HMT – Machine Tools Division

Danish Mansoor
Hamood ur Rehman
Saad H. Gore
Q1) In the taxonomy of the environment, briefly describe the related environment of
HMT. How would you describe the corporate marketing strategy of the Machine
Tools Division?
• The taxonomy of the environment for HMT is as follows:
• Demographics;
The demographics in HMT is a major concern in industries of Consumer Durables.
The demographics include youth intended targeting for watches. The company
invested heavily on finding patterns of population growth and age distribution.
• Social and cultural values:
The social and cultural values in consumer durables are of vital concern. The fact of
the matter is that without the knowledge of the attitudes, self expression and
ecological concerns the brand cannot be established.

The watch division takes into account the launch of its brand on special occasions
like Diwali, Valentines Day and other cultural events. The patronage in
Consumer Durables requires proper behavioral study in order to best advertise
its products.
• Economic Factors:
• The economic conditions for HMT become harsh when foreign competitors
are open to compete.
The era of liberalization in 1990 brings great difficulty for watch division which
enjoyed almost a monopoly at the time of inception. Furthermore the
Machine tool division also gets affected due to limited R&D capabilities and
Recession hit in 1993.

•  Technology
• Technological environment brings immense pressure to innovate. The most
affected were the watch industry and then machine tools industry having
Wire Cut Electric Discharge Machines with amazing features but inefficient
performance.
• CNC Machine range also becomes a looser due to no radical improvements
were made since the time the development was transferred to the units.
• Legal and regulatory actions
The Outburst of Foreign Competitors after the liberalization marks the
turnaround for HMT. The financial crisis began severe with debt burden
which ultimately reduce PAT upto the losses in 1993 and further.

• Competition:
• Post liberalization scenario made things worse
– Entry of new firms
• Massive FDI from market leaders of Watch and Machine tool industry
around the globe. Rival firms bring great technologies and lead with
innovative variants in watch and machine industry.
 Corporate Marketing Strategy:

• Growth Strategy:
– Growth in Existing Markets:
• The evolution began with the introduction of In house know how for
product changes, standardization, development of tooling, jigs and
fixtures as a stepping stone to subsequent product development of new
products is realized.
• The post recession period of 1965-68 strengthened the HMTs R&D effort and
brings development of machine tools like minichuker, heavy duty lathe,
carbide tool grinding and lapping machine, and a cylindrical grinder G9. These
generated confidence in Machine tool Group.

• The diversification by HMT is reflected in the case in which it plans to include

productivity and precision oriented machines to cater to major user
segments like automobiles, defense, railways and aerospace.
• Certainly it means new products for new markets.

• The product development in machine tool industry is done by introduction of

CNC machines. It requires high end engineering; to channelize a development
committee was formed. The R&D took up products like Punch Press(TPP),
ROBOTS and Wire Cut Electric Discharge Machines. However it remains
inefficient although the CRT display with graphics and backgrounds were
outstanding attributes of the products.
 Backdrop
In 1991, the Govt. of India (Rajiv Gandhi’s at the time):
• Eased restrictions on capacity expansion for incumbents
• Removed price controls
• Reduced corporate taxes

The result has been a profound reassessment of economic strategy for

growth and the role of state along with a realisation of the need for
institutional transformation.

Economic realities have had a deep impact on the political economy of

growth and the political economy of trade in India.

These developments have been accompanied by fundamental changes in

India’s institutional framework.

AUTARKY LIBERALIZED ECONOMY

 Likely problems and Challenges faced
in the wake of liberalization policies
• Significant liberalization of its investment
regime since 1991 has made India an
attractive place for foreign direct and portfolio
investment:
– staged tariff reductions
– elimination of non-tariff barriers
 Contd.
• High technological investment/upgradation
imperative
• Conventional oligopolistic systems (reflection
of Nehruvain socialist structure) had to be
ousted.
• Restriction of strategic outlook
• Outdated production facilities and technology
 Environmental changes critical to
the machine tools industry
• Product technology development for current
business as well as for diversification
• Advanced features which are in sync with the
International standards in machine tools
• Investigative research in taking up machine
tool performance upgradation
• Application engineering
 How should HMT respond?
• Technological upgradation
• Production process re-engineering
• Economies of scale
• In house R&D
• Technology acquisition and collaboration
• Integration with international technological
developments (strategic alliances)
 Base technology or Key
technology?
• HMT product technology:
High-tech
Superior features

Low effectiveness
No real improvements in product
Disadvantage of cost, performance and reliability
 Contd.
The the answer is:
Base technology + Key technology= Optimum
• The Indian machine tools market still is a low
growth rate market as compared to their
European and Far eastern counterparts, and thus
require base technology.
• The degree of advancement in processes for e.g.
programs like CAD/CAM, tools like TPP and Robot
and WEDM require key technology.
 Q5) With respect to the growth rate of world tool machine industry, what
changes should HMT machine tools division make to achieve global
competitiveness?

• The HMT should opt for the following in order to survive in the current market:
• Set up R&D with CAD Facilities.

• Well established customer support service and capitalize over international machine
tool builders.

• Ensure significant technical tie ups with internationally reputed.

• manufacturers and exporters.

• Develop Product Range specialization.

• Divest its non profitable division

• Export its Machining Tools.