CASE STUDY : HONDA

Presented by :
Tan Tai Seng M061130005
Lim Mei Chin M061210001
History & Background
Founder : Soichiro Honda

1946 Honda Technical Research Institute in
Hamamatsu, Japan to develop small motorbike
engines

1948 Establish Honda Motor Company, Ltd

1959 Opened its 1
st
store front at Los Angeles
with 6 industrial employees
History & Background
1986 1st released brand luxury car, Acura
- Also manufactured garden equipment,
marine engines, power generators &
pumps.
2000 Released ASIMO robot

2004 GE Honda Aero engines for aerospace

2012 Honda Jet
Slogan & Philosophy
Basic Principles
Respect for the Individual
The Three Joys (the joy of buying, the joy of selling, and the joy of creating)

Company Principles (Mission)
Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality
yet at a reasonable price for worldwide customer satisfaction

Management Policies
Proceed always with ambition and youthfulness
Respect sound theory, develop fresh ideas, and make the most effective use of time
Enjoy your work and encourage open communication
Strive constantly for a harmonious flow of work
Be ever mindful of the value of research and endeavor
Products
Automobiles
Motorcycles
Products
Scooters
Electrical Generators
Water Pumps
Products


Lawn & Garden Equipments
Products
Tillers
Outboard Motors
Products
Robotics
Jets & Engines
Thin Films Solar Cells
Porters Five Forces Model
Threat of substitute products
- Customer may switch to better performance with more economical prices
compared to Honda
- Eg : Yamaha

Threat of entry of new competitors
- Honda unable to gain maximum profit in American market because of American
government policies to protect domestic companies, such as Ford
- Spend money in American distribution market

Rivalry among existing competitors
- To compete with Toyota, Ford & General Motor
- Keep on innovating, improving, researching & developing to
compete effectively in auto industry
- Eg : Honda Accord 1982 vs Toyota Camry 1982


Porters Five Forces Model
Bargaining power of customers
- April 2007 in Vietnam, Honda Air Blade Scooter was highly attracted to the youth, the
supply is not enough for demand & pushed to higher price.

- July 2007, Suzuki introduced ready stock Hayate scooters which has same function
with Air Blade with 23% lower price, customers changed their mind & move to Suzuki.


Honda Air Blade Suzuki Hayate
Porters Five Forces Model
Bargaining power of suppliers

- Honda keys suppliers (Metal Stamping Parts) :
Hongo Co.,Ltd
Kikuchi Co.,Ltd
Takao Kinzoku Kogyo Co.,Ltd
Technical Co.,Ltd
- Kikuchi Co., Ltd also deal with Nissan & if Nissan offer higher price & better promotion
of than Honda, capacity of Honda would be affected & increased its cost to sustain.

The External Environment
Natural environment
- Honda puts endeavor to create better, cleaner and more fuel-efficient engine
technologies, and to further improve recyclables throughout its product lines.
- To make further progress with fuel cells and solar cells, and to promote commercialization
of solar cells


Cultural environment
- Men and women have different style in vehicle of demand & their needs for scooter
differed too
- Eg : Honda Active > 100cc (men) & Honda Scoot Pep <100cc & with ABS (women)


The External Environment
Economic environment
- Increases in fuel price & economic crisis could triggers decline in demand for automobiles

Political / Legal environment
- Regulations regarding vehicle emission levels, fuel economy, noise, safety and noxious
substances, as well as levels of pollutants from production plants, are extensive within
the automobile, motorcycle and power product industries.
- These regulations are subject to change, and are often made more restrictive.
- Costs to comply with these regulations can be significant to Hondas operations.

Technological environment
- Honda can build an information system to approach their customer effectively.
- Not only attract intention of the ones who need car but also the ones have not plans to
buy it.

SWOT Analysis
Enterprise Strategy
The Mission Statement of Honda is try to maintain a global point of
view, with the dedication to supply the highest quality products at a
reasonable price for worldwide customer satisfaction .

Moreover, taking new challenges with the pursuit of Initiative,
Technology and Quality, Honda is pursuing their vision: Striving to be
a company society wants to exist through creating new value,
globalization, and commitment for the future
Corporate Strategy
Hondas portfolio includes three businesses: Automobiles business,
Motorcycles business, Power business.


Honda has devoted in one basic rule: build products close to the
customer.
Business Strategy
R&D is sharpening the business advantage of Honda

With the systematic way of approaching, focus on durability, reliability
and basic performance to establish a creative and innovative technical
foundation. With the wisely approach to the future, the Honda
products do care about the economical, environmental, and social
issues
Operational Strategy
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, thats all to maximize the worldwide customer
satisfaction.

The Individual Strategy
The Three Joys

The joy of buying to exceed the customers expectation

The joy of selling - the pride of having a positive relationship with
their customers

The joy of creating - by producing quality products that satisfy
customers worldwide, Hondas employees can experience pride in
exceeding the expectation of their customers
The Firms Structure
Honda use matrix organization structure that combines geographic, business and
functions

Advantage
Facilitates rapid response to change in two or more environments.
Eg : when some changes occur in American market, the local company freely
makes decision in order to immediately adapt to the market. Instead of waiting
the decision from Parents Company, it has authority to themselves decides,
resulting in saving time, cost and reducing risk.
Matrix structure is flatter and more responsive than other types of structures.
Permits Honda's associates efficiently, effectively exchange information
together.
Highly specialized employees and equipment are shared by departments

Managing People
Honda focus on 2 ways of managing people :

Environmental Training
- It has committed to environmental conservation and spent a lot of effort to
contribute to human health and the preservation of the global environment

Ensuring diversity in employment
- Honda believes that diversity of workforce will provide the company with the
creativity by integrating many different perspectives in a unique competitive
advantage
Financial Analysis
Financial Analysis
Honda net sales has dropped from
$ 2,440 billion yen to $ 2,028
billion yen (-17%) in 2012 mainly
due to decreased net sales in
automobile business by Japan
earthquake, flood in Thailand as
well as negative foreign currency
translation impact.

Honda Hybrid
Honda Hybrid
The Insight uses the first generation of Honda's Integrated
Motor Assist (IMA) hybrid technology.

During heavy acceleration, the NiMH batteries drive the
electric motor, providing additional power; during
deceleration, the motor acts as a generator and recharges the
batteries using a process called regenerative braking.
Honda Hybrid
1999 2006 : Production of 1
st
generation of Hybrid Insight
2001 : Released Hybrid Civic
2009 : Introduced 2
nd
generation of Insight

Conclusion
What are Hondas distinctive competencies? How do they play a role
in its choice of technology strategy?

Distinctive competencies also its strength which are :
Powerful R&D
Market leader
Strong brand equity
Innovative
Wide range of products (Unique products and diversify product line)
Better production plan

With the powerful R&D, Honda choose to go solo in its choice of technology
strategy. The decision was made by Hiroyuki Yoshino because he believe that Its
better for a person to decide about his own life rather than having it decided by
others



Conclusion
Honda has chosen to develop the hybrid technology alone as
opposed to collaborating with other manufacturers. What are the
benefits and risks of this approach?

Benefits :
High risk comes with high profit. With the sole own technology in the market,
Honda can monopoly the market with huge profits.
Delayed the competitors technology advancement
Raise the entry barrier for new/existing competitor
Raise its brand equity image (as well in history) for every successful product.
Possess the first mover advantage as the market leader. Thus enable Honda to
set comparison bar for consumer to gauge/evaluate against competitors.
Give more over its technological direction and ensured that the accumulated
learning remained in house.
Force itself to understand all aspect of strength to weakness in technology.

Conclusion
Risks :
If Honda chooses to go solo, it faces the risk that its products will branch away
from standardization because most of the people (or competitors) will be using
other technology.
If Hondas products are not more superior to others, it might face difficulties in
marketing the products
Waste money in R&D if products are unprofitable (all cost bare alone)
If unsuccessful, will takes time to catch up with competitors (dead or alive)
Lost the opportunities to collect licensing profits
More money needed in advertsing to educate public with new idea or promote
new product



Conclusion
Can Honda reduce the risk of going solo?

Yes, there are possibilities

i. Honda must also has a strong sales team to survey the market
needs (such as PESTEL Analysis) before designing a product
ii. Timing of the launch of new product also crucial which will
determine the success/ failure of the product.
iii. Consider narrowing the gap of launching (but still need to ahead
of competitor) so that the cost of educating share by both and the
success rate will be higher.



The End
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