COMPARATIVE STUDY OF BAJAJ AUTO AND HERO HONDA

Company profile Bajaj Auto limited is one of the largest two wheeler manufacturing company in India apart from producing two wheelers they also manufacture three wheelers. It is the world's 4th largest two- and three-wheeler maker. It is based in Pune, Maharashtra, with plants in Waluj near Aurangabad, Akurdi and Chakan, near Pune. Bajaj Auto makers motor scooters, motorcycles and the auto rickshaw. The company had started way back in 1945. Initially it used to import the two wheelers from outside, but from 1959 it started manufacturing of two wheelers in the country. By the year 1970 Bajaj Auto had rolled out their 100,000th vehicle. Bajaj scooters and motor cycles have become an integral part of the Indian milieu and over the years have come to represent the aspirations of modern India. Bajaj Auto is a major Indian automobile manufacturer. It is India's largest and the worlds 4th largest two- and three-wheeler maker. It is based in Pune, Maharashtra, with plants in Waluj near Aurangabad, Akurdi and Chakan, near Pune. Bajaj Auto makers motor scooters, motorcycles and the auto rickshaw.

Company's history Bajaj Auto came into existence on November 29, 1945 as M/s Bachraj Trading Corporation Private Limited. It started off by selling imported two- and three-wheelers in India. In 1959, it obtained license from the Government of India to manufacture two- and three-wheelers and it went public in 1960. In 1970, it rolled out its 100,000th vehicle. In 1977, it managed to produce and sell 100,000 vehicles in a single financial year. In 1985, it started producing at Waluj in Aurangabad. In 1986, it managed to produce and sell 500,000 vehicles in a single financial year. In 1995, it rolled out its ten millionth vehicles and produced and sold 1 million vehicles in a year. According to the authors of Globality: Competing with Everyone from Everywhere for Everything, Bajaj has grown operations in 50 countries by creating a line of value-for-money bikes targeted to the different preferences of entry-level buyers.

Origins The Bajaj Group was formed in the first days of India's independence from Britain. Its founder, Jamnalal Bajaj, had been a follower of Mahatma Gandhi, who reportedly referred to him as a fifth son. 'Whenever I spoke of wealthy men becoming the trustees of their wealth for the common good I always had this merchant prince principally in mind,' said the Mahatma after Jamnalal's death. New Tools in the 1990s Still, intense competition was beginning to hurt sales at home and abroad during the calendar year 1997. Bajaj's low-tech, low-cost cycles were not faring as well as its rivals' higher-end offerings, particularly in high-powered motorcycles, since poorer consumers were withstanding the worst of the recession. The company invested in its new Pune plant in order to introduce new models more quickly. The company spent Rs 7.5 billion ($185 million) on advanced, computer-controlled machine tools. It would need new models to comply with the more stringent emissions standards slated for 2000. Bajaj began installing Rs 800 catalytic converters to its two-stroke scooter models beginning in 1999. New Image The Company, over the last decade has successfully changed its image from a scooter manufacturer to a two wheeler manufacturer, product range ranging from Scooterettes to Scooters to Motorcycle. Its real growth in numbers has come in the last 4 years after successful introduction of a few models in the motorcycle segment. Bajaj has redefined both the value and the premium segments with its motorcycles offering unique features not seen in their competitors in those classes.

PROFILE OF BAJAJ AUTO

Founder Year of Establishment Industry Business Group Listings & its codes Presence Jamnalal Bajaj 1926 Automotive - Two & Three Wheelers The Bajaj Group BSE Code: 500490; NSE Code:BAJAJAUTO Distribution network covers 50 countries. Dominant presence in Sri Lanka, Bangladesh,Columbia, Guatemala, Peru, Egypt, Iran and Indonesia. Kawasaki Heavy Industries of Japan. Akurdi Pune-411035 Indis Tel:+91-20-27472851 Fax:+91-20-27473398 Akurdi,oune 411035 Bajaj Nagar,waluj Aurangabad 431136 Chahan Industrial Area, Chakan, pune 411501 rahulbajaj@bajajauto.co.in www.bajajauto.com

Joint Venture Registered & Head Office

Works

E-mail website

BAJAJ AUTO
Timeline of new releases 1971- three-wheeler goods carrier 1972-Bajaj Chetak 1976-Bajaj Super 1977- Rear engine Auto rickshaw 1981-Bajaj M-50 1986-Bajaj M-80, Kawasaki Bajaj KB100 1990-Bajaj Sunny 1994-Bajaj Classic 1995-Bajaj Super Excel 1997-Kawasaki Bajaj Boxer, Rear Engine Diesel Auto rickshaw 1998-Kawasaki Bajaj Caliber, Legend (India's first four-stroke scooter) 2000-Bajaj Saffire 2001- Eliminator, Pulsar 2003-Caliber115, Bajaj Wind 125,Bajaj Pulsar 2004-Bajaj CT 100, New Bajaj Chetak 4-stroke with Wonder Gear, Bajaj Discover DTS-i 2005-Bajaj Wave, Bajaj Avenger, Bajaj Discover 2006-Bajaj Platina 11 2007-Bajaj Pulsar-200 Some of the models that Bajaj makes (or has made) are:

BAJAJ COLLECTION
SCOOTERS Bajaj Sunny Bajaj Chetak Bajaj Cub Bajaj Super Bajaj Wave Bajaj Legend

MOTORCYCLES Kawasaki Eliminator Bajaj Pulsar Bajaj Kawasaki Wind 125 Bajaj Boxer Bajaj CT 100 Bajaj Platina Bajaj Caliber Bajaj Discover Bajaj Avenger

UPCOMING MODELS Bajaj Pulsar 220 DTS-Fi Bajaj Krystal Bajaj Blade Bajaj Sonic Hero Honda "Splendor" Mode

SWOT ANALYSIS
Lets analyze the position of Hero Honda in the current market set-up, evaluating its strengths, weakness, threats and opportunities available.

STRENGHTS
Highly experienced management. Product design and development capabilities. High export to domestic sales ratio. High economies of scales. High economies of scope. Great financial support network. High performance product across all categories.

WEAKNESS Not a global player in spite of huge volumes. Not a global recognised brand. Still has no established brand to match Hero Hondas splendour in commuter segment.

Hasnt employed the excess cash for long.

THREATS The competition catches-up any new innovation in no time. Threats of cheap imported motorcycles from china Margin getting squeezed from both the direction (price as well as cost).

OPPORTUNITIES Double-digit growth in two-wheeler market. More maturity and movements towards higher-end motorcycles. Growing world demand.

Company Profile

Hero, is the brand name used by the Munjal brothers in the year 1956 with the flagship company Hero Cycles. The two-wheeler manufacturing business of bicycle components had originally started in the 1940s and turned into the worlds largest bicycle manufacturer today. Hero is a name synonymous with two-wheelers in India today. TheMunjals roll their own steel; make free wheel bicycle critical components and have diversified into different ventures like product design. The Hero Group philosophy is: To provide excellent transportation to the common man at easily affordable prices and to provide total satisfaction in all its spheres of activity. The Hero group vision is to build long lasting relationships with everyone (customers, workers, dealers and vendors). The Hero Group has a passion for setting higher standards and Engineering Satisfaction is the prime motivation, way of life

and work culture of the Group. In the year 1984, Mr. Brijmohan Lal Munjal, the Chairman and Managing Director of Hero Honda Motors (HHM), headed an alliance between the Munjal family and Honda Motor Company Ltd. (HMC). While doing so, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keep the momentum going to take the company to excellence in the new millennium. This alliance became one of the most successful joint ventures in India, until the year 1999when HMC had announced a 100% subsidiary, Honda Motorcycle & Scooter India (HMSI). This announcement caused the HHM stock price to decrease by 30 percent that same day. Munjal had to come up with some new strategic decisions as, HMSI and other foreign new entry companies were causing increased intensity of rivalry for HHM.

Growth The business growth of Hero Honda has been phenomenal throughout its early days. The Munjal family started a modest business of bicycle components. Hero Group expanded so big that by 2002 they had sold 86 million bicycles producing 16000 bicycles a day. Today Hero Honda has an assembly line of 9 different models of motorcycles available. It holds the record for most popular bike in the world by sales for 17 Its Splendor model. Hero Honda Motors Limited was established in joint venture with Honda Motors of Japan in 1984, to manufacture motorcycles. It is currently the largest producer of Two Wheelers in the world. It sold 3 million bikes in the year 20052006.Recently it has also entered in scooter manufacturing, with its model PLEASURE mainly aimed at girls. The Hero Group has done business differently right from the start and that is what has helped them to achieve break-through in the competitive two-wheeler market. The Group's low key, but focused, style of management has earned the company plaudits amidst investors, employees, vendors and dealers, as also worldwide recognition. The growth of the Group through the years has been influenced by a number of factors: Just-in-Time The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-in-time inventory. The Group boasts of superb operational efficiencies. Every assembly line worker operates two machines simultaneously to save time and improve productivity. The fact that most of the machines are either developed or fabricated in-house, has resulted in low inventory levels. In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production in the unit and is functional even till date.. This is the Japanese style of production and in India; Hero is probably the only company to have mastered the art of the just-in-time inventory principle. Dealer Network

The relationship of Hero Group with their dealers is unique in its closeness. The dealers are considered a part of the Hero family. A nation-wide dealer network comprising of over 5,000 outlets, and have a formidable distribution system in place. Sales agents from18 Hero travels to all the corners of the country, visiting dealers and send back daily postcards with information on the stock position that day, turnover, fresh purchases, anticipated demand and also competitor action in the region. The manufacturing units have a separate department to handle dealer complaints and problems and the first response is always given in 24 hours. Financial Planning The Hero Group benefits from the Group Chairman's financial acumen and his grasp on technology, manufacturing and marketing. Group Company, Hero Cycles Limited has one of the highest labour productivity rates in the world. In Hero Honda Motors Limited, the focus is on financial and raw material management and a low employee turnover. Quality Quality at Hero is attained not just by modern plants and equipment and through latest technology, but by enforcing a strict discipline. At the Group factories, attaining quality standards is an everyday practice - a strictly pursued discipline. It comes from an amalgamation of the latest technology with deep-rooted experience derived from nearly four decades of hard lab or. It is an attitude that masters the challenge of growth and change change in consumers' perceptions about products and new aspirations arising from a new generation of buyers. Constant technology up gradation ensures that the Group stays in the global mainstream and maintains its competitive edge. With each of its foreign collaborations, the Group goes onto strengthen its quality measures as per the book. The Group also employs the services of independent experts from around the world to assist in new design and production processes. Diversification Throughout the years of enormous growth, the Group Chairman, Mr. Lall has actively looked at diversification. A considerable level of backward integration in its manufacturing activities has been ample in the Group's growth and led to the establishment of the Hero Cycles Cold Rolling Division, Munjal and Sunbeam Castings,Munjal Auto Components and Munjal Showa Limited amongst other component-manufacturing units. Then there were the expansion into the automotive segment with the setting up of Majestic Auto Limited, where the first indigenously designed moped, Hero Majestic, went into commercial production in 1978. Then came Hero Motors which introduced Hero Puch, in collaboration with global technology leader Steyr Daimler Puch of Austria. Hero Honda Motors was established in 1984 to manufacture 100 cc motorcycles. The Hero Group also took a venture into other segments like exports, financial services, information technology, which includes customer response services and software development further expansion is expected in the areas of Insurance and Telecommunication. The Hero Group's phenomenal growth is the result of

constant innovations, a close watch on costs and the dynamic leadership of the Group Chairman, characterized by a culture of entrepreneurship, of right attitudes and building stronger relationships with investors, partners, vendors and dealers and customers.

PROFILE OF HERO HONDA

Type Founded Headquarters Key people public company BSE-HEROHONDA M January 19,1984 in gurgaon, Haryana,India Haryana, India Om Prakash Munjal, Founder Mr. Brijmohan Lall Munjal, Chairman Mr. Toshiaki Nakagawa, joint Managing Director Mr. Pawan munjal, Managing Director Automotive Motorcycles ,scooters U$ 2.8 billion http//www.herohonda.com/site/home/home.asp

Industry Product Revenue Website

MILESTONES
Timeline of new releases Hero's success saga contains an element of spirit and enterprise; of achievement through grit and determination, coupled with vision and meticulous planning. 1956-Hero Cycles Limited is established. 1961-Rockman Cycles Industries Limited established which the largest manufacturer of bicycle chains and hubs is today. 1963-It pioneered bicycle exports from India - a foray into the international market.

1971-Highway Cycles was set up to meet the demands of Hero Cycles. It is today the largest manufacturer of single speed and multi-speed freewheels. 1975-Hero Cycles Limited became the largest manufacturer of bicycles in India. 1978-Majestic Auto Limited was formed and the Hero Majestic Moped was introduced. 1981-Munjal Castings established.

SWOT ANALYSIS
Lets analyze the position of Hero Honda in the current market set-up, evaluating its strengths,weaknesses,threats and opportunities available. STRENGHTS

Huge brand equity among customers. Research and development- due to joint venture with Japanese giant- HONDA Models/products in almost every bike segment. Healthy growth in profits. Ability to understand customer needs & wants. Its after sales service. Maintenance cost is low.

WEAKNESSES Low cash reserves due to massive dividend ppayouts. Virtual absence in the highly lucrative bike segements. Import>31% of its spare parts requirements. Slow to react to market changes- slow innovation- late entrants into the 125cc segment Too much dependence on few models.

OPPORTUNITIES Discount & loans offered laed to great demand. Ads appealing to youth can do wonders for the company.

THREATS All major bike maker in the world are lining are up for india. The growth in two-wheeler market is slowing down. Low cash reserves.

ANALYSIS OF BAJAJ AUTO AND HERO HONDA

Q1) which bike do you have?

Q2) Which model do you have?

3) In which family income level do you fall?

4) For what purpose do you use your Motor Bike?

5) How do you come to know about this motor bike?

6) Does Advertisement Influence your decision in choosing a motor Bike?

Q7) If new Bike with good features comes in,then would you like to change your bike?

CONCLUSION

1) Hero Honda is considered to be most fuel-efficient bike on Indian roads & have better quality, higher resale as compared to Bajaj bikes. 2) Bajaj service and spare parts are available throughout India in local markets also and Bajaj bikes have comparatively low maintenance cost in contrast to hero Honda bikes.

3) While buying a motorcycle, economy is the main consideration in form maintenance, cost fuel efficiency. 4) Majority of the respondent had bought their motorcycle more than 3 years.

5) Market leader Hero Honda has lost more than 3% of its market share in the motorcycle segment to its nearest rival Bajaj Auto. 6) Bikes such as Bajaj Pulsar,Hero Honda Hunk,Karizma are purchased by young generation 18 to 30 because they prefer stylish looks and rest of the models of Hero Honda are purchased more by daily users who needs more average of bikes than looks

RECOMMENDATIONS
1) Bajaj should introduce some more models having more engine power. 2) Hero Honda should think about fuel efficiency in case of upper segment bikes.

3) More service centres should be opened for Hero Honda bikes 4) Maintenance cost and the availability of the spare parts should also be given due importance.

5) They also introduce some good finance/discount schemes for students. 6) The price should be economic.