II.

REVIEW OF LITERATURE

Pai, Vadivel & Kamala (1995) have studied about the diversified companies and financial performance.
Main Purpose of research was found out the relationship between diversified firms and their financial
performance. For the purpose of research, they have selected seven large firms and analysed those firm
which having different Products-both related and otherwise-in their portfolio and operating in diverse
industries. In this study, a set of Performance measures / ratios was employed to determine the level of
financial performance and variation in Performance from one firm to another has been observed and
statistically established. They revealed that the Diversified firms studied have been healthy financial
performance.

Samuel & Vanniarajan (2007) discussed about financial performance of bank by applying Du-Pont
analysis. They concluded that the liberalization of the finance sector in India has divulged Indian banks
to a new Economic environment that is considered by increased competition and new regulatory
requirements. They also Revealed that Indian and foreign banks need to explore development
opportunities in India by initiating new Products for different customer segment, and many of which
were not conservatively viewed as customer for the Banking industry. They suggested all banks should
to evaluate their performance and compare with the others. In the last they depicted from the analysis
the performance of the banks may be viewed on the base of three Dimensions like structural,
functioning and efficiency factors which was suggested by the India Bank Association.

Bhunia, Mukhuti & Roy (2011) have discussed about “Financial Performance Analysis-A Case Study”.
The Main aim of study was to identify the financial strengths and weaknesses by covering two public
sector drug & Pharmaceutical enterprises listed on BSE. For study purpose, they have been selected
twelve years from 1997-98 to 2008-09. They analysed the data by using ratios, and statistical tools like
A.M., S.D., C.V., linear multiple Regression analysis and test of hypothesis t-test. They used SWOT
analysis to overcome the weakness and grab The opportunities available in public sector drug &
pharmaceutical enterprises in consideration of strengths and Threats. They concluded that growth
during last decade was noteworthy and market trend was growing at a faster Rate. They suggested that
the opportunities can be grabbed through the diversification of export basket in Untouched foreign
destinations. They also revealed that strict quality standards, services and use of latest Technology can
provide an edge over competitors across the globe.

Bhunia, Mukhuti & Roy (2011) “Financial Performance Analysis-A Case Study” Current Research
Journal of Social Sciences 3(3): 269-275, 2011

Dr Pratibha Jain & Prof. Megha Mehta (2013) In their study on financial performance of automobile
Companies finds that Hero Honda company performed well because of its usage of latest technology
and Tata motors weak performance due to increased manufacturing overheads and company’s inability
to face competition
Tariq Zafar & Khalid (2012) have discussed about “A Comparative Evaluation of Financial Performance
and Market Value of Maruti& Tata Company”. For the purpose of analysis, they have been selected two
most preferred companies like Maruti Suzuki Ltd. and Tata Motors Ltd., and for the using period of
2006-2010. They tried to analyse qualitative and quantitative performance of both companies and to
investigated their risk and returns factors, their market position, their collective impact on profitability
and to come up with the best and worst performing company by using modern performance evaluating
techniques and later ranking them according to their achieved performance. They concluded from the
ratio analysis there was a lack authenticity in data, in calculation which may manipulating presentation
by the promoters. They have also found that different firms follow different accounting policies like
depreciation allowance; valuation of inventory etc. and often management ignore these differences
while making inter-firm comparison. They revealed that the change in price levels due to inflation is also
not properly considered by management.

COMPANY INFO AND ANALYSIS:

Hero Motocorp Company History

Hero MotoCorp Limited is the world’s largest manufacturer of two-wheelers. The company has four
manufacturing facilities namely Dharuhera and Gurgaon in Haryana Haridwar in Uttarakhand and
Neemrana in Rajasthan. The company is based in New Delhi India. The company offers a range of bikes
starting from CD Dawn CD Deluxe Splendor Plus Splendor NXG Passion and Passion Pro. The 125 cubic
centimeter segment offers Glamour Super Splendor and Glamour F1. It also has an offering called
Achiever in 135 cubic centimeter segment. In the 150 cubic centimeter and above the company offers
brands like Hunk CBZ X-treme Karizma and the Karizma ZMR. It also offers a 100 cubic centimeter
scooter Pleasure.Hero MotoCorp Limited was incorporated in the year 1984 with the name Hero Honda
Motors Ltd. The company was established as a joint venture company between Honda Motor Company
of Japan and Hero Group. In the year 1983 they signed a joint collaboration agreement and formed the
company. The joint venture between India’s Hero Group and Honda Motor Company Japan has not only
created the world’s single largest two wheeler company but also one of the most successful joint
ventures worldwide.In the year 1985 the company commenced their commercial production at
Dharuhera plant in Haryana and introduced their first motorcycle CD 100 in the market. In the year 1989
they launched the new motorcycle model Sleek in the market and in the year 1991 they introduced new
motorcycle model CD 100 SS in the market. In the year 1995 the company introduced their
extraordinary product Splendor in the market.In the year 1997 the company inaugurated their second
manufacturing facility at Gurgaon in Haryana. Also they introduced new motorcycle model Street in the
market. In the year 1999 they launched Hero Honda CBZ the first 150cc motorcycle in the Indian two
wheeler industry. In the year 2001 the company introduced new models Passion and Joy in the market.
In the next year they introduced new models Dawn and Ambition in the market.In the year 2003 the
company launched new motorcycle models namely CD Dawn Splendor+ and Passion Plus in the market.
Also they launched Hero Honda Karizma the industry’s first 223cc motorcycle. In the year 2004 they
introduced new models Ambition 135 and CBZ* in the market. During the year they renewed the joint
technical agreement with the Honda Motors Company Japan.In the year 2005 the company launched
Super Splendor CD Deluxe Glamour and Achiever in the market. In the year 2006 the company forayed
into scotter segment and launched 100cc gearless scotter Pleasure in the market. In the year 2007 the
company launched Splendor NXG CD Deluxe Passion Plus and Hunk in the market.During the year 2007-
08 the company commissioned their third plant at Haridwar in Uttarakhand with an initial installed
capacity of 500000 units. This plant had lean manufacturing and practices that ensure efficiency. During
the year the company launched new models (including variants) including Splendor NXG Hunk New
Super Splendor New Passion Plus Commemorative Splendor+ and a refreshed version of Pleasure.
During the year 2008-09 the company increased the installed capacity of Motorised 2 wheelers upto
350CC engine by 1800000 Nos to 5200000 Nos. Also they launched eight models: Passion Pro (100 cubic
capacity-4 Stroke) CBZ-Extreme (150 cubic capacity – 4 Stroke) Pleasure New Aesthetics Splendor NXG
(Self Start) CD Deluxe (Self Start) Glamour FI Glamour (Carb) and HUNK Special Edition. Also they
launched new motorcycle model Karizma – ZMR in the market.During the year 2009-10 the company
increased the installed capacity of Motorised 2 wheelers upto 350CC engine by 200000 Nos to 5400000
Nos. The company launched nine new models during the year. During the year 2010-11 the company
launched six new models including variants of existing models successfully. They refreshed Glamour and
Glamour FI. They introduced the New Hunk Super Splendor and Splendor Pro. The company launched
the new upgraded versions of CBZ Xtreme and Karizma. Also they breached the landmark 5 million
figure cumulative sales in a single year. During the year the Indian Promoter Group of the company
which comprised of Hero Investments Pvt Ltd (HIPL) Bahadur Chand Investment Pvt Ltd (BCIPL) and Hero
Cycles Limited (Hero Cycles) re-aligned the shareholding in the company following a family agreement.
As a result Hero Cycles transferred its shareholding in the company to HIPL on May 28 2010. As a result
of these transactions the Indian Promoter Group of the company now comprises of HIPL and BCIPL
owned and controlled entirely by the Munjal Family headed by Brijmohan Lall Munjal. Also during the
year the Indian Promoter Group and Honda Motor Co Ltd Japan (Honda) entered into a Share Transfer
Agreement (the Agreement) on January 22 2011. As per the terms of the Agreement Honda had agreed
to transfer its entire shareholding of 26% in the Company to the Indian Promoter Group bringing an end
to the joint venture between the two promoter groups of the company. The acquisition was completed
on March 22 2011 and the shares held by Honda were transferred to the Indian joint venture partner.In
addition to the Agreement the Indian Promoter Group and Honda also entered into a License
Agreement on January 1 2011. As per this agreement Honda has given to the company the right and
license to manufacture assemble sell and distribute certain products and their service parts under their
Intellectual Property Rights.In July 2011 the company changed their name from Hero Honda Motors Ltd
to Hero MotoCorp Ltd. In February 2012 the company entered into a strategic partnership with Erik
Buell Racing (EBR) of USA for contemporary technology and design inputs to enable the company to
launch high end bikes for the domestic and international markets.In 2013 Hero Motocorp commenced
construction of its new plant & Global Parts Centre. The company Commences Construction of Its
‘GAME-CHANGING’ Centre of Global Innovation And Research & Design. In 2014 Hero Motocorp Heralds
A New Era Of Technology Leadership. The company Sets New Benchmark For The Global Two Wheeler
Industry. The company Launches Splendor Ismart With Game Changing I3s Technology. The company
also rides Into A Greener Tomorrow With ‘GARDEN Factory’In 2015 Hero MotoCorp launched a new
entry level commuter the HF Dawn. During the year the company has been allocated a 592-acre site to
facilitate development of its Rs 1600-crore Greenfield manufacturing unit in Andhra Pradesh. HMCL
Americas INC enters into ‘Settlement Agreement’ to Acquire EBR’s Consulting Business. The company
commences operation in their first ever plant outside India established in Villa Rica Colombia.On 29
September 2015 Hero MotoCorp launched two scooters under the brands Maestro Edge and Duet.In
February 2016 Hero MotoCorp showcased three new bikes Splendor iSmart 110 the Xtreme 200 S the
XF3R and an electric scooter the Duet E at Auto Expo a trade show in New Delhi. On 10 March 2016
Hero MotoCorp formally inaugurated its world-class Global Centre of Innovation and Technology’ (CIT)
in Jaipur Rajasthan. Built with an investment of Rs 850 crore the CIT will design and develop world-class
products for global markets.In April 2016 Hero MotoCorp launched a drive against unscrupulous traders
selling counterfeit Hero spare parts. On 14 July 2016 Hero MotoCorp launched the new Splendor iSmart
110 the first motorcycle to be developed completely in-house with Hero’s own technology. To
commemorate the landmark 70 million in cumulative production of two-wheelers Hero MotoCorp on 26
September 2016 launched a Limited Edition of a new premium motorcycle Achiever 150. The Board of
Directors of Hero MotoCorp at its meeting held on 26 October 2016 approved an investment of up to Rs
205 crore in one or more tranches for approximately 26-30% shareholding in Ather Energy Private
Limited. Ather is a Bangalore-based technology start-up engaged in the business of designing and
manufacturing smart Electric Vehicles (EV) and associated charging infrastructure.On 10 November 2016
Hero MotoCorp unveiled its new Dawn 125 motorcycle at the EICMA Motorcycle show in Milan Italy. As
part of Hero MotoCorp’s market-specific product strategy the Dawn 125 motorcycle has been developed
specifically for the Africa region.On 12 January 2017 Hero MotoCorp launched new Glamour motorcycle
in Argentina its first-ever global launch of a new product outside India. On 3 April 2017 Hero MotoCorp
announced that the company clocked its highest-ever sales in a financial year at 6663903 units in FY
2017 compared to 6632322 units it had sold in the previous fiscal (FY 2016).In May 2017 Hero MotoCorp
commenced commercial production at the second global manufacturing facility in Bangladesh. On 3
October 2017 Hero MotoCorp announced that it has set a new global benchmark in the two-wheeler
industry surpassing the seven lakh sales mark in any month. Riding on robust demand for its range of
two-wheelers the company registered its highest-ever sales for any month despatching 720739 units in
September 2017. On 11 October 2017 Hero MotoCorp announced that it has set a new global record
clocking 2 million unit sales in Q2 September 2017. Hero MotoCorp sold 2022805 units of two-wheelers
in Q2 September 2017 recording 11% growth over the corresponding quarter in the previous fiscal. On 7
November 2017 Hero MotoCorp unveiled the Xpulse Concept motorcycle as a world premier at the
EICMA annual trade show in Milan Italy. On 21 December 2017 Hero MotoCorp unveiled three new
motorcycles – the 125cc Super Splendor the 110cc Passion PRO and the 110cc Passion XPRO – to further
augment its dominant leadership in the domestic market. On 22 December 2017 Hero MotoCorp
announced that it will be increasing the ex-showroom prices of its motorcycles by about Rs 400 per
model with effect from 1 January 2018 to partially off-set rising input costs. Hero MotoCorp surpassed
the landmark seven million units in cumulative sales in a calendar year in 2017. The company sold a
record 7207363 units of two-wheelers in the calendar year in 2017.

Hero Moto Corp earlier also known as “Hero Honda” is one of India’s first motorcycle manufacturers.
The company has seen many ups and downs throughout their life span up till now. It is clear that the
motorcycles by Hero are built to last. They are majorly known for their fuel economy and cost.

The company owns a market share of about 46% in India in the two-wheeler category. Lt.Briaj Mohal Lal
Munjal the founder of Hero Moto Corp took the company to new heights. The company has never failed
with their promises of fuel efficiency. How did they achieve and what went into the company? Let’s have
a glimpse of India’s most successful motorcycle brand.
Here is how the company went from Fill it, Shut it, forget it to dhak-dhak go to Hum mein hai Hero.

History of Hero MotoCorp | Before the birth of a Legend

Ludhiana, Punjab is where everything came alive. In 1956 a still renowned brand “Hero Cycles” came
into power. Soon after Munjal brothers founded the cycle company in 1975 it became the largest
manufacturer of bicycles in the entire nation.

Nobody could stop the attention of international automakers “Hero Cycles” grabbed. After that came
the Honda of Japan in 1983. Both of the brands were class-leading in their nations. Hero and Honda had
to come to a conclusion and contracts where they collaborated. Soon after their alliance the very next
year, in 1984 Hero Honda was born.

Honda chose Hero in India because of its wide network and the quality of the products produced by the
company. Well, Honda’s decision was spot on and by 2001 Hero Honda motorcycles became the largest
motorcycle manufacture globally.

First motorcycle (CD100) | Fill it, Shut it, Forget it!!

The Joint venture of Hero and Honda produces some iconic motorcycles. One such motorcycle was the
CD100 which also the fist motorcycle manufactured by the brand.

Hero Honda CD100

Hero Honda CD100

Hero Honda was the first company to introduce 4-stroke motorcycles in India. The motorcycles from the
giant brand were renowned for their class-leading fuel efficiency, low cost, and their manufacturing
quality.

CD100 had the Honda’s tried and tested 97cc four-stroke engine. The motorcycle was capable of
achieving a top speed of 87km/h. The engine produced 7.5hp@8,000rpm of power and
7.3Nm@5,000rpm of torque driving the rear wheels via a 4-speed transmission. Hero Honda CD100 had
the class-leading efficiency of 80km/l.
Starting of Hero Honda’s Golden age | Hero MotoCorp journey

After launching the CD100, Hero Honda set the benchmark for other motorcycle manufacturers. As Hero
Honda CD100 offered the balance between the fuel economy, price, and the built quality.

The research and development of the company never stopped. Hero along with Honda brought many
motorcycles in the Indian two-wheeler market and created a buzz till the year 2000.

The Youth Motorcycle

With time the company moulded their offering according to the customer’s demands. Hero Honda Sleek
was the second motorcycle after the collaboration in 1984.

Hero Honda Sleek

Hero Honda Sleek | Hero MotoCorp journey

In 1989 the motorcycle Hero Honda Sleek was way ahead of its time and boasted a simple yet elegant
design. The motorcycle came with a 97.2cc engine which produced 7hp of power and 7.5Nm of torque
from a 4-speed transmission. The USP of the motorcycles was not just the looks but also it weighs just
over 100kg.

From the start of the 1900s, the company introduced many motorcycles that became popular amongst
every age group. Low cost and high fuel economy along with high refinement are what made the
company what it is now.

Here are some Motorcycles from the Hero Honda brand with the companies achievements.

In 1991 Hero Honda launched its new and upgraded motorcycle the CD100SS. In the same year, the
company achieved a milestone of producing 5 Lakh motorcycles.

Hero Honda CD100SS

Hero Honda CD100SS

Later in 1994, came the iconic motorcycle in the Indian market, the Hero Honda Splendor which was the
successor of CD100.
1994 Hero Honda Splendor

1994 Hero Honda Splendor | Hero MotoCorp journey

1999 was the year which changed the Hero Honda’s perception in the people’s mind. Came company’s
first motorcycle to cross 100km/h mark. Hero Honda “CBZ” made its way in many Indian homes.

1999 Hero Honda CBZ

1999 Hero Honda CBZ | Hero MotoCorp journey

In the Year 2001, Hero Honda made a ton of progress and launched not one but two motorcycles. Hero
Honda Passion and Hero Honda Joy. While the Passion was aimed towards the sightly premium buyers
with its new design. On the other hand, Joy was the most affordable Hero of the time.

Hero Honda Passion

Hero Honda Passion

Besides the new motorcycle launches Hero Honda got the tag of #1 motorcycle manufacturer in the
world in terms of the number of bikes manufactured. The company still maintains the standards to date.

The first high capacity motorcycle from the company was launched in 2003. Hero Honda Karizma, which
was capable of top speeds of more than 130km/h hence it was seen as a high-speed tourer of the
decade.

Hero Honda Karizma R

Hero Honda Karizma R

Alongside Karizma, the company came with Hero Honda CD Dawn and some tweaks were done in
Splendor and passion. Both of them also got a name change to, Splendor+ and Passion Plus.

In 2003, enters the motorcycle aimed towards the premium commuter buyers the Hero Honda
“Ambition 135”. In the same year Hero Honda also came up with 2 new updates in their existing
motorcycles. Hero Honda CBZ got a design change along with name change to “CBZ Star”

In 2005, Hero Honda introduced four new motorcycle models namely Super Splendor, CD Deluxe,
Glamor, and all new Achiever.

The Era of Powerful Motorcycles

In 2007, Hero Honda uplifter their offerings which were more focused on youngsters with more power
and aggressive appeal.
Hero Honda launched its one of the iconic power full motorcycles the “Hunk”. Alongside that, the
company also launched the Splendor NXG.

2009 marked the silver jubilee for the big automotive giant. Hero Honda Celebrates its achievement by
launching its new most powerful motorcycle the “Karizma ZMR”.

Termination of the Joint Venture | Hero MotoCorp journey

Through the years both Hero and Honda gave their everything. The result can be seen now as the
company still holds the crown of the best motorcycle manufacturer in terms of number. But the rising
tension between the two companies let to the fall of collaboration between the two companies.

Reason for Termination

The differences between the two companies were rising for some time due to the issues between them.

Despite more than 10 years of a long partnership, Honda was reluctant for not sharing the full
technology gone in their motorcycles.

Hero also had to pay high royalty to the Japanese company “Honda”.

The barrier for Honda was the refusal of Hero Honda to merge the company’s spare parts business with
Honda’s new fully owned subsidiary Honda Motorcycle and Scooter India.

The main reason for the termination was restricting the export of the motorcycles in just a few countries
namely, Bangladesh and Nepal. Exporting was one of the main components that could help Hero to
expand its footprint.

In 2011 Honda the Japanese motorcycle sold its 26% shares to the Munjal family. This was the end of
one of the successful collaborations in the world.

Formation of “Hero MotoCorp”

On 29th July 2011, the name changed from Hero Honda to Hero MotoCorp. The Hero got its new identity
form then and a British firm Wolff Olins designed the new logo of the company which is still in use. The
logo was showcased on the 9th of April in London to harmonize with the third test cricket match
between England and India.

Hero MotoCorp Logo by

Hero MotoCorp Logo by Wolff Olins

Hero MotoCorp was now free to export its motorcycles to any country. Now it exports many of the
motorcycles to Latin America, Africa, and West Asia.
People had double thoughts regarding the retirement of the joint venture of the two companies. But
Hero has overcome and now is a well developed and established motorcycle manufacturer brand.

Hero Impulse was the first motorcycle from the Indian motorcycle manufacturer to be launched solely
by Hero MotoCorp. Then came the Hero Ignitor along with updated 100cc engines in splendors.

In-House Research and Development at Hero MotoCorp | Uptill Now

After the joint venture got dissolved the Indian motorcycle manufacturer came up with many
innovations that were produced in house. Some of the achievements are the new 110cc engine, the
vertical 125cc engine, and the new I3s Tech. Hero introduced the I3S or Idle start-stop function in many
of its motorcycles.

Hero iSmart was the first motorcycle that was equipped with the new i3s technology. The motorcycle
got the highest ever fuel economy in India of 110km/l. This motorcycle was awarded the most fuel-
efficient motorcycle in the world.

Hero MotoCorp was the first to introduce Fi in the Indian Market. Hero Glamour Fi was the first
commuter motorcycle to come with an option of Electronic fuel injection instead of a traditional
carburettor.

All the latest 200cc offerings in the Hero line up are designed and developed in-House at the R&D facility
in Jaipur.

Hero MotoCorp manufacturing Units

There are many manufacturing units spread across India and few out of India.

Dharuhera, Haryana- This was the first manufacturing unit set up in 1984.

Gurgaon, Haryana- The second manufacturing unit in India and one of the biggest.

Neemrana, Rajasthan- The Green and environment-friendly manufacturing unit.

Halol, Gujarat- Another big manufacturing plants.

Chittoor, Andra Pradesh- The latest manufacturing unit to be set up.

Hero MotoCorp produces nearly 9,500 two-wheelers in a day. For instance, nearly 7 motorcycles roll
down the production line every minute. Indeed Lt. Brijmohan Lall Munjal established a big firm and neo
has a name worldwide.
VISION

The story of Hero Honda started with a simple vision – the vision of a mobile and an empowered
India, powered by its two wheelers. Hero MotoCorp Ltd., company’s new identity, reflects its
commitment towards providing world class mobility solutions with a renewed focus on expanding
company’s footprint in the global arena.

MISSION

Hero MotoCorp’s mission is to become a global enterprise fulfilling its customers’ needs and
aspirations for mobility, setting benchmarks in technology, styling and quality so that it converts its
customers into its brand advocates. The company will provide an engaging environment for its people
to perform to their true potential. It will continue its focus on value creation and enduring
relationships with its partners.

OUR VALUES

PASSION

We have the ‘JOSH’– we are driven to deliver our best every day; loving what we do, be bold and have
fun

INTEGRITY

Our behavior is ethical and do the right thing when no one is watching.

RESPECT

We show regard and appreciation for everyone; celebrate diversity, act with confidence yet humility.

COURAGE

We are Risk-takers, pioneers, unafraid to question the status-quo.

RESPONSIBLE

We are Accountable for our actions and performance; delivering outcomes as a team, caring for each
other and the environment.
COMPANY ANALYSIS:

1. SWOT ANALYSIS
Strengths
Hero Motocorp enjoy various competitive advantages and strengths that has contributed to
its success and immense growth for more than three decades.

Brand Recognition: Brand and brand trust plays a huge part when purchase decisions are made
by consumers. Hero MotoCorp is a strong brand which is synonymous with reliability and fuel
efficient two wheelers. According to The Brand Trust Report published by Trust Research
Advisory, the conglomerate surged 223 places to rank 33 as one of India’s most trusted brands
in 2018. It was ranked 6 in the automobile category, the highest of any Indian two wheeler
manufacturer in the shortlist.
Extensive Domestic Network: Hero MotoCorp has over 6,500 dealerships and service points
across India. The large number of service points has allowed it to roll out its Express Service
scheme, where it strives to service a customer’s vehicle within 60 minutes.
Strong Global Presence: Ever since the termination of the joint venture between Hero Group of
India and Honda of Japan, Hero MotoCorp began to establish its global footprint. As of late
2018, its two wheelers are being sold in over 37 countries and has 8 manufacturing plants in 3
countries.
Large Product Portfolio: Not only does Hero MotoCorp provide a large variety of two wheelers,
it is moving rapidly alongside current market trends as well. In late 2016, it made its first venture
into the electric vehicle market by investing in a Bangalore-based tech manufacturer, Ather
Energy. It has a rich and diversified portfolio targeting different segments. For example, the
XPulse series is catered towards the international consumer and the Xtreme series is targeted at
the growing premium motorcycle segment.

Weaknesses
Despite its strong domestic presence and large market, Hero MotorCorp still have some
weaknesses that can threaten its growth and future.

 Poor Gender Diversification: As of late 2018, Hero MotoCorp had only 256 female
employees out of 8266. Although the figure has tripled from a mere 1% in 2014,
much more still can be done to address the gender inequality and diversification.
 Global Exports: Despite having a gargantuan market share domestically, Hero
MotoCorp is still largely focused on India. In 2017, only 12% of the units sold by all two
wheeler manufacturers in India contributed to exports. This is greatly eclipsed by China,
which had exported more than 46% of units sold, more than 4 times the amount. As
more competitors are looking to jump on the two wheeler market in India, it would be
unwise for the company to solely focus on its home ground.
  Declining Service Quality: In a study conducted by the International Journal of
Innovative Research in Science, Engineering and Technology in 2015, the overall
service quality for Hero MotoCorp fell below expectations of end consumers. According
to the study based using SERVQUAL model of service quality, Bajaj Auto, one of its
closest competitors, was deemed to have better overall service and appeal.

Opportunities
 Joint Ventures and Acquisitions: Despite the terminated joint venture with Honda
Japan, it is crucial to note that for many years, technology in its two wheelers came
from Honda. By acquiring start-ups or going into joint ventures will allow the
conglomerate to obtain more valuable technology and tap into other market
segments. A good example is its 49.2% stake buyout of Erik Buell Racing, which
allows Hero MotoCorp to synergize motor technologies and extend sales into the
North American market.
 Electric Two Wheelers: The electric bike and scooter market is booming globally and it
would be an opportunity for Hero MotoCorp to leverage on. The e-bike market is
expected to reach about 24.3 billion U.S. dollars by 2025. According to Prescient and
Strategic Intelligence, the electric scooter and motorcycles market in India alone will
surge past $617.7 million by 2025.

Threats
 Strong Competition: Hero MotoCorp faces strong competition domestically despite
its strong foothold in India. The two wheeler market in India is very competitive and is
dominated by three other major players, TVS Motors, Honda, and Bajaj Auto. In
2012, Honda launched made-in-China two wheelers which are priced lower than
equivalent cost-efficient models. Honda has been expanding aggressively since the
joint venture was terminated in 2010. It began enticing Hero dealers to join the Honda
network under its subsidary in India, Honda Motorcycles and Scooters India Pvt. Ltd
(HSMI). Similarly, TVS Motors has collaborated with BMW to establish its presence in
the premium motorcycle market in direct competition with Hero's Xtreme series.
Competition will continue to remain strong as India is an extremely large market to
delve into.
 Public Transport Infrastructure: The government of India is striving to improve on its
public transport infrastructure. Projects such as the National Highways Development
Project (NHDP) under the ambitious Bharatmala Pariyojana will add on more than
80,000 km of highways in India. In early 2019, India's Union Minister Nitin Gadkari
announced that India's public transport will be based on the London model with an MoU
with Transport for London (TFL) being signed in the previous year. Government
initiatives will definitely reduce the demand for automobiles if public transport becomes
more reliable.

2. PESTLE ANALYSIS
Hero Motocorp’s outside environment would certainly be studied with the PESTEL framework
for highlighting the industry’s Political, Economic, Social, Technological, Environmental as well as
Legal environment.
The PESTLE Analysis for Hero MotoCorp is given below:
Political
1.Government promoting loans taken to
 purchase EVs through tax deductions
2.Fame India Scheme II for the faster adoption
of electric mobility
Economical
1.Average family and disposable income rising
despite families being nuclear
2.Emerging markets (EMs) to lead economic
growth though short-term volatility in India
and other developing markets remains
3.Favourable credit scenario to drive growth
4.India on track to grow to a $5 Tn economy by
2025
Social
1.Increasing preference for personal mobility
2.Increasing people's preference for premium
Vehicles
Technological
1.Technological advancements driving
development of electric vehicles
2.Leveraging digitalization in automobile
industry
Legal
1.Safety regulation systems and policies
2.Emission control and regulation policies
Environmental
1.Focus on sustainability in operations
2.Organizations increasingly conscious about
carbon footprints they leave

PESTLE analysis is one the significant and widely used tool or framework mostly by
organizationswith the intent of considering the market environment before commencing the
process of marketing. In fact, the analysis of the environment needs to feed all planning
aspects as well as it should be continuous. The internal environment of an organization
includes internal customers or staff, wages, office technology and finance etc. whereas the
micro environment includesthe external customers of an organization, distributors or agents,
competitors and suppliers. Additionally, the macro environment includes legal and political
factors, sociocultural forces, economic forces and technological factors.

Political forces:
These are the Hero Motocorp forces that tends to be altered by the influence of government
on the infrastructure of country. The political factors may involves environment regulations,
employment laws, tariffs, tax policy, trade restrictions, political stability and reforms. It is
 noteworthy, that the charities needs to be included where a government are not willing
services and goods to be provided.
Economic factors:
The Hero Motocorp economic factors or forces involves interest rates, inflation, and growth
of economy, cost of living, working hours, wage rate and exchange rates. Combining these
factors, it last greater and inevitable impact on organization.

Social factors:
The culture or social influence on certain businesses vary from country to country. It is
significant to consider these factors. The social factors includes safety and health
consciousness, various demographics, population growth rates and cultural aspects.
Technological factors:
Notably, Hero Motocorp technology is one of the most important way of being competitive in
the highly competitive market arena. Not only this, it drives globalization, the factors includes
environmental and ecological aspects, and available services as well as products. An
organization should innovate and be compatible with the technologies.
Legal factors:
The Hero Motocorp legal factors involves the certain laws and regulations which might effect
on the business operations of an organization. It also includes impending and current
legislation that tends to impact on the industry in areas including competition, employment,
safety and health. An organization should consider the influence of the national and
international laws where the organization would originate the business operations.
Environmental factors:
The environmental factors include all those factor lasting impact or influence, the
surrounding environment most likely determine environmental factors. The factors involves
awareness of the seasonal or climate change or terrain variation. The analysis of the
environment including internal and external elements is vital for organization since it impacts
on the performance of an organization.

3. BCG MATRIX

BCG Matrix of Hero MotoCorp

The BCG Matrix for Hero MotoCorp will help Hero MotoCorp in implementing the business level
strategies for its business units. The analysis will first identify where the strategic business units of
Hero MotoCorp fall within the BCG Matrix for Hero MotoCorp.

Stars
4. The financial services strategic business unit is a star in the BCG matrix of Hero
MotoCorp. It operates in a market that shows potential in the future. Hero MotoCorp
earns a significant amount of its income from this SBU. Hero MotoCorp should vertically
integrate by acquiring other firms in the supply chain. This will help it in earning more
profits as this Strategic business unit has potential.
5. The Number 1 brand Strategic business unit is a star in the BCG matrix of Hero
MotoCorp, and this is also the product that generates the greatest sales amongst its
product portfolio. The potential within this market is also high as consumers are
demanding this and similar types of products. Hero MotoCorp should undergo a product
 development strategy for this SBU, where it develops innovative features on this product
through research and development. This will help Hero MotoCorp by attracting more
customers and increases its sales.
6. The Number 2 brand Strategic business unit is a star in the BCG matrix of Hero
MotoCorp as Hero MotoCorp has a 20% market share in this category. It also the market
leader in this category. The overall category is expected to grow at 5% in the next 5
years, which shows that the market growth rate is expected to remain high. Hero
MotoCorp should use its current products to penetrate the market. This could be done by
improving its distributions that will help in reaching out to untapped areas. This will help
increase the sales of Hero MotoCorp.

Cash Cows
 The supplier management service strategic business unit is a cash cow in the BCG matrix
of Hero MotoCorp. This has been in operation for over decades and has earned Hero
MotoCorp a significant amount in revenue. The market share for Hero MotoCorp is high,
but the overall market is declining as companies manage their supplier themselves rather
than outsourcing it. The recommended strategy for Hero MotoCorp is to stop further
investment in this business and keep operating this strategic business unit as long as its
profitable.
 The Number 3 brand strategic business unit is a cash cow in the BCG matrix of Hero
MotoCorp. This is an innovative product that has a market share of 25% in its category.
Hero MotoCorp is also the market leader in this category. The overall category has been
declining slowly in the past few years. Hero MotoCorp has the power to influence the
market as well in this category. It should, therefore, invest in research and development
so that the brand could be innovated. This will help the category grow and will turn this
cash cow into a star. The overall benefit would be an increase in sales of Hero MotoCorp.
 The international food strategic business unit is a cash cow in the BCG matrix for Hero
MotoCorp. This business unit has a high market share of 30% within its category, but
people are now inclined less towards international food. This change in trends has led to
a decline in the growth rate of the market. The recommended strategy for Hero MotoCorp
is to invest enough to keep this strategic business unit under operations. If it no longer
remains profitable and turns into a dog, then Hero MotoCorp should divest this strategic
business unit.

Question Marks
 The local foods strategic business unit is a question mark in the BCG matrix for Hero
MotoCorp. The recent trends within the market show that consumers are focusing more
towards local foods. Therefore, this market is showing a high market growth rate.
However, Hero MotoCorp has a low market share in this segment. The recommended
strategy for Hero MotoCorp is to invest in research and development to come up with
innovative features. This product development strategy will ensure that this strategic
business unit turns into a cash cow and brings profits for the company in the future.
 The Number 4 brand strategic business unit is a question mark in the BCG matrix for
Hero MotoCorp. This strategic business unit is a part of a market that is rapidly growing.
However, this strategic business unit has been incurring losses in the past few years. It
has also failed in the attempts made at innovation by research and development teams.
 The recommended strategy for Hero MotoCorp is to divest and prevent any future losses
from occurring.
 The confectionery strategic business unit is a question mark in the BCG matrix for Hero
MotoCorp. The confectionery market is an attractive market that is growing over the
years. However, Hero MotoCorp has a low market share in this attractive market. The low
sales are as a result of low reach and poor distribution of Hero MotoCorp in this segment.
The recommended strategy for Hero MotoCorp is to undergo market penetration, where it
pushes to make its product present on more outlets. This will ensure increased sales for
Hero MotoCorp and convert this strategic business unit into a cash cow.

Dogs
1. The plastic bags strategic business unit is a dog in the BCG matrix of Hero MotoCorp. This
strategic business unit has been in the loss for the last 5 years. It also operates in a market
that is declining due to greater environmental concerns. The recommended strategy for Hero
MotoCorp is to divest this strategic business unit and minimise its losses.
2. The Number 5 brand strategic business unit is a dog in the BCG matrix for Hero
MotoCorp. This is operating in a market segment that is declining in the past 5 years. The
company also has negative profits for this strategic business unit. However, it is expected
that the market will grow in the future with environmental changes that are occurring. The
recommended strategy for Hero MotoCorp is to invest in the business enough to convert
into a cash cow. This will ensure profits for Hero MotoCorp if the market starts growing
again in the future.
3. The synthetic fibre products strategic business unit is a dog in the BCG matrix of Hero
MotoCorp. The market for such products has been declining, and as a result of this
decline, Hero MotoCorp has been facing a loss in the past 3 years. The market share for
it is also less than 5%. The recommended strategy for Hero MotoCorp is to divest this
strategic business unit to minimise any further losses.
4. The artificially flavoured products strategic business unit is a dog in the BCG matrix for
Hero MotoCorp. These products were launched recently, with the prediction that this
segment would grow. However, with increasing health consciousness, people are now
refraining from consumption of artificial flavours. The market is shrinking, and Hero
MotoCorp has no significant market share. The recommended strategy for Hero
MotoCorp is to call back this product.

5. Porters five forces

Hero Motocorp Porter’s Five Forces

Hero Motocorp Porter five forces reflects the competitive environment of an industry. It is a strategic
tool that is used to avoid or minimize the risk of losing the competitive edge that the organization has
and to ensure the profitability of the products in the long run. The company holds its vision closely as
it allows them to orientate its innovation in terms of choices regarding the investment and strategies.
Within the industry the businesses profitability is dependent upon the following forces:

1. Competitive rivalry
 2. Threats of new entrants

3. Threats of substitute

4. Bargaining power of suppliers

5. Bargaining power of customers

Structure of porter’s five forces analysis

Hero Motocorp Competitive rivalry
The competition among the firms help in identifying the lucrativeness of an industry where
companies are competing hard in order to maintain their power within the industry. The Hero
Motocorp competition is moreover on basis of diversity, the development within the sector and the
barriers related to entrance in the market. The competitive rivalry is the analysis of the brands and
the product, its strengths and weakness along with the strategies, competitors and the share in the
market.

Threat of new Hero Motocorp entrants

It is in the favor of the companies that exist in the market to create barriers for the new entrants to
prevent them from entering into the industry. The organizations could be the new companies or the
companies that are planning to diversify itself in the market. The barriers can be both industrial and
legal. Apart from this the size and the reputation of the companies that are already operating in the
market also play an important. Furthermore the cost related to the entry, access to raw materials,
barriers related to culture and technical standards also play a major role and can affect the decision
of the new entrants in the market.

Threat of substitute products

The Hero Motocorp substitute products are an alternatives that are available in the market at
comparatively better prices. Such products prevail due to the technological and innovative
advancement. Due to which the products being produced by the companies that are already existing
in the market and is using the same technology are than replaced by the other company’s products
that are comparatively better in terms of price and quality and are being produced from sectors with
significant profits. The substitute products are dangerous as the companies are under constant
threat of being replaced.

High threat of substitute leads to low profitability as it limits the industry profits by placing a price
ceiling due to the fear of being substituted by other product. Apart from this it also affect the growth
potentials of the industry as a whole but reducing the profitability margins. 

Bargaining power of suppliers Hero Motocorp

Powerful suppliers possess more power to capture significant value for themselves by demanding
high prices while limiting the quality and the quantity of the product or services or by transferring the
cost on the participant of the industry. Many condition imposed by the suppliers generally include the
increase in price while compromising the quality and quantity.

A bargaining power of a supplier in the market is strong if:

7. It is more concentrated than the industry it is selling to.

 8. It is not heavily relying on the industry for its profits

9. If the participants in the industry have to incur high cost for switching suppliers or the firms
are located adjacent to the suppliers manufacturing facilities.

10. The product being offered by the suppliers are highly differentiated.

11. And when there is no close substitute available for the products being supplied by the
suppliers.

Hero Motocorp Bargaining power of

customers
The buyers having strong bargaining power can highly influence the profitability of the suppliers
operating in the market by imposing condition that are not much favorable for the suppliers in terms
of price, quality or service. Therefore choosing clients often become crucial for the organizations as
to avoid the situation of being highly depended on the buyers. The level of interest and concentration
of buyers toward the product gives them more or less power.

Powerful buyers could flip the side of the powerful supplies by forcing the prices to move downwards
and by demanding high quality and services by creating a competition between the participants in
the industry on the basis of price and quantity. Hero Motocorp Customer are deemed strong if they
contain negotiating leverage specifically if the industry is sensitive to price, the buyers can pressure
suppliers for further price reductions.

The customer are assumed to have strong buying power in case:

 If the number of buyer are limited or each of the buyer purchases large quantity relative to
the size of the suppliers.

 The products in the industry are standardized or are undifferentiated.

 The cost of switching is comparatively low.

6. McKenzie 7s