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

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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

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

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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
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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

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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

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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, Rs
2004 30th,
September 1,943.60
Rs
2005 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 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
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 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

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 Thank you!
Questions/comments?