Driven By The Trust Of Our Customers

Chris DeMicco, Laura Dunne, Dave Gelber, Sarah Haight, Sarah Hunkins
December 2nd, 2005

HISTORY
Automobile products of india started manufacturing scooters in 1950. Between 1940-80 govt did not give licence 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.

Problems & Issues

Joint Venture Problems
Honda Motor Company Ltd. announced it was setting up a subsidiary (HMSI) The development of the CD-100 motorcycle was only successful for a very short period of time Honda held complete responsibility for the Research & Development department for Hero Honda Honda negotiated new ventures and partnerships with other Indian manufacturers 3

Problems & Issues

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

FORGING A PARTNERSHIP WITH HMC

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 Honda motors ltd.But KEL was intersted to manufacture only scooters due to the prevailing trend. 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.

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

New Tactics
Collaborating with Steyr Daimler Puch Supplying completely knocked-down (CKD) kits Establishing a more proactive marketing department Expanding the distribution network

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

Recommendations
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

Recommendations
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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Recommendations
Expand to countries that heavily utilize two-wheelers
Popular vacation spots in Central and South America as well as the Caribbean
Tourists year-round; may opt to rent motorcycles or scooters versus automobiles

Could be potential for high volume/fleet sales Examine warm tourist locations within the United States including California and Florida for possible market entry
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Case Update
Hero Honda Today
India and Hero Honda
Fuel Efficient Pollution Control/Quality

Technology
Customers, Dealers/Vendors

Fiscal Year 2003-2004

Market Share Distribution & Service Network Routes/Delivery MapInfo
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Case Update
Fiscal Year 2004-2005
Earnings Results
Technological Support
September 30th, 2004 September 30th, 2005 Rs 1,943.60 Rs 2,379.20

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Case Update
Current Models
100 cc plus segment
Super Splendor & Glamour

150 cc plus segment

Achiever

Scooter Segment wider customer base

Pleasure

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SWOT Analysis
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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SWOT Analysis
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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A Bright Future?

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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Thank you!
Questions/comments?