report on hero honda
TRANSCRIPT
PROJECT
ON
HERO HONDA MOTORS
SUBMITTED BY:
NAME: BARUN KUMAR
ROLL NO.:60
SUB: STRATEGIC MANAGEMENT
DIV: J
ACKNOWLEDGEMENTI would like to place my deep sense of mba to the indira institutes career studies for providing me with an opportunity to do a suitable project for such an esteemed organization as part of my mba Project. I am grateful to my Friends & my Guide to provide me necessities required for analyzing the project. They were very co-operative and helpful while allocating me the project and also while other interaction with them.
I have sincere obligation towards my faculty Prof Radha Vijaya who provide me in doing analysis and designing the project.
BARUN KUMAR
EXECUTIVE SUMMERYThe project was assigned to us by our Prof .Radha vijaya and it was entitled as“A Comparative study of company, an industry or any issue relating to Strategic Management & Business Ethics.my topic is HERO HONDA MOTOR.
The main purpose of the project was to find out company detail and collect the information about there Strength, weaknesses, opportunities and threats of the product. How that product getting comparative advantages over the competitor. Company performance and which type of strategic should be applied on company product to get comparative advantages.
To fulfill the above objective I contact with my senior who guide me how to do this project .According to there suggestion I collect complete information from the internet about that product and by the help of own knowledge I successesfully done my project.
Contents:-1. Introduction on topic.2. Background Detail 3. Legends of Hero Honda4. Portfolio of Hero Groups Business.5. SWOT Analysis6. Competitors7. STRATEGIC TOOL FOR APPRAISING BUSINESS
PORTFOLIO& FORMULATION STRATEGY.8. ANSOFF PRODUCT MARKET EXPANSION GRID ON
HERO HONDA.9. BCG MATRIX.10. CELLS MATRIX.11. SELLS PERFORMANCE12. MICHEL’S PORTERS 5 FORCES13. PEST ANALYSIS
INTRODCTIONHero Honda Motors Limited, based in Delhi, India is a joint venture between the Hero Group of India and Honda of Japan. It has been referred to as 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 any's most popular model is the Hero Honda's Splendor, which is the world's largest-selling motorcycle, selling more than one million units per year.“Hero” is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda company India.
During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it - Forget it' that emphasised the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception.
Hero Honda has three manufacturing facilities based at Dharuhera and Gurgaon in Haryana and at Haridwar in Uttarakhand. These plants together are capable of churning out 3.9 million bikes per year.[ Hero Honda's has a large sales and
service network with over 3,000 dealerships and service points across India. Hero Honda's customer loyalty program, the Hero Honda Passport Program, claims to be one of the largest programs of its kind in the world with over 3 million members.The2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at 108.
BACKGROUNDTwo Wheelers industry in INDIA
Early 1950’s , API started manufacturing scooters in India ( Lambrettas).
Later Bajaj Auto Ltd a company become a legend in the global scooter industry.
License Raj ( 1940’s to 1980’s), did not allow foreign companies to enter into the market.
This made customers to wait for 12 years to buy a scooter.
Only three motorcycle manufacturer were there – Royal Enfield, Ideal Jawa & Escorts
Enfields in the segment of 350cc, Jawa & escorts are into fourstroke.
Mid 80’s Indian government started permitting foreign companies to enter into the Indian market.
Then a number of Indo-Janpanese joint venture witnessed like Hero Honda, TVS Suzuki, Bajaj Kawasaki & Kinetic Honda.
LEGENDS OF HERO HONDA
The HERO GROUP
• Mr.Brijmohan lall Munjal is the founder Director and Chairman of the Company and the $ 2.8 billion Hero Group.
• He is the Past President of Confederation of Indian Industry (CII), Society of Indian Automobile Manufacturers (SIAM) and was a Member of the Board of the Country's Central Bank (Reserve Bank of India ).
• In recognition of his contribution to industry, Mr. Lall was conferred the Padma Bhushan Award by the Union Government.
Honda Motor Company of Japan
• Founded in 1946 as the Honda Technical Institute :- Mr. Soichiro Honda Produced 1st Bicycle engine
• Today with over 100 plants in 33 Countries selling 11 million product units.
• Expertise Lawnmovers,Generators,Scooters, Motorcycles & Cars.
Portfolio of Hero Groups Business
Bicycles
Hero Cycles
• Established in 1956
• Products:- Bicycles
Hero Cycles Limited
• Established its 2nd unit in 1988
• Products:- Bicycles
Gujarat Cycles Limited
• Established in 1998
• Products:- Bicycles
Auto Two wheelersHero Honda Motors Limited
• Established in 1983 in New Delhi
• Product:- Motorcycles
• Collaborator:- Honda Motors Co. Ltd Japan
Majestic Auto Limited
• Established in 1978
• Product:- Mopeds and Fitness Equipments
Hero Motors ( A division of Majestic Auto Limited)
• Established in 1988
• Product:- Mini- Motorcycles, Scooters
• Collaborator:- Steyr Daimler Puch, Austria and Malguti, Italy
Bicycle and Auto Components
Rockman Cycle Industries
• Established in 1960
• Products:- Automotive and bicycle chains, steel and aluminum Hubs
Highway Cycle Industries Limited
• Established in 1971
• Products :- Freewheels and special Machine Tools
Munjal Showa Limited
• Established in 1985
• Products:- Shock Absorbers
• Collaborator:- Showa Manufacturing Co. Japan
• Castings & Steel Munjal Castings
• Established in 1981
• Products:- Non Ferrous Castings
Sunbeam Castings
• Established in 1987
• Products:- Non Ferrous Castings
Hero Cycles- Cold Rolling Division
• Established in 1990
• Products:- Cold Rolled Steel sheers and coils
Services
Hero Exports
• Established in 1993
• Products:- International Trading company dealing in commodities and engineering items
Hero Corporate Services
• Established in 1995
• Products:- Corporate Services in finance, HRD,IT and strategic planning
Munjal Sales Corporation
• Established in 1975
• Products:- Sole selling agents of bicycles and bicycles parts for India
SWOT Analysis
Strengths
Ability to understand customer’s needs and wants
Recognized and established brand name
Effective advertising capability
Strong distribution network and Service centers
Due to the large range of products that are available, almost the entire customer base is covered.
Weaknesses
R&D is not close to the Hero manufacturing plant
Hero is vulnerable in the joint venture because Honda Motor Company has so much power
The technological changes in the bike sector occurred at a very fast rate. Bajaj Auto Ltd. patented the DTS-i model of the Pulsar. The technology was introduces by Hero Honda into the market with the launch of the “Ambition”, but it was not patented.
Opportunities
Global expansion into the Caribbean and Central America
Expansion of target market (including women)
To become India’s leader in the scooter market
Hero Honda can capitalize on its superior distribution channel to facilitate the selling of more bikes.
Hero group entered into aviation sector and invested 500 Cr in M.P. SEZ.
Threats
Honda Motorcycles and Scooters India can take away market share and cause joint venture to go sour
Bajaj Motors, TVS Motors are strong competitors
Bajaj Auto has found popularity with both its low-end and premium offerings, which have helped chip away at Hero Honda's dominance
Competitors
TVS-Suzuki
• Started in 1982 as Indian Motorcycles Pvt. Ltd in collaboration with Suzuki(Japan)
• Later named as TVS-Suzuki Limited, which is now one of the leading two-wheeler manufacturers in India.
• Their Innovations-
Suzuki Max 100RTVS Scooty
TVS Victor
TVS Samurai
TVS Fiero
Kinetic Honda Ltd. • Came into existence in 1970.
• Kinetic Engineering Ltd. Was the beneficiary of Honda’s.
• A joint venture with Japanese company brought KHL in the market.
• The terms of the agreement specified that KHL could not enter the motorcycle business.
Bajaj Auto
• Came into existence in the year 1945,imported scooters and three wheelers from Italy for sale in India.
• Scooter production started in 1961 and three wheelers followed in 1962
• By 2001, Bajaj became the market leader in scooters with annual production in excess of 1.34 million units.
• Bajaj entered into a technical collaboration agreement with Kawasaki of Japan.
• Production of Kawasaki 100cc motorcycles started in 1986.
Escorts-Yamaha (EYML)
• EYML is a joint venture between Escorts Ltd. and Yamaha Motors Co. Ltd. Japan in 1985.
• By June 2000,the Investment Ratio of YMC was 74%
Strategic tool for appraising business portfolio & formulation strategy .
Segment and Brands
PRODUCT BRANDS
TWO WHEELERS
Achiever CBZ* CBZ Xtreme CD Deluxe
CD100ss CD DAWN Glamour Hunk
Karizma Passion Plus*
Pleasure Splendor
Splendour+* Super Splendor*
Ansoff product market expansion grid ON HERO HONDA
EXISTING PRODUCT NEW PRODUCTEXISTING PRODUCT MARKET PENETRATION
CBZ.Splendor.CD - Dawn.Joy.CD - Deluxe.(advertising , promotion , price reduction etc.)Consumer satisfaction
PRODUCT DEVELOPMENT
New attractive colors.New Hi-Tec Technologies.Alloy Wheel Technology.KarizmaCBZ-ExtremePlesure
NEW PRODUCT MARKET DEVELOPMENT
Expand geographically.Target new segment.Alliance & Joint Ventures
DIVERSIFICATION
Heavy Motor VehiclesEarth moving Equipments( Related diversificationUnrelated diversification)
BCG Matrix on Hero Honda
STAR• SPLENDOR’s-series
(plus & super)• PASSION’s-series
(simple & plus)• CBZ• Karizma \
QUESTION MARKS ?• Hunk• CBZ – extreme• Pleasure
CASH FLOWS• CD deluxe• CD 100ss• CD Dawn
DOGS• Achiever• Honda joy• Glamour• Ambition
HIGH LOW
PEST Analysis
Porter’s Five Forces of Competitive Position
Competitive Rivalry, eg:
number and size of firms
industry size and trends
fixed v variable cost bases
Supplier Power, eg:
brand reputation geographical coverage product/service level quality relationships with customers bidding processes/capabilities
Product and Technology Development, eg:
alternatives price/quality market distribution
changes fashion and trends legislative effects
Buyer Power, eg:
buyer choice buyers size/number change cost/frequency product/service
importance volumes, JIT scheduling
New Market Entrants, eg:
entry ease/barriers geographical factors incumbents resistance new entrant strategy routes to market
A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:
Political Economic Social Technological
The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macro environmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:
Environmental Scan
/ \
External Analysis
Internal
Analysis
/ \
Macroenvironment
Microenvironment
| P.E.S.T.
Political Factors
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:
tax policy employment laws environmental regulations trade restrictions and tariffs political stability
Economic Factors
Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macroeconomy:
economic growth interest rates exchange rates inflation rate
Social Factors
Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. Some social factors include:
health consciousness population growth rate age distribution career attitudes emphasis on safety
Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:
R&D activity automation technology incentives rate of technological change
Methodology
Sequential Processing of Ideas in a Focus Group Discussions format, for positioning development - Co-development of optional positioning concepts with the respondents themselves - in the following groups, seeking reactions to concepts developed in the previous group, rejecting the weaker ones and exploring newer options if any emerged – Finally drilling down to the one concept that emerged as the most potent concept.- A total of 8 FGDs were carried out back to back and Creative teams were a part of this real-time development & modifications of conceptsKey Findings- 3 positioning ideas were generated in the initial groups
a) Biking = Buddies (like a friend / best moments with friends)
b) Bike = My style statement (to impress girls, not to seek a serious romance)
c) Different looking bike = stand apart from the clones
- These three ideas were made into mood-boards with the help of respondents & creative teams, and used as stimulus in the following groups.
- Respondents in successive groups rejected the second idea (impressing girls) as clichéd; liked the first idea but felt it was
incomplete and not compelling enough; and found the third idea most relevant.
- Additionally one more option was generated and found very relevant: Bike = Signals my success and achievement
- This process of co-creation, fine-tuning and rejection finally collapsed into the position: "Different looking bike = stand above from the clones" (aspirational, not alienating)
RECOMMENDATION
Use company philosophy as competitive advantage. Create a marketing campaign around the business
strategy. Building motorcycles for the common man. Reasonably priced with above average fuel economy. Emphasize this could increase the likeliness of the bikes as
being a substitute for the auto market, especially when gas prices are so high.
Utilize a related diversification strategy – enter the scooter market
Use expertise of India’s terrain and people to capture the scooter market before new sister
company Honda Motor Scooters India Ltd. enters the market
Capitalize on positive and popular brand image Share similar resources for motorcycles and
scooters.
Expand to countries that heavily utilize two-wheelers
o Popular vacation spots in Central and South America as well as the Caribbean
Tourists year-round; may opt to rent motorcycles or scooters versus automobiles
o Could be potential for high volume/fleet sales
o Examine warm tourist locations within the United States including California and Florida for possible market entry
CONCLUSION AND SUGGESTION
1. Hero Honda is NO 1 followed by Big other bicycle.2. To have a competitive advantage over the other bicycle. company should come up with new models.
3. Company should try to do customers surveys on regular basis so as to know the areas of improvement they could make.
4. Company should try to divide customer segments on the basis of prices as well as product.
5. Company should pay attention to the comfort about there seats and buddies.
6. Company should provide more services to the customers.
7. Company should come up with better promptional offers, services etcImproving supply ofReal EstateTax ExemptionsFavorableDemographicsRising Income levels
Willingness of peopleto spend on recreationDemand SideSupply SideFilm IndustryImproving supply ofReal EstateTax ExemptionsFavorableDemographicsRising Income levelsWillingness of peopleto spend on recreationDemand SideSupply Side
Film IndustryImproving supply ofReal EstateTax ExemptionsFavorableDemographicsRising Income levelsWillingness of peopleto spend on recreationDemand Side
Supply Side