INTERNATIONAL EXPANSION PLAN FOR HERO

MOTOCORP AFTER SEPARATION FROM HONDA-

LAUNCH PLAN IN BANGLADESH
Group Number: 10
ABOUT THE COMPANY
 Largest two wheeler manufacturer in the world

 Founded in 1984 as a JV between Hero Cycles and Honda by B.L. Munjal

 46% market share in India as of 2017

 Revenue in 2017: 4.4 bn USD; Net Income: 490 mn USD

 In 2010, Hero Motocorp terminated their JV with Honda

 In 2013, Hero Motocorp acquired 49.2% share in Erik Buell Racing

 It plans to expand in 50 global markets by 2020

PESTEL ANALYSIS
POLITICAL TECHNOLOGICAL
•Govt. of Bangladesh’s stated policy is to attract FDI •Technological development declined over the years
•No distinction between domestic and foreign private investors regarding •National Council devised skill development programmes
export and import •IT is a emerging field
•100% ownership in most sectors •Growth in fuel efficient bike market
•Reduced import duty; duty free imports for 100% exporters •Technological innovations in engine capacities and emergence of electric
•Ideological clashes among 3 primary parties vehicles

ECONOMIC ENVIRONMENTAL
•GDP per capita is $ 1209 in 2017 •National environmental management action plan to promote fuel efficient
•GDP is projected to grow at 7 % till 2020 vehicles to monitor air pollution
•Standard corporate tax rate is 27.5% •According to 2012, vehicle emission standard, 4.5% CO emission is allowed per
•Corruption index 143rd ; So admin and governance cost high petrol run vehicle
•Supply chain dominated by inland waterways which is not modernized •For CNG run vehicle the emission limit is stocked at 0.5%
technology equipped •Compliance on Euro 3 motor type
•Total NPA pegged at 32%; very difficult to get loans

SOCIAL LEGAL
•Muslim majority country •Ease of doing business ameliorated to 176
•Consumer rights social responsibility not widespread in society\ •Formation of anti-corruption commission
•Lack of quality management •Patent and design act 1933, Copyright act 1999, Trademark Act 1940
•Basic education system and skill development programmes
•Good relationship with stakeholders
PORTERS FIVE FORCES

Bargaining Bargaining
Threat of new Threat of Threat of
power of power of
entrants substitutes existing rivals
suppliers buyers

Supplier concentration
Economies of scale Availability of substitute Product differentiation
Product Differentiation inputs Switching costs to use Relative price of No. of competitors
Capital requirements Suppliers product other product substitute Industry growth rate
Switching cost to buyers differentiation Buyers threat of Relative quality of Diversity of competitors
Access to distribution Suppliers threat of backward integration substitute
forward integration Buyers switching costs
buyers Sellers threat of forward Switching costs to buyer
Buyers threat of integration Diversity of competitors
Government Policies
backward integration
SWOT ANALYSIS
• Huge brand equity
• Strong Brand Image
• Excellent Distribution • Lack of innovative products
• Wide Range of Products • Low on Design
• Association with Global • Lack of POD’s
Sporting Events
STRENGTHS WEAKNESSES

• 44% increase in two wheeler • Strong competitors like Bajaj,

purchase in 2017 Yamaha,TVS, Znen, Akij
OPPORTUNITIES THREATS
• India is the largest exporter of • Increase insurance cost
two wheeler market to • High import duty of 25% and
Bangladesh VAT 15%
• Hero has proprietary • Public Transport
technologies like ASFS, ATFT
ROSTOW’S MODEL OF DEVELOPMENT
 Population: 15.7 Crore (As of July 2017)
 15-24 Years (24% of Population)
 25-54 (39.73% of Population)
 55-64 (6.93% of Population)
 Median Age (Male: 26 Years, Female: 27.3)
 Sex Ration: (M:F=0.93)
 GDP per Capita: 1516 USD
 Average household income per month: 137
USD
 GDP growth rate: 7%

 Bangladesh is a developing country where

product assortment and price point and
parity would be similar as of Indian society
PRICING STRATEGY & MARKET FOR 2-WHEELERS
 Average Price point of Motor Bikes in
Bangladesh is 65000 BDT; for Scooty’s it is 60000
BDT

 Want to launch those very brands of Hero which

are similar to price points of India and
Bangladesh

 Brands are Splendor, Passion, Deluxe in bike

segment; Pleasure and Maestro in scooty
segment

 Initial price range of Splendor (All Prices in BDT):

65000-70000, Passion: 68000-75000, Deluxe:
62000-66000, Pleasure: 59000-61000, Maestro:
62000-65000)
 DIAMOND STRATEGY
STAGING AND
ARENAS: Different bikes for
PRICING: different segment, Distributors
Initial models are and dealers, Geographies
launched first followed include Barisal, Dhaka, Sylhet,
by high end models; Chittagong
Manufacturing facility
later to be established VEHICLES: Joint Venture
depending on with local third party
circumstances manufacturer of automobile
parts, dealership building
programme, Hero affiliated
DIFFERENTIATORS: repairing centre, warranty
Branding to be done
keeping in mind ECONOMIC LOGIC:
Discount during festivities,
POD’s, Price points to
Economic Growth: 7%, GDP
be kept based on factors, PPP
purchasing power