Business Functions and Process

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INTRODUCTION
Organisations in the world today build on business processes and functions. The highly
competitive industries build on several strategies to survive and compete. The relaxation of
trade barriers by most countries has opened a new business arena on a global scale and
organisations in the current world compete locally and internationally though physically not
present internationally. This report is constructed to critically evaluate the decision of Hero
Motor Corp Ltd to launch a new product and its implications on the organisation’s various
functional areas and its resources.
Business processes are a group of interconnected activities which create a value by altering
an input into an output that is more valuable. Business processes include management
process, operational process and supporting processes. Each of these processes has significant
importance in the overall performance of an organisation. Management processes include
building strategy and decision making, operational processes include core business functions,
supply chain management, sales, marketing, manufacturing and purchasing etc. Supporting
processes on the other side include technical support, human resource management,
accounting and Research and development etc. Considering the nature of business chosen in
creating this report, all the business processes and functions mentioned above fall in place.
(Monk & Wagner, 2007)
Business processes have sub processes by which they are affected. This report also focuses
on various contemporary issues such as the effect of globalisation, market trends,
sustainability and risk management. Managers in organisations have the advantage of looking
at their businesses through the customers’ perspective with business processes. For example,
Dell computers adapted online customization of products. A customer chooses the
configuration he desires and purchases online. On a larger note, the organisation understands
what customers need. The company works on a build to order basis. The company also has
the ability to classify its customers based on geographical locations, age, gender etcetera, to
understand their customers’ needs through this process.
Having introduced the scenario of business functions and processes, a detailed study and
understanding is made on the company, the product it is trying to launch. Furthermore in this
report, individual functions that constitute the organisation are identified and how these
functions are integrated across the company with respect to the decision of launching a new
product is made.
COMPANY OVERVIEW AND PRODUCT – HERO MOTORCORP
The organisation chosen for this report is Hero Motor Corp Ltd. Hero Motor Corp Ltd is an
Indian Automobile company which was formerly known as Hero Honda Motors Ltd. Hero
and Honda collaborated and operated in India for more than two decades after they decided to

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find ways apart and operate in India individually. Hero motor Corp Ltd is the world’s largest
two wheeler manufacturer. It is located in India. The organisation also boasts to be the No 1
in the world in terms of unit sales per annum. Hero Motor Corp Ltd sells its products in three
different forms such as direct selling through website, corporate sales and merchandizing.
Hero Motor Corp Ltd currently has 16 products in the two wheeler market in India and plans
to launch a new motorcycle in the market. The name of the product is Hero – Impulse. Hero
Impulse falls into the category of 150 cc vehicles which is a high end product in Indian
markets. The vehicle has a high end ATFT engine and is targeted to customers who fancy
terrain riding. It also has various other high end technology based attribute which add value
to the vehicle. The vehicle is priced at INR 78,300 which is approximately GBP 900. The
vehicle categorises itself into an affordable price segment in India. Hero Motor Corp Ltd
works on the strategy of exploring global opportunities, improving operational efficiency and
aggressive expansion to reach its customers. The organisation invests heavily on brand
building and expansion to satisfy its customers and its shareholders. (Company profile, 2012)
AUTOMOBILE INDUSTRY -2 WHEELER IN INDIA
 GDP/Economy/Purchasing Power
Automobile Industry in India is one of the largest and fast selling industries in India. India is
a country where maximum transport is run on two wheelers and public transport.
Economically and demographically the automotive industry is positioned ideally for growth
considering the domestic demand and the export opportunities. India’s working age
populations has tremendously increased over the last two decades which creates high
purchasing power among all classes of people. The drastic development in technology,
services, distribution networks and manufacturing facilities has given better access to this
industry in India. The economy of India has grown at 9 per cent average over the last five
years and is predicted to be the same in the coming future. With the increase in economy and
the increase in employment every year in India, more and more people are expected to afford
vehicles in the future. The graphs below gives an insight into the GDP growth of India and
the projected purchase power of vehicles by Indian customers.

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Figure 1 (Source: KPMG: Indian Automobile Industry, Evolving Dynamics (2010))
The graph clearly explains the annual passenger vehicle volumes against the GDP growth in
India. Similarly the growth in the population with high income levels can be seen in the
graphs below:
Figure 2: (Source: KPMG: Indian Automobile Industry, Evolving Dynamics (2010))
From the above two graphs it can be clearly understood that there has been a rise in the
income of average Indian and the purchasing power has drastically increased in Indian
markets. The automobile industry in India has seen interesting changes over the last decade.
A decade filled with recession has caused major companies in India a considerable loss in
sales, but, the rise in demand from Indian buyers and the rise in purchasing power has
stabilized this equation. The domestic volume of sales in the years 2009 – 10 can be seen in
the graphs below:

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Figure 3 (Source: KPMG: Indian Automobile Industry, Evolving Dynamics (2010))
The graph clearly explains the percentage growth of vehicles purchased in 2009 – 10 out of
which 76 per cent constitute the two wheelers segment. This shows a great factor of demand
in the market as well as a great opportunity for companies to launch new products. Although
the growth in demand exists, the automobile industry in India finds it difficult to place a
strategy due to high competition and other external factors such as lack of infrastructure,
roads, and transport etcetera.
ANSOFF’S MATRIX:
In this section Ansoff’s matrix is used to understand the current position of the company in
launching a new product and developing a strategy based on it. Ansoff’s matrix is a major
advantage for organisations to understand the current strategic position and evaluate the
competitiveness of the organisation. Below is a diagram illustrating the Ansoff’s matrix.

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Figure 4 (Source: Ansoff’s Matrix, 1948)
The above chart distinguishes the newness of the product and newness of market. The
product that falls in each of these columns can be distinguished and a strategy can be
developed in order to reach its customers effectively. The product chosen in this research
falls under the category of new product and same market which has 8 times higher risk
strategy than selling its products (existing) in existing markets. The advantage of using this
matrix is that a graphical representation helps in identifying the products position in the
market thereby understanding the complexity involved in making a decision towards building
a strategy. However, the external factors do not account in this matrix. Individual functions
that constitute the organisation are therefore identified and the necessity to integrate these
functions across the organisation is justified in this report. The strategic decision making in
launching a new product in an existing market requires heavy research and development and
involves identifying the target market and placing the product at the right moment. To do so
and to attain maximum success, the internal organisational functions have to be aligned based
on the strategy developed. Organisations face difficulty in doing so due to many external and
internal factors and it takes a strong strategy to overcome these difficulties. In the modern era
of unconventional marketing strategies, extreme customer centric, high globalisation and
competition it is important to assess the organisations capability and therefore draw a line on
the sustainability of the organisation.
FOCUS ON CUSTOMERS: CRM
Customer relationship management is one of the key business processes that define the
success of an organisation. Maintaining customer relationship is being perceived as a strategy
which is process oriented and that which creates a value for both the seller and the buyer.
(Lambert, 2010) Management teams of organisations identify key customers who are highly
valued and are targeted as a part of the organisation’s key business strategy. The customers
potential is evaluated before a set of customers are targeted for profits. To maintain and
strengthen this bond for more sales or ultimately success for the new product launched,
organisations should make sure that all its corporate functions actively participate and
cooperate with each other to attain success. (Ryals and Knox, 2001)
FUNCTIONAL AREAS AND RESOURCES THAT WILL BE AFFECTED BY
THE DECISION:
(CONSIDERING globalisation / Competition / sustainability / risk management)
Below is the list of functional areas and resources identified which will be affected by the
decision of Hero Motor Corp to launch a new product in the market. These functional areas
have to be integrated with respect to the focus on customers.
A. Operations Management
B. Sales and Marketing