WAC REPORT

ON
Hindustan Petroleum Corporation Ltd.:

Submitted by:
Karan Arora
281026
 Case Summary
Hindustan Petroleum Corporation Limited in 2003, launched a major organizational transformation,
because of the extensive competitive pressures in the Indian oil industry. The company which followed a
top-down approach had to now adopt a bottom up approach of participative management. A great effort
was made to close the gap between the leaders and the employees. This was primarily done through the
‘vision workshops’, which aimed to create a sync between the personal and organizational vision. Digital
platforms were developed, with programs like: ‘ICS’ and ‘Coin Your Idea’ which were made to
emphasize on the concept of transformational communication. The HPCL site further improved its
interactive capability by offering the feature of blogs, which gave a free platform to employees to share
their views. Along with this, tremendous importance was given to individual, one-to-one conversation to
ensure that employees have an outlet, where they can express themselves. The positive outcome of this
increased stress on improving internal communication was seen during the huge strike in 2009, where
HPCL alone among the major state-owned oil companies, kept all its officers on the job. The question
that HPCL leaders now face is, of how they should pave a path for themselves, to become the number 1,
in the Indian retail petroleum sector, and whether the internal communication channel, they have
developed, is viable with the rapid expansion.

Situation Analysis

Previous Scenario

 HPCL had been a fully state-owned enterprise

 HPCL was owned by the GOI
 People had “Public System Mentality” i.e. they were system-oriented
 Channels which were used are print media, mass email distribution i.e. channels through which
information is travelled in one direction.

Current Scenario
 Due to privatization, the company was now under extreme competitive pressure as it was now
responsible for generating their own revenues
 Earlier, the company was system-oriented and now because of privatization it had to be changed
to a customer-oriented one.
 They followed the idea of Internal Development and External Growth i.e. Instead of directing
their focus outside the company they investigated inside as they thought their employees were
their first customers and if they are satisfied within themselves, then they will put all their efforts to
fulfil the needs of the customers.

Problem Definition
 Due to privatization, company was now responsible for raising revenue
 Logistics cost and operations cost
 Continuously Falling share prices from 499 INR to 270.45 INR
 Lack of external and internal communication in terms of marketing efforts

Analyse the Problem

Excess internal communication which might result in cynicism i.e. distrust for the entire procedure of
vision workshops believing that there is no outcome of the procedure. Because vision-making is an
ongoing, iterative process but redefining vision multiple times may lead to desynchronization of the
vision from the main objective of the company

Falling share prices was due to lack of external communication because of which there was no decent
market presence and other reason could be agile economic conditions in crude oil sector which greatly
influences the cost and hence their prices

Due to privatization, company was responsible for raising revenue earlier the customers used to go to
them and now they had to go to the customers because of privatization and the entry of new private
players

Cost of logistics or operations cost was high because of the technological disadvantage of the refineries
because of which they had to purchase expensive crude oil and even the refining process cost was high

Lack of external communication in terms of marketing efforts HPCL was concentrating more on their
internal customers rather than on external customers. They used to consider the ideas of their
employees i.e. their internal customers but did not care to take the feedback of external customers.
They did not tell their customers what they were doing as a customer-oriented company should do and
that showed in their share prices

Strength Weakness

 Customer orientation  Less market share as compared to

 Established market share other giants
 Work Culture and internal  More focus on internal than external
coordination customers
 Employee driven  Government regulation
 logistics  Continuous redefining of vision with
might lead to confusion
 Falling share prices

Opportunities Threats

 Improve growth and market share  Falling share price

 Define company as energy company  Geopolitical factors
 Invest in renewable sources of energy  Prey to economic stocks
 Innovation  Electric cars
 CSR efforts can be done  Rapid unionization and union
intervention

Alternatives
 Define company as energy-based company as HPCL aspired “to be a leader in World Class
Energy Company”, it can expand to renewable energy resources like wind, water, solar energy
etc.
 CSR Activities
 Initiative taken for implementing CSR (Corporate Social Responsibility) activities will actually
create a strong and positive brand image among the public (customers)
 Technological Development
 By upgrading the refineries, they can actually reduce their logistics cost and operations cost
 Focus on external communication
 By taking the feedback and analysing the customers’ expectations and living up to those
expectations should be the new motive which would eventually help HPCL to reach among the
people in the market.
 Deciding on the common vision and building on that vision so that it does not result in cynicism
or pessimism rather being a competitive advantage

Evaluation of Alternatives
 Market diversification
It is a viable option as it would give them a competitive edge in the market and make them prepared for
the future
 CSR Activities
This can be implemented because CSR activities are a way to show the public that company does not
only care for itself rather it cares for the society also. This will give a reason to people to believe in the
company

 Technological Development
This can be implemented but will be a long-term process and would be a costly project to be taken up
but at the same time it is also very important to make them equally competent in the market

 Focus on external communication

For implementing this a centralized team can be formed to make sure that the cross-functional teams
pay a timely and regular market visit to keep updated with the market demands and customer needs.
They must also closely monitor the demands and how to meet those demands

 Deciding on the vision and building on that vision

This must be implemented so that there is no vision weakness resulting in pessimism or loss of
employee engagement. This would also ensure that the vision of the company is effectively
communicated to all the employees of the organization

Contingency Plan
 If competitors are able to bring the renewable or bio-degradable resources before HPCL does that,
then they must be prepared to face the challenges by coming-up with suitable alternatives and for
this, they must be technologically sound and be flexible and adaptable to new changes
 Despite of all the efforts the vision fatigue might still be probable. The firm must appoint certain
people to deal with the problem
 They might still face strong competition in the market so they should be prepared to come up with
innovative ideas to counter any move by the competitors