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How Organizations Handle Change – Yamaha Motors India

TABLE OF CONTENETS

TOPIC PAGE NO.


Acknowledgement 2
Yamaha Motors India 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 Page 1


How Organizations Handle Change – Yamaha Motors India

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 new production policies on the organization .

Mr. Anil Nanda , Manager – Quality Assurance , for his detailed brief about the
Quality control department and changed that it underwent after 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 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 .

Prof . Nomita Kapoor Page 2


How Organizations Handle Change – Yamaha Motors India

YAMAHA MOTORS INDIA


The first ever Press release made by 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. Rajan Nanda. Location: Faridabad, suburbs of New Delhi) under which YMC will
acquire all of the 26% of the stock 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 subsidiary 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 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 brand motorcycles in an environment
of growing motorcycle demand in the Indian market. In November of 1995, the two
companies established the joint venture company Escorts 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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How Organizations Handle Change – Yamaha Motors India

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 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, 2003), the Indian motorbike industry 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 Motor Company introduced a new model,
Enticer. The company recorded a 21.4 percent rise in sales. Sales of LML and Kinetic
Engineering went up by 16.7 percent and 29.4 percent 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 all the way. Honda
has a 26 percent stake in market leader Hero Honda. 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 amount by Indian standards. But buyers 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, two-night, holiday; a gold pendant and in the case of TVS Motor, whose brand
ambassador is Sachin Tendulkar, a dinner with the cricketing maestro for the winner of a
lucky draw.

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 120-
odd 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 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. 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. 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. 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 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 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 manufacturer wants to be a national player. But
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 smartly they can read the
market, re-jig their strategies and how quickly they can introduce a new model - or
upgrade a best-seller.

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How Organizations Handle Change – Yamaha Motors India

WHAT TRIGGERED CHANGE

The change cannot be said to have happened overnight . The gradual process had begun
ever since 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
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 Motors India Mr Masihoka Shiboya taking over from Mr S .K
Taneja , the outgoing General Manager of 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, Yamaha Motors also planned to convert its India operations into a sourcing base
for parts and fully-built two-wheelers . The company was hoping to manufacture 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 brand. While
the Yamaha RX 100 model, which before being withdrawn due to new emission norms,
seemed to achieve considerable success, the other models including the 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 emphasized the group's
intentions to focus on core activity and on enhancing shareholder value. The latest
proposal to divest partly in EYML would signal a furtherance of these objectives .
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 .

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How Organizations Handle Change – Yamaha Motors India

CHANGE OUTLINED
YAMAHA Motor Company of Japan renamed its wholly-owned Indian subsidiary
Yamaha Motor India Pvt Ltd, after buying out the entire equity holding of the Escorts
group in the erstwhile joint venture Yamaha Motor Escorts Ltd.

The world's second largest manufacturer of motorcycles also planned to restructure 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 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 Motor India also initiated a `Challenge 21'
project to restructure its businesses in the country. According to the company, the project
is a time-bound initiative that will reorient and revitalize the entire operations and
provide sustainable competitive advantage. Yamaha Motor India is hoping to corner 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 is also expected to gradually increase its
manufacturing capacity from the present three lakhs units 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 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 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 expected to help the company
add new distributors and infuse a customer-oriented policy amongst the existing channel
partners.

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How Organizations Handle Change – Yamaha Motors India

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 long as Escorts had a say in the organization, atypical Indian Culture prevailed.
With Yamaha taking over 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 stake in the organization had grown over the
period of time. For reasons mentioned before, Yamaha decided to have complete
ownership in India. While the financial benefits of such a move were known, Yamaha
also realized the perils of an Indian Work Force being managed by Japanese leadership.
Strangely, there was limited or almost no resistance from employees at any level. We
shall better understand the cause of that when we take up the Human Resource
perspective later.

Japanese work ethos are built around a single minded devotion to discipline. 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. That’s exactly what happened at Yamaha Motors India strict 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 same uniform. The obvious benefits are an increased sense 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, lunch hours were divided into two categories.
One for the operation level workers and other for managers. The upside of such a
bifurcation is stronger and more open channels of informal communication 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 off A.Cs , fans and lights .
2. Keep the gangway clear of any hindrances .
3. Put yours tools in appropriate closet .
4. Keep your work surroundings clean and hygienic .

Prof . Nomita Kapoor Page 8


How Organizations Handle Change – 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 it’s own obligations. The standards for employees safety and general
sanitation are same in India as in Japan. After Yamaha took over, an entire 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 bit of discipline does
no work life anybody” – as one of the workers remarked. Clearly, the general perception
which prevailed was that the benefits of changed culture have for outweighed the
bottlenecks and costs involved in the process of change.

Prof . Nomita Kapoor Page 9


How Organizations Handle Change – Yamaha Motors India

THE PRODUCTION 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 that a technologically superior product will sell itself against any competition.
After Yamaha took over, increased attention was paid to streamlining the entire
production process. Every change whether big or small, had a common objective of
improving employee productivity. Changes in Production Department are summarized
below :

1. Introduction of Public announcement 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 techniques as employed in Japan. They also get a 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 standard is analysed and corrected jointly by the workers and the
management.

4. Quality Circles : A concept, originally pioneered by the Japanese, was


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 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
integrated with employee’s needs and individual objectives. The fact that there was
almost no resistance bears testimony to the goodwill of the top management and their
commitment to employee participation and empowerment.

Prof . Nomita Kapoor Page 11


How Organizations Handle Change – Yamaha Motors India

THE QUALITY 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. During the era of Escorts when Yamaha was just a technical collaborator,
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. 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 stay in touch with the vendors of parts and
components. The team ensures that there are no hitches on the vendors side during
order processing. If a particular vendor is facing certain problems in delivering on
time, the team communicates the same to top level management. Alternate
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


process in Yamaha Motors India. This software links up three departments-
Purchases, 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.

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How Organizations Handle Change – Yamaha Motors India

The gains from all these changes were very visible. The average productivity of an
eight hour shift increased from 450units to 650 units. Gains were also noticed 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 that the quality standards for production in India is same as in Japan
demonstrates the commitment on the part of Yamaha to never let their guard down.

Prof . Nomita Kapoor Page 13


How Organizations Handle Change – Yamaha Motors India

THE HUMAN RESOURCE ASPECT

Change, in any organization is routed through 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 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 working on all levels. Strangely though, the resistance 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
future bread and butter depended upon the success of this change. Almost every
employee understood the need for this broad change. There were some voices of
discontent regarding small details which had to be worked out. The H.R. department’s
role in handling the entire process 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 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
attraction rate of labour and managers was very low. What Yamaha ensured
through was there are no dissatisfied employees in the organization. Yamaha knew
that workers will be facing a cultural change soon and only wanted those
employees who were ready and willing to accept 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 by the company during the [period of training. Secure
wit the knowledge that their families are taken care of, employees were motivated
to undergo training in Japan.

3. 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 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. At the time of our research, the dialogue 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 force. The Japanese presence in the H.R. department is bare minimum.
Language barrier is a significant constraint in this regard. So, while the company boasts
of presence of Japanese professionals in production, quality assurance and finance
department, the H.R. department is still completely handled by their Indian counterparts.

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How Organizations Handle Change – Yamaha Motors India

THE FINANCE ASPECT

Yamaha joined Escorts Motors as a technical Collaborator . It then 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 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 Reduction Department : Under the finance division, a whole new


department was created just to look after cost reduction. All quality circles report
to this department. The department scans technological economic and political
environment to unearth possible methods of cost reduction. By using DOI
techniques, the department has been successful in reducing procurement costs of
components by around 8-10%.

2. Credit Control Department : This department was created to mainly deal with
the dealers. Earlier, dealers were allowed credit until Motorcycles were actually
sold and cash was realized. Such a system lengthened the working capital cycle
and exerted added pressure on liquidity requirements of the company. After
Yamaha took over, an external agency called Tedfel was hired for this purpose.
Tedfel made prompt payment to Yamaha and then collected the respective
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 over, all dealers were allowed individual discretion to tie up with any
financing company of their choice.

IN a bid to become a dominant player in the Indian motorcycles market, Yamaha India
plans to invest Rs 35-60 crore on capacity expansion and upgradation 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 will think of
going for an IPO when the need for a third plant arises. This will happen when the
combined capacity at two plants hits 6,00,000 units.

Yamaha is expecting a 30-40 per cent increase in sales. In volume terms, Yamaha are
targeting sales of about 4,00,000 units next year.

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How Organizations Handle Change – Yamaha Motors India

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 sliding market share, Yamaha was seen as the saviour of 2000
employees working with Escorts Yamaha motors India. The fact that there was no in
fighting signified goodwill on the part of both 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 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.

Prof . Nomita Kapoor Page 17


How Organizations Handle Change – Yamaha Motors India

ANNEXURES

Checklist For In-Depth Interview With Human Resource Department :

1. Under what circumstances did the company require to separate from Escorts?
2. What according to you was the main driver for change in this process?
3. What triggered the change?
4. Who initiated the change from the organization’s perspective –
i. Role of top management
ii. Communicating the decision to all employees
iii. What all was told and how?
5. Did the change process require a major change in the employee’s behavioral
aspect?
6. Was there any culture change, as now the company is a wholly owned subsidiary
of YAHAHA (Japan)?
7. What sort of action plan or strategy did the HR department design?
8. Was there any resistance to this change?
9. If yes, then how was it tackled by the HR department?
10. Were there any changes done to the organizational structure as such, which would
have an effect on the power, responsibility, and authority equation of YAHAMA?

Checklist for In – Depth Interview at Productions Department :

1. Were there any major reshuffles in the Productions Dept after Yamaha took over ?

2. What were the visible changes in methods of Production after change was
implemented ?

3. Were there any changes in measures followed for worker’s safety ?

4. Is the Product designing done indigenously or in Japan ?

5. Was any new Technology introduced after Yamaha took over ?

6. Was there any resistance to new technology or work practice introduced ?

7. How was this resistance tackled ?

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How Organizations Handle Change – Yamaha Motors India

Checklist for In-depth Interview at Finance Department :

1. How was the finance division affected by the change ?

2. What was the shareholding pattern before Yamaha assumed total control ?

3. What was the market share at the time of separation and what is 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 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 Dept. after the change ?

2. Are quality standards in India any different from those in Japan ?

3. Were the quality standards made more stringent after 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 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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