Analysis of Hondas Business Strategy

Analysis of Hondas Business schemeIntroductionHonda Motor Compevery, Ltd. is a Nipp mavense multi national corporation primarily k outrightn as a maker of bicycles and elevator carmobiles.Honda is the bes biggest and leading manufacturing assembly line of cycles as well as the worlds turgidst manufacturer of privileged combustion engines measured by volume, producing to a greater extent than than 14 zillion intimate combustion engines per course. Honda surpassed Nissan in 2001 to become the second-largest japanese automobile manufacturer. As of revered 2008, Honda surpassed Chrysler as the fourth biggest automobile manufacturer in the United States of America. Honda is the one-sixth largest automobile manufacturer in the world.Honda was the depression Japanese automobile manufacturer to release a dedicated comfort brand, Acura in 1986. Aside from their means automobile and motorcycle stemmaes, Honda besides progress tos garden equipment, marine engines, personal vas and indi cea striation generators, amongst differents. Since 1986, Honda has been involved with artificial intelligence/robotics inquiry and released their ASIMO robot in 2000. They have also ventured into aerospace with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-420 Honda Jet, scheduled to be released in 2011. Honda throw aways about 5% of its revenues into RD. Its head quarters atomic number 18 in Tokyo the capital city of Japan and thus it spreaded almost exclusively over the world. The Honda comp whatsoever non only manufactures the railcars exclusively also they produces various bikes and scooters.History of the companyFrom a young age, Hondas founder, Soichiro Honda had a great af plum in automobiles. He recreateed as a mechanic at a Japanese tuning shop, Art Shokai, where he tuned cars and entered them in races. A self-taught train, he of later lended on a piston design which he hoped to address to Toyota. The first drafts of his design were rejected, and Soichiro worked painstakingly to perfect the design, even going spikelet to school and pawning his wifes jewelry for collateral. Eventu anyy, he won a contract with Toyota and make water a plant to construct pistons for them, which was damaged in an earthquake. repayable to a gas short(p)age during World War II, Honda was unable to wont his car, and his legend idea of attaching a small engine to his bicycle attracted much curiosity. He then established the Honda Technical Research Institute in Hamamatsu, Japan, to obtain and produce small 2-cycle motorbike engines. Calling upon 18,000 bicycle shop owners cross moods Japan to take part in revitalizing a nation torn apart by war, Soichiro received enough capital to engineer his first motorcycle, the Honda Cub. This marked the beginning of Honda Motor Company, which would grow a short beat later to be the worlds largest manufacturer of motorcycles by 1964.The first return automobile from Honda was the T360 mini pick-up truck. Powered by a small 356 cc straight-4 gaso kickoff engine, it was classified under the cheaper Kei car tax bracket. The first employment car from Honda was the S500 sports car. Its chain driven rear wheels point to Hondas motorcycle origins.In the 1950s, Honda first exported its motorcycles to Europe. In 1961, Honda became the first Japanese motorcycle manufacturer in Europe to establish a local anesthetic anesthetic subsidiary, and in the same year, Honda won victories in the Isle of Man Tourist Trophy races, sweeping maiden with and through 5th places in the 125cc and 250cc classes. In 1963, Honda opened a motorcycle manufacturing plant in Belgium, the first such facility outside of Japan for the company, followed in 1976 by a motorcycle plant in Italy. Now, Honda motorcycles be popular for their dynamic performance, ease of riding, and environsal performance, earning the top market division in many European countries. In fact, Honda earned top gross sales in eight of ten Western European countries in 2008. Honda continues to lead its crossway lineup in its determination to improver customer pleasance in Europe.Honda Motor Co., Ltd. operates under the rudimentary principles of remark for the Individual and The terce pleasures commonly expressed as The bless(prenominal)edness of Buying, The Joy of Selling and The Joy of Creating. discover for the Individual reflects our desire to respect the unique character and baron of each individual person, trusting each other as refer partners in order to do our best in every situation. found on this, The Three Joys expresses our belief and desire that each person on the job(p) in, or coming into contact with our company, directly or through or products, should look at a sense of joy through that experience.In line with these basic principles, since its establishment in 1948, Honda has re of imported on the leading edge by creating new value and providing products of the high schoolest quality at a sensible footing, for ecumenical customer satisfaction. In addition, the Company has conducted its activities with a commitment to protecting the environment and enhancing pencil eraser in a mobile ordinationBasic PrinciplesRespect for the individual. The Three Joys ( demoralizeing, marketing and creating.Company Principle(Mission Statement)Maintaining a pla elucidateary viewpoint, we atomic number 18 dedicated to supplying products of the highest quality, yet at a reasonable determine for worldwide customer satisfaction.Management PoliciesProceed al trends with ambition and youngfulness.Respect sound theory, develop fresh ideas, and make the most effective use of time.Enjoy work and encourage open communication.Strive constantly for a harmonious flow of work.Be ever mindful of the value of research and endeavor.Dreams inspire us to give rise innovative products that enhance mobility and take in society. To sate the particular needs of c ustomers in different regions rough the world, we base our sales ne iirks, research and development centers and manufacturing facilities in each region. Furthermore, as a socially responsible corporate citizen, we strive to address important environmental and safety abbreviates. And by the year 2008 honda company is the 6th largest company of automobile industries and extremely recommended industry.PRESENT SITUATIONAPPLY 5 LEVELS OF STRATEGY TO YOUR COMPANY green light dodgeThe Mission Statement of Honda is try to maintain a ball-shaped 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, engineering science and Quality, Honda is pursuing their 2010 Vision Striving to be a company society wants to exist through creating new value, globalization, and commitment for the future.Corporate StrategyHondas portfolio holds terzetto businesses Automobiles business, Motorcycles business, Power business. Even though stepping into Automobile industry rather late at 1963, Honda quickly leads the industry with characteristics like superior fuel sparing, best safety, and driving pleasure. Hondas sales and intersection in this industry prove sure-fire steadily not just in U.S. moreover also in many regions worldwide.Mean speckle, motorcycle business is the first business of Honda, from 1963 with the event of the first oversea plant in Belgium, Honda has devoted in one basic rule build products close to the customer. Honda has operated successfully in 28 motorcycle plant in 21 countries, as well as Honda RD operations in the U.S., Italy, China, Germany, Thailand, and India. In 2005, the 150- jillionth Honda motorcycle created, its business goal is to make Honda cycles more popular than ever.The first Power Product engine started in 1953, and now has expanded includes tillers, portable generators, outboard engines, lawn mowe rs, power carrier. Cumulative production of power products has exceeded 70 million units (May, 2006). Power Products be produced at 11 plants in 9 countries worldwide, sold in 156 countries, and used by around 5.5 million mickle annually. Honda is now expanding into robot industry with ASIMO, reaching the sky through Hondajet, providing financial run worldwide to enhance sales qualify magnitude. They all create a very promising and potential Honda in the future.Business StrategyRD is sharpening the business advantage of Honda, together with the fierce competition between Honda and competitors, and they all define the Business Strategy of Honda. One of the proudest things about Honda is its RD placement. With the systematic way of resembling, focus on dur capability, reliability and basic performance to establish a creative and innovative technical foundation.With the wisely approach to the future, the Honda products do carry on about the economical, environmental, and social issues This leads to a maturation steady in Ameri mountain and Europe recently meanwhile the whole industry is going drink down by more or lesswhat external factors such as U.S.D. depreciation, Oil price raising, political recession. Honda is keeping involving in the research and development that benefit people in the future through leading-edge technology and commitment to innovation that opens up new possibilities in mobility.With The Joy of Selling The dealership of Honda is also one of its say-sos. Through creating products and services that provide the core values that make Honda unique, the Hondas associates around the world keep creating such inspiring experience for its customer. Honda put costly endeavors into services, responding to changing values and increasingly complicated needs of customer worldwide. Its services focus on improving customer relations, with friendly and attentive sales, antiphonal service support, thorough maintenance and repairs. Life with a H onda Honda began unifying its quaternary dealership channels into a single Honda sales channel, seeking to settle the Honda brand, enhance customer satisfaction, and help ensure lifetime customer loyalty.The manufacturing and distri neverthelessing system of Honda are also sources for the succession of Honda. With the global network, Hondas global strategies someway 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 unwashed understanding. The competition between Honda and others speed up year by year. This is somehow carry the win/lose characteristic.The world Automobile market is being taken by Asian Brands. In the U.S. market, the foremost threat to U.S. car makers is the emergence of Toyota, Honda, and Nissan that are threatening directly to the wealth being of these large-mouthed Boys here, popular Motors the worlds current largest car manufacturer, hybridization the pioneer ofautomobile industry, and some others big boys of Detroit. The raise of Honda and Toyota hit cosmopolitan Motor the most because they came so strong many years ago.Hondas greatest competitor of all time worldwide is Toyota Motor, exclusively 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 cash advance 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.Operational StrategyHonda operates in the worldwide market with 134 production facilities in 28 countries and at 31 RD facilities in 15 countries, about 167000 Honda employees and associates serve 23 million customers worldwide annually. Hondas global operations are divided into 6 admin istrative regions responsible for operating. Hiring and act 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 sophisticated plan for each region. They operate under the conduct guidelines that help ingredient 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 StrategyThe individual strategy of Honda is reflected through the Hondas philosophy The Three JoyThe Joy of buying- the Hondas associates essential try their best to exceed the customers expectation.The joy of selling- which concern not only about the relationship between the dealers and their customers, but they also feel the soak of having a positive relationship with their customers.The joy of producing- comes from manufacturing, research and development. by producing quality products that satisfy customers worldwide, the Hondas 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 Hondas strategic spirit throughout the company.FUTUREThe future of a company or the strategies to be do to keep an company alive in future can be framed by keeping in mind the environment and the challenges that are expected to arise in near future. So we allow synopsis the future policies of the company by taking monkey arounds 5 force pretence for environment and challenges that whitethorn arise in futureENVIRONMENT- Potters 5 force mannikinThe threat of substitute productsThat is specify as the existence of close substitute products increases the propensity of customers to switch to alternative s in response to price increases (source from Wikipedia.org). This does mean that when a Hondas competitor can produce with high performance and economical price rather than Hondas. This product impart replace Hondas product in the market. Hence, simultaneous reducing market circumstances and earnings of Honda are the results. For example, for the product line of sport motorbike, R6 of Yamaha is the close substitutes of Hondas F4. If Yamaha can achieve an innovation to produce R6 with the lower price against F4, It can genuinely replace Hondas F4 on the market because customers have the same expectation on both two products.The threat of the entry of new competitors.The theoretical kernel is that in marketing with many competitors active, the profit of each company bequeath be lower than the maximum level. American Market as an example, Ford and Honda aggressively compete together in this market. Honda cannot get the maximum profit in this market because of the policies from American Government protecting domestically Company. Additionally, Honda has to spend money on assentinging to distribution in American market. Moreover, it also finds difficulties in adopting the culture differences, etc. those reasons go out reduce the Hondas profit level.Rivalry among existing competitorsAmong five characteristics important to the automobiles industry abridgment is the competitive rivalry. Three main rivals that Honda has to compete fiercely are Toyota Motor Corp. (TM), Ford Motor Co. (FM), and General Motor (GM). Whatever change in strategy of one of these competitors can have influences on performance of Honda. At the end of fiscal year 2007, FM reported 172,455 million dollars of sales and 16,418.5 million dollars of market capability, while GM experienced 181,122 million dollars of sales and 11,853.3 million dollars of market capability. Toyota with 299,394 employees generated 202,864 million dollars of sales in the fiscal year 2007. Honda as well as its three rivals always keeps on innovating, improving, researching and developing to compete effectively in this auto industry. For example, whenever one of these four company releases a new model, the others result catch up and have similar products to compete. Like when Honda has just released its FCX Clarity, the adjacent generation of its fuel electric cell vehicles, GM put their fuel cell platform into the body of a Chevy Equinox SUV.A illustrious model of Honda, Accord, has been competing with its chief rival, Toyota Camry since its first appearance. Accord was released into market in 1976, and until 1983, Toyota introduced itsCamry. Since then, these two models have kept on competing with each other. GM Malibu and Ford jointure are also two models that GM and Ford use to compete with Accord and Camry. For, Toyota, and GM all can replace Honda in this auto industry. So, what Honda has to do is trying to improve its technology, research and development to create a competitive advantage, maybe as a Greenest automaker.The bargaining power of customers-In business, if a company wants to exist it must create a goodly relationship with customers. Honda is a global company, it means Honda have a portion out of competitors. So customers will confuse when they make decision for what Brand will be the best choice. It depends not only the famous company but also the price and quality. For example, In Vietnam on April 2007, Honda introduced fashion Blade water scooter with functions like sport and fashion model, more fuel- economical engine technology. It rapidly attracted the youth , the supply was not enough for expect. Then it made the shortage of Air Blade in the market and pushed price higher. Customer want to buy it must order and wait around one to two months. No longer after, Suzuki has utilized maximize the advantage of its competitors to its product. On July 2007, Suzuki introduced new model Hayate Scooter that have the same functions of Air Blade but set the amazing price (lower than 23%) and customer can take their product immediately. As a result, many customers change of their mind, therefore the market share of Honda to shrink.The bargaining power of suppliers-One of the factor helps the company competes against with other companies is the ability to reduce the cost. Therefore, suppliers plays an important role to make the companys success. Suppliers may refuse to work with the blotto or increasing prices for unique resources. Realizing the serious element, Honda purchases raw seculars and trusted components and parts, from numerous external suppliers. Moreover, Honda relies on some main suppliers for the items and raw material that use in the manufacture of it products. Honda has ability to obtain these supplies in an efficient and cost-effective manner is subject to a number of factor. Some of which are not within Hondas control, these factors include the ability to provide a go on source of supply and ability to c ompete with other company in obtaining the supplies. If Honda loss a key supplier, it may affect the capacity and increase the cost.There are some key suppliers of Honda in term of Metal Stamping authority Takao Kinzoku Kogyo Co.,Ltd Hirata Technical Co.,Ltd Hongo Co.,Ltd Kikuchi Co.,Ltd Marujun Co.,Ltd, ect,Among these companies, Kikuchi Co.,Ltd deal with not only the supplier of Honda but also Nissans supplier. If Nissan was willing to purchase with higher price or had some benefit promotion than Honda, Honda might be affected on the capacity and increase the cost.GLOBAL CHALLENGESIn this globally competitive business world, every firm has to looking at many challenges, and Hondadoes, too. There are four common challenges that Honda has to pillow slip problems that cannot be solved, managing intangibles, managing renewal, and addressing new issues for which managers and organization are ill-prepared. In this part, we will cover more about these challenges of Honda. dispute 1 Problems that cannot be solved but must be managed.Honda has to face some challenges that cannot be solved only they just can be managed, like these two examples below.In Europe, several(prenominal) factors negatively impacted automobile operations of Honda during fiscal 2001, including the appreciation of the yen, the helplessness of the euro against the sterling pound and pricing pressure in the United Kingdom. Due to this business environment, Hondas automobile unit sales in Europe declined 23.3%, to 191,000 units, and net sales declined 30.8%, to 311.2 billion ($2,512 million).Because of the Asian currency crisis in 1997, Honda had to streamline local operations to ensure profitability within a small-scale production volume. These efforts include cost reductions, technology transfers, human resource development and exports to other regions. These efforts have allowed Honda to enhance its profitability and presence in this region.Challenge 2 Managing intangibles. Building rela tionshipsMost of firms that want to become industry leadership or be competitive globally must have strategic partners, and Honda is not an exception. Building relationship (with business partners and giving medicational agencies) is a challenge that Honda has to face to successfully compete globally.Business Transactions To maintain a fair and sound relationship with business partners, Honda conducts fair and sound transactions. Honda starts with the selection of business partners. When they need to purchase products or services, they will select a business partner by comparing and evaluating in an impartial manner the impairment and conditions offered by various business partners. After selecting, in their dealings with business partners, they will neither offer nor accept gifts or benefits beyond that usually considered appropriate. In addition, they also prohibit on incorrect exercise of positions and authorities. They will not exercise positions or authorities inappropriate ly to exact improper benefits from business partners nor will they give business partners improper benefits.Relationships with Governmental Agencies To build strategic relationships with governmental agencies, Honda abides laws and regulations for ethics. They act in a manner that recognizes government officials ethics and what are considered conflicts of interest under the relevant laws and regulations. Furthermore, prohibition on excessive gifts and benefits is also conducted. They do not offer government officials any gift or benefit exceeding the social custom or socially accepted limits.Honda is reliant on the protection and preservation of its intellectual airplane propeller Honda owns rights in a number of homelys and trademarks relating to the products it manufactures, which have been obtained over a period of years. These patents and trademarks have been of value in the growth of Hondas business and may continue to be of value in the future. Honda does not regard any of its businesses as being dependent on any single patent or related group of patents. However, an inability to protect this intellectual property generally, or the illegal breach of some or a large group of Hondas intellectual property rights, would have an adverse effect on Hondas operations. So, managing these intellectual properties is also a challenge for Honda.Challenge 3 Managing renewingHonda is a global organization. Its associates come from many places all over the world, so diversity certainly occurs and needs a lot of attention. How to deal with diversity is really a difficult challenge for Honda.Respecting diversity- an open-door employment policy, is the policy that Honda conduct to manage its diversity. Even since the days when Japanese corporations tended to favor employing only graduates of a few elite educational institutions, Honda has had an open door employment policy, hiring the most capable and motivated individuals available. In addition to hiring new graduat es, they also welcome talented individuals in mid-career, enriching the company with a diverse mix of personalities and experience.Challenge 4 Addressing new issues for which managers and organizations are ill-prepared. Some problems have just occurred recently, but did not in the past, give Hondas managers considerable difficulties, because they are not well-prepared for them. humour change is a good example for this situation.Climate change and the increasing demand for mobilityThe problem of climate change is of global scope it cannot be solved through isolated regional measures alone. The entire world must work together to face this problem. However, there is still a meaning(a) gap between developed and developing countries in terms of access to convenient transportation. Improvement in the quality of mobility is indispensable to the betterment of peoples lives. Consequently, the demand for automobiles and other means of transportation will likely continue to increase. Honda is functional to apply advanced technologies to help resolve the conflicting issues of climate change and the growing demand for mobility.Products improving global average fuel rescueSince the internal combustion engine seems likely to remain the primary source of power for human mobility until at least 2020, improving its fuel economic system and overall efficiency is an issue of vital importance. In the US, Europe and other regions, automakers are being required to improve the average fuel economy of their products through compliance with tough standards like the US Corporate come Fuel Economy (CAFE) regulations. However, climate change is a global issue and needs to be addressed on a global level. Honda is alter from a regional strategy to one based on a global perspective and from fuel economy targets for product by heaviness or model to worldwide targets for all product categories.Swot analysis of Honda companyStrengthsIts strength is high innovationIts strength is manufa cturing different products unvoiced brand equityMarket share leadershipWeaknessIt has high cost structureIt has high deposit structure where It differs from Toyota and Nissan.Some cars are very high in cost so that only some people can buy.OpportunityDue to high interest from customers into more fuel efficient and lower pollution cars, honda can use its strength in high RD to develop these kind of cars to suit customers needs.Threatless rate competitors or importseconomic slow downThere may be external changes like government ,taxes ,politics.Price wars.