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PART A: Conflict

Case of Labour Unrest at Maruti Udyog Limited.

Introduction of the company

Maruti Udyog Limited, a subsidiary of Suzuki Motor Corporation (SMC) of Japan, manufactures cars in the 800cc range. The commercial production started in December, 83. The installed capacity has been gradually increased to 350000 units per annum. During the fiscal year 2007-08, the production was 680,000 units. Maruti has become the largest Asian car company (Outside Japan and Korea). In the first half of 2007-08, Maruti sold more cars in the Indian market than sold by Suzuki in the Japanese market.

Even though there was no real competition and Maruti was the dominant player, it has been regularly introducing new models to meet rapidly changing customer needs. Till now 9 major models, namely Maruti -800, Omni, Gypsy, Alto, Esteem, Swift, Zen, Estilo, SX-4, and Wagon R have been introduced.

Maruti’s contribution as the engine of the growth of the auto industry indeed has its impact on the lifestyle and psyche of an entire generation of Indian middle class. Maruti has been instrumental in laying the foundation for strong vendor base in India. In 2000-01, J D Power, the reputed name in car market surveys, has rated Maruti as the number one car company in customer service. It has noted that this is the first instance anywhere in the world of a market leader topping in customer satisfaction as well. Shortly after that, J D Power’s Quality Survey rated Maruti has maintained the position since then.

Maruti has identified Pre-owned car business, leasing and fleet management, Car insurance and Auto finance as strategic areas of growth.

Source of Conflict
To motivate the workmen for higher productivity, in 1989, management introduced an incentive scheme valid for 4 years and this was modified form time to time in consultation with union. After expiry of the scheme on 31.03.1995, as no common understanding could be reached with union, management introduced a revised scheme through notification on 01.01.1996, effective from 01.04.1995 for 4 years, and was implemented and accepted by the workmen without any dispute.

As the scheme has lapsed on 31.3.1999, management has given a proposal of the revised incentive scheme to be effective from 1.4.1999. When the initial incentive schemes were formulated, the need of the day at that time was higher production. Accordingly, the focus in the earlier schemes was achieving higher productivity. However, in the current


1.    Do you think that the conflict was resolved in proper manner? Give reasons?

2.    If you were the union leader how would you have solved this dispute?

3.    Amongst all the incentives schemes from the negotiated settlement which 3 skills are more effective? And why?



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