Hindustan Motors: Struggle For Survival

CIA-1; Strategic Marketing Management

IntroductionHindustan Motors: The iconic Indian car manufacturer that ruled the India Roads

Hindustan Motors Limited, the flagship venture of the multi-billion-dollar C. K. Birla Group, was established during the pre-Independence era at Port Okha in Gujarat. Operations were moved in 1948 to Uttarpara in district Hooghly, West Bengal, where the company began the production of the iconic Ambassador. Equipped with integrated facilities such as press shop, forge shop, foundry, machine shop, aggregate assembly units for engines, axles etc and a strong R&D wing.

1948-1980: Only players and market leaders (HM & PAL)1981- late 80’s: Maruti Udyog Ltd (the new market leader)1990: Many new MNC entrants, affecting HM1995-1998: Collaboration, Expansion & downfall1999: Re-launch & Improvisations

The Down Fall

SWOT Analysis

EXPORT

DIVERSIFICATION INTO OTHER PRODUCTS

IMPROVE TECHNOLOGY

FIRST INDIAN CAR COMPANY

GOOD DISTRIBUTION STRATEGY

DIVERSIFICATION INTO COMPONENTS

POOR MANAGEMENT

INEFFICIENCY OF EMPLOYEES

INFERIOR TECHNOLOGY & DESIGN

STRONG COMPETITORS

GOVERNMENT REGULATIONS

S W

TO

Q.1HINDUSTAN MOTORS ITSELF IS RESPONSIBLE FOR ITS INABILITY TO SUSTAIN LEADERSHIP

POSITION IN THE POST-LIBERALIZATION ERA. CRITICALLY COMMENT ON THE ABOVE STATEMENT WHILE CRTICALLY ANALYZING THE FACTORS THAT LED TO ITS DOWNFALL

THERE WERE A LOT OF EXTERNAL FACTORS THAT AFFECTED THE COMPANY.

COMPETITION

GOVERNMENT REGULATION

BUT THE MANAGEMENT WAS NOT ABLE TO COPE UP WITH THESE PROBLEMS AND THEY ALSO FAILED TO UPGRADE.

FactorsINFERIOR TECHNOLOGY

INEFFICIENCY OF EMPLOYEES AND UNION ACTIVITIES

POOR MANAGEMENT

THEY DID NOT UPGRADE THEIR TECHNOLOGY PRODUCTION FACILITIES

Q.2After the liberalization in 1991,H.M had lost its position in the passenger car market. What were

the restructuring initiative taken by H.M?

The various initiatives taken by H.M :They launched the Ambassador Nova in 1990 and a improved Ambassador 1800 ISZ in 1993.

They appointed consultant like Mckinsey and company.

They tried to tap new segment to ease competitive pressure.

They collaborated with Oka motor company in 1995 to develop vehicle specifically targeting rural market.

H.M tied up with M&M & G.M.

They overhauled their distribution system to become more market friendly.

In the year 1998, HM signed a JV with Mitsubishi motors, Japan.

Q.3External environment has a significant influence on the functioning of an organization. Of the

elements of external environment, Political environment can have a positive or negative influence on an organization. Study the effects of the political environment on the functioning of HM.

Under the cost cutting exercise HM introduced VRS for workers in 1998 offering a Rs. 0.1 million package per employee but it was not well received by Centre of Indian Trade Union(CITU) and Indian National Trade Union Congress (INTUC), leaders of both the union rejected the offer.

As employee protest intensified, HM approached the state government.

Government rejected HM’s proposal, following which the company decided to seek legal recourse.

1999, January, HM filed a writ petition in the Calcutta High court, claiming that its decision was not prompted by industrial relations, but by the company’s poor financial position.

Company stated that the layoff in Uttarpara plant was temporary in nature and the company would resume normal production as soon as demand pick up in market. (High court ordered the sate government to reconsider the issue)

Q3. Conti..

May 1999, Instead of reconsidering the issue, the sate government filed an appeal before the division bench of the Calcutta High Court.

State government stated that HM had suppressed facts and figures during its meeting with them to settle the issue.

The division bench directed that matter be referred to the Industrial Tribunal.

July1999, The Industrial Tribunal dismissed the company’s proposal.

HM again filed a writ petition against the Tribunals order in the division bench of Calcutta High Court, and the division bench upheld the Tribunals order.

July 1999, In response to the division bench's order, HM moved to Supreme Court for further movement of the situation.

During all this time, productivity at plant suffered and other expenditures also increased rather than cost cutting.

ConclusionAmbassador cars are identified with the masses and the ruling class. It gained access into parliament because of its symbolic value and the power it connotes.The Ambassador is to India what the Chevrolet is to the United States. In many ways, the clatter and bang of the simple Ambassador, which is built by one of the country's oldest carmakers, Hindustan Motors, is the heartbeat of India.After the advent of MUL and foreign companies downturn of HM occurred , the major reason which could be identified is not able to cope up with the new technology and mismanagement.After several attempts to revive the company Hindustan Motors, is hoping that a new-look Ambi will be able to compete with today's modern cars and thus stop a slide into oblivion. The revamp began last December, and it will be at least a year before the results become evident.Ambassador is all set to get a complete makeover as the company looks to introduce a completely new version of this car with new design and style characteristics. The move will be taken in a bid to enable the Ambi to compete more promptly with its competitors.Hindustan Motors Limited is also gearing-up to launch a small car in the Indian market which is likely to hit the Indian roads by July 2011. After ruling the Indian market for over 3 decades and than completely washed out, HM has seen it all and now its trying to shrug off itself again and preparing to travel the road for revival.

Presented by: Merrin 1021255 Rochak 1021256 Shashank 1021257 Tanu 1021234

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