Published on October 20, 2013
DHAK DHAK GO to DHAK DHAK “GONE”
HERO HONDA MERGER TVS BAJAJ SUZUKI KINETIC ACCESS TO INDIAN MARKET LATEST TECHNOLOGY ACCESS TO INDIAN MARKET LATEST TECHNOLOGY HONDA
SWOT ANALYSIS OF HERO HONDA STRENGTHS WEAKNESSES Retained the coveted position of World No 1 Two- Less promotion wheeler Company for several consecutive years. High maintenance High sales growth Lack of recycling scrap Fuel economy Labor relations Quality policy Service schedule High financial performance OPPORTUNITIES THREATS High GDP and increasing income level of Finance assistance consumer. Inflation Good will of the company Technical renovation aspect
DIFFERENCES Honda's reluctance to fully and freely share technology with Hero Refusal of Hero Honda to merge its spare parts business with HMSI Non – union model Management activity as coercive and repressive Incompetent people management Indian management blocking direct access to top company executive 3 joys of Honda as means of control cross – cultural management Managing Indian people Complacency on the part of Indian managers
RATIONALE OF DEMERGER Honda Representatives On the Board Honda’s Subsidiary HMSI Hero Honda wanting to do its independent R&D and manufacturing its own products… DEMERGER Conflict of Interest (Exports) Launch of HMSI’s 110cc Motorcycle
DECEMBER 16’ 2010, 1600 HOURS
VISION OF HERO MOTOCORP POST SPLIT 10 million volume company 10% of volume from exports Cumulative sales of 100 million two-wheelers by 2020
VISION OF HONDA POST-SPLIT Honda aimed at becoming market leader in India by 2020 and sell no less than 10 million two wheelers in India alone. (Prashanth, 2013) With the impending Honda threat, Hero Motocorp had begun looking outward for growth even as things got hot under the collar in its home market, India!
CHALLENGES FOR HERO MOTOCORP Transition of the brand Change of name on the bikes Launching products Exports Managing our costs Managing costs Philosophical shift
POSITIVE ANTICIPATIONS (IMMEDIATELY AFTER SPLIT) Continued technical support till 2014 Higher exports Positives Three years to develop its R&D capabilities No royalty after 2014
NEGATIVE ANTICIPATIONS (IMMEDIATELY AFTER SPLIT) Reserving good models for HMSI HMSI is likely to turn more aggressive in its plans Negatives Exports may not rise as fast as expected R&D spend for Hero Honda will rise
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