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STRATEGIC MANAGEMENT (MBA 431)

CIA – 3
Company Analysis - Hero MotoCorp Limited

Submitted by
Deepali Deepti
2027536
L3
Submitted to
Prof. Sonia Mathew

SCHOOL OF BUSINESS AND MANAGEMENT

CHRIST (DEEMED TO BE UNIVERSITY)
SEPTEMBER 2021
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About Hero MotoCorp:

Hero MotoCorp is India's largest two-wheeler Manufacturing Company incorporated in the year
1984. It is also the largest 2-wheeler manufacturer in the world. Hero is the market leader in the
Indian 2-wheeler Industry, with a market share of 38.5%. The company operates in both the
motorcycle and scooter segments with a market share of 51.9% and 12.4%, respectively. The
Company's main activity is manufacturing and selling motorcycles, scooters, spare parts, and
related services. The Company has eight manufacturing plants and offices across three countries.
It has 2 R&D centers in Germany and Jaipur to develop new products and have a competitive
advantage. Currently, Hero is present in 44 countries outside India in Asia, Africa& Middle East,
the Americas, and Europe.

Challenges faced by Hero MotoCorp:

Hero, the largest 2W manufacturer globally, faces many challenges in many aspects like
economic, social, and environmental challenges. The following are some of the major challenges
that the Company currently faces at the national level and globally.

 Though Hero is the market leader, there are many national and international players in
the market, creating high competition in the industry. Some of the major competitors of
Hero are TVS, Bajaj, and Honda motorcycles and scooters in India.
 High dependence on government policies and increased fuel prices can significantly
affect business margins in March 2020. Per litre, petrol was around 72, and now it
reached 100 per litre.
 Development and growth in public transport can change the behavior of the public, which
leads to shifting to public transport from own mobility. This could affect the sales of the
business.
 Again, an increase in the covid cases might lead to restrictions in movement, which will
affect the production and volume. This might also lead to difficulties in getting the raw
materials for manufacturing.
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 Over the past years, the Hero focused mainly on the segment of the lower middle class to
the upper-middle class, and their motorcycles price ranges between 55,000 to 1,00,000.
But now, recently, the Company is trying to enter the premium bikes segment. As they
are new to this segment, any unsuccessful launch can restrain its growth path

 Fear of pandemic in certain geographies preventing customers from visiting showrooms

directly.

 Due to this covid 19 pandemic, there is an uncertainty in the global markets. Economic
uncertainty could affect the top line and bottom line of Hero.
 In the lockdown times, many employees are in work from home culture. This creates a
new risk of potential cyber-attacks, which could lead to the loss of valuable information.
 Sharp fluctuations in commodity prices can create business challenges affecting
production costs, product pricing, and earnings.

Opportunities:

 Battery-powered bikes and scooters are becoming increasingly popular, opening up new
growth opportunities. The Company's current investment in Ather Energy and its recent
cooperation with Gogoro position it to benefit from fresh market possibilities in this
sector.
 With its state-of-the-art R&D centers driving product innovation and ensuring new
product releases that are sensitive to customer requirements and market dynamics, Hero
MotoCorp's new product releases and strategic collaboration should meet these needs.
The Company has made deals with Harley Davidson, which will cater to a growing
consumer base in this sector and drive company growth with its state-of-the-art R&D
centers driving product innovation and ensuring new product releases that are sensitive to
customer requirements and market dynamics.
 Post pandemic, there will be high demand for personal mobility as people were practiced
social distancing norms over the last year, so this behavior might provide growth
opportunities in many geographies.
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 The Company has planned to Support the global business through entry into newer
markets.
 In order to mitigate the effect of the decreasing air quality index, the Company is
continually working to improve green covering by planting trees in and around its
facilities.
 Hero introduced an e-commerce platform, an AI-enabled showroom, digital payments at
dealerships, and online document collecting services, among other things. As a result of
the pandemic, the Company has had to make certain modifications to its sophisticated
technology and the way they operate.

 Hero MotoCorp's path forward is anticipated to be driven by increased penetration

opportunities in the local market, a focus on export markets, and a stronger presence and
performance in luxury bikes and scooters with growth in urban India.

Analysis of the impact of challenges on divisional and corporate-level strategy

 Shift from Internal Combustion Engine (ICE) vehicles to Electric Vehicles is happening
in the industry significantly. There are several measures taken by government to promote
electric mobility and reduced the tax for this segment. So, the Company will face many
changes in how they produce the motorcycles as they have been producing the Internal
combustion engine over the past three decades.
 Given the numbers to be controlled over the whole plant configuration, the vertical ramp
up and ramp down between BSIV and BSVI was critical. However, because the
production setups are part of a long-term goal, the Company will challenge solving with
well-thought-out comprehensive planning and collaborative teamwork.
 Hero MotoCorp adopted digital invoicing to streamline material inbound and finance
invoice verification, reducing duplication. The use of an online central packaging data
repository allowed for centralized packaging monitoring on a single screen in the
Company's supply chain management. The effective implementation of the GST and E-
way bill regimes at all of the locations within the government's timeframes has resulted in
smooth operations.
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 Hero Connect, the customer relationship management (CRM) solution for authorized
representatives of dealers (ARDs), was rolled out to cover 99 percent of the Company
and ensure consistency. This aids the Company in obtaining more accurate statistics and a
better understanding of the sales.

Analysis of the impact of opportunities on divisional and corporate-level

strategy

 Hero MotoCorp is building on agility in manufacturing so that the asset can be utilized
properly, and this will help introduce multi-models of scooters/motorcycles in the
framework. With a new scooter product line and new 160/200cc avatars (that comply
with multi-mission standards), the Company can increase capacity utilization with a
dynamic model mix.
 The two-wheeler industry's long-term development story is intact. Given that total
penetration levels are just 1/2 to 1/3 of what they are in other ASEAN nations, the sector
has many potentials. Two-wheelers are not only a means of transportation but also a
source of money. The car generates its demand, feeding a positive feedback loop.
 HTCG Germany and CIT India engineers are working on an in-house electrical product.
Possibility of expanding into the charging station industry at the Company's contact
points.
 Investment in Ather Energy along with Hero MotoCorp's in-house R&D efforts to
develop a mass-market EV solution. Collaboration with Taiwan-based Gogoro to venture
into battery swapping infrastructure.
 Hero MotoCorp has opportunities in multiple new products linked to technology, a
prototype of the self-designed electric scooter, items developed particularly for export
markets, and innovative world transportation solutions. Hero is also developing other
fascinating related business models, such as one in the two-wheeler rental market as a
side business.

Hero's Business/strategy for a different country or geographies:

South Asia:
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 The Company has entered the premium flagship segment of 160cc recently in the last
quarter of FY 21 and gained a market share of 10% in this segment.
 The Company used to export its products to Sri Lanka, but now there is an import ban in
Sri Lanka which stops the country from exporting its products to Sri Lanka.
 In the Nepal market, the Company launched six new products and focused on retail
financing and festivals to gain Market share from 13% to 19%. The Nepal market grew
mainly due to the strong festival sales and the launch of the new products.

Europe:

 Hero MotoCorp wants began its entry into Europe by introducing its hybrid scooter “the
Leap”, in Italy, Spain, and France, and then expanded into other European markets with
other scooters and motorbikes.
 In Europe, Hero has many technological collaborations. It has an engine development
partnership with AVL in Austria, and it has two key relationships in Italy, Engines
Engineering and Magneti Marelli, both situated in Bologna.

Africa:

 The Company had a 142 percent increase in dispatches in FY 21 due to new markets and
products that aided in developing the Africa strategy. Aggressive efforts in Uganda and
Kenya with new distributors have increased market share and solid momentum for the
coming fiscal year.

 HMC entered into Africa by introducing its brands and goods in Kenya, where it has
established an international assembly factory as part of its worldwide development
strategy. The company has well planned strategic market for starting the operations in
Africa.
 Partnerships with financiers have aided in expanding market reach. In March 2021, the
Company dispatched the Hunter series, which would be released in June 2021, as part of
a revised product range for Nigeria.

Middle East:
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 Hero MotoCorp has entered the Gulf market to offer its motorcycles. With seven new
models, it has entered the Middle East market. Al Futtaim, based in Dubai, will handle
Hero motorbike distribution in the UAE. Al Futtaim is a commercial support services
company that will distribute these seven Hero motorbike models in the UAE.

 In this region, the Company experienced the highest ever dispatch in Turkey, with a retail
growth of 96% in FY 21.
 The Company grew by more than 200 percent year over year in the Middle East, owing
to new model releases and reworking of old models to satisfy market demand.

Latin America:

 Hero is worked on flexi-fuel engines for Brazil, which uses ethanol-blended gasoline, and
hopes to join the market by March.

 Increased sales in Latin America resulted from the reworking of the premium range and
the launch of new models. To further extend the footprint in these areas, the Company
appointed new distribution partners in Mexico, Honduras, and Nicaragua.
 Due to a successful Premium strategy with a redesigned premium portfolio that includes
the introduction of X Pulse last year and continued with Hunk 190R and Hunk 160R this
year, the Company expanded by 56 percent. The Company was able to increase market
shares in important markets of Colombia and Peru.

Some of the other key initiatives in the global market are

 With a revised product range, network development, and sales promotion efforts, the
Company is making a big push throughout Africa's main markets of Nigeria, Kenya, and
Uganda.
 Increase market share in Colombia, Guatemala, and Peru by expanding your network,
investing in brand building, and updating your products.
 Scale-up retail finance in key markets.
 Launch of Hunter in Nigeria and start of Mexico operations.
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BCG Matrix of Hero MotoCorp:

The BCG Matrix is a corporate planning tool that looks at two variables: relative market share
and market growth rate, to look at business units or product lines. By integrating these two
factors into a matrix, a company may determine where to allocate additional (financial)
resources, cash out, and divest, as well as where to deploy extra (financial) resources, cash out,
and divest. The primary aim of the BCG Matrix is to assist organizations in making business
investment decisions. Hero MotoCorp's BCG Matrix will aid in the implementation of business-
level strategies for its business units.

Stars:

In a fast-growing sector, stars have a large market share (possibly market leaders). Due to their
high relative market share, celebrities make a lot of money, but they also require money to
compete and maintain their growth rate. In Hero MotoCorp's BCG matrix, the product that caters
to rural areas is a star. This SBU contributes a major portion of Hero MotoCorp's revenue. 90%
of the revenue generated by hero MotoCorp comes from the rural market. The relative market
shares, as well as the market growth rate, are high. Hero splendor pro, passion xpro are stars for
this Company.

Cash Cows:

After several years in the business, market growth may slow, and revenues may stagnate. Your
Stars are likely to turn into Cash Cows at this point. In Hero, HF Delux HF Dawn is cash cows.
These products have a high market share, but the market growth has reached maturity.

Question Marks:

Typically, ventures or start-ups begin as Question Marks. The products in this quadrant have a
small market share in a rapidly growing sector. They can grow their market share and potentially
become Stars (market leaders). Hero MotoCorp's Electric vehicles segment is a question mark on
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the BCG matrix. The Company has been working on developing its new EV vehicles. As of now,
the market share of EVs is very less, but it is expected to be a high growth market in the future.
The entry into the premium segment can also be considered as a Question mark.

Dogs:

Dogs are business units having a tiny relative market share in a slow-growing or falling market.
Hero MotoCorp has achiever, impulse, Ignitor in this category.

Blue Ocean Strategy of Hero MotoCorp:

The pursuit of uniqueness and low cost at the same time to create new market space and demand
is known as a blue ocean approach. It ultimately comes down to capturing uncontested market
space and making competitors irrelevant. Through their strategies and efforts, industry players
like Hero MotoCorp Championing a Cause may use the blue ocean strategy to change market
limitations and industry structure. The industrial structures are believed to be flexible rather than
inflexible in the blue ocean model and framework.

Hero MotoCorp Championing a Cause has created the finest blue ocean strategy by sequencing
its approach to optimize impact and profit utilizing the framework. Hero MotoCorp
Championing a Cause employs the optimal sequencing for value innovation, i.e., buyer utility,
pricing, cost, and adoption, as part of their blue ocean strategy. By following this process, Hero
MotoCorp Championing a Cause may tap into the blue oceans of untapped market areas,
ensuring that its growth originates from underused market places and is organic in demand
generation.

Hero MotoCorp Championing a Cause is different in the following ways:

 Hero MotoCorp is supporting a good cause. Creates new market areas, rendering
competitors obsolete, and redefining industry boundaries.
 Hero MotoCorp Championing a Cause generates fresh, inventive demand and bakes an
entirely new pie.
 Hero MotoCorp is supporting a good cause. The value-cost trade-off is broken.
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 Hero MotoCorp Championing a Cause focuses on low-cost methods and initiatives to

differentiate itself.

Bowman's strategy Clock of Hero MotoCorp

A firm can pick a strategic position from Bowman's Strategy Clock that provides the best
competitive advantage. Bowman's Strategic Clock investigates strategic placement possibilities.
It shows the variety of ways a corporation, brand, or organization may position a product
depending on two dimensions: price and perceived value. This yields eight strategic choices,
each divided into four quadrants and represented by a clock.

Hero MotoCorp is placed in the Hybrid component as it offers products at a low cost but offers
products with a higher perceived value than those of other low-cost competitors. The quality and
value are good, and the consumer may expect fair prices. Customer loyalty is increased as a
result of this combination.
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Conclusion:

Hero MotoCorp is one of India's largest automotive manufacturers, specializing in low-cost

automobiles aimed towards middle-class families. Hero MotoCorp promotes in a way that
appeals to those with strong emotional and cultural ties. This report has covered the basic details
of Hero MotoCorp and the challenges and the opportunities the Company faces globally. And the
impact of various challenges and opportunities on divisional and corporate level strategy.
Different tools such as BCG Matrix has been done to examine the product lines and business
units; Blue Ocean strategy has been discussed for the Company as to how it has been able to
expand its brand globally and Bowman's clock strategy, which shows on which component
makes the Hero stand on.

REFERENCES

 https://www.essay48.com/case/20418-Hero-MotoCorp-Championing-a-Cause-Blue-
Ocean-Strategy

 https://wirc-icai.org/applications/anthology-of-ind-as-notes-and disclosures/data/Hero
%20Motocorp%20Limited.pdf

 https://www.heromotocorp.com/en-in/digital-annual-report-2019-20/pdf/Overview.pdf

 https://www.thehindubusinessline.com/companies/hero-motocorp-enters-
africa/article20634249.ece1

 https://economictimes.indiatimes.com/latin-american-countries-key-markets-for-heros-
global-ambitions/articleshow/58583834.cms?from=mdr