The Hero Honda Break-Up

The Hero Honda Break-Up
Case Code: BSTR409
Case Length: 17 Pages
Period: 1984-2011
Pub Date: 2012
Teaching Note: Not Available		 Price: Rs.400
Organization: Hero Group, Honda Motor Company, Hero Honda
Industry: Automobile
Countries: India
Themes: Joint Venture, Strategic Alliance
The Hero Honda Break-Up
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

This case is about the split between the Hero Group and Honda Motor Company. Hero Honda Motors Ltd. (Hero Honda), a joint venture between Hero Cycles of India and Honda of Japan, came into existence in 1984 as a motorcycle and scooter manufacturer in India. In 2001, Hero Honda became the largest two wheeler manufacturing company in India with over a million units produced as well as the 'World's number one' company in terms of the unit volume sales for the calendar year. The technology for manufacturing the bikes was provided by Honda whereas Hero was strong in its distribution and service network spread across the country.

In August 1999, Honda Motor Company announced the setting up of Honda Motorcycle and Scooter India (HMSI) for making scooters and later motorcycles as well. After this, the stock of Hero Honda fell by 30%. Subsequently, HMSI started producing motorcycles, competing directly with Hero Honda. Hero felt that its ambition to go international was being hampered by the joint venture. Both the companies decided to end the joint venture and signed their parting agreement on December 16, 2010. With the split, the erstwhile partners became competitors. Both the companies have several opportunities ahead of them and are likely to face challenges to gain and consolidate their position in the Indian two wheeler market.

Issues

  • Understand the benefits (utilizing strong points of both) and problems (different ambitions) of companies being in a Joint Venture
  • Understand how the companies can together make the Joint Venture a success
  • Discuss whether the decision of both companies to split Hero Honda was correct
  • Discuss the future strategies of both the companies and what they need to do to succeed
  • Analyze who will benefit more from this split
  • Analyze the impact of this split on consumers and competitors

Contents

Keywords

Honda Motor Co., Hero Group, Hero Honda, Hero MotoCorp., Honda Motorcycles and Scooters India, HMSI, Joint Venture, Break-Up, Split, Two Wheeler market in India, Munjal family, Technology, CD 100, Rebranding, Scooters, Motorcycles, Gearless scooters, Technology sharing, International markets, Royalty

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