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Strategic Leadership: The story of Maruti Udyog Ltd. and R. C Bhargava*

CASELET, ORGANIZATIONAL BEHAVIOR
ET Cases - GSMC, 6 Pages

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Strategic Leadership: The story of Maruti Udyog Ltd. and R. C Bhargava

 

Leading change is considered to be one of the most important and difficult responsibilities for administrators. It involves guiding, encouraging and facilitating the  collective efforts of members to adapt and survive in an uncertain and sometimes hostile environment. As part of the change management initiative, Bhargava witnessed all the elements involved in change-creation: conflict and crisis and evolved as the change agent for Maruti Suzuki.

Maruti Suzuki is a company that came into being with the government of India as its majority owner, has ceded charge to its Japanese partner, Suzuki Corporation and through its days of origin Bhargava has been the troubleshooter-in-chief for Maruti Suzuki for issues ranging from indigenization to shareholding, control, labor issues  and lock-out.

Major changes took place in Maruti involving both political and administrative aspects but Bhargava has enjoyed the confidence both of the government – till it exited the company fully in 2006 – and of Suzuki, which now owns 56.2 % of the shares of the company......................

Teaching Note Preview

Strategic Leadership: The story of Maruti Udyog Ltd. and R. C Bhargava

 

Synopsis

Managing in an ambiguous environment requires strategic out of the box thinking, extremely high EQ and instant decision making abilities with a string  understanding if the business and its environment. Leaders who are able to withstand the uncertainties and can envision and predict the future are more likely to succeed in such challenging environments. In addition, the dynamics of changing environment require leaders who are able to stand above the operational  day-to-day challenges and generate new possibilities for the business. Possibilities may be in terms of new markets, new products or services, analysis of likely changes in technology, politics or economics. R.C.Bhargava (Bhargava) did exactly this. While leading Maruti Udyog Ltd., (now Maruti Suzuki India Ltd. ) from the front, he achieved results by the infusion of Japanese management and labor practices, discarded many traditional practices employed by the government and enabled Maruti to excel in productivity. Leaders of yesteryears used to provide a vision and wait for years to determine if it would produce desired results.  Bhargava did not have luxury of such a delay, and he went on constantly scanning the environment for possible new opportunities and threats.

While nationalizing Sanjay Gandhi’s Maruti Ltd., Parliament decided that a government company should be established to modernize the Indian automobile industry. The management of Maruti decided that this object had to receive its full and undivided attention and evolved a strategy to achieve this objective within the  constraints of operating as a public sector organization. Maruti Udyog Ltd. was incorporated on February 24th 1981 with Mrs. Indira Gandhi giving Sanjay Gandhi’s dreams..................

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Abstract

This case study’s objective is to establish that organizational success brought about by strategic leaders is the result of a studied fit between four fundamental functions that they internalize and apply them in the organization’s environment. Presented through the dynamic achievements of R.C.Bhargava (Bhargava), Chairman, Maruti Udyog this case seeks to establish the role of a strategic leader in creating, questioning and transforming a company from a mere Public Sector Undertaking to India’s most successful automobile manufacturer with successful employees participation in management that lead to the success of “Way of Life”. Bhargava with his decision to diverge from regular PSU practices by infusing Japanese management and labor practices lead to higher turnovers with Maruti’s market share rising from 38 % to 44 % in the last four years. These values internalized and demonstrated by these leaders and Bhargava are:

  • Internalizing the organizations vision, mission and core values
  • Working towards the formulation of strategies, policies and structure that translate the vision, mission and core values into business possibilities
  • Create an environment for organizational growth and learning
  • Serve as role models within the organization and lead form the front

Bhargava lead from the front: whether at a labor standoff in 2011-12, which resulted in violence, a general manager dead, 100 managers hospitalized with 147 workers arrested and a plant lockout, he demonstrated an uncanny ability to turn crisis into cosmos. He was elevated to its chairmanship in 2007 by his repeated demonstration of his ability to anticipate, envision, and think strategically making stakeholders to realize that sustained profits is a necessary condition for any company to survive for long. He was an innovator: whether it involved building sales and after sales network, promoting road safety, running of driver training schools or maintaining roundabouts and parks, Bhargava implemented these initiatives under his leadership to demonstrate their importance for long term business sustainability. Bhargava has been planning out the success for Maruti’s next plant at Becharaji, Gujarat where it would be sub-contracting part of its manufacturing to Suzuki which would in turn sell those cars to Maruti.



Pedagogical Objectives

  • To identify and relate strategic leadership as being a key factor in the long term sustainability and success of an organization
  • To understand how innovation, inclusion and adaptation lead to profit maximization
  • To internalize the values and apply the roles of leadership that fits itself into the environment of the organization to make it a successful venture

Case Positioning and Setting
This case study can be used for MBA or Executive MBA for the following course:

  • Strategic Leadership Course – The role of individual decision making and ownership- How inclusion of people, innovative policies and techniques and measured implementation of management methodologies to keep the stakeholders contended at all levels contribute to sustained growth of an organization
  • * GSMC 2014, IIM Raipur

    This Case Pack Includes:
    - Abstract
    - Caselet
    - Teaching Note (**ONLY for Academicians)
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