CASE ANALYSIS -

HPCL: DRIVING CHANGE THROUGH

INTERNAL COMMUNICATION

AISHWARYA RAJ
271124 SECTION – C
CASE SYNOPSIS:

Hindustan Petroleum Corporation Ltd founded in 1974, is one of India’s largest oil and natural
gas company with a strong marketing infrastructure. Earlier HPCL had been wholly state owned
but now the company has been subject to divestment by the government. This has led to a
complete change in the organizational management of the company.

The following are some of the major topics discussed in the case -
● The case discusses how the company i.e. HPCL will need to adapt towards the changing
environmental conditions and what changes the company needs to bring in its culture and
in the mentality of the employees so as to remain competent in the market which is full of
competitive pressures.
● HPCL started to feel the need for a change in the management systems for its survival
and what measures it needs to take to bring in a sense of responsibility of all.
● The company’s focus is on what to do next in terms of achieving internal development by
interactive communication with external growth simultaneously.
● At the centre of HPCL’s commitment to achieving change through internal
communication was a project which involved creating a new vision for the company
which would align with the internal vision of its employees.

SITUATION ANALYSIS

COMPANY HISTORY:

● The government of India created HPCL in 1974 by combining two nationalized

entities, ESSO of India and Lube India.
● During liberalization in 1991 when the government began expanding the role of
private and foreign investment, it decided to divest major shares of HPCL to private
sectors.
● By 1995 49% of HPCL shares were sold to private companies.
● The company was however not completely privatized because of a court decision in
2003 that blocked the move.
● But these movements brought a realization to the executives of HPCL that they had to
change the way they operate in order to survive the competition.

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 CURRENT SITUATION:

● In order to bring a change in the organizational management HPCL had to focus on

the strengths and weaknesses of its competitors as well as reduce the gap between the
employees associated with the company.
● HPCL decided to integrate its employees by formulating new rules and using
traditional methods of internal communication.
● The main aim was to change HPCL from a ‘System and Product’ dependent company
to a ‘Customer Centric’ model.
● HPCL planned to do this by first creating a new vision for the company which would
align with the future of the company as well as with that of its employees.
● In order to do this, an initiative called Project ACE (Achieving Continuous
Excellence) was started in 2003 which included intensive workshops for vision
creation.
● 14 HPCL executives were selected as workshop coaches to conduct hundreds of
sessions which would lead to a clear outcome.
● Seniors and juniors were told to create different mission statements of the company.

IMPLEMENTING THE VISION:

● Once the vision was formulated, HPCL leaders set out a campaign to find out how the
company would implement the vision.

Vision Employees build Employees build Employees build

vision for their vision for their vision for the
Worshops department Business Unit organisation

Goal - To improve Goal - To increase

Part of Project
internal employee
communicaiton involvement ACE

14 people from the Led hundreds of

company become sessions reaching
coaches 1000s of employees

Employees gave opinion Vision 2006 -develop Later years, focused on

Helped in
about current and future consensus view of refining, updating and
generating trust what HPCL would implementing the
course of the company
and collegiality ideally become visions and plans

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 ● This was done by sending the employees from diverse departments to the market
place where the customers lived. This allowed them to actually understand the needs
and wants of their customers and how they felt about the company and its
competitors.
● This exercise allowed the employees to connect with the customers and have a sense
of duty towards them. They realized that their distribution system to the last mile was
poor.
● This gave them an opportunity to serve the rural markets by creating ‘Hamara
Pumps’.
● HPCL also began modernizing their gas stations and retail outlets.

Source: moneycontrol.com Source: BSEIndia.com

Financials of HPCL of ten years. Share Price Trend of HPCL in last one year

PROBLEM IDENTIFICATION:

Main Problem:
The main problem of the case is that because of the increasing market competition and a change
in the organization management (due to divestment) there was an overdrive of the internal
communication and less focus was put on the external communication in terms of market growth
strategies because of which expected outcomes on growth rate and market share could not be
seen.
Sub Problems:
● In HPCL development of vision has become an iterative process rather than a periodic
process. This may lead to a possibility of ‘vision fatigue’ or ‘conversational fatigue’ due
to which confusion, cynicism and a loss of engagement on the part of an employee may
result.
● The cost of logistics and operations are increasing and expected levels of outcomes are
not seen.

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ANALYSING THE PROBLEM:

● The market competition is increasing rapidly.

● Also due to government’s rule to divest the company, a complete change in the
management is taking place due to which more focus is diverted to improving the internal
communication and the external communication in terms of market competition is a gap.
● To improve upon the internal communication with their employees the company
developed four methods - Vision Workshops, Marketplace visits, Transformational
Communication and one to one communication
● Also, there is lack of technological innovations.

SWOT ANALYSIS OF HPCL:

Strength Weakness

● Established market strength ● Less market shares as compared to its

● Customer orientation (HPCL worked
keeping in mind their customers)
● Healthy work culture.
● Internal coordination which was seen
during the strikes too
● Logistics
competitors Bharat Petroleum and
Indian Oil
● More focused on internal rather than
external communication
● Strict government regulation, hence
less growth in share prices
● Continuous redefining may lead to
confusion and cynicism

Opportunities Threats

● HPCL can improve growth and market ● Falling share prices

share
● It can expand its positioning as an
energy company rather than just an oil
company
● Can introduce more innovations
● CSR efforts can be carried out as part
of the marketing strategy too.
● Geopolitics like the Qatar blockade
● Prey to economic shocks like OPEC or
the rise in oil prices
● Private policies
● Electric cars may redefine the future
● Technological advancement
● Underperformance may lead to
reduction in market share
● unionization can lead to internal
conflicts

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COMPETITIVE ADVANTAGES:

● HPCL had differentiated service. It follows the bottom up approach based on total
participation of each and every employee.
● Increased its brand presence in rural districts
● Launch of Hamara Pumps which was one tenth of the cost of full scale urban outlet and
the sales volume was twice as high
● The executives were excellent listeners and they followed interactive communication.
● HPCL made good use of digital technology. Communication was carried out on
MyHPCL, the company’s intranet portal. HPCL offered a service called the ICS (Internal
customer service) which allowed any employee at any level to submit a service request or
a grievance to the company.
● HPCL was customer oriented i.e. they kept in mind the needs and demands of the
customer.

GENERATING ALTERNATIVES:

● Increasing External communication and marketing efforts:

HPCL should put more focus on formulating new marketing strategies in order to be at
par with its competitors Bharat Petroleum and Indian Oil and increase its growth.

● Diversification:
HPCL should diversify from being just an oil company to an energy company as was
mentioned in the vision statement.

● CSR Activities:
CSR activities should be promoted keeping in mind the marketing advantages too.

● Technological advancement and Innovation:

Technological advancement must be made in order to increase productivity and reduce
cost and wastage. Also, innovative strategies must be formulated for uniqueness and
efficiency.

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EVALUATION OF ALTERNATIVES:

● Increasing External communication and marketing efforts:

The first alternative which is to increase its external communication and focus more on
marketing strategies is needed because HPCL has worked a lot on interactive
communication but the expected increase in terms of market share could not be seen. So
in order to be at par with its competitors HPCL must formulate new marketing strategies.
The cost of this would be medium but it would probably lead to growth of its market.
Efficiency would be high for this alternative.

● Diversification:
HPCL should expand its vision from being an oil company to being an energy company.
This would require diversification to other sectors such as natural gas and other
renewable as well as non-renewable forms of energy. The cost of diversification would
be high but it would increase its brand presence and further lead to growth and increase in
share prices. Efficiency would be high for this alternative.

● CSR Activities:
CSR activities would get HPCL more recognition which would benefit the company in
terms of marketing strategies. Efficiency would be medium for this alternative.

● Technological advancements and innovative strategies:

Technological advancements and innovative strategies must be made so that the
productivity is increased at a lower cost. The profits will be more, waste would be less
and hence the company would grow. But technological advancement comes at a very
high cost. So this could be a long term goal for the company rather than a short term goal.
Efficiency would be high for this alternative.

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SOLUTION:

The solution would be to put more attention towards external communication so that the
company can divert more attention towards the market growth strategy. Also because of
overdrive of internal communication the problem of confusion among employees may
occur. So external communication with the market would lead to more outcomes on the
growth of the company. The cost of this solution is feasible and the efficiency would be
high because it would lead to market growth and thus ultimately to higher share prices.

CONTINGENCY PLAN:

 HPCL could acquire the lower companies in its sector.

 It could also merge with companies of its sector with higher market growth like Bharat
Petroleum and Indian Oil.
 HPCL could also make a paradigm shift towards renewable resources keeping the
environment in mind.