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CASE ANALYSIS OF HERO HONDA MOTORS

LIMITED

PRESENTED BY:- VISHAL KUMAR


RAJ LAKSHMI GUPTA
INTRODUCTION

Today if one talks about Indian two wheelers industry,


reference to Hero Honda Motors Limited is by
default. It is not only the market leader in the two
wheeler segment but also the number one two
wheeler company in the world by volume. The
company’s name is synonymous with fuel efficient
bike and longevity.
BACKGROUND

Hero Honda came into existence as a Joint venture agreement


between Munjal’s family Hero group and Honda motor
company (HMC) Japan, each having 26% stake in the
company. A ten year agreement was first entered in the year
1984, where by HMC brought in Technical expertise and Hero
brought in local talent to manage all other function including
Marketing, Finance and Human resources.
PERFORMANCE

The Indian two wheeler industry has seen a paradigm shift


from being a regime of regulation and tight control in the
1980s to a more liberalised and competitive present day era.
After missing out on the initial boom in two wheeler segment
during the period of 1993- 1996, Hero Honda has emerged as a
world leader. The gap between motorcycles sold by Hero
Honda and its closest rival is approximately 1 mn units( 23%
of industry size).
• One of the reason for tremendous performance of Hero
Honda is the significant increase of share of motorcycles in the
two wheeler segment.
ISSUES:
• Threat of competition:- Not only from its own partner i.e
Honda motor co. but also from domestic rivals and foreign
interlopers.
• Decline in market price of shares:- The share plummeted more
than 30%, when Honda motors announced to start a new loop
subsidiary.
• Lack of cooperation's from Honda motor co’s R&D engineers.
• Competition from domestic as well as international front:-
Domestic players such as Bajaj and TVS were giving
competition to Hero Honda, after making a joint venture with
foreign co’s, moreover Chinese motorcycles imported in India
were for cheaper than domestic motorcycles.
STRATEGIES ADOPTED BY HERO HONDA
MOTORS LTD.
We have divided the whole duration of 1984-2009 in three
phases for understanding the relationship between their
Resources, Capabilities and Competencies in developing their
strategy.

PHASE 1: 1984 – 1994


During this period they launched 4 stroke bike CD-100. They
stressed more on developing dealers and suppliers network,
they have focused on operational efficiencies. They followed
market diversification strategy as there Business strategy with
campaign, “fill it, shut it, forget it”.
PHASE 2: 1994- 1999

During this period they launched ‘splendor’ , which is a multi


targeted Robust vehicle, with this product which is the largest
selling bike in the world they focused on market consolidation
across country. The market punch line of their Business
strategy of market consolidation was “ Desh ki Dhadkan”.

PHASE 3:1999- 2009

In the wake of outside competition from Bajaj, Tvs, Honda


they started with Business strategy of Aggressive marketing
and market Diversification . At Resource development level
they stressed upon Product innovation and product
diversification.
PORTER FIVE FORCES ANALYSIS
1. THREAT OF NEW ENTRANTS.
• Joint venture like Bajaj-Kawasaki, Kinetic and Tvs.
• Competition on volume basis.
• Potential competitors like HMSI, Chinese(low cost) and other
Foreign companies.

2. THREAT OF SUBSTITUTES.
• There were few numbers of substitutes available such as
Scooters and moped.
• High earning has driven market towards High end bikes.
• Introduction of low cost four wheelers e.g.. Tata Nano

3. RIVALRY AMONG COMPETITORS.


• Aggressive marketing strategy by competitors.
• Companies like Bajaj, Tvs, Kinetic, HMSI, were trying to
enter into new segment as well as motorcycle segment.
• Rivalry from low cost Chinese bike and Yo-bike(electrical).

4. BARGAINING POWER OF BUYERS.


• First mover advantage.
• Launch of splendor in response to competition was huge
strategic success.
• The customers were searching for features in addition to price
and fuel efficiency like style, pick up etc.

5. BARGAINING POWER OF SUPPLIERS.


• Suppliers are mostly companies owned by Hero family.
• Hence HHM wouldn’t be facing much threats from bargaining
of the suppliers.
CONCLUSION
• Through above discussion we have seen that there is strong
interdependence between Resources, Capability, Competency,
Strategy and Performance.
• While in phase 1 and 2 Hero Honda adopted the Resource
driven strategy to have sustainable competitive advantage.
During phase 3 its strategy was Environment driven strategy.
Hence, we see that as the variables changed, Hero Honda
changed its strategy. Which shows Agility in strategic
approach of Hero Honda.