Organizational Transformation at Hughes Electronics Corporation

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"If you look at the totality of it, Hughes really represents a tremendous case of defense conversion. The big deals they made were all the right ones." ¹

- Cai von Rumohr, Analyst at S.G. Cowen Securities Corp, Boston, in March 2000.

Introduction

On September 05, 2003, DirecTV, a subsidiary of the US-based Hughes Electronics Corporation (HEC), was ranked number one in customer satisfaction by J.D Power and Associates.2 This ranking was arrived at after a study of 7,380 satellite and cable TV subscriber households in the US named the 'Syndicated Cable/Satellite TV Customer Satisfaction Study.' The parameters used for ranking were performance and reliability, customer service, cost, billing, and offers and promotions. This was the second time in succession that HEC had won this award. Earlier in May 2003, the American Customer Satisfaction Index (ACSI) had also ranked DirecTV as the best in customer satisfaction among satellite and cable TV companies. The company had received this recognition from ASCI for two consecutive years.

Analysts remarked that these developments were remarkable considering that the company managing DirecTV was HEC. Not very long ago, the parent company (HEC) had been a defense equipment manufacturer best known for its missiles, military satellites and radar systems.

However, by 2003, HEC had emerged as a leading digital multi-channel service provider, satellite based broadband services provider, and satellite based video and data broadcast services provider in the US (it provided these services through its subsidiaries DirecTV, PanAmSat and HNS).

This radical change was the result of a four year long organizational transformation exercise that had begun in 1997. According to industry observers, HEC's transformation was a classic example of how a company could successfully shift its focus from one business to another by making the right strategic moves.

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1] 'Direct Hit,' www.cfo.com, March 01, 2000.

2] J.D. Power and Associates is a leading global marketing information services provider operating in the market research, consulting, forecasting, training and customer satisfaction businesses.