Driven By The TrustDriven By The TrustOf Our CustomersOf Our Customers

2

Problems & IssuesProblems & Issues

Joint Venture ProblemsJoint Venture Problems Honda Motor Company Ltd. announced it was Honda Motor Company Ltd. announced it was

setting up a subsidiary (HMSI)setting up a subsidiary (HMSI) The development of the CD-100 motorcycle was The development of the CD-100 motorcycle was

only successful for a very short period of time only successful for a very short period of time Honda held complete responsibility for the Honda held complete responsibility for the

Research & Development department for Hero Research & Development department for Hero HondaHonda

Honda negotiated new ventures and Honda negotiated new ventures and partnerships with other Indian manufacturers in partnerships with other Indian manufacturers in the automobile and power equipment industry, the automobile and power equipment industry, leaving Hero completely outleaving Hero completely out

3

Problems & IssuesProblems & Issues

External ProblemsExternal Problems The Indian government starting allowing The Indian government starting allowing

foreign companies to enter the Indian foreign companies to enter the Indian markets through joint venturesmarkets through joint ventures

The Indian marketplace was gaining The Indian marketplace was gaining more entrants causing rivalry in the more entrants causing rivalry in the industry to riseindustry to rise

Competitors such as TVS-Suzuki, Competitors such as TVS-Suzuki, Yamaha from Japan and Bajaj Auto Yamaha from Japan and Bajaj Auto began to introduce newer product linesbegan to introduce newer product lines

4

Implementing Implementing ChangesChanges Management introduced new ideas Management introduced new ideas

coupled with improved terms of coupled with improved terms of agreement for their joint ventureagreement for their joint venture

Two primary goals in mindTwo primary goals in mind Continuing their success Continuing their success Maintaining their existing market shareMaintaining their existing market share

5

New TacticsNew Tactics

Collaborating with Steyr Daimler Collaborating with Steyr Daimler PuchPuch

Supplying completely knocked-down Supplying completely knocked-down (CKD) kits(CKD) kits

Establishing a more proactive Establishing a more proactive marketing departmentmarketing department

Expanding the distribution networkExpanding the distribution network

6

RenegotiatingRenegotiating

Extending the joint venture Extending the joint venture agreementagreement

Bettering the terms in regards to Bettering the terms in regards to royaltiesroyalties

Requesting more timely cooperationRequesting more timely cooperation Manufacturing the Street and Dream Manufacturing the Street and Dream

modelsmodels Increasing the quantity of Increasing the quantity of

components and subassemblies components and subassemblies purchasedpurchased

7

RecommendationsRecommendations

Use company philosophy as Use company philosophy as competitive advantagecompetitive advantage Create a marketing campaign around Create a marketing campaign around

the business strategythe business strategy Building motorcycles for the common manBuilding motorcycles for the common man Reasonably priced with above average fuel Reasonably priced with above average fuel

economyeconomy Emphasize this could increase the likeliness of the Emphasize this could increase the likeliness of the

bikes as being a substitute for the auto market, bikes as being a substitute for the auto market, especially when gas prices are so highespecially when gas prices are so high

8

RecommendationsRecommendations

Utilize a related diversification Utilize a related diversification strategy – enter the scooter marketstrategy – enter the scooter market Use expertise of India’s terrain and Use expertise of India’s terrain and

people to capture the scooter market people to capture the scooter market before new sister company Honda Motor before new sister company Honda Motor Scooters India Ltd. enters the marketScooters India Ltd. enters the market

Capitalize on positive and popular brand Capitalize on positive and popular brand imageimage

Share similar resources for motorcycles Share similar resources for motorcycles and scootersand scooters

9

RecommendationsRecommendations

Expand to countries that heavily Expand to countries that heavily utilize two-wheelers utilize two-wheelers Popular vacation spots in Central and Popular vacation spots in Central and

South America as well as the CaribbeanSouth America as well as the Caribbean Tourists year-round; may opt to rent Tourists year-round; may opt to rent

motorcycles or scooters versus automobilesmotorcycles or scooters versus automobiles Could be potential for high volume/fleet Could be potential for high volume/fleet

salessales Examine warm tourist locations within Examine warm tourist locations within

the United States including California the United States including California and Florida for possible market entryand Florida for possible market entry

10

Case UpdateCase Update

Hero Honda TodayHero Honda Today India and Hero HondaIndia and Hero Honda

Fuel EfficientFuel Efficient Pollution Control/QualityPollution Control/Quality

TechnologyTechnology Customers, Dealers/VendorsCustomers, Dealers/Vendors

Fiscal Year 2003-2004Fiscal Year 2003-2004 Market ShareMarket Share Distribution & Service NetworkDistribution & Service Network Routes/Delivery – MapInfoRoutes/Delivery – MapInfo

11

Case UpdateCase Update

Fiscal Year 2004-2005Fiscal Year 2004-2005 Earnings ResultsEarnings Results

Technological SupportTechnological Support

September 30th, 2004

Rs 1,943.60

September 30th, 2005

Rs 2,379.20

12

Case UpdateCase Update

Current ModelsCurrent Models 100 cc plus segment100 cc plus segment

Super Splendor & GlamourSuper Splendor & Glamour 150 cc plus segment150 cc plus segment

AchieverAchiever Scooter Segment – wider customer baseScooter Segment – wider customer base

““Pleasure”Pleasure”

13

SWOT AnalysisSWOT Analysis

StrengthsStrengths Ability to understand customer’s needs Ability to understand customer’s needs

and wantsand wants Recognized and established brand nameRecognized and established brand name Effective advertising capabilityEffective advertising capability

WeaknessesWeaknesses R&D is not close to the Hero R&D is not close to the Hero

manufacturing plantmanufacturing plant Hero is vulnerable in the joint venture Hero is vulnerable in the joint venture

because Honda Motor Company has so because Honda Motor Company has so much powermuch power

14

SWOT AnalysisSWOT Analysis

OpportunitiesOpportunities Global expansion into the Caribbean and Global expansion into the Caribbean and

Central AmericaCentral America Expansion of target market (include Expansion of target market (include

women)women) Become India’s leader in the scooter Become India’s leader in the scooter

marketmarket ThreatsThreats

Honda Motorcycles and Scooters India can Honda Motorcycles and Scooters India can take away market share and cause joint take away market share and cause joint venture to go sourventure to go sour

Bajaj Motors is a strong competitorBajaj Motors is a strong competitor

15

A Bright Future?A Bright Future?

YesYes!! Established name and dominant market Established name and dominant market

positionposition Strong Marketing DepartmentStrong Marketing Department

Local KnowledgeLocal Knowledge Technological AdvancementsTechnological Advancements Introduction of scooterIntroduction of scooter Renewal of joint ventureRenewal of joint venture

Thank you!Thank you!Questions/comments?Questions/comments?