Hindustan Motors' Struggle for Survival
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Case Details:
Case Code : BSTR021
Case Length : 10 Pages
Period : 1998 - 2002
Organization : Hindustan Motors
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Automobiles and Automotive
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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EXCERPTS
The Turnaround Efforts - Phase I
In the early 1990s, when the Indian economy was opened up for foreign players, many multinational automobile companies entered the country.
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In the 1990s, companies including Daewoo, General Motors, Daimler Benz, Hyundai and Honda entered India through joint ventures and partnerships with Indian firms. HM was one of the worst affected companies due to this inflow of competitors. Forced to react due to the poor performance of its vehicles, HM launched the Ambassador Nova in 1990 (with better interiors) and an improved Ambassador 1800 ISZ (with better engine performance) in 1993. The company also appointed consultants McKinsey & Co for a restructuring plan to turn around its business. McKinsey asked HM to focus on the marketing of components, refurbish the Ambassador model and upgrade other vehicles, speed up the delivery process and improve productivity through reengineering on the floor shop and reduce the workforce in its production plant at Uttarpara...
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The Turnaround Efforts - Phase II
When its attempts to reorganize its operations did not pay off, HM decided to look beyond its existing product portfolio to come out of its problems. As per McKinsey's recommendations, the company explored the global auto components business in 2000 and established a unit at Indore to assemble engines and gearboxes.
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Analysts said that this was a wise move because HM with its expertise, could easily become a component supplier for both domestic and global car majors. HM's executive director Sarker Narayanan said, "We are open to such opportunities. It brings in extra cash and it's an inexpensive way to upgrade our skills by working with different customers."
In order to use its design and engineering skills to enter new businesses, HM entered into an agreement with Mahindra & Mahindra (M&M) for developing petrol engine for M&M vehicles. The company also tied up with GM to market the entire range of transmission equipment manufactured by Allison Automatics (a company owned by GM)... |
Excerpts Contd... >>
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