Hero Strategy

Jitendra Solanki


Table of Content

Executive
summary................................................................................................................02

Introduction of company ......................................................................................................02

Value chain
analysis...............................................................................................................03

Primary activities...............................................................................................03

Management Information System........................................................................................06

Application of MIS in Honda...............................................................................................06

Competitive advantage08

Recommendations.................................................................................................................08

References
...........................................................................................................................09

Page 2


Executive summary
In todays world marketplace whichever the sector is to have a competitive advantage every
company possesses some core competencies. In manufacturing sector, Honda is one of the
companies striving for having an competitive edge over its competitors. In this report the value
chain analysis and Management Information System of the Hero Honda Ltd. has been
di scussed. In the val ue chai n anal ysi s pri mary acti vi ti es are tri ed to be di scussed
comprehensively. While in MIS, there is a discussion that how it helps Honda in better flow of
information and helps in various activities like decision making, resource management, data
collection, how it facilitates managers at different levels. Competit ive advantage of the
company regarding MIS is discussed and in the last some recommendations are given for the
company that could prove helpful.
































Introduction of the company
Indian based worlds largest manufacturer of bikes is Hero Honda Ltd. In 1984 the company
aroused as the joint venture of Indias Hero Group and Honda Company Japan. In India
Company achieved its popularity as largest two-wheeler manufacturing company in 2001. And
in terms of unit volume sales per year it is the Worlds No.1 Company. The coveted position of
being the largest two-wheeler manufacturer is still retained by the company. Across the three
worldwide benchmarked facilities Hero Honda bikes are manufactured. Two of these are based
in the state of Haryana in northern India at Gurgaon and Dharuhera. In the hill state of
Uttrakhand the third and latest manufacturing plant is based at Haridwar. Hero Honda
pioneered in introducing the fuel efficient, environment friendly four stroke motorcycles in
1980.today it continues to be the technology pioneer. In June, 2006 it launched the fuel
injection technology and became the first company of introducing this technology.


To consolidate its position in the market place Hero Honda is constantly working towards it, as
it has attained the incontrovertible position in Indias two-wheeler market. It is strongly
believed by the company that increasing urbanization, changi ng the demographic profile of
India and empowering rural India will add a large number of families in economic mainstream.

















Value chain analysis

It is fairly clear that Hero Honda enjoys some competitive advantage over the competition, and
for 7
th

wheeler market of India Company commands a robust market share of 52% and is
continuously growing at a healthy rate of 13%. By analyzing its value chain we make an effort
to ascertain competitive advantage it has.

Primary activities

Inbound logistics

Material components make 73% of production cost, so Honda always tried to have close
integration with suppliers. Hence, when procuring components it is very important to control
tightly and reduce the logistical cost. Moreover, diminution of inventory will be an added
benefit so that working capital requirements will be less.

JIT manufacturing philosophy is being adopted by the company, and it demands close
coordination among manufacturing units, vendors and ancillary units. Efforts are going on to
broaden JIT ahead of shop floor in the operational & strategic decisions of the vendors as well
like production planning, capacity expansion etc. Online real time connectivity between the
operations and that of 72% of its 300 plus strong vendor base has been established and its a
success of the company. All this has resulted in the reduction of logistical & transactional cost.


Operations

Only Indian company that has mastered the art of JIT is Hero Honda. To ensure the high
efficiency and low inventory production, Hero Honda uses high degree of automation and
pursues lean manufacturing, with the usual benefits of increased cash flow, reduced cash &
operating cycles and hence improved working capital conditions. The unique tangible assets
that Hero Honda Ltd. has are these fully equipped plants where manufacturing concepts are
applied. With annual production capacity of 4.5 million units the company has three
manufacturing facilities at Haridwar, Dharuhera and Gurgaon. With workforce in range of 4320
productivity/employee is high. To make Haridwar plant efficient the concepts of lean




manufacturing, JIT & integrated supply chain have been applied from very start.


Technological know-how, improving designs etc. for two-wheelers are offered by Honda after
the initial design requirements as promoted by customers and market trends put in structured
appearance by Hero Honda R&D team of India.

Outbound logistics

Through its well established delivery channels from three plants, Hero Honda is fulfilling the
demand in India is exporting approximately 95000 bikes. The effort is to provide for minimum
waiting period or rather filling regions as per demand forecasts and market trends.

Marketing & Sales

Years ago Fill it, Shut it, Forget it campaign was started by marketing department of Hero
Honda to pitch for better fuel efficiency and hence lower owning cost. To attract new
customers, retain previous customers and reliability of its products the marketing department
of Hero Honda strived constantly. It came up with Honda passport program to ensure the
loyalty of customers. Company has also faced complaints of the customers like company dont
present powerful bikes like competitor Bajaj is doing, there is no product differentiation to
justify price differences etc. To make its offerings well accepted Hero Honda improved its 4Ps
and paid attention to customers needs.





Dealers, authorized representatives, stockers etc together form distribution network of Hero
Honda and use conscious strategies to penetrate new markets and unrepresented territories.
From 2001 to 2008 company customer points increased from 826 to 3500 in India. Within same
period 50dealers, 150SSPs and 45 city work agents were added.


The distribution network of Hero Honda is wide & deep rooted; it is based on mutual trust and
relationship between company and its distributors and its philosophy to ensure growth of
partners with its own growth. It has unique intangible resources in the form of strengthened
supply chain and distribution networks. And the outcomes of it are its superior brand image
and reliability of its brand.




























Management information system

To run organizations efficiently, the flow of information has to be quick and efficient;
management information system provides help in doing this. For solving the business processes
like pricing, costing etc of products or services, a subset of the whole internal control processes
in an organization which consists of the documents, applications of people, technologies and
processes is used by the management accountants that can be regarded as Management
Information system (MIS) (Bidgoli, 2010). As MIS is applied in analyzing the operational
activities in the organizations, its this feature make it different from the other information
systems (Lucey, 2005).

Singhal (n.d) reported that an astonishing amount of information is generated, as Honda is
progressing in the manufacturing sector. For reducing costs, enhance productivity and
maximization of profits, it is very important for Honda to get the right kind of information
quickly and efficiently.

To integrate various functions and control operations ERP was implemented in the company. A
high level of integration of data was presented through the implementation of ERP.
ERP has helped the company immensely. Today nobody asks any other department for
information. One can log in and see reports online, says Mukesh Malhotra, deputy general



manager, Hero Honda. It enabled them to implement better cost controlling measures. (Term
paper of information management in business on hero Honda information management, n.d.).

Application of MIS in Honda

In decision making:
As this era is regarded as era of technology, so it is very hard for any organization to escape
from the use of IT systems, as computers are present everywhere. There are some departments
in Honda where MIS have incalculable value. Though computers cant make the strategies of
their own however, these can help, in efficient decision making process and in understanding
the usefulness of strategies, to the manager of the organizations. Data can be converted into
useful information with the help of MIS that can be used in decision making. For planning,
supervising and implementation of plans Honda is assisted by MIS, as it provides performance
reports, financial statements etc.


As it is almost impossible to manage volumes of data manually, MIS facilitates Honda in
collection of important information and converts it into rational reports. Trends and patterns in
information can be recognized with the help of these reports. To answer a variety of theoretical
questions such as what if regarding alteration in strategies and to run replication, MIS system
makes use of raw data. For example, MIS can inform Honda about the consequence of
alterations in price on the sales of their cars. Honda has become capable of making more
informed decisions due to the use of Decision Support Systems.

Data collection


MIS has made quite easy, the collection of numerable amounts of business information as well
as has provided the employees with the benefit of time saving. After entering the data into
computer through the computer process MIS can quickly examine the large amount of data.
Therefore, it has resulted in efficient working by enhancing faster decision making at Honda.




Resource management
MIS of Hero Honda also assist it in looking at the utilization of resources, if the resources are

being used in apposite and efficient manner. The examples of the management resources that
are required to be monitored regularly by the company are Equipments, raw materials, assets,
labor etc.

Facilitation Decision making at three tiers of management
Decisions are made at fundamental levels, strategic, programs, operations and activity levels, in
Honda. MIS at different levels of Honda:
Senior Management: MIS provides direction to seniors management at Honda for
positioning of the business, planning strategic business plan, competitors analysis and
the all the other factors which have impact over the strategic planning.
Middle Management: for the performance of operational and organizational functions
MIS assists the middle managers by giving them data for operational planning, delivery
procedures, synchronization of work units and by helping in identifying different ways of
budget control and problem solving.
Line management: It facilitates the line managers by providing them with data for
decision making, information for problem solving and routine services etc.


Competitive advantage

With the augmentation of Business processes in Honda, there is requirement of more well -
organized production processes. With the improved and better information and data on the
business processes, there is a quicker approach to improve the supply chain management
which comprises all the processes ranging from the sourci ng of the raw materials to the
production and allocation of the finished products. As a result of the enhancement in
management of supply chain, Honda is capable to respond efficiently to the variations in
market. With the effective and efficient implementation of MIS, Honda is capable to respond
swiftly to the external environment as well as MIS made the organization able to deliver
efficient service and products and is giving a tough competition to its competitors.



While MIS is very useful to generate data analysis and statistical reports, furthermore it is very
helpful for creating Management by Objectives tool. SMART i.e. specific, measurable, agreed,
realistic and time-specific, approach is used to set the objectives.


The main purpose of this approach is to evaluate the employees performance. For its success
there is a need to keep a constant track of progress rate. For this MIS proves to be best because
it provides management reports to the policy makers and all the relevant information required.

Recommendations

To remain competitive Honda should give a prime importance to its MIS system
It should pay heed to the problems faced by its information system
For the collaboration and connectivity of the employees the main ingredient is the
hardware pattern at Honda so it should strive to keep balance between price and
hardware equipment.
In the modern economy there is high need for connectivity and efficiency so Honda
should adapt to these changes and adapt to changes taking place in technology.




References

Bidgoli, H (2010), MIS (2010), United States: Sage Publications Inc

Corporate
http://www.herohonda.com/co_corporate_profile.htm

Lucey, T., (2005), Management Information Systems (9th ed.), Croatia: Zrinski d.d

Resource based strategic project Hero Honda Ltd. (n.d.) Retrieved June 1, 2011, from
http://www.scribd.com/doc/12950370/RBS-Hero-Honda-Motors-Limited-Final-Submission

The Term Paper of Information Management in Business on Hero Honda Motors Ltds
Information
http://www.scribd.com/doc/5593586/hero-honda-mis

profile
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