1.

INTRODUCTION

1.1 AUTOMOBILE INDUSTRIES

 The Indian auto industry is one of the largest in the world. The industry accounts for
7.1 per cent of the country Gross Domestic Product (GDP). The two wheelers segment
for 81 per cent market share is the leader of the Indian Automobile market owing to a
growing middle class and a young population.
 India is also a prominent auto exporter and has strong export growth expectation for the
near future. In April- January 2016, exports of the commercial vehicles registered the
growth of 18.36 per cent over April-January 2015. In addition, the several initiatives by
government of India and the major automobile players in the Indian market are expected
to make India a leader in the two Wheelers (2W) and four Wheelers (4W) market in the
world by 2020.
 The Indian automobile industry includes two-wheelers, trucks, cars, buses and three
wheelers which play a crucial role in growth of the Indian economies. India has emerged
as Asia’s fourth largest exporter of automobiles behind Japan, South Korea, and
Thailand.

1.2 COMPANY PROFILE- “HERO MOTOCORP”

 Hero MotoCorp is the World's single largest two–wheeler motorcycle company. Honda
Motor Company of Japan and the Hero Group entered a joint venture to setup Hero
Honda Motors Limited in 1984. 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.

1.3 HISTORY OF “HERO MOTOCORP”

The principal owner of the hero two wheeler manufacturing two unit - hero cycles – was
founded in 1956 in Ludhiana, Punjab, by the Munjal brothers. In 1975, hero cycles
became the largest manufacturer of bicycles in India. An agreement of collaboration and
formation of a joint venture was sign into Hero group of India and Honda of Japan in
1983. A year later, Hero Honda motors limited came into existence. In 2001, the

1
company attained the status of being the largest two-wheelers in the world. The Japanese
partner Honda walked out the partnership in 2010, selling the 26 per cent of stakes it held
to Hero. The company was named Hero MotoCorp in August 2011.

1.4 PROFILE OF THE COMPANY’S DIRECTORS

Mr. Pawan Munjal (Chairman, managing director and CEO)

Mr. Pradeep Dinodia (Non-executive & Independent Director)

Mr. V.P Malik (Non-executive & Independent Director)

2
 Mr. Suman Kant Munjal (Non-executive Director)

Mr. Paul Edgerley (Non-executive & Independent Director)

Mr. Anand C. Burman (Non-executive & Independent Director)

Mr. M Damodaran (Non-executive & Independent Director)

3
Mr. Pritam Singh (Non-executive & Independent Director)

Mr. Ravi Nath (Non-executive & Independent Director)

Ms. Shobana Kamineini (Non-executive & Independent Director)

Mr. Vikram Kasbekar (Whole Time Director & Head of Operator)

4
1.5 HERO MOTOCORP “VISION”

The story of Hero Honda began with a simple vision- the vision of a mobile and an
empowered India, powered by its two-wheelers. Hero MotoCorp ltd., company’s new
identity reflects its commitment towards providing world class mobility solution with
renewed focus on expanding company’s footprint in the global arena.

1.6 HERO MOTOCORP “MISSION”

Hero MotoCorp mission is to become a global enterprise to fulfilling its customer’s need
and aspirations for mobility, setting benchmarks in technology, styling and quality so that
its convert its customer into its brand advocates. The company will provide an engaging
environment for its people to perform to their true potential. It will continue its focus on
value creation and enduring relationships with its partners.

1.7 HEROMOTOCORP PLANT LOCATION

 Hero MotoCorp has manufacturing facilities located at five locations in India. The
five manufacturing plants of Hero MotoCorp have a combined production
capacity of more than 9 million vehicles annually.
 Satyavedu, Andhra Pradesh
 Dharuhera, Haryana
 Gurgaon, Haryana
 Neemrana, Rajasthan
 Haridwar, Uttarakhand
 Hero MotoCorp has over 7,000 dealership and service centre units in 29 states and
four union territories of India.

1.8 HERO MOTOCORP CURRENT MODELS

Being the largest manufacturer of two-wheelers in India and the world. Hero MotoCorp
produces a diversified range of models and variants to cater to the needs and demands of
its customers.

Following are the current models and their starting prices:

 Karizma ZMR Rs.1, 05,500

 Karizma Rs. 83, 900

5
 Xtreme Sports Rs. 72, 625
 Xtreme Rs. 71, 925
 Hunk Rs. 69, 725
 Impulse Rs. 71, 400
 Achiever Rs. 61, 425
 Ignitor Rs. 60, 500
 Glamour Programmed Fi Rs. 65,600
 Glamour Rs. 55, 925
 Super Splendor Rs. 53, 600
 Splendor I-Smart Rs. 50, 000
 Splendor Pro Classic Rs. 50, 500
 Splendor Pro Rs. 47, 650
 Splendor plus Rs. 45, 850
 Passion X Pro Rs. 49, 525
 Passion Pro Rs. 47, 650
 Passion Pro TR Rs. 53, 500
 HF Deluxe Eco Rs. 46, 150
 HF Deluxe Rs. 42, 100
 HF Dawn Rs. 39, 470
 Deut Rs. 54, 671
 Maestro Edge Rs. 50, 600
 Maestro Rs. 48, 700
 Pleasure Rs. 44, 650

1.9 HERO MOTOCORP FUTURE

Hero Motorcycles are a households name in India and are famous worldwide. The
continuous manufacturing of quality products over the years helped Hero MotoCorp
achieved the status of being the largest manufacturer of two-wheelers in the world, as
being the most sought after the brand per-requisite for being the biggest producer. A
vision and a strategy for the company to strive hard to keep moving towards perfection
have been laid down. The company vision documents say “The story of Hero Honda
began with a simple version-the vision of a mobile and an empowered India, powered by
its two wheelers. Hero MotoCorp ltd. Company new identify, reflects its commitments
towards providing world class mobility solutions with renewed focus on expanding
company’s footprint in the global arena. The main strategy of the company are to built a
robust product portfolio across categories, explore growth opportunities globally,
continuously improve its operational efficiency, aggressively expands its reach to
customers, continue to invest in brand building activities and ensure customers and
shareholders delight”.
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1.10 MILESTONE ACHIEVE BY HERO MOTOCORP

 1, 00, 000th motorcycle produced in 1987.

 New motorcycle model – ‘CD 100 SS’ introduced and 5, 00, 000th motorcycle in 1991
produced.
 New motorcycle model – ‘Splendor’ introduced and 1, 00, 000th motorcycle produced
in 1994.
 Hero Honda Splendor was declared the world largest selling two-wheelers in 2000.
 4, 00, 000th motorcycle produced in 2000.
 5, 00, 000th motorcycle produced in 2001.
 Declared the largest manufacturer of two wheelers in the world in 2001.
 Became the first Indian company to have sold 70, 00, 000 units in 2003.
 Achieved the 15 million production mark in 2006.
 Crossed the 20 million production mark in 2007.
 Achieved the 25 million production milestone in 2008.
 Crossed the landmark figure of 5 million cumulative sales in a single year in 2011.
 Crossed the 50 million production milestone in 2013.

1.11 AWARDS WON BY HERO MOTOCORP

 1991 Harvard Business School Award for corporate performance by Economic Times.
 NSIC Award, National Award for Outstanding Contribution to the development of
Indian small scale industry by the president of India in 1995.
 National Productivity Award for the best Production in the category of automobile and
tractor by the vice president of India.
 Most Respected Company Award in automobile sector by Business world in 2003.
 2006 Top Indian Company in the Automobile – two wheeler sector by American
Express Corporate Express.
 CBZ Xtreme won the ‘bike of the year’ award at the NDTV profit car India awards
2007.Business Leadership Award by NDTV profit in 2008.
 HUNK won bike of the year at the top gear design awards in 2008.
 Won two wheeler Manufacturer of the year at the NDTV profit cars and bikes awards
2009.
 Company of the year award at the Economic Times awards for Corporate Excellence
2008-09 in 2010.
 Adjudged as the best brand in the Auto (two-wheelers) category in the brand equity
“most trusted brand” 2011 survey.

7
 Adjudged the Business Leader in Automobiles at the NDTV profit business leadership
awards 2012.
 Business Leader of the year Award by the president of India, Shri Pranab Mukherjee, at
the AIMA managing India Awards 2013.

1.12 ABOUT HERO SPLENDOR iSmart 100 CC

 Hero MotoCorp has finally launched the Splendor iSmart in India at Rs. 47, 250 (Ex-
showroom Delhi). The bike was first showcased during the dealer conference that was
held in Macau last year and later unveiled officially at an event in Gurgaon.
 The Splendor iSmart features a new technology that has been developed by the
company in-house called the i3S. Its green technology that automatically shuts the engine
when idling and turns its on when needed, thus giving more fuel efficiency in congested
cities. This technology has been first featured in the Splendor iSmart and will later be
introduced in other motorcycles.
 The Splendor iSmart is powered by a 100-cc air cooled four stroke single cylinder
engines that churn out maximum power of 7.9 bhp at 7500 rpm and maximum torque of
8.04 Nm at 4500 rpm.
 The Splendor iSmart gets an aerodynamic front cowl, stylish rear grab rails with a
luxurious seat texture. It gets a matte black exhaust silencer and an all-weather power
start option which is standard across all variants. The bikes are available with four
colours – Sports Red, Leaf Green, Excellent Blue and Heavy Grey.

8
1.13 PRICE OF SPLENDOR iSmart 100cc BIKE

 HERO SPLENDOR iSmart Prices

 Self Drum Spoke
 Spoke wheels, Electric start, and Drum brake- Rs. 49, 887
 Self Drum Alloy
 Alloy wheels, Electric Start, and Drum brake- Rs. 50, 887

1.14 SPLENDOR iSMART SPECIFICATIONS & FEATURES

 Engine and Transmission

 Displacement: 97 cc
 Cylinder: 1
 Maximum power: 8.20 bhp @ 8000 rpm
 Maximum Torque: 8.05 Nm @ 5000 rpm
 Bore: 50mm
 Stroke: 49mm
 Valves per Cylinder: 2
 Fuel Delivery System: Carburetor
 Fuel Type: Petrol
 Ignition: DC- Digital CDI
 Spark Plug: 1 per Cylinder
 Cooling System: Air-cooled
 Gear Box type: Manual
 No. of Gear: 4
 Transmission type: Chain Drive
 Clutch: Multi plate Wet

1.15 BRAKES WHEELS AND SUSPENSION

 Brake Type: Drum

 Front Disc: No
 Front Disc/ Drum size: 130 mm
 Rear Disc: No
 Rear Disc/Drum size: 110 mm
 Caliper Type:
 Wheel Size: 18 inches
 Front Tyre: 2.75x18-4 I 80/100-47P
 Rear Tyre: 2.75x18-6 I 80/100-54P
 Tubeless Tyres: Yes
9
 Radial Tyres: No
 Alloy Wheels: No
 Front Suspension: Telescopic Hydraulic Shock Absorb
 Rear Suspension: Swing Arm with Adjustable Hydraulic Shock Absorber

1.16 FUEL EFFICIENCY AND PERFORMANCE

 Fuel Tank Capacity: 8.70 litres

 Reserve Fuel Capacity: 1.80 litres
 Fuel Efficiency Overall: 92 kmpl
 Fuel Efficiency Range: 800km
 Top Speed: 87 kmph

1.17 DIMENSIONS AND CHASSIS

 Kerb Weight: 110 kg

 Overall Length: 1965 mm
 Overall Width: 770 mm
 Overall Height: 1095 mm
 Wheel Base: 1235 mm
 Ground Clearance: 160 mm
 Seat Height: 785 mm
 Chassis Type: Tubular Double Cradle Frame

1.18 HERO iSmart Colours

 Sports Red
 Leaf Green
 Excellent Blue
 Red & Black
 Silver & Black
 Heavy Grey

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1.19 PORTER FIVE FORCE ANALYSIS

 Porter’s five forces model is an analysis tool that uses five industry forces to determine
the intensity of competition in an industry and its profitability level.
 Five forces model was created by M. Porter in 1979 to understand how five key
competitive forces are affecting an industry.
 These forces determine an industry structure and the level of competition in that
industry. The stronger competitive forces in the industry are the less profitable it is. An
industry with low barriers to enter, having few buyers and suppliers but many substitute
products and competitors will be seen as very competitive and thus, not so attractive due
to its low profitability.

 It is every strategist’s job to evaluate company’s competitive position in the industry

and to identify what strengths or weakness can be exploited to strengthen that position.
The tool is very useful in formulating firm’s strategy as it reveals how powerful each of
the five key forces is in a particular industry.

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THREATS OF NEW ENTRANTS

 Threat of new entrants: This force determines how easy (or not) it is to enter a
particular industry. If an industry is profitable and there are few barriers to enter, rivalry
soon intensifies. When more organizations compete for the same market share, profits
start to fall. It is essential for existing organizations to create high barriers to enter to
deter new entrants. Threat of new entrants is high when:

 Low amount of capital is required to enter a market;

 Existing companies can do little to retaliate;

 Existing firms do not possess patents, trademarks or do not have established brand
reputation;

 There is no government regulation;

 Customer switching costs are low (it doesn’t cost a lot of money for a firm to switch to
other industries);

 There is low customer loyalty;

 Products are nearly identical;

 Economies of scale can be easily achieved.

BARGAINING POWER OF SUPPLIERS

 Bargaining power of suppliers: Strong bargaining power allows suppliers to sell higher
priced or low quality raw materials to their buyers. This directly affects the buying firms’
profits because it has to pay more for materials. Suppliers have strong bargaining power
when:

 There are few suppliers but many buyers;

 Suppliers are large and threaten to forward integrate;

 Few substitute raw materials exist;

 Suppliers hold scarce resources;

 Cost of switching raw materials is especially high.

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BARGAINING POWER OF BUYERS

 Bargaining power of buyers: Buyers have the power to demand lower price or higher product
quality from industry producers when their bargaining power is strong. Lower price means lower
revenues for the producer, while higher quality products usually raise production costs. Both
scenarios result in lower profits for producers. Buyers exert strong bargaining power when:

 Buying in large quantities or control many access points to the final customer;

 Only few buyers exist;

 Switching costs to other supplier are low;

 They threaten to backward integrate;

 There are many substitutes;

 Buyers are price sensitive.

THREATS OF SUBSTITUTES

 Threat of substitutes: This force is especially threatening when buyers can easily find
substitute products with attractive prices or better quality and when buyers can switch
from one product or service to another with little cost. For example, to switch from coffee
to tea doesn’t cost anything, unlike switching from car to bicycle.

INDUSTRY RIVALRY

 Rivalry among existing competitors: This force is the major determinant on how
competitive and profitable an industry is. In competitive industry, firms have to compete
aggressively for a market share, which results in low profits. Rivalry among competitors
is intense when:

 There are many competitors;

 Exit barriers are high;

 Industry of growth is slow or negative;

 Products are not differentiated and can be easily substituted;

 Competitors are of equal size;

 Low customer loyalty.

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 1.20 PORTERS FIVE FORCE FACTORS

THREATS OF NEW ENTRY

 Amount of capital required

 Retaliation by existing companies
 Legal barriers (patents, copyrights, etc.)
 Brand reputation
 Product differentiation
 Access to suppliers and distributors
 Economies of scale
 Sunk costs
 Government regulation

SUPPLIER POWER

 Number of suppliers
 Suppliers’ size
 Ability to find substitute materials
 Materials scarcity
 Cost of switching to alternative materials
 Threat of integrating forward

BUYERS POWER

 Number of buyers
 Size of buyers
 Size of each order
 Buyers’ cost of switching suppliers
 There are many substitutes
 Price sensitivity
 Threat of integrating backward

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RIVALRY AMONG EXISTING COMPETITORS

 Number of competitors
 Cost of leaving an industry
 Industry growth rate and size
 Product differentiation
 Competitors’ size
 Customer loyalty
 Threat of horizontal integration
 Level of advertising expense

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2. OBJECTIVE OF THE STUDY

 To study and overview the automobile sector in India.

 To gain the theoretical knowledge of Porters Five Force Analysis.
 To analyze the structure of getting entry of new entrants in the Sagar automobile
market.
 To leverage the intensity of the competition so that degree of high rivalry drives down.
 To let the buyers to enjoy their bargaining power so that they became reliable to our
product.
 To stick with fewer suppliers, the choices will be more.
 To sky heighted our product so that threat from other substitutes remains low.
 To conduct the SWOT analysis of the company.
 To access the degree of satisfaction of the consumers with their current series of HERO
iSmart 100cc.
 To study and analyze the competitive position of HERO iSmart 100cc in the
automobile sector.

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3. REVIEW OF LITREATURE

A literature review is an account of what has been published on a topic by accredited

scholars and researchers. Occasionally you will be asked to write one as a separate
assignment (sometimes in the form of an annotated bibliography—see the bottom of the
next page), but more often it is part of the introduction to an essay, research report, or
thesis. In writing the literature review, your purpose is to convey to your reader what
knowledge and ideas have been established on a topic, and what their strengths and
weaknesses are. As a piece of writing, the literature review must be defined by a guiding
concept (e.g., your research objective, the problem or issue you are discussing or your
argumentative thesis). It is not just a descriptive list of the material available, or a set of
summaries.

3.1 REVIEWS ON TOYOTA

 Author: Edward Ferguson

 Year of Research: September 25, 2015
 Objectives:
a) To study on Michael Porters five force analysis
b) To find the rivalry of Toyota.
c) To find the substitute of Toyota.
 Conclusion: Toyota must focus on ensuring competitive advantages to withstand
the strong force of competition. In addition, Toyota needs to maximize its ability
to satisfy the preference and expectations of customers, who also exert a strong
force on the business and the automobile industries.

3.2 REVIEWS ON HARLEY-DAVIDSON

 Author: Justin Young

 Year of Research: May 22, 2010
 Objectives:
a) To counteracting the effects of strong forces.
b) To compare the other companies of automobiles with Harley Davidson.
c) To ensures that the company overcomes external factor while the business
internationally expands.
 Conclusion: Harley-Davidson is success as one of the main players in the
chopper/custom motorcycle market. The company’s ability to respond to the five
forces in its industry environment. Harley-Davidson bikes having not any
competitors in the automobile industry in the India. It is successive company of
the bikes.

17
4. RESEARCH

4.1 NEED FOR THE STUDY

In general, any CEO or a strategic business manager is trying to steer his or her business
in a direction where the business will develop an edge over rival firms. Michael Porter's
model of Five Forces can be used to better understand the industry context in which the
firm operates. Porter's Five Forces model is a strategy tool that is used to analyze
attractiveness of an industry structure. Porter's Five Forces model views the business
from outside. It focuses on assessing competitive position within industry .Porter's Five
Forces model in the internal view.

4.2 DATA COLLECTION

After identifying and defining the research problem and determining specific information
required to solve the problem. The researcher will look for the type and sources of data
which may yield the desired results, while deciding about the method of data collection to
be used for the study, there are two types of data. They are as follows:

 PRIMARY DATA

Primary data is original research that is obtained through first-hand investigation. Primary
data includes information collected from interviews, experiments, surveys,
questionnaires, focus groups and measurements. The designed questionnaire consisted of
closed and open-ended items. Close-ended items enabled the respondents to choose what
they felt was best from the given alternatives while open-ended items enabled them to
express their opinions in details.

Here we use close ended questionnaires which were distributed among the employees of
Honda Company for the collection of primary data.

 SECONDARY DATA

Secondary data means data that are already available i.e. they refer to the data which have
been collected and analyzed by someone and can save both money and time of the
researcher. Secondary data may be available in the form of company records, trade
publications, libraries etc. secondary data sources are as follows:

 Various websites
 Journals
 Research papers.

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4.3 RESEARCH METHODOLOGY

Research methodology is a methodology for collecting all sorts of information and data
pertaining to the subject in question. The objective is to examine all the issues involved
and conduct situational analysis. The methodology includes the overall research design,
sampling procedure and fieldwork done and finally the analysis procedure.

4.3.1 RESEARCH DESIGN

 Research design outlines the methods used for data collection, measurement and
analysis (Cooper & Schindler, 2001) to obtain answers to research questions. The
researcher collected data from selected various respondents sampled in the study using
descriptive survey design. Descriptive survey research method was used in order to
obtain accurate information for large numbers of people with a small sample to explore
relationships between variables because it allows generalizations across the population.
 Owing to the above justification, the researcher used descriptive survey design in this
study as it rightly fitted and clearly brought out what is in the mind of the researcher
(James & Sally, 2001). A triangulation of both quantitative and qualitative approach was
used because the expected information from the field will involve factual elements that
were presented using descriptive and inferential statistics. The study also surveyed
attitudes that could not be quantified but only thematically analyzed. Triangulation comes
up with data rich information that enriches the study (Mugenda & Mugenda, 2003).

4.3.2 SAMPLE DESIGN

A sample design is made up of two elements.

 Sampling method- Sampling method refers to the rules and procedures by which some
elements of the population are included in the sample. Some common sampling method
are simple random sampling, stratified sampling, and cluster sampling.
 Estimator- the estimation process for calculating sample statistics is called the
estimator. Different sampling methods may use different estimators. For example, the
formula for computing a mean score with a simple random sample is different from the
formula for computing a mean score with a stratified sample. Similarly, the formula for
the standard error may vary from one sampling method to the next.
 The “best” sample design depends on survey objectives and on survey resources.

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4.3.3 SAMPLE SIZE

Sample size determination is the act of choosing the number of observations or replicates
to include in a statistical sample. The sample size is an important feature of any empirical
study in which the goal is to make inferences about a population from a sample.

The sample size is an important feature of any empirical study in which the goal is to
make inferences about a population from a sample. In practice, the sample size used in a
study is determined based on the expense of data collection, and the need to have
sufficient statistical power. The sample size was 10 employees of HERO MOTOCORP
SAGAR M.P.

4.3.4 SAMPLE TECHNIQUE

Convenient Sampling Method with the help of close ended questionnaire.

4.3.5 SAMPLE UNIT

A sample unit is one of the units into which an aggregate is divided for the purpose
sampling, each unit being regarded as individual and indivisible when the selection is
made.

The sample unit of this survey was the sales manager and employees of the Hero
MotoCorp Automobiles, Bhagwaanganj in Sagar City, Madhya Pradesh.

4.4 SIGNIFICANCE OF THE STUDY

 Porter's five forces determine a company's competitive environment, which affects

profitability. The bargaining power of buyers and suppliers affect a small company's
ability to increase prices and manage costs, respectively. For example, if the same
product is available from several suppliers, then buyers have bargaining power over each
supplier. However, if there is only one supplier for a particular component, then that
supplier has bargaining power over its customers. Low-entry barriers attract new
competition, while high-entry barriers discourage it. For example, opening a home-
cleaning business is simple, but starting a manufacturing company is considerably more
difficult. Industry rivalry is likely to be higher when several companies are vying for the
same customers, and intense rivalry leads to lower prices and profits.
 The model is typically described as a tool for industry analysis. However, depending on
the actual question, it can be applied to particular companies, market segments, or regions
to. In a given industry, all market players face the same five forces. The impact of these
forces on any of these players may vary, do to different strategies, competences and

20
processes of these players. Analogously, the same applies for specific market segments,
regions or niches.
 Therefore, it is necessary to determine the scope of the market to be analyzed in a first
step. Following that, all relevant forces for this market are identified and analyzed.
Hence, it is not always necessary to analyze all elements of all competitive forces with
the same depth.

4.5 SCOPE OF THE STUDY

 This study is confined within the limit of Sagar city. This study attempts to examine the
Porters Five Forces Model towards Hero MotoCorp. Here only one model was
considered. There are another analysis also like PEST analysis and many more. A gap in
literature provide areas of compels research financial practice in various company. There
is a scope to study the profile of impact of financial performance analysis in each
industry, comparing and constructing different Industries.
 Also research can be done to delineate major issues that are faced by contemporary
Indian companies going for implementation of financial position in their management.
Studies are required to be done throw light on the effect and the potential benefits of the
financial performance, which will help to the banking take faster decision regarding
profitability, working capital as well liquidity maintaining based investment
management. Such studies may also motivate automobile industry to undertake activities
towards enhancing their financial performance initiative. The potential research in the
area will act as a guideline to the other auto-mobile industry for leveraging financial
performance analysis for the successful management of the company. Set of studies can
be dedicated to study the impact of financial performance and utilization of funds on
improving the overall competitiveness of automobile company and another.

4.6 LIMITATIONS OF THE STUDY

Although the study was carried out with extreme enthusiasm and careful planning, there
are several limitations which handicapped the research via:
 Time Constraints
 Sample Size
 Accuracy

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 5 DATA ANALYSIS AND INTERPRETATION

THREATS OF NEW ENTRANTS/BARRIER TO ENTRY

 Porter believed that the possibility of new entrants had a significant part to play in
developing and changing the competitive dynamics of any industry. Porter’s definition
helped people see this threat as substantial and influential.

 New entrants to an industry bring new capacity and a desire to gain market share that puts
pressure on prices, costs, and the rate of investment necessary to compete. Particularly
when new entrants are diversifying from other markets, they can leverage existing
capabilities and cash flows to shake up competition. The threat of entry, therefore, puts a
cap on the profit potential of an industry. When the threat is high, incumbents must hold
down their prices or boost investment to deter new competitors. The threat of entry in an
industry depends on the height of entry barriers that are present and on the reaction
entrants can expect from incumbents. There are 2 questions on New Entrant’s Threat
which are given below:

22
QUES. 1 Do you think there is scope for new entrants to make investment in the
market?

Table 1 showing No. of respondents supports the scope for new entrants in the market.

S.NO. OPTIONS NO. OF RESPONSES IN %

RESPONSES

1 YES 10 100%

2 NO 0 0

10

6
YES
4 NO

0
RESPONSES %

INTERPRETATION

From the above survey it is easily concluded that majority of people i.e. 100% supports
the scope of new entrants in automobile market.

23
QUES.2 Do brand image helps your company to restrict other company?

Table 2 showing the following:

S.NO. OPTIONS NO. OF RESPONSES IN %

RESPONSES

1 YES 10 100%

2 NO 0 0

12

10

6 YES
NO
4

0
RESPONSES %

INTERPRETATION

From the above survey it is easily concluded that majority of people i.e. 100% supports
the fact that brand image helps the company to threatens other entrants.

24
THREAT OF SUBSTITUTES

This is affected by the ability of your customers to find a different way of doing what you
do – for example, if you supply a unique software product that automates an important
process, people may substitute by doing the process manually or by outsourcing it. If
substitution is easy and substitution is viable, then this weakens your power. There are 2
questions on Threats from Substitutes which are given below.

QUES.3 How likely is customers to switch?

Table 3 showing No. of respondents supports the following:

S.NO. OPTIONS NO. OF RESPONSES IN %

RESPONSE

1 RARELY 3 30%

2 FREQUENTLY 7 70%

12

10

6 YES
NO
4

0
0 0.5 1 1.5 2 2.5

INTERPRETATION

Graph 3 showing No. of respondents supports switching rates to new brand.

25
QUES.4 which benefit you get when someone switch your company from others?

Table 4 shows the no. of responses benefit of the company.

S.NO. OPTIONS NO. OF RESPONSES IN %

RESPONSES

1 COST BENEFIT 2 20%

2 BRAND IMAGE 8 80%

COST BENEFIT
BRAND IMAGE

RESPONSE

0 2 4 6 8 10

INTERPRETATION

Graph 4 showing No. of respondents mostly supports brand image benefit.

26
COMPETTIVE RIVALRY

Rivalry among existing competitors takes many familiar forms, including price
discounting, new product introductions, advertising campaigns, and service
improvements. High rivalry limits the profitability of an industry. The degree to which
rivalry drives down an industry’s profit potential depends, first, on the intensity with
which companies compete and, second, on the basis on which they compete. There are 2
questions on Competitive Rivalries which are given below:

QUES.5 Do you gain any competitive advantage from your product?

Table 5 shows response of competitive advantage of the product.

S.NO. OPTIONS NO. OF RESPONSES IN %

REPONSES

1 YES 7 70%

2 NO 3 30%

YES
NO

RESPONSE

0 20 40 60 80 100

INTERPRETATION

Graph 5 shows the supports high rate of competitive advantage of the product.

27
QUES.6 does your product become interruption for some other products?

Table 6 shows the following:

S.NO. OPTIONS NO. OF RESPONSES IN %

RESPONSES

1 YES 10 100%

2 NO 0 0

10
9
8
7
6 NO
5 YES
4
3
2
1
0
RESPONSE %

INTERPRETATION

This graph shows the 100% interruption for other products.

28
BARGAINING POWER OF BUYERS

Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven
by the number of buyers, the importance of each individual buyer to your business, the
cost to them of switching from your products and services to those of someone else, and
so on. If you deal with few, powerful buyers, then they are often able to dictate terms to
you. There are 2 questions on Bargaining Power of Buyers which are given below:

QUES.7 Do you gain benefits from being loyal and achieve loyalty in return?

Table7 shows benefit from being loyal and achieve loyalty.

S.NO. OPTIONS NO. OF RESPONSES IN %

RESPONSES

1 YES 7 70%

2 NO 3 30%

10

6 NO
YES
4

0
RESPONSE %

INTERPRETATION

This graph shows that how much loyalty Company has to be achieved.

29
QUES.8 while going the development of new bikes which points company keeps in
mind?

Table 8 shows the following:

S.No. OPTIONS NO. OF RESPONSES IN

RESPONSES %

1 ACCEPTABILITY 0 0
OF CUSTOMER

2 SCALE OF 0 0
ECONOMY

3 COMFORT 2 20%

4 DESIGN 4 40%

5 ALL OF THE 4 40%

ABOVE

RESPONSE
ACCEPTABILITY OF
CUSTOMER
SCALE OF ECONOMY

COMFORT

DESIGN

ALL OF THE ABOVE

INTERPRETITION

This graph shows that the company keeps Acceptability of customers, scale of economic,
comfort, and design in their mind. They all are important for the company.

30
BARGAINING POWER OF SUPPLIERS

Here you assess how easy it is for suppliers to drive up prices. This is driven by the
number of suppliers of each key input, the uniqueness of their product or service, their
strength and control over you, the cost of switching from one to another, and so on. The
fewer the supplier choices you have, and the more you need suppliers' help, the more
powerful your suppliers are. There are 2 questions on Bargaining Power of Suppliers
which are given below

QUES. 9 Is there a monopoly of suppliers?

Table 9 shows the following:

S.No. OPTIONS NO. OF RESPONSES IN

RESPONSES %

1 YES 4 40%

2 NO 6 60%

10

6
NO
4
YES
2

RESPONSE
%

INTERPRETITION

This graph shows the monopoly of supplier i.e. 40% is monopoly and 60% is not
monopoly (according to the dealers of the company).

31
QUES. 10 Do you take input from a single supplier or from a group?

Table 10 shows the following:

S.No. OPTIONS NO. OF RESPONSES IN

RESPONSES %

1 SINGLE 0 0%

2 MULTIPLE 10 100%

RESPONSES IN %

SINGLE
MULTIPLE

NO. OF RESPONSES

0% 20% 40% 60% 80% 100%

INTERPRETITION

This graph shows that there are multiple numbers of suppliers in the company.

32
6. FINDINGS, SUGGESTIONS AND CONCLUSIONS

6.1 FINDINGS

 From the above survey it is easily concluded that majority of people i.e. 100% supports
the fact that brand image helps the company to threatens other entrants.
 From the above survey it is easily concluded that majority of people i.e. 70%supports
the facts that customers frequently switch to new brand.
 From the above survey it is easily concluded that majority of people i.e. 70% supports
facts that company gains competitive advantage in selling the products.
 From the above survey it is easily concluded that majority of people i.e. 100% supports
facts that company have multiple suppliers of the bikes.

6.2 SUGGESTIONS BASED ON THE FINDINGS

Based on the findings of the study, the following recommendations were made as a way
of highly benefiting from the Five Forces Model and other forces that affect the
performance of HERO MOTOCORP other than Porter’s Five Forces.

 Equal employment opportunity employment and promoting gender parity exercised by

HERO MOTOCORP of India should applied by all organizations that wish to retain their
employees as no employee can withstand unjust employment policies.
 Other than the use of M-banking only for checking of balances and transferring money
from the bank accounts to MPESA accounts and vice versa, HERO MOTOCORP should
go towards the step made by Commercial bank of Africa in offering M-SHWARI.
 Owing to the fact that substitutes are posing challenges to the bank’s products, the bank
should constantly study the steps taken by the firms that offer substitutes and integrate
them within their system as partners or be proactive in modifying their products to avoid
losing clients to substitute products.
 In response to the increasing number and strength of competitors this study
recommends that HERO MOTOCORP increases its product diversity and customize its
products in a way that suits and retains the already existing customers as well as
increasing efficiency and effectiveness in service provision.
 As a way of maintaining high quality services and good working environment, this
study recommends that
 HERO MOTOCORP should use their bargaining power of consuming such services to
engage high quality service providers at the lowest possible cost as such a step could be
cost effective and reduce the rates that the bank charges its clients.

33
CONCLUSION

 The purpose of this research was to find an answer to the following Research Problem:
“To what extent does the Five Forces model of Porter still is applicable for analyzing
profitability of an industry?” But first of all it was necessary to analyze the impact of the
three new forces on the industry structure in order to provide a valid answer.
 The question to what extent Digitalization, Globalization, and Deregulation affect
Porter’s Five Competitive Forces can be answered as follows: Since Porter’s Five Forces
relies on the principals of microeconomics; the challenges.
 Nowadays it is already a matter of course for many companies to think and act globally.
This matter of course will expand continuously in the coming years. On the one side, the
today’s technological progress in the areas of logistics, distribution or communication
provides companies to buy and sell products at a global level. Furthermore organizations
are able to cooperate better with other organizations. On the other side, the end
consumers have the ability to compare prices worldwide and to buy the product with the
best price-performance ratio. This also impacted the small-, and medium-sized
companies. Now, they have international collaborators and they are no longer operating
in a local market with local competitors. Those companies who are not operating in a
global environment are not able to compete on the market anymore. Furthermore
Globalization extends the markets. Due to this force, more potential customers and more
potential suppliers and partners are available which also affects the Five Competitive
Forces. Also the start-up barriers decrease, which means that the Threat of New Entrants
is high. Young companies can enter a market much easier based on Lower Trade
Barriers, Lower Transportation Costs or Lower Communication Costs. This means that
Globalization does not require a new force. Globalization has an impact on the existing
five forces, which should be considered by firms.
 The porter’s five force model was helpful in studying the market position of the Sagar’s
bike automobile industry. The study helped in getting the idea about the Five Forces of
Porter’s Model. This study has found that generally it is not necessary to add an
additional force to the Five Forces model as Thurlby (1998) and Andriotis (2004) did.
The Five Competitive Forces are still applicable, but it is necessary to know the
limitations of the model. Globalization, Deregulation and Digitalization have an impact
on the existing forces but they do not develop a new one. As already mentioned in the
previous parts, the three forces changed the industry structure as well as the attractiveness
of an industry. If the Entry Barriers are low due to the Deregulation process and therefore
the Threat of New Entrants is high, the industry is not that attractive for companies than
industries with high Entry Barriers and low Threat of New Entrants. Digitalization can
affect the attractiveness of an industry as well. Because of the Internet, firms are able to
reproduce products of their competitors. This increases the Threat of Substitutes and
consequently impacted the attractiveness of the industry negatively.

34
REFERENCES:

 https://www.heromotocorp.com
 www.cfo-connect.com/images/article/cs-the-hero-reborn-may12.pdf
 https://www.strategicmanagementinsight.com/tools/img/porters-five-forces.svg
 http://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy/
 https://www.profit.ndtv.com
 https://www.bikewale.com/hero-bikes
 https://www.userreviewd.com/bike/hero-motocorp-splendor-ismart
 http://www.mbaskool.com/brandguide/automobiles/1196-hero-moto-corp.html
 https://www.cleverism.com/threat-of-new-entrants-porters-five-forces-model/
 https://www.motownindia.com

35
 ANNEXURES
DEPARTMENT OF BUSINESS MANAGEMENT

DR. HARI SINGH GOUR CENTRAL UNIVERSITY

SAGAR (M.P.) 470002

QUESTIONNAIRES

I am pursuing a study on Michael Porter’s Five Force Model on Splendor

iSmart of Hero MotoCorp Company. I will be grateful to you if you spare
your valuable time and provide me your valuable views on the subject of the
research study. I assure you that it is purely an academic exercise and the
information supplied by you would be kept strictly confidential.

Student: KARTIK GUPTA

MBA – 1ST SEMESTER

Name: _________________________________________________

Designation: ____________________________________________

Address: _______________________________________________

PART-1st BARRIERS TO ENTRY

QUES. 1 Do you gain cost advantages (Economies of scale and scope) with
your product Splendor I-smart?

□ Yes □ No
QUES. 2 Do you think there is scope for new entrants to make investment in
the market?
36