) will allow Tech Mahindra technical competencies to develop innovative internet based products as well as implement go-to-market strategies for any jointly designed product. It will also enable Mahindra to nominate a director to the board of directors of Servista CanvasM. The important international strategic alliances that have presented Mahindra group with a comprehensive strategic advantage have been listed below. a European Systems Integrator. set up a steel distribution centre in Sharjah. marketing and supply of branded seeds. due to its diverse business interests in different geographies. Alliance Partner WIN Details Tech Mahindra inked a formal contract with WIN. The alliance with Celona Technologies allowed Tech Mahindra access into the telecom industry space of developed markets. will allow the company a foothold in European markets. The deal inked with HZPC allowed Mahindra to go beyond farm equipment and begin production. The deal will allow Tech Mahindra access to WIN’s capabilities in the mobile platform that will be leveraged in the Asian markets. Mahindra Intertrade in alliance with Nippon Steel. It was the first foray for Mahindra group into the highly competitive US telecom space. it can be considered more of a ‘prestige’ buy CA Technologies Celona Technologies HZPC Nippon Steel East India Company Servista Tech Mahindra’s minority stake in Servista. Although an equity stake in the East India Company does not further the strategic interests of the Mahindra group. was the result of a joint venture between Tech Mahindra and Motorola.
19 Organizational Structure. Design & Change: Mahindra Group .
This feat is considered as one of the defining moments of the organizational culture that exist in Mahindra & Mahindra. There was an acute shortage for engines and the production was running at its lowest setups. This was taken up by the plant with full vigor and was decided that this order will be fulfilled no matter what. the plant was able to meet its demand. The incident occurred sometime in the late 90’s. Time was also a constraint as they had a limited timeframe in which to complete the manufacturing.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). and successfully complete it. where the management and employees were able to work together towards a goal that seemed impossible in the beginning. With a lot of help from the officers and employees. officers and even mid level managers were involved in assembling engines day in and day out. Mahindra is an exception where even young Graduate Engineer trainees are encouraged to address their superiors on a first name basis. All employees are encouraged to address their superiors on a first name basis. employees. Although this is common in most modern organisations. This is due to the fact that the organization is an extremely diverse one with a focus on the manufacturing sector. 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. 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. However. Most organisations in the manufacturing sector do not follow this system and subordinates still address their superiors with the appropriate title. There was a sudden requirement that came up – an export order. it was too late. it was found that one cultural artifact that is common throughout the group. Design & Change: Mahindra Group . By the time he realized this. 20 Organizational Structure. The head of the sector committed on the order without taking into consideration the crisis situation. 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. it merits special mention especially in the case of Mahindra & Mahindra. The problem was that the order was very critical for the company and pulling out after committing would hit hard on the reputation factor. in all business divisions is the absence of the ‘Sir/Madam’ culture. Thus the sector head apparently requested the plant in charge to satisfy the order at any cost. the company was able to export the vehicles well in time.
The two goals that the organization aims to inculcate in its recruits through this programme are innovation and independent thinking. The training consists of three stages. with a possibility of extension. The programme extends for 24 months. they are put through a rigorous process that tests their theoretical knowledge and creates avenues for its application. For instance.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. Maharashtra followed by 9 months of onthe-job training at various production facilities across the country. The primary aim of this is to instill the tenets of Indian corporate culture in the recruits. focus shall be given to the induction programme conducted for the international management trainees that are recruited for the Mahindra Group companies. On the other hand. the recruits are assigned a mentor who is a business graduate from an Indian business school. Due to the diverse nature of the various induction programmes. there will be multiple induction programmes in operation in various companies. 21 Organizational Structure. for the purpose of this study. and is open only for students of select Ivy league institutes of the USA. This is the most intensive and detailed training programme for any recruit in any Mahindra group Company. All GMRs undergo training together in a single batch. namely : Since recruits of this programme eventually enter middle management positions in one of the various group companies. the automotive division of Mahindra & Mahindra conducts a 3 month induction programme for all its recruits annually at its plant in Nasik. Design & Change: Mahindra Group . Tech Mahindra conducts a 3 month training programme for various batches of students every year in different cities. Employees are recruited with the designation of “Global Management Recruit”. Throughout the programme.
Another aspect of the culture is the penchant for innovativeness and creativity. when. Although this is classically considered a negative attribute. is the informal nature of relationships between superiors and subordinates. it is our opinion that a certain degree of power distance is necessary in the lower levels of any organisation’s hierarchy. Maharashtra. A classic example of this is the instance mentioned earlier. one aspect of the corporate culture that really stood out is the unity that exists between the management and employees when it comes to achieving goals. especially in a time of crisis. One of the aspects of the culture. 22 Organizational Structure. This would have been impossible to implement had the organization disapproved of employees managing high level decisions and using their own creative input. Design & Change: Mahindra Group . From the interactions with the employees of the organization. has led to problems for Mahindra in the past. it is not always possible to classify the aspects of the culture as advantages or disadvantages. however impossible they may be.What advantages and disadvantages are associated with the organization’s culture? How could the culture be improved? There are several facets of the culture at Mahindra & Mahindra that have enabled the organization to reach it’s current position as a global conglomerate. Employees are encouraged to express their ideas and suggestions freely. which although cannot be considered a disadvantage. There have been instances of labour unrest in production plants. This aspect of the culture may be improved by increasing the power distance in the lower levels of the organizational hierarchy. which may be attributed to employees not taking their superiors seriously. especially in its manufacturing facilities. during a crisis even the midlevel managers were on the shop floor assembling engine blocks. This is especially true of the automotive division factories in Nashik. 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. especially in a manufacturing set-up. However.
What do you think has the strongest impact on the organization’s culture: the people. A very good example of this could be the Induction programs that are organized for the Graduate Engineer Trainees and Management trainees. An eg. What is the relationship between the organization’s 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. In addition to this certain flaws in the recruitment processes were also pointed out by some senior managers. 23 Organizational Structure. Thus it can be clearly seen that people have more of an impact on the culture of the organization. Work is very much confined to a particular department or project. Mahindra has its shortcomings. But on the whole the part played by people outweighs the other. Employees are recruited from the normal batches and possess basically the same competency as the shop floor officer in most cases. The structure is designed such that it does not create much room for horizontal development.” As far as the organization structure is concerned. the culture has not been able to develop as it has in Mahindra. 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. organizational structure? Explain. These incidents have had their effects on the culture aspect. This difference can be seen very evidently in my current organization where even though the structure is more appealing. the type of relation that bosses have with their sub-ordinates etc. of this is the R&D of the Auto sector. These programs are so designed that the new recruits get to understand the way the organization functions and also instill these ways into their own. which you analyzed before. both people as well as the organizational structure play their share in impacting the organization’s culture.In Mahindra. especially in the concerned departments. Design & Change: Mahindra Group . A major trend that we see in the organization is the way people interact with each other. There is always an element of informality in the interactions and it is found that this virtue is transferred to the new employees when they join. there is no separate recruitment process for this function. Even though this is a very important function as far as the sector is concerned.
the organization has more of an organic structure than mechanistic. 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. globally as well as in the domestic market on a large scale. Of these the Auto sector and Farm equipment sector are the major businesses and maximum profits are derived from them. The Auto sector is the most powerful among all the divisions in Mahindra. 24 Organizational Structure. Design & Change: Mahindra Group .As mentioned before. it has been able to allure the top management and influence decisions in its favour. 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. Auto sector has been able to influence decision making to a large extent. The recent merging of the two sectors and the new sector (AFS) being headed by the Auto sector President reinforces this conclusion. Each division is independent and takes care of only their own business. 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. Auto Sector : Mahindra is one of the biggest auto manufacturers in the country and a market leader in the UV segment. Analyze the sources of power of the principal subunits. There is de-centralization of decision making power wherever possible. the growth rate and the profits from the segment. 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. Which subunit is the most powerful? Identify any ways in which the subunit has been able to influence decision-making in its favor. This has helped a lot in shaping the very pleasant culture that exists. Their main source of power is the way the sector has been performing. functions. The sector has been able to leverage on this and extent their presence. The brand value that is tagged with Mahindra products in this market is huge. 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. both work and otherwise. Technology up gradations. Farm Equipment Sector : Mahindra is the world leader in the farm equipment sector. or divisions in the organization. low cost automobiles. new manufacturing facilities etc are areas where these influences can be seen very predominantly. As a result this business is very important for the group as such. Cost effectiveness is a very important aspect in this segment and the Mahindras have been able to work everything to their advantage. Because of the growth that is being achieved and the future prospects that is in store for the sector.
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. Design & Change: Mahindra Group . financial services. There have been many instances where certain sector level decisions had to be changed and modified. For the group. 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. from an overall perspective. 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. performance management systems. the latest being the two-wheeler segment by taking over Kinetic Motors in India. career and succession planning have all been re-aligned to form synergy with the company’s overall business strategy. What started as a steel trading company in 1945 expanded into manufacturing general-purpose utility vehicles. Over the past few years. organizational restructuring posed the greatest challenge keeping in mind the changing dynamics in the business especially the tractor and automotive 25 Organizational Structure. M&M is the leader in the utility vehicle segment in India. What major changes has your organization been pursuing over time? What resources and capabilities has it been trying to improve? The organization has been changing rapidly right from the time of its founding. The objective was to grow leadership positions in the UV and tractor market and developing successful businesses in relatively new business areas like IT. stake in REVA Electric Car Company and South Korea's SsangYong Motor Company in 2011. realty and infrastructure development and also service industries like Club Mahindra and also the early identification of potential successors. Like any other organization.Conflict and politics have played their part in the decision making processes. is an on-the-job development of a larger perspective and understanding. Today. M&M has expanded into new industries and geographies. On a positive note even though such incidents pop up once in a while. managing key resource requirements.
wherever possible. This system was capable of motivating leaders but made sure that no one had a complete picture of everything that happened in the organization. An additional post called Chief Compliance Officer was also introduced. 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). were functioning as two separate businesses of the group. The main purpose of this merger was to remove the duplication of resources. In 2001. executive. Most of these gaps were tried to be filled through promotions internally. most of the changes in organization have been due to the large number M&A related activities that the company was into. enabling the company to induct a talent pool with rich background which was suitable to the changing business requirements of the group. but this alone could not help the cause. Arthur Anderson and Korn Ferry. A full-fledged assessment on competency Vs requirement was carried out throughout the organization. They wanted to de-centralize the decision making power. which had to be filled at the earliest.division. department/unit head. The whole scheme was to bring in a level of confidence and comfort-ness in the minds of the employees. To achieve these objectives the company began a full reassessment of organization and management structure with the help of consultants like Mckinsey’s. The restructuring also led to the pruning of the staff. one such example being Mahindra Engineering. which is the basis of any company structure in the Mahindra family. 26 Organizational Structure. Thus it was decided to unite the two sectors that. there were 3970 officers in 13 grades and levels which was brought down to 3400 officers in five responsibilities namely strategic. till then. managerial and operational in 2003. Mahindra Satyam is an important case in this context. The process of restructuring began by changing internal benchmarks of excellence to global standards. 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. Removing the element of formality between the employee and their bosses was also part of Tech Mahindra’s plan. Design & Change: Mahindra Group . Each division acted like a separate division. Initially Satyam’s organizational structure was based on the system of silos. What this also resulted in was that it made a few gaps in the organization. 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. Tech Mahindra is trying to bring in a structure that is more transparent. Mahindra Satyam Especially in recent times. 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.
discuss (a) the need for change. the organization has an 8 level hierarchy. today. and (c) the strategy for change in your organization.With the information that you have at your disposal. Design & Change: Mahindra Group . the company is dependent on them for each and everything. What stresses on this concern is that often we find that not all the levels are relevant in every business. hence for someone joining in the lowest level. These can be broadly characterized with regard to three major attributes. 1) Organizational structure: From the organizational chart of the top management. Changes in the structure will also need to address these areas. This is very essential because directly and indirectly. Structural changes along with the necessary training for the employees and managers most certainly look like the way forward. The only major concern here can be related to the height of the structure. As mentioned before. 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. thereby effectively reducing the number of levels. it would impossible to reach to the top management in a life time. the various businesses that they are into. The management might have to bring in more transparency with regard to the communications with the employees and union. There is thus a scope for combining a couple of these levels . Some sectors have also had issues related to the workforce. (b) obstacles to change. we have found a lot of good practices as well as shortcomings that have helped the company become what it is. In this section the focus will mainly be on the shortcomings. 27 Organizational Structure. As such the span of control is well within efficient levels considering the size of the group. a fair idea of the dimensions of the structure can be obtained.
3) Organizational culture: As discussed earlier. The only concerns in this aspect could be the negative side of informality among the employees and the management. involving resources wherever required and keeping the customer requirements at the forefront. beyond a point the purpose gets defeated. the culture in Mahindra is very conducive for personal development of the employees. One major concern that the organization is having is that most of the strategies follow a fire-fighting approach. Poor support and alignment with middle management 28 Organizational Structure. Resistance to the change from employees 3. The biggest obstacle to these changes could be: 1. process deviation. training related discrepancies etc. Though informality to an extent is very much essential. Here Mahindra has been able to identify very precisely what their core competency is. This included the strategy for new products as well as markets. Though the business level strategies will differ from business to business. This can lead to inherent troubles like quality issues. 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. the top management has been able to keep the corporate level strategies clean and simple. Though there are standard processes and methods defined. The management itself maintains its focus on achieving results and the methodology is often neglected. Design & Change: Mahindra Group . Ineffective change sponsorship from senior leaders 2. they are not always followed.2) Organizational strategy: The various strategies that the groups as well as each business units have taken have been mentioned before.
most certainly would be the resistance to the change from employees. Design & Change: Mahindra Group . Though not all the change efforts have been received in a positive manner. its attributes such that we can predict the impact of the change beforehand. Supporting structure : During the process of the change it is extremely essential for the management to have a supporting effect on the changing dimensions. most of them could be implemented successfully resulting in its present stature. The evolution from what had started as a steel trading company to its current position as a global conglomerate is highly appreciable. 29 Organizational Structure. Situational awareness: It is very essential to understand the nature and depth of the change. Knowing the target group is also important as this facilitates the knowledge of the nature of impact . will have to be addressed. 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. It is expected that the leaders would build support mechanisms during the changeover phase and that communications regarding the same is done effectively. 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. what when etc. They were able to foresee a lot in to the future. Lack of change management resources and planning Of these the biggest. who. The implementation could follow a three level strategy. Along with this we will also need to have a thorough understanding of the organization. analyse these readings and come up with strategies that ensured the survival and growth of this organization. Questions like scope. Strategy analysis : This level would include activities like risk assessment. The leaders have been able to do a commentable job in this regard.4. But all said.
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