Is It HONDA That Made it HERO?

Team Members :Vikash Prince Saquib Narendra Amit

This case is all about the Hero Honda that how Hero became Hero Honda Hero was mainly in bicycles business and had expanded it by diversification (Majestic auto ltd., Munjal castings, Sunbeam Castings, Hero Corporate Services, Hero Exports etc.)

But after sometime Hero decide to go to two-wheeler market with having a dream to be the leader of the market

Automobile products of India started manufacturing scooters in 1950. Between 1940-80 government did not give license to foreign company for manufacturing two wheeler in India. In the mid of 80s the government allow to foreign company with the joint venture of local company due to that the face was changed. The two-wheeler market witnessed a veritable boom with four indo-japanese joint venture: Hero Honda, TVS Suzuki, Bajaj Kawasaki and kinetic Honda.

Joint Venture Problems

Fall in the share price when HMSIs announcement was made on August 1999 Honda Motor Company Ltd. announced it was setting up a subsidiary (HMSI) The development of the CD-100 motorcycle was very successful but competition became tough 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 of focus

 External Problems The Indian government starting 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

After liberlized of indian market Honda motor company was searching for best suitors for joint venture in two wheeler industry. Honda motors company made a joint venture with Kinetic Electronic Ltd. as Kinetic Honda motors ltd. At last HMC made a joint venture with Hero group for motorcycles venture. Deal done in 1984 and the firm called Hero Honda Motors ltd.

 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

 Extending the joint venture agreement Bettering the terms in regards to royalties Requesting more timely cooperation Manufacturing the Street (Dream) models Increasing the quantity of components and subassemblies purchased

 Use company philosophy as competitive advantage Create a marketing campaign around the business strategy Building motorcycles for the common man Reasonably priced with above average fuel economy Emphasize this could increase the likeliness of the bikes as being a substitute for the auto market, especially when gas prices are so high

 Utilize a related diversification strategy enter the scooter market Use expertise of Indias terrain and people to capture the scooter market before new sister company Honda Motor Scooters India Ltd. enters the market Capitalize on positive and popular brand image

Share similar resources for motorcycles and scooters

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 Strengths Ability to understand customers needs and wants Recognized and established brand name Effective advertising capability Weaknesses R&D is not close to the Hero manufacturing plant Hero is vulnerable in the joint venture because Honda Motor Company has so much power

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 Opportunities Global expansion into the Caribbean and Central America Expansion of target market (include women) Become Indias leader in the scooter market

Threats Honda Motorcycles and Scooters India can take away market share and cause joint venture to go sour Bajaj Motors is a strong competitor

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 What would be the future hold of HHM? What is the market potential for HMSI? Would HMC go back to its holding with its R & D or it should go for the new ways? Would HHM have to dismantle its competitors as like it did in past? What would be the future for both Honda and Hero?

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 Yes!
Established name and dominant market position Strong Marketing Department Local Knowledge Technological Advancements Introduction of scooter Renewal of joint venture

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 After reading the whole it can be concluded that Hero is not individually made by Honda because it was the Honda which made Hero Honda with the great association of Hero

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Thank you! Questions/comments?