Honda Motor Company Ltd Commerce Essay

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Honda Motor Company Ltd. which has been in the market for a long time and very few people in modern society are unfamiliar with the brand. Today, Honda has given society everything from cars, trucks, generators and motorcycles. Honda is a Japanese based company which is well known for its cars and motorcycles. It is the 2nd largest automaker in Japan and the 5th largest automaker in the world. Honda is world renowned for innovative ideas and engineering excellence. Its most well known cars are the Civic and Accord. In the west, Honda currently stands as one of the leading automakers. It has reputation and style. Companies like Honda aim to provide luxury and performance above everything. Nevertheless, there are various internal and external factors that have a significant influence on how the company does business. 

Company Background

Honda Motor Company, Ltd. (本田技研工業株式会社) is a Japanese multinational which has all the while been classified as an automobile and components manufacturer. It was founded by a Japanese mechanic Soichiro Honda in the year of 1948 after which the company was named after him. After a few years of being recognized, Honda Company started to spread to other nations such as Europe, United States and Asia.

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Honda has been the global automobile manufacturer since the year 1959, as well as one of the largest manufacturer of auto engines which are calculated by quantity, generating more than 14 million internal auto engines each year ahead. (Wikipedia)

Honda was the first Asian Japanese automobile manufacturer to come out with a dedicated luxury brand, named Acura, in 1986. This was specifically chosen for the American auto market. Besides from their essential automobile and motorcycle industry, Honda Co. also do produces garden equipment, marine engines, personal watercraft and power generators, as well as many others. From the year 1986, Honda has been engage with artificial intelligence robotics research after which they released their ASIMO robot in 2000. They have since endeavored into aerospace with the formation of GE Honda Aero Engines in 2004 and the Honda HA-420 HondaJet, which is to be unclassified in 2012.

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Financial Information on Honda Motor

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PRODUCTS:

Popular Car Models

Hatchback: Honda Jazz, Honda Airwave, Honda CRZ (Hybrid market)

Sports: Honda Civic Type R (Japanese Market), Honda Euro FN2R (Euro Market), Honda Integra, Honda NSX.

Sedans: Honda City, Honda Civic or the Hybrid version, Honda Accord

SUV: Honda CR-V

MPV: Honda Odyssey

Features:

Looks and Design:

The outlook of Honda vehicles looks splendid which has a spectacular design compared among their competitors.

Interiors:

Interiors are magnificently structured and Multidimensional dashboard, Steering wheel which has audio control system, new models with I pod connective music system, comfortable leather seats, as well as airbags for safety, etc.

Engine and Gearbox

VTEC engine, proficient engine which are broadly spaced gearing ratios, Paddle shifting, Ride and handling, liberated suspension on the front end, Wheel base, ABS and EBD.

Strategic Analysis

Market analysis tool is a vital tool for accepting the swelling and turn down condition of markets. In a business structure, market analysis helps both in now and the time to come for business evaluation of a market structure by dealing with the opportunities and threats which narrates to the strength and weakness to shorten a justifiable stance in the market.

External Analysis

PEST plays a significant position in the important formation opportunities in a strategy. On the other hand, they are normally outside the restriction of the firm and typically be measured as threats or opportunities.

In detail the PEST is a helpful tool for accepting risks related with market development or deterioration, which the position, ability and control for a firm. The PEST method is at times supplemented by the legal and environmental factors.

Political Trend

1. Government proposition to limiting the amount of cars being offered in the UK. This would influence the business of Honda as they will not be able to assemble at the level which they formerly could.

2. The UK Government was eager to bring together foreign companies to capitalize into UK Honda investment in England (Swindon in addition to primary share in rover).

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3. Demanded to manufacture cars with cleaner emissions. Besides this shows Honda has to capitalize heavily in Research & Development to manufacture cars with cleaner engines. One such example is i-vtec

Economic Trend

1. Investment and selling in Europe. Production inside of Europe has meant that they would not have to add the expense of extra tariff to their vehicles.

2. Exchange rate - From £ to Yen. The disadvantage of yen compels Honda vehicles to be expensive in the UK.

3. Higher income means that citizens of the nation will have more to spend; and Honda has been keeping up with this by launching newer car models, particularly the new generation Honda Civic which will be introducing this year.

4. Increasing cost of petrol which Honda will need to accommodate for the market by bringing in more economical and efficient cars such as the Honda Jazz 1.3/1.5.

Social and Demographic Trend

1. Because of the language barriers, Honda has decided to setup in Swindon because they would normally prefer to transact in English Language.

2. Increasing desire of customize cars. Honda is a prominent industrialist of cars that can be simply modified, sophisticated and performance. And this is feasibly their USP.

3. Because of the request for city driving cars, Honda had to establish smaller and economic cars like the Honda Jazz 1.3 and Honda Airwave.

4. Recent trend of the Formula One, Speed! And this is a feature of Honda which is mostly apprehensive with show-boating rather than revenue. Honda is one of the primary automobile manufacturers which has a vast Research and Development budget dedicated to that basis.

Technological Trend

1. Honda will need machines that specialize at a single task ensuring that the product is done much quicker and of a higher class product.

2. Safety Requirements. Because of legal and the consumer tension, automobile manufacturers have to advance cars with substantial safety features that Honda will need to examine and test. This would be at the expenditure of their Research and Development Department. This is extensively distinct from a decade ago when crash dummies were used before.

3. Intelligent cars. Most cars have added in Satellite Navigation systems (GPS) as a standard add-on, Honda has to catch up with this in their newer car models.

4. Environmental friendly cars. Honda had invented I-VTEC engines, which is a follow on from their disreputable older generations' vtec engines. I-VTEC engines deliver better fuel economy, greater torque and cleaner emissions.

Porter's Five Forces

Bargaining Power of Suppliers:

The motor supply businesses have inadequate bargaining power. There are a lot of supply firms and there are numerous parts that are necessary to manufacture a car, demanding for many suppliers, one would then think that automobile manufacturers would always be at the supplier's mercy. But however, the suppliers really do not have power. The suppliers would likely need to depend on probably one or two automobile manufacturers to acquire the majority of their merchandise. If the auto manufacturer decides to replace suppliers, the things happen to the supplier would then be damaging. With the Just in Time (JIT) manufacturing approach Honda applies, there will be a push and pull mechanism. These justify a well built relationship between the automobile manufacturer and suppliers. This also can be quite beneficial for both businesses.   

Bargaining Power of Buyers:

The auto industry is extremely competitive; consequently buyers have certain degree of control because there are numerous automobiles to choose from. Customers have the utmost power in connection for relatively standardized nature of the automotive product and the low switching costs related with selection from competing auto brands. Honda has a record of liberating high quality and fuel efficient cars. With the rising cost in fuel and the nation of the economy, the customers are looking for the best product for a good value. Honda has always been a leading light in creating fuel efficient and low emission cars. As the world continue to have a better recognition of the need to look after the environment and going green, Honda remains to amend the vehicles manufacture with this focus. In the year of 1977 and 1983, Honda Civic was classified as first in the United States fuel economy tests. Honda had then launched hybrid cars such as the Insight, Civic 1.3 Hybrid and Accord model. During 2006, Honda Insight was recorded as the best fuel efficiency car. These are just a few of the examples on how Honda performs to meet the demands of the customers. 

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In the previous history of auto business, the automobile manufacturers really went unrestrained, particularly in the United States. They have a tendency to have additional bargaining power. Customers had become progressively disenchanted with the cars that were manufactured. This is when the imported automobile businesses increased and Honda was a significant part of it.   

Threat of new entrants:

In the automotive industry barriers to entry are habitually high due to the capital costs required in automated manufacturing, design, location, materials costs, marketing expenses, and so many other factors that are too numerous to document.   Although the threat of entry of new manufacturers is low, in the 1980s the United States car manufacturers were faced with numerous new entries when the consumers were extremely frustrated with the automobiles that were produced at the time.   This is one of the reasons Honda became such a competitor in the American market.

  

As the worldwide fuel sources continue to be depleted, the need for new technology and new or different energy sources is more than evident.   This will allow for new entrants in the near future.   Honda will need to continue to be a leader in the market for meeting these demands.   

Another factor to consider is with the challenges facing America and the current state of the economy.   Numerous American automotive manufacturers are filing bankruptcy, closing their manufacturing plants, and essentially going under.This could be an alternative prospect for new entries in the automobile industry.   

Threat of Substitutes:

The threat for of substitutes to the automobile commerce as a whole is comparatively mild.   There are numerous forms of transportation, however none as convenient or valued as owning a vehicle.   The use of other forms of transportation such as trains, buses, or bicycles is an option and even saves the owner cost such as gas, insurance, taxes. However, this does not pose a huge risk of being a substitute.   Consumers enjoy the ease of owning an automobile for things such as transporting luggage and groceries which would not be nearly as easy to carry on the bike, train, or a bus.   The exception to this is in urban areas where walking, mass transit, riding a bicycle is preferred by some.   

Degree of Rivalry:

Honda, Toyota, Nissan, and Hyundai have similar vehicles and are routinely compared to each other.   Honda makes the Accord, Toyota has the Camry,

Nissan has the Maxima, and Hyundai produces the Sonata.   All are considered in the same class.   Marketing of the companies themselves, all indicate they are comparable.   The degree of rivalry continues to increase as new technology develops, environmental concerns rise, and the economy challenges the market.   The automobile industry is measured to be an oligopoly, which supports to reduce the effects based on price competition.   The competition between the companies continues to intensify due to the changes in the economy.   The companies use rebates, financing, long-term warranties, and recently the guarantee to make payment or return the vehicle should the consumer lose their job.   This is definitely a sign of the times.   The automotive companies compare themselves to each other.   In their advertising campaigns, the companies point out the weakness of the other company and stressing their strength compared to the other companies.   

The American market is Honda's largest contributor.   As the economy continues to be in turmoil, Americans are turning to Honda for their small, low-maintenance and more fuel efficient vehicles.   The company has embrace on hybrid and fuel cell vehicles, such as the Honda Civic and Accord Hybrid models. Honda has a restricted product line, emphasizing on low powered vehicles.   They focus on their limited products and focus on being the best in the market with these models.   

S.W.O.T Analysis

The SWOT analysis for Honda Motor Co. is done and the findings are listed below:

Strengths:

1. Honda has a unique and innovative technology that makes them leaders in the automotive industry

2. Honda utilizes the Just in Time production approach

3. The models that Honda produces are some of the best in the market with regards to fuel efficiency and low emissions.

4. Several of Honda's models are rated best in the industry for safety.

Weaknesses:

1. Honda has a relatively small scale production

2. Honda has limited models.

3. Honda only focuses on the economy class vehicles.4. Weakening financials, Poor presence in pick-ups, Non-core activities

Opportunities:

1. Design and expand production line.

2. Honda needs to look at some of the new global markets.

3. Continue to improve technology.

4. Continue to focus on safety standards.

5. Continue to lead the industry in environmentally sound products.

6. Continue to lead the industry in fuel-efficient products.

Threats:

1. Global economic downturns

2. Upcoming technologies in other company.

3. Global automobile manufacturing alliances.

Porter's Value Chain

Value Chain techniques aims at adding value into products or service so as to enhance the comparative advantage of firm. The value chain would be divided into firm level and industry level.

Firm Level

At firm level, it is a chain of activities of a firm operating in the particular industry. The chain of activities could be primary activities and supporting activities.

Primary activities are inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance).

Supporting activities are administrative infrastructure management, human resource

management, technology (R&D), and procurement.

The industry level value chain is about how the firm work out the various processes which staring form raw materials to delivering the finished goods to customers. By setting up the effective chain or adding value from each chain, a firm can minimize the cost and maximize the value of the produce.

Applying to case of Honda, value chain management helps to increase the efficiency of internal and external network. Honda's global network comprises 434 subsidiaries and affiliates which including 118 production facilities in 33 countries. In the fact that Honda needs the value chain management to enhance its comparative advantages.

Strategic Formulation

Boston Cow Group Matrix

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For a business to grow progressively and strategically, it must first distinguish itself to be either a leader (Star and Strength) or a follower (Question Mark and Weakness). Founder of Honda Motor Corporation, Saichiro Honda started in a small bicycle repair shop after which his startup business expanded into an automobile company. During the growth phase, the business did not regulate itself only to automobiles and robotics. Their most current venture in jet engine production is taking baby steps to maturity. Honda is a mobility business that handles in the transportation of valuable human cargo. The Power of Dreams which is their tag line has without a doubt interprets the company's assurance to new technological development (www.Honda.com). Honda never projected itself as an automobile manufacturer, which is it core Strength (Star), but as a people driving force. The company's leading foundation of profitability (Opportunities and Cash Cows) is their practice of technology, innovation and creativity in diagnostic new trends for its variety of products.

Corporate Strategy

Honda's portfolio embraces of three businesses which are Automobiles, Motorcycles and Power business. Although stepping into automobile business was considerably late at 1963, Honda rapidly maintains the business with features like exceptional fuel economy, optimum safety and driving leisure. Honda's turnovers and creation in the automobile industry demonstrate positive steadily not just in United States but as well in many provinces globally.

Ansoff Matrix

This tool is developed by the Igor Ansoff the father of strategic management. Here Ansoff Matrix tells about what will be proper marketing strategy of Honda motors to increase the market share with their range of products.

http://www.franteractive.net/resources/Ansoff-Matrix.GIF

Market Development (Existing Product)

According to Nikkei Tokyo, Honda is ever changing its development of its next generation Honda Civic and Accord models to the United States to expedite the delivery of vehicles which are suited to local tastes. (Nikkei reported in its Nov. 26 edition).

Honda will additionally reinforce the product lines through the introduction of six latest car models in Japan by the year end of 2015, introductory with the "N-ONE" model in November 2012 and the third model for the N series. In the small car group classification, the all new Fit Series will be launched to the market. With the tremendous product strong point, Honda will vividly enhance its manifestation in mature markets.

New Product (Existing Market)

In the extent of middle sized vehicles, resulting in the market introduction of the all new Accord hybrid model in the United States in early 2013 which is a hybrid model fitted with two motor hybrid systems will be added to the listing. Subsequently after the United States introduction, these cars will then be launched in Japan as well as other regions. The hybrid model which will happen to be on sale in Japan will be fitted with an efficient inverter competent of external power supply and was established by utilizing Honda's new generator technologies.

As regards to the interest of driving performance, a extremely efficient and higher output which has a three motor hybrid system, the Sport Hybrid (Super Handling All Wheel Drive) which comprises of each high level of balanced handling and better fuel economy, will be installed to the Honda NSX, Acura RLX Sport Hybrid and the successor of Honda Legend which is suppose to be launched in Japan 2014. Honda will deliver to the assumptions of customers who are excited waiting for these models by reinforcing the presence of these hybrid cars with extraordinary driving performance and excellent fuel economy.

For fuel cell electric vehicles, Honda deems to be the best ecologically responsible vehicle, therefore has been prominent in the industry for Research and Development and sales, Honda will reveal an all new fuel cell electric car chronologically in Japan, the United States and Europe in 2015.This innovative fuel cell model will display additional technological advancement and substantial diminution that Honda has accomplished.

Diversification

Honda Motor delivers a respectable example of leveraging an essential capability through correlated diversification. Even though Honda is famous for its cars and trucks, the business actually started out in the motorcycle industry. Through contending in this business, Honda established an exclusive capability to construct small and reliable engines. When management was determined to diversify into the automobile business, Honda was booming because it influenced this capability inside its new business. Honda was also pragmatic for its engine building expertise in the all ground vehicle, lawn mower and motorboat industries.

Business Strategy

Research and Development had improved the business benefits of Honda, composed with the fierce rivalry between Honda and their competitors. With the organized way of being potential, emphasizing on durability, consistency and basic performance to create a productive and innovative technical substance. With the prudently method to the future, Honda products are concern about the economical, environmental and social issues.

This commands a steady increase in the United States and Europe for the time being while the whole industry is declined due to some external aspects such as American Dollars depreciation, price of oil increase, political turndown. Honda has consistently been involved in research and development that will help people in the near future through leading advantageous technology and dedication to innovation which will then expand new possibilities in success.

The premises of Honda are also one of its strong points. Throughout inventing products and services that endow the core values which compels Honda uniqueness, Honda's management around the world keeps providing such inspirational experience for its customers. Honda put genuine efforts into services, reacting to varying values and progressively complex needs of customers worldwide. So its services concentrate on refining customer relations, with responsive and dutiful sales, receptive customer support, maintenance and repairs.

Life with a Honda

Honda began unifying its multiple dealership channels into a single Honda sales channel, seeking to strengthen the Honda brand, enhance customer satisfaction, and help ensure lifetime customer loyalty. The manufacturing and distributing system of Honda are also sources for the succession of 

Honda. With the global network, Honda's global strategies somehow include the globalization 

characteristic. Honda has established independent local operation around the world and pushed local autonomy and proactive efforts to localize the needs regional with mutual understanding. The competition between Honda and others speed up year by year. This is somehow carry the win/lose characteristic.

Honda's greatest competitor of all time Worldwide is Toyota Motor, but the competition around the world involve Hyundai, Volkswagen, Nissan, General Motor, Ford, Kia, Mazda. The rivalry against these top car manufacturers in the world has created a work ethic that is unmatched in the American auto scene. With their constant improvement on their cars, the healthy competition that mostly in Japan - leads the way for the production of vehicles that gets more and more miles per gallon.

Automobile Industry Life Cycle

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Image from OpenLearn

Introduction

In the introductory phase, auto companies promote the product's offerings and what makes it stand out in the market. For instance, the company may tout the car's voice recognition software, fuel efficiency, compact size, parking facilitation technology or speed. In this stage, car companies bank on wealthier consumers buying the car at its most expensive point in exchange for buying the "latest and greatest" product. When the auto industry unveiled the first hybrid cars, marketing tactics included showcasing the vehicle's fuel efficiency and congratulating the consumer for her willingness to be a pioneer of the environmental movement. The success of these tactics enables car companies to charge a high price, which subsidizes the technology for the new product.

Growth

Car companies advertise the growth phase of the car by appealing to a wider audience. Alexander Hiam, author of the book, "Marketing for Dummies," explains that in this phase consumers buy the product in greater numbers and competitors enter the market. In this phase, automakers focus on brand differentiation and not just the product features. Instead of putting consumers on the waiting list to buy the vehicle (as is the case in the introductory phase), the car is showcased in dealerships as trendy and popular. If other cars offer similar features, price becomes a selling point and the auto dealers may offer rebates and cash-back incentives.

Maturity

The maturity phase brings slower growth and ruthless competition based on the number of competitors saturating the market with similar products. According to Rajan Saxena, author of the book, "Marketing Management," companies undergo a competitive price and promotion war in an effort to gain sales. Saxena also explains market segmentation and brand repositioning strategies are most critical during this time. Thus, the car company may show endless commercials of its automobile portraying it as a family-friendly car or a sleek vehicle for singles.

Decline

At the decline phase of the growth cycle, interest in the vehicle begins to wane as other newer, more intriguing products take the spotlight. During the stage, companies slash the price of this line of vehicles to make way for its newer-year models. Advertising offers steep discounts and rebates for all prior-year models: This tactic is partly because the dealers wish to avoid paying year-end taxes for all their unsold cars.

Operational Strategy

Honda operates in the worldwide market with 134 production facilities in 28 countries and at31 R&D facilities in 15 countries, about 167000 Honda employees and associates serve 23 million

customers worldwide annually. Honda's global operations are divided into 6 administrative regions

responsible for operating. Hiring and engaging the people and philanthropic initiatives locally in the communities that Honda operates. Honda is pushing the independence of their local management and sales operations, at the same time with integrating and forward-looking plan for each region. They operate under the conduct guidelines that help member companies and associates in evaluating and managing risks, complying with laws and regulations, keeping a high level of transparency in

operational level, that's all to maximize the worldwide customer satisfaction.

 The individual strategy of Honda is reflected through the Honda's philosophy The Three Joy

 

The Joy of buying, the joy of selling, and the joy of producing. With the joy of buying, the Honda's associates must try their best to exceed the customers' expectation. Meanwhile, with the joy of selling,

which concern not only about the relationship between the dealers and their customers, but they also feel the pride of having a positive relationship with their customers. And the last one, the joy of producing comes from manufacturing, research and development by producing quality products that satisfy customers worldwide, the Honda's employees can experience pride in exceeding the expectation of their customers. That all bring the strategies of Honda from their enterprise level, through corporation, business, operational level, to individual strategy level, that spread the Honda's strategic spirit throughout the company.

Conclusion

Honda Motor Co., Ltd. is one of the "Big Three" automotive companies in Japan and continues to expand its production across the world.   Honda continues to be a leader in the production of economic, fuel-efficient, low emissions automobiles.   The company has received numerous awards for the safety rating of the vehicles.   By reviewing Porter's Five Forces Model and the S.W.O.T. methodology, strategic planning for the Honda Company is formulated.   Although Honda has numerous strengths, with the changing economy and the competitive market, Honda will need to expand their products, continue to create new technology products, continue to lead in safety and environmentally sound products, and finally expand their global market