Strategic Management

Group 12
Hero MotoCorp

Group 12
Akhil Anand (M22MS006)
Shrehit Agarwal (M22MS071)
Gaurav Nidhi Pandey (M22MS099)
Ankit Kumar Mehta (M22MS011)
Bandi Sai Dora Babu (M22MS021)
 ABOUT THE COMPANY, VISION AND MISSION

Hero MotoCorp which is among the biggest manufacturers in the world was founded in 1984 under the name Hero
Honda as a joint venture between Honda of Japan and Hero Cycles of India. Hero MotoCorp was given a new name
in 2010 when Hero Group acquired Honda's 26% ownership share in the business. The New Delhi-based
corporation has a wide network of dealerships and servicing facilities dotted all across India and exports its goods
to more than 40 nations.

VISION : The vision of Hero MotoCorp is “Be the future of mobility.”

MISSION : The mission of Hero MotoCorp is to become a global leader in the motorcycle industry, by providing
products and services of the highest quality, at the most affordable prices, while maintaining superior customer
satisfaction. They aim to achieve this by continuously innovating and improving their products, processes and
services, while also being socially and environmentally responsible. Hero MotoCorp's mission is to create value for
all stakeholders, including customers, employees, shareholders, suppliers and the society at large, and to contribute
to the growth and development of the communities in which they operate.
 OBJECTIVES

Hero MotoCorp's objectives are:

Global Leadership: Increase market share both domestically and abroad by providing a diverse selection
of items that cater to the tastes and wants of clients from all over the world.

Customer Satisfaction: Deliver high-quality goods and services that exceed client requirements and
continually improve them to meet customer needs.

Innovation and Technology: Continually innovate and enhance products and business practices through
investments in R&D and cutting-edge technologies.

Operational Excellence: Increase productivity, efficiency, and cost-effectiveness of operations by

improving the supply chain, production methods, and distribution systems.

Social and Environmental Responsibility: Conduct all activities in an ethical and sustainable manner by
encouraging sustainable practices, reducing carbon impact, and supporting local communities.
 SWOT ANALYSIS

Strengths:
● Different range of products and good
research and development
● Huge distribution network
● Brand equity
● Successful rebranding from Hero Honda to
Hero MotoCorp
Weaknesses:
● Doesn’t manufacture luxury bikes
● Almost 30% of spare parts are imported
● Most bike models are identical, indicating
lack of creativity
● Uses Honda’s technology

Opportunities: Threats:
● Increasing demand for two-wheelers ● Public transportation is getting more
efficient
● Growth potential in untapped overseas
● Increasing gasoline costs and strict
markets government regulations
● Affordable pricing ● Competition from large domestic and
foreign brands
 PESTLE

Political Factors:
●Recently, the Indian government has announced several initiatives to promote electric mobility and reduce carbon
emissions, including tax incentives for electric vehicle manufacturers. This can create opportunities for Hero
MotoCorp to expand its electric vehicle product line and capture market share.

Economic Factors:
●The COVID-19 pandemic has had a significant impact on the global economy and the automobile industry. Hero
MotoCorp experienced a decline in sales and revenue during the pandemic due to supply chain disruptions and
decreased demand for two-wheelers.

Social Factors:
●Recently, there has been a growing trend towards sustainable and eco-friendly transportation options. Hero
MotoCorp's focus on electric vehicle technology and sustainability initiatives can help the company capture this
growing market.
 Technological Factors:
●Hero MotoCorp has recently launched several new electric vehicle models, including the Hero Photon HX and the
Hero Electric Optima. The company's focus on electric vehicle technology can help it stay competitive in a rapidly
evolving market.

Legal Factors:
●Recently, the Indian government has announced new safety regulations for two-wheelers, including mandatory
anti-lock braking systems (ABS) and electronic stability control (ESC). Hero MotoCorp's compliance with these
regulations can improve its brand reputation and customer trust.

Environmental Factors:
●Hero MotoCorp has implemented several sustainability initiatives, including reducing its carbon footprint,
implementing renewable energy solutions, and supporting social and community development programs. These
initiatives can help the company stay ahead of environmental regulations and capture market share in a growing
sustainable transportation market.
 EXTERNAL FACTOR EVALUATION (EFE) MATRIX

S.No OPPORTUNITIES WEIGHT RATING WEIGHTED S.No THREATS WEIGHT RATING WEIGHTED
SCORE SCORE

1. Salaries in urban India are likely to grow at 0.15 3 0.45

10.3% in 2023. 1. Increasing number of competitors in the 0.08 3 0.24
two-wheeler industry.
2. Growth in the Indian middle class population will 0.07 2 0.14
peak till 2030. 2. Fall in share price at 14.63% during the 0.12 3 0.36
previous 6 months.
3. Diversification and increase in variety of 0.08 4 0.32
suppliers. 3. Decrease in consumer demand due to 0.07 2 0.14
fears of economic recession.
4. Strategic focus to increase market share in the 0.05 1 0.05
international market. 4. Declining service quality based on the 0.04 3 0.12
IJEST report in 2015.
5. Benefits of National Logistics Policy for low cost 0.13 3 0.39
and quick supply of raw materials, machines and 5. Loss of potential revenue due to less 0.03 1 0.03
equipment. exports in the International Market.

6. Use of high end promotions, advertising and 0.06 4 0.24 6. Increasing governmental and 0.04 2 0.08
marketing strategies for increase in demand of bureaucratic regulation.
Hero MotoCorp two-wheelers.

7. Technological advances for electric scooters and 0.04 4 0.16 7. Improved public transportation may lead 0.04 3 0.12
bikes to ensure sustainability. to decrease in sales.

TOTAL WEIGHTED SCORE 1 2.84

 INTERNAL FACTOR EVALUATION (IFE) MATRIX

S.No STRENGTHS WEIGHT RATIN WEIGHTED S.No WEAKNESSES WEIGHT RATIN WEIGHTED
G SCORE G SCORE

1. Products are not much 0.07 1 0.07

1. Attain 8% annual growth rate in 0.15 4 0.60 attractive in the high-end
sales for FY23. consumer segment due to lack
of presence in the luxury bike
market.
2. Good customer service support. 0.08 2 0.16
2. Many spare parts are imported 0.09 1 0.09
3. Exceptional R&D and increasing 0.05 2 0.10 from foreign countries like China
diversification of products. and Germany.

3. Lack of creativity and innovation 0.08 2 0.16

4. Excellent distribution facilities and 0.12 3 0.36 leads to identical characteristics
service centres lead to more in different models of bikes and
customer satisfaction. scooters.

4. High logistics and supply chain 0.08 4 0.32

cost.
5. High Inventory Turnover. 0.04 4 0.16
5. New models not readily 0.04 3 0.12
6. Good advertising strategies to 0.07 4 0.28 available at various dealerships.
increase demand in products
offered. 6. Less productivity in employees. 0.02 3 0.06

7. Good brand recognition in India. 0.09 3 0.27 7. Not much diversification of 0.02 2 0.04
products offered.

TOTAL WEIGHTED SCORE 1 2.79

 RESOURCE BASED VIEW

● Hero MotoCorp's transition from family to professional management is explored in the case study "Hero
MotoCorp: The World's Largest Two-wheeler Maker's Transition from Family to Professional Management" by
Ruchi Sinha and Ravi Chinta.
● RBV (Resource-Based View) is used in this case study to analyze how the company's resources and
capabilities, such as brand reputation, manufacturing expertise, and distribution network, have contributed to
its success over the years.
● The case study "Hero MotoCorp: Revving Up the Growth Engine" by Debapratim Purkayastha and Namrata
Rana also uses RBV to examine how the company's strong brand reputation, R&D capabilities, and
manufacturing expertise have helped it expand into new markets and develop new products.
● RBV is applied to analyze Hero MotoCorp's marketing strategy in the case study "Hero MotoCorp: Decoding
Rural Marketing" by Piyush Kumar and Prashant Salwan.
● The case study explores how the company's marketing resources and capabilities, such as distribution
network, advertising campaigns, and digital marketing initiatives, have helped it reach customers in rural areas
of India.
● Hero MotoCorp leverages technology to improve its marketing efforts and gain a competitive advantage over
its rivals.
 VALUE CHAIN ANALYSIS

● Inbound Logistics: Hero MotoCorp purchases premium raw materials and parts from domestic and foreign
vendors for its inbound logistics. To guarantee a consistent supply of materials at reasonable rates, the firm
has a solid network of suppliers and built long-lasting ties with them.
● Operations: In India, Hero MotoCorp has a sizable and effective production network. To increase productivity
and cut costs, the firm has automated its manufacturing processes and incorporated cutting-edge
technology. The business also emphasises environmentally friendly production techniques and has adopted
green technology like solar energy and rainwater collecting.
● Outbound Logistics: Hero MotoCorp has a sizable distribution network that consists of more than 6,000
dealerships in India and 40 other nations. The business controls inventory levels and makes sure that
consumers receive their orders on schedule.
● Sales and Marketing: Hero MotoCorp promotes their goods using a number of platforms, including print,
online media, television, and events. The business makes research and development investments to create
new goods that cater to shifting consumer demands. Hero MotoCorp has a wide network of dealerships that
offer assistance and servicing to customers.
● Service: Hero MotoCorp has an extensive after-sales network that spans more than 5,000 service locations in
India. The business offers its clients warranty services, maintenance services, and replacement components. To
promote a seamless and trouble-free ownership experience for its consumers, Hero MotoCorp also provides
roadside assistance and 24/7 customer support.
● Procurement: Hero MotoCorp monitors supplier relationships, selects dependable suppliers, and negotiates
rates to make sure the business gets high-quality products and services at reasonable costs.
● Technology Development: To create new products that satisfy shifting consumer tastes, Hero MotoCorp
invests in research and development. The business uses green technology for sustainable production processes
and embraces innovative manufacturing technologies.
● Human Resource Management: Hero MotoCorp recruits and keeps competent workers, offers chances for
training and development, maintains a safe and healthy workplace, and fosters employee engagement and
wellbeing.
 PORTER’S FIVE FORCES MODEL

Bargaining power of suppliers (low):

●Depends on their number of suppliers
●Most of the suppliers of Hero MotoCorp are from China (lights) and Germany (engine parts)

Bargaining power of customers (moderate):

●Less switching costs. Easy availability of alternatives/substitutes
●Competitors (TVS, Honda and Bajaj) in almost same price range

Potential entry of new competitors (high):

●Make in India
●Permission of 100% FDI in automobile sector
 Potential development of substitute products (moderate):
●Public transport is more easily available
●Taxi services, private players like cab aggregators
●
Rivalry among competing firms (high):
●Honda, TVS, Mahindra, Bajaj
●High demand
●Increasing population
What are the expansion strategies of Hero MotoCorp for expansion in foreign markets?

● Joint ventures: In order to take advantage of local partners' knowledge and get access to regional markets,
Hero MotoCorp has formed joint ventures with local partners in a number of different nations. For instance,
the business collaborates with AIM Group in Nigeria and Magna Steyr in Austria.

● Acquisitions:To improve its position and get access to new markets, JHero MotoCorp has bought a number
of businesses in overseas countries. For instance, in 2015, the business purchased American racing team
Erik Buell Racing.

● Localization of products: Hero MotoCorp has been adapting its offerings to the unique requirements and
tastes of consumers in international areas. This involves modifying its products to comply with legal
specifications and regional road conditions.
● Brand building: Hero MotoCorp has been spending money on various marketing and promotional
initiatives in global markets. This involves supporting charitable causes, running advertising campaigns,
and interacting with clients on social media.

● Distribution network expansion: Hero MotoCorp has been adding additional dealerships and servicing
facilities in overseas countries to increase its distribution network there. This enables the business to
contact more clients and offer superior post-sale assistance

● •360 degree campaign on Eid in Bangladesh

● Campaigns on product refresh mileage campaigns across regions.
● Aggressive efforts in Nigeria, Uganda and Kenya have helped in gaining the market share and a strong
momentum for next FY.
● Tie-up with micro financiers have helped increasing reach in the markets.
What are the Risks and Challenges for the company?

Political and regulatory risks are a concern for the corporation in overseas markets.
• Shifting laws and regulations, trade restrictions, and geopolitical conflicts are examples of such risks.
• Economic risks can also affect the company's profitability in international markets.
• Economic variables such as currency fluctuations, inflation, and changes in tax laws can have an impact.
• Hero MotoCorp faces fierce competition from national and international businesses in multiple global countries.
• Competitors may have better knowledge of the regional market, stronger distribution systems, and higher
brand awareness.
• Establishing operations in international markets can be difficult and complex.
• The business must address logistical issues such as supply chain management, localizing the product, and
hiring and educating local people.
What are the future prospects of the company?
Expansion into foreign markets:
● Hero MotoCorp has established its presence in various foreign areas.
● The company can still expand further in new regions.
● Utilizing their experience in emerging markets, the business can enter new areas.

Introduction of electric vehicles:

● Hero MotoCorp is well-positioned to take advantage of the trend towards electric vehicles.
● The Indian government has set high goals for the adoption of electric vehicles, providing a favorable
environment for the company.
● The company has already launched electric scooters, with plans for more electric cars in the future.

Diversification into new segments:

● Hero MotoCorp has focused on the commuter market, but there are opportunities to diversify into new
markets.
● The business can enter the high-end motorbike and high-performance scooter segments.

Technical developments:
● Hero MotoCorp has invested in research and development to incorporate new technology and features
into their products.
● The company is introducing advanced safety features, fuel-efficient engines, and linked technology.
How will the company tackle global challenges to ensure a safe transition to green
energy?
● Hero MotoCorp invests in R&D to create innovative products and technology.
● The focus is on developing fuel-efficient hybrid and electric vehicles.
● The aim is to reduce climate pollutants.
● Hero MotoCorp is raising awareness among the general public about renewable energy sources.
● The company is promoting the necessity of transitioning to a sustainable future.
● This is done through awareness campaigns, instruction, and teaching.
● Hero MotoCorp partners with various organizations, governments, and businesses.
● The partnerships are aimed at developing and promoting green energy.
● The collaborations focus on creating new technology, systems, and laws.
● The goal is to facilitate a secure switch to renewable energy.
Thank you