Rover Honda Alliance
THE ROVER/HONDA ALLIANCE AND THE BMW
Rover was an ailing car manufacturer in the 70’s, owned by the British government, which was losing a significant amount of money. It was having trouble with quality control mechanisms and needed a new product in the “lower-medium” sector to plug a gap in its product range. At the same time, Honda was becoming a larger player in the automobile sector. After laying its foundation as a high quality motorcycle manufacturer, Honda needed a stronger presence in Europe and in 1979 an alliance was formed between Rover and Honda to leverage each other’s resources and capabilities. Rover would leverage Honda’s quality controls and high reputation, and Honda could use Rover’s manufacturing facilities, which were running under-capacity. The relationship developed much further over the years, to the point of minority ownership in each other’s companies.
Key Success Factors of the automobile industry in the middle of the 1970’s
The 70’s were an era of industrial change in the world. The word „globalization” was being used more and more, especially in the automobile industry, where names such as General Motors and Ford were becoming synonymous the world ove
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• Diversification
o By the late 70’s it was apparant that if you were to be a successful player in the automobile industry, that you would have to have a wide array of products and be able to diversify in the ever changing and global marketplace.
Rover’s Strategy
Rover also wished to become a larger player in the automobile market, but knew its capacity was not that yet of a global player, so it retained a strong domestic focus in the European market. Unionization also hurt Rover as dealing with ...