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Conflict, Competition and
Collaboration
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Collaboration of Hero Honda
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Motors Limited
12/10/2010

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Alisha Makhijani, Anuj Gosalia and Binal Deopura

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Collaboration of Hero Honda
Motors Limited
Market Before Joint Ventures
• 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.

Hero Company
 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

 Market capitalization of over €3.43 bn (USD4.18 bn)

 Global Partnerships and over 5000 Business Associates.

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.
Collaboration
• 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

Hero Honda’s Mission

 Strive for synergy between technology, systems and human resources, to
produce products and services.

 Maintain the highest standards of ethical and social responsibilities.

 World leader because of its excellent manpower, proven management,

extensive dealer network.

 Efficient supply chain and world class products with cutting edge
technology from Honda Motor company Japan.

Milestones of Hero Honda

 1984- Hero Honda Motors ltd Incorporated.

 1985- First Motorcycle “CD 100” rolled out.

 2003- Becomes the first Indian company to cross cummulative 7million

marks.

 Splendour emerged as the world’s largest selling model.

 2009- Hero Honda is the World No. 1 for the 8th year in a row.

 Sales volume of 3,722,000 units in 2008-09.

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.

Strategies to be Global Leader

• Hero Group NOT only as a “low cost provider” but also as “VALUE FOR
MONEY” provider

• Build strong alliances and relationships with all stakeholders in the chain

• Benchmark against best global practices

• Product Innovation keeping in mind the sensitivities of the target market

• Strong culture of performance

Financials

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.