Jv of Hero Honda Essay

742 WordsMar 12, 20153 Pages
Nature of the strategic alliance Hero Group of India signed a joint venture agreement with Honda Motor Corporation, forming Hero Honda in 1984. Honda had wanted to enter the market, motorized two-wheeled transport, where it had no prior experience. It had initially planned to enter the two wheeler segment and electric generator segment. It first chose kinetic engineering ltd. and formed Kinetic Honda Motors Ltd. joint venture for scooter manufacturing and Hero Group for motor cycle manufacturing as joint venture. The shareholding pattern was: Hero Group 26%, Honda Motor 26%, Financial Institutions 37%, Others 11%(http://www.thehumanfactor.in/tim/TIM3.html). Honda got into alliance with Hero group for their wide distribution network through dealers, experience in manufacturing of vehicles, better understanding of the markets, their commitment to quality,engineering capabilities and the salience of the Hero brand. Honda wanted to leverage on the campany’s modern manufacturing concepts such as just-in-time supply chain management, team-based manufacturing performance evaluation, and rigorous quality management programs. Hero’s management practices had led to exceptional results, low employee turnover, and zero industrial unrest. Also Honda had a limited option considering their focus on the financial and raw material processes. The alliance was made with Honda to provide the technical know how and assistance in setting the manufacturing facilities. The technology for manufacturing the bikes was provided by Honda whereas Hero was strong in its distribution and service network spread across the country( http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/BSTR409.htm). Hero Honda started its journey with the launch of Hero Honda CD-100 motorcycle, the first four-stroke motorcycle to be launched in the Indian market. In 2001, Hero Honda

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