Hero MotoCorp

PROJECT REPORT

Prepared by:
Lakshay Arora - 1911308
Santosh Kumar - 1911351
Divyanshi Rao - 1911363
Sangeeth Asokan - 1911309
Prachi Jayaswal - 1911338
Amrit S - 1911365
 TABLE OF CONTENTS

S.No. PARTICULARS PAGE

NO.
1 Objective 2
2 Methodology 2
3 Topics Covered 2
4 Company Background 3
5 Growth Phases 4
5.1 Phase Zero 4
5.2 Phase First 6
5.3 Phase Second 7
5.4 Phase Three 10
6 Culture and Social initiatives 12
7 Phase Four - The Future 14
8 Depth Interview 15
9 References 16

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1. Objective

The following objectives were taken up for this project –

1. To study the evolution of the organization structure

2. To understand the triggers and requirement of changes in the organization
3. To predict the future growth opportunities that exist for the organization

2. Methodology

The purpose of this project was to study the evolution of the organization structure of Hero
MotoCorp. The utmost care was taken to collect data from appropriate and authentic sources.
Our primary source of data is telephonic interviews (Transcript attached at the end) with Mr.
Devendra Prasad, DGM (Operations), Hero MotoCorp and Mr. Navjyot Shanker, Deputy
Manager (Hero Innovation Cell), Hero MotoCorp. They provided us a holistic view of the
culture and internal processes that have been adopted by the company and how it has evolved.

We have collected information from various secondary sources. News articles available on the
internet served as triggers and helped us to trace back initial organization designs of Hero
MotoCorp. Timeline available on Hero’s website further bolstered our understanding of trigger
points. Press releases by Hero MotoCorp were used to get information about CSR activities
undertaken. We have speculates the future plans using Hero MotoCorp’s Annual Report and
the Auto Summits conducted in recent years.

3. Topics Covered

(1) Evolutionary Period

(2) Global expansion through international strategic alliances

(3) Organizational conflict

(4) Organization decision making

(5) Assign loyal people to key positions

(6) Organization innovation, technology change

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 (7) Stages of International Development

(8) Creation of new department

(9) Role of information technology

(10) Environmental Uncertainty

(11) Innovation

(12) Ethics and Sustainability

(13) The Digital Workplace

(14) Strategic apex/management

(15) Adding positions

(16) Resource Dependence

(17) Underlying values and beliefs

4. Company Background

Hero MotoCorp Ltd. is the global leader in two-wheeler market. It commands a market share
of 46% among Indian two-wheelers. The product range includes motorcycles and scooters. The
Hero group started as a bicycle manufacturing company in Ludhiana, a town in Punjab, in the
year 1956. With the growth of the Indian economy in the subsequent decades, Honda, the
Japanese giant collaborated with Hero in 1983 to manufacture two-wheelers for the Indian
market.

Vision
“A mobile and an empowered India, powered by our two-wheelers.”
Hero MotoCorp Ltd. represents its dedication to deliver world-class mobility solutions with a
renewed focus on extending the company's global footprint.

Mission
“To 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. 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.”

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Here, we are analysing the growth of Hero MotoCorp as an organization by breaking up it into
five phases, starting from their partnership with Honda to the expected future developments in
the organization.

5. Growth Phases
5.1 Phase Zero- Joint Venture (Hero- Honda Ltd)

Hero MotoCorp started operating as just a joint venture with Honda Motors, Japan. It was
established as Hero Honda Motors in 1984. With the increasing demand for motorcycles and
the shift from 2 stroke to 4 stroke engines, Hero started to rise in dominance in the 2-wheeler
market(1). It produced motorcycles at an increasing rate and finished the 100000 mark. Their
venture proved to be one of the most successful ones and tapped the majority of the Indian
market.

Figure 1: Hero MotoCorp’s Ride To Leadership

Figure 2: Functional Distribution of Hero Honda

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End of Joint Venture - Hero Honda MotoCorp Limited --- Drawback of Phase Zero
In 2010, Hero leadership team decided to end the contract with Honda Motors. This was
attributed to the internal conflicts(3). Hero finally decided to buy the shares of Honda in the
company.

Why Joint Ventures Fail? - The Hero-Honda Case

Joint Ventures can fail to deliver the desired expectations of customers and shareholders,
primarily due to misalignment in venture strategy.

Goal Incompatibility

Barriers of Expansion

Decision Making Power/Autonomy

Technological Constraints

Figure 3: Reasons for failure of Joint Venture - Hero Honda

(i) Goal Incompatibility (3) – Honda started off with its separate 2-wheeler division in
India called HMSI (Honda Motorcycle and Scooter India). Honda group made
it fairly clear entering the Indian 2-wheeler market as a separate entity. This meant
a direct competition between Hero Honda and HMSI.
(ii) Barriers of Expansion – Under Hero Honda venture, the company was not allowed
to export its products the other countries. This acted as a constraint for the company
to lose potential market and growth.
(iii) Decision Making Power/ Autonomy (4) – All the major business and strategic
decisions were taken by the Honda Team. The representatives of Hero in the Board
of Directors had little to no say in board meetings. With reduced autonomy, their
relationship with Honda was strained even further.
(iv) Technological Constraints (6) – Hero MotoCorp had limited access to resources,
primarily in automotive technology. Honda had confidentiality agreements with

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 Hero for the technology it shared. The company lacked a separate Research &
Development facility in India, and everything was controlled from Honda, Japan.

Finally, in 2011, the joint venture came to a halt with Hero buying out Honda’s shares in the
joint venture, forming the new entity, Hero MotoCorp Ltd. (4)

5.2 Phase One (2011-13) : Early Evolution

After the breakup, Hero still had to depend upon Honda for the technology and had to pay
royalty amount to Honda for using the models before 2011. This created a need for the
development of a strong R&D unit. The breakup also allowed the organization to kickstart its
plans to go global.
The organization underwent many changes in the period, which is summarized below:

Global Organization Design (7):

a. New Plants/ Local Expansion
After their split with Honda, Hero MotoCorp took many initiatives in line with a global
expansion plan. They started out with Domestic Expansion. Investment into existing plants
at Dharuhera, Gurgaon and Haridwar and initial investment towards building a new plant at
Gujarat was to help increase their production capacity for the Indian market.
b. Exports to International markets (2)
Added to investment towards domestic demand, they also targeted International Expansion in
the Asian subcontinent. The products were not necessarily modified for the countries but
aggressive sales campaigns, contests and exchange melas were conducted in Sri Lanka,
Bangladesh and Nepal to drive sales.

Creation of R&D Department (8)

After the split, an R&D department had to be created. Tie ups with international firms like
AVL, Erik Buell Racing and Engines Engineering were instrumental in setting up a strong base
for R&D. It also helped Hero create a presence in superbike racing, adding a sporty look to the
company.

Changes in IT infrastructure (9)

Other than marginal improvements in existing IT infrastructure, the company took multiple
initiatives to stay relevant with changing technology. Hero introduced its apps in the mobile

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platform(iOS and Android) and previously manually operated functions of performance
management and learning systems were automated.

Workplace Technology and Design

A new department called ‘Achieving Cost Excellence’ (ACE) was created to optimize cost
performance. Also, a Global Parts Centre was set up at Rajasthan ensuring Lean processes.
Conforming to Standards: (10)
Hero MotoCorp started mandatory changes to comply with the International Financial
Reporting Standards (IFRS).

Figure 4 : Organizational Structure at the start of Phase One

5.3 Phase Two (2013-15) : Phase of Changes and Rapid Growth

After having established itself as a strong brand and proving wrong the critics who predicted
failure of the standalone entity, Hero entered its second phase of growth, which promised a lot
of changes within the organization and rapid growth in the process. The changes in the period
is summarised below:

Global Strategy (2)

In 2013, the Indian motorcycle giant unveiled its plans to go global, with the CEO announcing
the plan to enter 50+ countries, with 20+ manufacturing facilities across the globe by
2020. The company which was limited predominantly to the Indian Subcontinent decided to

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venture into the African Continent by launching bikes in Kenya. It further planned to enter
more emerging markets in Africa, Central and Latin America. The company targeted an overall
annual turnaround of ₹60,000 crore through its global expansion plans by 2020.

Figure 5 : Stages of global expansion-Hero MotoCorp

Stepping Towards Global Expansion -

1.Expansion through Acquisition (16)
Hero MotoCorp Ltd, in its first steps of globalization, acquired 49.2% stakes in Erik Buell
Racing, a US based firm for around Rs. 148 crores. However, this first equity investment out
of the home country was not successful and had to be sold out in 2015.

2. Expansion Through Alliance(16)

In December 2013, Hero and Magnetic Marelli came together as a joint venture to the produce
high quality powertrain systems for the two-wheeler market with the main to provide a series
of high-tech solutions for powertrain control of two and three-wheel vehicles. This by taking
advantage of the additional value brought by electronics could raise the degree of innovation
of the arrangements’ accessibility.

3. Expanding the Manufacturing and Export Capacity

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In 2015, Hero planned to develop its Halol plant in Gujarat into an export hub in an attempt
to go international. The company planned to sell 1.2 million units a year by 2020 with most of
the export requirements to be met from the Halol plant.

Figure 6 : Hero MotoCorp - Global Footprint

Changes and Augmentations in Leadership (10)

This crucial phase in the growth of the organization saw many changes in personnel as well as
the creation of new verticals to favor growth and adapt to the changing environment.
In a significant leadership augmentation in 2013, Mr. Rajat Bhargava was appointed as Head
of Strategy & Performance Transformation and Mr. Markus Feichtner as the Head of Engine
Design & Development, a newly created division (15).
Mr. Pawan Munjal, who was then the Managing Director & Chief Executive Officer, was
elevated as the Vice Chairman of the company, a newly created position, giving him more
power and authority in the proceedings of the company (14).
Hero had initiated the development of its own R&D unit after its split, and the appointment of
Dr.Marcus Braunsperger as the Chief Technology Officer in October 2014 was a crucial step
in establishing a fully functional R&D unit (11),(15).
In 2014, Hero invested ₹1,050 crore on manufacturing world-class production unit & Global
Parts Centre (GPC) based on Green Concept to promote sustainable growth (12). With the intent
of expansion in next epoch of globalization, Hero MotoCorp, further augmented the leadership
team by appointing Mr. Ashok Bhasin as the Head of Sales, Marketing & Customer Care
function for the Indian market(6).

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 Figure 7: Organizational Structure at the end of Phase Two

5.4 Phase Three (2016-18) : Onus on Innovation and Sustainable Growth(11)(12)

By the end of phase two, Hero had penetrated more markets, inching closer towards its vison
of being a global leader in the two-wheeler industry, and as a result, focussed more on important
tweaks in the system to enable this transition. It was also a period where Hero consolidated its
position in the Indian market and brought in some changes in reaction to the environmental
changes and other factors. The most important feature was that the organization shifted its
focus towards innovation and sustainable growth.

The major changes that happened in phase three are:

Changes in Leadership (16)
In June 2016, Hero MotoCorp appointed Malo Le Masson, who was formerly Global Head of
Product Long Term Strategy Infiniti Motor Company - Hong Kong, as Head of ‘Global Product
Planning’.
In October 2016, Hero MotoCorp further strengthened its senior leadership team with
Ms. Neerja Sharma being appointed as the Company Secretary and Chief Compliance
Officer.
Innovation and Sustainable Growth (12)
Hero Innovation Cell - Hero started its incubator called as Hero Innovation Cell which sponsors
start-up ideas related to consumer service areas and offering better purchase options.

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Emerging Mobility Center –With the advent of increasing inclination towards the environment-
friendly mobility options, a strategic team has been set up to explore areas of future mobility
solutions.

Merchandise & Biking gears - A step towards diversification of product portfolio and creating
aspirational value targeted towards the youth segment, a separate merchandise unit has been
established.

New R& D in Germany – To increase the footprint in premium segment bike and bring about
higher displacement engine offerings, Hero has recently developed a new R&D Center in
Germany (11).

Investment in Electric Vehicle – Ather Energy: Hero bought 35% stake in electric scooter
startup in Ather Energy Pvt. Ltd., marking its commitment towards sustainable energy
development in the country (12).

Hero inaugurated the Global Centre of Innovation and Technology which is based on the
idea of “Innovate in India”, is an augmentation of Hero’s commitment to build sustainable
mobility solutions for the world by bringing together automobile experts from different nations
(12).

Figure 8: Present Organizational Structure of Hero MotoCorp

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6. Hero MotoCorp – Culture & Social Initiatives

Organizational culture encompasses the underlying beliefs and values that contribute to the
unique social environment of an organization and guides the behaviour of its members.

Hero Core Values (17) -The company has laid the foundation of its employee unity through
five core values. These are represented below:

Figure 9: Hero MotoCorp Core Values

Hero MotoCorp – Work Environment

Hero MotoCorp follows an interesting idea of ‘Manufacturing Happiness’, where man and
machine exist in harmony within the manufacturing unit. This manufacturing happiness theme
resonates with the plant design and work culture, which provides an ecosystem for employees
to work together towards as a family.

The company slogan which says, “We are the Heroes” further binds the employees to be the
harbingers of change.

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Hero MotoCorp – Employee Feedback on Workplace

Hero MotoCorp has received the Great Place to Work award. Under this mission, every section
head/manager had to undergo workshops to improve communication and build better work
environment to promote teamwork. The transformation of the work atmosphere has been
evident through the feedback received on various workplace review platforms like Glassdoor
and Ambition Box (ref below)

Figure 10: Employee Feedback of Hero MotoCorp

Hero MotoCorp – Social Initiatives

Hero Motocorp has initiated multiple social programs & campaigns for different segments of
the Indian populations. They have touched more than 330000 lives coming from the marginal
sections of the society, be it underprivileged, the women, the children, the army, rural or
urban people.

Different programs which have been initiated and are running successfully are as below:

o Empower women cops – Project Sakhi

o Two-wheeler riding training – Project Ek Pahal
o Employability & livelihoods – Project Jeevika
o Educate to Empower – Project E square

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7. Phase Four, 202X-The Future
The following section highlights some of the major challenges that the companies today are
facing. In order to retain the leadership spot, the companies try to adapt to these changes.
1. Favorable macroeconomic and demographic trends - Rising incomes are set to
play an important role, as more than 60 million households are expected to enter the
consuming class by 2025 in India alone. At the same time, it is estimated that a lot
more people will enter the job market, resulting in increased demand for mobility.
2. Technological Shift - With the increasing bent towards electrification of vehicles
and connected cars, several organizations today face the challenge to either develop
in-house technological departments or to embrace an operational model that
involving non-traditional associates as the automotive and hi-tech worlds merge.

Future Opportunities for Hero MotoCorp

1. The Change Within - Capturing humongous potential of the expansion opportunities is
conditional—auto manufacturers would need to cater to the increasing demand globally
2. Strategize to Win—Create a significant and deliberate shift in their attitude towards people,
product, channel, resources, etc.
3. Revamp leadership and talent—acquire emerging skills, build local teams, and map talent to
value.
4. Reset culture and mindset—from a traditional manufacturing company to develop a work
culture which involves highly involved partnership with upcoming startups
5. Achieve operational excellence—across the supply chain, quality, cost, delivery, and service
(QCDS), pricing and costing, data infrastructure.

India’s two-wheeler industry is in a significant phase as opportunities initially threatened by

the potential disruptions can now change the market game for competitive players who are
willing to venture into new possibilities and better engage with digitally acclaimed consumers
(13).

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8. Depth Interview - Transcript
Interviewee – Mr. Devendra Prasad
Deputy General Manager, Operations, Hero MotoCorp Ltd
Date - 22/07/2019

Interviewer: How long have you been working at Hero MotoCorp?

Interviewee: I joined Hero in 1998. So, I guess that would make it around 20 odd years

Interviewer: What made you stay in the same organization for 20+ years?

Interviewee: I liked how my work has progressed over the years, how my responsibilities
have changed and the rapid growth in the organization, especially the past decade made it
very interesting. I’ve been offered roles in other companies, but since I was comfortable with
my team, colleagues and the culture here, I decided to stay.

Interviewer: Being in this organization for a long time I guess you would’ve witnessed the
split of Hero and Honda first hand. How did it affect the organization as well as you
personally?

Interviewee: Yes, that was definitely a big change. The split was amicable but inevitable.
Honda was operating as a separate entity and there was a conflict of interest. We could not
continue to function under the restrictions on our expansion into domestic and especially
foreign markets and lack of decision-making power. So, we had to split. Initially there were a
lot of changes like introduction of new departments, forming partnerships, etc and then
gradually we eased into the work.

Interviewer: How do you think Hero is keeping up with changing technology?

Interviewee: We are investing significantly in emerging technology. Electric vehicles seem to

be the future and we have invested into Ather, who are rapidly innovating in electric two
wheelers. Recent plants are state of the art and Industry 4.0 ready. Our R&D team also
constantly strives to better the competition.

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9. References
[1]Bhattacharya, Roudra. “Hero MotoCorp Ties up with Italian Firm for
Design.” @Businessline, The Hindu BusinessLine, 12 Mar. 2018,
https://www.thehindubusinessline.com/companies/hero-motocorp-ties-up-with-italian-
firm-for-design/article20501989.ece1
[2][Bhattacharya, Roudra. “Hero MotoCorp Invests $20 m in Erik Buell of US for
R&D.” @Businessline, The Hindu BusinessLine, 12 Mar. 2018,
https://www.thehindubusinessline.com/companies/hero-motocorp-invests-20-m-in-erik-
buell-of-us-for-rampd/article20478365.ece1.
[3] https://www.heromotocorp.com/sp-co/new-notewothy/AnnualReport2011_12.pdf
[4] “Hero MotoCorp in Sri Lanka Two Wheeler Market: Mahindra Bike Exports to Island
Nation Will Begin by 2012 End.” RushLane, 28 Dec. 2016,
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bike-exports-to-island-nation-will-begin-by-2012-end-1244476.html.
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[6] Bhattacharya, Roudra. “Hero MotoCorp to Invest Rs 1,200 Cr in Gujarat
Plant.” @Businessline, The Hindu BusinessLine, 12 Mar.
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powertrain systems for two-wheelers. (n.d.). Retrieved from

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https://www.magnetimarelli.com/press_room/news/magneti-marelli-and-hero-motocorp-
sign-joint-venture-india-sector-powertrain-systems
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60000-crore-turnover-by-2020/articleshow/21706335.cms?from=mdr
[12] ET Bureau. (2016, June 02). Malo Le Masson to head Hero MotoCorp's global product
planning. Retrieved from https://economictimes.indiatimes.com/industry/malo-le-masson-
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[14] “Press Releases - Hero MotoCorp Ltd.” HERO MOTOCORP AUGMENTS ITS
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[15] Press Trust of India. “Hero MotoCorp Appoints Ex-BMW Markus Braunsperger as
CTO.” Business Standard, Business-Standard, 13 Oct. 2014, https://www.business-
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as-cto-114101300873_1.html.
[16] “Press Releases - Hero MotoCorp Ltd.” HERO MOTOCORP SHOWCASES IN
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OF INNOVATION AND TECHNOLOGY CIT, www.heromotocorp.com/en-in/press-
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[17] “Press Releases - Hero MotoCorp Ltd.” HERO MOTOCORP FURTHER
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[18] “Press Releases - Hero MotoCorp Ltd.” HERO MOTOCORP BOARD
REAPPOINTS PAWAN MUNJAL AS CHAIRMAN MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER, www.heromotocorp.com/en-in/press-releases/hero-
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executive-officer-281.html.
[19] “Media Release.” Hero MotorCorp, 3 Mar. 2018, www.heromotocorp.com/en-
in/uploads/media/pressrelease_pdf/20180324062755-pdf-225.pdf

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[20]Saran, Rohit. “Riding on a Motorcycle Boom, Hero Honda Becomes India's Largest
Two-Wheeler Maker.” India Today, 9 Oct. 2012,
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