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Honda: Changes and challenges

Paper Type: Free Essay Subject: Business
Wordcount: 3383 words Published: 18th Apr 2017

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The aim of the assignment work is to understand what a business and what business environment is, and it is considerable for organisation and also management students to know about business environment and understand its influence on business actions. It is very important to have clear ambition as to what they want to get in the future and a strategy to get. To accomplish this purpose a PESTEL analysis will be perform on the Hero Honda group of Company. With this in aptitude, this document is analysing the main factors in the business environment in the last five years that led the Company to create exact policy. These analyses consequently create conclusions and recommendations for the company.

Introduction of Business Environment

Business Environment is effects your business direct and indirect way.

Business Environment refers to all those which are internal and external factors that is impact the functioning or performance of a company and its decision making particularly strategies in the company.

Gerald Bell describe: as an organization external environment consists of those effects outside an organization such as customers, competitors, financial firm, government, suppliers, and employment that are related in the business operation”

so, business environment can be said that the position of outside oe external factors such as the political, economic factors, social factors, and government factors legal factors, which are out of control in nature and affects in the business decisions of organisation or in the company.

Types of Business Environment:

The business environments are separated into two ways.

Micro Environment

Macro Environment


The micro environment of organisations that the services in the company’s environment with the aim of influence onto the act of the company. These forces are more strongly synchronized with the organisation or business than the macro factors.

Philip Kotler defines that “The micro environment consists of the factors in the company’s directly in the environment that are affects the management of the company. These include the suppliers, customers, marketing, mediators, competitors, and public”.

Micro environment factors are connected with

1. Suppliers

2. Competitors

3. Public

4. Labour

5. Financiers

6. Customers

Macro environment:

The Macro Environment of business includes performance which are uncontrollable and require correct awareness on the component of the business enterprise.

Hill and Jones describe that The macro environment consists of the wider economic social, political, ecological, legal and technological background inside the industry and the company are located”.

Macro environment factors are connected with

1. Political factor

2. Economical factor

3. Social factor

4. Technological factor

5. Environmental factor

6. Legal factor

Environmental factors that are internal factors determine to the positive classified SWOT as strengths and weaknesses, and external firm classified as opportunities or threats. Such an analysis of the strategic or tactical environment is consigning as a SWOT analysis. It is providing information that is supportive in the firm’s resources and capabilities to the environments in which are function. As such, SWOT analysis helpful in selection and formulate strategies in the firm.

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Introduction of Company

Hero Honda Motors Ltd. is an Indian producer of motorbikes and scooters. Hero Honda group is a joint enterprise that started in 1984 involving the Group of Hero is from India and Honda From Japan. It is the world’s top manufacturer of 2-wheeled mechanical vehicles since 2001. Through the 1980s, Hero Honda group of company is became the former company in India to attested and prove that it was capable to drive a vehicle without any polluting on the roads. The company introduced new group motorcycles that place industry for fuel saving and low emission. A famous sentence of the company is ‘Fill it – Shut it – Forget it’ operation capture the thoughts of commuters across in India, and Hero Honda group of company sold millions of motorbikes on the commitment of better mileage. Hero Honda has developed at double digits since foundation; and today, every second they sold in all over in India. Hero Honda Company sell motorbike in every half of minute, person in India buys its top -selling motorbike that is Hero Honda Splendor. This celebratory season, the company sold half a million motorbike in a single month-a achievement ultimate in worldwide automotive history.

Hero Honda has a massive set of connections of the sales and services network and now over the three thousand customer contact point. These contact points are cover of dealership, service station and spare parts stockiest and official representatives of dealer which are located across overall in India at different places.

Hero Honda Company has a good value system and therefore it cares for its relationship with their customers and dealers who helped to sell their products. It has a unique CRM proposal for example The Hero Honda Company launch Passport Program that is one of the key programs of this type in the globe. That type of program has not only helped Hero Honda to know or understand its customers and transport value at different price points, but also formed a reliable society of brand ambassadors.


The Hero Honda story starts with a plain or simple vision. The vision of a transportable and an empowered India, which are powered by Hero Honda company. This vision was determined by company’s commitment to customer, superiority, quality and, and though doing consequent, maintain the highest values of principles and societal responsibilities and they are believe that best way to turn that dream into a truth is by outstanding focused on that vision.


The Mission of Hero Honda company is to effort for synergy between technology in machinery, human resources and system, to manufacture products and services that get together the performance, price and quality goal of their customers. At same time sustain the maximum values of principles and social responsibilities.


Hero Honda company’s main policy has been determined by plan to innovation in every field of activity – build a tough product collection across category, explore the new markets, forcefully expanding the system and progressing to spend in brand building performance.


Hero Honda motorbikes are manufactured across globally manufacturing services and facilities. Some of manufacturing facilities are based at Dharuhera and Gurgaon these are placed in the state of Haryana in north India.


In the 1980’s Hero Honda company pioneer the introduction of fuel-efficient, environment responsive four-stroke motorbikes in the country. Now days Hero Honda company maintain to be technology pioneer. Because of the first corporation to start on the Fuel Injection technology in Indian motorbikes, with the launch of their model Hero Honda Glamour FI in the month of June 2006.


Hero Honda company’s products run includes variety of motorbikes that have set the business standards across all over in the market segment. The company offer large numbers of products to large variety of requirements crossways all the market segments. The company also underway develop scooter in 2006.

Key milestone of HERO HONDA

Year Event

1983 Joint partnership with Honda Motor Co. Ltd. Which are from Japan.

1984 The name of company is Hero Honda Motors Ltd.

1985 First motorbike that is “CD 100” introduce.

1987 100,000th motorcycle manufactured in this year.

1989 Company introduce new model that is “Sleek”.

1991 Modify innovate CD 100 that is “CD 100 SS” introduced.

In same year company produces 500,000th motorbike all over India.

1994 Introduce New model of the company “Splendor” and

1,000,000th motorbikes produced in same year.

1999 New motorbike model that is Hero Honda CBZ introduce.


Splendor is branded ‘World No. 1’ – largest selling model of the company and launched “Hero Honda Passport Programme”

2001 New model “Hero Honda Passion” introduces.

2002 Company’s new two models introduce in same year that are “Ambition” and “Dawn”.

Splendor model has appear as the World’s leading selling model for the third

record year in a rank which are 2000, 2001, 2002.


Grow to be the first Indian Company to cross the growing seven million sales and another model produce “Hero Honda Karizma”.

2004 Hero Honda company is became the World No. 1 Company for the third year in a row.

2005 Hero Honda is the World top for motorbike in the 4th year.

2006 Hero Honda is the top for the 5th year in a row and

fifteen million production targeted are achieved in 2006.

2007 New model ‘Splendor NXG’ introduced. (modify by old model).

New ‘Passion Plus’ introduced. (modify by old model).

New model ‘Hunk’ introduced.

Twenty million production targeted are achieved.


New ‘CBZ Xtreme’ launched.

2008 about Twenty five million productions achieved.

CD Deluxe innovate with electric start feature.

New Hero Honda model ‘Glamour’ launched.

2009 Splendor completed 11 million production marker. And new model ‘Karizma – ZMR’ launched.

Silver jubilee celebrations.

Hero Honda Business Environment

Political Factors

Political factors consign to government rule such as the level of interference in the market. Political decisions can impact on several significant areas for business organisations such as the information and knowledge of the workforce, the health and the superiority of the transportation of the economy, such as-

a) Customer protection laws: In Hero Honda Company that type of laws are considered to protect customers against excessive practice such as clear descriptions of the product related auto mobile.

b) Resistance laws: Aimed of the resistance laws is defending small organisations against singling out by larger companies and ensure customers are not broken by firms with monopoly power.

c) Employment or labour laws: Employment laws cover areas such as discharge, working hours and minimum wages.

d) Health and Safety: Health and safety laws are expected certify the workplace is safe as is practically valuable. They feature concern such as training, reporting accident and the suitable provision of safety tools.

Economic factors

Economic Environment refer what is happens or happening within the financial system, for example; economic expansion, interest rate, trade rate, inflation rate, demand, wages rate etc.

Vendors need to evaluate the trading economy in short term and long term. Economic factors have major impacts on how business operate and how to they make decisions.

Hero Honda has been strongly dedicated not only environmental organization programmes but also state the gradually more indivisible stability between the economic fears and the environmental and social topics are faced by a business. A company must not rise at the outlay of mankind and man’s future but to a certain extent provide mankind.

Social factors

Social factors consist of the demographic and cultural aspects of the external environment. These factors are affect customer requirements and the size of possible markets. Changes in social trends can contact on the require for a company’s products and the accessibility and motivation of individuals work. Culture is the set of morals and attitudes that are approved by a group of people and transferred from one generation to another. Social factors include health awareness, population rate, age, importance on safety. Hero Honda auto mobile change various management strategies use different strategies related age, gender, categories in society (income of society).

Hero Honda has been placed on forty acres of land next to the Delhi-Jaipur Highway. The Centre entire with broad near roads, clean water, and teaching facilities for both adults and children. Now care for a exciting, educated and healthy society.

Hero Honda engaged by the institution includes:

Raman Munjal Memorial Hospital

Raman Munjal Sports Complex

Vocational Training Centre

Adult Literacy Mission

Marriages of underprivileged girls

Rural Health Care

: “We must do something for the society from whose land we generate our prosperity.”

A quote from Chairman of Hero Honda Motors Pvt.Ltd.

Technological factors

Technological factors include environmental and natural aspects, such as Research &Development activity, technology incentive. Technology has played a essential role in developing the transportation system. Technology has also positively affected the economic status of some countries. It is generally practical that the countries employing a high level technology is a well advanced state. It has increased productivity and has contributed actually in producing more quantity with quality. Some benefits of technology in production process are:

-Reducing the record wastage.

-Fewer waiting time.

-Decreased over production. -Reduces avoidable activities of employees.

Hero Honda group dedicated at all stages to complete high quality in everything they perform, generally in their products and services which will assemble and beat customer’s growing goal through-

Modernism in products developments and services.

Permanent progress in its total quality organization schemes.

Cooperation and duty.

Environmental Factors

Environmental factors contain the weather conditions and climate change. Changes in temperature can collision on many businesses including agriculture, tourism and insurance. With major climate changes happening due to global warming and with larger environmental responsiveness this external factor is fetching a major issue for definite to consider.

Hero Honda environmental awareness of our employees and dealers , while promoting their involvement in ensuring noise environmental management. Organization resource protection in the areas of oil, water, electrical power, paints and chemicals. fulfil with all related environmental legislation and also controlling their environmental discharges.

Legal Environment factor

Marketing decision is affected by developments in legal environment. This environment is related of different types laws, government policies. Sometimes these laws also create new opportunities for business. (Kotler, p 2003).

Legal environment refers to what is happening with changes to legislation. Legal Environment impact resources, import & export, taxation, employment etc. It is reflect the policy framework and the move towards of the Governmental structure of the country and ensure that every company is performance as per the legislative structure of the country.

SWOT analysis of Hero Honda


Sales Increase:

Hero Honda skilled great expansion during its early days. By 2002 Hero Honda Group sold eighty six million motorbikes so that is producing 16000 motorbikes a day. Today Hero Honda has many different models of bikes available. It holds the most popular bike in India and in the world by sales for Its Splendor model in last several years.

b) Fuel efficiency:

Over all fuel consumption by its products is less in compare to other brand’s product. Hero Honda able to give better mileage. Because of this Hero Honda splendor has magical sales record and the reason of mileage.

c) Service :

Hero Honda offers free services on all their two-wheelers. Customer avail all these service within the time period or kilo metre range.

d) High financial performance:

The Hero Honda financial information shows that it has strong financial background in terms of sales, profit and assets. Hero Honda Ltd. the world’s chief two-wheeler manufacturer, at present statements 31% per cent increase in profit after tax at Rs 275 crore for the third part October-December of financial year 2007-2008.

4.2 Weakness:

a) High maintenance:

Some of the products of hero Honda like Karizma, CBZ, Hunk require high maintenance.

Less promotion and Lack of recycling scrap:

The promotions and of Hero Honda are very less to its competitors and they have problem of recycling scrap.

c) Labour relations:

In Hero Honda Company there is no labour organized and family member of employees. The familiar of the manufacturer workers, who are borrowed through service providers, so that these benefits are out of manage to reach.

4.3 Opportunity:

a) Good will of the company:

With new launch Hero Honda can be benefited at present market scenario like Karizma, CBZ, Hunk has huge attraction in the younger generation because of its style, look, and power at high speeds.

4.4 Threats:

Technical aspect:

Competitor bike like Bajaj pulsar and TVS apache are threat to Hero Honda product like Karizma, CBZ and Hunk in respect to fuel economy. So if they don’t short out in the new launches and give something extra in its engineering performance it may affect in demand of this company product.


If inflation increases the cost of raw material used in production will go high and selling

Price of product may go high that may decrease demand of the two wheeler.


To review, of the environmental analysis it is obvious that Hero Honda Company had faced the some challenges: First now a days falling level of sales in the auto industry as a consequence of a bottomless economical disaster that caused people fear of buy high price of bikes. As a reply of this threat the company launched Hero Honda Passport Programme policy that end result in raise in its sales and profitability, while its competitor’s sales were decreasing which are TVS, Bajaj, etc.

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Next is that the growing up price of fuel, organization environmental regulations and a societies serious to fuel efficient bikes, forced the Hero Honda company to improve its motorbike models, and the company react by creation more investments in its manufacturing centres and service centres. Another problem faced from their employer but pasting these difficulties the Hero Honda Group of company finally entered the market in current year and will try to get a better situation between employers and main competitors in the market. They would not only achieve success in rapid period, but also they prepared for the changes that may happen in the business environments which are very important in terms of achieving the goals.


The wealth, prospective and business environment can all contribute to the value of execute transaction by the company. The company after that design a scheme for plan for this policy. Significant wealth that will provide as the strategy’s structure should be organized. It is possible that the company develop a supervise scheme, which will frequently estimate the strategy’s development. It will be also supportive for notice that the problems are in front of period and execute strategy adjust and development in the organization.


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