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    Presentation On Joint Venture: Hero Honda

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    mamatadalei
    This presentation summarizes the Hero Honda joint venture between Hero Cycles and Honda Motor Company. It describes how the license raj limited foreign companies in India prior to the 1980s. Honda selected Hero Group for its engineering capability, brand reputation, distribution network, quality commitment, and experience handling large production volumes. In 1984, the two companies formed Hero Honda Motors Ltd with each owning 26% equity. The joint venture was highly successful, making Hero Honda the world's largest motorcycle manufacturer by 2001 with over 2 million annual sales. However, concerns remained about competition increasing and Honda's long-term commitment post-2004.

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    Presentation On Joint Venture: Hero Honda

    Uploaded by

    mamatadalei
    21 views11 pages
    This presentation summarizes the Hero Honda joint venture between Hero Cycles and Honda Motor Company. It describes how the license raj limited foreign companies in India prior to the 1980s. Honda selected Hero Group for its engineering capability, brand reputation, distribution network, quality commitment, and experience handling large production volumes. In 1984, the two companies formed Hero Honda Motors Ltd with each owning 26% equity. The joint venture was highly successful, making Hero Honda the world's largest motorcycle manufacturer by 2001 with over 2 million annual sales. However, concerns remained about competition increasing and Honda's long-term commitment post-2004.

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    This presentation summarizes the Hero Honda joint venture between Hero Cycles and Honda Motor Company. It describes how the license raj limited foreign companies in India prior to the 1980s. Honda selected Hero Group for its engineering capability, brand reputation, distribution network, quality commitment, and experience handling large production volumes. In 1984, the two companies formed Hero Honda Motors Ltd with each owning 26% equity. The joint venture was highly successful, making Hero Honda the world's largest motorcycle manufacturer by 2001 with over 2 million annual sales. However, concerns remained about competition increasing and Honda's long-term commitment post-2004.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    21 views11 pages

    Presentation On Joint Venture: Hero Honda

    Uploaded by

    mamatadalei
    This presentation summarizes the Hero Honda joint venture between Hero Cycles and Honda Motor Company. It describes how the license raj limited foreign companies in India prior to the 1980s. Honda selected Hero Group for its engineering capability, brand reputation, distribution network, quality commitment, and experience handling large production volumes. In 1984, the two companies formed Hero Honda Motors Ltd with each owning 26% equity. The joint venture was highly successful, making Hero Honda the world's largest motorcycle manufacturer by 2001 with over 2 million annual sales. However, concerns remained about competition increasing and Honda's long-term commitment post-2004.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 11

    Presentation on

    Hero Honda
    Joint Venture
    By:
    Ashish Agarwal
    Gunjan Singh
    Manish Chawla
    The Market before JV
     The license raj that existed prior to economic
    liberalization (1940s-1980s) in India did not
    allow foreign companies to enter the market.
     In the mid-’80s when the Indian government
    started permitting foreign companies to enter
    the Indian market through minority joint
    ventures.
     The entry of these new foreign companies
    transformed the very essence of competition
    from the supply side to the demand side.
    What Was Hero Before JV.
     Hero Cycles manufactured Over 16000
    Bicycles a day.
     They Sold about 86 million bicycles in
    aggregate as of 2002.
     They had nurtured an excellent network of
    dealers to serve India’s expansive markets.
     Over the years Hero Group had entered
    multiple business areas.
    Some Facts About Honda.
     HMC initial plans called for both two-wheeler
    market and the electric generator market.
     HMC first chose Kinetic Engineering Ltd. And
    formed Kinetic Honda Motors Ltd. But this JV
    would work in field of Scooters Manufacturing.
     HMC came to Hero Group as the Last
    compromise choice for its motorcycle venture.
    Honda selected the Hero Group for a variety of
    reasons, which included:
     􀂃 Its engineering capability
     􀂃 Relevance and salience of HERO brand.
     􀂃 Distribution network.
     􀂃 Commitment to Quality.
     􀂃 Know-how and experience in handling large
    volume production and distribution.
     􀂃 Tight focus on financial and raw material
    processes.
     􀂃 Cordial Industrial Relations.
    The Deal Is Done.(June 1984)
     Honda agreed to provide tech. know-how to
    HHM and setting up manufacturing facilities.
    This included the future R & D efforts.
     Honda agreed for a lump sum fee of
    $500,000 & 4% royalty on SP.
     Both Partners held 26% of the equity with
    other 26% sold to the public and the rest held
    to financial institutions.
    Success Story
     HHM had grown consistently, earning the title of the
    world’s largest motorcycle manufacturer after having
    churned out 1.3 million vehicles in 2001.
     World’s largest two-wheeler manufacturer with annual
    sales volume of over 2 million motorcycles.
     Owns world’s biggest selling motorcycle brand – Hero
    Honda Splendor.
     Over 9 million motorcycles on Indian roads.
     Deep market penetration with 5000 outlets.
    Success Story (Contd.)
    Reasons for success
     The deep penetration network of hero largely
    benefited the sales.
     Absence of major competitors in initial years.
     Sound and proven technical capabilities of
    Honda and the reliability of Hero.
     Increased market for motorcycles:
     Better Fuel efficiency.
     Change in people’s perception.
     Decrease in price difference with scooters.
    Some concerns
     In August 1999, HMC announced Honda
    Motorcycle & Scooter India (HMSI) to initially
    make scooters and later, motorcycles as well.
    HHM’s stock plummeted by 30% on the day
    of the announcement.
     JV with Honda Motors : A Question mark post
    2004.
     Possible hike in royalty .
     Competition hotting Up.
     Recovery in the Scooter segment
    Thank You

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