-Building a Global Brand

Agenda

1. Hero Motocorp : Company Overview

2. Hero Motocorp : The Split from Honda

3. Hero Motocorp : The Global Footprint

4. Hero Motocorp : Strategic Planning

5. Hero Motocorp : Success Factors, SWOT analysis and the Road Ahead

Hero MotoCorp – A Brief Overview

1956 • Formation of Hero Cycles in Ludhiana(majestic auto limited)

1975 • Hero Cycles becomes largest bicycle manufacturer in India.

1983 • Joint Collaboration Agreement with Honda Motor Co. Ltd. Japan signed Shareholders Agreement signed

1984 • Hero Honda Motors Ltd. Incorporated.

1985 • Hero Honda CD 100 launched as first bike.

1994 –2004 • Successful models like Spelendor, Passion, Karizma launched in the market

2005 • Hero Honda Scooter Pleasure launched.

2011 • Hero and Honda part company, thus forming Hero MotoCorp. In November, Hero launched its first ever Off Road Bike Named Hero "Impulse".

2013 • Hero MotoCorp unveiled line-up of 15 updated products including Karizma R, ZMR, Xtreme, Pleasure, Splendor, HF Deluxe ECO and Glamour.

2014 • Introduction of three new technologies- Engine Immobilizer , Integrated Braking System (IBS) and i3S (Idle Stop and Start System)

Mission Become a

global enterprise fulfilling its customers' needs and

aspirations for mobility, setting

benchmarks in technology, styling and

quality so that it converts its

customers into its brand

advocates.

VisionProviding

world class mobility solutions

with renewed focus on

expanding company's footprint in the global

arena.

StrategyBuild a robust

product portfolio

across categories,

explore growth

opportunities globally,

continuously improve its operational efficiency,

aggressively expand its reach to

customers

Brand Identity

Company's new identity

"Hero MotoCorp

Ltd." is truly reflective of its

vision to strengthen

focus on mobility and technology

and creating global

footprint.

Hero MotoCorp – The Split from Honda

Terms of the Joint Venture with Honda

In 1984, Honda formed two JVs; one was to manufacture motorcycles with the Hero Group and the other was with Kinetic Honda to manufacture scooters

The understanding that Honda will not manufacture motorcycles whereas Hero Honda will not make scooters for five years

The other agreement that was made at that time was to set up a model committee comprising a representative each from Hero Honda, Honda, and from Honda’s newly formed Indian subsidiary Honda Motorcycles and Scooters India Private Limited (HMSI)

The third agreement was that Honda would manufacture the products based on the individual specifications of both companies

Reasons for the Split

HSMI decided in

2010 to launch a

110cc motorcycle, the segment that formed over 70 per cent of Hero

Honda’s sales

There was an issue of

exporting the Indian JV’s products to

other countries.

Honda said that Hero

Honda will have to

compete on its own

Hero Honda wanted to do

its own independent

R&D and manufacturing its own products.

When asked Honda

Declined

Hero felt there was a conflict of

interest with same

people in both Hero Honda as

well as HMSI board

Parting terms from Honda

1. Honda agreed to provide Hero the products that were being developed for the joint venture at the time of the split.

2. Honda’s parting gestures showed that it appreciated Hero and it would have liked to continue its relationship, except that Hero had ambitions to go global

3. Honda’s gesture reflected its appreciation for the fact that it was this joint venture that built the Honda brand in India over 26 years of a win-win relationship

4. Honda also provided assurance that they will not share the JV’s strategies of which they were privy

Hero MotoCorp – The Global Footprint

Asia: Head Quarter in India. Also present in Sri Lanka, Nepal, Bangladesh

Middle East : Presence in Turkey

and Egypt

Africa: Present mostly in East African countries like Kenya, Uganda, Mozambique, Angola, Tanzania

Americas: Present in the Latin American countries like Columbia, Peru , Honduras, El Salvador and Guatemala

Hero MotoCorp is initially planning to focus on markets where volumes are large, and products can be sold with no changes or minimum charges to rapidly rev up its overseas business.

“The aim is to raise the Hero Flag in as many as 50 countries by 2020. Hero realized a part of that objective by launching range of two wheelers globally.”-Hero MotoCorp growth plan

Vision 2020“By the year 2020, the company aims to cross 100 million units in cumulative production, and annual bike and scooter sales of 12 million units. It also plans to have more than 20 manufacturing and assembly plants across the globe with sales in more than 50 countries by that year. ”

Hero’s R&D centre is coming up at Kukas near Jaipur, the foundation was laid in September 2013 by vice-chairman Mr. Pawan Munjal

Hero also has plans to introduce new products over different segments. Hero MotoCorp gave its first glimpse of tech-driven future’s approach at the Auto Expo in Delhi, February 2014

Hero MotoCorp is aiming at aggressive growth in India and global markets in line with its ‘Vision 2020’ plan. •It is striving to position itself as a tech-oriented, strong R&D player.

•Hero MotoCorp is setting up two overseas manufacturing plants in Bangladesh and in Colombia that are expected to go on stream in 2015-16. •In partnership with local distributors, Hero has also set up assembly units in Uganda, Kenya, and Tanzania

For engines-AVL of Austria For engines with greater displacements- EBR of the US For completed design language- Engines Engineering of Italy For advance fuel systems and similar technologies- Magneti Marelli of Italy

Hero MotoCorp – Strategic planning

Steps Being Taken

Key Partnerships and Acquisitions being Undertaken to reach the 2020 vision.

Hero has signed up with series of technology partners. It is now open to acquire companies which include full-fledged two wheeler makers as a part of global expansion strategy

In July 2013, the company had picked up 49.2 % stake in Erik Buell Racing (EBR) an US-based company for $25 million

Hero MotoCorp – Success Factors, SWOT and the Road Ahead

Lack of major competitors in initial years

Better fuel efficiency and increased market for two wheelers

Strong distribution network of Hero

Sound and proven technical capabilities of Honda

STRENGTHS •Established brand name and one of the biggest players in the two wheelers market in India• Excellent distribution networks ,over 3000 dealerships and service centers •Excellent R&D, and huge variety of products in every segment.•Good advertising and excellent rebranding from Hero Honda to Hero Moto Corp

WEAKNESS

•Absence in the premium bike segment• Over 30% imports i.e., High imports on its spare parts •Most of the products have same or similar features and low on design and innovation

OPPORTUNITIES

• High growth potential: Two-wheeler segment is one of the most growing industries

•International market is untapped as the export of bikes is limited

THREATS

• Strong competition from International as well as Indian brands•Dependence on fuel prices and government policies•Other facilities like better public transport will affect the sales of two-wheelers.

Success Factors Over the Years

•Hero group would continue doing well, especially in the mass markets, but R&D and technology would remain a challenge. But as Hero is concentrating on R&D, the future may be better.•Honda would do well in the premium segment, but creating a mass market appeal might prove difficult. Another challenge would be in the terms of local distribution, after-sales service, and spare parts.

SWOT Analysis

The Road Ahead for Hero Motocorp and Honda

References

Hero MotoCorp Annual report 2012-13(http://www.heromotocorp.com/en-in/uploads/Annual_Reports/pdf/20130809004805-pdf-184.pdf)

Hero MotoCorp Annual report 2013-14(http://www.heromotocorp.com/en-in/uploads/Annual_Reports/pdf/20140708105458pdf291.pdf)

http://www.thehumanfactor.in/tim/TIM3.html

http://www.venturenavigator.co.uk/content/hero_honda_case_study

http://www.heromotocorp.com/en-in/

http://www.cfo-connect.com/title_detail.asp?art_id=1055&cat_id=10