[AC: C 1] Analyse the internal and external environments which influenced Hindustan Motors to

undertake organizational change.

Hindustan Motors is an automobile manufacturer in India. Company manufacturer of the well-

known Ambassador and Padmini. Ambassador is usually utilized as a government car and passenger
car. It was the market leader in car sales until the 1980s when the industry was opened up.

The situation changed significantly in 1981 when Maruti Udyog Ltd (MUL) entered the market.
Maruti 800, MUL's tiny, fuel-efficient, and well-designed automobile, had been a huge success. By
the late 1980s, MUL had overtaken HM as the market leader.

When the Indian economy opened up in the early 1990s, many overseas automobile companies
entered the country. Daewoo, GM, Daimler Benz, Hyundai, and Honda all entered India in the 1990s
through joint ventures and partnerships with Indian companies. The entry of international players
impacted negatively on HM.

Some internal and external factors influence HM to undertake organizational change.

INTERNAL ENVIRONMENT CHANGE:

1. Until the 1980s, Ambassador and Premier Automobiles Ltd.’s (PAL) Padmini were the only
two cars offered in the Indian market. So, the company never thinks about competition and
never upgrades technology and design.
2. As the standard Output of production was 8-10 cars per head per year but the actual output
was 3 cars. A total of 14,000 people worked at the Uttarpara facility. According to the fact
that each employee has 8 automobiles and 14,000 employees equal 1,12,000 cars. The
plant's annual production dropped from 30,822 automobiles in 1995-96 to 26,684 cars in
1996-97.
3. Along with all crises, HM spent over INR 750 million to update the assembly line, including
the construction of the new body and paint facilities as well as the procurement of new
equipment.
4. In April and November 1998, the company started on a cost-cutting effort and proposed a
Voluntary Retirement Scheme (VRS) for employees. Which Offers 10,000 per
employee package as compared to Fiat (35000). That offer creates an issue with
Trade Unions. HM offer them but they refused the offer and protested. Unions were
confident that Govt. of West Bengal would support them on this issue.

EXTERNAL ENVIRONMENT CHANGE:

1. In 1981, Maruti Udyog Ltd. Launched a fuel-efficient car and properly designed Maruti 800 in
the Indian market. Maruti 800 provides a different perspective of cars in the market. The
success of Maruti 800 damaged the market of HM.
2. In the 1990s, when the Indian economy opens up, many multinational companies entered
India. Daewoo; General Motors; Daimler Benz; Hyundai; Honda companies came to India.
These multinational companies have their well-designed cars which created tough
competition for HM.
[AC: C 2] Discuss how the change process was designed by the Management of Hindustan Motors.

After the 1980s, changes in the Indian market affected negatively Hindustan Motors. The success of
Maruti 800 and the entry of multinational companies change the market position of HM. To
overcome those situations HM decided to adopt some changes. That changes are;

1. HM appointed McKinsey as a business consultant.

McKinsey examined HM's circumstances and identified some concerns that need to be addressed.

Those concerns were:

a. HM should focus on component marketing.

b. Providing a new look to famous ambassadors.
c. Focus on customer attributes; speed up delivery.
d. Reduce workforce in its Uttarpara plant which helps in finance also.

Collaboration: In about the same way that India opened its market to foreign countries in 1991, HM
sees a chance to engage with multinational corporations. In 1995, the company teamed up with Oka
Motor Co to create a vehicle aimed squarely at the rural market.

The Trekker (also known as the Rural Transport Vehicle - RTV) was introduced in 1995 as a result of
this. The Trekker was favorably accepted in rural markets when it was introduced in three northern
states.

Improvement: Nova (1990) was introduced by HM with improved interiors. In 1993, HM introduced
the 1800 ISZ, a more powerful engine.

Export era: In 2001, HM decided to expand business in the international market as well. For that
purpose, the company expands its product line in another market. HM started exporting 150 RTVs to
Bangladesh.

Change distribution network: HM started first customizing services to retain their old customers and
to create a new image in the developing market. Company introduces customizing services in the
year 2001-02. Under this project, HM planned to install 16 computer kiosks at its dealers’ locations
all across India.

According to the company report, Lancer's market share increased by 4% after the launch of the
service.

Cost-benefit measure: HM spend 750 million on the building change in infrastructure and types of
machinery. To reduce dates, HM took some steps.

a. HM sold its earthmoving equipment to Caterpillar Inc. (CAT) for Rs 3.3 billion in February
2001.
b. HM was able to reduce its high-interest obligations from Rs 255.5 million to Rs 156.9
million as a result of the purchase. (From the first quarter of 1999-00 through the first
quarter of the fiscal year 2000-01).
 c. From its Rs 6.2 billion in long-term borrowings, the company used to settle obligations
totaling Rs 2.25 billion. Reduced gross loss from Rs 255.5 million in the same quarter of
1999-00 to Rs 152.2 million.

These are some of the actions taken by HM towards the change process. HM worked for change for
a better future for the company.

[AC: C 3] Critically evaluate ways in which the management of Hindustan Motors created the
conditions to bring about change in the context-changing environment.

The initial phase of Hindustan Motors was very successful. Ambassador and Padmini both the cars
were very successful. From governmental to passenger car, all were ambassadors. Because of this
huge success HM never thought about change; change in terms of product or research or
technologies.

At the end of the 1980s Maruti and in 1992 multinational companies came into the Indian market.
HM suffered from huge market losses. To overcome these losses and to sustain itself in the market
company created the conditions to bring change.

1. Appointing McKinsey as a business consultant.

McKinsey understands HM’s condition and provides some concern that needs to be
changed. One of McKinsey’s concerns was to reduce the workforce of its Uttarpara plant.
The reason behind the step was to reduce the finances of the workforce.
Steps were taken for workforce reduction:
a. HM introduced VRP (Voluntarily Retirement Plan) in April 1998: in this policy, every
worker gets 0.1 million of his retirement.
In reverse, Trade Union rejected HM’s VRP policy. Rejection comes from the Centre of
the Indian Trade Union (CITU) and the Indian National Trade Union Congress (INTUC).
For justice, the union goes to the West Bengal State government and government-
supported Union. For betterment, HM bring this case to court but at every stage HM got
rejection.
HM offers a scheme, 3 work in a week to the union but that was also rejected. By
offering a 3 working days scheme, the company wanted to save 32 million in a week.

As per my opinion, appointing McKinsey as a consultant was a good decision. Because he provided
some very important decisions like; change in a successful model, focusing on components
marketing, and focus on the customer and their requirements. But reducing the workforce was not
the best decision. Because of this HM falls into legal issues and with that workforce was not there to
be part of the change management process.

2. Collaboration with Foreign companies: After 1991, when foreign companies came into the
Indian market. HM finds the opportunity of collaborating, as per the company’s situation HM
decided to grab the opportunity of collaboration. In 1995, HM collaborated with Oka
Motors.
 Oka motor’s collaboration aim was to the development of a vehicle for rural markets. HM
launched “Trekker” in 1995. Trekker referred to as Rural Transport Vehicle – RTV. The launch
of Trekker was in three northern states.
Trekker had a technical problem, so trekker became a failure. Within 2 years of launch, sales
go down by two-thirds of the initial sales of 800.

As per my opinion, collaboration was the right decision. But collaboration with whom is the
important thing. While manufacturing and launch of Trekker, HM was not properly ready with
product or market. The research was not done properly on the product.

3. Investment in modernization: HM invested Rs 750 million in new technology. The company

installed an assembly line, built a new body and paint store for cars, and also purchases
advanced technological equipment.
HM repay these debts in a year In February 2001, HM sold its Earthmoving equipment
manufacturing section for Rs. 3.3 billion to a Caterpillar Inc. wholly-owned Indian subsidiary.
This money was utilized to pay off debts of Rs. 2.25 billion. This helped lower the gross loss
to Rs. 152.2 million in 2000-01, down from Rs. 255.5 million the previous year. In the same
quarter of 1999-2000. After loan settlement from the government, the remaining amount of
Rs. 1.05 billion.

In my opinion, HM invested a huge amount at its low time, which was a risk. But HM work smartly
and manage all his finance, by using different strategies like sales of products as well as some old
capital, cost-cutting schemes, etc. HM manages his finance very well.

[AC: C 4] Evaluate the importance of employee engagement in Hindustan Motors to bring about
change.

After 1880, HM started falling in the market because of new companies (Maruti and after 1992
multinational companies) entrance into the market. Another reason for falling was no innovation
and development in terms of products done by HM. Because of this, HM decided to adopt change.

For a change, HM some areas of change; cost-cutting and innovation are two major areas.

1. Innovation in terms of technology: HM changes its technologies and strategies towards

technological development. HM invested a huge amount in the advancement of technology.
a. HM installed an assembly line, which helps in faster and more efficient production.
b. HM bought advanced technology machinery, and build a new paint unit.
c. HM introduced car customization and install 16 computer kiosks at its dealers’ locations
all across India.

HM started adopting advanced technology, which reduced the workforce.

2. Cost-cutting approach: by investing in new technologies, HM needs to work on its finances.

As in Uttar para, plant unit produces only 3 units per person instead of 8 units, which creates
a huge loss to the company.

To resolve these two issues HM decided to reduce the workforce. HM introduced VRS
(Voluntary Retirement Scheme). Under this scheme, HM provided 0.1 million per person.
While FIAT provided 0.35 million per person. The difference between payments became an
 issue by Trade Union. Employee unions are managed by the Centre of Indian Trade Unions
(CITU) and the Indian National Trade Union Congress (INTUC).

Trade Union is aware of the fact that the West Bengal government also rejects this
scheme. s the workers' protests gets stronger, HM approached the State Government with a
proposal to shut down the facility for three days a week to save Rs. 0.32 million per week.
HM promised to pay for a whole week.

However, the State Government rejected HM's proposal, prompting the corporation to
pursue legal action. In January 1999, HM filed a writ application in the Calcutta High Court,
stating that its decision to shut down the facility for three days was influenced by the
company's financial state, not by Industrial Relations. The company also said that the layoffs
at the Uttarpara factory were only temporary and that normal production would resume as
soon as demand increased. The State Government was then instructed by the High Court to
critically examine the issue.

Instead of reviewing the issue, the State Government filed an appeal with the Calcutta
High Court's Division Bench in May 1999, alleging that HM had hidden facts and data during
its meeting with them to settle the issue. The matter was referred to the Industrial Tribunal
by the Division Bench. The company's proposal was rejected by the Industrial Tribunal in July
1999. HM filed a writ petition at the Calcutta High Court Division Bench against the
Tribunal's order, and the Division upheld the Tribunal's decision. In July 1999, HM filed a
petition with the Supreme Court in opposition to the Division Bench's decision. During this
time, the plant's output suffered significantly, adding to the company's problems.

At the time when HM was implementing changes, the workforce was involved in a cost-cutting
struggle. Because the entire organization is growing and developing, the workforce is not fully
prepared to participate.

Task 2

[AC: D 1] Examine an approach that Hindustan Motors can use to enable successful change.

Hindustan Motors should restructure its organization’s ability to survive and expand in the Indian
market. Selecting an appropriate change model and providing effective succession planning go far
toward reducing change resistance. If a major corporation like HM needs to make a change, it can
apply Kotter's change model.

KOTTER’S 8 STEP CHANGE MODEL:

1) Create a Sense of Urgency: it's critical to convey the need and objective for any change. For
employees to see change as a potential solution to an existing problem is very important.
As HM faces the problem of lack of innovation and research. It’s very important to convey a
change requirement to each individual in an organization. HM must share the approaches
which need to be changed. The approaches are:
a. Development in terms of technological advancement.
b. Strategies behind change requirements.
Management of HM should create awareness regarding every aspect of change. Awareness creation
is done by communication.

2) Form a Guiding Coalition: Change cannot be driven by a single person; the whole
organization needs to work as a single identity. Under the efficient leading change, a guiding
coalition is made up of people you choose as your support systems, such as managers and
supervisors.

In the case of HM, a company can create a change management team, which helps in the change
management process. Selecting some leaders and providing them an objective to drive change
which makes proceed faster.

3) Create a Strategic Vision: At the lower levels of the hierarchy, a change initiative can be
difficult to accept. Begin by creating a change management strategy that specifies all project
progress and results. It's easy to underestimate as lengthy efforts like training or data
transfers will take when the goal is solely in your brain. A defined vision aids in balancing
various components of change implementation and establishing more realistic timelines.

HM should create a documented vision that helps every individual in the change process.
Providing documented guidelines to each section help them to be familiar with change.
Timelines of a project make it in a track of work and provide better results.

4) Initiate Change Communication: Different organizations focus primarily on the operations

of a change than on properly communicating the change. For change to be successful, it
must be understood and supported; without good change management communication, the
change endeavor is likely to fail. calorie levels Begin by creating a change management
strategy that specifies all project milestones and deliverables. It's easy to misjudge how long
efforts like training or data transfers will take when the goal is solely in your brain. A defined
vision aids in balancing various components of change implementation and establishing
more realistic timeframes.

The Leaders of HM always communicate the change, change requirement, change process, and
organizational & personal benefits as well. Regular communication helps to keep things in mind
and that makes a change easy to understand.

5) Remove Barriers to Change: Employee resistance to change imposition from the top to the
bottom is common. To successfully drive the change, you must first identify all of the
elements that may threaten its success.
There will almost certainly be some impediments to change, whether it's due to
individuals, organizational culture, or a shortage of funds. Identify these roadblocks as soon
as possible and use available resources to overcome them without impacting other aspects
of the business.

As HM decided to communicate management perspective towards the operational level, with that
company should provide a path for feedback as well. If management only shares their thoughts
without any update in terms of feedback, then that change process fails. One way communication
process never works efficiently. Top management should be asked for feedback and if it’s necessary
then they can make changes in the change process.
 6) Generate Short-Term Wins: Change is a time-consuming and difficult process. You must
recognize and reward short-term gains and achievements to keep your personnel motivated
throughout their change process.

Management of HM should divide their main aim into the short-term goal for better
performance. A huge target creates confusion which leads to failure.

7) Make Change a Continuous Process: Between the deployment and complete adoption,
there is a significant gap. A change endeavor might easily collapse if the people driving it to
become complacent as a result of short-term success or discouraged as a result of obstacles.

As part of a process, management generates feedback from the learning and experience. HM
should evaluate change after every short step. Make necessary changes in the process for better
improvement.

8) Incorporate Changes in the Org Culture: Change projects require behavioral changes, and
for a chance to be effectively adopted, it must be deeply anchored in the culture and
processes of the business. Step 1 to 7 was about building a process and step 8 is about
maintaining the process.

Hindustan Motors has many areas for change purposes. If we consider innovation approach for
change purpose then Kotter’s model for innovation purpose will be;

As HM founds its Market drop by other companies entry. Management of HM found that reason
behind this issue was a lack of innovation in a company.

1. creating a sense of urgency: based on the situation, HM decided to add new features to their car.
For that, they need to convey this change message to the R& D department as well as the product
department, through these departures every one should get aware of the development of the
product.

2. Form a guiding coalition: For the addition of new features in the car. HM should form a team that
will observe the change process. The team had members from top management, R & D department,
production department, as well as operations members, also be there.

3. Create a strategic vision: after a discussion of the main motive, the team should decide the vision
for their given change process and make it in proper documentation.

4. Initiate change communication: as a team creates the change process documentation, it must be
circulated to the concerned department and members to create awareness and information
purpose.

5. Remove barrier to change: after providing documentation, if the team got negative feedback from
the concerned member, then they need to solve that problem. They can solve problems by
explaining the actual process or by making process changes.

6. Generate short-term wins: to make the process easier, convert the target into small steps.

a. Research on respective product

 b. Designing the change factor in the product

c. Small scale practical approach

d. Review and analysis

These steps will help to make the process easier, more efficient, and time-saving.

7. Make Change a continuous process: if the change team gets success in the Change application
then they can adopt change in the actual process.

8. Incorporate changes in the organization structure: lastly, the company can implement change in
the actual process for best results.

[AC: D 2] Prepare a Change Management Strategy for Hindustan Motors and give your
justification.

Hindustan Motors must adopt change for performance improvement and a better future. For HM
TOWS matrix can be used as a change management strategy.

TOWS matrix: TOWS matrix exact opposite of SWOT analysis. TOWS stands for Threads,
Opportunities, Weakness, Strength. In SWOT analysis, identification of Strength, Weakness,
opportunity, and threads is done but the TWOS matrix, identify strength and weakness in terms of
threads and opportunity.

TOWS MATRIX: in a situation of Hindustan Motors, the TOWS matrix will be;

EXTERNAL FACTOR OPPORTUNITY THREAT

INTERNAL FACTOR
STRENGTH a. Open economy a. Machinery was quite
provides exporting outdated.
opportunities. b. Industry was large but
b. Acquisitions to matured.
strengthen its c. A large amount of
distribution. capital is there.
c. Ambassador and
Padmini created loyal
customers.
WEAKNESS a. Chances of a. moderate numbers of
improvement in competitors.
ambassador car. b. Lack of innovation.
b. Employee engagement c. Legal policies affect
c. Collaboration the cost-cutting
product’s technical strategy
issue.

STRENGTH- OPPORTUNITY APPROACH:

a. Open economy provides exporting opportunities: HM gets the benefit of international

business opportunities because of supporting infrastructure.
 b. Acquisitions to strengthen its distribution: HM purchases the latest equipment for the
development of business.
c. Ambassador and Padmini created loyal customers: These two were the most successful car
in India at that time. So, that created customer loyalty towards the HM.

STRENGTH-THREAT APPROACH:

a. Machinery was quite outdated: HM bring new technology, so old machinery can sell to
generate money.
b. Industry was large but matured: HM has the infrastructure but it was old need to made
changes into it.
c. A large amount of capital is there: As company has capital but development also cost a lot.
WEAKNESS-OPPORTUNITY APPROACH:

a. Chances of improvement in ambassador car: Ambassador was famous but outdated. So, it
can be restructured and re-launch.
b. Employee engagement: HM has some issues with employees but it has a huge trained
workforce.
c. Collaboration product’s technical issue: Trekker had some technical issues, with time HM
can resolve that issue and relaunch the Trekker.

WEAKNESS-THREAT APPROACH:

a. moderate numbers of competitors: As the economy open up, HM got tough competition
with national and multinational companies.
b. Lack of innovation: after the grand success of Ambassador and Padmini, HM never thinks
about innovation or new product development.
c. Legal policies affect the cost-cutting strategy: While introducing a cost-cutting strategy HM
faces so many legal issues and fails against all legal issues.

Hindustan Motors has a strength with infrastructure and successful market but lack of
innovation and poor management gives tough time. As company got so many opportunities to
grow again but poor management never changed.