Hero Honda

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INSTITUTE OF MANAGEMENT SCIENCES (LUCKNOW UNIVERSITY) LUCKNOW

CASE STUDY
WHAT WILL BE THE FUTURE OF HERO GROUP AFTER SPLIT WITH HONDA GROUP?

RISHABH KEDIA MBA (CM) IV ROLL NO- 901112037

ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide MR. ANIL DUA Marketing and Customer Care Manager, Hero Honda Ltd. for his able guidance, continuous support and cooperation throughout my case study, without which the present work would not have been possible.

I would also like to thank the entire team of Hero Honda Ltd. Lucknow, for the constant support and help in the successful completion of my case study.

Also, I am thankful to my faculty guide MS. SMITA SINGH of my institute, for her continued guidance and invaluable encouragement.

RISHABH KEDIA MBA (CM) IV sem

INDEX

Story Line

Question/ Problem

Industry Background

Company Background

Competition Background

Strategies Background

Suggestions

Future Actions

Conclusion

Bibliography

STORY LINE

A joint venture between the Hero Group and Honda Motor Company was established in 1984 as the Hero Honda Motors Limited at Dharuhera India. Hero is the brand name used by the Munjal brothers for their flagship company Hero Cycles Ltd. Manjul family and Honda group both own 26% stake in the Company. However the Hero Honda group is set for a split in the end of 2010. After the split the Munjal family will buy Honda Motor·s 26% stake for around $1 billion, or a little less than half the current value of the stake in the stock market. The Japanese auto major will exit the JV through a series of off market transactions by giving the Munjal family³that currently holds 26% stake in the company³an additional 26%. Honda, which also has an independent fullyowned two-wheeler subsidiary³Honda Motorcycle and Scooter India (HMSI)³ will exit Hero Honda at a discount and get over $1 billion for its stake. The discount will be between 30% and 50% to the current value of Honda's stake as per the price of the stock after the market closed on Wednesday. The Munjal family plans to compensate Honda through high royalty payouts, which could double to nearly 6% of net sales. However, key financial institutions have objected to this move, saying that the deal could favour the Munjals but be detrimental to other shareholders.

QUESTION/ PROBLEM

What will be the future of Hero group after split with Honda group?

Hero Honda is a world leader because of its excellent manpower, proven management, extensive dealer network, efficient supply chain and worldclass products with cutting edge technology from Honda Motor Company, Japan. The teamwork and commitment are manifested in the highest level of customer satisfaction, and this goes a long way towards reinforcing its leadership status.

After Hero·s Honda divorce, it starts work on its Brand Identity! Hero Honda has been the largest manufacturer of two²wheelers since a decade. With a market share of 60% in motorcycles and 43% in two ² wheelers, Hero Honda has been the leader by far. But then as they say everything isn·t always hunky ² dory, Honda recently sold off its stake of 26% in the Hero Group because of problems which have not really come out in open. So, basically their 25 year old successful association has culminated in a sad divorce.

So now we have to look about the future of Honda group and its strategies towards the market. How this split will affect the hero group? What will be the strategies of Hero group to maintain its brand image?

INDUSTRY BACKGROUND

AUTOMOBILE INDUSTRY TILL DATE The automobile industry is one of the biggest industries in the world. Being a major revenue and job generating sector it drives the economies of some of the superpowers of the world. In India the automobile industry has grown by leaps and bounds since the advent of the liberalization era the automobile industry and especially the two wheeler segment has grown by leaps and bounds. The...
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