Macro Analysis of the Indian Motorbike Industry

STEEPLED ANALYSIS
1) SOCIAL FORCES
- Lack of roads that were suitable for four wheelers increased the demand for 2 wheelers
- Two Wheelers were a priced possession.
- Expensive four wheelers. The time and the opportunity were apt and Hero Honda stuck the cord at the
right time in all the strata including the tier 1 and tier 2 cities (the initial penetration of two wheelers being
around 10%). This created a social impact and brought about change.

2) TECHNOLOGICAL FORCES
- four-stroke engines were superior to the incumbent two-stroke engines in multiple areas Hero Honda had
the first and for many years only four-stroke vehicle (except for Royal Enfield’s 346 cc four-stroke)
-These four stroke engines were more efficient, less fuel consuming, long lasting and gave a better milage
than a two-stroke engine or a scooter.

3) ECONOMIC FORCES
- India had a penetration rate of less than 10% which was way below that of other Developing countries so
the Indian market had a huge space to grow this helped Hero convince Honda that a large population
coupled with emerging market economic situation constituted an excellent market for affordable,
motorized, two-wheeled scooters.
- Further the economic crash or 2008 proved to be a boon for Hero Honda as their nearest rivals focused on
high end bikes while they focused on affordability.

4) ENVIRONMENTAL FORCES
- Government becoming strict with the emission regulations made environmentally friendly vehicles more
attractive and two wheelers with fuel efficiency and low emissions fit the bit
- Four stroke engine of Hero Honda was less polluting than two stroke ones. Hero Honda bike was fuel
efficient and gave a better mileage.

5) POLITICAL & LEGAL FORCES

- In the mid 1980’s the government started permitting foreign companies to enter the Indian Market through
minority joint ventures with domestic alliance partners. The restrictive government policies in the pre
liberalization era prevented foreign companies from making investment in India which was changed by the
1991 reforms, thus setting up the red carpet for Honda to make a mark in the Indian automobile sector with
Hero.
-License raj prevented and prohibited the foreign company from investing in India however FIPB
regulations enabled the Hero to join hands with Honda, thus opening up the market creating accessibility.

6) ETHICAL FORCES
- Environmentally sound technology is the ethical orientation that Hero Honda has.
- Hero Honda actually delivered what they initially promised and actually realized the slogan ‘Fill it, Shut
it, Forget’ it in reality
- This led to an increase in their market share and reputation

7) DEMOGRAPHIC FORCES
- With the Indian population growing at 2.1% every, the adult age group has the highest possibility of
buying two-wheelers (15–65-year-olds) and increased to more than 500 million by 1990 and to an
approximate 700 million by 2006.
- 5.2% increase in the per capita income over the next 10 years.
- By 2000, motorcycles were the choice of 60 per cent of India’s two-wheeled customers, up from 33 per
cent in 1996.
- Increasing rural urban migration, Urban population density and traffic congestion in metro cities.