Is Monopoly Fatal to the Firm’s

Growth: Experience of HMT

Watches Ltd.

Section - B | Group – 5

21086 – Kushagra
21087 – Mullapudi Teja
21088 – Sai Suraj
21089 – Naman Vora
21090 – Niharika Natraj
21091 – Nisanth Kumar
 MONOPOLY

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Sole Seller / No Substitute Very Rare

Discriminating Power of Price FEATURES Willingness To Pay

Market Power Economy of Scale

 Hindustan Machine Tools

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Established in Used to make Started watch

1953 under the tractors, printing manufacturing Introduced first HMT reaches in
ministry of machinery, in 1961 with analogue- monopoly stage
Heavy plastic collaboration digital watch, with 90%
Industries in processing with Japan and first market share
Bangalore machines Company automatic Day- through
mastering craft
date watch
 HMT'S SUCCESS

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 HMT had a managed brand status in people in 1970s and considered as a symbol of status and matter of pride
 In India HMT was the first one watch manufacturer who goes into technological upgradation and launched quartz
Tasks
watches in 1981. “Keeping
From 1970 time to nation” was the tagline for HMT.
HMT
 A true a leader watches
in mechanical watches and very reliable and offered quality oriented watches to customers, HMT
considered as
statuswhen it doubled its capacity
made history in 1976
 HMT ruled market of watches for almost 3 decades, virtually monopoly in the market
Implementation
. Schedules
Plan

Prime Minister Indira
Gandhi’s favorite watch was
Janata. For more than 40
years, Janata watches have
been known to keep time.
The Indian Army, Air Force, A customer oriented watch,
and Navy, which were considered as a “Dowry watch”
HMT's main customers, One of the status symbol to
Collection of Pilot is favorite have this watch
in customers
 Ready For Competition ?

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 After kind of monopoly HMT’s first jolt comes when TATA group and TIDCO(Tamil Nādu Industrial
Development Corporation ) joined hands
 Companies like Sonata, Citizen, Timex are also making efforts to be in the market
 Hyderabad Alwyn Limited, a public sector watch firm, entered the Indian market with the help of
Seiko, a Japanese company
 HMT Failed to impress customers in quartz watch and Titan took opportunity to gain customers
 Titan’s beginning is so tremendous that people started to loose interest from HMT
 One of the major setback comes when 350 engineers left and joined Titan
 In 1991 it had 8,000 employees and generated highest revenue of Rs 300cr.
 As in 1991 economic reforms also make scenario worse for with new competitor entry
 After liberalization new MNC brands enters like Casio, Rolex, Gucci, Etc.
 Analysis

Project analysis slide 7

6
 Loosing Monopoly
• Lack of Innovation-HMT was never known for its
Project analysis slide 6
creativity. It copied designs from foreign products
available in places such as Hong Kong and the Far East,
which HMT personnel would choose and bring back to
India to copy. In fact, until 1982, HMT had only four
basic designs, leaving clients with few options.
• Not able to adapt with changing technical environment-
HMT began by making mechanical watches but failed to
notice a shift in the tide as competitors began to actively
promote Quartz Analog watches.
• No attention on design-Aesthetics and packaging were
given little or no consideration by HMT. It also failed to
develop an appropriate retail outlet, which are all major
faults for a manufacturing company.
• Bad cost management system- HMT failed to establish
an adequate cost management mechanism. Over the
years, the labor bill and manufacturing prices also
increased resulting in the company generating huge
losses. The number of employees was reduced from 4120
in 2000-01 to 1105 in 2013-14 in order to deal with the
financial crises
 Running Out of Time
Project analysis slide 8
• Lack of diversification-HMT was unable to diversify its business.
It may have expanded into several watch categories, such as
analog-digital, multi-function, digital, stop-watch, alarm clocks,
and so on. It may have also taken advantage of the export market. It
may have also made a line of timepieces for ladies.
• Lack of proper product positioning-HMT missed the pulse of the
youth market despite commissioning frequent marketing audits and
having full access to shifting client demographics. In comparison to
its competitors, their advertising seemed dull. HMT's average age
of first-time consumers was 23, and the company did little to lower
that age and get into the youth market, which is a significant aim
for most retailers.
• Product price mismatch- HMT Quartz was designed to be a high-
end product for the modern Indian young guy. Quartz's expensive
price, however, meant that only the middle-aged elite could buy it.
It failed to attract the target demographic because it lacked an
obvious differentiator, and the product did not correspond to its
narrative.
• Mismanagement in the organization- HMT suffered a shortage of
trained people despite having considerable managerial skills and
providing ample training opportunities for its staff. Aside from that,
there was a major lack of team spirit and innovation drive. HMT's
people and machine resources were also underutilized to a
 Conclusion

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 HMT was once the market leader and it captivated the
hearts of millions of Indians who remained faithful to it
 HMT as an organization had no effective strategies or
efficient course of action to combat this change which
for a long time because of its affordable costs, ultimately led to its downfall
fashionable appearance, good quality, and the fact that  New plan launched in 2006 Board of Reconsecration of
it was manufactured in India public Sector Enterprises ( BRPSE) authorized it but it
 The prevailing microeconomic conditions in India were was rejected
a major factor in HMT's success and expansion.  Acceptability of new MNC after 1991 reforms not
Because it was the only rival in the market, HMT was considered by HMT
immune to competition. In a monopolistic market,  Government closes HMT in 2016 with Rs. 242 Cr
customers have only one choice and will all gravitate
toward it.  “Innovation is processing, not a product”
 HMT was hesitant to respond to this competition,
which posed a serious threat to them. They continued
to make the same old watches with little or no changes
in style, and they used the same marketing strategies
that barely met the demands of modern Indian
customers
 Even though HMT carried out many product
innovations and delivered customized watches to
various government organizations, the majority of
these creative launch initiatives were inconsistent and
did not occur at regular intervals
Thank You