Economic Analysis of Hero Honda

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Managerial Economics Case Study

EMP OCT 2008

Term 1

Case Report on Hero Honda

Team Members
Pavitar Singh - 41
Uttam Kotdiya - 59
Bimal Luthra - 16
Kamlakar - 33
Gaurav Yadav - 27
Janmejay Gupta - 32

Introduction to Hero Honda3
Hero Honda Mission4
Hero Honda Mandate5
Factors influencing growth5
[ Just-in-Time ]5
[ Ancillarisation ]5
[ Dealer Network ]6
[ Financial Planning ]6
[ Quality ]6
[ Diversification ]6
Competitor Analysis8
Market Overview11
Two Wheeler Market in India11
Domestic Trends13
Cost theory18
Various type of cost18
Cost analysis of Hero Honda Motors Ltd19
Cost Analysis20
Trend for Sales, cost and profit21
Initiatives for cost reduction by Hero Honda22
Economic Analysis24
Economic Reasons Behind this De-Growth:24
Higher Interest Rates25
Availability of Finance25
Hero Honda Champion in De-Growth26
Long Term Strategy27
Rural Economy27
Hero Honda’s stress on Rural Economy27
Is this really Paying27
Effective Working Capital Management28
Financial Analysis30
Sales Volume33
Growth in Sales Volume34
Net Total Income35
Profit Before Tax37
EVA with Investment40
EVA Without Investment42
SWOT Analysis43

Introduction to Hero Honda

| | |Hero Honda Motorcycle Ltd. | |[pic] | |Type |Public company BSE:HEROHONDA M | |Founded |January 19, 1984 in Gurgaon, Haryana, India | |Headquarters |[pic]Haryana, India | |Key people |[pic]Om Prakash Munjal, Founder | | |[pic]Mr. Brijmohan Lall Munjal, Chairman | | |[pic]Mr. Toshiaki Nakagawa, Joint Managing Director | | |[pic]Mr. Pawan Munjal, Managing Director | |Industry |Automotive | |Products |Motorcycles, Scooters | |Revenue |[pic]U$ 2.8 billion | |Website | |


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.

Over 20 million Hero Honda two wheelers tread Indian roads today. These are almost as many as the number of people in Finland, Ireland and Sweden put together! Hero Honda has consistently grown at double digits since inception; and today, every second motorcycle sold in the country is a Hero Honda. Every 30 seconds, someone in India buys Hero Honda's top -selling motorcycle ' Splendor. This festive season, the company sold half a million two wheelers in a single month—a feat unparalleled in global automotive...
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