KINETIC – HONDA
Kinetic Motor Company (KMC) instituted a foothold in the two wheeler market in 1972 when they bought the moped design ‘Luna’ from a foreign company. The design proved successful in taking over the bicycle market to such a large extent that Luna became a generic name for mopeds much like how all chewing gum in Kenya in the 80’s to 90’s was referred to as ‘Big G’!
With globalisation footprints beginning to emerge in the 1980’s and the de-licensing policy of Indian government that allowed foreign companies to operate in the Indian two-wheeler market through joint ventures (JV’s), Japanese auto maker, Honda Motor Company (HMC) teamed up with KMC to form Kinetic Honda Motors Limited (KHML).
In 1984 KMC entered into a technical-cum-financial collaboration agreement with HMC and as per the collaboration agreement HMC was to furnish complete technical information and know-how and other relevant data. Both partners held 28% of the equity.
In the subsequent year, the Company continued its expansion in the market with its first ungeatred scoter, the KH100. So successful was this expansion that, in the domestic market the Company was reported to have a market share of 44%. By 1994, the successes were being sung about Hero Honda and TVS Suzuki as they had eaten into the KMC’s market share reducing it by half. In 1998, the inevitable happened; Honda exists from the joint venture by selling its stack back to Firodias
The JV necessitated that both organisations had to contend with the strategy on two fronts in order to compete with other organisations, e.g. TVS Suzuki so as to survive in their business sector. These fronts were at a business level and at a corporate level. On the business level, they were obliged to integrate and coordinate their actions in order to gain competitive advantage. This would involve engaging actions such as marketing activities, research and development and product diversification. At the corporate level, the decisions...