The Alliance Between Honda and Rover
Introduction
The alliance between Honda and Rover from 1981 to 1994 was thought to be a successful case at that moment. However, four years after the end of the relationship, Rover still just had all those old models in its product portfolio. On the other hand, it was said that because of the end of the relationship, Honda was put back by four years (Button 2005).
This report is divided into two parts. In the first part, the Honda-Rover case is discussed in terms of their capacity and incentive to deliver in the alliance, what they wanted from each other, and what was the outcome of the alliance and why it brought limited benefit to Honda and Rover. In the second part, the reasons are presented to show why Tata might do better than Honda by establishing its engineering expertise in UK.
I. The alliance between Honda and Rover
Before the collaboration- the capacity and the incentive to deliver
Background
After a period of continuing growth, the stagnant sales growth of the automotive industry in the late 1970s led all car makers to start to look for methods to fit the new climate. With the purpose of using money on research and development more effectively, spreading the risk of making main components in greater volume, and accessing to new market which were hard to enter, more and more automobile producers reached to the conclusion of collaborating with others. In addition, to remain independent, joint venture seemed to be the best answer. (Campbell, Stonehouse & Houston 2002)
The capacity and incentive
Honda, like other automotive companies, also came to the conclusion of firming a joint venture. At the moment, Honda was already famous for motorcycles in UK, but it was less well known in terms of the automobiles. While Honda’s cars enjoyed reputation for good quality and durability, the import restrictions limited its success it the European market. However, the European market was essential for the company’s global expansion. With the joint venture, Honda
The alliance between Honda and Rover from 1981 to 1994 was thought to be a successful case at that moment. However, four years after the end of the relationship, Rover still just had all those old models in its product portfolio. On the other hand, it was said that because of the end of the relationship, Honda was put back by four years (Button 2005).
This report is divided into two parts. In the first part, the Honda-Rover case is discussed in terms of their capacity and incentive to deliver in the alliance, what they wanted from each other, and what was the outcome of the alliance and why it brought limited benefit to Honda and Rover. In the second part, the reasons are presented to show why Tata might do better than Honda by establishing its engineering expertise in UK.
I. The alliance between Honda and Rover
Before the collaboration- the capacity and the incentive to deliver
Background
After a period of continuing growth, the stagnant sales growth of the automotive industry in the late 1970s led all car makers to start to look for methods to fit the new climate. With the purpose of using money on research and development more effectively, spreading the risk of making main components in greater volume, and accessing to new market which were hard to enter, more and more automobile producers reached to the conclusion of collaborating with others. In addition, to remain independent, joint venture seemed to be the best answer. (Campbell, Stonehouse & Houston 2002)
The capacity and incentive
Honda, like other automotive companies, also came to the conclusion of firming a joint venture. At the moment, Honda was already famous for motorcycles in UK, but it was less well known in terms of the automobiles. While Honda’s cars enjoyed reputation for good quality and durability, the import restrictions limited its success it the European market. However, the European market was essential for the company’s global expansion. With the joint venture, Honda
References: Button L 2005, ’Why did BMW buy Rover?’ AROnline, derived 4 May 2008, from http://www.austin-rover.co.uk/index.htm?whydbbrf.htm Campbell,D, Stonehouse, G & Houston B 2002, ‘Case Study 11: Honda-Rover: How successful was it?’, Business Strategy- An Introduction, 2nd Edition, Butterworth-Heinemann, Oxford, pp. 412-417. Motor Trader 1995, ‘THE split between Honda and Rover in the UK left many wondering how the Japanese marque would market itself after shadowing its British partner for so long.’, Motor Trader, derived 3 May 2008, from http://www.motortrader.com/12447/THE-split-between-Honda-and-Ro.ehtml Pilkington A 1999, ‘Strategic alliance and dependency in design and manufacture: the Rover-Honda case’, International Journal of Operations & Production Management, 19,5-6, 460-73. Pollack A 1994, ‘Honda Plans to Cut Ties with Rover’, New York Times, derived 1 May 2008, from http://query.nytimes.com/gst/fullpage.html?res=9F01E3D8133BF931A15751C0A962958260 Tombat A 2007, ‘Global challenges, hi-tech solutions’, Tata Group, derived 1 May 2008, from http://www.tata.com/0_knowledge_centre/technology/articles/20070314_tmetc.htm