In definition a technological innovation is the use knowledge to apply tools, materials, processes, and techniques to come up with new solutions to problems. (citation: book). The Honda FCX clarity is a good example of technological innovation, as there is a new solution to an existing problem.
There are various problems related with the normal gasoline-powered vehicles that have been around since 1886, these environmental and energy problems are more evident today than ever before and will become even bigger problems in the future, especially as Global warming is becoming a greater problem every day.
The new solution to the existing problems is the FCX concept, even though the concept of the Fuel cell stack was not new, Honda was the first to develop it into a usable commercial technology in 2002 by using their knowledge expertise and applying tools and techniques. The GM Electrovan is the credited to have built the first hydrogen fuel cell powered vehicle in 1966 (Please recheck your analysis)
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Type of innovation:
The Honda FCX clarity is an incremental innovation, a small improvement to the existing automobile technology, as the Honda FCX clarity design is similar to the dominant automobile design that has been around for a long time, the difference is the engine, which changed from being gasoline-powered to hydrogen powered by use of a fuel cell stack. The fuel cell stack is also an incremental innovation, as the concept was invented in 1970's and has just been improved over the years, becoming more light weight and more compact.
Even though both the automobile and fuel cell stack technology might have been around for some time, the whole new idea of making the fuel cell stack small and compact enough to fit in the automobile makes it a radical innovation, as automobiles have never before been made with hydrogen fuel cell stacks. (Not a radical innovation as it has been already implemented by GM)
The FCX concept was not a Honda original, as fuel cell stacks were developed earlier, however they were incredibly bulky and heavy, making it difficult to design a car around it, even the first Fuel cell stack that Honda unveiled in 1999, was enormous, weighing as much as 202kg.
In 2003, Honda developed its own fuel cell stack (the Honda FC Stack) which was much lighter and smaller, but was still too bulky and needed a tall, SUV-style vehicle design with the stack located under the floor. At this time, other manufacturers also produced similar type Fuel cell stacks and this emerged as the limiting factor in fuel cell vehicle design.
Honda was able to take that massive stack and make it compact enough to fit in the center tunnel of the automobile and create an advanced design featuring a low floor, low overall height, and spacious interior, while at the same time presenting an attractive short front overhang. The new FCX Concept was a revelation of the form of automobiles of the future. (Repetition from the case. It has already been emphasized that it is an innovation of the future in the case. This part can be reduced to avoid monotonity)
Competition and innovation
The timing of product and process innovation
Source: James Utterback, ' Mastering the Dynamics of innovation'
The Fuel cell vehicle concept technology (FCX) is a product innovation as this technological innovation involves the creation of a new type of product sold to customers.
At the moment the Fuel cell vehicle concept technology (FCX) is still in the Fluid phase, however slowly passing to the transitional phase, as the Fuel cell stack technology in automobiles it is not yet the dominant design, since the dominant design is still the gasoline powered engine, however the future predicts that this FCX design will become the dominant design and will eventually reach the specific phase in many years to come. (Please cite sources of your future prediction as how you can confirm that it is going to be a dominant design in the future. Isn't it too early to guess considering that it is not even commercially available and hydrogen fuel stations are not yet popular)
It is evident that the FCX technology is in the fluid phase due to the following factors:
Always on Time
Marked to Standard
' Markets are still relatively small and only few customers are using this technology: Honda for example does not yet sell its FCX clarity, as it would be too expensive to sell the technology, however it does lease the car for an affordable price, though only affordable to the very wealthy and famous, in California, this is only a very small market base.
' Customers do not have clearly defined preferences: Customers are not yet sure whether they would want this new type of car with FCX technology, it may be good for the environment, as there are zero gas emissions, but it is an expensive car and hydrogen station fill ups are more expensive than gasoline, and are not conveniently available everywhere, only in some places in California. Most customers prefer cheaper options such as the gasoline-powered engine. ( This contradicts your assumption that it is going to be a dominant design)
' High rate of competitors: since the FCX technology is not yet the dominant design, the number of competitors and new entrants is huge, as other competitors are also finding new types of technologies, to solve the environmental and energy problems. (add competitors) (????)
' Diffusion of industry's core technology is quite limited: (?????)
The FCX technology can be categorized as a disruptive technology, because it offers a new type of technology that appeal to the nowadays environmental issues, such as Global warming. For example Honda FCX Clarity, even though at the moment it is in the initial stages of innovation, and satisfies only a small niche market, over time by improving on the new FCX technology to the point at which Honda can target segments that previously preferred the older technology ' Gasoline powered vehicles. By improvement such as making it more cheaper, smaller, faster, more reliable, Honda would be able to capture the interests of the mainstream customers, gain a foothold in the market and would have the potential for becoming the dominant design and taking over the gasoline powered vehicle. Which shows that this the FCX technology has the potential of being a disruptive technology in the future.
Technology adoption and diffusion
Normal distribution of adopters
According to the Technology life cycle the Fuel cell vehicle concept technology (FCX) is in the initial phase: 'innovators', as there are only a small number of customers who have adopted the FCX technology.
It can be seen that the FCX technology is in the 'innovators' phase due to the following reasons:
1. At this stage there is not too much demand for the FCX technology, there are only about 250+ people who are actually leasing a Honda FCX clarity automobile, and most of the customers that lease the car, do so because they are intrigued by this new type of technology and want to explore it.
2. Customers are not very price sensitive as they are willing to pay a lot of money to buy the new Honda FCX clarity, the price is $600 per month to lease the car, which is quite expensive, when a person could buy a new car for about $4000. Also a really expensive and classy BMW can be bought in installments after a couple of months, which would be cheaper than leasing a car for $600 a month and not owning it in the end. It is obvious that people are not buying the car because it is cheaper or because it is a prestigious car, they are buying it because of the new type of engine, and because they love to play around with new technology, it is prestigious for them to be among the first people to use it.
3. The car has limited availability, open for leasing only in California, as it cannot run for too many miles, with a small hydrogen tank , and there is only limited number of hydrogen fueling stations in California, which means that the car cannot be used to drive outside of California, as it can run out of fuel quickly.
4. The below S-shaped curve shows the cumulative adoption of the FCX technology. At the moment the FCX technology has a low rate of market growth, as the technology is very expensive and availability is limited to California, so according to the Adoption S-curve, the percentage of adoption is also low.
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The Adoption S-Curve
5. Honda's revenues for this car model are not very high, as costs are very high to make the Honda FCX clarity since the car is largely hand-assembled and full of really expensive technology, with the value of $1,000,000 per car just to break-even, which shows that the leasing cash flows are not high enough to have high profit margins.
Moving on to next stage: Early adopters and Crossing the Chasm
The new Honda FCX clarity has not yet reached this stage, and may take a few years before it gets here, perhaps there would be more customers of the new car, when the FCX technology would become more cheaper and the complementary product: hydrogen fuel stations would be made more conveniently available in other places, so that the car would be used in other US cities, as well as permit customers to travel from one city to the next.
To move into the Early adopters stage, more public awareness through promotional campaigns should be made by Honda, perhaps initially to high end customers, who would be willing to pay more money for such a car. The price would also have to be decreased, perhaps permitting the sale and ownership of the car, for early majority to be able to afford the automobile, Honda would also have to work with its complementors -the hydrogen fuel station providers to increase the amount of fuel stations.
One of Honda's goals is to cross the Chasm into the early majority which would mean a huge step for the FCX technology and may take many years to get there. one way to cross the Chasm would be to realize the appropriate pricing, and to show customers that they will be getting value for their money, show how environmentally friendly it is and how easy to use. Perhaps in the future the technology would be more improved and new features that add value would be added, this however is not yet known for the time being, but the possibility of having a hydrogen station at home is a good one, though still in the developmental phase. (Good Analysis)
Factors affecting Rate of diffusion of FCX technology
Diffusion: the rate at which a new technology product becomes adopted by potential users
the diffusion for the FCX technology is quite slow at the moment, as can be seen by the product characteristics such as
' Price: The cost of leasing the Honda FCX clarity is quite high, which is a major factor for slower diffusion of the FCX technology, at the moment customers find that the cost is too much higher than their benefit of purchasing the car.
' Availability: the limited availability of Honda FCX clarity also slows the diffusion of the technology
' Amount of learning: at the moment, even if there are many Honda reviews about the new car, it is not yet advertised everywhere, as it is still out on a limited basis, so most people are not yet aware of it, and do not yet understand the value of the new technology, which slows the diffusion.
' Perceived risk: Since the Honda FCX clarity is really a novel innovation, there is a high level of perceived risk, because this type of automobile has not been tried out. People who have already tried using the gasoline powered engine automobile already have a good idea about how to use it, how to fill it up and know that this engine model is reliable since it has been around as a dominant design for many years. In the case of the Hydrogen-powered FCX engine automobile, people may be wary in adopting it straight away, as it has just entered the market and is not yet experience-driven and people may perceive that some risks are present in terms of reliability and the fact that there is limited amount of hydrogen fueling stations, which slows the level of diffusion.
' Characteristics of adopters: At the moment the Honda FCX Clarity is targeted at the high end niche market, these people are more wealthy and have the ability to adopt the technology, because they have what can be called 'extra money' to spend on luxuries such as the Honda FCX clarity. For this wealthy high-end market, the rate of diffusion may be faster, but in general because Honda envisions that this type of automobile is the car of the future, it means that it would have to capture the majority of the market, and the majority usually buy affordable cars for everyday use, which are not too expensive, so this slows the diffusion.
(Repetition of ideas such as price and perceived risks. Although we agree that these points are important to the Factors for Diffusion, we suggest we write less as they are already addressed earlier in the case analysis. Instead you can write more on the new stuff that has not been addressed before)
Internal Analysis of Honda
1) Resources and capabilities
1.1) Product diversification
Producing high quality products from cars to motorcycles to lawn mowers.
1.2) A pioneer in engineering low emissions internal combustion and hybrid technology.
1.3) Organisational structure
The organisational structure in Honda is the matrix type which allows more innovation and flexibility since they allow the mixture of different dimensions in the organisation.
Honda Company prefers geographically defined divisions as the operation units for local marketing, because of their specialist local knowledge of customers.
1.5) People are at the core
The main resource in the company is people. The main philosophy at Honda is three JOYs which are 'the joy of buying', 'the job of selling' and 'the job of creating' . Moreover, at Honda, everyone has to follow the concept of 'Respect for the Individual' and from the managers to floor workers, they believe that each and everyone has the value and ideas. Each and everyone is valuable to the growth of the organisation. For this reason, their company is so conscious with their recruitment policies so that they can employ employees with the marketing skill to help the company fulfill the joy of buying, and joy of selling. Moreover, Honda tries to attract engineers who are very freethinkers and creative.
1.6) Honda corporate culture
The corporate culture in Honda is different from others since they support entrepreneurship. Moreover, what is strange is that Honda's habit of looking into odd corners and which has given it a significant advantage in the industry's biggest challenge: finding a replacement for the gasoline-powered internal-combustion engine. "I'm not in a position to give direct orders to the engineers in R&D," "This is a positive. On their own, they can carry out their work with a different set of values." This is what
Honda's current president and CEO, Takeo Fukui says about his R&D team.
2) core competence
2.1) strategic intent and stretch at Honda
While others are trying to build on your current strengths, instead, Honda tries to explore new ideas and stretch to new areas which is obvious if we look at its product diversification.
2.2) Honda approaches to innovation (searching for loose bricks)
' There are four approaches that Honda uses to innovation called 'building layers of advantage', 'searching for loose bricks', 'changing the terms of engagement', and 'working with collaborators'. Honda used the "loose bricks" approach which means that engineers in Honda try to poke into odd technical corners. Due to this, they could have built a base of operations in underserviced territory and then use that bass to launch an installed base
' Innovating around competitors' product offerings is also one approach of Honda to innovation.
2.3) Technologies at Honda (what made Honda today)
Product and technology at Honda
Honda engine technology outperforms its competitors. The reason behind it is because of its 'Product development centre' which always try to research and develop the power products of Honda. It is composed with three main divisions such as Planning, Technological Development and Product Development. To make them efficient, Honda makes sure that each division has clear roles and responsibilities, speedy decision-making through smooth communication. Moreover, that centre applies a two-step process: Conducting research to accurately identify the wishes and needs of customers, and developing the required technology and product concepts.
Most recent technologies at Honda
iGX440 Next-Generation Multipurpose Engine Technology
The iGX engine is the first in the world that incorporates "STR governor" electronic rpm control technology in order to facilitate constant control of the throttle opening and rpm. Furthermore, communication with the ECU in the power product enables optimum control of the engine according to the diverse range of work that is being performed.
Four-Stroke Outboard Engine Technology
In addition to incorporating compact, lightweight technologies, Honda four-stroke outboard engines were the first to adopt the variable valve timing lift (VTEC) mechanism used in automobiles, variable intake system, electronic fuel injection unit achieve lean burn using electronic fuel injection system with LAF feedback sensor, as well as various other features, providing high performance and economical operation.
Honda technology is always at the cutting edge: designed,
refined, implemented, and produced to perfection. The most technology that Honda innovated recently is i-VTEC (Variable valve Timing and lift Electronic Control) engine technology.
Two complimenting systems are part of the i-VTEC system. Variable valve lift is accomplished by using two rocker arms and different camshaft profiles to change the opening of the valve. The other technology is a computer controlled variable camshaft actuator that can vary a camshaft up to 50 degrees relative to crankshaft angle. Optimizing combustion with high swirl induction makes these engines even more efficient. One unnoticed but major advantage of i-VTEC is the reduction in engine emissions
Honda's i-VTEC technology gives us the best in vehicle performance. Fuel economy is increased, emissions are reduced, driveability is enhanced, and power is improved.
3) Cost advantage (economies of scale and learning)
' The production in Honda is mass production. It produces about 200 motorcycles per worker per year and due to this mass production, they are gaining economies of scale and due to Honda's workers cumulative experience, they are gaining economies of learning : both offering Honda the competitive advantage.
' Honda's capital costs per bike were approximately just one-fourth that of its competitors in foreign markets.
' As a result, Honda can lower its average cost and become a leader in the market
Porter's five forces model of automotive industry (How is this related to the case)
Bargaining Power of Suppliers:
the suppliers in the automotive industry have limited bargaining power because there are many suppliers in the market for many parts. Though there are many parts suppliers for main few auto makers but those big buyers are just few. As a result, if the buyer decides to change the supplier, then the supplier will be hopeless. Many suppliers would have to count on their big auto makers' demands. (Please cite how it can be related to the fuel cell technology. You can write that currently Honda is only one of the few buyers and has buying power over bargaining power of the supplier)
Bargaining Power of Buyers:
The automotive industry is highly competitive, therefore, buyers have some degree of control, as there are many automobiles from which to chose. Consumers have the greatest power the low switching costs associated with selecting from competing brands. Though in some markets like Japan, there are only two or three main car markers, buyers still have much bargaining power since they try to make their products diversified. (Relation to case???)
The competition mainly in the US and the global automotive industry are intense. Though some big companies like GM, Ford, and Daimler Chrysler dominated the market once, now they are also facing intense competition both from domestic and abroad. It was obvious when Japanese car makers entered US fairly disciplined auto market in the 1980s. Nowadays, the degree of rivalry is even more intense for some western car makers due to the high cost of manufacturing and labour. However, some emerging countries like China and India becomes more being able to compete in the world market due to their cheap cost of production.
(Relevance to the case??!!)
Risk of entry by potential competitors (RELATION TO THE CASE??!!!)
Economies of Scale: the economies of scale and learning now incumbents (Toyota, Honda) are having cannot be attained by new firms at the beginning.
Product Differentiation: established firms try to differentiate their products both to gain huge market shares and deter entrants, for example, Honda differentiated from lawn mowers to Jet . (Why???!!!! Relevance??!!)
Capital Requirements: For a new company, the start-up capital required to establish manufacturing capacity to achieve minimum efficient scale is limited.
Access to Distribution Channels: Although the barriers to new companies are substantial, established companies are entering new markets through strategic partnerships or through buying out or merging with other companies. Moreover, incumbents have more power on access to distribution channels than entrants due to their long-term relationship.
Government policy: Government policies such as regulations for standards of emissions will also deter some entrants unless they cannot meet it. However, a domestic start up who has local knowledge, expertise, and the potential to compete in its home market against the global firms though they are not yet well established. Nevertheless, they still have the risk of being acquired by one of the big companies.
Threats of substitute (non relevance)
The threat of substitute to automotive industry is quite low. Even though there are certain types of transportation which can be substituted, none of them offer the utility, convenience, independence, and value afforded by automobiles. If one switches to use a different mode of transportation, for example train, it might be cheaper since we can avoid the cost of car insurance, maintenance and parking charges. However, the non-monetary switching costs can be higher since more time spent to wait for train, if train does not reach the distinction directly, one has to take bus again and thus, is less convenient.
Value net or value creation in Honda
When we analyzed the case, we found out that the following are the activities that Honda tries to create value at each stage and how they try to create value to achieve competitive advantage and value for their customers.
' Careful site selection of their US manufacturing plants (Greenfield manufacturing plants)
' In-depth supplier relationship (close and interactive and similar to partnership)
' Autonomic organizational structure
' Japanese/North American managers mix
' Suppliers are involved with development and design of new products
' Relationship is much like a partnership
' Use an in-depth supplier selection process
They are the drivers that reduce operating costs and increase productivity
' Economies of scale : all purchasing done by Honda Trading America Corporation
' Technology : multi-purpose machinery
' Capacity utilization: Honda operates facilities in every major markets they enter
Supply chain and its characteristics (not relevant)
' Use their economies of scale by working with their parts suppliers to order raw materials in large quantities and getting price discounts
' In-house guests engineers
' Flow of information with suppliers in initial contact, preparation of Honda parts, quotations, initial plant visits, prototype development, testing and evaluation, preparation for mass production, trial run, quality assurance visits, agreements and purchase order.
Dominant design (please realign the diagram of the vehicle as it is blocking text of the case)
Since FCX clarity is a low-emission technology, we will be discussing the dominant designs specifically in low-emission technologies excluding some other technologies that are not low-emission in automotive industry.
Some main automotive propulsion technologies that are technically capable of radically reducing exhaust emissions are Electric Vehicles (EVs), Hybrid Electric Vehicles (HEVs), and Fuel Cell Vehicles (FCVs).
Electric Vehicles (EVs)
An EV can be defined as a vehicle that is propelled by an electric
engine that is powered by a battery.
Hybrid Electric Vehicles (HEVs)
An HEV is defined as a vehicle that is propelled by an internal combustion engine and an
electric engine. An HEV can have serial or parallel propulsion systems depending on the way
the combustion engine, electric engine, and the batteries are connected. An HEV can be fueled
with conventional or alternative fuels.
Fuel Cell Vehicles (FCVs)
An FCV is defined as a vehicle driven by an electric engine that is powered by a fuel cell.
The fuel cell converts an energy carrier (e.g., hydrogen) into electricity. Hydrogen can be
fueled directly in the vehicle or can be produced on board of the vehicle when other fuels, like
gasoline or methanol, are used as fuel.
' the possibility to regenerate 'braking energy'
' the omission of transmission
' the low noise rate
' Necessitates large changes in the current fueling infrastructure
and due to its gaseous nature, requires novel on board storage technology.
' can also be fueled with conventional fuels (gasoline, LPG, or diesel) or alternative fuels (alcohol, natural gas, or methanol).
(please check the spelling of fuelling, fuelled)
' A major problem is the fueling of the vehicle. If zero emissions are required, the vehicle needs direct fueling with hydrogen since the conversion of hydrogen in the fuel cell only leads to water vapour emissions.
' Fuel conversion leads to unwelcome emissions and involves a complicated technical process.
Table 1: comparison of EV, HEV and FCV with conventional internal combustion electric vehicles (ICEV) (Why are you comparing EV, HEV, FCV with IC engines'Couldn't it better if you can compare FCX with internal combustion engine as the case concerns FCX)
In environmentally friendly propulsion technologies, the various options are not unrelated technically. Generally, it is assumed that an adoption decision only contributes to increasing returns to the one technology adopted. However, innovations within one technology class often have technological spillovers to other technologies.
For example, the development of EV and HEV has lead to innovations that benefited the FCV as well. It is obvious that if we look at a case in point is the electrical drive train of EV, which overlaps considerably with the ones used in FCV. When two technologies are technologically interrelated, an adoption of one technology contributes to increasing returns of the other, although to a lesser extent. Technological spillover does not imply that the risk of lock-in into a suboptimal technology is removed, but it does imply that the risk is lower than in the cases where technologies are not interrelated. (No mention of FCX)
Dominant design by companies and number of patents held
Figure 1 shows the cumulative number of patents held by 11 main automakers. In the nineties, only International Fuel Cells (IFC) and Mitsubishi dominated the markets by acquiring many patents. As a result, the engine technologies they use for their cars became the dominant design. However, Honda came into the market in 2001 by innovating many power products and acquiring many patents as well. Thus, in 2001 the total number of patents Honda held became around 246 though it had only one patent in 1992. As it can be seen from the figure, due to continuous innovation in Honda and Toyota, their innovated technologies(mentioned above), they were able to build quickly their installed base in the automotive industry later.
Figure 1: cumulative number of patents in all propulsion technologies per firm (GM = General Motors, Mitsu = Mitsubishi, DC = DaimlerChrysler, IFC = International Fuel Cells, APC = Air Products and Chemicals)
Figure 2 shows cumulative number of patents in all propulsion technologies per firm
As you can see from the figure that the earlier firms who held maximum patents or who were dominant companies and their products being dominant designs in the market started to have less power in the market due to their slow rate of innovation though Honda started to innovate aggressively and tried to patent as much as possible. However, one organization (International Fuel Cells) dominated during the entire period while other organizations rapidly increased their patenting activity, in particular, Ballard, General Motors, and again, Honda and Toyota. All these organizations focused primarily on hydrogen and methanol, while Toyota recently patented several inventions in conventional fuels. (unnecessarily long, relevance to the case??)
Dominant design in Fuel technologies (This is more relevant )
Within the class of fuel cell technologies, we analyzed patents associated with five fuel technologies: hydrogen, methanol, conventional, natural gas, and alcohol. The following figure provides the cumulative number of patents in the five fuel technologies.
Figure 3 shows cumulative number of patents of all firms per fuel. shows Hydrogen fuel trend.
The above figures showed who were the leaders in automotive market by holding many patents and creating their products as the installed base. Now we would like to discuss about dominant fuel technology. As it can be seen from the figure, though the rate of innovation in each technologies (methanol, hydrogen, alcohol, and so on) did not have big gap, obviously, hydrogen has been a dominant fuel along the period. However, at the moment, though hydrogen is assumed to be a dominant fuel in low-emission propulsion technologies, in fact, each fuel technology is still in their transactional or explorative stage. Many more companies are still trying to explore more on each low-emission engine propulsion technology so that we are too early to say at that moment that hydrogen fuel technology is the most dominant design. However, in the future, there is a possibility.
According to figure 1,it is obvious that Mitsubishi and International Fuel Cells (IFC) were the companies with dominant designs in the eighties. However, according to figure 2, in the nineties, IFC became only one company who dominated the market with its fuel cell technology while GM, Honda and Toyota were trying to increase their innovations and have more patents around that time. Again, from the side of fuel technology, starting from the seventies, hydrogen has been a dominant fuel among other low-emission technologies such as natural gas, methanol and alcohol. According to the trend, it is expected that fuel cell technology will continue to become a dominant design in the future in low-emission automotive propulsion technologies due to its advantages mentioned above (advantages and disadvantages of FCVs).
Moreover, here are some reasons why we think fuel cell technology will continue to become a dominant fuel in the future.
' No moving parts: FC technology limits the number of moving parts. It will solve the typical Internal Combustion Engine (ICE) problems associated with wear, high maintenance and relatively low durability.
' Easy manufacturing: in internal combustion engine, the associated gear box and driving shaft are complex to manufacture and to assemble. But in fuel engine technology, it is easier to assemble and manufacture.
' Electricity demand: the use of the current battery is increasingly problematic for the increased electricity demand in modern vehicles.
' Stand still power provision: Fuel cells can provide electricity even during standstill situations unlike the current ICE as the battery will run out of power.
' Design of the car: the design of the current car is largely built around the motor which requires sufficient space in the front of the car.
' Oil independence/self-sufficiency: Fuel Cell technology provides it.
' Complementary products: major car makers have diversified their activities in other related areas such as the purchase of aerospace-related companies by several car makers to strengthen the technological basis of the automotive industry and to allow technological spillovers from the aerospace department to automotive
(The effect of poluution from CO2 Emissions??)
Consumer-pull or technology push
It is hard to say that FCX is totally consumer pull or totally technology push. However, it is more due to consumer-pull which is derived from government regulations in different countries on emission requirements and people awareness to global warming issues.
According the research, it says that cars which use the internal combustion engine which runs on non-renewable fossil fuel leads to harmful emissions. Thus, from the environmental point of view, it is very appropriate and right time to search for low-emission or zero-emission technologies in automotive industry.
Moreover, nowadays, many governments set the regulations about emissions from cars and the US regulation of Clean Air Act (CAA) was passed in early of 1970s. According to that regulation, individual states are to meet required air quality and have got to mange car density and high mileage which all lead to the demand of higher quality low-emission fuel cell vehicles such as Honda FCX clarity. Soon later, both EU and Japan followed the standards of the US.
Moreover, many environmental activists around the world also continue to urge for the care of environment and low emissions of carbon dioxide. As a result, all above factors leads to the demand of environmentally friendly cars in the future. Thus, we can say Honda FCX clarity is while partially due to technology push (because of automotive companies' huge investment in their R&D to come up with better fuel cell technology which is already on its half-way development process), at the same time, it is also due to customer pull which is indirectly derived from governments and environmental activists and those individuals who are aware of the global warming issues.
Protecting Technology innovation:
It was about two hundred years ago, in 1806, Swiss engineer Fran'ois Isaac de Rivas invented an internal combustion engine that used a mixture of hydrogen and oxygen as fuel. But the car he designed to go with it was a failure. Daimler, invented the modern gas engine in 1885, and Benz, received the patent DRP 37435 for a gas-fueled car in 1886 which became very popular. At the turn of 20th Century electric cars were more popular than gasoline-powered models. The electric cars do not emit noxious fumes; they are quiet, smoother and easier to drive. Today, companies are coming up with new technologies of renewable energy to save the environment from pollution and take a control of the limited natural resources. With this in view the innovation of fuel cell by Honda has become the basic design for vehicle in future 1.
Large number of patents is granted by the U.S. Patent and Trademark office to Honda Motor Co. Ltd., Tokyo 2. . Japan really believes in the hydrogen- based society and is really betting on having fuel cell vehicles in widespread use by 2030. It has been seen that between 1998 to 2004 Honda has about 1,526 applications for Patent of fuel cell 3.. As per the CLEAN ENERGY PATENT GROWTH INDEX (CEPGI), published quarterly by the CLEANTECH GROUP at Heslin Rothenberg Farley & Mesiti P.C., it provides an indication of the trend of innovative activity in the Clean Energy sector from 2002 to 2009. It also tracks success rates of earned patents by ranking Patent Owners, along with the Countries which receive the most clean energy patents.
It can be clearly seen from the graphs that Honda is the largest patient assignees for clean energy technology, thereby proving that Honda FCX is an innovative future car.
Honda's FCX was certified by the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), in July 2002, making it the first and only fuel-cell car in history to be approved for commercial use. CARB and the EPA have also certified the FCX as a Zero-Emission Vehicle (ZEV), Tier-2 Bin 1'the lowest possible national emission rating4.
In fuel cell technologies, the FCX received approval from Japan's Minister for Land, Infrastructure and Transportation. The FCX features Honda FC STACK, which enables startup at subzero temperatures. As a result, it is possible to sell the FCX in cold regions which have freezing winter temperatures. Also, the FCX was approved by the Environmental Protection Agency, which is the U.S. regulatory authority for fuel cell vehicles, and the California Air Resources Board (CARB) 5.
First Mover Advantage:
It is a form of competitive advantage that a company earns by being the first to enter a specific market or industry. Being the first allows a company to get hold of higher brand recognition and customer loyalty. The company also has more time to perfect its product or service. Honda has been successful in establishing itself as being a corporate identity of an innovative, technologically sharp and constantly progressing company. Hiroyuki Yoshina, currently president and CEO of HONDA clearly stated in December 2002 Press Conference that Honda was the first mover in the launch of the CVCC technology in the 1970ies as well as the launch of the FCX fuel cell vehicles in 20026. It was seen in the Tokyo Motor Show in 2005 that several of the key automotive manufacturers displayed new concept cars. Toyota, Suzuki, Ford, GM, Hyundai and DaimlerChrysler came up with new concepts but Honda was the first to announce its new offering with a concept version of the FCX fuel cell vehicle7.
Global Honda Brand Value 8:
Honda has successfully entered the automobile industry by attacking the U.S. motorcycle market in the late 1950s and early 60s by flexibly adjusting strategic visions and incremental adaptation to customer demand. HONDA has developed its competencies in the market and has gained significance in Power Products. By its constant drive product and Process Innovation, the leveraging of resources and stretched ambitions being pursued in a dynamic approach to strategy, HONDA has become what it is today. By clever leveraging of Global HONDA's resources further into the European market, and possibly by learning through a Joint Venture about the German motor industry style, profitability in Europe should be achieved in the near future.
An embracing synergy has been created by Honda's 3 product segments (cars, motorbikes, and power products). The success of all 3 industry products have added to the Global HONDA Brand value. 'The Company has capitalized on its core competencies by leveraging the same brand name into all the products that share them' (Mair 1999)
KAWAMOTO'S CLEAR DIVISION into 3 successful segments.
Formulating technological innovation strategy: Collaboration strategy
Due to globalization and liberalization of economy, removal of trade barriers, geographical limitation of information flow and short technological development waves automotive manufacturers feel the vital desire to be present in the global market, to be established all over the world and in more market segments than they alone feel capable of covering. But besides the fact that most of the mergers or acquisition of Industry Giants did not prove to be lucrative in the long run it, it is significant noting that the Go it Alone way has fitted Honda since its creation in 1948.
Honda is already a successful company and the world's leading automakers, with a global network of 396 subsidiaries and 105 affiliates. Honda manufactures, develops and markets a wide variety of products the latest being its environment friendly Honda FCX clarity.
As per its Annual Report 2009, Honda has a net sale and other operating revenue of Yen 10,011,241 and the total consolidated R&D expenses for the year ended March 31, 2009 amounted to Yen 563.1 billion. Thereby, showing that Honda is already well positioned in the market.
With the launch of Honda FCX Clarity it had proved its capability in the automobile industry.
Merger - The functioning 'Made by Global Honda' concept that coordinates global sharing of knowledge, people, capital and products within the company diminishes the prospect of gains a merger could bring.
Acquisition - Expanding by acquisition has the disadvantage of often inducing a hostile takeover culture, much in contradiction to the ideas of informal, cooperative and openly communicative culture the company has established (Fujisawa) , cultivated and updated (Kawamoto) over decades.
Strategy in networked industries and Time of Entry:
Today, when the world is talking of automobile pollution, save environment, green and clean earth, reduction in carbon dioxide emission and green house effects, Honda strives to achieve a significant advancement toward the next generation of manufacturing systems. Honda has made an all out effort and has introduced a new dedicated hybrid vehicle, Honda FCX Clarity, a fuel cell vehicle, which emits no carbon dioxide and uses no fossil fuel to satisfy and please customers . This car emits only water. With this hybrid strategy Honda is the first to announce global CO2 reduction targets for 2010 for both its products and production activities and is making efforts in various areas. Honda believes that, in the product area, the advancement of hybrid technologies is the most practical and effective measure to reduce carbon dioxide at this time and is making steady progress towards market penetration of fuel cell vehicle.
FCX Clarity is a world leading next generation fuel cell vehicle which is designed from scratch as a fuel cell vehicle. 'Honda expects to lease several dozens of this vehicle per year to reach a total of approximately 200 units in the first three years from its launch in 2008', CEO speech in midyear 2008 9.
In September 22nd, 2009 Honda received the prestigious Grove Medal in recognition of the FCX Clarity hydrogen fuel cell electric vehicle at Grove Fuel Cell Symposium.
Recently in April 9th, 2009 at a press conference hosted by the New York International Auto Show and Mobil 1 at the Jacob Javits Centre in Manhattan, New York, the Honda FCX Clarity
was declared the 2009 World Green Car11.
Hence, it can be seen that this technology has been successful from the time it was introduced. The future is yet unknown but Honda anticipates great success and customer appreciation with its innovation. As rightly said by Tetsuo Iwamura, President & CEO of American Honda Motor Co, "Along with a renewed focus on quality, we begin our next fifty years by accelerating our efforts to develop and deploy new technologies that put Honda at the forefront of this global challenge, to create a cleaner and more sustainable future for generations to come." 12