CASE SYNOPSIS:

HPCL was originally a state-owned organization for over a quarter century. However, in 2003, there were
significant changes in Indian Oil Industry due to various steps taken by the Government of India. This
persuaded HPCL to undergo some major organizational changes.
The government of India had a new economic policy of Liberalization and Privatization, in response to
this change HPCL in 1995 sold 49% of its shares to private investors. It leads to a major organizational
change and a new competitive market condition for HPCL. At that point of time company realized that
they have to make changes so as to compete with private sector within the country. In this situation, the
most obvious step is to focus on customers and competitors but HPCL focussed on their employees and
internal organizational structure. Instead of outward approach, HPCL took an inward approach and focus
on reducing the gaps between the company and its employees. HPCL took necessary steps to engage
employees that involved in constructing a new strategy and cultural vision for the company.

1. Situation Analysis
1.1. Background
 The case is about one of the major company in the Indian Oil Industry, HPCL
 Other key players are Bharat Petroleum and Indian Oil
 Bharat Petroleum and Indian Oil are shown as market leaders (Exhibit 15a in the case), while
HPCL is at third position
1.2. Competition
 In 1991, the Government of India announced the liberalization of Indian Economy. This
impacted all the industries in India including the Oil Industry
 In addition due to privatisation, there was entry of new players in the industry. This increased
competition for HPCL
 To overcome this HPCL implemented major organizational changes
1.3. History of HPCL
 HPCL was originally the Standard Vacuum Refining Company of India Limited, established
in 1952
 In 1974, it was merged with the ESSO Standard Refining Company and Lube India by the
Government of India. Along with this the nationalization of Hindustan Petroleum Company
Limited (HPCL) was done
 In 1978 and 1979, the Caltex Oil Refining Limited and the Kosan Gas Company were merged
with HPCL, respectively
 In 1995, 49% of the company shares were sold to private investors
 From 1995 to 2003, the Government of India continued to deregulate the Indian Oil Industry
1.4. Current Scenario

 HPCL began the organizational changes in 2003 with the launch of Project ACE
 A lot of workshops were held between 2003-2008 to develop action plans and to update vision
of the company at the region, zone and business unit levels
 The company tapped the rural areas with the setting up of Humara Pump outlets in 2004
 MyHPCL, the intranet portal of HPCL was launched to serve as primary communication
channel in 2008
 In 2009, HPCL launched chairman's blog and community blog for employees
 Thus, HPCL focused on the internal communication rather than being only externally focused
2. Problem Statement
2.1. Main Problem

 HPCL was more focused on the product than customers. This led to decline in customer base.
Market share and market hold
 The Government of India was increasingly interfering in the Indian Oil Industry
 Advent of Digital Technology
 Increase in Operational Cost and Logistic Costs

2.2. Analysing the Problem

 The Economic Liberalization of 1991 led to the entry of new players in the industry which
resulted in high competition
 There was a rapid change in government policies during the period 1990-2003 led to a rapidly
changing business environment
 HPCL in response paid more attention to the internal factors and less focus on the external factors
 HPCL was reluctant to the new technological advancements

3. Analysis of The Problem and SWOT Analysis

● STRENGTH: HPCL had a huge consumer base. Along with this, it had a large product line
ranging from industrial lubricants to jet fuel. In addition, it had the advantage of having conducted
complex distribution operations and refining throughout the subcontinent.

● WEAKNESS: The major weakness of HPCL was its product-driven approach. With the changing
demands and customer information patterns, HPCL should have focused on the customer-driven
approach. They were used to customers coming to them for meeting their needs, and not building
up relationship with customer for long-term goals.

● OPPORTUNITIES: With the changing Indian Oil Industry, HPCL had two alternative
opportunities. First, to focus on its competitors. This approach required to evaluate the strengths
and weaknesses of their already existing competitors and the potential ones. Second, to focus on
the customers. This approach required to evaluate different customer segments and thus
channelize the resources according to particular segments.

● THREATS: HPCL faced threats from the already existing competitors like Bharat Petroleum and
Indian Oil. In addition to this, HPCL faced a lot of competition from potential competitors due to
various steps taken by the Indian government, like privatisation of 49% of the stocks of HPCL and
other organizations in the industry.

4. Generating Alternatives
1. Evaluation of the strengths and weaknesses of the existing competitors and the potential ones, and
thus planning the strategy based on this research.
2. Improving the technology and processing activities
3. Move towards a customer-driven approach. This involves understanding the customer needs and
devising a strategy to target customer segments accordingly. This approach would include the
reinforcement of communication channels and increasing employee engagement by building
employee communication. The employee communication included Vision Workshops,
Transformational Communication and one-to-one communication
4. Equal reliance to both the external and internal communication
5. Evaluation of Alternatives
 HPCL came to a conclusion that the best way to target different customer segments is through
employee engagement. Thus, the company focused on improving employee communication. The
main element of this project involved developing a new cultural and strategic vision for HPCL.
 Developing customer relations will increase the brand loyalty
 Proper feedbacks will ensure greater customer satisfaction
 Improving the existing technology will help in optimizing costs and reduce waste generation

6. Implementation Plan
HPCL considered that the most important part of customer engagement and targeting is to improve
the internal communication.

 Vision Workshops: HPCL focused on creating new cultural and strategic vision by involving the
employees to participate in a series of "Vision Workshops". This helped the employees to build
the correct vision of the compang and also enhanced their communication skills. These workshops
aimed at opening up two-way interconnected communications within the company. This involved
the employees interacting among each other about the core purpose of the company and the
leaders engaging in the interactive communication with the employees.In these workshops the
employees were able to offer their own opinions and insights on the current state and future course
of the company. Here they were able to hear their fellow employee’s views and vision. The
workshops helped to promote trust and collegiality among the workshop participants, it
familiarized them with the speculative, aspirational style of thinking that the vision-making
process required. It set up a dynamic in which they developed and explored the link between
personal aspirations and organisation’s growth. Employees showed commitment and a very good
response in the vision workshops. This resulted in a unity goal among employees that was to work
towards the company's vision.
 Visiting Marketplace: HPCL sent employees in groups to the marketplace to make them better
understand the customers and the company's vision. Formation of cross-functional teams and
assigned them to do the market study and market research and understand where the customer is.
This helped the employees get an insight into the needs of the customer and developed a beter
customer relationship as compared to the competitors. The market research improved the retail
performance of HPCL.
 Transformational Communication: In this the company emphasized on the two-way
communication. This was done to invoke a better understanding of the decisions, policies and
vision of the company among the employees. This would further increase the efficiency of the
organization. The company introduced an intranet portal called MyHPCL for the same.
 One-to-one Communication: The company executives strongly preferred the one-to-one
communication as this would enhance the employee's sense of belonging in the company and thus
have a very positive impact on their outlook. Though being in the large marketplace, HPCL
cannot rely much on the one-to-one communication between executives and the employees.

7. Solution

 HPCL focused more on the internal environment than the external environment. This led to a
nominal decline in market share
 HPCL must look outward i.e. to fight its competitors. Along with this it should focus on other
external stakeholders such as customers, technology, processes and logistics
 Simultaneously, HPCL should continue its approach on the internal communication. It must also
focus on the needs and demands of the customers by regularly taking feedbacks from the
customers and thus devising a strategy according to particular customer segments
8. Reference

 Hindustan Petroleum Corporation Ltd. :Driving Change through Internal Communication

(Harvard Business Review) by Boris Groysberg and Michael Slind.