Chris DeMicco, Laura Dunne, Dave Gelber, Sarah Haight, Sarah Hunkins

1
Driven By The Trust Of Our Customers

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

2
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 in the automobile
  and power equipment industry, leaving Hero
  completely out

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

4
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

5
New Tactics

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

6
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

7
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

8
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

9
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

10
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

11
Case Update

• Fiscal Year 2004-2005
• Earnings Results
• Technological Support

12
Case Update

• Current Models
• 100 cc plus segment
• Super Splendor Glamour
• 150 cc plus segment
• Achiever
• Scooter Segment wider customer base
• Pleasure

13
SWOT Analysis

• Strengths
• Ability to understand customers needs and wants
• Recognized and established brand name
• Effective advertising capability
• Weaknesses
• RD is not close to the Hero manufacturing plant
• Hero is vulnerable in the joint venture because
  Honda Motor Company has so much power

14
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

15
A Bright Future?

• Yes!
• Established name and dominant market position
• Strong Marketing Department
• Local Knowledge
• Technological Advancements
• Introduction of scooter
• Renewal of joint venture

16
Thank you! Questions/comments?