August

HERO HONDA MOTORS.LTD

31, 2009

8/31/2009
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 CONTENTS
PAGE NO
1. Introduction

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 1.1 - Hero Honda Group & Hero Honda Motors Ltd
3
1.2 - Company Profile
4
1.3 - Strategic Intent of HHML
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 1.4 -Two - Wheeler Industry in India
6
1.5 - Key Milestones
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 2. Resources Analysis
2.1 - Financial Resources
11
2.2 - Physical Resources
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 2.3 - Technological Resources
12

3.Strategies & Policies

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3.1 - Leadership
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3.2 - Promotional strategies
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3.3 - Target market
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 3.4 - Marketing mix of Hero Honda
17

4.Group Analysis

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4.1 - Value Chain Analysis
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4.2 - SWOT Analysis
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4.3 - Competitor Analysis
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4.4 - BCG Matrix
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4.5 - Porters Five Forces Model
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5. Conclusion & Recommendations
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6. References
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 1. INTRODUCTION

1.1. Hero Honda Group & Hero Honda Motors Ltd.

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"Hero", the brand name symbolizing the steely ambition of the
Munjal brothers, came into being in the year 1956. From a
modest manufacturer of bicycle components in the early 1940's
to the world's largest bicycle & two-wheeler manufacturer today,
the odyssey was fuelled by one vision - to build long-lasting
relationships with everyone, including workers, dealers and

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vendors. This philosophy has paid rich dividends through the
years.

Hero Honda Motors Limited, based in Delhi, India, is the world's

third largest manufacturer of motorcycles after Honda and
Yamaha. Hero Honda is a joint venture that began in 1984
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between the Hero Group of India and Honda of Japan. It has been
the world's biggest manufacturer of 2-wheeled motorized vehicles
since 2001, when it produced 1.3 million motorbikes in a single
year. During the fiscal year 2008-09, the company has sold 3.28
million bikes and the net profit of the company stood at
Rs.1281.7 crore, up 32% from the previous fiscal year.

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Hero, a name synonymous with two-wheelers in India is today a
multi-unit, multi-product, geographically diversified Group of
companies. Through fully integrated operations, group roll its own
steel, make critical components such as free wheels for their
bicycles, and have the foresight to simultaneously diversify into
myriad ventures, like product designing, IT enabled services,
finance and insurance, just to name a few.
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Like every success story, Hero's saga contains an element of
spirit and enterprise; of achievement through grit and
determination, coupled with vision and meticulous planning.
Throughout its success trail, the Hero Group and its members
have displayed unwavering passion of setting higher standards
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for themselves and delivering simply the best to their customers.
"Engineering Satisfaction" is the prime motive of the Hero Group
and it has become a way of life and a part of the work culture of
the Group. This is what drives the Group to seek newer vistas,
adopt faster technology and create quality driven products to the
utmost satisfaction of customers, partners, dealers and vendors.

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1.2. Company Profile

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“Hero” is the brand name used by the Munjal brothers in the year
1956 with the flagship company Hero Cycles. It is a joint venture
between India's Hero Group and Honda Motor Company; they are
related to Jagdish Lal Munjal.

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During the 1980s, Hero Honda became the first company in India
to prove that it was possible to drive a vehicle without polluting
the roads. The company introduced new generation motorcycles
that set industry benchmarks for fuel thrift and low emission. A
legendary 'Fill it - Shut it - Forget it' campaign captured the
imagination of commuters across India, and Hero Honda sold
millions of bikes purely on the commitment of increased mileage.
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Hero Honda has consistently grown at double digits since
inception; and today, every second motorcycle sold in the country
is a Hero Honda. Every 30 seconds, someone in India buys Hero
Honda's top-selling motorcycle: Splendor.

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Hero Honda bikes currently roll out from two globally
benchmarked manufacturing facilities based at Dharuhera and
Gurgaon in Haryana. These plants together are capable of
churning out 3.9 million bikes per year. A third state-of-the-art
manufacturing facility at Haridwar in Uttranchal will soon be
commissioned to cope with sustained customer demand. Hero
Honda's extensive sales and service network now spans over
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3,000 customer touch points. These comprise a mix of
dealerships, service and spare points, spare parts stockists and
authorized representatives of dealers across different areas.

Hero Honda values its relationship with customers. Its unique

CRM initiative, Hero Honda Passport Program, one of the largest
programs of this kind in the world, has over 3 million members on
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its roster. The program has not only helped Hero Honda
understand its customers and deliver value at different price
points, but has also created a loyal community of brand
ambassadors.
1.3. Strategic Intent

Vision/Mission
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Mission -
“Hero Honda’s mission is to strive for synergy between
technology, systems and human resources, to produce products
and services that meet the quality, performance and price

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aspirations of its customers. At the same time maintain the
highest standards of ethics and social responsibilities.

This mission is what drives Hero Honda to new heights in

excellence and helps the organization forge a unique and
mutually beneficial relationship with all its stake holders.”
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Mandate -
“Hero Honda is a world leader because of its excellent manpower,
proven management, extensive dealer network, efficient supply
chain and world-class products with cutting edge technology from
Honda Motor Company, Japan. The teamwork and commitment
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are manifested in the highest level of customer satisfaction, and
this goes a long way towards reinforcing its leadership status.”

Objective & Values

The Hero Group philosophy is -
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"To provide excellent transportation to the common man
at easily affordable prices and to provide total
satisfaction in all its spheres of activity”

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The group philosophy clearly states what the group objectives are
and stresses the focus on – customers, providing reliable and
affordable mobility for the masses and other stakeholders like
employees, suppliers, distributors, society and environment at
large.

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Apart from being customer-centric, the Hero Group provides its
employees with a fine quality of life and its business associates
(suppliers & distributors) with a total sense of belonging, thus
strengthening the bond that is already deep-rooted.

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1.4. Two – Wheeler Industry in India

History

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Arguably, the first motorcycle was designed and built by the
German inventors Gottlieb Daimler and Wilhelm Maybach in Bad
Cannstatt (since 1905 a city district of Stuttgart) in 1885.

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Replica of the Daimler-Maybach Reitwagen

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A 1913 Fabrique National in-line four with shaft drive from
Belgium
Automotive market in India (2007-2008)
The automotive market of India is dominated by two – wheelers
which constitute about ¾-th of the entire market.

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The manufacturing facilities for all these automotive players are
well – spread across the country with the east zone having the
least of participation.

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There are many factors which affect the India automotive
industry as a whole which is analyzed in the following figure.
These factors drive the industry & make it competitive globally.
India is slowly becoming the manufacturing hub for the
automotive sector.

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Players in the two – wheeler industry in India
All the manufacturers in the automobile industry can be broadly
classified into the following categories:
Major players are:
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✔ Hero Honda Motors Ltd. :- Achiever - CBZ - Hunk - Karizma -
Passion – Splendor
✔ Bajaj Auto Ltd. :- Avenger - Boxer - CT 100 - Discover -
Eliminator - Legend –
Pulsar - Pulsar 220 - Platina - Wind – XCD
Kristal - Chetak –
Saffire - Sunny – Wave
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✔ TVS Motor Company :-Victor - Flame – Apache

✔ Honda Motorcycle & Scooter India Ltd. :- Activa - Aviator - Dio -

Unicorn

Minor players are:

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✔ Suzuki Motorcycles India Ltd
✔ Yamaha: - Crux - Gladiator - Libero - RX-135 - RX 100 - R15
-FZ16 - FZ-S

✔ Royal Enfield (Niche Segment)

New Entrants
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✔ Mahindra & Mahindra (Acquired Kinetic Motor Co. Ltd. in 2008)
✔ Mahabharat Motors (Will start producing TVS branded 2-
wheelers in Apr.’09)
Other Players
✔ Manufacturers of electric two – wheelers such as Yo Bikes
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1.5. Key Milestone
Y MILESTONE
EAR
1.Joint Collaboration Agreement with Honda Motor Co. Ltd.
Japan signed
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 1 2. Shareholders Agreement signed
983
1 Hero Honda Motors Ltd. incorporated
984
1 First motorcycle "CD 100" rolled out
985
1 100,000th motorcycle produced
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987
1 New motorcycle model - "Sleek" introduced
989
1 1. New motorcycle model - "CD 100 SS" introduced
991
2. 500,000th motorcycle produced
1 Raman Munjal Vidya Mandir inaugurated - A School in the

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992 memory of founder Managing Director, Mr. Raman Kant
Munjal
1 1. New motorcycle model - "Splendor" introduced
994
2. 1,000,000th motorcycle produced
1 1. New motorcycle model - "Street" introduced
997
2. Hero Honda's 2nd manufacturing plant at Gurgaon
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 inaugurated
1 2,000,000th motorcycle produced
998
1. New motorcycle model - "CBZ" introduced
2. Environment Management System of Dharuhera Plant
certified with ISO-14001 by DNV Holland
1
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999 3. Raman Munjal Memorial Hospital inaugurated - A Hospital
in the memory of founder Managing Director, Mr. Raman Kant
Munjal
1. 4,000,000th motorcycle produced
2. Environment Management System of Gurgaon Plant
certified ISO-14001 by DNV Holland
2
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000 3. Splendor declared 'World No. 1' - largest selling single two-
wheeler model
4. "Hero Honda Passport Programme" - CRM Programme
launched
1. New motorcycle model - "Passion" introduced
2 2. One million production in one single year
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001 3. New motorcycle model - "Joy" introduced
4. 5,000,000th motorcycle produced
1. New motorcycle model - "Dawn" introduced
2 2. New motorcycle model - "Ambition" introduced
002
3. Appointed Virender Sehwag, Mohammad Kaif, Yuvraj

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Singh, Harbhajan Singh and Zaheer Khan as Brand
Ambassadors.

1. Becomes the first Indian Company to cross the cumulative

7 million sales mark
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 2. Splendor has emerged as the World's largest selling model
for the third calendar year in a row (2000, 2001, 2002)
3. New motorcycle model - "CD Dawn" introduced
2
003 4. New motorcycle model - "Splendor +" introduced
5. New motorcycle model - "Passion Plus" introduced
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6. New motorcycle model - "Karizma" introduced
1. New motorcycle model - "Ambition 135" introduced
2. Hero Honda became the World No. 1 Company for the third
consecutive year.
3. Crossed sales of over 2 million units in a single year, a
global record.
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2 4. Splendor - World's largest selling motorcycle crossed the 5
004 million mark
5. New motorcycle model - "CBZ*" introduced
6. Joint Technical Agreement with Honda renewed
7. Total sales crossed a record of 10 million motorcycles
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 1. Hero Honda is the World No. 1 for the 4th year in a row
2. New motorcycle model - "Super Splendor" introduced
3. New motorcycle model - "CD Deluxe" introduced
2 4. New motorcycle model - "Glamour" introduced
005
5. New motorcycle model - "Achiever" introduced
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 6. First Scooter model from Hero Honda - "Pleasure"
introduced
2 Hero Honda is the World No. 1 two-wheeler co. for the 5th
006 year in a row
2 Hero Honda is the World No. 1 two-wheeler co. for the 8th
008 year in a row

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 2. Resources Analysis

2.1. Financial Resources

We begin the resource analysis of Hero Honda Motors Ltd. with
the break up of the capital structure of the firm & the financial
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comparison of different players in the two – wheeler segment.
The company is 100% debt free with the break up of the capital
structure as follows:

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26% of the shares are each owned by Hero Group & Honda
Motors, Japan while the rest is owned by equity shareholders.
Apart from this Honda Motors, Japan gets a royalty fee of 25% of
the contribution margin because of the technical - know how
provided to Hero Honda. Needless to say, this has been one of
the most successful overseas joint ventures by Honda Motors,
Japan. However, employees are free to take the company’s
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shares at their own discretion. It is interesting to note that in spite
of the global meltdown, Hero Honda’s net profit has increased by
47% as in the first three quarter as compared to last financial
year.

2.2. Physical Resources

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Hero Honda has got three manufacturing facilities at Dharuhera &
Gurgaon in Haryana & Haridwar in Uttarakhand. The production
capacity of the first two plants is 6500 vehicles per day while for
the third plant is 3500 vehicles per day. The cycle time for vehicle
production is maintained at 18 secs. Its distribution network is
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controlled by regional offices & area offices & includes about
3000 dealers, stockists & SSP’s (Service & Spare parts) across the
length & breadth of India. The concepts of Lean Manufacturing
are applied in all the plants to improve performance & drive down
cost.
2.3. Technological Resources
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The company believes in the concept called World Class
Manufacturing. Its major ingredients are shown in the figure
below –

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The Direct Online System (DOL) is similar to JIT. Here the vendors
are selected for DOL category based on a variety of parameters
such rate of parts being defective & replaced in warranty. In order
to remove bottlenecks & improve quality of work fully integrated
robotic lines are used such as in Aluminium phase (for
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manufacturing cylinder heads, crankcase etc.) and in weld &
paint shops.

Flexible manufacturing system is followed where in any product

assembled in any assembly line.

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3. STRATEGIES & POLICIES

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3.1. Leadership
Dr. Brijmohan Lall Munjal, Chairman, Hero Honda Group, is one of
the best known first-generation entrepreneurs in India. Dr. Munjal
started Hero group right from the scratch along with three of his

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brothers after shifting base to Ludhiana, India from Pakistan after
1947 and built a business empire of US$ 3.2 billion in a span of
nearly six decades comprising of 20 companies in diverse fields
including auto parts, bicycles, motorcycles, education, BPO, IT
software etc.

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The value set, which forms the intrinsic core of his business
philosophy, is based on simplicity, honesty, highest integrity &
sense of fairness.

Dr. Munjal traversed the road to success with the Hero group
following these principles –
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• “Trust the instincts”,
• “Deal with people with compassion”,
• “Think ahead of time”,
• “Show others the way through highest form of corporate
citizenship”.
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The examples for all of the principles just mentioned are easy to
find out. Dr. Munjal, never satisfied being only a bicycle
component manufacturer, moved up the value chain by
becoming a complete bicycle manufacturer in 1956. Through
continuous growth and establishing a nation-wide supply &
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distribution network which was based on mutual trust and
relationship, within 30 years of starting, Hero Group became the
largest bicycle manufacturer in the world and it continues to be
so till date. Hero Group, under the able leadership of Dr. Munjal,
pioneered bicycle exporting from India as early as in 1963.
Though exports were initially limited to Africa & Middle East, now
Hero Group caters to the US & European markets as well.
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Adoption of key new technologies and providing best-in-class
value & performance are the hall marks of Hero Cycles.

At a time when the Indian two-wheeler industry was known by the

rusty Bajaj Chetak and other two-stroke engine vehicles, Dr.
Munjal revolutionized the industry by bringing the first four-stroke
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motorbikes to the table. It was a brilliant strategic move. Since
these technologies were not indigenously available, he
collaborated with the Honda Motor Company of Japan and Hero
Honda Motors Ltd. was formed in 1984 as a JV between Honda &
the Hero Group. It’s one of the best success stories in India as a
collaborative effort between two different cultures and entities.
The JV thrived because the roles of the partners were clearly
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demarcated by the leadership – Honda to provide the
technological inputs and overall guidance, Hero Group to provide
the manufacturing resources and foot the distribution efforts.
With this, Dr. Munjal ensured cheaper, affordable mobility to the
millions of Indians. Not only the four-stroke engines gave better
mileage, but these are reliable, less polluting machines which
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immediately became the darling of the masses and for Govt.
regulators as well. He was at the forefront of the campaign by
Hero Honda Motors Ltd. - 'Fill it - Shut it - Forget it', which brought
forth the value-of-money aspect of these bikes and endeared the
masses. The testimony to all these efforts came in 2001 when
Hero Honda Motors Ltd. became the largest two-wheeler maker in
the world with a customer base of over 20 million. Though
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without teamwork & commitment, all these achievements would
not have been possible, it was the vision and zeal of the founders
which pushed Hero Group to rise higher and higher and touché
the horizons.

3.2. Promotional Strategies

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1. BRAND AMBASSADORS OF HERO HONDA
Hrithik, Saurav Ganguly, brand ambassadors of Hero-Honda. Hero
Honda, a leading manufacturer of motorcycles, has roped in film
actor Hrithik Roshan and captain of Indian Cricket team Saurav
Ganguly as its brand ambassadors for three years till 2003.

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The latest commercial featuring Hrithik Roshan, Priyanka Chopra
and six cricketers, is perhaps the longest ad, at three minutes.
Promotion Policy:
➢ Company gives advertisement in different media vehicles time
to time. Like in TV, Magazines, newspaper, etc.
➢ Hero Honda also organizes free service camps every year.
➢ Hero Honda also takes art in trade fair.
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➢ Hero Honda with the help of ICICI Bank provides loan to the
customers & also provide easy monthly installment scheme to
customers.
➢ Hero Honda gives huge commission to their dealers.

2.ADVERTISEMENT

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Hero Honda - Sa Re Ga Ma Pa Challenge 2009 - Watch Hindi Zee
TV Program
Hero Honda - Sa Re Ga Ma Pa Challenge 2009 is the 3rd
installment of the Sa Re
Ga Ma Pa Challenge series which premiered on July 4, 2008 on
Zee TV
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The show is hosted by Aditya Narayan, who also hosted the
previous competition Sa Re Ga Ma Pa Challenge 2007. This show
features three new mentors, Aadesh Shrivastava, Shankar
Mahadevan and Pritam, who join Himesh Reshammiya.The
concept, is similar to the previous show Sa Re Ga Ma Pa
Challenge 2007 where the contest invited singers from all around
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the world. Auditions were held outsideIndia & contestants were
judged by various music artistes from the Indian Music industry.
Only the top contestants from the auditions were selected to
participate in the show.

Some of the advertisements are:

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 3.PLAN HAR GAON HAR AANGAN:

Hero Honda was quick to realize that there was a huge

opportunity waiting to be tapped. A rural vertical was set up
under Dua sometime in 2007. Five hundred sales representatives
were taken on board for the mission Har Gaon, Har Aangan (every
village, every courtyard.)
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These representatives have been given work tasks and not sale
targets - they need to meet potential customers and opinion
leaders in villages. So far, Hero Honda hasmounted three two-
month long "waves" through these men. Each wave hasresulted
in additional sale of 15,000-16,000 motorcycles

4.CORPORATE SOCIAL RESPONSIBILITY:

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Hero Honda Motors takes considerable pride in its stakeholder
relationships, especially ones developed at the grassroots. The
Company believes it has managed to bring an economically and
socially backward region in Dharuhera, Haryana, into the national
economic mainstream.

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3.3. Target Market

WHY COMPANY CHOOSE RURAL MARKET

Hero Honda has worked out a major expansion strategy for the
rural markets and is planning to strengthen retail financing to
support the initiative that could lead to setting up of its own
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finance arm. Pawan munjal, MD of Hero Honda, told TOI that rural
market would be a special focus area for the company as it is
looking at new growth areas to maintain sales momentum in a
shrinking market. "We have created a special ‘rural vertical' to
push growth and this would spearhead our expansion in the rural
market,' Munjal said.

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India's largest two wheeler company Hero Honda Motors is
spreading its wings to capture the commuting bikers' imagination
in rural India, after witnessing flat sales growth in 2007-08. The
two wheeler market leader plans to cover 100,000 of the600,000
villages in the country by the end of this financial year under a
campaign named Har Gaon, Har Aangan (every village, every
household).
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3.4. Marketing mix of Hero Honda

4- A’s OF HERO HONDA

1. Availability

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a) Hero Honda's 2 plants are in Dharuhera and Gurgaon, both in
India. Third plant at Haridwar, Uttaranchal has also started
production byApril, 2008.
b) Hero Honda's extensive sales and service network have spans
over 3,000 customers touch points.

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c) The number of touch points (dealerships plus sales and service
outlets) is already 3,500 from 2002 and another 500 would be
added every year.

2. Affordability
a) Hero Honda offer cheapest motorcycles in India cost between
Rs 30,000 and Rs 35,000.
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b) Hero Honda with the help of ICICI Bank provides loan to the
customers & also provide easy monthly installment scheme to
customers.

3. Awareness
a) Hero Honda Motors Ltd was the top advertiser then, accounting
for a little over 25% (one fourth) of the share.
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b) Five hundred sales representatives were taken on board for the
mission Har Gaon, Har Aangan (every village, every courtyard.)
c) Company gives advertisement in different media vehicles time
to time. Like in TV, Magazines, newspaper, etc.
d) Hero Honda also organizes free service camps every year.
e) Hero Honda also takes art in trade fair.

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4. Acceptability

a) Hero Honda has accepted by people because its strong brand

image and product quality.
b) Hero Honda is considered to be most fuel-efficient bike on
Indian roads.

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c) Hero Honda bikes are purchased more by daily users who
needs more average of bikes as well as look.
d) People prefer Hero Honda because of its product varieties &
stylish design etc.

4. Group Analysis

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4.1. Value Chain Analysis
It is quite obvious that Hero Honda possesses some competitive
advantages over competition, enabling them to be the largest
two-wheeler maker in the world for the 7th year in a row and
commanding a hefty market share of 52% of Indian two-wheeler
market and continuing to grow at a healthy rate of 13% (PAT)
amid worsening financial crisis and deepening of recessionary
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influences. We attempt to ascertain the competitive advantages
that HHML has by analyzing its value chain.

Primary Activities
✔ Inbound logistics

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From early days, HHML tried to have close integration with
suppliers as vendor management is critical for its operation, for
the simple fact that 73% of production cost is due to material
components. Thus it is essential for HHML to ensure tight control
& reduction of logistical cost and/or transaction cost when
procuring components.

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With these aims, HHML adopted “Just in Time” (JIT) manufacturing
philosophy which demanded close coordination between its
manufacturing facilities and the vendors and ancillary units. For
example, ~ 100 ancillaries are setting manufacturing bases in
Haridwar near the newly started HHML plant to ensure integrated
supply chain. All these vendors will be connected to the main

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plant by conveyors to prevent chances of time & material loss
due to multiple handling.

✔ Operations

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As was being described above, HHML is probably the only Indian
company to have truly mastered the art of JIT manufacturing.
HHML also follows Lean Manufacturing, uses high degree of
automation levels (full automatic robotic operation in welding and
some other specific areas) to ensure high efficiency, low
inventory production, with usual benefits like increased cash flow,

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reduced cash & operating cycles and thus improved working
capital conditions.
With employee strength being in the range of 4320, the
productivity per employee is very high. Further, the concepts of
Lean Manufacturing, JIT & Integrated Supply Chain have been
applied from the start in Haridwar plant making it highly efficient.
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 ✔ Outbound logistics
HHML feeds the demand in India & exports ~ 95,000 bikes
through its well established delivery channels from the 3 plants.
The effort is to provide for minimum waiting period or rather

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filling the regions as per the demand forecasts and market
trends.

✔ Marketing & Sales

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Marketing arm of HHML started the hugely successful “Fill it, Shut
it, Forget it” campaign years ago to pitch for its better fuel
efficiency and thus lower owning cost. To ensure customer
loyalty, HHML has come up with Hero Honda Passport Program
which gives special privileges to its customers. HHML does not
indulge in price wars in an effort to maintain the perception of
enduring quality among present & potential customers. Of late,
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there were complaints from customers that HHML is not dynamic
enough to present newer, flashier & more powerful bike models in
the premium segment that competitors like recharged Bajaj is
offering. Another complaint was that many of the variants offered
by HHML have little or insignificant product differentiation which
can justify the price difference. HHML has paid heed to these
stated & unstated needs of its customers and improved the 4P’s
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(Product, Price, Place & Promotion). Its offerings now are well
accepted in the market.
It has been a constant endeavor of HHML to cater to both urban
and rural markets with similar zest, with advertising campaigns
and promotional events clearly focusing on the two markets –
“Har Gaon, Har Angaan” is the recent rural connect initiative to
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cover ~ 23,360 villages with a population of 5000 or more by 500
specially trained rural sales executives.
HHML has a conscious strategy of penetrating new markets and
unrepresented territories through its distribution network which is
made up of dealers, authorized representatives, stockists and
SSPs. In March 2001, the company had 826 such customers’
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points in India. By March 2008, this number went up to over
3500. On an all India basis, 50 dealers, 150 SSPs, 267 dealers and
45 city work agents were added within this period.

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 ✔ Services
HHML has constituted one the best after-sales service network in
the industry. Apart from improving the quality of service and easy
availability of spare parts, HHML has also focused on cleanliness
and other aesthetics of the service stations and added amenities
such as air-conditioned waiting area, internet browsing and coffee
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shops etc. to enhance the in-house experience of the consumers
at those “customer touch-points”.
To ensure that millions of customers in the rural areas are not left
waiting for adequate service as it is impossible for HHML to
introduce service stations at every nook & corner of the country,
mobile service stations are regularly arranged with prior
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intimation to public about the route that the mobile workshop
would take when passing through that region, so that consumers
can come and get their two-wheelers serviced.
The value activities done by HHML in its value chain (both
primary & support activities) are given in Fig. IA1.

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4.2. SWOT Analysis

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4.3. COMPETITIVE ANALYSIS

HERO HONDA HONDA BAJAJ

- Environment -The Joy of buying: - Total

policy: Cleaner The joy of using Productivity
production world class products Maintenance:
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 processes and Provide safe
better - The Joy of work
environmental selling: The joy of environment to
KEY performance selling world class enhance
POLICIES products efficiency of
- Quality policy: work processes
Provide innovative - The Joy of
products and focus manufacturing: - Quality
on TQM The joy of producing Policy: Provide
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 world class quality value for money
- Safety Policy: products through
Provide a safe work enhanced
environment for quality, safety
employees to and service
enhance
productivity

-Large number of -Most products in the -Market leader

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 products in all executive segment, in Premium and
PRODUCT segments especially scooters Entry segments
LINE
- Market Leader in - A new entrant, so - Cashes in on
executive segment all products are the success of
relatively new in the the previous
markets variants of its
large selling
models
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 -Does not have -Dedicated R&D -Fully integrated
own dedicated facility at Gurgaon R&D facility
R&D R&D facility
- Major strength lies - Major strength
- Also faces a in new product in quality but
threat of Honda development and not in new
withdrawing its quality product
support with HMSI development
entering the
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 market
As per the Not Applicable Largest 2 and 3
EXPORT agreement with wheeler
HMSI, it cannot exporter, leader
export to countries in Sri Lanka and
where Honda bikes Central America
are already present
-Aggressive -Lesser presence in -Aggressive
promotion the advertising promotion
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 strategies canvas campaigns for
BRAND especially for new products
PROMOTION launch of new bikes - Emphasizes on
product and quality - No celebrity
- Extensive use of characteristics in endorsements;
celebrity advertisements prefers to
endorsements and emphasize on
event sponsorships lifestyle aspect
Losing market Has grown above Steadily rising
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MKT SHARE share in most 10% in the overall market share on
CHANGE segments due to market the back of
greater competition superior
performance of
Pulsar

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The following diagram summarizes the competitive advantages
Hero Honda enjoys thus -

4.4. BCG Matrix for Hero Honda

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The BCG matrix shows a link between the growth rate of business
and the market share. “Question marks” in business are with
weak market share and high growth rate usually requires cash
investment so that they can become Stars. The business with
high growth and strong competitive position has opportunities for
growth and profit. The “Cash cows” with a strong competitive
position and low growth rate, are usually well established in the
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market and such enterprises are in the position of making their
products at low cost. The “dogs” are the business with a low
growth rate and a weak market share. These businesses are
usually not profitable and generally should be disposed of.

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4.5. Porters Five Forces Model

Rivalry:-
Hero Honda has competitive advantage over its competitors in
following manner:-
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• Huge customer base
• High sale in tier1 and tier2 cities and also in rural areas.
• Large distribution network
• Technical knowledge to the mechanics.
• Large service centre across whole country.
• Stable prices

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• Resale value of Hero Honda bikes is more than other
company’s bikes.

Threats of substitutes:-
Hero Honda faces threat of substitute in many segments.
• Splendor with Bajaj Discover and TVS Apache.
• Karizma with Bajaj Pulsar 220 DTSFi and Yamaha R1.
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• Substitute of High ended bike with bikes like avenger.
• Lowering price of second hand cars. The car price is low which
gives the
switching power to buyer. Due to availability of substitute
demand is more
elastic.

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Buyer’s Power:-
• Buyers are less powerful because Hero Honda has its own
distribution channel.
• Buyer’s are fragmented in the market so no particular group of
buyer had a significance on sale of motorcycle or its price so
buyer are less powerful.

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Supplier Power:-
• Rolex IPEX Company provides the engine, suspension, brakes
etc for Hero Honda.
• Saicom International provide electrical parts, head light, tail
light, switches. In case of Hero Honda its suppliers have the
power to bargain because in all the product line the same
spare part is used by the company so it cannot early switch it.
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 But the supplier maintains relationship with the company
because they regularly receive the order from the company in
bulk.

Barrier to Entry and Exit:-

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• If Hero Honda wants to enter into other segment market, i.e.
producing scooters, cars, three wheelers etc.
• It has to take patent or proprietary knowhow.
• It has to explore new distribution channel.
• Product would be successful or not.
• Switching to other segment will affect the Industry.
• Very high exit cost from the Industry.
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 5. CONCLUSION & RECOMMENDATIONS

Conclusion:
1) Most of the Hero Honda Bikes are purchased by young
generation 18 to 30 because they prefer stylish looks and rest of
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the models of Hero Honda are purchased more by daily users who
needs more average of bikes than looks.
2) Hero Honda is considered to be most fuel-efficient bike on
Indian roads.
3) Service & Spare parts are available throughout India in local
markets also.
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4) While buying a motorcycle, economy is the main consideration
in form of maintenance cost, fuel efficiency.
5) Hero Honda started growing in rural market rapidly with its ad
campaign and promotion strategies in rural market.

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Recommendations:
1) The company can utilize a related diversification strategy by
entering the scooter market.
2) They can capitalize on positive and popular brand image.

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3) Optimum utilization of resources can be done by sharing
similar resources for motorcycles and scooters.
4) Expand to countries that heavily use two wheelers as tourists
may opt to rent two wheelers instead of cars

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6. REFERENCES

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1) www.businessweek.com

2) www.herohonda.com

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3) www.herogroup.com

4) www.indiatoday.com

5) www.extrememachines.com
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6) www.twowheeler.com

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CONTRIBUTION OF EACH MEMBER IN THE REPORT

CONTENTS NAME
OF THE MEMBER
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 1. Introduction
1.1 - Hero Honda Group & Hero Honda Motors Ltd : Pallavi
B
1.2 - Company Profile :
Pallavi B

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 1.3 - Strategic Intent of HHML :
Sandeep T
1.4 -Two - Wheeler Industry in India : Atul
K / Yashodhan M
1.5 - Key Milestones :
Yashodhan M
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 2. Resources Analysis
2.1 - Financial Resources :
Nitin B

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 2.2 - Physical Resources :
Nitin B
2.3 - Technological Resources :
Atul K

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3.Strategies & Policies
3.1 - Leadership :
Nitin B
3.2 - Promotional strategies :
Sandeep T

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3.3 - Target market :
Yashodhan M
3.4 - Marketing mix of Hero Honda : Pallavi
B

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4.Group Analysis
4.1 - Value Chain Analysis : Atul
K
4.2 - SWOT Analysis :
Yashodhan M

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4.3 - Competitor Analysis :
Sandeep T
4.4 - BCG Matrix :
Pallavi B
4.5 - Porters Five Forces Model : Nitin
B
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5. Conclusion& Recommendations :
All

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