4.

1 BRIEF HISTORICAL SKETCH

Hero group was established in 1944 in Amritsar as a bicycle

spare parts business. After independence and partition of India they
shifted to Ludhiana and commenced a business unit “HERO CYCLES”
IN 1956. HERO now named HERO MOTOCORP is a brand name
associated with two-wheelers in India and is being owned by Munjal
brothers i.e. Mr Satyanand Munjal, Mr Omprakash Munjal, The Late
Mr Dayanand Munjaland, The Late Mr Ramankant Munjal. The four
Munjal brothers, hailing from a small town called Kamalia, now in
Pakistan, are the men who are behind the mission. Brotherhood apart,
what knit the men together was the wealth of will, integrity, ambition &
determination. In the year 1944, they decided to start a business of
bicycle spare parts in Amritsar. It was a modest beginning and the
next 3 years saw the business grow rapidly. But the dark clouds of
partition eclipsed their plans of the future. With renewed vigor and
optimism, the operational base was shifted to Ludhiana. By 1956, the
brothers had began manufacturing key components of bicycles and as
a logical way forward, began to assemble the entire cycle at their
manufacturing plant in Ludhiana. In the early days, the plant had a
capacity for 25 cycles per day. Over the next few years, the Bicycle
Unit started growing in stature and size, attracting skilled engineers,
technocrats, administrators and entrepreneurs. From a modest
beginning of mere 639 bicycles in the year 1956, Hero Cycles
produces over 18500 cycles a day today, the highest in global
reckoning. With the 48% share of the Indian market, this volume has
catapulted Hero in the ‘Guinness Books of World Records’ in 1986
and edge over global players is being maintained since then.

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 A tiny corn has now become a mighty Oak. From cycle to two -
wheeler was a natural step, and the Hero Group came into being. The
Hero Group, today, is a vast conglomerate of companies, either in the
form of collaborations, joint ventures or fully owned subsidiaries, with
more than Rs. 10000 Crore turnover annually. Hero Group, besides
being the world’s largest manufacturers of bicycles, motorcycles and
chains to this date, has diversified into newer segments like
Information Technology, IT Enabled Services and Financial Service.

Hero group ranks amongst the top ten Indian business houses
comprising 20 companies. It is a vast conglomerate of companies
either in the form of collaborations, joint ventures or fully owned
subsidiaries with more than Rs10000 crore turnover annually. It is a
group now being 50+years old and is a now one of the most widely
recognized brands. It has sold more than 15 million motor cycles and
100 million bicycles in the last 50 years. It has a huge segmented
market of its products and services and still are targeting towards
potential customers. They export their products to more than 90
countries.

Hero, the brand name synonymous with two-wheelers in India, is

a multi-unit, multi-product, geographically diversified, Group of
Companies - the reflection of the steely ambition and indomitable grit
of the Munjal Family. Trace the saga of the "Hero" - through more
than 50 years of Enterprise and Achievements, of Vision and
Planning.
The Hero Group has done business differently right from the
inception and that is what has helped us to achieve break-through in
whatever product category we have ventured in. The Group's low key,
but focused, style of management has earned the plaudits amidst

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investors, employees, vendors and dealers, as also worldwide
recognition. The growth of the Group through the years has been
influenced by the number of factors.

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. The
vendors bring in the raw material and by the end of the day the
finished product is rolled out of the factory. This is the Japanese style
of production and in India, Hero is the first and a beautiful tomorrow,
as tomorrow isn’t just another day, it’s another chance for us to better
ourselves and to excel. Hero Cycles is a product of this philosophy ---
the philosophy that instills commitment, team work and foresight.
Hero’s colossal journey started before Independence. It is a company
to have mastered the art of the just-in-time inventory principle.

The Vision and mission

The Hero Group are continuously striving for synergy between

technology, systems and human resources to provide products and
services that meet the quality, performance, and price aspirations of
the customers. While doing so, the company 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 group to excellence in everything we do." Hero
Honda’s mission is to strive for synergy between technology, systems

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and human resources, to produce products and services that meet the
quality, performance and price aspirations of customers. While doing
so, company maintains the highest standards of ethics and societal
responsibilities.” This mission is what drives us to new heights in
excellence and helps us forge a unique and mutually beneficial
relationship with all our stakeholders.

Company Profile

"Hero", the brand name symbolizing the steely ambition of the

Munjal brothers, came into being in the year 1956. From a modest
manufacturer of bicycle components in the early 1940's to the world's
largest bicycle manufacturer today, the odyssey was fueled by one
vision - to build long-lasting relationships with everyone, including
workers, dealers and vendors. This philosophy has paid rich dividends
through the years. Hero, a name synonymous with two wheelers in
India is today a multi-unit, multi-product, geographically diversified
Group of companies. Through fully integrated operations, the Munjals
roll their own steel, make critical components such as free wheels for
their bicycles, and have the foresight to simultaneously diversify into
myriad ventures, like product designing, IT enabled services, finance
and insurance, just to name a few.

Like every success story, Hero's saga contains an element of

spirit and enterprise; of achievement through grit and determination,
coupled with vision and meticulous planning. Throughout its success
trail, the Hero Group and its members have displayed unwavering
passion of setting higher standards for themselves and delivering
simply the best to their customers. 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

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spheres of activity.” Thus apart from being customer-centric, the
Hero Group also provides its employees with a fine quality of life and
its business associates with a total sense of belonging.

“Engineering Satisfaction” is the prime motive of the Hero

Group and it has become a way of life and a part of the work culture of
the Group. This is what drives the Group to seek newer vistas, adopt
faster technology and create quality driven products to the utmost
satisfaction of customers, partners, dealers and vendors. Today the
Hero Group has a number of accolades and achievements to its
credit, yet consumer requirements and newer technologies provide
fresh challenges every day, and at Hero the wheels of progress
continue to turn.

Hero Group of Companies

Hero Group ranks amongst the Top 10 Indian Business Houses

comprising 18 companies, with an estimated turnover of US$1.8 billion
during the fiscal year 2012-2013. Table 4.1 shows the various brand
wise companies of Hero Honda Group.

Table 4.1

Various brand wise companies of Hero Group

Hero Cycles Limited

Hero Honda Motors Limited

Hero Cold Rolling Division

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Hero Motors Limited

Hero Exports
LO GO

Majestic Auto Limited

Rockman Cycle Industries

LOG O

Highway Cycle Industries

LOG O

Sunbeam Auto Limited

LOGO

Munjal Auto Industries Limited

Munjal Showa Limited

Munjal Castings

Munjal Auto Components

Hero Global Design

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Hero Corporate Services Limited

Hero ITES

Hero Mind mine

Hero Soft

Munjal e-systems

Easy Bill Limited.

Source : Own Compilation

The Achievements

The Group and its management have acquired a number of

accolades and achievements over the years. Hero Group
Management style has been acclaimed internationally by World Bank
and BBC, UK. Hero Group is discussed as a case study at London
Business School, UK and INSEAD, France. World Bank has
acclaimed Hero Cycles as a role model in vendor development based
on a world-wide study. The London Business School, UK, has done a
case study on the Group as model of entrepreneurship. Boston
Consulting Group has ranked Hero Group as one of the top ten
Business Houses on Economic value, in India. HSBC-Merrill Lynch
has estimated Hero Group to be amongst the top value creators in the
five years 2001-05.

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 The Hero Group is recognized as a long term partner and an
ideal employer:

 Hero Group's partnership with Honda Motors, Japan is over 20

years old.
 Hero Group's Partnership with Showa Manufacturing
Corporation, Japan is over 18 years old.
 Group Chairman, Mr. Brijmohan Lall Munjal received the
coveted "Ernst & Young Entrepreneur of the Year" award for
2001.
 Hero Cycles was ranked 3rd amongst top Indian companies
Review 2000 - Asia's leading companies award (2003) by Far
Eastern Economic Review.
 Hero Cycles is the World's largest manufacturer of Bicycles with
annual sales volume of over 4.8 million cycles.
 Hero Cycles Limited is a Guinness Book Record holder since
1986 as the world's largest manufacturer of bicycles, with annual
sales volume of 5.2 million bicycles in FY 2004.
 Engineering Exports Promotion Council has awarded Hero
Cycles with the Best Exporter Award for the last 28 years in
succession.
4.2 CHRONOLOGICAL DEVELOPMENT OF HERO GROUP

Hero’s success saga contains the element of courage, great,

determination, enterprises and perseverance coupled with vision and
meticulous planning. A chronological development of Hero group has
been shown in Table 4.2.

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 Table 4.2

A chronological development of Hero group

1956 Hero Cycles Ltd. is established.

1976 Rockman Cycle Industries Ltd. Established, which is today the

largest manufacturer of bicycle chains & hubs in the world.

1977 Bicycles exports take off from India – a faray into the
international market.

1978 Highway Cycles was set up. It is today the largest

manufacturer of single speed & multi-speed freewheels in the
country.

1979 Hero Cycles Limited became the largest manufacturer of

bicycles in India.

1980 Majestic Auto Limited was formed and Hero Majestic Moped
was introduced.

1981 Munjal Casting established.

1982 Hero Honda Motors Limited established in joint venture with

Honda Motors, Japan to manufacture Motorcycles. It is now
the world’s largest producer of two-wheelers.

1983 Munjal Showa Ltd. established to manufacture shock

absorbers and sturts and is today one of the topmost shock
absorber manufacturer companies in this country.

1984 100 cc Hero Honda Motorcycle was launched, which, later on

in 1988, became No.1 among all motorcycles in India.

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1985 Hero Cycles Limited entered the Guinness Books of World
Records as the largest bicycle manufacturer in the world.

1986 Hero Motors, a division of Majestic Auto Limited set up in

collaboration with Steyr Diamler Puch of Austria.

1988 Gujarat Cycles Limited, now known as Munjal Auto Centre Ltd.
was established to manufacture and export state-of-the-art
bicycles and light products in its full automated plant at
Wagodia.

1987 Sunbeam Auto Limited, earlier a unit of Highway Cycle

Ind.Ltd., established as an ancillary to Hero Honda. It has the
largest die casting plant in India.

1988 Hero Puch was introduced by Hero Motors Ltd. which was a
revolutionary machine to set new records of petrol efficiency in
50 to 65 cc engines.

1989 Ranger bicycles (a generic name for Mountain Bikes today)

was introduced by Hero Cycles Limited.

1990 Hero Cold Rolling Division established, which is one of the

most modern steel cold rolling plants in India.

1991 Hero Honda received National Productivity Council Award and

also the Economic Times – Harvard Business School
Association Award against 200 contenders.

1992 Hero Cycles introduced Kidd – the first branded bike in

children’s segment.

1993 Hero Cycles introduces Impact, the first citibike in India.

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1994 Munjal Showa Ltd. received national safety award.

1995 Hero Exports was established as International Trading Division

for group & non-group products.

1996 Hero Corporate Services Ltd. was established.

1997 The first exerbike from Hero Group was introduced with the
name – Allegro.

1998 Hero Winner, a large wheeled scooter with a choice of 50 cc &

75 cc engines was launched by Hero Motors Ltd.

1999 Munjal Showa Ltd. received British Council’s National Safety

Award.

2000 Hero Briggs & Stratton Auto (P) Ltd. was set up to produce 4-
stroke two wheeler engines in various cubic capacities.

2001 Munjal Auto Components established to manufacture gear

shaft & gear blanks for motorcycles.

2002 The first fully automated bicycles by the name ‘POWERBIKE’

was introduced by Hero Cycles Limited.
Hero Corporate diversified into I.T. and I.T. Enabled Services
through its services segment Hero Corporate Services Limited.

2003 Hero Honda emerges as the market leader in motorcycles with

the sales of over a million motorcycles and a market share of
47%.

2004 Hero Global Design established to offer engineering services in

CAD/CAM/CAE related to new product development design,
engineering, manufacturing.

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2005 Hero Cycles Limited ties up with National Bicycle Industries, a
part of Matsushita Group, Japan, to manufacture high end
bicycles.

2006 Fastener World established.

2007 Easy Bills Limited established to offer utility bill collection and
retail services.

2008 Super Starter Series launched by Hero Cycles Limited.

2009 Tie-up with Live Bridge Inc., U.S.A., Aprilia Scooters, Haly &
Bombardier Rotax GmbH of Germany.

2010 Hero Honda continues to be the world’s largest manufacturer

of two-wheelers with the market of more than 48%.

2011 Hero Retail Insurance Business established.

2012 Super Smart Series introduced by Hero Cycles Limited.

Source : Own Compilation

4.3 PRODUCTS MANUFACTURED

 Motorcycles
 Cycles, Auto Components, and Cold Rolled Steel
 Shock Absorbers
 Aluminium Castings & Pistons
 Mopeds, Scooterette, and Health Care Equipment
 International Trading Arm
 Auto Components
 Cycle and Auto Components
 Cycle Components, Auto Components, and Machine tools

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  Financial Services
 Two-Wheelers
 Non Ferrous (Aluminium) Castings
 Sheet Metals and Fabricated Auto Components
 Financial Services
 IT, Training & Education , Insurance
 Distribution
 Product & Engineering Design
 Payment Services
 IT Enabled Services
 Auto Components

Benchmarks

 One of the most widely recognized brands in India

 Members – among the leaders in their business
 Hero Cycles is the World’s largest bicycle maker
 Hero Honda is the World’s largest two wheeler
Manufacturer
 Others include Auto components, Engineering design,
Call Centre/ BPO, Training & Learning
 Market capitalization of over €3.43 billion (USD 4.18 bn)
 Global partnerships: Over 5,000 business associates
 Over 23,000 employees
 Sold more than 15 million motorcycles and 100 million
bicycles in the last 50 years :

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Strategy

 Hero Group NOT only as a “low cost provider” but also as

“VALUE FOR MONEY” provider
 Build strong alliances and relationships with all stakeholders in
the chain
 Benchmark against best global practices
 Product Innovation keeping in mind the sensitivities of the target
market
 Strong culture of performances always believed in growth

Growth through partnerships

 International partnership

 Hero Honda motors are most successful Honda joint venture,

worldwide functioning for now over two decades.

 The relationship with SHOWA corporation, japan is over 20

years old and Munjal Showa is the largest manufacturers of
shock absorber in India.

 Partnership with other stakeholders.

 Large number of five thousand has had a successful partnership

with group for over four decades.

The group has helped develop a large number of venders who

have grown along with companies and therefore have a strong
commitment in success of the business. The group enjoys a very
healthy respect amongst institutions including banks, central and state
government. The Hero group has won various awards for continuous
achievements which are shown in Table 4.3.

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 Table 4.3

Hero Group Have Won Various Awards For Continuous

Achievements

Awards for impulse Corporate Awards

Best Motorcycle (up to 150cc Effies, Awards for Pleasure

category) — NDTV Car & Bike (‘Question Markl’ campaign) and
Awards, 2012 Splendor NXG (‘Yaari ki Gaadi’
Campaign)

Bike of the Year (up to 150 cc) Hero Good Life, the Company's
award — ET Zig wheels, 2011 CRM programme, received the
prestigious AIMIA Award at the
5th Loyalty Awards 2012 in the
automotive sector (January 2012)

Bike of the year (upto 150 cc) the CNBC : Most Effective Brand
Car India & Bike India Awards Transition

Bike of the Year Award 2012 — NDTV : Hum Mein Hain Hero
Business Standard Motoring Campaign : Best campaign
Awards, 2012

Promotion Marketing Awards of

Asia —Order of Merit—GoodLife

Echo award - Certificate of

Excellence — GoodLife

Colloquy award — Innovation in

Loyalty marketing (International)
— GoodLife

AIMIA Loyalty awards — Winners

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 in Customer & Brand Loyalty
Awards — GoodLife

IDMA — Best Integrated

Campaign Corporate — Gold

IDMA — Best Integrated

Campaign Product/Services—
Silver

IDMA — Best use of PPC

Product/Service — Bronze

Best PR and Communication

Team of the year — NDTV Car &
Bike Awards, 2012

Source : Own Compilation

Ability to Compete

 The Group has a proven track record of managing long term

relationships with its domestic as well as global partners

 The Group has demonstrated capabilities to manage a large pool

of people (23,000+ employees) which is a pre-requisite for
success in this business

 The Group has consistently exceeded customer expectations by

understanding their needs both expressed and implied

 The Group’ s value proposition is based on providing value for

money by managing cost (without compromising on quality) and
efficient use of resources

 The Group has attained leadership position through its service

orientation

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4.4 FINANCIAL GROWTH

1. Technological tie-up : Hero group ties-up with Honda motors,

Japan give it edge over other domestic peers in two ways :

(a) Company does not have to earmark funds for

technological research and can concentrate more on
market expansion.

(b) The company’s access to ready-to-use technology of

international standards give it the opportunity to enter in
international market as well. The company pays Hero
Honda a royalty of approximately 2.4 per cent of net sales.

2. Dealer and service network : the dealer and after sales service
network forms a crucial part of success formula for any
consumer product. The same applies to two-wheeler industry. It
has the highest number of service centre approximately 3000 as
well as highest sales per dealer.

3. Concentration on rural areas : The company currently derives

approximately 60% of its revenues from rural areas. The
company is connected to over 18000 villages through its rural
programs such as “Har gaon Har angan”. Besides the company
has employed over 500 special trained rural sales executive at
the dealership level.

4. Less dependence on credit sales : It derives approximately

10% of its sales through financing. A comparison of sales with
other market leaders has been shown in figure 4.1.

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 Figure 4.1

A Comparison Of Sales With Other Market Leaders

Two Wheeler Industry (Sales of 5090594 units in April-November 08)

Motorcycle (79%) Scooters (15%) Mopeds (6%)

Industry Leaders : Industry Leaders : Industry Leaders :

Hero Honda (58%) HMSI (58%) TVS Motors (99%)
Bajaj Auto (24%) TVS Motors (22%)
TVS Motors (8%) Hero Honda (12%)
Kinetic Motors (0.5%)

5. Growth in terms of revenues

Over the last couple of decades, the main reason behind the
growth of Hero Group is their approach, which is based on technology,
marketing and manufacturing expertise. The main focus of the group
is on managing finance and resources. It also focuses on high labour
productivity and low employee turnover.

6. Growth in revenue and net profits

Table 4.4 shows the group’s growth during 2002-03 to 2011-12.

The sales of the company have increased by 271.68% in terms of
units and 358% in terms of sales revenue. The total income has
increased by 360%. Profit after tax, Earning per share and dividend
per share have also increased by 309%, 309%, 150% respectively.

107
108
8. Marketing Strategies

Hero Group’s philosophy is based on the understanding of

consumer demands, market segments and available opportunities.
The strategy is totally customer driven, with nation wide network of
dealers, making sure that the group’s product is accessible throughout
the country. At the same time, upgrading to new technologies and
committed service has been the main reason behind the successful
growth of the group. According to the Greg Fisher, many International
businesses, especially MNCs, develop strategies for three distinct
levels within the organization to cope with the complexities of the
international strategic management. These levels of strategies are:

1. Corporate strategy.
2. Business strategy.
3. Functional strategy.

Throughout the years of its growth, Hero Group has actively

looked at diversification. The use of Related Corporate Diversification
strategy after company’s growth in manufacturing activities 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. Then the group looked into other industrial segments
for its further growth, and followed Unrelated Diversification Strategy
to enter into other segments like exports, financial services,

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information technology, which includes customer response services
and software development. Further expansion is expected in the areas
of Insurance and Telecommunication.

4.5 MODE OF ENTRY IN THE INTERNATIONAL MARKET

In the domestic market, Hero cycles soon started giving good

competition to already well-established players in the market such as
Hind cycles and Atlas cycles. The major reason behind this was the
fact that the Hero cycles were comparatively cheaper and was sturdy
and reliable, giving the customers value for their money. After the
group success in the domestic market, Munjal brothers looked for
International market for further growth, to achieve additional sales,
and to extend its product’s life cycle. To enter into the Global market,
Hero Groups used one of the simpler and common modes of market
entry i.e. exporting.

Until 1960s there were not many Indian companies, into

exporting bicycles. But, after 1963, when the Hero Group started
exporting bicycles, a new era of export started in the Indian bicycle
segment. The Hero Group initially started exporting to Africa and
Middle East, but now there major export is to Europe and America.

To meet the requirements in the international market, this group

has been constantly changing to newer and better technologies. It has
also taken some extra measures like setting up a special Export
Oriented Unit (EOU) named Gujarat Cycles Limited (now Munjal Auto
Industries Limited), to cope up with requirements for international
standards. The main areas where this unit exports its manufactured
products is in the markets of developed countries like France,
Germany, United Kingdom, etc , where the requirements are of high
standard. Not only in the cycle’s segment, but the group also excelled

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in other fields in the international market, like the Hero Majestic Moped
was a huge success not only in the Indian market, but also in the
International market. This eventually made the Hero group moped as
the largest exported moped from India. Another bike “Hero Puch” was
the first Indian bike to be assembled outside India. It was first
assembled in Spain, and then had its assembly plants in Mauritius and
Egypt. Now it has become quite popular in various countries like
Paraguay, Mexico, Argentina, Turkey and Holland. The Group’s
company, Munjal Showa Limited is one of the largest suppliers of
shock absorbers to major auto giants in Japan, U.S., and the U.K. in
developed markets.

Another division of the group was formed in 1993, “Hero

Exports”, which was responsible for the International trading of the
group for all the segments, and was also recognized by the
Government of India as a trading house. The recent development in
International market for the group is in the field of Software
Development and the ITES industry through Hero Corporate Service
Limited. It provides services to various corporations in the USA, UK,
and Australia. To further facilitate its exports it has set up its offices in
UK and USA to manage their corporate relationships. The companies
who are providing their products and services in foreign countries
have been shown in table 4.5

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 Table 4.5

Hero Group of Companies in international markets

Hero cycles

Hero Honda motors

Hero Motors

Hero Corporate Service Limited

Hero Management Service Limited (Hero ITES)

Munjal Showa Limited

Source : company records

Other then exporting, hero group has also actively participated in

joint ventures with many companies located in international as well as
local market; Hero entered a joint venture for technical and financial
participation with one of the world's largest automotive makers, Honda
Motor Company Limited, Japan, in 1984. This joint venture was
formed to manufacture the companies’ first 100cc motorcycle for the
Indian market. In order to provide low-cost and fuel efficient two-
wheeler for the market hero group entered into technical collaboration
with Steyr Daimler Punch, Austria in 1987 .Another company of hero
group which is named as Munjal Showa Limited was formed when
group collaborates financially and technically with Showa Corporation,
Japan in order to manufacture front forks, shock absorbers, and gas
struts.

In order to grow its bicycle segments and to improve its

production hero cycle’s cold rolling division was set up with technical

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collaboration with Wean United, USA. And Kawasaki Steel
Corporation, Japan. After the successful joint ventures and market
growth in bicycles and two-wheelers, Hero Group’s Munjal e-Systems,
which is a Microsoft Gold certified partner and also a ISO 9001:2000
certified company, started expanding in Enterprise-oriented and
Software Solutions division.

Another sector Hero Mindmine, has provided extensive services

in the BPO/Customer service for various sectors such as Airlines, IT,
Pharma, FMCG, etc. For training purpose for the same, it has alliance
with two other companies:

1. DynEd Corporation, that provides classroom coaching for

English and Multimedia.

2. ACS Incorporated, USA, which is a fortune 500 company, that

helps Hero ITES to provide services in customer acquisition and
customer interaction for the BPO industry. Combined they
provide services to countries like the US, Canada, Argentina and
India.

It also has various alliances in Production Engineering industry.

Hero Global Design is the exclusive representative of Porsche Design
GesmbH (studio) in India. For industrial and automobile design, it has
venture with German company Target Design.

4.6 MARKETING MIX

To appeal to the customer in a powerful way, it is necessary to

analyze the marketing mix or the four P’s of marketing, that are,

1. Product Strategies
2. Place or Distribution Strategies.
3. Pricing Decision.

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4. Promotion Strategies.

Product Strategies

In order to develop its product strategy the group relies on the 3

R's-- Reach, Research and Reliability as its basic building blocks.
Using feedback from the market, a fully-equipped R&D center has
consistently created best practices in designing, testing and
harmonization. This emphasis has helped Hero group to build the
products that are ahead of their time.

Place or Distribution strategies

Distribution is nothing but the link between the company and the
end users. Place strategy involves consideration of distribution, that
the product or service takes between the production and the final
consumer. This strategy is different for different countries, so group
spends a considerable amount of time in examining the different
systems that are in place, criteria to choose distributors and channels
and how the distribution segmentation can be accomplished. However
it is difficult to standardize the distribution system and to use the same
approach in every country, so there are many differences to be
considered while developing the distribution strategy. Some of the
approaches that the group considers for developing this strategy are
consumer spending habits, location where consumers are used to
buying, selecting the best possible distributor to carry their product,
checking the financial strength of the distributor, considering the
nature of the market and the competition etc.

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Pricing strategy

Again pricing strategy of the group differs from country to

country. The different factors that the group considers for developing
there pricing strategy are government control, market diversity,
currency fluctuations, and price escalation forces. For developing
countries like India, they have come up with special economical
product to suit everyone’s need. For instance, they manufacture
motorcycles for different sections. To attract more customers and
make it accessible to everyone the pricing for these bikes starts from
as low as US $800 for CD 100 bikes and varies to high-end bikes
such as Karizma which is worth US $2500 and so on.

Promotion Strategies

The Hero Group promotes their goods and services through

advertising and personal selling. However, specific approach differs as
per the products nature. They have promoted their product with
advertising in different ways right from print media to slogans and
campaigns. Through sponsoring different events, such as Hero
Honda Sa Re Ga Ma Pa or Campus Rock Idols, which generally
involve common people, they have become very popular in the public.
They also actively participate in social activities, to gain the trust and
confidence of their customers. They have done a lot of work of socio-
humanitarian nature in different fields such as healthcare, education,
environment, public amenities, sports and entertainment, donations in
both cash and kind, employment generating programs, adult literacy
mission, rural health care and safety awareness programs.

SWOT Analysis

Every company has to find out its strengths, weaknesses,

opportunities and threats in order to fight future problems. Hero Honda

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Company has also marked all the four factors which are shown in
table 4.6.

Table 4.6

Strengths, Weaknesses, Opportunities And Threats of

Hero Group

Strengths Weaknesses
Latest Upgraded Technology, Comparatively new in
Well known Brand name, other industries like the
ITES industry.
Good Public Image,
Very few services and
Strong Market Share, products offered to the
Long lasting Business relationship with higher income group.
workers, dealers and Vendors,
Strong dealer network across the world,
Skilled Workforce,
High labor productive rate in the world,
Constantly Innovated Products and ideas,
Has strong R&D department,
Has strong marketing & management team,
Reputation for production of high quality goods,
Collaborations with most advance players in
the market,
Opportunities Threats
Still can diversify further in many areas like High competition from
Four wheeler Industry, Telecommunication other companies in the
sector, Bank sector, FMCG products, Retail same industry, like from
industries, etc. Bajaj Automobiles in the
two-wheeler industry or
TI in the bicycle
manufacturing
department in India.
Demand of bicycles is
decreasing

Source : Personal inquiry

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4.7 SOCIAL ACTIVITIES UNDERTAKEN BY THE COMPANY

Hero Group's humane approach is manifested in all aspects of

commercial production. The Group undertakes various projects and
activities of socio-humanitarian nature to contribute to the National
Mainstream. Group Companies, Hero Cycles Limited and Hero Honda
Motors Limited has been pioneers within the Group, in undertaking
socially productive work of myriad nature.

Healthcare

Raman Munjal Memorial Hospital is a 100-bed hospital with a

well-equipped laboratory, a fully functional operation theatre, an out
patient department as well as a casualty section. A fully equipped
mobile clinic provides comprehensive health care to the rural masses
in Dharuhera. The medical centre on the factory premises of the
Group Companies is open for the sub-urban and rural communities
of the surrounding areas. The medical centre is also equipped to
provide First Aid and ambulance facility for road accident victims.
Other efforts, under the auspices of Hero Cycles Limited include.

Eye Camps :

With over 15,000 patients examined and about 1700 cataract

operations performed so far, these Eye Camps have also aided
patients with free accommodation, food and medicines.

Family Planning Camps:

Held since 1993 at the Civil Hospital, Rewari and Bawal, these
camps offer monetary incentives to the masses to adopt family
planning measures.

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Blood Donations Camps

These camps are being organized on a regular basis since

1992. 464 units have been donated to Indian Red Cross Society in the
last camps.

ENT Check up Camps

Conducted by specialists from AIIMS, these camps have been

organized since November 1997.

Heart Check-up Camps

Since July 1988, free camps are being organized in

collaboration with Escorts Heart Institute and Research Centre, where
specialized diagnosis methods like Echocardiography and ECG are
used.

Rehabilitation Camps

Conducted with the assistance of the District Rehabilitation

Centre, Red Cross Society, Rewari, these camps help physically
challenged villagers to rehabilitate and re-employ themselves. Many
patients have found a new lease of life on account of the physical aids
given to them.

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