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PART A Hitachi's Better Handle When Hiroaki Nakanishi asked a gathering of Hitachi employees in 2011 how many people the company employed, the room went silent. No one could answer the CEO's remarkably simple question. (It's around 336,000.) On closer inspection it's not hard to see how the company might have lost head count. Over the last century Hitachi has survived earthquakes, economic downturn and two world wars, while gaining more than 900 diverse subsidiaries and a reputation for chumning out innovative products The company currently operates on 11 different business segments, including: IT, renewable energy, electronics, automotive, defense, finance and digital media and consumer products. But while Hitachi built its reputation on making reliable products, it has lacked the shimmer and appeal that attracts Millennials the way younger tech companies have. Even with a trusted brand and a valuation of $24 billion, Hitachi knows success can be fleeting. Indeed, the current stock price is back where it was 25 years ago. "What got us here the last 100 years will not get us to the next 100 years, so we have to change," says Levent Arabaci, Executive Vice President of Human Resources at Hitachi. And it is in HR that the company faced particular headwinds. There's irony in that Arabaci says Hitachi was founded on a pioneering spirit, which gives employees the freedom to start their own projects. This attitude resulted in nearly a thousand subsidiaries and a complicated environment where none of its personnel data communicated with one another - each subsidiary had its own way of managing its people. "Oh, it was just madness," Arabaci says. "You would get anything from Excel spreadsheets to someone's diary book, maybe Oracle or, in some cases, SAP. There was no sharing of talent, systems or anything, so literally it was like running 1,000 companies separately What spurred an overhaul was a combination of Japan's decline in population and Hitachi's self-realization that its promotion model worked against the innovation it stands for and needed an update "You almost had to put in your 40 years in order for you to become a senior manager or manager, and so on. That kind of tradition no longer works for Japan," says Arabaci, who appreciates that Nakanishi publicly announced his plans for Hitachi to revamp its "human capital management practices. "When you publicly announce something, you actually hold yourself accountable. You have to deliver it. I can set goals all day long, and if I don't share it with anyone, no one has to know. Arabaci and Imtiaz Shaikh, who is Senior Vice President of global HR - both are based at the giant's San Francisco Bay area offices - set out to find HR software that would Improve the promotion system. In four years Hitachi went from having an HR team that was 100% Japanese to one with members from eight countries. The company will be migrating 250,000 of its people to Workday software over two to three years. Since the internal revolution, Hitachi has attracted 190,000 applicant, seen its overseas revenue ratio reach 50% in 2015 and ranked No. 38 on the the Boston Consulting Group's most innovative companies list, While other companies are splitting up for more agility (think Hewlett-Packard), Hitachi is looking within its own conglomerate of subsidiaries for comprehensive synergies. Across its thousand parts, Hitachi merely has to combine its products in ways that make sense. For example, Hitachi as leveraged its electrical equipment, pumping stations and water purification systems to guarantee safe drinking water while contributing to water recycling. It also has recently venturing into still blossoming concepts such as social innovation and smart cities. The internal transformation has proven to be productive, but the company has seen and expects resistance. Says Arabaci of his more traditional colleagues, "They don't take change easily. They're slow to adopt. They feel like they have a very proud history of consistency. But when you have pressure from Samsung or some low-cost provider from China and other countries, you're racing against time." (Source: Rosa Trieu, "Hitachi's Better Handle," Forbes, February 2016, 16-17) QUESTION 1 Describe four (4) strenghts that had made Hitachi strong in facing all the challenges that came their way (10 marks)