Amity Business School

What is Organizational Restructuring

• Organizational Restructuring is a complex and multi-dimensional task which
can be re-assignment of human resources, downsizing, redrawing of
systems & rules, selling off assets / businesses or changing the finance
portfolio or a combination of all

• It should be a constant process with periodic doses to fine tune the

organization
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Objectives of Organizational Restructuring

• Changes in competitive situation

• Changes in capital markets

• Changes in Govt. policies

• To avoid unsolicited take-overs

• To gain long term competitive advantage

• To enter international markets

• To achieve operational & market related benefits

• To reduce cost

• To increase management control

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Introduction to Hero Group

• "Hero", the brand name symbolizing the steely ambition of the Munjal
brothers, came into being in the year 1956

• Munjal started this company as a modest manufacturer of bicycle

components with a foresight to simultaneously diversify into myriad
ventures, like product designing, IT enabled services, finance and
insurance, just to name a few

• Now Hero Group ranks amongst the Top 10 Indian Business Houses
comprising 20 companies, with an estimated turnover of US$ 3.2 billion
during the fiscal year 2005-2006
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Joint venture of Hero with Honda Group

• Hero went into a joint venture with Honda Motor Company of Japan in the
year 1984 which made Hero Honda a leader in two wheelers

• Hero Honda product range today commands a market share of 48% making
it a veritable giant in the industry

• The joint venture helped Hero Group to face the foreign competition,
accelerated rate of technological change & competitive pressures faced
globally

• After this joint venture Hero group entered into global competition for two
wheelers and got a technological support from Honda Group.
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Restructuring of Hero group this year

• The restructuring that happened in the group as to streamline the ownership
patterns among the families of Brijmohan Lal Munjal and his three brothers

• All promoter cross-holdings have been untangled and consolidated in the

name of the relevant family

• This organizational restructuring no change has been introduced in the

management system of the company rather this showed an effective
leadership implementation as this lead to streamlining of ownership patterns
so as to have better control over the functioning of the company

• This restructuring offers three benefits:

-unlocks value for shareholders
-makes the tax structure more efficient

-helps capitalize on individual synergies rather than group synergies

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Technology Related Partnerships/ Alliances and

Joint Ventures
• Hero entered a joint venture for technical and financial participation with
Honda Motor Company Limited of Japan, in 1984 for the manufacture of
100cc motorcycles in India

• Hero's quest for a low-budget, fuel-efficient and environment-friendly two-

wheeler led Hero Motors to enter into a Technical Collaboration with Steyr
Daimler Puch of Austria in 1987 for the manufacture of the 65cc, Porsche-
design mini-motorcycles

• Hero Cycles Cold Rolling Division has also entered into a technical
collaboration with Kawasaki Steel Corporation, Japan for the improvement
of production yield, elimination of defects, reduction of customer returns and
enhancement of maintenance operations against certain predetermined
targets
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IT Related Alliances
• Hero Mindmine, the technology based learning solutions provider and
training division of Hero Corporate Service Limited has alliance with two
companies, in order to facilitate the successful training of students and
professionals in globally understood Business English: DynEd Corporation,
which provides quality courseware by combining proven classroom teaching
skills with the best of multimedia techniques

• HeroITES, the BPO and Contact Centre solutions provider of Hero

Management Service Limited has a strategic alliance with ACS
Incorporated, USA, a leading BPO and IT services company offer a
complete range of services to clients from their on-shore, near-shore and
off-shore centers across the United States, Canada, Argentina and India