AUTOMOBILE SECTOR

HERO HONDA
The joint venture between India's Hero Group and Honda Motor Company, Japan has not only created the
world's single largest two wheeler company but also one of the most successful joint ventures worldwide.
During the 80s, Hero Honda became the first company in India to prove that it was possible to drive a vehicle
without polluting the roads. The company introduced new generation motorcycles that set industry benchmarks
for fuel thrift and low emission. A legendary 'Fill it - Shut it - Forget it' campaign captured the imagination of
commuters across India, and Hero Honda sold millions of bikes purely on the commitment of increased
mileage.

Hero, the brand name synonymous with two-wheelers in India, is a multi-unit, multi-product, geographically
diversified, Group of Companies - the reflection of the steely ambition and indomitable grit of the Munjal
Family. Trace the saga of the "Hero" - through more than 50 years of Enterprise and Achievements, of Vision
and Planning.
Always blazing through the trails of success.
Hero Honda is currently the world’s largest motorcycle manufacturer thanks to its fuel efficient, high quality
products made in collaboration with Honda motorcycles, Japan.
Hero Honda has a wide variety of models ranging from the CD Deluxe in the value for money market to the
recently upgraded Karizma R which has set the new norm in the performance segment.
Old favorites like the Splendor + and Passion + have been upgraded and joined by variants such as the Splendor
NXG.
In the growing 125cc segment the Super Splendor and Glamour sport the new 125cc Quantum Core engine and
are gaining popularity.
The Hero Honda CBZ Xtreme and its sibling the Hunk compete with each other in the performance segment.

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.

Vision
Hero Honda is committed to supply Indian market with superior performance clutches at rational prices through
consolidated production system, conscientious quality control and continuous improvement of process
efficiency.
Strategies

Hero Honda has worked out a major expansion strategy for the rural markets and is planning to strengthen retail
financing to support the initiative, that could lead to setting up of its own finance arm. As part of its strategy,
Hero Honda is mapping the demographic landscape to formulate region-specific modules to tap customers at a
very local level.For example , distinct strategies are being evolved to leverage regional festivals such as Pongal
and Onam in the south, Gudi Padwa in Maharashtra, Durga Puja in the eastern region , Dhanteras and Diwali in
the north.
The company is also reaching out to ‘opinion leaders’ . Village haats and mandis are also being targeted to
reach customers.
The company is tying up with new partners, including local cooperative banks and financing units to have a
robust financial model.
The company is also expanding its distribution network to support the rural initiative. It has grown its network
by over 50% over the last two years from 2,000-3,000 ‘touch points’, that include authorised dealerships,
service and spare parts outlets, and dealer-appointed outlets across the country. This would be further expanded
to 3,500 this year.

Bajaj Auto also has an aggressive strategy for rural markets and has set up a separate dealer structure—rural
dealerships—for this purpose.

Just-in-Time Manufacturing

The Hero Group through the Hero Cycles Division was the first to introduce the concept of just-in-time
manufacturing. The Group boasts of superb operational efficiencies. Every assembly line worker operates two
machines simultaneously to save time and improve productivity. The fact that most of the machines are either
developed or fabricated in-house, has resulted in low inventory levels.

In Hero Cycles Limited, the just-in-time inventory principle has been working since the beginning of production
in the unit. This is the Japanese style of production. In India, Hero is probably the only company to have
mastered the art of the just-in-time inventory principle.

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

SWOT analysis
• Strengths
o Ability to understand customer’s needs and wants
o Recognized and established brand name
o Effective advertising capability
• Weaknesses
o R&D is not close to the hero manufacturing plant
o Hero is vulnerable in the joint venture because Honda Motor Company has so much power

• Opportunities
o Global expansion into the Caribbean and Central America
o Expansion of target market (include women)
o Become India’s leader in the scooter market
• Threats
o Honda Motorcycles and Scooters India can take away market share and cause joint venture to go
sour
o Bajaj Motors is a strong competitor
 HR POLICIES
OF
HERO HONDA

HR POLICIES
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!

Fill it  Hiring

No, not filling fuel in a bike but filling in organisational fuel-its people! The foremost requirement for any
organisation’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.

Shut it  Training

Having filled the positions, it’s time to equip employees with relevant information and training. Hero Honda
has a formalised induction programme at the plant and the corporate levels. The duration of the programme
varies for different recruits. Engineering recruits, for instance, have a month-long induction programme, 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 programme 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 emphasised.

The employee development programmes 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) and 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.

Forget it

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 programmes 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.

• Teamwork 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:

• Ensuring compliance with all applicable legislative requirements.

• Continuous improvements in safety performance through precautions besides