PROJECT REPORT

TO STUDY STRATEGIC ALLIANCES OF HERO & HONDA COMPANY

A PROJECT REPORT SUBMITTED TO UNIVERSITY OF MUMBAI IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR M.COM SEMESTER 2IN SUBJECT OF STRATEGIC MANAGEMENT

BY

NAME OF THE STUDENT: GAURAV BHAURAM JADHAV

ROLL NO: 14-7280

COLLEGE NAME: K.V.PENDHARKAR COLLEGE

BATCH : 2014-2015

DECLARATION BY STUDENT

I GAURAV BHAURAM JADHAV, ROLL NO.14-7280, The student of M.Com (Accountancy) Semester1(2014),K.V.PNDHARKAR COLLEGE,Affiliated to University of Mumbai, hereby declare that the project for the Subject of STRATEGIC MANAGEMENT TO STUDY STRATEGIC ALLIANCES OF HERO AND HONDA COMPANYSubmitted by me to University of Mumbai, for Semester II examination is based on actual work carried by me.

I further state that this work is original and not submitted anywhere else for any examination.

Place : Dombivli Signature Of The Student Date : Roll No : 14-7280 Name : Gaurav B Jadhav

ACKNOWLEDEMENT

AT BEGINNING I WOULD LIKE TO THANK GOD FOR HIS BLESSING. I AM VERY MUCH THANKFUL TO MY TEACHER DR. RAJESHRI DESHPANDE AND MY PRINCIPAL FOR THEIR GUIDANCE, SUPPORT & ENCOURAGEMENT.I ALSO LIKE TO THANK MY FAMILY MEMBERS AND FRIENDS FOR THEIR CO-OPERATION & HELP AND ALSO WOULD EXPRESS MY GRAITUDE TO ALL THOSE WHO HELPED ME DIRECTLY OR INDIRECTLY TO COMPLETE MY PROJECT.I ALSO TAKE THE OPPORTUNITY TO SHOW MY SINCERE GRATITUDE TO MY PARENTS.

Gaurav B. Jadhav

INDEX Sr. No.TitlePage No.

1Objectives Of the study

2Research Methodology

3Scope & Limitations

4Introduction & Meaning of Strategic Alliances

5Importance of Strategic Alliances

6Types of Strategic Alliances

7Advantages of Strategic Alliances

8 Disadvantages of Strategic Alliances

9Company Profile

10Data Analysis

11Findings

12Conclusion

OBJECTIVES OF THE STUDY

The objectives of our project is - To study the Strategic Alliances of Hero & Honda Company. To study the importance of Strategic Alliances in corporate sector. To find out its advantages & disadvantages. To study the awareness of company and its product among the consumers. To know about the status of the competitors. To analyze the financial performance of the company.

RESEARCH METHODOLOGY

The study is an exercise involving estimation of parameters as regard to organizational requirements- research was designed so as to get relevant information that can be used for various organizational purposes.

Data sourcesPrimary dataSecondary data

Primary Data is the first hand information collected from respondents with the help of questioner, schedules and interviews. In this project a structured questioner is prepared and data of thirty respondents is collected, tabulated and analyzed on percentage basis.

Secondary Data is an information collected through published data, various reference books, journals, magazines, bullient, week lings, papers, articles and internet are referred.

SCOPE AND LIMITATIONS

Data is collected on questionnaire basis.

The questionnaire includes a set of 10 questions.

Data collected is limited to only Thirty respondents.

The information provided by respondents proved to be sufficient to analyze the accuracy of study.

Introduction & Meaning of Strategic Alliances

AStrategic Allianceis an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. This form of cooperation lies betweenmergers and acquisitionsand organic growth. Partners may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance is acooperationor collaborationwhich aims for asynergywhere each partner hopes that the benefits from the alliance will be greater than those from individual efforts. The alliance often involvestechnology transfer(access to knowledge and expertise),economic specialization,shared expenses and shared risk. There are several ways of defining a strategic alliance. Some of the definitions emphasize the fact that the partners do not create a new legal entity, i.e. a new company. This excludes legal formations like Joint ventures from the field of Strategic Alliances. Others see Joint Ventures as possible manifestations of Strategic Alliances. Some definitions are given here: A strategic alliance is an agreement between two or more players to share resources or knowledge, to be beneficial to all parties involved. It is a way to supplement internal assets, capabilities and activities, with access to needed resources or processes from outside players such as suppliers, customers, competitors, companies in different industries, brand owners, universities, institutes or divisions of government. A strategic alliance is an organizational and legal construct wherein partners are willing-in fact, motivated-to act in concert and share core competencies. To a greater or lesser degree, most alliances result in the virtual integration of the parties through partial equity ownership, through contracts that define rights, roles and responsibilities over a span of time or through the purchase of non-controlling equity interests. Many result eventually in integration through acquisition. Agreement for cooperation among two or more independent firms to work together toward common objectives. Unlike in a joint venture, firms in a strategic alliance do not form a new entity to further their aims but collaborate while remaining apart and distinct.

Importance of Strategic Alliances

Strategic Alliances have developed from an option to a necessity in many markets and industries. Variation in markets and requirements leads to an increasing use of Strategic Alliances. It is of essential importance to integrate Strategic Alliance management into the overall corporate strategy to advance products and services, enter new markets and leverage technology and Research & Development. Nowadays, global companies have many alliances on inland markets as well as global partnerships, sometimes even with competitors, which leads to challenges such as keeping up competition or protecting own interests while managing the Alliance. So nowadays managing an alliance focuses on leveraging the differences to create value for the customer, dealing with internal challenges, managing daily competition of the alliance with competitors and Risk Management which has become a company-wide concern. Statistics show that the percentage of revenues for the top 1000 U.S. public corporations generated by Strategic Alliances increased from 3-6% in the 1990s up to 40% in the year 2010, which shows the fast changing necessity to align in partnerships. The number of equity-based alliances has dramatically increased in the last couple of years, whereas the number of acquisitions has decreased by 65% since the year 2000. For a statistically examination over 3000 announced alliances in the USA have been reviewed in the years 1997 to 1997 and results showed that only 25% of these alliances were equity based. In the years 2000 until 2002 this percentage increased up to 62% equity-based alliances among 2500 newly formed alliances.Types of Strategic Alliances

Some types of strategic alliances include: Horizontal strategic alliances, which are formed by firms that are active in the same business area. That means that the partners in the alliance used to be competitors and work together In order to improve their position in the market and improve market power compared to other competitors. Research &Development collaborations of enterprises in high-tech markets are typical Horizontal Alliances. Vertical strategic alliances, which describe the collaboration between a company and its upstream and downstream partners in the Supply Chain, that means a partnership between a company its suppliers and distributors. Vertical Alliances aim at intensifying and improving these relationships and to enlarge the companys network to be able to offer lower prices. Especially suppliers get involved in product design and distribution decisions. An example would be the close relation between car manufacturers and their suppliers. Intersectional alliances are partnerships where the involved firms are neither connected by a vertical chain, nor work in the same business area, which means that they normally would not get in touch with each other and have totally different markets and know-how. Joint ventures, in which two or more companies decide to form a new company. This new company is then a separate legal entity. The forming companies invest equity and resources in general, like know-how. These new firms can be formed for a finite time, like for a certain project or for a lasting long-term business relationship, while control, revenues and risks are shared according to their capital contribution. Equity alliances, which are formed when one company acquires equity stake of another company and vice versa. These shareholdings make the company stakeholders and shareholders of each other. The acquired share of a company is a minor equity share, so that decision power remains at the respective companies. This is also called cross-shareholding and leads to complex network structures, especially when several companies are involved. Companies which are connected this way share profits and common goals, which leads to the fact that the will to competition between these firms is reduced. In addition this makes takeovers by other companies more difficult. Non-equity strategic alliances, which cover a wide field of possible cooperation between companies. This can range from close relations between customer and supplier, to outsourcing of certain corporate tasks or licensing, to vast networks in R&D. This cooperation can either be an informal alliance which is not contractually designated, which appears mostly among smaller enterprises, or the alliance can be set by a contract.

Advantages of Strategic Alliances

For companies there are many reasons to enter a Strategic Alliance: Shared risk: The partnerships allow the involved companies to offset their market exposure. Strategic Alliances probably work best if the companies portfolio complement each other, but do not directly compete. Shared knowledge: Sharing skills (distribution, marketing, management), brands, market knowledge, technical know-how and assets leads to synergistic effects, which result in pool of resources which is more valuable than the separated single resources in the particular company. Opportunities for growth: Using the partners distribution networks in combination with taking advantage of a good brand image can help a company to grow faster than it would on its own. The organic growth of a company might often not be sufficient enough to satisfy the strategic requirements of a company, that means that a firm often cannot grow and extend itself fast enough without expertise and support from partners Speed to market: Speed to market is an essential success factor In nowadays competitive markets and the right partner can help to distinctly improve this. Complexity: As complexity increases, it is more and more difficult to manage all requirements and challenges a company has to face, so pooling of expertise and knowledge can help to best serve customers. Costs: Partnerships can help to lower costs, especially in non-profit areas like Research & Development. Access to resources: Partners in a Strategic Alliance can help each other by giving access to resources, (personnel, finances, technology) which enable the partner to produce its products in a higher quality or more cost efficient way. Access to target markets: Sometimes, collaboration with a local partner is the only way to enter a specific market. Especially developing countries want to avoid that their resources are exploited, which makes it hard for foreign companies to enter these markets alone. Economies of Scale: When companies pool their resources and enable each other to access manufacturing capabilities, economies of scale can be achieved. Cooperating with appropriate strategies also allows smaller enterprises to work together and to compete against large competitors.

Disadvantages of Strategic Alliances

Sharing: In a Strategic Alliance the partners must share resources and profits and often skills and know-how. This can be critical if business secrets are included in this knowledge. Agreements can protect these secrets but the partner might not be willing to stick to such an agreement. Creating a Competitor: The partner in a Strategic Alliance might become a competitor one day, if it profited enough from the alliance and grew enough to end the partnership and then is able to operate on its own in the same market segment. Opportunity Costs: Focusing and committing is necessary to run a Strategic Alliance successfully but might discourage from taking other opportunities, which might be beneficial as well. Uneven Alliances: When the decision powers are distributed very uneven, the weaker partner might be forced to act according to the will of the more powerful partners even if it is actually not willing to do so. Foreign confiscation: If a company is engaged in a foreign country, there is the risk that the government of this country might try to seize this local business so that the domestic company can have all the market on its own. Risk of losing control over proprietary information, especially regarding complex transactions requiring extensive coordination and intensive information sharing. Coordination difficulties due to informal cooperation settings and highly costly dispute resolution.

Company Profile

Hero Motocorp Ltd., formerly Hero Honda, is an Indian motorcycle and scooter manufacturer based in New Delhi, India. The company is the largest two wheeler manufacturer in the world. In India, it has a market share of about 46% share in 2-wheeler category. The 2006 Forbes 200 Most Respected companies list has Hero Honda Motors ranked at #108. On 31 March 2013, the market capitalisation of the company was INR 308 billion (USD 5.66 billion). Hero Honda started in 1984 as a joint venture between Hero Cycles of India and Honda of Japan. In 2010, when Honda decided to move out of the joint venture, Hero Group bought the shares held by Honda. Subsequently, in August 2011 the company was renamed Hero MotoCorp with a new corporate identity. In June 2012, Hero Motocorp approved a proposal to merge the investment arm of its parent Hero Investment Pvt. Ltd. into the automaker. The decision comes after 18 months of its split from Honda Motors.

History "Hero" is the brand name used by the Munjal brothers for their flagship company, Hero Cycles Ltd. The two-wheeler manufacturing business of bicycle components had originally started in the 1940s and turned into the worlds largest bicycle manufacturer today. Hero, is a name synonymous with two-wheelers in India today. The Munjals roll their own steel, make free wheel bicycle critical components and have diversified into different ventures like product design. The Hero Group philosophy is: To provide excellent transportation to the common man at easily affordable prices and to provide total satisfaction in all its spheres of activity. The Hero group vision is to build long lasting relationships with everyone (customers, workers, dealers and vendors). The Hero Group has a passion for setting higher standards and Engineering Satisfaction is the prime motivation, way of life and work culture of the Group. A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera, India. Munjal family and Honda group both owned 26% stake in the Company. During the 1980s, the company introduced motorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it Shut it Forget it' that emphasized the motorcycle's fuel efficiency helped the company grow at a double-digit pace since inception. In 2001, the company became the largest two-wheeler manufacturing company in India and globally. It maintains global industry leadership till date. The technology in the bikes of Hero Motocorp (earlier Hero Honda) for almost 26 years (19842010) has come from the Japanese counterpart Honda.

Motorcycle & Launches 1985Hero Honda motorcycle CD 100 launched. 1989Hero Honda motorcycle Sleek launched. 1991Hero Honda motorcycle CD 100 SS launched. 1994Hero Honda motorcycle Splendor launched. 1997Hero Honda motorcycle Street launched. 1999Hero Honda motorcycle CBZ launched. 2001Hero Honda motorcycle Passion and Hero Honda Joy launched. 2002Hero Honda motorcycle Dawn and Hero Honda motorcycle Ambition launched. 2003Hero Honda motorcycle CD Dawn, Hero Honda motorcycle Splendor plus, Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Karizma launched. 2004Hero Honda motorcycle Ambition 135 and Hero Honda motorcycle CBZ Star launched. 2005Hero Motocorp SuperSplendor, Hero Honda motorcycle CD Deluxe, Hero Honda motorcycle Glamour, Hero Honda motorcycle Achiever and Hero Honda Scooter Pleasure. 2007New Models of Hero Honda motorcycle Splendor NXG, New Models of Hero Honda motorcycle CD Deluxe, New Models of Hero Honda motorcycle Passion Plus and Hero Honda motorcycle Hunk launched. 2008New Models of Hero Honda motorcycles Pleasure, CBZ Xtreme, Glamour, Glamour Fi and Hero Honda motorcycle Passion Pro launched. 2009New Models of Hero Honda motorcycle Karizma:Karizma ZMR and limited edition of Hero Honda motorcycle Hunk launched 2010New Models of Hero Honda motorcycle Splendor Pro and New Hero Honda motorcycle Hunk and New Hero Honda Motorcycle Super Splendor launched. Company performance The company has sold over 47 million 2-wheelers since its inception in 1984 till March 2013. It sold 6.07 million 2-wheelers in 2012, out of which 5.5 million were motorcycles. Hero Motocorp sells more two wheelers than the second, third and fourth placed two-wheeler companies put together. Its most popular bike Hero Honda Splendor sells more than one million units per year. In 2013, Hero MotoCorp registered best ever calendar year performance of more than 6.1 million unit sales. By selling 6.25 lakh units in the month of October, it became the first-ever manufacturer to cross landmark 6 lakh unit sales in a month. In the last quarter of the year or say in the festive season, the company sold more than 1.6 million units, while in non festive time in AprilMay 2013, it managed to sell out quite good numbers of units- 1.1 million.

Marketing Strategies

Hero Honda globally known of being the most fuel-efficient and the largest CBZ selling Indian motorcycle company. This is a relationship so harmonious that Hero Honda has managed to achieve indigenization of over 95 percent, a Honda record worldwide. The company is committed to provide the customer with excellence. A rich background of producing high value products at reasonable prices led the world's largest manufacturer of motorcycles to collaborate with the world's largest bicycle manufacturer

CD Dawn : Honda CD Dawn is a beginner's bike well tested on Indian roads and proven in city conditions. Hero Honda CD Dawn is a no-nonsense bike that's all about price and utility. New bikes have showroom prices of around Rs. 32,000 and on-road prices of around Rs. 37,000.

Splendor NXG : The Hero Honda Splendor NXG is a new age bike in Hero Honda's 100 cc stable. Stunning looks, economic performance, and a multitude of features backed by Hero Honda's reliable support network, makes this a good choice for the city commuter. The Hero Honda Splendor NXG is now available at a showroom price of around Rs. 42,000. Hero Honda Splendor Plus is one of the largest selling bikes in India.

DATA ANALYSIS 1) Are you aware about Hero Honda Company ?No. of Consumers 30

Yes 28

No 02

Findings: Out of 30 Respondents, 28 peoples aware about Hero Honda Company, which shows its market image.

2) For what Purpose Hero Honda company Known for ?

No. of Consumers 30

Electronic Products 01

Automobiles 27

Furniture & Furnishing 01

None of the above 01

Findings: We found that out of 30 consumers 27 peoples said Automobiles and every single said remaining ones respectively.3) Which bike you used mostly?No. of Consumers 30

Hero Honda 16

Bajaj 08

Any Other 06

Findings: From the above question 16 respondent said Hero Honda bike, which shows trust factor of the people on it. Remaining 8 & 6 said Bajaj & Any Other respectively.

4) Which Model do you have/had ?

No. of Consumers 30

Passion 05

Splendor 10

Karizma 01

Any Other 14

Findings: From the above question, Splendor is the most popular bike of Hero Honda because out of 30 consumers 10 consumers uses splendor bike and remaining ones uses other models.

5) How did you come to know about this motor bike ?

No. of Consumers 30

Through Advertisement 22

Through Customers 03

Through Internet 05

Findings: Out of 30 respondents 22 consumers aware through Advertisement and 5 & 3 said Internet & Customers respectively, which shows that Hero Honda Company spend aggressive money on Advertisement and all.6) Does Advertisement Influence your decision in choosing a motor bike?

No. of Consumers 30

Yes 20

No 04

Cant Say 06

Findings: Out of 30 respondents 20 says that Advertisement influence to take a decision in choosing a motor bike which proves that Advertisement plays an important role in taking decision to customers.

7) Is Hero Hondas price range affordable to common people?

No. of Consumers 30

Yes 26

No 04

Findings: Out of 30 respondents 26 said Yes & only 4 said No, which shows that Hero Hondas price is affordable to all common people.

8) Which factor below do you liked in Hero Honda bike?

No. of Consumers 30

Price 10

Mileage 08

Quality 07

Look 05

Findings: Out of 30 respondents 10 people like price, 8 peoples like mileage, 7 peoples like quality and 5 peoples like look of Hero Honda bike.

9) Which Company was competing Hero Honda in the market?

No. of Consumers 30

Bajaj 15

Mahindra 05

Other 10

Findings: Out of 30 respondents 15 peoples said Bajaj, 5 peoples said Mahindra and 10 people said others. From the above question we conclude that Bajaj is strong competitor of Hero Honda in the market.

10) Are you satisfied with After sales services provided by Hero Honda ?

No. of Consumers 30

Yes 22

No 08

Findings: Out of 30 respondents 22 customers like after sale services provided by Hero Honda.

Findings

1. Hero Honda was considered to be most fuel-efficient bikeon Indian roads,& have better quality, higher resale ascompared to Bajaj Bikes.

2. Hero Honda Service & Spare parts was available throughoutIndia in local markets.

3. Customer trust on brand of Hero Honda.

4. While buying a motorcycle, economy is the mainconsideration in form of maintenance cost, fuelefficiency.

5. Bikes such as Hunk, Karizma are purchased by young generation 18 to 30 because they prefer stylish looks and rest of the models of HeroHonda are purchased more by daily users who needs more average of bikes than looks.

CONCLUSION

Most of the bikes like CBZ, Karizma are purchased by young generation 18-30 because they prefer stylish look and rest of the model of Hero Honda was purchased more by daily users who need more average of bikes than look. Hero Honda was to be considered most fuel efficient bike on Indian road. While buying a motorcycle, price, mileage look and quality influence to take decision. Price and mileage are key factors which drives the customer to buy the particular bike. Strategic Alliances plays a vital role in creating unique identity of Hero Honda in Indian market.