Hitachi Measures to Improve Business Performance
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Transcript of Hitachi Measures to Improve Business Performance
Group 1Apoorva Srivastva
Bhuvan BajajDebdeep Chatterjee
Rakhi JainTushar Panjwani
Hitachi Retrenchment Program
Hitachi background
Hitachi, Ltd. is both Japan's largest electronics manufacturer and one of the largest conglomerates in the world.
1964: Hitachi builds the first cars for Japan's bullet train1974: Company produces its first IBM-compatible computer1982: Hitachi and 11 of its employees are indicted on charges of stealing confidential design secrets from IBM1988: Company forms joint venture with Texas Instruments to develop a 16-megabyte DRAM chip1989: Hitachi acquires controlling interest in National Advanced Systems, a U.S. distributor of mainframe computers; National is renamed Hitachi Data Systems1991: Through an alliance with IBM, Hitachi begins reselling IBM notebook computers in Japan under the Hitachi name1999: Company announces a ¥336.92 billion ($3 billion) net loss for the fiscal year ending in March; major restructuring efforts ensue.
Root cause analysis
This model helps in identifying the cause of problems the reason for the occurrence of the problem and how can these problems be prevented
Poor Business Performance
Manufacturing
Operations Finance
HR
High Fixed Cost
Excess Employee Strength
Deterioration in Operating Environment
High Procurement Cost
High DistributionCost
High DebtHigh Accounts
Receivables
High Investments
High Inventory Days
RCA -Fish Bone Diagram
Retrenchment
Retrenchment is a corporate-level strategy that seeks to reduce the size or diversity of an organization's operations
Retrenchment is also a reduction of expenditures in order to become financially stable
When do Companies use Retrenchment Strategy
•Clear distinctive Competence but failed to meet its objective and goal.
•Plagued by inefficiency , low profitability , poor employee morale and pressure from stake holders to improve performance.
•Failed to capitalize on external opportunities, minimize external threats, take advantage of internal strength and overcome internal weakness.
•Grown so large so quickly that major internal reorganization is needed
Business Process Re-Engineering
• The model proposed by Hammer and Champy
• The model deals with fundamental re-consideration and radical re-design of the organizational processes in order to achieve drastic improvement of current performance in cost , service and speed
• Information Technology often plays a an important enabling role in the BRP process
BRP – 5 Step Process for Hitachi
Step1• Develop the business vision and
process objectives• Cost reduction at Hitachi and
improve business results
Step2
• Identify the business processes to be redesigned• Subsidiaries belonging to segment s
where the results are particularly sluggish such as Electronic Devices and High Functional materials and Components.
• Re structuring of Semi Conductor Group and Display Group.
BRP – 5 Step Process for Hitachi
Step3
• Understand and measure the existing processes.
• Top to Bottom Review of the Planned Investment in Plant and Equipment to reduce the investment items to the minimum required.
Step4 • Identify the IT levers.• Implementation of MIS
Step5• Design and build the prototype for the
existing process.• Double the sales of product and
services by 2002
After Retrenchment
www.hitachi-c-m.com/global/pdf/ir/FR20050127165601162_pdf_url1.pdf
Hitachi current situation
• Long term debt in 2010 has been reduced by 14.35% as compared to 2001.
• Even after Restructuring in 2002, the company didn’t see any substantial profit till 2010 , made a loss of 107 billion yens in 2008-2009
• Hitachi profit in financial year 2009-10 is 238.9 billion Yen.• 17% of revenues come from the Information &
Telecommunications Systems