Contents:
- Company Summary 3-6
1.1 Vision of the company 3
1.2 Company profile 4
1.3 The Hero Group 5
- Marketing Summary 7-15
2.1 Strategy 7
2.2 Mode of entry in the international market 8
2.3 Marketing Mix 12
2.4 SWOT Analysis 14
- Financial Growth Summary 16-17
- Milestones 18-19
- Awards and Conclusion 20-21
- References 22
Company Summary
1.1 Vision of the company:
"We, at 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, we maintain the highest standards of ethics and societal responsibilities, constantly innovate products and processes, and develop teams that keeps the momentum going to take the group to excellence in everything we do." [1]
1.2 Company profile:
"Hero" is the brand name used by the Munjal brothers, and which came into existence in the year 1956. The brothers started this business with manufacturing of bicycle components in the early 1940's and today they are known to be the world's largest bicycle manufacturer, which has only been possible due to their foresighted vision which is to build long-lasting relationships with everyone starting from workers, dealers to the vendors. [2]
The Hero group can be defined as a multi-unit, multi-product, geographically diversified Group of companies. Not only are they worlds largest two-wheeler manufacturer, but their services also includes auto components, Engineering Design, Training and learning, and IT enabled services, finance and insurance, just to name a few.[2]
Hero’s success story is a result of achievement through determination, coupled with vision and planning, and not to forget the commitment of display of high standard of work by the Hero Group and its members to deliver the best to their customers. [2]
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." [2]
Thus from the above philosophy we can say that the group not only focus mainly on its customer but at the same time, the group also makes sure that the employees and other associates are happy and satisfied.
"Engineering Satisfaction" is the primary objective of the Hero Group. It has become a part of the work culture of the Group. This in turn motivates the group to excel in their field in terms of technology, quality and customer satisfaction. [2]
1.3 The Hero Group:
The Hero Group today comprises of companies from various sectors, and provides different products and services to its consumers.
| Company | Products and Services |
| Hero Honda Motors Ltd. Hero Cycles Ltd. Munjal Showa Ltd. Sunbeam Auto Ltd. Majestic Auto Ltd. Hero Exports Munjal Auto Industries Ltd Rockman Industries Ltd. Highway Industries Ltd. Hero Honda Finlease Ltd Hero Motors Ltd. Munjal Castings Satyam Auto Components Ltd. Hero Financial Services Ltd. Hero Corporate Service Ltd. Munjal Sales Corporation Hero Global Design Ltd. Easy Bill Ltd. Hero Management Service Ltd. Shivam Autotech Ltd | 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 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 |
Marketing Summary
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. [5]
2.1 Strategy:
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. [6]
These levels of strategies are:
- Corporate strategy. [6.1]
2. Business strategy. [6.1]
3. Functional strategy. [6.1]
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. [11]
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, information technology, which includes customer response services and software development. Further expansion is expected in the areas of Insurance and Telecommunication.
2.2 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. [5]
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 [5]
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
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. [3]
Not only in the cycle’s segment, but the group also excelled 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
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. [3]
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
International market:
Fig 1: Different countries where ‘Hero Group’ provide their services and products [3]
|
| Hero cycles |
|
| Hero Honda motors |
|
| Hero Motors |
|
| Hero Corporate Service Limited |
|
| Hero Management Service Limited (Hero ITES) |
|
| Munjal Showa Limited |
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,
In order to provide low-cost and fuel efficient two-wheeler for the market hero group entered into technical collaboration with Steyr Damiler Punch,
Another company of hero group which is named as Munjal Showa Limited was formed when group collaborates financially and technically with Showa Corporation,
In order to grow its bicycle segments and to improve its production hero cycle’s cold rolling division was set up with technical collaboration with Wean United,
After the successful joint ventures and market growth in bicycles and two-wheelers, Hero Group’s Munjal-eSystems, which is a Microsoft Gold certified partner and also a ISO 9001:2000 certified company, started expanding in Enterprise-oriented and Software Solutions division. [4]
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:
- DynEd Corporation, that provides classroom coaching for English and Multimedia. [4]
- ACS Incorporated, USA, which is a fortune 500 company, that helps HeroITES to provide services in customer acquisition and customer interaction for the BPO industry. Combined they provide services to countries like the
It also has various alliances in Production Engineering industry. Hero Global Design is the exclusive representative of Porsche Design GesmbH (studio) in
2.3 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,
- Product Strategies
- Place or Distribution Strategies.
- Pricing Decision.
- 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. [6.2, 7]
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. [6.2, 7]
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. [6.2, 7]
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
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
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. [6.2, 7, 8]
2.4 SWOT Analysis:
| Strength Latest Upgraded Technology, Well known Brand name, Good Public Image, Strong Market Share, Long lasting Business relationship with 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, | Weakness Comparatively new in other industries like the ITES industry. Very few services and products offered to the higher income group. |
| Opportunities Still can diversify further in many areas like Four wheeler Industry, Telecommunication sector, Bank sector, FMCG products, Retail industries, etc. | Threats High competition from other companies in the same industry, like from Bajaj Automobiles in the two-wheeler industry, or TI in the bicycle manufacturing department in |
Financial Growth:
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. [11]
Growth in revenue and net profits
The graph provided, shows the group’s growth in revenue (in US$ Mn) since 1997-98 till 2005-06. As is clearly visible from the graph, the company has increased its revenue from $ 555 Mn in 1997-98, to $ 3188 Mn in 2005-06, i.e. an increase of $ 2633 in the span of 8 years. [9]
Not only was there a tremendous rise in revenues, but also in the net profits for the group.
For the same time period, the company witnessed a growth from $ 27 Mn in 1997-98 to $ 255 Mn in 2005-06. [9]
Graph 1: Showing Growth of the Group in revenue and net profit. [9]
| Years | Revenues (US$ Mn) | Profit (US$ Mn) |
| 1997-98 | 555 | 27 |
| 1998-99 | 681 | 39 |
| 1999-00 | 829 | 55 |
| 2000-01 | 1110 | 70 |
| 2001-02 | 1455 | 120 |
| 2002-03 | 1810 | 137 |
| 2003-04 | 2269 | 203 |
| 2004-05 | 2751 | 218 |
| 2005-06 | 3188 | 255 |
Milestones:
With determination and planned steps Hero Group celebrated Golden Jubilee year in 2006 complimented by sales of over 15 million motorcycles & over 100 million bicycles. [10]
| 1956 | Hero Cycles Limited is established. |
| 1961 | Rockman Cycles Industries Limited established, which is today the largest manufacturer of bicycle chains and hubs. |
| 1963 | It pioneered bicycle exports from |
| 1984 | Hero Honda Motors Limited established in joint venture with Honda Motors of |
| 1985 | Munjal Showa Limited established to manufacture shock absorbers and struts and is today among the top two shock absorber manufacturing companies in |
| 1986 | Hero Cycles Limited entered the Guinness Book of Records as the largest bicycle manufacturer in the World. |
| 1987 | Hero Motors, a division of Majestic Auto Limited set up in collaboration with Steyr Daimler Puch of Austria. |
| 1987 | Gujarat Cycles Limited, now known as Munjal Auto Industries Limited was established to manufacture and export state-of-the-art bicycles and allied products in its fully automated plant at Waghodia. |
| 1993 | Hero Exports established as the International Trading Division for Group and non-Group products. |
| 1993 | Hero Motors becomes |
| 2000 | The Hero Group diversifies into IT and IT enabled services through its service segment - Hero Corporate Services Limited. |
| 2002 | Hero Cycles ties up with National Bicycle Industries, part of Matsushita Group to manufacture high-end bicycles. |
| 2003 | Tie up with Livebridge Inc., |
| 2004 | Tie up with Bombardier - Rotax GmbH for scooter engines. |
| 2004 | Tie up with Aprilia Scooters, |
| 2004 | Hero Honda continues as the World's largest manufacturer of two-wheelers with annual sales volume of 2.07 million motorcycles and a market share of 48%. |
| 2004 |
|
| 2006 |
|
Table showing the milestones of the company. [10]
Conclusion:
The constant and the determined effort to gain customer’s trust and satisfaction along with the zeal to provide the best product to the customer through innovation and latest technology, has been the primary reason behind the remarkable growth of the Hero Group. The other factors such as understanding of customer’s needs and choice, a close watch on the market, corporate excellence and understanding of corporate social responsibility and stronger relationships with the investors, partners, vendors and dealers along with the customer have been equally important in their achievement. [11]
Due to all these reasons, the Hero Group has been able to excel especially in the bicycles and motorcycles manufacturing. They have received numerous awards including the “Bike Maker of the year award” for continuously 6 years from 2001-2006 by Overdrive magazine. Their effort and hard work in every field can be seen as it was ranked 4th in “Overall Best Managed Company” category, ranked 3rd in “Best Financial Management” and “Best Operational Efficiency” category, ranked 6th in “Overall Best Investor Relations” category by Asiamoney in the year 2002. [12]
The management style adopted by the Hero Group has been commended internationally as well by different organizations such as World Bank and
The Hero Group has been considered as one of the top ten Business Houses on Economic value in
The two-wheeler department that is Hero Honda Motors has received the highest ratings for Corporate Governance in 2003, and Best Governed Company award in private sector in 2004 by CRISIL, which is
Hero Group has received awards not only in the domestic market but it has also received awards for its excellence in international trade. Engineering Exports Promotion Council has awarded Hero Cycles with the Best Exporter Award for the last 28 years in succession. [12]
Reference:
- http://www.herogroup.com/vision.htm
- http://www.herogroup.com/profile.htm
- http://www.herogroup.com/export.htm
- http://www.herogroup.com/alliance.htm
- http://www.herogroup.com/mktg.htm
- International Business managing in the Asia-pacific, by Greg Fisher, Raechel Hughes, Ricky Griffin, & Michale Pustay, 3rd edition,
6.1 Level of International management strategy, pg no 331-336
6.2 Marketing Mix, pg no 446-450
7 http://www.herohonda.com/co_corporate_profile.htm
8 http://www.herogroup.com/national.htm
9 http://www.herogroup.com/financial.htm
10 http://www.herogroup.com/history.htm
11 http://www.herogroup.com/growth.htm
12 http://www.herogroup.com/achievement.htm
