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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