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PRESENTATION ON ON

CORPORATE STRATEGY OF
HERO MOTOCORP
By sumanjit mohanta

About The Company


Hero MotoCorp Ltd.

(Formerly Hero Honda Motors


Ltd.) is the world's largest
manufacturer of two wheelers, based in India.
In 2001, the company

achieved the coveted position


of being the largest twowheeler manufacturing
company in India and also,
the 'World No.1' two-wheeler
company in terms of unit
volume sales in a calendar
year. Hero MotoCorp Ltd.
continues to maintain this
position till date.

Termination of Honda joint venture

Issue

Cause

2010
Hero and
Hero - Honda
Honda
decides to
started
move out of seeing each
Joint Venture
other as
competitors

Effect
New brand
identity &
logo- Hero
Moto Corp

Theory

Solution

Competitio
n
Market
Hero Moto
Bajaj Auto,
Leader
Corp should Honda, TVS
defensive
spend on
Motors,
strategiesR&D for
Mahindra
innovation,
Scooters,
- Position
develop new LML, Kinetic
defence
technology
Motors,
- Counter
and
Suzuki, Royal
offensive
upgradation
Enfield,
defence
Yamaha
- Contraction
defence

Honda didn't Hero group


have
might have
intention of to pay higher
sharing the royalties for
upgraded the upgraded
technology
technology
Refusal to
merge the
Spare
Parts

Hero Moto
Corp buys
stake in
Honda

COMPETITORS
BAJAJ AUTO LIMITED
TVS
YAMAHA MOTOR CO., LTD

SUZUKI MOTOR COR

HONDA

CORPORATE STRATAGIES
Hero MotoCorp's key
strategies are to build a
robust product portfolio
across categories, explore
growth opportunities globally,
continuously improve its
operational efficiency,
aggressively expand its reach
to customers, continue to
invest in brand building
activities and ensure
customer and shareholder
delight.

JOINT
JOINT VENTURES
VENTURES
SWOT

PORTERS 5
FORCES
Intensity
Intensity of
of
Rivalries
Rivalries

JOINT VENTURES
Hero MotoCorp, on Tuesday,

announced a joint venture with Italybased Magneti Marelli for production


of powertrain systems for the twowheeler market.
According to the agreement, Hero

MotoCorp will hold 60 per cent stake


in the joint venture, while the balance
will be held by Magneti Marelli.
The aim is to partner with Hero

MotoCorp to equip with advanced


Powertrain solutions to all Hero twowheelers and most of the two
wheelers circulating in a country
where current sales are already in the
order of 15 million per year, Magneti
Marelli CEO Eugenio Razelli said.

Pawan Munjal, Managing


Director and Chief Executive
Officer, Hero MotoCorp, said,
This is our first joint venture
since charting our solo
journey, and as an immediate
opportunity and focus area,
the new firm shall be taking up
development and
manufacturing of nextgeneration fuelling systems.
Magneti Marelli, which designs
and produces advanced
systems and components for
the automotive industry
around the globe, reported a
turnover of 5.8 billion euro in
2012.

STRENGTH

1. Huge brand equity and one of the biggest


players in the two wheelers Indian market
2. Excellent R&D, and wide variety of products
in every segment.
3. Excellent distribution, over 3000 dealerships
and service centers
4. Good advertising and excellent rebranding
from Hero Honda to Hero Moto Corp

WEAKNESS

1. Absence in the premium bike segment


2.High imports for its spare parts i.e. over 30%
imports
3. Most of the products have similar features and low
on design and innovation

OPPURTUNITY

1.Two-wheeler segment is one of the most growing


industries
2.Export of bikes is limited i.e. untapped international
markets

THREAT

1. Strong competition from Indian as well as


international brands
2. Dependence on government policies and rising fuel
prices

PORTERS 5 FORCES MODEL


Bargaining Power of Suppliers
business entry
High competition among suppliers

(HERO MOTO CORP)High levels of


competition among suppliers acts to
reduce prices to producers. This is a
positive...
Diverse distribution channel (HERO
MOTO CORP)The more diverse
distribution channels become the less
bargaining power a single distributor
will...
Volume is critical to suppliers (HERO
MOTO CORP)When suppliers are
reliant on high volumes, they have
less bargaining power, because a
producer can...
Low cost of switching suppliers (HERO
MOTO CORP).

Bargaining Power of Customers

Low buyer price


Product is important to customer
Large number of customers (HERO

MOTO CORP)When there are large


numbers of customers, no one customer
tends to have bargaining leverage...

Intensity of Existing Rivalry


.

Fast industry growth rate


(HERO MOTO CORP)
Large industry size (HERO
MOTO CORP)
Relatively few competitors
(HERO MOTO CORP)
Exit barriers are low
(HERO MOTO CORP)

Threat of Substitutes
of Substitutes
Threat
Unlimited
number of substitutes (HERO MOTO CORP)
Substitute product is inferior (HERO MOTO CORP

Threat of New Competitors


Strong brand names are important
(HERO MOTO CORP
Strong distribution network required
(HERO MOTO CORP)

Threat
Threatof
ofNew
NewEntrants
Entrants

Low
Low
Bargaining
Bargaining
Power
Powerof
of
Suppliers
Suppliers

High
HighBargaining
Bargaining
Power
Powerof
of
customers
customers
Suzuki; 3% Others; 2%
Hero MotoCorp; 44%
Yamaha; 3%
Honda;
15%19%
Bajaj;
TVS; 14%

Munjal Showa
AG Industries
Satyam Auto components
Sunbeam Auto
Rockman Industries

Extensive
Extensivecompetition
competition
2012 Domestic Sales 15.4 Million
Threat
Threatof
ofsubstitutes
substitutes

Rs. 79

Rs. 45
Government
Policies
High import duty
on motorbikes

105%

76%

R & D facilities
in U.S. Erik
Buell Racing
$ 20 Millions

Core Competency
Exports
0.17 Mn two-wheelers
Share Price
10 % since 2011 Tie-up with AVL for
1713-1905
engine development

HMC Sports Bike


HMC Racing
Events

CC
M
H
ee HM
t
a
e
r
t
CCrea iencee
rrienc
e
p
x
EExpe
HMC Roadies

HMC Merchandise

Political
Land acquisition
Imposition of taxes

Technological

Economical

Technical collaboration with


Changing lifestyles & high
Steyr Diamler Puch
quality
Largest investment of over Rs.
Deluxe segment (category)
2500 Cr.
100-125cc grew up by 15%
to build an integrated R&D
125-250cc category grew at
centre in
9%
Rajasthan
4% excise cut & 1% reduction
Technical & Financial collaboration Social
in CST
with
Higher interest rate & fuel
- Green Technology
Showa Corporation Japan
- Safe Manufacturing prices
- Rain Water Harvesting
- The Green Supply Chain
- Vocational Training Camp
- Safe Rider Program

PEST
PEST

Thank You