PROJECT

ON

HERO HONDA MOTORS

SUBMITTED BY:

NAME: BARUN KUMAR

ROLL NO.:60

SUB: STRATEGIC MANAGEMENT

DIV: J
 ACKNOWLEDGEMENT
I 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 SUMMERY
The 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 Honda
4. Portfolio of Hero Groups Business.
5. SWOT Analysis
6. Competitors
7. 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 PERFORMANCE
12. MICHEL’S PORTERS 5 FORCES
13. PEST ANALYSIS

INTRODCTION
Hero 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.
BACKGROUND
Two 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 wheelers

Hero 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 100R

TVS 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 Achiever CBZ* CBZ Xtreme CD Deluxe

WHEELERS
CD100ss CD DAWN Glamour Hunk

Karizma Passion Pleasure Splendor

Plus*

Splendour+* Super
Splendor*

Ansoff product market expansion grid ON HERO

HONDA
EXISTING PRODUCT NEW PRODUCT
EXISTING PRODUCT MARKET PENETRATION PRODUCT DEVELOPMENT
 CBZ. New attractive colors.
Splendor. New Hi-Tec
CD - Dawn. Technologies.
Joy. Alloy Wheel Technology.
CD - Deluxe. Karizma
(advertising , CBZ-Extreme
promotion , price Plesure
reduction etc.)
Consumer satisfaction

NEW PRODUCT MARKET DEVELOPMENT DIVERSIFICATION

Expand geographically. Heavy Motor Vehicles

Target new segment. Earth moving
Alliance & Joint Ventures Equipments
( Related diversification
Unrelated
diversification)

BCG Matrix on Hero Honda

STAR
• SPLENDOR’s-series
QUESTION MARKS ?
• Hunk
(plus & super)
• CBZ – extreme
• PASSION’s-series
• Pleasure
(simple & plus)
• CBZ
• Karizma \

CASH FLOWS
• CD deluxe
• CD 100ss DOGS
• CD Dawn • Achiever
• Honda joy
• Glamour
• Ambition

HIGH LOW
 G.E Ni n e – Ce l l Ma t r i x
M
a Business strength
r
k H M L
e
t H
A
tt
r
a
c M
ti
v
e
n
e
s
s
L
Market Attractiveness : Size, growth, Margin , Regulation Fewer
competition etc
Business strength : Skill, financial soundness, technology edge ,
Distribution , Brand , large customer base ,
R&D, prod Qlty etc.
 Business strength
H M L
M
a
r CBZ – extrem e
k
H SPLENDOR’s- series
e Pleasure
t PASSION’s-series

A
t Hunk
t M CBZ
Am b ition
r Kariz m a Glam our
a
c
t
i
CD deluxe
v Achiev er
e L Hond a joy
n CD Da w n
CD 1 0 0 ss
e
s
s

G.E Ni n e – Ce ll Ma t r i x
 Sales Performance

Dec'04 Dec'05 Apr'04-Dec'04 Apr'05-Dec'05

Domestic 2225250 238822 1892540 2155479

Exports 5501 6282 43441 72815

Financials at a Glance
(Rupees in Crores)
Particulars 2000-01 2001-02 2002-03 2003-04 2004-05
Total Income 3191 4539 5195 5997 7563

Profit before Tax 377 694 885 1072 1217

Profit after Tax 247 463 581 728 810

Total Debt 66 116 134 175 202

Net Fixed Assets 454 491 517 589 715

OPBIT*/Net
13.2 15.0 16.7 16.8 15.7
sales-%
OPBT**/Net
11.7 13.9 15.5 15.6 14.6
Sales*(%)
Dividend Per
3.0 17.0 18.0 20 20
Share ( Rs)
Dividend Payout
26.7 75.5 69.8 61.9 56.3
(%)

* OPBDIT = Operating Profit before Depreciation, Interest and Tax

**OPBT= PBT before other income
 Porter’s Five Forces of Competitive Position

New Market Entrants, eg:

 entry ease/barriers
 geographical factors
 incumbents resistance
 new entrant strategy
 routes to market

Supplier Power, eg:

Competitive Rivalry, eg: Buyer Power, eg:
 number and size of firms
 brand reputation  industry size and trends
 geographical coverage  fixed v variable cost  buyer choice
 product/service level quality bases  buyers size/number
 relationships with customers  product/service ranges  change cost/frequency
 bidding processes/capabilities  differentiation, strategy  product/service
importance
 volumes, JIT scheduling

Product and Technology

Development, eg:

 alternatives price/quality
 market distribution changes
 fashion and trends
 legislative effects

PEST Analysis
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
          /   \
    Interna
l
External Analysis
Analysis  
  
/                       \  
Macroenvironme Microenvironme
   
nt  nt 
| 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 concepts
Key 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 etc
Improving supply of
Real Estate
Tax Exemptions
Favorable
Demographics
Rising Income levels
Willingness of people
to spend on recreation
Demand Side
Supply Side
Film Industry
Improving supply of
Real Estate
Tax Exemptions
Favorable
Demographics
Rising Income levels
Willingness of people
to spend on recreation
Demand Side
Supply Side

Film Industry
Improving supply of
Real Estate
Tax Exemptions
Favorable
Demographics
Rising Income levels
Willingness of people
to spend on recreation
Demand Side
Supply Side