Hero honda Demerger
Download as PPTX, PDF•4 likes•2,785 views
1. The document discusses the history of Hero Honda and its joint venture with Honda, formed in 1984. It was very successful and became the largest motorcycle manufacturer in the world, but the partnership ended in 2010. 2. Honda chose Hero Group for a joint venture to manufacture motorcycles in India due to Hero's wide distribution network, market understanding, brand salience, and engineering capabilities. The joint venture was highly successful. 3. However, in 2010 Hero and Honda parted ways due to conflicts over exports and Honda's launch of its own 110cc motorcycle in India through its subsidiary HMSI. Both companies had visions for high sales volumes post-split.
Hero honda Demerger
- 1. By 1. Aditya 2. Debangshu 3. Kiran Kumar 4. Manikandan 5. Sandra
- 2. MARKET BEFORE LIBERALIZATION License Raj Restricted foreign investment In 1980’s, government permitted joint venture with minority foreign holding in Indian companies Supply side economics to demand side economics
- 3. HERO BEFORE JOINT VENTURE Hero cycles manufactured 16000 cycles per day Sold about 86 million bicycles till 2002 Nurtured an excellent network of dealers to serve to serve India's expansive market
- 4. HONDA STRATEGIES Honda motor company initially planned to enter two wheeler segment and electric generator segment Honda first chose kinetic engineering ltd. and formed Kinetic Honda Motors Ltd. joint venture for scooter manufacturing It chose Hero Group for motor cycle manufacturing as joint venture
- 5. WHY HERO FOR JOINT VENTURE Wide Distribution Network Through Dealers Better Understanding Of The Market Dynamics Limited Options With Honda Wide Experience In Manufacturing Of Vehicles Commitment To Quality Focus On Financial And Raw Material Processes Salience Of Hero Brand Cordial Industry Relation Engineering Capabilities
- 7. STRENGTHS 1. Retained the position of World no 1 Two-Wheeler company. 2. High sales growth 3. Fuel economy 4. Quality policy 5. Service schedule 6. High financial performance WEAKNESSES 1. High maintenance 2. Labor reactions 3. Lack of recycling scrap OPPORTUNITIES 1. High GDP and increasing income level of consumer 2. Good will of company THREATS 1. Finance assistance 2. Technical renovation aspect SWOT ANALYSIS OF HERO HONDA
- 8. SUCCESS STORY OF HERO HONDA Hero Honda Motors had grown consistently, earning the title of the world’s largest motorcycle manufacturer with annual sales volume of over 7 million Targeted the rural markets Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle – Hero Honda Splendor Company lead in both domestic two wheeler industry with nearly 48 % and motorcycle segment, with the shares of 59% Over 9 million motorcycles on Indian roads Deep market penetration with 5000 outlets
- 9. REASONS FOR SUCCESS 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.
- 10. THE PARTING OF HERO AND HONDA
- 12. REASONS OF PARTING OF HERO HONDA DEMERGER Conflict of Interest (Exports) Launch of HMSI’s 110 cc Motorcycle Hero Honda wanted its independent R&D and manufacture its own products Honda’s Indian Subsidiary HMSI Honda representative On The Board
- 13. DECEMBER 16’ 2010, 1600 HOURS
- 16. VISION OF HERO MOTOCORP POST SPLIT 1. 10 Million volume company. 2. 10% volume from exports. 3. Cumulative sales of 100 million two- wheelers by 2020.
- 17. VISION OF HONDA POST SPLIT 1. Honda aimed at becoming market leader in India by 2020 and sells no less than 10 million two-wheelers in India alone. 2. With the impending Honda threat , Hero Moto corp. had begun looking outward for growth even as things got hot under the collars in its home market, India!
- 18. CHALLENGES FOR HERO MOTOCORP. Transition of the brand. Change of name of the bikes. Launching products Exports Managing our costs. Managing costs Philosophical shift.
- 19. POSITIVE ANTICIPATIONS ( IMMEDIATELY AFTER SPLIT ) POSITIVES No royalty after 2014 Continued technical support till 2014 3 Years to develop R&D capabilities Higher exports
- 20. NEGATIVE ANTICIPATIONS ( IMMEDIATELY AFTER SPLIT ) NEGATIVES R&D spent for Hero Honda will rise. Reserving good models for HMSI Exports may not rise as fast as expected HMSI is likely to turn more aggressive in its plans