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    Honda Case - A: Group 8

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    Shivam Shukla
    1. Honda was founded by Soichiro Honda and began producing lightweight motorcycles in 1949, gaining manufacturing expertise and expanding their product line over the following decades. 2. Honda focused on innovation, developing a multi-product line and exploiting economies of scale in production. They pursued regional market expansion and steadily increased their US market share through strategic pricing and sales/distribution efforts. 3. Honda's low-cost manufacturing in Japan and policies aimed at long-term growth helped drive their 10-fold production increase between 1959-1974, despite facing competition internationally.

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    Honda Case - A: Group 8

    Uploaded by

    Shivam Shukla
    64 views9 pages
    1. Honda was founded by Soichiro Honda and began producing lightweight motorcycles in 1949, gaining manufacturing expertise and expanding their product line over the following decades. 2. Honda focused on innovation, developing a multi-product line and exploiting economies of scale in production. They pursued regional market expansion and steadily increased their US market share through strategic pricing and sales/distribution efforts. 3. Honda's low-cost manufacturing in Japan and policies aimed at long-term growth helped drive their 10-fold production increase between 1959-1974, despite facing competition internationally.

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    a case on honda a

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    Honda A

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    1. Honda was founded by Soichiro Honda and began producing lightweight motorcycles in 1949, gaining manufacturing expertise and expanding their product line over the following decades. 2. Honda focused on innovation, developing a multi-product line and exploiting economies of scale in production. They pursued regional market expansion and steadily increased their US market share through strategic pricing and sales/distribution efforts. 3. Honda's low-cost manufacturing in Japan and policies aimed at long-term growth helped drive their 10-fold production increase between 1959-1974, despite facing competition internationally.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    64 views9 pages

    Honda Case - A: Group 8

    Uploaded by

    Shivam Shukla
    1. Honda was founded by Soichiro Honda and began producing lightweight motorcycles in 1949, gaining manufacturing expertise and expanding their product line over the following decades. 2. Honda focused on innovation, developing a multi-product line and exploiting economies of scale in production. They pursued regional market expansion and steadily increased their US market share through strategic pricing and sales/distribution efforts. 3. Honda's low-cost manufacturing in Japan and policies aimed at long-term growth helped drive their 10-fold production increase between 1959-1974, despite facing competition internationally.

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    HONDA CASE - A

    Group 8:
    DM16204
    DM16206
    DM16229
    DM16230
    DM16224
    DM16233
    DM16244

    Akshay
    Ali Zeeshan Fateh
    Megha
    Mobashshir
    Koushik
    Pranjal
    Shivam Shukla

    Company Overview

    Soichiro Honda was the founder. He was a visionary inventor and was involved with the
    automotive industry prior to World War II

    Honda Technical Research Institute was set up in 1946 reflecting Hondas commitment to a
    technologically based strategy

    Came up with a lightweight 50cc, 2-stroke, D type Motorcycle in 1949

    Followed by a superior 4-stroke design that doubled horsepower with no additional weight in
    1951

    In 1951, acquired a plant and within a span of two years gained enough manufacturing
    expertise to become a producer of engines, frames, chains, sprockets, and other ancillary parts
    crucial to motorcycle performance

    Honda basically operates on 3 ideas-

    1.

    Offering a multiproduct line

    2.

    Leadership in Product innovation

    3.

    Exploiting opportunities for economies of mass production by gearing designs to production


    objectives

    Key Success Factors


    Sales & Distribution
    Honda followed a policy of developing a market region by region, beginning
    from the West Coast of US moving eastward over a period of four to five years
    This resulted in setting up of 125 dealers by 1961
    Estimated total S&D expenditure by Honda was $ 90-100 million
    Advertising expenditure was around $ 8.1 million
    This helped in increasing their market share to 43% in 1974

    Key Success
    Factors

    Price Performance
    Prices are set such as to meet the
    market share targets and they were
    ready to cut the prices in case of tough
    competition.
    Some of the implications of price
    performance in larger bike models of
    Honda-Price performance in large bikes
    has been consistent with that in small.
    Cost Performance
    Non subsidizing of motorcycle
    business from other business.
    No decline in margin.
    Cost reduction is in parallel with real
    price reduction.
    Experience based cost reduction.

    S.W.O.T.

    Innovation.
    Market Share Leader.
    Unique & Diverse products.
    Experience based cost
    reduction

    Emerging Market.
    Expansion Abroad.
    High labor cost in developed
    markets.

    High Dependence on international


    market.

    Strength

    Weakness

    Opportuni
    ty

    Threat
    International Japanese players.
    Economic Slow down.
    Prone to external environment.

    Value
    Chain
    Analysis
    Supplier
    Most are
    Japanese
    Low
    procureme
    nt Cost

    Manufacturi
    ng
    Mostly
    done in
    Japan.
    Low
    Labour
    Cost.
    Economy
    of Scale

    Export
    Duty &
    Ocean
    Freight
    Charges

    Distribution
    Major
    focus on
    Market
    Share
    Ready to
    bear short
    term
    losses.

    Strategic Implication
    Highly innovative & able to bring innovation in work in very
    less time: time between conception & production to be 18
    months.
    As market share went up, Hondas expenditure over sales
    & distribution went up simultaneously.
    Synergizing product quality with competitive dealers drives
    sales & distribution of Honda in USA.
    American & European manufacturers where not able to
    bring down there cost position, driving there price
    performance low.
    Availability of cheap labour in Japan was driving Japanese
    Manufacturer competitive advantage.

    Strategic Implication
    Policies:
    Products are updated or redesigned whenever a market threat or
    opportunity is perceived.
    Prices are set at levels designed to achieve market share targets
    and will be cut if necessary.

    Effective marketing systems are set up in all markets where


    serious competition is intended, regardless of short-term cost.

    Plans and objectives look to long-term payoff.

    Effective policies implementation reflects 10x growth in


    production (285k in 1959 to 2133k in 1974) with 14%
    annual growth rate.

    Strategic Implication
    Devaluation of Japanese Yen was facilitating exports
    from Japan.

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