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Hero Honda

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Adil Ikram

on 4 September 2013

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Transcript of Hero Honda

Hero Honda
Introduction
Honda was built in 1948 as the factory to manufacture power engine of bicycle.
It still treats the dream as motive power to support wide movable culture for individual and society through commodity.
Honda initiates respect for individuality and emphasizes the concept of personality
The Indian Market
HONDA AND HERO
What made them such a great partnership?

CHOOSING INDIA OVER CHINA TO SET UP NEW MANUFACTURING PLANT
The reasons:
India is an emerging economy
2nd largest two wheeler market
4th largest commercial vehicle market
Expected to become among the top 10 passenger car exporters in the world
Expected to become among the top 10 passenger car exporters in the world


Development of honda under global marketing
During the process of global market integration and economic globalization, Honda actively boosts modern system and expanding its international business in the range of the worldwide.
Besides Japan, Honda has more than 120 production base in 29 countries and the quantity of consumer is more than 170 million.
During the internationalization process of Honda, it prefers to adopt the method that makes cooperation with local enterprise to get into target market.
One of the leading emerging economies in the world today
Characteristics:
- Rapidly improving living standards
- Growing middle class with rising economic aspirations
Factors that make India attractive to FDI:
-high economic growth
-low-cost labor
-low-cost capital
-knowledge workers
-government support

How can companies learn from Honda’s investment in the Indian Market?
Honda recognized the market potential of the Indian market, and wasted no time in entering the market.
Things foreign firms can learn from Honda:
-Global market potential awareness
-Urgency in penetrating targeted markets.
Allows firms to gain first mover advantages, such as:
-Superior brand recognition
-Customer loyalty
-Considerable market share

How can companies learn from Honda’s investment in the Indian Market?
Honda set up partnership with Hero, a bicycle company with a reputation of being one of the leading bicycle brands in India, and formed Hero Honda.
Things foreign firms can learn from Honda:
-Clever partnerships with key local firms/conglomerates

Benefits companies by granting them competitive advantages:
-Foreign alliances
-First mover advantages
-Competitive positioning
-Diversification
-Information regarding local market conditions can be easily obtained from local partners
How can companies learn from Honda’s investment in the Indian Market?
After much success in the motorcycle market, Honda used their market knowledge gained to establish Honda Siel Cars Ltd and Honda Motors India. Honda then introduced the CR-V and ‘Brio’, in an attempt to exploit the market potential for these vehicle segments
Things foreign firms can learn from Honda:
-Utilizing and leveraging market knowledge and connections to expand business operations
-Implementation of new strategies to expand business operations
Benefits foreign firms as:
- Gain market share in a number of markets
-Offsets losses from another country
- Build a network of connections for future business purposes
HERO
Largest bicycle manufacturer in India.
proven manufacturing, distribution and management practices.
Already established database.
Reputable name.
strong distribution channels and supplier network.
Economy.
Culture.
People.
Government.
Rural and urban market.

HONDA
Already reputable brand outside of India
sound knowledge of global marketing
it’s technology from Japan

HERO HONDA
Identified a target market
Regulations in India fuel emissions
Fuel efficient and low cost motorcycle

HERO AND HONDA
HERO + HONDA = GREAT PARTNERSHIP

Demand for two wheelers and cars to increase substantially in future.
cheap and young labor in abundance to take cost advantage from.
The Indian Labor is comparatively cheaper than Chinese labor.
Honda has established its brand name
successful in tapping Indian markets
Better understanding of political and economic conditions of India.
In a better position to negotiate for land prices and other set up costs.
Projected to be an Export-hub
Strategies for Japanese Companies in India
Their labor and capital productivities are improving thus setting up a manufacturing plant in India would save time lags, duties, transportation and other expenses
Exporting automobiles from India is also very much feasible.
The strategies of Japanese firms in emerging markets: The case of the automobile industry in India. Horn, S., Forsans, Ni.,  and Cross, A. (2010).

Honda has been successful in forming agglomerates in India and their marketing strategies have worked big time.
Honda has competitors in form of Bajaj and others
having manufacturing plants across India would strengthen their footing in India.
It will save them from any sorts of shortages in supplies
China and India: Any difference in their FDI performances? Wei, W.(2005)
Although China has larger domestic markets and larger international ties, India has an edge over China in terms of :
cheaper labor costs
geographic suitability
cultural understanding
barriers in form of language differences
understanding customers
analyzing and arranging resources
Conclusion
The demand of Indian motorcycles and car market is increasing and Honda has built strong brand influence in the India market.
Otherwise, the cheap labor power cost of India is lower than China as the increasing wage level in China.
Overall, Honda and Hero made a good partnership, even though because of political and legal requirements Honda had to find a local business to work with. They are a great example of global marketing and how other companies can learn from what they had to do in order to market their brand globally.
Full transcript