Rover's Global Strategy
Rover began seeking a partner that could provide a mid-sized car in the short term, help improve quality and efficiency, and infuse needed capital and expertise to update technology. By forging licensing agreements with Honda, Rover would gain access to Honda’s formidable R&D capabilities. Primarily Rover were seeking someone to bring Rover out of their financial hole and provide new car models, and they unintentionally came across much greater, longer-tem benefits achieved by learning from Honda 's business culture. In addition, BL management subsequently identified Honda as a strategically and politically viable match. Honda could provide …show more content…
As discussed in the article, successful companies build skills in areas outside of the formal agreement and share these skills throughout the organization. In this case, both Rover and Honda learned skills outside of the formal agreement. The three conditions existed where mutual gains would be most successful. First, both partners allowed for the continued success of the other. Second, both partners were modest in terms of size and market share (at the time). Third, senior management was committed to learning new skills and limited financial risk.
The Honda-Rover alliance was sustained because the companies became significantly interdependent. Rover was a steady customer of Honda’s, and Rover became dependent on Honda’s engineering designs and licensing agreements. Therefore, Honda took long term, deeper and better advantage of the deal. For example, Honda was able to develop a line of all-terrain vehicles and is continuing its success today. Rover over time became dictated to by Honda and the Rover cars started to look and feel like Honda vehicles. Honda was gaining significant royalties because all they were supplying. Honda even restricted where Rover could sell their cars to not compete with Honda. We believe, part of the reasons that Honda seems to have gained more advantage from the alliance is because they got exactly what they wanted. They had a more defined strategy joining the alliance then Rover did and took better advantage of it. Rover was in a bad financial situation and the alliance was their way out of it, Honda did not need the alliance but knew it would be