International Joint Venture: Hero Honda Performance Evaluation Project

This project examines the Hero Honda joint venture, providing a comprehensive analysis of its performance and the factors that contributed to its success and eventual split. The assignment delves into the concept of joint ventures, outlining their advantages and disadvantages, and discussing the challenges associated with measuring their performance. It explores the Hero Honda case in detail, highlighting its initial success in the Indian market and its expansion over the years. The project also analyzes the reasons behind the eventual split of the venture, referencing relevant academic literature and providing a bibliography of cited sources. The assignment also addresses the broader context of international joint ventures, discussing frameworks for managing them effectively, and providing a detailed understanding of the complexities involved in such collaborations, including knowledge transfer and organizational support.

JOINT VENTURE
HERO HONDA

• Corporations came a long way from command
and control structure to loosely knit organizations.
• Corporate alliances are the starting point for
modern business model.
• Large companies have at least 30 alliances and
some have more than 100.
• In order to get a grip on performance the
management must develop a structure approach
for evaluating the health of the alliance.
INTRODUCTION

• Joint Venture is a cooperative enterprise that
consists of two or more business entities for
the purpose of specific project or other
activity.
• All the business entity has a legal status.
• In some cases it can be formed for
continuing purpose also.
JOINT VENTURE

• Each entity contributes assets and shares
risks and also agrees to share income and
expenses.
• It may be short-term or long-term.
• Each entity has priorities and separate goals.
• In some cases both entities creates joins and
create a separate entity that might be
corporation or limited liability.
WHAT JOIN VENTURE MIGHT LOOK LIKE?

• Joint venture assists the organizations to
scale up their limited capacity.
• Joint venture provides access to new
distribution channel and new markets.
• It assists the entity to upgrade their products
and services.
• The production cost reduced by considerable
amount.
ADVANTAGES OF JOINT
VENTURE

• The combination of two business entity
disrupts the objectivity of the business.
• Most of the joint ventures lack uniformity in
the leadership of the business.
• The possibility of clash of culture is very high.
• The chance of communication gap is
immense.
DISADVANTAGES OF JOINT
VENTURE

• Joint venture is by definition arrangements
between separate business entity, each employing
its own reporting processes and systems and
each pursuing its own goals for the alliance.
• The operational interdependence in the joint
venture makes benefits and costs difficult to track.
• Joint venture is the non-core position of alliances
within the corporate portfolio.
CHALLENGES IN MEASURING
THE PERFORMANCE

• Every partner should individually assess the
performance to establish how the venture is
performing and whether the entity needs to
intervene or not.
• The partner should periodically search for
performance patterns across the portfolio.
• Once the venture started to perform well then
the partner can conduct top-down review for
ensuring the performance of the venture.
HOW TO MEASURE PERFORMANCE OF
JOINT VENTURE

• Hero Honda started of their venture
with four stroke motor cycle in the
Indian market.
• Almost in a single night Hero Honda
four stroke bikes became fan
favourite.
• Within a short span of time it
became number one competitor of
Royal Enfield.
• The powerful and high speed engine
compiled with good mileage gave
Hero Honda a kick start to their
business.
JOINT VENTURE
(HERO HONDA)

• Over the years product portfolio of Hero
Honda increased by considerable amount.
• Splender, which was launched in 1994, went
on to become highest selling model of India.
By 2004, Hero Honda sold 5 million units of
Splender.
• In 2008, Hero Honda entered into scooter
market and sold 25000 units per annum.
MESURING PERFORMANCE
OF HERO HONDA

• After Honda’s
announcement to open a
new subsidiary with HMSI,
the rise of rift between the
two behemoth in motorcycle
industry of India started.
• Honda also failed to provide
the technology
advancement to its product.
• This led to the rise in the
split and hence the venture
came to an end by 2010.
REASONS BEHIND SPLIT

• Hearn, B., 2015. Institutional influences on board composition of
international joint venture firms listing on emerging stock exchanges:
Evidence from Africa. Journal of World Business, 50(1), pp.205-219.
• https://www.sciencedirect.com/science/article/pii/S1090951614000327
• Shah, K.U., 2015. Choice and control of international joint venture partners
to improve corporate environmental performance. Journal of cleaner
production, 89, pp.32-40.
• https://www.sciencedirect.com/science/article/pii/S0959652614011330
• Park, J.Y. and Harris, S., 2014. Microfoundations for learning within
international joint ventures. International Business Review, 23(3), pp.490-
503.
 https://core.ac.uk/download/pdf/96620858.pdf
• Larimo, J.A. and Le Nguyen, H., 2015. International joint venture strategies
and performance in the Baltic States. Baltic Journal of Management.
• Saha, A. and Chattopadhyay, U., 2015. The impact of international joint
venture on local economy: A case study of hero honda. South Asian Journal
of Business and Management Cases, 4(1), pp.14-26.
BIBLIOGRAPHY

THANK
YOU