Description
This is a presentation highlighting motorcycle and bike company Hero Honda Joint venture discusses about stratgies of HHML and HMSI, problems, issues, negotitation and future scope.
HERO HONDA JV
The Market Before JV
?
?
?
Restricted foreign investment and License Raj In 1980’s govt. permitted JV with minority foreign holding Supply side economics to demand side economics
Why JV with Hero???
?
?
? ? ? ? ? ?
Wide distribution network through dealers Better understanding of the market dynamics Limited options with Honda Wide experience in manufacturing of vehicles Commitment to quality Its relation with the distributors Focus on financial and raw material processes Salience of HERO brand
Distribution Network Brand Image
Core Competency
Threshold Competency
Organizational Competence
Distinctive Competency
Strategic Competency
Four Stroke Engine
Focus on Rural Market along with urban
Honda’s Initial Strategy
?
?
? ?
To enter the Indian market through JV and understand different market dynamics. To have different JV for scooters and motorcycles. For scooters, they chose the firodia group. For Motocycles, they chose the Hero Group.
HERO + Honda= HEROHONDA
?
?
?
?
JV came up in June 1984 Honda would provide technical know how and assist in setting manufacturing facilities HHML would pay $500000 as one time lump sum fees and 4% loyalty JV had 26% equity each with 26% to the public and rest with the financial institutions
Business Strategy of HHML
? ? ? ? ? ? ? ? ? ? ?
Technological Leadership Extending brand equity to new categories Stronger product portfolio Capacity expansion Ancillarization Expanding Dealer Network Market STP Innovative Advertising Consumer Initiatives Rural Market Penetration Employee Management
Success Story
Renegotiating of JV: 1994 and 2004
?
Amidst speculations the Joint Venture has been renegotiated twice since it was done originally, in 1994 and in 2004.
Problems & Issues
?
Joint Venture Problems
?
?
?
Honda Motor Company Ltd. announced it was setting up a subsidiary (HMSI) Honda held complete responsibility for the Research & Development department for Hero Honda Honda negotiated new ventures and partnerships with other Indian manufacturers in the automobile and power equipment industry, leaving Hero completely out
?
External Problems
?
?
?
The Indian government started allowing foreign companies to enter the Indian markets through joint ventures The Indian marketplace was gaining more entrants causing rivalry in the industry to rise Competitors such as TVS-Suzuki, Yamaha from Japan and Bajaj Auto began to introduce newer product lines
Implementing Changes
?
?
Management introduced new ideas coupled with improved terms of agreement for their joint venture Two primary goals in mind
? ?
Continuing their success Maintaining their existing market share
HMSI Vs HHML
?
?
?
Overlapping of products has already started Honda has Unicorn in 150cc segment whereas Hero Honda has CBZ Extreme. Similar is the case with Honda Shine and Splendor plus.
Core Competency of HERO group
?
?
?
?
Large dealership network, close to 4000. Knows the Indian market closely. Has its presence in the market for more than four decades . Large service centre network
Core competency of HONDA group
?
?
?
?
Technological prowess. Has its presence in India now for 25 years. Well known worldwide for its quality and fuel efficiency in its products. Has created good dealership network presently in the Indian market.
The Path Ahead
?
?
?
The JV may be continued but HHML needs to grow R&D of its own. If the JV is not continued it may benefit Honda Motors. Chances of competition growing between HHML and HMSI are high.
Future of JV
1st Possibility: JV Fails to continue Individual gains stood ahead of mutual gains: ? HHML bargained huge concession from HMC while renegotiating in 1994. ? HHML learning and developing their own R&D. ? Ambitious plans and strategies of both groups for future. ? Partners turning into Competitors. ? Successful entry of HMSI in Indian market and strengthening their dealership network.
?
Future of JV (contd.)
2nd Possibility: JV continues successfully Both still needs each other and cannot survive without each other. ? Tough to resist as competitors. ? Hero Group still needs technical expertise of HMC. ? HMSI developing 100 dealerships but cannot compete with a wider network of Hero Group consisting of about 4000. ? HMC marking their presence around 25 years cannot still stands small in front of Hero Group’s presence of 4 decades and their understanding of Indian market. ? Honda after developing a large dealership network still needs Hero Group for its large service centre network.
?
doc_559624309.ppt
This is a presentation highlighting motorcycle and bike company Hero Honda Joint venture discusses about stratgies of HHML and HMSI, problems, issues, negotitation and future scope.
HERO HONDA JV
The Market Before JV
?
?
?
Restricted foreign investment and License Raj In 1980’s govt. permitted JV with minority foreign holding Supply side economics to demand side economics
Why JV with Hero???
?
?
? ? ? ? ? ?
Wide distribution network through dealers Better understanding of the market dynamics Limited options with Honda Wide experience in manufacturing of vehicles Commitment to quality Its relation with the distributors Focus on financial and raw material processes Salience of HERO brand
Distribution Network Brand Image
Core Competency
Threshold Competency
Organizational Competence
Distinctive Competency
Strategic Competency
Four Stroke Engine
Focus on Rural Market along with urban
Honda’s Initial Strategy
?
?
? ?
To enter the Indian market through JV and understand different market dynamics. To have different JV for scooters and motorcycles. For scooters, they chose the firodia group. For Motocycles, they chose the Hero Group.
HERO + Honda= HEROHONDA
?
?
?
?
JV came up in June 1984 Honda would provide technical know how and assist in setting manufacturing facilities HHML would pay $500000 as one time lump sum fees and 4% loyalty JV had 26% equity each with 26% to the public and rest with the financial institutions
Business Strategy of HHML
? ? ? ? ? ? ? ? ? ? ?
Technological Leadership Extending brand equity to new categories Stronger product portfolio Capacity expansion Ancillarization Expanding Dealer Network Market STP Innovative Advertising Consumer Initiatives Rural Market Penetration Employee Management
Success Story
Renegotiating of JV: 1994 and 2004
?
Amidst speculations the Joint Venture has been renegotiated twice since it was done originally, in 1994 and in 2004.
Problems & Issues
?
Joint Venture Problems
?
?
?
Honda Motor Company Ltd. announced it was setting up a subsidiary (HMSI) Honda held complete responsibility for the Research & Development department for Hero Honda Honda negotiated new ventures and partnerships with other Indian manufacturers in the automobile and power equipment industry, leaving Hero completely out
?
External Problems
?
?
?
The Indian government started allowing foreign companies to enter the Indian markets through joint ventures The Indian marketplace was gaining more entrants causing rivalry in the industry to rise Competitors such as TVS-Suzuki, Yamaha from Japan and Bajaj Auto began to introduce newer product lines
Implementing Changes
?
?
Management introduced new ideas coupled with improved terms of agreement for their joint venture Two primary goals in mind
? ?
Continuing their success Maintaining their existing market share
HMSI Vs HHML
?
?
?
Overlapping of products has already started Honda has Unicorn in 150cc segment whereas Hero Honda has CBZ Extreme. Similar is the case with Honda Shine and Splendor plus.
Core Competency of HERO group
?
?
?
?
Large dealership network, close to 4000. Knows the Indian market closely. Has its presence in the market for more than four decades . Large service centre network
Core competency of HONDA group
?
?
?
?
Technological prowess. Has its presence in India now for 25 years. Well known worldwide for its quality and fuel efficiency in its products. Has created good dealership network presently in the Indian market.
The Path Ahead
?
?
?
The JV may be continued but HHML needs to grow R&D of its own. If the JV is not continued it may benefit Honda Motors. Chances of competition growing between HHML and HMSI are high.
Future of JV
1st Possibility: JV Fails to continue Individual gains stood ahead of mutual gains: ? HHML bargained huge concession from HMC while renegotiating in 1994. ? HHML learning and developing their own R&D. ? Ambitious plans and strategies of both groups for future. ? Partners turning into Competitors. ? Successful entry of HMSI in Indian market and strengthening their dealership network.
?
Future of JV (contd.)
2nd Possibility: JV continues successfully Both still needs each other and cannot survive without each other. ? Tough to resist as competitors. ? Hero Group still needs technical expertise of HMC. ? HMSI developing 100 dealerships but cannot compete with a wider network of Hero Group consisting of about 4000. ? HMC marking their presence around 25 years cannot still stands small in front of Hero Group’s presence of 4 decades and their understanding of Indian market. ? Honda after developing a large dealership network still needs Hero Group for its large service centre network.
?
doc_559624309.ppt