Hindustan Motors’ Struggle for Survival*

            


Details

Case Code : CLBS012
Publication date : 2004
Subject : Business Strategy
Industry : Automobile
Length : 05 Pages
Price : Rs. 50

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Key words:

joint ventures, partnerships, distribution strategy, niche markets, working capital, restructuring


* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.

 


Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

The caselet explores the reasons behind Hindustan Motor’s poor performance after the liberalization of the Indian automobile industry. It examines in detail the company’s efforts to turnaround and make its brands successful.

Issues:

 » How external environment affects a company

 » Will diversification into the auto-component industry help HM?

Introduction

Until the 1980s, Hindustan Motors’ (HM) Ambassador and Premier Automobiles Ltd’s (PAL) Padmini were the only two cars available in the Indian market. However in 1981, with the entry of MUL, the scenario changed drastically. MUL’s small, fuel-efficient and well-designed car, Maruti 800, became a huge success. By the late 1980s, MUL became the market leader, leaving HM way behind.


In the early 1990s, when the Indian economy opened up, many multinational automobile companies entered the country....

Questions for Discussion:

1. ‘Hindustan Motors itself is responsible for its inability to sustain leadership position in the post-liberalization era.’ Critically comment on the above statement while analyzing the factors that led to the company’s downfall.

2. In the 1990s, HM had lost its position in the passenger car market to MUL and foreign automobile companies that entered the automobile market after the opening up of the Indian economy. To face the competition, HM had undertaken many restructuring initiatives. Examine the restructuring initiatives of HM.

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