HERO HONDA-INTRODUCTION

Hero Honda Motors Ltd. is the world's largest manufacturer of two – wheelers,

based in India. 

The company is a joint venture between India's Hero Group and Honda Motor

Company, Japan that began in 1984. 

In 2001, the company achieved the coveted position of being the largest two-

wheeler manufacturing company in India and the ‘World No.1’ two-wheeler

company in terms of unit volume sales in a calendar year by a single company.

Hero Honda has retained that coveted position till date. 

Today, every second motorcycle sold in the country is a Hero Honda bike. Every

30 seconds, someone in India buys Hero Honda's top-selling motorcycle –

Splendor. 

Vision

The Hero Honda story began with a simple vision – the vision of a mobile and an

empowered India, powered by Hero Honda. This vision was driven by Hero

Honda’s commitment to customer, quality and excellence, and while doing so,

maintaining the highest standards of ethics and societal responsibilities. Hero

Honda believes that the fastest way to turn that dream into a reality is by remaining

focused on that vision.

Strategy

Hero Honda’s key strategy has been driven by innovation in every sphere of

activity – building a robust product portfolio across categories, exploring new

markets, aggressively expanding the network and continuing to invest in brand

building activities. 

Manufacturing

Hero Honda bikes are manufactured across three globally benchmarked

manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which

are located in the state of Haryana in northern India. The third and the latest

manufacturing plant is based at Haridwar, in the hill state of Uttrakhand.

Technology

In the 1980’s Hero Honda pioneered the introduction of fuel-efficient, environment

friendly four-stroke motorcycles in the country. Today, Hero Honda continues to

be technology pioneer. It became the first company to launch the Fuel Injection

(FI) technology in Indian motorcycles, with the launch of the Glamour FI in June

2006.

Products

Hero Honda's product range includes variety of motorcycles that have set the

industry standards across all the market segments. The company also started

manufacturing scooter in 2006. Hero Honda offers large no. of products and caters

to wide variety of requirements across all the segments.

Distribution

The company's growth in the two wheeler market in India is the result of an

intrinsic ability to increase reach in new geographies and growth markets. Hero

Honda's extensive sales and service network now spans close to 4500 customer

touch points. These comprise a mix of authorized dealerships, Service & Spare

Parts outlets, and dealer-appointed outlets across the country.

Brand 

The company has been continuously investing in brand building utilizing not only

the new product launch and new campaign launch opportunities but also through

innovative marketing initiatives revolving around cricket, entertainment and

ground- level activation. 

Hero Honda has been actively promoting various sports such as hockey, cricket

and golf. Hero Honda was the title sponsor of the Hero Honda FIH Hockey World

Cup that was played in Delhi during Feb-March 2010. Hero Honda also partners

the Commonwealth Games Delhi 2010. 

2009-10 Performance

Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent

Total net operating income of Rs. 15860.51 Crores, growth of  28.1 per cent

Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent

Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2

EBIDTA margin for the year 17.4  per cent

EPS of Rs. 111.77, growth of 74.1  per cent

HERO HONDA'S MISSION Hero Honda’s mission is to strive for synergy between technology, systems and

human resources, to produce products and services that meet the quality,

performance and price aspirations of its customers. At the same time maintain

the highest standards of ethics and social responsibilities. 

This mission is what drives Hero Honda to new heights in excellence and helps

the organization forge a unique and mutually beneficial relationship with all its

stake holders.

 HERO HONDA'S MANDATE Hero Honda is a world leader because of its excellent manpower, proven

management, extensive dealer network, efficient supply chain and world-class

products with cutting edge technology from Honda Motor Company, Japan.

The teamwork and commitment are manifested in the highest level of customer

satisfaction, and this goes a long way towards reinforcing its leadership status.

Ancillarisation

An integral part of the Group strategy of doing business differently was providing

support to ancillary units. There are over 300 ancillary units today, whose

production is dedicated to Hero's requirements and also a large number of other

vendors, which include some of the better known companies in the automotive

segment.

Labor relations

In Hero Group there is no organized labor union and family members of employees

find ready employment within Hero. The philosophy with regard to labor

management is "Hero is growing, grow with Hero." Hero workers receive a

uniform allowance, as well as House Rent Allowance (HRA) and Leave Travel

Allowance (LTA). Extra benefits include medical check-ups not just for workers,

but also for the immediate family members. For the majority of the production

workers, who are hired through contractors, these benefits are out of reach. This

and other problems lead to a strike and factory occupation by 4,000 temp workers

in the Gurgaon plant in spring 2006.

Diversification

Throughout the years of enormous growth, the Group Chairman, Mr. Lall has

actively looked at diversification. A considerable level of vertical integration in its

manufacturing activities has been ample in the Group's growth and 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. Hero Honda Motors was

established in 1984 to manufacture 100 cc motorcycles.

The Hero Group also took a venture 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. The Hero Group's phenomenal growth is the result of constant

innovations, a close watch on costs and the dynamic leadership of the Group

Chairman, characterized by a culture of entrepreneurship, of right attitudes and

building stronger relationships with investors, partners, vendors and dealers and

customers

SWOTanalysis

Strengths :

Ability to understand customer’s needs and wants

Recognized and established brand name

Effective advertising capability

Weaknesses:

R&D is not close to the hero manufacturing plant

Hero is vulnerable in the joint venture because Honda Motor Company has

so much power

Opportunities:

Global expansion into the Caribbean and Central America

Expansion of target market (include women)

Become India’s leader in the scooter market

Threats:

Honda Motorcycles and Scooters India can take away market share and

cause joint venture to go sour

Bajaj Motors is a strong competitor

HR POLICIES OF HERO HONDA

HR as a function has undergone drastic changes. Both, companies that have built

empires over a period of time and those that have recently surfaced, owe their

success to their people. Hence, companies are working really hard on their human

resources management practices. Few have stuck to their age-old practices, while

some others have blended them with some modern day techniques.

Hero Honda Ltd. exemplifies an ideal blend of family values, partner values and

modern day practices. A joint venture company between Honda Japan and Hero

Group India, Hero Honda Ltd. has come a long way from being a two-wheeler

manufacturer to being synonymous with two-wheelers!

People management practices at Hero Honda are a reflection of those of their

Japanese partner, Honda Motors, although they differ in implementation. These

differences could be attributed to the diverse cultural backgrounds of their

employees. The ‘fill it, shut it, forget it ’mantra for its CD 100 model holds true for

Hero Honda’s HR practices. Hiring Fill it, not filling fuel in a bike but filling in

organizational fuel-its people! The foremost requirement for any organization’s

success is its employee fitment vis-à-vis its goals. Filling in positions with

employees that best suit the requirement governs the recruitment policy at Hero

Honda.

The recruitment process is an annual affair at Hero Honda carried out in two

phases. Phase one comprises hiring managerial and engineering recruits under the

supervision of corporate HR, in addition to a plant representative (either the HR

head or a General Manager). Campus recruitments and advertisements are main

sources of hiring these people. Phase two involves shop floor hiring, for which the

plant’s HR is solely responsible. Hero Honda has put in considerable effort to drive

its recruitment process at the plant level. Pre-requisites have been laid down for

positions at the plants. A diploma from Industrial Training Institutes (ITIs) and

experience determine a candidate’s rank in the organisation. Prior to the interview

process, a written exam is held to assess candidates’ technical / professional

knowledge, IQ and general aptitude. Traits like honesty, earnestness and integrity

are assessed during the interview. The company’s internal sources are exercised for

filling in senior level hiring needs. Employees from company competitors are also

considered seriously.

Training

Shut it having filled the positions, it’s time to equip employees with relevant

information and training. Hero Honda has a formalized induction program at the

plant and the corporate levels. The duration of the program varies for different

recruits. Engineering recruits, for instance, have a month-long induction program,

unlike managerial recruits who spend comparatively less time. The difference is

largely because the engineering hires need more time on the production floor than

the managerial and other function recruits. The induction program begins with

classroom lectures on the company’s vision, mission, goals, culture and values.

Interspersed with these are lectures by the top management officials about their

experiences in the company. Classroom sessions lasting a couple of days are

followed up by orientation to various functional areas. During the induction

process, employees are expected to maintain a record of their learning and daily

activities. This helps while providing feedback. Apart from the knowledge of

business operations, the five golden rules of work at Hero Honda- punctuality,

cleanliness, and quality of work, maintenance of equipment and courteousness and

helpfulness towards both external and internal customers are emphasized. The

employee development programs at Hero Honda include areas like team building,

quality control, stress management, time management etc. Star performers are

given an opportunity to pursue correspondence courses in Japanese management

techniques, like 5 Sigma, TPM, TQC Kaizen and business process management.

Employees also have an option of taking ILO sponsored courses on labour

management.

Employee Policy

“Hero is growing, grow with Hero,” is the governing principle of Hero Honda’s

labour management practices. It was one of the first few companies to offer

benefits like

House rent allowance (HRA)

Leave travel allowance (LTA)

Uniform allowance to its employees.

The company shuns unionism. Instead it has well established communication

channels across organizational levels. The company’s Quality circle facilitates

quality improvement among employee groups. This apart it has a suggestion

system that seeks employee suggestions regarding work processes, company

culture and other relevant matters. Employees providing the best and implemental

solutions are rewarded suitably. Shift meetings and morning meetings that discuss

routine problems and concerns besides recognizing employee efforts are some of

the managerial level communication channels at Hero Honda.

As a recruitment practice, employment is provided to family members of

employees especially in the case of untimely death or retirement.

Having hired the right people, and equipped them with adequate information

and training, the company gives them enough opportunities to prove

themselves. Interference in daily chores is considered “bad manners” at Hero

Honda.

PRINCIPLES

Today Hero Honda has managed to achieve indigenisation of over 95 percent, a

Honda record worldwide. Hero Honda is at present the largest-selling Indian

motorcycle and the most fuel-efficient in its category - the outcome of Hero

Group's foresight and another classic example of how the Group strives to provide

the customer with excellence and satisfaction.

Customer-centric:

The Company's success has been driven by customer centric policies and

teamwork to achieve progress and productivity. The philosophy of Hero Honda

emphasizes the "Pursuit of Excellence" in designing and manufacturing

technologically and qualitatively superior products and in creating economic value

for its stakeholders. It takes care of its customers through value based competitive

pricing and good after sales service.

Excellent marketing, finance and loan services, an efficient dealer network, tactical

promotion comprising of fuel conservation campaigns, mobile workshops, safety

driving courses and others, all placed Hero Honda in a league distinct from the

conventional. The Company focuses on providing "Value for Money" through its

pricing strategies and after sales services.

Excellent Collaborator Relationship:

Hero Honda is now the leading two-wheeler Company in India in terms of net

sales (sales less excise duty value, which was Rs 3171 crores. It is both the leading

two wheeler manufacturer and sales operation among Honda's worldwide

operations. The Company has maintained excellent relationship with all

stakeholders including its collaborators. Hero Honda has emerged as the most

successful joint venture Company of Honda in the world, their relationship over

116 years old now.

ERP Implementation:

The Company has successfully implemented SAP R/3 (ERP Program - "Project

Synergy") thereby enabling proper planning and company wide efficiency. The

modules were implemented and stabilized in a record 10 months period. It speaks

of the commitment of the management and the implementation team towards

making it processes accountable and efficient.

Philosophies:

AN ENVIRONMENTALLY AND SOCIALLY, AWARE COMPANY

At Hero Honda, their goal is not only to sell a bike, but also to help you every step

of the way in making your world a better place to live in. Besides its will to

provide a high-quality service to all of its customers, Hero Honda takes a stand as a

socially responsible enterprise respectful of its environment and respectful of the

important issues.

Hero Honda has been strongly committed not only to environmental conservation

programs but also expresses the increasingly inseparable balance between the

economic concerns and the environmental and social issues faced by a business. A

business must not grow at the expense of mankind and man's future but rather must

serve mankind.

"We must do something for the community from whose land we generate our

wealth."

A famous quote from our Worthy Chairman Mr.Brijmohan Lall Munjal

Quality Policy.

Excellence in quality is the core value of Hero Honda's philosophy.

They are committed at all levels to achieve high quality in whatever we do,

particularly in our products and services which will meet and exceed customer's

growing aspirations through:

Innovation in products, processes and services.

Continuous improvement in our total quality management systems.

Team work and responsibility.

Safety Policy

Hero Honda is committed to safety and health of its employees and other persons

who may be affected by its operations. they believe that the safe work practices

lead to better business performance, motivated workforce and higher productivity.

They try to create a safety culture in the organization by:

Integrating safety and health matters in all their activities.

Ensuring compliance with all applicable legislative requirements.

Empowering employees to ensure safety in their respective work places.

Promoting safety and health awareness amongst employees, suppliers and

contractors.

Continuous improvements in safety performance through precautions

besides participation and training of employees

QUALITIES- TOP BRASS

Brijmohan Lall Munjal – Chairman & Director

"Don't dream if you can't fulfill your dreams'' Brijmohan Lall Munjal is often fond

of saying. The founder and patriarch of the $ 2.8 billion Hero Group is your classic

first generation entrepreneur. He is a man who started small, dreamt big and used a

combination of grit and perseverance to create one of the country's largest

corporate groups and the World's No.1 Two Wheeler Company.

Instinctive from a young age, Brijmohan Lall made a rather unusual start in life.

Around the time when the freedom movement in India was taking shape in the late

1920s, he walked into a newly opened Gurukul (Indian heritage school) near his

home in Kamalia (now in Pakistan). He was only six years old then. 

Thus began an extraordinary tale of courage and perseverance. Brijmohan began

his business story after partition in 1947, when he and his brothers relocated to

Ludhiana. The family set up a company that provided poor people with basic

transport (cycles). Three decades later, as India evolved, he added a second crucial

chapter - which visualized affordable and technologically superior transport to

millions of middle class Indians. The rest is history. 

Building Relationships  

When Brijmohan and his brothers started out, there was no concept of organized

dealer networks. Companies just produced, and most dealers functioned like

traders. Brijmohan changed the rules of the business by trusting his gut instincts;

introducing business norms that were ahead of their time, and by investing in

strategic relationships.

Brijmohan built a series of bonds and networks with hundreds of family members,

vendors, dealers and employees. Much like the Japanese keiretsu system, these

networks are now the glue that holds the Hero Group together.

"Thanks to the relationships that we have nurtured so passionately in the Hero

Family, the younger generations of some of our bicycle dealers have become

dealers of Hero Honda. These relationships have survived through generations -

through bad times and good times'' the patriarch now reminiscences.

Besides bonding with his vendors and dealers, Brijmohan has been personally

responsible for kindling a spirit of entrepreneurship amongst his employees, and

today, 40 of his former employees are successful entrepreneurs.

Staying Ahead

Though not technically qualified in the conventional sense, few of his

contemporaries have understood the dynamics of technology better than Brijmohan

Lall has. He could always visualize the applicability of technology before others

could. For example, in the 1980s, when all two-wheeler companies in India opted

for two-stroke engine technology, Brijmohan preferred a four-stoke engine - a

technology that dramatically increased fuel efficiency and reduced maintenance

costs. This technology was one of the biggest reasons for Hero Honda's stupendous

success.

Time and again, Brijmohan managed to steal a march over his industry peers. For

example, when Honda Motors of Japan was looking for a collaborator in the 1980s,

the Hero Group was not high up the pecking order initially as there were other

more eligible and established suitors.

Yet it didn't take long for the astute Japanese to realize that the Hero Group and

Honda had much more in common than earlier perceived; there a sharp focus on

financial and raw material management, and employee turnover was low. Honda

officials were also amazed to find that the Munjals were already practicing "Just-

in-time-inventory" at the time (JIT). It turned out that Brijmohan Lall's aspiration

to provide cheap transportation to India's poor by default ensured lean and cost-

effective operations. This in turn increased vendor efficiency and led to near-zero

inventories.

A Corporate Citizen  

A frugal upbringing and a value system modeled on the famous Gurukul system -

which stresses the sanctity of the teacher-pupil relationship - imbibed in Brijmohan

a strong sense of social commitment and responsibility.

There is a special place in his heart for Ludhiana, the city where he took roots.

Today, Ludhiana is a modern, bustling city, but Brijmohan has played no mean

role in its evolution. Several schools and educational institutions in Ludhiana owe

their existence to the Munjal family.

The Ludhiana Stock Exchange owes its existence to Brijmohan's vision as does the

Ludhiana Flying Club. He's also set up the not-for-profit Dayanand Medical

College and Hospital-an institute now rated as one of the best medical colleges in

India, in terms of infrastructure, quality of staff and alumni profile.

In and around Dharuhera, near the first Hero Honda plant, Brijmohan and his

family have left their stamp of philanthropy. The Raman Kant Munjal Foundation -

which Brijmohan set up in memory of his eldest son, today runs a higher secondary

school and a very modern and well-equipped 100-bed hospital at Dharuhera. The

group has also adopted numerous villages and provides education, vocational

training, drinking water, roads, streetlights and sewerage.