A PROJECT REPORT

ON:

EXPORATORY
RESEACH

SUBMITTED TO: SUBMITTED BY:

Mrs. ARCHANA JOSHI PRITPAL SINGH
Exploratory Research
• Exploratory research is most commonly unstructured, “informal”
research that is undertaken to gain background information about
the general nature of the research problem.

• Exploratory research is usually conducted when the researcher

does not know much about the problem and needs additional
information or desires new or more recent information.

• Exploratory research is used in a number

of situations:
• To gain background information

• To define terms

• To clarify problems and hypotheses

• To establish research priorities

• A variety of methods are available to

conduct exploratory research:
• Secondary Data Analysis

• Experience Surveys

• Case Analysis

• Focus Groups

• Projective Techniques
CASE ANALYASIS ON HINDUSTAN MOTORS :
WHY HINDUSTAN MOTORS STRUGGLE FOR
SURVIVE:
BACKGROUND OF HM:
 Hindustan Motors is an automobile manufacturer from India. It is
part of the Birla group of industries. The company was the largest
car manufacturer in India before the rise of Maruti Udyog (MUL).
It is the producer of the famous Ambassador car, widely used as a
taxicab and as a government limousine. One of the original three
car manufacturers in India, founded in 1942, it was a leader in car
sales until the 1980s, when the industry was opened up from
protection. Hindustan has a joint venture with Mitsubishi,
producing versions of the Lancer and Pajero, but is best known for
its own models. It started production of the Landmaster in 1954,
and in 1957 began the production of the Ambassador. Later tie-
ups with General Motors Corporation of USA, Vauxhall Motors,
UK, Marion Power Shovel Co, USA led to new products being
launched. In 1963 commenced the production of the Ambassador
Mark 2. Later versions and more forays in related vehicle
segments followed.

 It is a one billion turnover company manufacturing Passenger

Cars, Utility Vehicles, Power Products and Earthmoving
Equipment. The manufacturing facilities of the company are
spread across India: Uttarpara in West Bengal, Pithampur in
Madhya Pradesh, Thiruvallur and Hosur in Tamil Nadu, and
Pondicherry. The latest model, Mitsubishi Lancer, is manufactured
in their state - of - the - art manufacturing facility at Thiruvallur,
Tamil Nadu. Until the 1980’s, Ambassador and Premier
Automobiles Ltd’s (PAL) Padmini were the only 2 cars available in
the Indian market. Ambassador was the vehicle of choice,
Government of India, and the official car for almost every Indian
Prime Minister after independence. There was no executive order
that the government departments have to buy only ambassador
cars. Still all were buying as a prestige to own it. HM derived a
major part of its sales from senior politicians, top civilians, bank
managers and defense personnel. Ambassador was very popular
in the taxi segments as well, even in 2001 the segment accounted
for almost 65% of ambassadors sales because of the perception
that the ambassador was better suited for the rough Indian roads
and its strong structure, it’s believed to withstand the impact of
accidents much better than any other car. During early 80’s
delivery of Amby usually takes a span of 6 months to 1 year for
delivery from the company or from the agencies dedicated in
each market/state. In 1981 with the entry of MUL, the scenario
changed drastically, MUL’s small fuel efficient and well designed
car, Maruti 800, became a huge success. By the late 1980’s MUL
became the market leader, leaving Hindustan Motors way behind
in the market share. 1984 launched the Contessa, which was
labeled as one of the first up-market cars in India in technical
collaboration with Vauxhall Motors (VM). 1987 launched Contessa
classic considered the most powerful car available. Contessa was
reasonably successful car, though it never managed to match
Ambassadors success. In 1997 Contessa GXL version with power
 steering was launched. In 1996 launched Opel Astra in
collaboration with GM.

BRANDS OF HINDUSTAN MOTORS

 Ambassador (1948 -…Present)

 Contessa

 Trekker

 Opel Astra (1996 GM - Mid size luxury car)

ONLY AFTER 1997, HM WAS ONLY ABLE TO JOINT

WITH MITSUBISHI
 1997- Began the production of the Road Trusted Vehicle.

 1998 - Commenced the Mitsubishi Lancer Car project.

 Mitsubishi Montero - SUV

 Mitsubishi Pajero - SUV

 Mitsubishi Cedia - Sedan

 Mitsubishi Lancer -Sedan

But all brands were eventually failing ……

 HM premium segment market share were being eaten up

drastically by MUL and Honda. Mostly due to advertising and
effective marketing strategies of the competitors. The key players
in the start of 2k in passenger vehicles are TATA Motors, MARUTI,
Honda Motors, Toyota, Skoda, Mahindra & Mahindra & Hindustan
Motors. HM’s market share went low and was considered as
‘others’ in the segment. HM didn’t know where they fit in the
existing economy.

Others, 5.73
Honda, 5.33

Tata Motors,
17.19
Maruti, 50.37

Hyundai, 19.17
CAUSES FOR HM COLAPSE:
 HM was unable to create barrier for potential new entrants, many
foreign collaborated entrants like Maruti Suzuki, GM, Toyota
launched and HM was unable to compete with their existing
strategies

 Many multinational automobile companies entered the country.

Companies including Daewoo, GM, Daimler Benz, Hyundai,
Honda……entered India through joint ventures (JV) and
partnerships with Indian firms.

 Threat of Substitute: HM was focused only to one segment till

1997 and with in that time MUL was able to bring out brands for
each segment with in the nation. Substitute for the brand was
quite visible in the economy

 Rivalry within the company also lead to downfall of the company

and ultimately leading to less market share. E.X. Internal
Problems, Union problems etc….

 HM had a bad image in market offering very low dealer incentives

and poor after sales service.

 Analysts opinioned that HM’s condition was a result of its lax

management policies and shortsightedness.

 Before MUL, HM was the market leader. HM was able to sell

whatever it produced and there fore it did not care to upgrade
the technology or production facilities.
 Pressure from competition was another aspect in its failure. HM’s
design was not aesthetic and even failed in aerodynamic designs.
Car was not up-to the mark in design and performance compared
to other segments of its competitors in the market.

TURNARROUND EFFORTS BY HM:

 HM was the worst affected due to its inflow of competitors.
Forced to react due to its poor performance of its vehicles. So HM
launched Nova (1990) with better interiors & 1800 ISZ (1993) with
better engine performance. Company also appointed consultants
McKinsey & Co. for a restructuring plan to turn around its
business.

 HM decided to tap new segments to ease the competitive

pressures from other giants. They collaborate with Oka Motor Co.
to develop targeting at rural markets. HM Launched Trekker
(Rural Transport Vehicle) 1995 in 3 northern states. Initially it was
received well in the market but vehicle soon became a criticism
owing to a host of technical problems.

 In 1998, Trekker sales dropped by two thirds of its initial volumes

to around 800 a year. In 1999, HM launched the redesigned
Trekker and an upgraded version of the amby. All restructuring
and efforts could not sustain in market for a longer time, there
was high decline in sales.
 HM overhauled the distribution system in order to become more
market friendly. In 1999, HM unveiled a new distribution system,
wherein dealers where divided into three tiers – red blue and
green depending on their location and performance records.

 Red tier catered to the metros for selling and servicing lancers

 Blue tier catered to the semi urban areas for Contessas and
Ambassadors

 Green tier to rural markets for Trekkers.

SOME FUTURE PLANS OF HM:

 Hindustan Motors planned to launch Mitsubishi's small-car model
iCar in India by the start of 2010.

 Reuters noted that the Indian passenger vehicle market is forecast

to nearly double to 2m units in annual sales by 2010 with small
cars taking up over two-thirds of sales. A tax cut in economy is
encouraging on small cars launches. HM will benefit with this.

 GM and Hindustan Motors are toying with the idea of introducing

CNG as a fuel option in order to boost sales.

 The companies have plans to introduce a CNG variant for the

Optra and Lancer (old variant). The two variants will be
introduced in CNG-centric areas including Mumbai, Delhi and
Gujarat.
 Mitsubishi source components from Hindustan, sourcing
components from a low cost base like India through partner
Hindustan Motors will prove beneficial for Mitsubishi, especially
when it is facing problems.

 Hindustan Motors already supplies engines and other auto

components to M&M, GM and Ford in India. With Mitsubishi
sourcing components, and HM possibly manufacturing some of
them, the Indian partner would be able to use some of its idle
capacity and shore up its bottom line.

BUT SOME THINGS NEVER CHANGE...

 One of India's best-known cartoonist RK. Laxman has driven an
Ambassador for years. Oscar-winning Indian director Satyajit Ray
immortalized the car in many of his films. "It's a car identified with
the masses and the ruling class. It gained access into parliament
because of its symbolic value and the power it connotes.

 The government has a fleet of more than 5,000 Ambassadors.

Whose rounded contours, big bonnet and bulging headlights have
remained virtually unchanged since it first rolled off the
production line in 1957.

 In some ways, the Ambassador is to India what the Chevrolet is to

the United States. In many ways, the clatter and bang of the
simple Ambassador, which is built by one of the country's oldest
 carmakers, Hindustan Motors is the heartbeat of India. For years,
you could buy any car in India-as long as it was an Ambassador.

 The Amby has a lot of home-ground advantages. Every

neighborhoods mechanic knows how to repair it and most
problems can be fixed with a hammer and wrench. Spare parts
are widely available, even in the remotest village........