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Industr

ial Visit
to
Hero
Honda
A Report

Abhishek Jain
COMPANY PROFILE

Hero Group, India and Honda Motors, Japan on 19th


January 1984 joined their hands together to create
a joint venture known as Hero Honda. Jointly they
decided to cater to the two – wheeler segment of
the Indian Automobile Industry.
Currently in the Company, Hero Group holds 26%
share, Honda Motors hold 26% share and the rest
is public issue.
Hero Honda was the first company which made it
possible to drive a two wheeler without pollution on
roads. Thus with its most popular slogan that: “Fill
it, Shut it, Forget it” is the main slogan which
created an image in the minds of the people that
Hero Honda make two wheelers which are fuel
efficient and give greater mileage. Thus Hero
Honda with this image is able to sell millions of
bikes upon this image.
Hero Honda has over 20 million bikes which are
leading in India.
Hero Honda has grown consistently since its
inception and hence its growth since inception is
more than 1000% and hence today, it is said that
every second motorcycle sold in India is a Hero
Honda one and every 30 seconds, someone in India
buys Hero Honda's Splendor which is the most
selling bike.
Hero Honda currently manufactures bikes at its
three manufacturing units. Two of these located at
Dharuhera and Gurgaon i.e. in Haryana and the
third state of the art manufacturing facility was
inaugurated at Haridwar, Uttrakhand in April, 2008.
These plants together are capable of producing out
4.4 million units per year. It is believed that every 2
seconds Hero Honda produces a bike.
Hero Honda has a huge network of sales and
service network now spans over 3000 customer
touch points. These touch points comprise of
dealerships, service stations and spare parts
stockiest and authorized representatives of dealers
which are located across different places.
Hero Honda also has a proper value system and
hence it cares for its relationship with its
customers. It has a unique CRM initiative i.e. Hero
Honda Passport Program which is one of the largest
programs of this kind in the world. The program
has not only helped Hero Honda understand its
customers and deliver value at different price
points, but has also created a loyal community of
brand ambassadors.

Objective of the Visit

The main objective of industrial visit is to know


about the management being practiced in the Hero
Honda, how the people at Hero Honda manage
their operations and how the resources are
managed. To know about the Supply system and
the how the demand is met. To know about
whether the concepts, which are being taught in
various business schools, are applied in the real
sense or not.

Interface of Academics and


Industry
Interface of Academics and Industry refers to that
point where the concepts that are taught in
management are applied in the Real business
scenario.
At Hero Honda, all the management functions are
being practised i.e. Planning, Organizing, Directing,
Staffing and Controlling. Without any of these it
would not have been possible to achieve quality
and excellence in the working of Hero Honda.

Hero Honda, practices the ‘5 S’ approach i.e.

Seiri - Put things in order


(remove what is not needed and keep what is
needed)
Seiton - Proper Arrangement
(Place things in such a way that they can be easily
reached whenever they are needed)
Seiso - Clean
(Keep things clean and polished; no trash or dirt in
the workplace)
Seiketsu - Purity
(Maintain cleanliness after cleaning - perpetual
cleaning)
Shitsuke - Commitment (Actually this is not a part
of '4S', but a typical teaching and attitude towards
any undertaking to inspire pride and adherence to
standards established for the four components).
Hence, We got to see whole lot of Management
Concepts being practised in practical functioning of
the Organization.

Information
1.Procurement of Raw Material
Raw material is procured from various vendors
which are 117 in number. These vendors provide
them all the necessary components starting from a
nut or bolt to large parts as well. The companies
which provide them with the various parts are
LUCAS-TVS, MRF, LUMAX, etc.
2.Warehousing
Warehousing is done for bikes, i.e. there is a
capacity for keeping more 6000 bikes in total, on
its 3 floors.
3.Inventory of Raw Material
The Inventory holding period has been reducing
subsequently by the time. The Inventory holding
period is 5 days. Earlier it was 20 – 25 days. This is
just because of the Just-in-time concept that is
being used these days, i.e. the organizations do not
want to keep their money blocked in maintaining
inventory which is unnecessary.

4.Time Lead and Lag


Hero Honda being the Assembling unit, thus
everything needs to be fitted on time i.e. there is
not time lag between two processes. Say there is
very less time lag between fitting engine onto the
chassis and the headlamps which are to be
installed over the chassis.
Lead time is also not there because all the
processes are assembly based and needs to be
done one after another. It can only be said that by
the time engine gets assembled in separate
division the fuel tanks and mud guards are painted
in the paint shop. Thus Lead time, also, is very little
or negligible.

5.Production Operation and Management


About the Production Process, Hero Honda does not
manufacture the parts of the bike on its own. It has
a complete list of 117 vendors from which it
gathers the parts. It only manufactures Fuel Tanks
for its bikes, Do the Paint job, Prepare the Chassis
according to the technical specifications and finally
it assembles all the parts to the chassis which
leads to production of a new bike.
Firstly, the metal sheet is taken from which the fuel
tank is casted in two parts, these two parts after
casting are joined together and then properly
sealed. Then, these Fuel Tanks are sent to the
checking zone where the test such as leakage
checking and all are done so as to check problem,
if any.
These fuels tanks are then sent to the painting
zone, where they get spray painted in 10-step
process and then the fuel tanks are cured through
heating so that its paint gets permanent and finally
the graphics are put over it.
Now on the other side, the engines were being
assembled, i.e. all the parts, like carburetor, air
filter, spark plugs, etc. are fitted into the engine
and then the finished engines are sent to the
assembly line.
The Assembly line consists of a basket of parts
which contains all the parts of the bike, and this
basket continuously moves along with the main
conveyor belt. This main conveyor belt holds the
chassis of the motorcycle into which all parts are
fitted into. The Engine, Tires, Fuel tanks, etc. all are
placed into that basket containing all the parts.
This Basket directly comes from the inventory
house, from where all the parts are loaded into the
basket.
Now, when all the parts are fitted into the chassis,
the final motorcycle is prepared and is sent for
further testing and analysis.

6.Distribution System
Hero Honda has established 4 zonal offices in India
at 4 different regions i.e. in North – Delhi, South –
Bangalore, East – Kolkata, and West – Pune.
These Zonal offices act as intermediary between
the Authorized Centers and the Hero Honda
Company, they gather demands from various
centers and send them to Hero Honda to which it
acts and supplies the bikes. Every Zonal Office is in
networking with every authorized centre in its area.
Hero Honda, in total has 771 Dealers, 693 Spare
Suppliers, 1440 Authorized Service Centers and 28
Stockists in India.

7.Units and Areas Supported


Hero Honda, caters to the demands of mainly India,
rest it also exports to Sri Lanka, Columbia and
Bangladesh.

8.Waste Recycling
The basic waste is the toxic waste i.e. from the
Paint Shop, the water released is mixed with paint
and that water is recycled and paint is extracted
out of it, which is further used, and the remaining
water is used for gardening purpose.
Other waste is the cut – outs that are left after
casting of fuel tanks, these cut outs are further
sent to the sheet vendor, and the scrap cost of it is
discounted from the sheet making cost.

9.Pricing
Pricing of the bike is done through all the costs
associated, i.e. operational costs, selling and
distribution costs, etc. Then the profit margin is
also added to the price of the bikes, and then the
transportation costs are added so that it becomes
what we get as the ex – showroom price. This price
differs from place to place because there are
different transportation costs directly associated
with it.

Observation and Analysis


Hero Honda has its value system properly
established and due to this it is able to maintain its
image in the mind of people. People working at
Hero Honda are very dedicated towards their work
and they feel Hero Honda as their home and
organizational goals as personal ones. The people
at Hero Honda are adequately remunerated,
besides all this Hero Honda provides whole lot of
recreational and other facilities to its people, and
hence they are very happy working there.
Now, for the analysis, there is S.W.O.T analysis:
For, the Strengths, Hero Honda holds 42% of the
two – wheeler market share of India and 56% of the
total motorcycle market in India.
It has a dedicated work force which is ready to
work 24 x 7 scales and is very efficient.
Reputation of the Hero Honda brand is its main
strength i.e. the impression in the minds of its
customers. It has been continuously winning
awards for the past 8 years.
Also, its main product i.e. splendor is a big hit in
the market and is the major strength of the
company.
Just due to its image, in this liquidity crunch time
also its share price has increased i.e. from Rs. 752
in July 2008, to Rs. 805 per share in Dec 2008.
For Weaknesses, It takes a lot of time to introduce
new products, because any new innovation
requires 18 – 24 months to be approved from
Honda Motors Japan, which is a major disadvantage
in this competitive world.
Very less Exports, i.e. not much of its production is
exported which is a major weakness of it. It is just
because of the terms written in the agreement of
joint venture between Hero Group and Honda
Motors.
For Opportunities,
Hero Honda is trying to cover 5 lakhs villages and
has already surveyed half of them, and has
planned to sell one bike in each village as a target,
and hence it is a great opportunity for them, as
more than 60% of the population lives in villages.
They can also manufacture sporty bikes, which all
youngsters demand.
For threats,
It has a major competitor Bajaj, which is just
standing next to it, Bajaj also manufactures low
cost, fuel efficient bikes which is like cut throat
competition for Hero Honda.
One of the bikes produced by Bajaj, i.e. Pulsar is
also major threat since, its stylish and is fuel
efficient. But Hero Honda also has an answer to it,
i.e. Hero Honda Hunk.
Conclusions and Suggestions
Visit to Hero Honda was an amazing visit where the
management functions were being practised and it
was a great experience going there.
We can conclude that since Hero Honda has a good
image attached to it, thus it should try and
maintain its image, because in today`s time the
people and more brand conscious and look for
value for their money and hence with such a great
brand name established for them, it is a real
advantage to them and with this they can reach to
new heights.

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