Hero Cycles Limited, based in Ludhiana punjab,india, is the largest bicycle and related

products manufacturing company of India.

History
Hero group was started by the four Munjal brothers, hailing from a small town called kamalia now in pakistan in the year 1944 by establishing bicycle spare parts business in Amritsar. After independence and partition of India, they moved to Ludhiana and started a bicycle unit called Hero Cycles in 1956. By 1975, Hero cycles became the largest bicycle manufacturer in India. In 1984, Hero group joined Honda Motors of Japan to create Hero Honda Motors ltd which soon became one of the market leader in motor-cycle sales in India. In 1986 Hero Cycles Limited entered the Guinness Books of World Records as the largest bicycle manufacturer in the world. By the year 2004, Hero Honda became the world' largest manufacturer of two-wheelers with over 48% market share in India. In year 2006, Hero Honda entered the scooter production with launch of its new model Pleasure Hero Group is a multi-unit, multi-product, geographically diversified Group with myriad interests. Hero, is synonymous with two-wheelers in India and Group's other ventures include product designing, IT enabled services, finance and insurance etc. Hero Group ranks amongst the Top 10 Indian Business Houses. The Group today comprises of 20 companies, 300 ancillary suppliers, over 5,000 outlets, and has employee strength of more than 23,000. The origins of Hero Group can be traced to 1956 when Hero Cycles Limited was established by Munjal brothers: Satyanand Munjal, Brijmohan Lall Munjal and O. P. Munjal. Before the establishment of Hero Cycles, which is the flagship company of the Hero Group, Munjal brothers were modest manufacturers of bicycle components. In 1961, Rockman Cycles Industries Limited established, which is today the largest manufacturer of bicycle chains and hubs. In 1963, Hero Group forayed into the international market with bicycle exports from India. In 1971, Highway Cycles was set up to meet the demands of Hero Cycles. It is today the largest manufacturer of single speed and multi-speed freewheels. In 1975, Hero Cycles Limited became the largest manufacturer of bicycles in India. In 1978, Majestic Auto Limited was formed and the Hero Majestic Moped was introduced. In 1981, Munjal Castings was established. In 1984, Hero Group started manufacturing motorcycles with the establishment of Hero Honda Motors Limited in joint venture with Honda Motors of Japan. In 1985, Munjal Showa Limited was established to manufacture shock absorbers and struts. In 1986, Hero Cycles Limited entered the Guinness Book of Records as the largest bicycle manufacturer in the World. In 1987, Hero Motors, a division of Majestic Auto Limited was set up in collaboration with Steyr Daimler Puch of Austria. In 1987, Gujarat Cycles Limited, presently known as Munjal Auto Industries Limited was established to manufacture and export state-of-the-art bicycles and allied products. In 1993, Hero Exports was established as the International Trading Division for Group and nonGroup products. In 1995, Hero Corporate Services Limited was established as the service segment for the Hero Group Companies, ancillaries, suppliers, dealers and other associates. In 1998, Munjal Auto Components was established to manufacture gear shafts and gear blanks for

motorcycles. In 2000, Hero Group diversified into IT and IT enabled services through its service segment - Hero Corporate Services Limited. In 2001, Hero Global Design established to offer engineering services in CAD/CAM/CAE related to New Product Development, Design, Engineering and Manufacturing. In 2002, Easy Bill was established to offer utility bill collection & retail services. In 2004, Hero Group forayed into retail insurance business with the establishment of NsurePlus. Today, Hero Group enjoys leadership position in all the business segments it has entered. Major Achievements of Hero Group

Hero Honda Motors is the World's largest manufacturer of two-wheelers. Hero Cycles Limited is a Guinness Book Record holder since 1986 as the world's largest manufacturer of bicycles. Hero Honda is ranked number one in the two-wheeler category on Environmental Performance by the Centre for Science and Environment. Group Chairman, Mr Brijmohan Lall Munjal received the coveted "Ernst & Young Entrepreneur of the Year" award for 2001.

Boston Consulting Group has ranked Hero Group as one of the top ten Business Houses Value Added (EVA), in India

Indias leading Ratings, Risk & Advisory company has awarded Hero Honda the highest rating for Corporate Governance Best Governed company in Private Sector Review 200 Asias Leading Companies Award Hero Honda ranked amongst top 3 Indian companies

GROWTH OF HERO CYCLE LTD One of the most widely recognized brands in India Members among the leaders in their business Hero Cycles is the Worlds largest bicycle maker Hero Honda is the Worlds largest two wheeler manufacturer Others include Auto components, Engineering design, Call Centre/ BPO, Training & Learning Market capitalization of over 3.43 billion (USD 4.18 bn) Global partnerships Over 5,000 business associates Over 23,000 employees Case Studies on Heros Management practices used at leading institutions London Business School Insead, France World Bank Group Sold more than 15 million motorcycles and 100 million bicycles in the last 50 years

Hero C

ycles growth has been through a tight focus on four key f

COMPANY ANALYSIS

Vision :

Aspiration of providing cheapest transportation to the poorest of Indias poor

Action :
Introduce Value for Money product Sturdier product to meet rural demand Ancillarisation and backward integration Continuously improve productivity

Outcome :
Product well accepted Production expanded from 25 cycles a day (1956) to 17,500 cycles a day (2010) Competition shrank across India from 100 manufacturers to 4 major players

Maintaining Growth :
Expand markets Rural Focus Product Innovation Technical Alliances Integrated Backwards to remain cost competitive and thus expand market share

social responsibilities :
The Group has set up and is involved with: Schools Colleges Hospitals Vocational Training Centres Promotion of Sports and Sports persons Various community development activities and in improving rural and urban infrastructure

Situation analysis of Germany

The modern-day folding bicycle would be a great introduction into Germany, also known as the Federal Republic of Germany. Types of folding bikes include urban utility bikes, urban performance bikes, road bikes, and mountain bikes. There is a competitive drive of motivation to innovate them to be simpler, lighter, faster, and stronger. Most all Germans live active lifestyles and are into "green products." These bikes can help one to keep control of their daily workout, weekly gas bill, and carbon foot print as well as help put an ease to any economic, environmental, or life pressures they may have. From youth to old age almost anyone can ride a bicycle and Germans are big on family. Also, according to the CIA World Fact book (2009) Germany is "Europe's largest economy and second most populous nation (after Russia)," which provides marketers a great deal of opportunity there. II. The target Market : A. The market : In Germany, public transportation is extremely popular and driving a car is more of a luxury rather than a common means of transportation. Therefore, instead of people having to walk or drive to bus, train or tube stations, they can utilize the folding bicycle as a convenient and efficient way of getting to their destination. i. Size and characteristics of target market : As of July 2009, the total population of Germany was estimated at 82,329,758 (CIA World Fact book, 2009). 13.7% of the population are aged 0 -14 years, 66.1% of the total population are aged 15 64 years and 20.3% are aged 65 years and above. The average household income in Germany is $35,400 (23,604.72 Euros), and due to the cost of the bicycle the folding bicycle is targeted to households who have an average income of at least 30,000 Euros. (CIA World Factbook, 2009). ii. Target market Segmentation: 1. Age group: The target age group for the folding bicycle is the youth and young professionals aged between 15 and 64 years, those aged 15 64 years amount to 54,384,520 which is 66.1% of the total population, also given that most businesses and universities are located in the city and many of the German youth pursue a college education; therefore, if the folding bicycle is marketed to this age group, many people will see an advantage in it and choose to invest in it making the product gain popularity quickly.

2. Gender: Those aged between 15 64 years amount to 66.1% of the total population, the number of males in this age group amount to 27,707,761 and females amount to 26,676,759, this is approximately a 1:1 ratio of males and females in this market so the folding bicycle will be targeted to both genders and will not differentiate one over the other. 3. Geographical location: Most businesses and universities are located in the city; the target location for introducing the product will be major cities such as, Berlin. This way more people will be exposed to the product and therefore the product will easily penetrate the market and gain popularity.

iii. Rationale for target market choices: The rationale behind the geographical area targeted market is because most universities and businesses are located in major cities; the age group is target given that these are the individuals who face transport challenges traveling to work and school. Both women and men are target and this is because the bicycle is an appropriate mode of transport for both genders. B. Competition : Direct and indirect As indicated, the direct competition on the sale of folding bikes in Germany is expected to come from the company by the name Riese and Mueller. According to a report in the year 2007, it is reported that they sell 5,000 bikes per year. The report also shows that Germans buy 4 million bicycles per year. This therefore indicates that that it is just but a small percentage of the total bicycles that are sold (McClellan, 2007). The major indirect competition that is expected in the marketing folding bicycles in Germany is expected to come from the non-folding bicycles. There are so many types of brands of these kinds of bicycles that are found in the German market. Most of them go for far much less prices and due to the fact that most German population is more sensitive to pricing than to other features like brand recognition, these posses a great challenge. There are also motor bikes which more powerful than bicycles and with the Germans being economically empowered people most will prefer them. Competition from various makes of motor vehicles is also expected to be encountered in Germany.

SWOT analysis

Strengths:
Differentiation of the product by introducing a folding bicycle High demand due to large population in Germany that face transport challenges

Weekness : Due to the advanced technology and slow change of preferences, the product meets challenges in its acceptance. The ageing population is reluctant to the acceptance of due to their physical limitations and the existence products in the market might make it less acceptable as compared to other products in the market.

Opportunities:
Expand into new markets Lower prices to increase demand Differentiation of products

Threat : Different competitors

Marketing Strategy
a. Distribution : Michael Roos (2005) found that in Germany "geography is more likely to influence the spatial distribution of production than the distribution of consumption" (p. 605). Germany's regulations and bureaucratic procedures encourage foreign investment, but at the same time can be quite complicated. "While not discriminatory in the classic sense, government regulation is often complex and may offer a degree of protection to already-established local suppliers." Germany presents "few formal barriers to U.S. trade or investment interests" and the "German government and industry actively encourage foreign investment in Germany" (German Tariffs, Trade, Taxes, Trademarks, 2000). b. Retail Outlets: The distribution of our folding bicycles should be very straight forward. We will be producing our bicycles in Germany so it will be very inexpensive to then distribute them to the retail locations. The type of retail outlets that we will focus on are Independent Bicycle Dealers. In Germany there are two massive independent bicycle dealer cooperatives named ZEG and BICO. BICO is a coalition of over 500 bicycle dealers from all over Germany (Powerful Verbundgruppe). ZEG is a cooperative with around 1000 bicycle shops across Europe. ZEG has about $2 billion in annual sales. Their website lists about 100 bicycle and bicycle related suppliers and claims that they have an inventory of 41,000 bicycles (Crenshaw, 2008). This is extremely important for our business because it allows us to go through one source to reach hundreds of bicycle retailers. We will need to become affiliated with their cooperatives so that they will carry our bicycle at all of their retail locations. Independent bicycle dealers (IBD) market share was 54% in 2006. German Two-Wheeler Industry Association (ZIV) GM Rolf Lemberg estimates that the independent bicycle dealers share in terms of value of 2006 total bicycle sales was 1.53 billion, which is "more than 71%." According to ZIV this underlines a trend toward high value product purchases at independent bicycle dealers. Do it yourself and department stores share of the market was 37% and online sales, which includes IBD's websites sales were 4.5%. Mail order suppliers share was the least at 2.5% (Bike Europe, 2007). These numbers show that not only do must bicycle purchases originate from an independent bicycle dealer, but that these are normally higher end purchases. Our bicycle will be a higher end priced bicycle so selling them at independent bicycle dealers gives us the best opportunity to capture the market we are targeting. We would not want to limit ourselves to just working with these cooperatives, but instead work with as many independent bicycle dealers as possible. Trade fairs are another distribution method we will want to utilize. Trade fairs are extremely important when doing business in Germany because they are business events where contracts are negotiated and deals are made. EUROBIKE is held yearly in Germany and is considered to be the most important trade fair for the bicycling industry. "The international bicycle trade show ended on Saturday with 39,152 trade visitors from 75 countries (an increase of six percent), 21,000 paying bicycle fans on one Open House Day (2008: 18.000), and 1,556 journalists from 36 countries" (EuroBike, 2009). Attending trade fairs like EUROBIKE would be an invaluable

resource to gain exposure for our product in the German market and to try to get orders from bicycle dealers. c. Intermediaries : The simplest way to get into the bicycle business would be to work directly with the independent bicycle dealers and not use any wholesalers, intermediaries, or distributors. Bicycle shops will either order bikes as orders come in for them or if it is something they believe they will be able to sell quickly they will order stock to keep on hand for walk in purchases. This allows our company to maximize profits and limit costs. The less cost between production and purchase the greater potential for profits for both our company and the dealers selling our folding bicycles. d. Promotion: Objectives & Media Mix The company will place ads in magazines such as DMEuro and Focus Money, which is a German version of the "Money" magazine we have here in the United States. In this magazine, the folding bicycle will be compared to other competing products in the market and will provide readers with financial information about the product, such as: Why is it a good product to invest in?It will also be advertised in Bike(German edition)a magazine devoted to biking, Neue Revuean up-to-date weekly magazine of what's going on in Germany and the lifestyle there, and Men's Health (German Edition). Commercial ads will be advertised on sports channels such as Super Sports Network or My Sports Germany and will play during the evening when most people are tuned in and will also play repeatedly during big soccer games. Overall, Germany has a 4-season climate, however the weather differs between regions, therefore, advertisements and promotional offers will differ between cities such as Berlin and Munich. In Berlin, summers are usually warm and quite sunny with a few rain showers, however, winters can get severely coldits' the season for snow and frost (Hochstadt). Therefore, more advertising will take place during summers instead of winters. In Munich, where the weather is pleasant throughout, the use of the folding bicycle will be greater; therefore, promotional offers and advertising will be stronger in this part of the region. In order to introduce the folding bicycle to Germany, we will place an introductory ad in Neue Reveue and, one month in advance. Each week, the ad in Neue Reveue will provide readers with specifications of the product, the launch date, and the stores that will be selling them. We will place the same ad in Bike; however, since Bike magazine subscriptions publish monthly, we will place ads in this magazine two months prior to launching. This way, it will be exposed to more people, especially those who are interested in bicycles. After the product is launched, we will place an ad in Men's Health, DMEuro, and Focus Money. e. Message : The major advertising media customarily used to reach the market of the folding bikes and all the other automobiles in general in Germany is the print media. This is due to the fact that one is able to give detailed information of the product being marketed at a relatively much cheaper price. The objectives of advertising the folding bicycle would be to increase its popularity and

promote the product to the target market. By aiming for increased popularity, we intend more people (both within and outside the target market) to be exposed to the benefits of the product. The message in every ad that is advertised will be focused on the benefits of the product. It will be directed toward promoting faster travel, increased recreation and better health. f. Internet Advertising : The World Wide Web is increasing its popularity by the minute and people spend more time surfing the internet than they do watching television or browsing though magazines. Therefore, placing ads on social sites such as Face book or My space will help advertise the folding bicycle and more people will be exposed to it. In addition, ads can also be placed on TVSPLANET.com. Sports is a big part of the German culture, however, due to hectic schedules and busy lives, people tend to follow sports online. Placing an ad on tvsplanet.com, where Germans have access to Del TV, which is a German sport channel, will be beneficial to the marketing of the folding bicycle.

g. Sales Promotions :

Sales promotions will be used to peruse people to invest in the product. Our internet links will direct customers to our website where after filling out a short survey, they will have the privilege to print out vouchers to receive a discount on the purchase of the folding bicycle. Also, we will organize raffle drawings in major colleges and universities for students to enter for a chance to win a free folding bicycle. The internet link will provide customers with a voucher for 50 off a brand new folding bicycle. The expected amount of people who will print out this voucher and use it to purchase the product is 1,000 people. Therefore, the amount we are liable to spend in the internet sales promotion is 50,000.

h. Personal Selling : Due to the fact that we are a newly established company in Germany, we will not have a sales force but instead will be selling our bicycles directly to dealers. Retailers will be educated with required knowledge of our product so they can provide customers with any needed information of our product. In the future if we start to grow we will reconsider this decision and generate a sales force at that time. i. Publicity : As the folding bicycle launches in Germany, the budget for creating publicity will be relatively small. Because of the fact that the population gives special attention to details of products, it is extremely important that as much information as possible is given about the product when advertising the product (Gianfranco, 2001). Therefore, as stated before, most of the advertising budget will be spent on creating TV commercials and magazine ads for the folding bicycle. This is the fastest and most efficient way to expose this product to the Germans. j. Reach & Motivation : Overall, this promotion plan will specifically aim toward the target market due to many reasons. First of all, Neue Reveue and Bike are among the top selling magazines in Germany, therefore, placing ads in these magazines will expose Germans to the product quickly. Also, the ads will include specifications that will inform readers with details of the bicycle which is what the German society looks for when viewing print ads. Secondly, TV commercials will be aired during peak hours of the day and on sports channels, especially. Since most 20-35 year old males tune in to sports channels for leisure, airing ads for the folding bicycle during peak hours on sports channels will expose the product to more people. Also, young males spend an ample lot of time browsing the internetwhether it is for educational or professional purposes. Therefore, placing ads on the internet will definitely expose the product to the targeted consumers. Last but not least, raffle drawings in major colleges and universities will be extremely vital in promoting the product to the target market because most people attending college are between the age of 20 and 25. Also, many campuses are located around other businesses, so young professionals ages 25-35 will hear about the promotional offer by simple word of mouth. This is how the promotional plan will reach and motivate the target market to invest in the folding bicycle. B. Stage in the PRODUCT LIFE CYCLE :

The product is in the introductory stage in its life cycle. The product should thus be very affordable to the majority of the consumers to penetrate the market and to counter effect the competition faced (Jacobs & Stone 2001). The product should be of high quality and of good branding to attract and maintain a large consumer base. It should first be distributed selectively amongst consumers. The product should be promoted to create awareness of its presence in the market.

C. Relative advantage : There are many advantages of the folding-bike product. It is more economical due to low purchase and maintenance costs. It is also pollution free, as it does not use fuel. It compatible since majority of the population falls between 30 and 50 years . This range contains physically able persons. D. Compatibility, Complexity, Trialabilty, & Observability : Due the scarcity of space in the urban areas where majority of the population is found, the folding bike is relatively smaller than other vehicles. It is a simple product to use, since it requires minimal training to operate. The transport infrastructure is well developed and thus usage of the product would be easier. Also, the product will come in different sizes and colors to suit the varying needs and preferences of the consumers. E. The product and those of the competition: The product will be simple to operate, it will be lighter, faster and stronger compared to the products in the market. The product will also be better than the competitors given that it will be the only hand built folding bicycle made in Germany, the product will also be of high quality and this will attract and maintain a large customer base. The product will also face competition from other modes of transport and the advantage will be that the product will be economical and pollution free and therefore will easily penetrate the market. The product will also be sold at an affordable price in order to gain market size, the low

F. Product name and Logo: The product name and logo depicts so much about why the product is better than the other products in the market, the product name and logo should contain words that are linked to something well known and at the same time related to the product, the best product name will be the German word for bicycle "fahrrad" and also will include the German name for cheetah "Gerpad", therefore the product name will be "Gerpad Fahrrad", this will give an indication that the bicycle is as strong and fast like the cheetah, therefore the logo will contain a picture of the cheetah and a person riding a bicycle.

G. Package sizes: Given that the product is a folding bicycle the package size will be depend on the size of the bicycle, however the size of the package will be easily folded to occupy less space and also enable easy carrying and storage. The product and logo name comply with the labeling required given that it does not bleach copyright laws and also there are no warning that should be indicated in the labels. H. Product features: The product will be categorized into sizes which include small, medium and large, this will enable individuals to select the appropriate product they prefer and also the prices will differ, this will ensure that there will be a product for each income group whereby larger sizes will be for higher income earners. PRODUCT 1

Wheel Size

20"

Folded 32x24x13 Size Height Range 58"-76"

Weight 200 pounds Limit Frame Hi-Ten Steel Material Weight 30 pounds Speeds 1

Price

$219

PRODUCT 2

Wheel Size

14"

Folded 23 x 20 x 14 Size Height Range 48"-73"

Weight 200 pounds Limit Frame Hi-Ten Steel Material Weight 25 pounds Speeds 1 Price $187

PRODUCT 3

Wheel Size

20"

Folded ? Size Height Range 58"-73"

Weight 220 pounds Limit Frame Hi-Ten Steel Material Weight 35 pounds Speeds 7 Price $379

PRODUCT 4

Wheel Size Folded Size Height Range Weight Limit

26" 38x 29x 13 60"-76" 240 pounds

Frame Material Weight Speeds Price

Aluminum 36 pounds 21 $439

I. Warranties: A six month warranty will be provided to consumers, products will be serviced free of charge for the first six months after purchase but only if damages do not result from negligence, however the company will continue to provide services after the six months at a lower fee compared to its competitors. J. Major problems to product acceptance: Due to the advanced technology and slow change of preferences, the product meets challenges in its acceptance. The ageing population is reluctant to the acceptance of due to their physical limitations and the existence products in the market might make it less acceptable as compared to other products in the market. K. The product and the needs of the target market: The product meets many needs of the target market since it is economical (the high standards of living call for less expensive products), eco-friendly (the Germans are selective buyers) and requires minimal storage space (majority of the population lives in the urban regions leading to scarcity in space).

PEST analysis of Germany

Political Environment : From the political point of view Germany is an ideal country where to export our product. It has good international relationships, especially with other EU countries where we are already present and with the USA. There are no restrictions to the importation or the exportation of capitals and goods. The accounting system follows the International Accounting Standards (IAS), the same adopted by all EU countries, and quite similar to the Americans General Accepted Accounting Principles (GAAP). There is a stable political regime with a multi-party system, which can ensure the certainty of law and the respect of contractual rights. However lawsuits tend to be lasting and expensive, and this could represent a risk in case of a contractual breach.

Economic Factors : The said situation in the political factors, are somewhat connected with the different economic factors that might affect the development process of the company. Primarily is the situation of the home economy or the economic situation of Germany, in terms of monetary issues, stock exchange and the likes. The economy trends of happenings in the home economy are also important, so as the economic situations and trends of the partner countries. This is due to the fact that, this political factor has a great impact to the social mentality of the possible customers. The different employment laws in different countries must also be considered, this is

due to the fact that different countries has their different cultures that might affect their beliefs as well as regulations regarding the human resource aspect of any company.

Social Factors : There are more social factors that might affect the development process of the company more than any other factors. This is due to the fact that social factor has the most important impact or effect to the taste or demand of the customers regarding one product or service. The fact that more and more people are into sports is a big chance or advantage for the company, because there will be a huge market for them. Another important thing is that sport is considered as one of the most important sector in the tourism industry, which considered as the most successful industry nowadays. On the other hand, sports are also considered as a form of exercise, for those who wants to have fit and healthy body. One of this is the lifestyle trends; there have been a big change in the sports sector of the world. The sports sector has been constantly evolving in terms of personal tastes, popular games as well as technologies (Plunkett Research, Ltd 2008). There are different sports that are gaining popularity such as different extreme sports. The popularity of those new sports such as diving, skateboarding and extreme bike must be considered as one of the most important factors in the strategy-making and management of the company.

Technological Factors : In terms of the technological factors, it focuses on the series of R&D activities as well as applications of automation and new technologies, most especially those that are connected to the Internet. Another important thing that might affect the development is the maturity of the technology; this is due to the fact that technology is considered as restless in terms of development. Furthermore, the global communication is also another important aspect, this is important because the company is operating in different part of the globe. It is also important to consider the different laws like the intellectual property issues.

Conclusion :
Germany's large economy and population provides marketers a great deal of opportunity there. "Cyclists are heading further a field, bagging their bikes to take them on trains or buses. And businesses are responding to this new trend, offering products and services catering to these traveling' riders" (Folding bikes, 2009). The availability of media, low cost of advertising, and because there are no distribution laws affecting the product the production of folding bikes should be a relatively profitable market in Germany. Also, Germans, being an information gathering society that heavily persuades the products they buy, will be happy to know these folding bikes are becoming even more attractive, easier to collapse, and smoother to ride, so there will no doubt be more riders getting out and coming into "the fold."