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Hero Honda: Challenges and Strategies

Hero Honda faced problems with its joint venture with Honda Motor Company, including Honda holding responsibility for research and development. It also faced increased competition in the Indian market from other foreign entrants. To address these issues, Hero Honda introduced new ideas and terms to its joint venture agreement, and pursued tactics like collaborating with other companies, expanding distribution, and renegotiating terms with Honda. The document recommends Hero Honda leverage its brand image and expertise, enter new markets, and expand its product line to scooters. It provides an update on Hero Honda's market share and models, and believes the company has a bright future through maintaining its brand, pursuing technological advances, and introducing new products.

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787 views16 pages

Hero Honda: Challenges and Strategies

Hero Honda faced problems with its joint venture with Honda Motor Company, including Honda holding responsibility for research and development. It also faced increased competition in the Indian market from other foreign entrants. To address these issues, Hero Honda introduced new ideas and terms to its joint venture agreement, and pursued tactics like collaborating with other companies, expanding distribution, and renegotiating terms with Honda. The document recommends Hero Honda leverage its brand image and expertise, enter new markets, and expand its product line to scooters. It provides an update on Hero Honda's market share and models, and believes the company has a bright future through maintaining its brand, pursuing technological advances, and introducing new products.

Uploaded by

vahid
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Driven By The Trust

Of Our Customers

Chris DeMicco, Laura Dunne, Dave Gelber, Sarah


Haight, Sarah Hunkins

December 2nd, 2005


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 2
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

3
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

4
New Tactics
 Collaborating with Steyr Daimler
Puch
 Supplying completely knocked-down
(CKD) kits
 Establishing a more proactive
marketing department
 Expanding the distribution network

5
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
6
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

7
Recommendations
 Utilize a related diversification
strategy – enter the scooter market
 Use expertise of India’s 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

8
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
9
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
10
Case Update
 Fiscal Year 2004-2005
 Earnings Results
 Technological Support

September 30th, Rs
2004 30th,
September 1,943.60
Rs
2005 2,379.20

11
Case Update
 Current Models
 100 cc plus segment
 Super Splendor & Glamour
 150 cc plus segment
 Achiever
 Scooter Segment – wider customer base
 “Pleasure”

12
SWOT Analysis
 Strengths
 Ability to understand customer’s 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 13
SWOT Analysis
 Opportunities
 Global expansion into the Caribbean and
Central America
 Expansion of target market (include
women)
 Become India’s leader in the scooter
market
 Threats
 Honda Motorcycles and Scooters India
can take away market share and cause
joint venture to go sour
14
 Bajaj Motors is a strong competitor
A Bright Future?
 Yes!
 Established name and dominant market
position
 Strong Marketing Department
 Local Knowledge
 Technological Advancements
 Introduction of scooter
 Renewal of joint venture

15
Thank you!
Questions/comments?

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