The Hero Honda Break-Up
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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 |
Abstract Case Intro 1 Case Intro 2 Excerpts
Splitsville
On December 16, 2010, India-based Hero Group (Hero) and Japan-based Honda Motor Co. (Honda) signed an agreement to dissolve their partnership, thus putting an end to one of the most successful joint ventures in the Indian automobile industry. The companies decided to part ways owing to unresolved disputes, and their own plans for the Indian and international markets. Honda decided to exit the venture by selling its 26% stake to the Munjal family, the owners of Hero. On ending the partnership, Fumihiko Ike, Managing Director and COO, Honda-Asia and Oceania, said, "When we entered India, the idea was to explore the market, but much has changed since then.
Both companies have their own vision of what they want." He added, "Our joint venture agreement will be dissolved, but our positive relationship will continue. Honda will grant the necessary license to enable continued production and sales of current products as well as license for new products."
Hero and Honda entered into a joint venture, Hero Honda Motors Ltd. (Hero Honda), in 1984 and introduced Hero Honda CD100 the next year. The first 100 CC bike in the country provided high mileage and went on to become the most popular two-wheeler in the country. The joint venture also resulted in several path breaking motorcycles, like the Splendor and the Passion. However, over the years, differences emerged between the partners mainly due to Hero's global plans which were hampered by its agreement with Honda5, and the foray of Honda's Indian venture, Honda Motorcycles and Scooters India (HMSI), into the Indian motorcycle market, directly competing with Hero Honda. Both the companies decided to part amicably, with Honda continuing to provide technological support to Hero till 2014, and Hero continuing to pay royalties to Honda. er franchise agreement (MFA) with Arcos. Under the MFA, Arcos operated all of McDonald's-branded restaurants in Latin America and the Caribbean....
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