IntroductionThe alliance between Honda and Rover from 1981 to 1994 was considered a success story at that time. However, four years after the relationship ended, Rover still had all those old models in its product portfolio. On the other hand, it was said that due to the end of the relationship, Honda was postponed for 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 ability and incentive to deliver in the alliance, what they wanted from each other, what the outcome of the alliance was and why it brought limited benefits to Honda and Rover. . In the second part, reasons are presented to demonstrate why Tata could do better than Honda by establishing its engineering expertise in UK.I. The Honda-Rover AllianceBefore the Collaboration: The Ability and Incentive to DeliverContextAfter a period of continuous growth, the automotive industry's stagnant sales growth in the late 1970s led all automobile manufacturers to begin looking for methods to adapt to the new climate. Aiming to use R&D money more effectively, spread the risk of producing major components in larger volumes, and access new markets that used to be difficult to enter, more and more automakers have come to the conclusion of partnering with others. Furthermore, to remain independent, the joint venture seemed to be the best answer. (Campbell, Stonehouse & Houston 2002) Capabilities and Incentives Honda, like other automotive companies, also came to the conclusion of forming a joint venture. At the time, Honda was already famous for motorcycles in the UK, but was less well known for cars. Although Honda cars enjoyed a reputation for good quality and durability, import restrictions limited their success on the European market. However, the European market has been essential to the company's global expansion. With the joint venture, Honda could avoid import quota restrictions by assembling cars locally, because these cars would be considered locally produced. Furthermore, a local partner could presumably have offered better insight into the market. At the same time, Rover was suffering from embarrassing sales of uncompetitive products but lacked the capacity to finance the development of new models on its own. Meanwhile, the skills acquired by the previously merged companies were not preserved.