Hero Honda (India) Ltd.: Is it 'Honda' that makes it a 'Hero'?

The case focuses on a joint venture between Honda Motor Company (HMC) of Japan and the Hero Group, a conglomerate of Indian companies held by the Munjal family. Hero is the largest manufacturer of bicycles in the world and at that time had already dabbled in the motorized two-wheeler market with its mopeds. HMC entered into a 50/50 alliance with Hero to manufacture motorcycles for the Indian market. It assumed product design and technology transfer responsibilities while Hero was in charge of manufacturing and marketing. The venture performed very well until the contract renewal period when Hero felt that HMC was slowing down its technology transfers. The agreement was extended for another ten years after protracted negotiations. Just as the relationship appeared to get better, HMC announced the setting up of a subsidiary in India to manufacture scooters. It said that the subsidiary would enter the motorcycle market in 2004. This grew from a split between Honda and its Indian partner in a venture that was manufacturing scooters. Having exited the venture, HMC wanted to go it alone. This caused serious concerns for Hero since HMC's entry into the motorcycle market would threaten its very survival. The case closes with a set of issues that face Hero and sets the stage for exploring alternative paths that Hero could take in managing it future.