Case Study 1
Hero After Separation with Honda
Business transformation and change
Hero Honda Motors Ltd had started a joint venture company between Hero Group of India and Honda Motor Company from Japan in 1984. Hero Group of India was known for manufacturing bicycles. And Honda for manufacturing motorcycle. Hero Honda company introduced motorcycles that were popular in India considering the cost and low fuel consumption. The target customers for the company where the middle-income earners. It was the worlds largest two-wheeler company. The company had superior technologies, broader dealer networks, and reliable after-sales services which have contributed to accumulating 5 million customers before 2001 (Pg.19). (Saha & Chattopadhyay, n.d.) Here in this case study, we will be looking at the changes Hero Motocrop had gone through after separation with Honda. In 2010 the joint venture company got separated. This split was marked to be the most significant successful change in history from a joint venture company. Honda has sold its 26 per cent of the stake to Hero. The main reasons for spilt were due to restriction on exporting the products to foreign countries. Both the companies had set an agreement during joint venture that the products to be sold in for domestic consumption. (Saha & Chattopadhyay, n.d.) The change for Hero Motocrop was huge. It is observed that the change began from changing the name to Hero Motocrop, and the superior management. The change brought the organisation to keep up the brand recognization amongst the consumers. Launching of a new range of products under the flagship of Hero Motocrop was in London. Moreover, by introducing the song directed by A.R. Rahman “ Hum Mein hai hero” which took over the hearts of Indian two-wheeler consumer. It was one of the strategies used by the organisation in the process to change. Munjal, the chairman of Hero Motocrop, refers to the most significant challenge he faced after separation was the increased demand for their new products. (Forbes, 2016).
As per my observation and study, I found that the company might have used Lewin’s model for change management. The strategy formation for the change can be observed in this model.
Unfreezing is a state where a company decides for change. Here the change was separation with Honda. Honda was proving reaches and development required for the products to be sold in the market. After separation Hero had to restart the company from scratch. Pawan Munjal, the chairman of Hero Motocrop, was aware of the after-effects of separation. His first strategy was to develop an R&D for Hero Motocrop. Which was the trigger for spilt. Before separation, the employees working under the supervision of Honda (Forbes, 2016).
Make change To build on a big project; Hero was in need for R&D department for which Munjal tied up with AVL for Engine development and Erik Buell Racing company for updating and developing high-end bikes for India. Munjal headhunted for talented people and employee teams for R&D capacity and the various aspects of Hero Motocrop development. Employees such as former Nissan
executive Masson, BMW veteran Braunsperger. Second Strategy was in setting up in fractures to build products. The Company lacked experienced and expert employees (Forbes, 2016). Therefore Munjal decided to hire talented youngsters to join them. These strategy opened ways for youngsters to show their(s) out of box talent. Moreover, has created employment opportunity to the youngest of the Nation. The third strategy was to launch premium products. This will be helpful for the growth of the organisation and will recover the losses after separation. (Forbes, 2016). Digital transformation has become a part for the growth of a business. Hero Motocorp as successfully managed to take part in digitalisation by implementing SAAS for the innovative workforce. Implementation of a social platform to build a communication network. Moreover, to retain customers who are willing to be connected with Hero. (PeopleMatters, 2016)
Refreeze the new status quo. After successful implementation of the changes above mention. Hero at present is standing still and extending its market compared to Honda Group. The growth rate can be measured by the number of units sold by Hero vs Honda. Reviewing the change shows that the change was a successful lesson to be learnt. Increased production capacity, upgrading technologies, upcoming of the new infrastructure unit is the result of successful change management. If we evaluate the strategies under the leadership of Chairman Pawan Munjal is a success rate. Having Honda as the rival to once domestic motorcycle market is noticeable.( NDTV CarAndBike, 2018.)
“Restructuring is an act of reorganising the structure of a company by changing the legal ownership, operations and or entire structure of the organisation.” (Restructuring, 2018). The reason for any organisation to reorganise the structure of the company is when the nature of the business is changed, to introduce new methods of working(new technologies), and separation from an existing group. (Reddy, 2016) Here Hero and Honda after a disagreement on international trade on a motorcycle have led to the separation of the worlds largest motorcycle company into working has two separate companies. It was certain that both the companies had to go through organisational restructuring. Organisational restructuring of Hero Motorcorp can be identified starting with maintaining the reputation of the company. To keep with the brand recognition and to gather technological and product support. Hero tied knots with racing technology company name Erik Bull Racing. (Linkedin. 2014.). To gain the lost market in the two-wheeler industry. Hero Motocorp decided to restructure its management. Taking decisions for each set jobs and by appointing staffs from different duties by knowing their ability to do more. Division for the international market and the domestic market was introduced. (BikeWale, 2013.) Moreover, the most awaited part for restructuring was the R&D sector. Five years after Hero Honda separation. Hero Motocorp has built its R&D facility to design, engineer, research its product for domestic, and international market. This was the most significant achievement of all from the restructuring change implementation Hero Motocorp had to give. Setting up an R&D centre has become an environment for the company to take decisions, to build for the future. (Businessfortnight, 2016). The associated members of Hero Motocorp had planned the restructuring by keeping the key important strategies for the organisation. By providing importance to the better quality product over quantity. Reorganisation the management, hiring new staff. External collaboration for product and technology support. And Internal collaboration by re-posting of staff to get effective result. (Reddy, 2016)
Behind the wheels, there is a person named Pawan Munjal, who controlled the movement of the Hero Motocorp business. By taking the right decisions at the right time. Consistent in achieving his set goal. Guidance to coming generation of leaders. He is considered to be the pilot of a firefighter aircraft. His leadership quality was remarkable at the time when Hero was going through a phase when Honda decided to separate. His defending technique, speed in achieving the goals, risk-taking attitude is appreciated. (TheEconomicTimes,2014). To me, Panwan Munjal will be a transformational leader. A leader who is capable of raising himself, his followers and motivates them is a Transformational Leader. The qualities of a truly transformational leader are present in Pawan Munjal such as, having clear goals for achievement, encourages his team, understanding of what is expected from him to be delivered to his customers, and employees. Set an example to be an inspiring story to other(Mindtools,2018). Under the leadership of Munjal, Hero Motocorp has flourished. He has enabled to given global trade. Guided Hero in the ups and down after separation. Raised the brand to be world’s No.1 Two wheeler company (Pawan Munjal,n.d.).
- Businessfortnight. (2016,). Five years after Honda split, Hero unveils R&D centre in Jaipur Retrieved from http://www.businessfortnight.com/five-years-honda-split-hero-unveils-rd-centre-jaipur/
- Linkedin (2014).Hero Group – Demerger & Restructuring case study. (n.d.). Retrieved from https://www.linkedin.com/pulse/20140902102506-77322934-hero-group-demerger-restructuring-case-study
- NDTV car and bike. (2018). Hero MotoCorp Extends Market Share Lead Over Honda Retrieved from https://auto.ndtv.com/news/hero-motocorp-extends-market-share-lead-over-honda-1867016
- BikeWale. (2013). Hero MotoCorp restructures its top management Retrieved from https://www.bikewale.com/news/15265-hero-motocorp-restructures-its-top-management.html
- People Matters (2016). Digital transformation journey of Hero MotoCorp. Retrieved from https://www.peoplematters.in/article/hrs-digital-transformation/digital-transformation-journey-of-hero-motocorp-13866
- Forbes India(2016). Past tense, present perfect, future-ready: How Hero MotoCorp has put the Honda split behind it. Retrieved from http://www.forbesindia.com/article/northen-giants/past-tense-present-perfect-future-ready-how-hero-motocorp-has-put-the-honda-split-behind-it/44423/1
- Pawan Munjal. (n.d.). Retrieved from https://www.weforum.org/people/pawan-munjal/
- Reddy, C. (2016). Organizational Restructuring: Reasons, Strategies & Benefits. Retrieved from https://content.wisestep.com/organizational-restructuring-reasons-strategies-benefits/
- Restructuring. (2018). In Wikipedia. Retrieved from https://en.wikipedia.org/w/index.php?title=Restructuring&oldid=838978204
- Saha, A., & Chattopadhyay, U. (n.d.). The Impact of International Joint Venture on Local Economy: A Case Study of Hero Honda. Retrieved from http://www.academia.edu/26831754/The_Impact_of_International_Joint_Venture_on_Local_Economy_A_Case_Study_of_Hero_Honda
- Mind Tools. (2018 )Transformational Leadership Becoming an Inspirational Leader. (n.d.). Retrieved from http://www.mindtools.com/pages/article/transformational-leadership.htm
A video related to how Pawan Munjal being a leader
NDTV. (2017) In Conversation With Pawan Munjal, Chairman, MD & CEO, Hero MotoCorp. Retrieved from https://www.youtube.com/watch?v=wHPsh9PJ7ss