Honda has been the world's largest motorcycle manufacturer since 1959. After succeeding in the automobile industry in Eastern Asia since 1949, Honda started to expand its business by registering as a corporation in different parts of the world resulting in huge growth in the vehicle segment. However, It struggled to establish their corporation in many countries as they were unable to comply with the rules and regulation of the country. Honda thereafter took up separate methods of operation to expand worldwide. One of the key market eyed by Honda in Asia was India but India proved to be a difficult destination for Honda to enter and hence, the company opted to proceed with a joint venture plan.Initially, the company tried to reach an agreement with Bajaj Auto Ltd thereafter concludinga deal with the Hero Group. Honda's entry plan for India's two wheeler market was divided into two segments. Firstly, the joint venture with the Ludhiana based Munial family's Hero group for motor cycles, called Hero Honda. And Hero and Honda group both taking 26% stake in the Company. The second JV that Honda entered was with the Pune based Eirodia Group's Kinetic Engineering Ltd (Kinetic) which was known for Luna mopeds. Consequently, 'Hero Honda' was established in 1984. In the year 1985 the company commenced its commercial production at Dhacubera plant in Haryana and introduced their first motorcycle CD 100 in the market During the 1980s, the company introducedmotorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it – Forgetiť that emphasised the motorcycle's fuel efficiency helpedthe company growata double-digit pace since inception. The joint venture between Heroand Honda not only created the world's single largesttwo wheeler company but also one of the most successful joint ventures worldwide. The joint venture Hero Honda was only for domestic production and consumption. The agreement was subsequent, modified to allowexports of limited products to a fewcountries, namely Sri Lanka, Bangladesh, Nepal, and Columbia. Most global companies want to have managementcontrol in their respective joint ventures. Once a substantial amount of business was generated there was no longer any need to continue with the operation. In December 2010, the board of directors of the Hero Honda Group decided to terminate the joint venture between Heroand Honda in a phased manner. Honda exited the joint venture through a series of off-markettransactions by giving the Munial family–which held a 26% stake in the company-an additional 26%. Honda.wanting to focus.onl.on.its.independent full.owned two-wheeler.subaidiarxHonda Motorsxcleand Scooter.india.(HMSI). Question: A. Why did Honda choose Joint venture route to enter indian 2 Wheeler marketyis a vis the routes of I. Exportfrom other Asian countries H. Licensed manufacture and franchisee i. FDI B. What are the challenges faced in Joint ventures by both partners?
Honda has been the world's largest motorcycle manufacturer since 1959. After succeeding in the automobile industry in Eastern Asia since 1949, Honda started to expand its business by registering as a corporation in different parts of the world resulting in huge growth in the vehicle segment. However, It struggled to establish their corporation in many countries as they were unable to comply with the rules and regulation of the country. Honda thereafter took up separate methods of operation to expand worldwide. One of the key market eyed by Honda in Asia was India but India proved to be a difficult destination for Honda to enter and hence, the company opted to proceed with a joint venture plan.Initially, the company tried to reach an agreement with Bajaj Auto Ltd thereafter concludinga deal with the Hero Group. Honda's entry plan for India's two wheeler market was divided into two segments. Firstly, the joint venture with the Ludhiana based Munial family's Hero group for motor cycles, called Hero Honda. And Hero and Honda group both taking 26% stake in the Company. The second JV that Honda entered was with the Pune based Eirodia Group's Kinetic Engineering Ltd (Kinetic) which was known for Luna mopeds. Consequently, 'Hero Honda' was established in 1984. In the year 1985 the company commenced its commercial production at Dhacubera plant in Haryana and introduced their first motorcycle CD 100 in the market During the 1980s, the company introducedmotorcycles that were popular in India for their fuel economy and low cost. A popular advertising campaign based on the slogan 'Fill it - Shut it – Forgetiť that emphasised the motorcycle's fuel efficiency helpedthe company growata double-digit pace since inception. The joint venture between Heroand Honda not only created the world's single largesttwo wheeler company but also one of the most successful joint ventures worldwide. The joint venture Hero Honda was only for domestic production and consumption. The agreement was subsequent, modified to allowexports of limited products to a fewcountries, namely Sri Lanka, Bangladesh, Nepal, and Columbia. Most global companies want to have managementcontrol in their respective joint ventures. Once a substantial amount of business was generated there was no longer any need to continue with the operation. In December 2010, the board of directors of the Hero Honda Group decided to terminate the joint venture between Heroand Honda in a phased manner. Honda exited the joint venture through a series of off-markettransactions by giving the Munial family–which held a 26% stake in the company-an additional 26%. Honda.wanting to focus.onl.on.its.independent full.owned two-wheeler.subaidiarxHonda Motorsxcleand Scooter.india.(HMSI). Question: A. Why did Honda choose Joint venture route to enter indian 2 Wheeler marketyis a vis the routes of I. Exportfrom other Asian countries H. Licensed manufacture and franchisee i. FDI B. What are the challenges faced in Joint ventures by both partners?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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