Hero Honda Motors (India) Ltd.

: Is It Honda that
Made It a Hero?
STATEMENT OF THE PROBLEM
We want to provide our customers with best quality automotive products, ensuring
that we continuously deal with the latest technology for us to remain competitive in the
automotive industry.
India was the second largest manufacturer of two wheelers in the world. Two
wheelers had become the standard mode of transportation in many of Indias large urban
centers. The two wheeler was typically a prized possession in the average Indian
household. It was normally used to transport both people and goods, substituting for a
car that was prohibitively expensive. Two wheelers had long road lives, and were often
used for even 15 years. Hero Honda Motors Ltd. (HHM) is the world's largest
manufacturer of two wheeler in the world. In 1984, it is a joint venture between the
Hero Group of India and Honda Motor Company of Japan. It is a company designed to
manufacture motorcycles in India. Munjals owned Hero Group of India, acknowledging
them as the worlds largest bicycle manufacturer in 1986 while Honda Motor Company of
Japan grew to dominate the global automotive market. Honda agreed to provide a
technical expertise to HHM and assist in setting up manufacturing facilities. This included
providing the design specifications and responsibility for the future R&D efforts relating
to the product lines that the company would offer. HHM Company became a public
company listed on the Bombay Stock Exchange (BSE). It has huge focus on operational
efficiencies and customer relationships. In August 1999, Honda Motor Company Ltd.
(HMC) announced the setting up of Honda Motorcycle and Scooter India (HMSI) for
making scooters and later motorcycles as well. After this, the stock of Hero Honda fell by
30%. It was apparent that the investors were no longer optimistic about the companys
ability to continue its sterling performance record. Reports from the marketplace clearly
showed increasing intensity of rivalry. Not only were domestic rivals getting better
equipped to challenge HHM for supremacy, there were foreign interlopers as well who
seemed determined on giving HHM a run for its money. How should the company arm
itself for its position in the marketplace and what if HMSI, despite all its assurances, saw
the potential marketplace in 2004 and decided to push HHM to periphery and engineer a
frontal assault on the motorcycle business?
The method to be use is Lean Manufacturing for whereby all production people are
working to eliminate waste.

CASE STUDY #012

UNDERGRAD
RESEARCH

Hero Honda Motors (India) Ltd.: Is It Honda that

Made It a Hero?

KEY ISSUES

External
Expansive markets
Due to the high demand of motorcycles in India, considering them as the
second largest manufacturer of two-wheelers in the world. It had become the
standard mode of transportation in many of Indias large urban centers. Increasing
urbanization, saturation of cities, and lack of adequate roads helped to propel
demand for two-wheelers.
Increasing intensity of rivalry
With so many companies competing in the motorcycle industry, each of them
strives for the best to retain their business in the growing market.

Internal
Technological Leadership
Sound and proven technical capabilities of Honda and the reliability of Hero
made them to provide products of superior value such as better fuel efficiency at
reasonable prices to the consumers.
Consumers Perception
Indians believe that motorcycles were more accident prone and less safe for
Indian roads.

CASE STUDY #012

UNDERGRAD
RESEARCH

Hero Honda Motors (India) Ltd.: Is It Honda that

Made It a Hero?

SWOTE ANALYSIS
Strengths

1. Strong product portfolio

2. Joint venture
3. Technological leadership
Weaknesses
1. Lack of new product innovation
2. Consumers perception
3. Lack of significant process automation

Opportunities

1. Bolstering its dealership network

2. Advertising campaigns
3. Expansive markets

Threats

1. Increasing intensity of rivalry

2. Partners become their competitors
3. Political conflict of interest
Environment
1. Intensify environment
2. Full of competition
3. Hazardous environment

ALTERNATIVE COURSES OF ACTION

1. Have a Sense of Urgency
By knowing on whats the latest trend, they have to make new products for
2.

innovation that would fit customers taste aside from fuel efficient motors.
Construct Future Strategy
They should not rely much on joint venture because sometimes partners
became competitors for the sake of dominating the market. So for them to remain
standing still they should construct a future strategy that would make them to

become competitive.
3.
Improve Marketing Strategy

CASE STUDY #012

UNDERGRAD
RESEARCH

Hero Honda Motors (India) Ltd.: Is It Honda that

Made It a Hero?

Aside from advertising campaigns, they should think of new ways on how to
promote their brand models.

RECOMMENDATION
Since Hero Honda has the sense of technological leadership, they have more
opportunities in the automotive industry thats why they have to focus more on
Research and Development (R&D) to create new products suitable to become
their fighter brand that no one can imitate.
CONCLUSION
For Hero Honda to arm itself for its position in the marketplace, they have to take
some necessary actions that would greatly contribute to their business performance and
that is to have a sense of urgency to cope up with the latest trends in automotive
industry for them to develop products consisting of new features, they also have to build
future strategies needed to sustain their companys performance in the market. And,
they have to improve their marketing strategy to build customers trust thus, creating
brand loyalty. And in order to perform the production of new brand models for product
innovation, lean manufacturing is the necessary method to apply.

CASE STUDY #012

UNDERGRAD
RESEARCH