Presentation on on Corporate Strategy of Hero Motocorpby Sumanjit

PRESENTATION ON ON CORPORATE STRATEGY OF HERO MOTOCORPBy – 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 two-wheeler 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

"Hero" is the brand name used by the Munjal brothers for their flagship company

Initiatives

Vission & mission

Issue Cause Effect Theory Solution Competition

2010Hero - Honda

decides to move out of Joint Venture

Hero and Honda started

seeing each other as

competitors

New brand identity & logo- Hero Moto Corp

Market Leader

defensive strategies-- Position defence- Counter

offensive defence

- Contraction

defence

Hero Moto Corp should

spend on R&D for

innovation, develop new technology

and upgradation

Bajaj Auto, Honda, TVS

Motors, Mahindra Scooters,

LML, Kinetic Motors,

Suzuki, Royal Enfield, Yamaha

Honda didn't have

intention of sharing the upgraded

technology

Hero group might have

to pay higher royalties for

the upgraded technology

Hero Moto Corp buys stake in Honda

Refusal to merge the

Spare Parts

business

COMPETITORS

S U Z U K I M O T O R C O R P

YAMAHA MOTOR CO., LTD.

HONDA

BAJAJ AUTO LIMITED

TVS

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 VENTURES

PORTERS 5 FORCES

SWOT

Intensity of Rivalries

JOINT VENTURES

•Hero MotoCorp, on Tuesday, announced a joint venture with Italy-based Magneti Marelli for production of powertrain systems for the two-wheeler 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 two-wheelers 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 next-generation 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 market2. 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 segment2.High imports for its spare parts i.e. over 30% imports3. Most of the products have similar features and low on design and innovation

OPPURTUNITY 1.Two-wheeler segment is one of the most growing industries2.Export of bikes is limited i.e. untapped international markets

THREAT 1. Strong competition from Indian as well as international brands2. Dependence on government policies and rising fuel prices3. Better public transport will affect two-wheeler sales

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 SubstitutesThreat of Substitutes• 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)

Hero MotoCorp40%

Bajaj19%

TVS14%

Honda16%

Yamaha4%

Suzuki4%

Others3%

Low Bargaining Power of Suppliers

Extensive competition

High Bargaining Power of

customers

Threat of substitutes

Threat of New Entrants

Munjal ShowaAG Industries

Satyam Auto componentsSunbeam Auto

Rockman Industries 2012 Domestic Sales – 15.4 Million

76%

Government Policies

High import duty on motorbikes

105%R & D facilities

in U.S. Erik Buell Racing

$ 20 Millions

Share Price10 % since 2011

1713-1905

Core CompetencyExports

0.17 Mn two-wheelers

Tie-up with AVL for engine development

Rs. 45

Rs. 79

Create HMC

Experience

HMC Sports Bike

HMC Roadies

HMC Merchandise

HMC Racing Events

Political

Economical

Social

Technological

- Green Technology- Safe Manufacturing- Rain Water Harvesting- The Green Supply Chain- Vocational Training Camp- Safe Rider Program

• Technical collaboration with Steyr Diamler Puch • Largest investment of over Rs. 2500 Cr. to build an integrated R&D centre in Rajasthan• Technical & Financial collaboration with Showa Corporation Japan

• Land acquisition• Imposition of taxes

• Changing lifestyles & high quality• Deluxe segment (category) 100-125cc grew up by 15% 125-250cc category grew at 9%• 4% excise cut  & 1% reduction in CST• Higher interest rate & fuel prices

PEST

Thank You