Effects of Changing Business Environment on Organization Performance: The Case of HMT Watches Ltd.

Abstract

Hindustan Machine Tools (HMT) Limited was incorporated in 1953 by the Government of India as a machine tool manufacturing company. In the later years, the company diversified into other products including watches. Its watch division, known as the HMT Watches Limited, started in 1961 with the support of Japan’s Citizen Watch Company. Over the years, HMT made tremendous progress in all business dimensions to emerge as a market leader in the Indian watch industry. The company also earned the reputation of ‘the time keeper of the nation’ for its profound impact on the country’s watch business. Hindustan Machine Tools established itself as a strong brand in the Indian market. However, post-liberalization in 1991, HMT’s performance started dwindling. The policies of liberalization, privatization and globalization paved the way for the entry of many private brands, both domestic and foreign, into the Indian watch market that became hyper-competitive. The HMT management did not show enough agility to make necessary changes in its business models to cope with the changing business environment. Gradually, HMT lost its numero uno position to Titan Watches of the Tata Group. Hindustan Machine Tools inability to understand the needs of modern-day customers and its less-than-adequate attention towards new product development made things even worse for the organization. With losses accumulating over the years, HMT became financially unviable. After several failed attempts to turn around, the government finally closed down HMT Watches in early 2016. With this, HMT became a brand of the bygone era. This case portrays the long and eventful journey of HMT Watches and then analyzes the major reasons behind its failure. It implies a few important strategic lessons for the management students.