Yamaha

How Organizations Handle Change – Yamaha Yamaha Motors India

TABLE OF CONTENETS CONT ENETS

TOPIC

PAGE NO.

Acknowledgement

2

Yamaha Motors M otors India Ind ia

3

Industry Situation

4

What Triggered Change

6

Changes Outlined

7

Broad Cultural Change

8

The Productions Aspect

10

The Quality Control Aspect

12

The Human Resource Aspect

14

The Finance Aspect

16

Conclusion

17

Annexures

18

Prof . Nomita Kapoor

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ACKNOWLEDGEMENT Our Project on How Change is handled in Corporate was centered around Yamaha Motors India Ltd . The project won’t have been possible without the help and guidance of members of the aforementioned organization and we would like to take this opportunity to thank all of them : Mr. V . K Mishra , Manager – Manufacturing , for lending his valuable time and explaining the impact of Yamaha’s Yamaha’s new production policies on the organization . Mr. Mr. Anil Nanda , Manager – Quality Quali ty Assurance , for his detailed brief about the Quality control department and changed that it underwent after Yamaha Yamaha took over . Mr M . K . Jaggi , Manager – Safety , for his valuable inputs regarding the Human Resource aspect of change how was it embraced by employees . Mr P . K . Khanna , Manager – Financial Accounting , for explaining what were the financial implications of the split and how were financial matters handled durig the change .

A special thanks to Mr A . K Ahuja , who made personal efforts to make our audience with the management of Y.M.I Y.M.I possible . Finally , a word of gratitude for Mr Nitin Kapoor who accompanied us during our visit to the plant in Surajpur and took care of all bottlenecks .


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YAMAHA MOTORS INDIA The first ever Press release made by Y.M.I Y.M.I was as follows : “An agreement has recently been reached between Yamaha Motor Co., Ltd. (YMC) and its joint venture partner in India, Escorts Limited (Chairman and Managing Director: Mr. Mr. Rajan Nanda. Location: Faridabad, suburbs of New Delhi) under which YMC will acquire all of the 26% of the stock s tock presently held by Escorts Limited in the two companies' motorcycle manufacturing and marketing joint venture, Yamaha Motor Escorts Ltd. (YMEL). The aims of this move to make Yamaha Motor Escorts a 100% YMC subs idiary are to increase the overall speed of managerial and business decisions, to improve product development capabilities and production efficiency, while also strengthening the marketing organization. Plans call for the change in the company's name and other procedures to be completed by the end of June. In addition to YMC acquiring Escorts' 26% of YMEL stock, the company's name will be changed to Yamaha Motor India Private Limited (YMI) and concerted efforts will be made to heighten its competitiveness in the Indian market and promote the spread of the Yamaha brand with target themes of developing de veloping products with greater appeal and a distribution network that can respond more quickly to user needs.”

As a company , YMI is only 3 years old in the Indian Motorcycle market . However Yamaha has had a presence in this sector for over 18 years ever since it entered into a technical collaboration with Escorts motors in 1985 . Ever since the establishment of the first technical assistance agreement between the two companies in 1985, YMC and Escorts Limited have built a cooperative relationship dedicated to the manufacture and sales of Yamaha Yamaha brand motorcycles in an environment en vironment of growing motorcycle demand in the Indian market. In November of 1995, the two companies established the joint venture company Escorts Yamaha Yamaha Motor Limited, based on a 50-50 capital investment. In June of 2000, that investment ratio was changed to 74% for YMC and 26% for Escorts Limited and YMC assumed managerial control of the company with the name being changed to YMEL and undertook numerous measures to build the company's motorcycle manufacturing and marketing operations. The next logical progression for Yamaha was obviously assuming full control of Indian operations . This is precisely the change which we are going to study in this research . We shall try to understand the phases which an organization goes through during the process of change . How employees at all levels react to a Multi National Corporation taking control of their jobs ? How change is viewed by various departments and divisions in the organization and the role played by them in successful implementation of change.


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INDUSTRY SITUATION Forget the four-wheeler revolution everybody's talking about in India. The real action is taking place not on the freeways but on the country's side roads, alleys and dusty streets. That is where the nearly half a dozen motorbike manufacturers are introducing one glitzy product after the other, toting up sales and bringing excitement ex citement into a market that has lain dormant for quite some time. The sector is bristling with brands, colors and engine sizes. Over the next six months, 12 new bike models are scheduled to hit the Indian roads. During the last financial year (April 1, 2002 to March 31, 31 , 2003), the Indian motorbike industry indu stry posted sales growth of 28 percent, according to data compiled by the Society of Indian Automobile Manufacturers. This is considered a significant achievement, all the more since many sectors of the Indian economy are still struggling to come out of the recession that crept in two years ago. The local subsidiary of Japan's Yamaha Yamaha Motor Company Compan y introduced a new model, Enticer. The company recorded a 21.4 percent rise in sales. Sales of LML and Kinetic Engineering went up by b y 16.7 percent and 29.4 percent respectively. respectively. Royal Enfield Motors, whose rugged 250cc and 500cc Bullet bike are sold on the strength of the catchy ad line "Let the boys have their toys", recorded 16.6 percent growth. Unlike the four-wheeler segment, where only one Japanese manufacturer, Suzuki, has been able to make a significant dent, in motorbikes it is the Japanese a ll the way. way. Honda has a 26 percent stake in market leader Hero Honda. Yamaha Yamaha broke away some years ago from Escorts, a major Indian manufacturer of tractors. Even Bajaj Auto has a technical collaboration with Kawasaki of Japan. On average, the purchase of a brand new bike will set back an interested soul by about Rs 40,000 (US$845) - a big b ig amount by Indian standards. But buyers bu yers don't blink an eyelid thanks to the attractive finance options offered by banks and financial institutions, as well as the motorbike manufacturers themselves. Then there are the goodies thrown in: a free three-day, three-day, two-night, holiday; a gold pendant pend ant and in the case of TVS Motor, whose brand ambassador is Sachin Tendulkar, Tendulkar, a dinner with the cricketing maestro for the winner of a lucky draw. Finally, Finally, another reason for the surge in motorbike sales is the targeting of most marketing and sales efforts towards the youth segment. The motorbike, which earlier stood for a secondary mode of transportation for the guy who could not afford a car, is now being promoted as a symbol of freedom, of exuberance, of convenience. Surf through the 120odd Indian TV channels and you can't help noticing a recurring theme - the beautiful girl rides pillion with the guy having the smartest looking motorbike.


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How Organizations Handle Change – Yamaha Yamaha Motors India At the entry level (below Rs 35,000), it is Bajaj Auto which rules the roost with a 46.5 percent market share. TVS Motor follows with 23.6 percent. The third place is taken up by Hero Honda (19 percent). In the executive segment (Rs 35,000 to Rs 45,000) of the Indian motorbike market, the top three slots are held by Hero Honda, TVS Motor and Bajaj Auto at 68.2, 22.1 and 6.2 percent, respectively. But with a 42 percent market share, Bajaj Auto is a clear winner in the premium segment, followed by Hero Honda (27.8 percent) and Yamaha (24.02 percent).

Even though Indian motorbike manufacturers are now gung-ho about the market and are planning new launches, barely six months ago they were worried about the threat of cheap Chinese imports. But the Chinese threat fizzled out before it could materialize. Take the case of Bajaj Auto's turnaround. turnaround. For a long time it was the undisputed king of the Indian two-wheeler market, mainly on the strength of its dominance in the scooters category. category. But Bajaj Auto made a fundamental mistake - for a long time it made consumers stick to scooters long after they had started romancing the motorbike. When Bajaj Auto realized its mistake, it was too late, and new entrants like Hero Honda had stolen the march. But a bigger consolidation seems to be taking place in south India where last month TVS Motor announced that its turnover will leap by 52 percent to Rs 29 billion this financial year, riding on the back of rising motorbike sales. The company plans to overtake Bajaj Auto to become India's second largest two-wheeler maker next fiscal. In 2003-04, it expects a turnover of Rs 35 billion. Much of TVS Motor's good fortunes have come via the launch of its runaway hit, the Victor. Victor. Even though the Victor was launched 18 months ago with a stress on style and a contemporary look, it is still setting the cash registers ringing. TVS is planning to push volumes of the Victor from 40,000 to 50,000 units a month by b y June. The company is launching two variants of the Victor in August 2003 - one will have a sleeker and more stylish look while the other will be a rugged rugge d version targeted at the semi-urban market. TVS Motor is also thinking of manufacturing new models at surplus land that it has near Mysore in Karnataka state. The market has opened up and now every ever y manufacturer wants to be a national player p layer.. But simultaneously, simultaneously, competition too has become stiffer. Who grabs a bigger share of the pie, therefore, will depend not on where they are located, but how ho w smartly they can read the market, re-jig their strategies and how quickly they can introduce a new model - or upgrade a best-seller. best-seller.


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WHAT WHAT TRIGGERED CHANGE The change cannot be said to have happened overnight . The gradual process had begun ever since Yamaha Yamaha progressed from being a technical collaborator to a stakeholder in the organization . The fact that the transformation was bloodless bears proves that interests of both the parties were served by this change . The macro cause for the change was Escorts Yamaha’s sliding share in the Motorcycle Market . In the light of growing benef icial competition , both parties deemed it fit to part ways . How it was seen as beneficial for both parties can be explained in detail :

(New M.D of Yamaha Yamaha Motors India Mr Masihoka Shiboya taking over from Mr S .K Taneja , the outgoing General Manager of Yamaha Yamaha Motors Escorts Ltd) 1.Yamaha : Yamaha believed that operating on an individual basis would help in building it’s separate Brand Name . A strategy was formulated in order to facilitate new product launches and the entire Marketing policy was overhauled . As part of the strategy, strategy, Yamaha Yamaha Motors also planned planne d to convert its India operations into a sourcing base for parts and fully-built two-wheelers . The company was hoping to manu facture as many as 5.5 lakh vehicles in the country by 2003-04, which will be sold both in the domestic and export markets. 2.Escorts : After Escorts' hugely successful motorcycle brand, Rajdoot, the group had not been able to replicate the success with the offerings under the Yamaha Yamaha brand. While the Yamaha Yamaha RX 100 model, which before being withdrawn due to new emission norms, seemed to achieve ach ieve considerable success, the other models including the Yamaha Yamaha YBX, its first four-stroke bike, have only received lukewarm response from the market. The Escorts group Chairman, Mr. Rajan Nanda, had also often empha sized the group's intentions to focus on core activity ac tivity and on enhancing shareholder value. The latest proposal to divest partly in EYML would signal a furtherance of these o bjectives . Escorts was quick to realize that it’s core competence lied in commercial transport vehicles rather than passenger transport .

In essence the decision to separate was on grounds of mutual consent by both parties . It made business sense to part ways now and the timing could not have been better in the light of prevailing competitive environment . Prof . Nomita Kapoor

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CHANGE OUTLINED YAMAHA Motor Company of Japan renamed its wholly-owned Indian subsidiary Yamaha Motor India Pvt Ltd, after buying bu ying out the entire equity holding of the Escorts group in the erstwhile joint venture Yamaha Yamaha Motor Escorts Ltd. The world's second largest manufacturer of motorcycles also planned to restructure its its sales channels, product development department and its human resources policies at the Indian subsidiary. At the two plants on the suburbs of Delhi , wholesale changes were made in Administration staff . Each department now has a Japanese representative called Deputy General Manager . As far as hierarchy in the top brass is concerned , the C.E.O , President , Vice President and Associate Vice Vice President were all now Japanese . The first Indian involvement in the top management begins at General Manager level of individual departments . Along with the rechristening, the Yamaha Yamaha Motor India also initiated a `Challenge 21' project to restructure its businesses in the country. According to the company, company, the project p roject is a time-bound initiative that will reorient and revitalize the entire operations and provide sustainable competitive advantage. a dvantage. Yamaha Yamaha Motor India is hoping to corner c orner a market share of 21 per cent by the year 2003 after the restructuring is fully in place. As part of its revival plans, Yamaha is also proposing to launch at least one new model every year for the next four years. The company compa ny is also expected to gradually increase its manufacturing capacity from the present three lakhs units un its per annum at its two plants near the capital to about 5.5 lakh units per annum by the year 2003. While the initial emphasis is expected to be on motorcycles, Yamaha Yamaha is not ruling out the possibility of getting into the scooter and scooterette segments. Announcing the new name and the restructuring plans of the company, Mr Masahiko Shibuya, the new Managing Director of Yamaha Yamaha Motor India said the company's realignment plans have been necessitated due to the growing importance of the Indian two-wheeler industry and the increasing expectations of the consumers here. Mr Shibuya said the restructuring programme is expected to speed up product development, quality and design. The plans include improving product quality and reduction of costs. The sales channel reorientation is also exp ected to help the company co mpany add new distributors and infuse a customer-oriented c ustomer-oriented policy amongst the existing channel partners.


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BROAD CULTURAL CHANGE Put yourselves into the shoes of an employee who is used to walking in at 9:15 for a shift which starts at 9:00. an employee who wants leaves at will and runs to his union at the slightest mention of conflict with management. Now imagine being asked to get your act together or else find a different job. That’s exactly what happened at Yamaha Motors India. As As long as Escorts had a say in the organization, organization, atypical Indian Culture prevailed. With Yamaha Yamaha taking over ove r the entire operation, Japanese Culture become dominant. Of course, the takeover didn’t happen overnight. Employees saw the change coming and were conditioned to handle it. From a mere technical collaborators for Escort’s indigenous motorcycle- Rajdoot, Yamaha’s Yamaha’s stake in the organization had grown over the period of time. For reasons mentioned before, b efore, Yamaha Yamaha decided to have hav e complete ownership in India. While the financial benefits of such a move were known, Yamaha Yamaha also realized the perils of an Indian Work Force being managed by Japanese leadership. Strangely, Strangely, there was limited or almost no resistance from employees at any level. We We shall better understand the cause of that when we take up the Human Resource perspective later. later. Japa Japanes nesee work work etho ethoss are are buil builtt aroun around d a sing single le minde minded d devot devotio ion n to disc discip ipli line ne.. No employee is offered preferential treatment and some rules apply for everybody. If your Japanese manager walks in at 8:45 for a 9’o clock shift, imagine the example it sets for subordinates subordinates.. That’s That’s exactly what happened happened at Yamaha Yamaha Motors India strict financial financial penalties were put in place for those who re[ported late at work. Moreover, continuing the policy of unbiased treatment, every employee was given the same uniform. Regardless of the fact that whether you are a Foreman or Chief general manager, everyone is expected to turn up in the the same same uniform uniform.. The obvio obvious us benefi benefits ts are an incr increa ease sed d sens sensee of camaraderie and team spirit. The lunch hours were also streamlined. During the reign of Escorts, separate departments had their own lunch timings. With Yamaha, Yamaha, lunch hours were divided into two categories. One for the operation level workers and other for managers. The upside of such a bifur bifurcati cation on is stronge strongerr and more more open channel channelss of inform informal al commun communicat ication ion among among employees working in different departments but at similar level in the organization. Above mentioned examples amply demonstrate the typical Japanese attention to details. Japanese Companies believe in life time involvement with it’s employees. In return, they expect their employees to treat the organization as their own family. When visiting their plant in Surajpur, close in Noida, you can notice posters like these. Have you remembered to : 1. Switch Switch off off A.Cs A.Cs , fans fans and ligh lights ts . 2. Keep Keep the gang gangway way clea clearr of any any hindr hindrance ancess . 3. Put your yourss tools tools in in approp appropria riate te close closett . 4. Keep your your work surroundings clean and hygienic .


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How Organizations Handle Change – Yamaha Yamaha Motors India Such reminders can be found all over the place – H.R. Department, Finance Division, Shop Floor etc. A concept introduced by all the Japanese but gladly embraced by all employees. While management expects employees to carry out their duties, it does not turns a blind eye towards towards it’s it’s own obligati obligations ons.. The standard standardss for employe employees es safety safety and genera generall sani sanita tati tion on are are same same in Indi Indiaa as in Japan Japan.. Afte Afterr Yamaha amaha took took over over,, an entir entiree new new department was created, just to look after general cleanliness of the plant and employees health and well being. Expenditure in such areas is looked upon as investment rather than cost. The Japanese work on the premise- “ A happy Employee is a productive employee” The acid test of any cultural change is the degree to which it is embraced by the people who are affected by it. During any interview at any level, we didn’t detect any tone of remorse or dissatisfaction with Japanese way of work life. “ A little little bit of discipline does no work life anybody” – as one of the workers remarked. Clearly, the general perception which which prevai prevailed led was that the benefit benefitss of changed changed cultur culturee have have for outweighed outweighed the bottlenecks and costs involved in the process of change.


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THE PRODUCTION ASPECT ASPECT When your core product is as technical a as motorbike, the first department you look to upgrade is production. Japanese are a quality conscious breed who have traditionally believed believed that a technological technologically ly superior superior product will sell itself itself against against any competition. competition. Afte Afterr Yamaha amaha took took over over,, incr increa ease sed d atte attent ntio ion n was was paid paid to stre stream amli lini ning ng the the enti entire re production production process. process. Every change change whether whether big or small, small, had a common objective objective of improving employee productivity. Changes in Production Department are summarized below : 1. Introdu Introductio ction n of Public Public announ announcem cement ent system system on the shop floor : Yamaha placed loud speakers on the shop floor across the entire plant. They come in hardy to communicate any instruction to the worker or to locate any worker on the shop floor. Workers are also continuously reminded to conserve electricity wherever possible and to keep the gangway empty. Soft instrumental music is played to soothe the workers. 2. Training of production employees in Japan : Every six months, a batch of 4-5 employees is selected to be trained at the Yamaha production plant in Japan. Stress is on selecting employees from areas as varied as possible so that all aspects of production are benefited. Employees receive salary for their work in the Japanese plant. The objective of such n exercise is that employees get to learn the latest production production techniques as employed in Japan. They also get a first first hand experience of Japanese work culture and discipline. 3. Stress on planning and involvement : Instead of communicating the production instructions downwards, shop floor workers are encouraged to plan out their work schedule. The schedule and resources required to complete the job is finalized through direct interaction of workers and management. Workers are also expected to state a minimum level of productivity- per day or per week. Any deviation from this this stan standa dard rd is analys analysed ed and and corre correct cted ed join jointly tly by the the work worker erss and and the the management.

4.

concept ept,, orig origin inal ally ly pione pioneer ered ed by the the Japa Japane nese se,, was was Quality Quali ty Circle Circless : A conc successfully implemented at Yamaha Motors India. Employees in 5the production department were divided into groups of 8 to 10. These groups, called quality circles, are expected to meet after work hours to discuss common production related issues faced by the plant. Any group coming up with the solution or a cost reduction idea is financially rewarded. Names of the members of the quality circle whose idea has been selected are put up on the notice board.


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How Organizations Handle Change – Yamaha Yamaha Motors India Although employee empowerment is a central theme running through above mentioned changes. Japanese still kept certain key powers to themselves. Product designing and assembly layout decisions were confined to the top management in Japan. Similarly, budget allocation for different areas of production was done directly by the Yamaha, Japan’s finance professionals. Despite this, production still developed as a function more integr integrate ated d with with employ employee’ ee’ss needs needs and indivi individua duall objecti objectives ves.. The fact fact that there there was almost no resistance bears testimony to the goodwill of the top management and their commitment to employee participation and empowerment.


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THE QUALITY QUAL ITY CONTROL ASPECT Quality control, or quality assurance as they like to call it, is something Japanese are obsessed with. Quality assurance became a key performance area only after Yamaha took over over. Duri During ng the the era era of Esco Escort rtss when when Yamah amahaa was was just just a tech techni nical cal coll collab abor orat ator or,, professionals from Japan visited only to collect date regarding rejection rate, efficiency, volumes per hour etc. Now, realizing that profit levels, quality assurance is given it’s due share of importance. Changes that Yamaha introduced after taking over are summarized below : 1. Quality Control Process Control sheet : Earlier, quality inspection used to be carried out only when the final product was manufactured. Yamaha realized that this caused a lot of motorbikes to be rejected as scrap just because one or two components had problems. Now quality control was conducted at each and every level of production. Through QCPC sheets, workers were asked to record their total quality produced and categorized them as “ good” and “ Not good”. Self maintenance is the underlying thought and workers are given gauges to check quality by themselves. 2. Rejection Rate : During the reign of Escorts a 1% rejection rate of components was deemed satisfactory. satisfactory. Now, with Yamaha, this standard was lowered to 0.5%. Infact, during recent checks, this number was found closer to 0.25%. A low rejection rate of components transforms into lower cost of production and better quality of final product. 3. Direct on line : DOL is the Yamaha version of just in time. A team of 4-5 production professionals is created to to stay in touch with the vendors of parts and components. The team ensures that there are no n o hitches on the vendors side during order processing. If a particular vendor is facing certain problems in delivering on time, time, the team team communi communicat cates es the same same to top level level managemen management. t. Altern Alternate ate sources or vendors are also suggested. The benefits of DOL is reduced inventory levels which in turn leads to lower costs of material handling.

4. Y.M.I Infotech : This is a network software developed to handle the production proces processs in Yamaha amaha Motors Motors India. India. This This softwa software re links links up three three departm department entssPurchases, stores and production department requires a certain component, the physical flow of information follows the route : Production  Stores  Purchases. Once the vendor has supplied the component the flow of material follows the route : Purchases  Stores  Production Earlier, with no networking software, the flow had to be physically verified at each level by the employees. With this new system, employees are only required to enter the status from heir respective work stations. It saves time and also eliminates chances of leakage of goods. Prof . Nomita Kapoor

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The gains from all these changes were very visible. The average productivity of an eight eight hour shift shift increa increased sed from from 450unit 450unitss to 650 units. units. Gains were also also notice noticed d in components production .for e.g, number of produced in a day went up from 175 to 225.yamana is continuously looking to automate the whole plant C.N.C or computerized numerically controlled machines are being installed to reduce the chances of human error. The fact fact that that the the qual qualit ity y stand standar ards ds for for prod product uctio ion n in Indi Indiaa is same same as in Japa Japan n demonstrates the commitment on the part of Yamaha Yamaha to never let their guard down.


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THE HUMAN RESOURCE ASPECT Change, in any an y organization is routed through it’s it’s Human Resource Department. There are always disgruntled employees who complain that change has adversely affected them. There are employees who believe in status status Quo and believe that if a system is working, there is no point in changing it. Escorts going out and Yamaha coming in was a change that influenced each other and every employee employee working working on all levels. levels. Strangely Strangely though, the resistan resistance ce to this major change and to all subsequent decisions taken to enforce the change was minimized,. It only depicts the success of the H.R. department in educating all employees. Change was viewed as mandatory rather than optional. Employees were made to believe that their futu future re brea bread d and and butte butterr depen depende ded d upo upon n the the succ succes esss of this this chan change. ge. Almost Almost every every emplo employe yeee under underst stoo ood d the the need need for for this this broad broad chan change. ge. Th Ther eree were were some some voice voicess of discontent regarding small details which had to be worked out. The H.R. department’s role in handling the entire process p rocess of change is summarized below : 1. Agreement with the Union : Escorts left behind a strong labour union which was known to use aggressive tactics to get it’s demand met. Yamaha Yamaha suspended the old agreement with the union and entered into a new one after taking over. The agreement covered various aspects like pay packages, increments, working hours, leaves schedule etc. Yamaha also offered V.R.S. ( Voluntary retirement schemes) to those who did not wanted to continue with the organization. However, the attract attraction ion rate rate of labour labour and manager managerss was very low. low. What What Yamaha amaha ensure ensured d through was there are no dissatisfied employees in the organization. Yamaha Yamaha knew that that work worker erss will will be faci facing ng a cultu cultura rall change change soon soon and only only want wanted ed thos thosee employees who were ready and willing to accept a ccept change in it’s true spirit. 2. Training of employees in Japan : Not every employee looks upon training in Japan as an opportunity or value addition. Certain employees are reluctant to leave their families back in India for a period of 6 months. People used to the social and cultural environment of India find it difficult to adjust to a foreign country. The challenge for the H.R. Department was to motivate such employees. These employees were assured that their families will be taken care of. While trainees will receive salary for their work in Japan, their families will be a paid a fixed amount periodically periodically by the company during the [period [period of training. Secure wit the knowledge that their families are taken care of, employees were motivated to undergo training in Japan. 3. Networking Networking with dealers : Yamaha is currently in process of networking all it’s dealer all over India. Dealers are seen as valuable channel partners and not mere supply chain members. The purpose of this online network queries on a perpetual basis. Dealers are encouraged to report all complaints, suggestions, ideas through this network. The network will also be used for online order processing.


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How Organizations Handle Change – Yamaha Yamaha Motors India 4. Routing bills through Tedfel : Dealers were not happy with Yamaha routing it’s bills through Tedfel. Earlier, dealers were not asked to pay until the motor cycles were actually sold. Now Tedfel only offered a 15 days credit period to the dealers. Presently, may dealers have already approached Yamaha and have asked to revert back to the old system. system. At the time of our research, research, the dialogue dialogue between between the dealers and the company was still on. Yamaha still believes in the company validity of hiring an outside agency for bill payments and wants to bring around the dealers to its way of thinking. Yamaha has also followed the policy that Indian managers are best equipped to handle Indian work work force. The Japanese Japanese presence in the H.R. H.R. department department is bare minimum. minimum. Language barrier is a significant constraint in this regard. So, while the company boasts of presen presence ce of Japanes Japanesee profes professio sional nalss in product production ion,, quality quality assura assurance nce and finance finance department, the H.R. department is still completely handled by their Indian counterparts.


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THE FINANCE ASPECT Yamaha amaha joined joined Escort Escortss Motors Motors as a techni technical cal Collabo Collaborat rator or . It then then became became a 24% stakeholder in the Company. It’s stake gradually increased and at the time of separation the stake was 74% . Today, Yamaha Motors India is Yamaha’s only wholly owned subsidiary outside Japan. A major reason why Escorts and Yamaha decided to part ways was the continuously falling market share in the Motorcycle segment. When Yamaha Yamaha took over the reigns, the mandate was simple. While marketing will look to improve the top line, Finance Department should focus on improving the bottom line. The measures undertaken to achieve cost reduction are summarized below : 1. Cost Underr the the finan finance ce divi divisi sion, on, a whol wholee new new Cost Reducti Reduction on Departm Department ent : Unde department was created just to look after cost reduction. All quality circles report to this department. The department scans technological economic and political enviro environme nment nt to unearth unearth possib possible le methods methods of cost cost reducti reduction. on. By using using DOI techniques, the department has been successful in reducing procurement costs of components by around 8-10%. 2. Credit Credit Control Control Department Department : This department was created to mainly deal with the dealers. dealers. Earlier Earlier,, dealers were allowed allowed credit until Motorcycles Motorcycles were actually sold and cash was realized. Such a system lengthened the working capital cycle and exerted exerted added added pressu pressure re on liquid liquidity ity requir requireme ements nts of the company company.. After After Yamaha took over, an external agency called Tedfel was hired for this purpose. Tedfel edfel made made prompt prompt paymen paymentt to Yamaha amaha and then then collec collected ted the respec respectiv tivee amounts from individual dealers. Yamaha is saved from the hassle of monitoring every dealer and possibility of bad debts. 3. No centralized Financing Company . Escorts require it’s dealers to offer it’s customers only one finance option which was pre decided by the company. Dealers all over India were communicated the decision of the company regarding which financing company is to be associated with Escorts Yamaha. After Yamaha took took over, over, all dealers dealers were were allowed allowed individ individual ual discre discretio tion n to tie up with with any financing company of their choice. IN a bid to become beco me a dominant player in the Indian motorcycles market, Yamaha Yamaha India plans to invest Rs 35-60 crore on capacity expansion and upgradation upg radation every year for the next three years. Anticipating greater demand for its newly launched models, the 125-cc Enticer and the 106-cc Libero, Yamaha India will increase the capacity of both the models to 10,000 units per month each from January 2003 onwards. Yamaha Yamaha will think of going for an IPO when the need for a third plant p lant arises. This will happen when the combined capacity at two plants hits 6,00,000 units. units. Yamaha is expecting a 30-40 per p er cent increase in sales. In volume terms, Yamaha Yamaha are targeting sales of about 4,00,000 units next year. year.


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CONCLUSION “ Change” is often viewed negatively by the people who are influenced by it. Nobody likes to be forced to change and if it happens, resistance is a natural reaction which is bound to show up. During our interviews at the plant, we tried to dig deep and locate any hint of resistance or discontent on the part of employees. However, the general perception was that change has been for the benefit of all those involved. Lack of resistance also signifies the gravity of the situation when Yamaha took over. In the light of continuously continuously sliding market share, Yamaha Yamaha was seen as the saviour of 2000 employees employees working with Escorts Escorts Yamaha Yamaha motors motors India. The fact that there was no in fighting signified goodwill on the part of both bo th Yamaha Yamaha and Escorts. Yamaha is still to turn the corner in the highly competitive motorcycle market. However, Yamaha has recognized the enormous potential of the market and it’s penchant to switch brands according to latest trends and technology. The profits are showing an upward trend recently. The progress made is painstakingly slow but sure. Employees at all levels showcase a deep rooted belief that their company can once again repeat the success stories of mid 1990s. The culture change which came as a shock two years ago has now become a norm. discipline has become a way of life. The professional approach which Yamaha Yamaha introduced is no more imposed on the workers. It has become a part of their social conditioning at the workplace. Yamaha Motors India is a perfect case study for understanding how change can be successfully implemented in organization.


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ANNEXURES

Checklist For In-Depth Interview With Human Resource Department :

1. Under what what circumstan circumstances ces did the the company require require to to separate separate from Escorts? Escorts? 2. What accordin according g to you you was the the main driver driver for for change change in this this process? process? 3. What What tri trigge ggere red d the the chan change ge?? 4. Who initiate initiated d the change change from the organizat organization’ ion’ss perspectiv perspectivee – i. ii. ii. iii iii.

Role of of to top ma management Commu Communi nica cati ting ng the the deci decisi sion on to all all empl employ oyees ees What hat all all was was told told and and how? how?

5. Did Did the the chang changee proc proces esss requi require re a majo majorr chan change ge in the the emplo employe yee’ e’ss behav behavio iora rall aspect? 6. Was there any culture culture change, as now now the company is a wholly wholly owned subsidi subsidiary ary of YAHAHA YAHAHA (Japan)? (Jap an)? 7. What sort sort of action plan or strategy strategy did the the HR departme department nt design? design? 8. Was there there any resi resista stance nce to this this change change?? 9. If yes, yes, then then how how was it tackled tackled by the the HR department? department? 10. Were there any changes done to the organizational structure as as such, which would have an effect on the power, responsibility, responsibility, and authority equation of o f YAHAMA? YAHAMA? Checklist for In – Depth Interview at Productions Department :

1. Were there any major reshuffles in the Productions Dept after Yamaha Yamaha took over ? 2. What were the visible changes in in methods of Production after change was implemented ? 3. Were there any changes in measures followed for worker’s safety safety ? 4. Is the Product Product designing done indigenously or in Japan ? 5. Was any new Technology introduced after Yamaha Yamaha took over ? 6. Was there any resistance to to new technology or work practice introduced ? 7. How was this resistance resistance tackled ? Prof . Nomita Kapoor

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How Organizations Handle Change – Yamaha Yamaha Motors India Checklist for In-depth Interview at Finance Department :

1. How was the finance division affected affected by the change ? 2. What was the the shareholding pattern before Yamaha assumed total control ? 3. What was the market share at the time of separation and what is it’s it’s status now ? 4. Were the dealings with the Dealers influenced in any way by the change ? 5. How were Escort’s share prices in India and Yamaha’s Yamaha’s in Japan affected by the change ? 6. What are the future expansion plans of the company ?

Checklist for In-depth Interview at Quality Control Department :

1. Were there any reshuffles in the Quality Control Control Dept. after the change ? 2. Are quality standards in India any different different from those in Japan ? 3. Were the quality standards made more stringent after Yamaha Yamaha took over ? 4. What is the Standard rate of output of Motorcycles per day/week/month ? Is it higher or lower than what it was during d uring the time of Escorts ? 5. What are standards followed in the Components division of manufacturing ? 6. What is the frequency of revision of Quality standards ? 7. Are there any rewards associated with achieving quality norms ?


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Yamaha

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