A. INTRODUCTION
In the global market scenario, Honda is the world‘s largest engine manufacturer and market leader in
motorcycles. Honda has been operating 120 manufacturing facilities in 29 countries and employs
167,231 people worldwide. Honda has expanded in main markets following:
1959 American Honda Motor Co., Inc. established (Honda‘s first overseas subsidiary).
1964 Asian Honda Motor Co., Ltd. (Thailand) established
1965 Honda (U.K.) Limited established in London (the first market of Honda in Europe)
1971 Honda Motor does Brazil Ltda. established in Sao Paulo (presently Honda South America Ltda.)
The key point lead to Honda‘s success is the continuous innovation that was found by Mr. Honda as a basis. Today Honda stands as the largest motorcycle manufacturer and the 9th largest automobile manufacturer in the world. The market share of Honda until now is 10.2 percent and it is ranked as No.
5 in UK (the most particular/fastidious market). Honda Company also becomes a technological force
in the motorcycle and automobile industries in Asia, Europe, United Kingdom and North America.
Ø In 2007:
Honda stated it is going to launch low-priced hybrids and advanced diesel technology in the near future, they were also voted the number one car manufacturer in the world for the third period.
Ø In February 2008:
Honda announced that it would cease production of motorcycles in the United States and United Kingdom in spring 2009.
Describe the firm today
For over sixty years, Honda hasn’t stopped evolving and innovating. Today, Honda has released the four main segments following
STRATEGY of Honda Motors
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 2010 Vision: Striving to be a company society wants to exist through creating new value, globalization, and commitment for the future.
Corporate Strategy
Honda‘s portfolio includes three 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 economy, optimum safety, and driving pleasure. Honda‘s sales and production in this industry prove successful steadily not just in U.S. but also in many regions worldwide.
Meanwhile, motorcycle business is the first business of Honda, from 1963 with the event of the first overseas 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 R&D operations in the U.S., UK, Italy, China, Germany, Thailand, and India. In 2005, the 150-millionth Honda motorcycle created, its business goal is to make Honda cycles more popular than ever. They all create a very promising and potential Honda in the future.
Business Strategy
R&D is sharpening the business advantage of Honda, together with the fierce competition between Honda and competitors, and they all define the B u s i n e s s S t r a t e g y of Honda. One of the proudest things about Honda is its R&D system. 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 – This leads to a increase steady in American and Europe recently meanwhile the whole industry is going down by some 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 strengths. Through creating products and services that provide the core values that make Honda unique, the Honda‘s associates around the world keep creating such inspiring experience for its customer.
Source: Honda Annual Report 2007
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 Big Boys here, General Motors – the world‘s current largest car manufacturer, Ford – the pioneer of automobile industry, and some others big boys of Detroit. The raise of Honda and Toyota hit General Motor the most because they came so strong many years ago.
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.
Operational Strategy
Honda operates in the worldwide market – with 134 production facilities in 28 countries and at
31 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
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.
D.THE SIX EXTERNAL ENVIRONMENTS (pestal) Natural environment:
The more industry develops, the more the environment is negative affected. Among the environmental problems, Global Warming and Pollution Level are the problems that take the most concern of community. Many Non-Government Organizations has requested industrial firms to reduce CO2 emission and toxic wastes. To deal with this problem, Honda continuously researches and develops new technologies involving hybrids and fuel cell vehicles. Moreover, they also recognized that its CO2 reduction efforts needed to include development of the diesel engine‘s potential. To achieve this goal, Honda has developed three solutions:
Economic environment:
Honda conducts its businesses in Japan and throughout the world (including North America, Europe and Asia). A continued economic slowdown, recession and the sustained loss of consumer confidence in these markets, which may be caused by rising fuel prices or other factors, could trigger a decline in demand for automobiles, motorcycles and power products that may adversely affect Honda‘s results of operations
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.
Technological Environment
Utilizing the most advanced information technologies, Honda has developed and innovated itself continuously. The changes in IT lead to almost Honda‘s operation were controlled more effective such as:
On the production process: by using the innovation means of production and mode of production, like the auto fit machine, Honda can mass product to reduce the cost, save the time and increase the capacity
Business and industries(porter and swot)
Along with the five environments above,
Porter‘s Five Forces
is a good framework to analyze the business and industries of a company. It encourages the strategic managers and marketers not only look outside the current competitors but also has a concern with potential competitors. Moreover, it helps the company understands what its customers want and control its supplier more effective. Now we utilize Porter‘s Five Forces to analyze Honda Company.
The threat of substitute products:
That is defined as the existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (source from Wikipedia.org). This does mean that when a Honda‘s competitor can produce with high performance and economical price rather than Honda‘s. This product will replace Honda‘s product in the market. Hence, simultaneous
reducing market share and profit of Honda are the results. For example, for the product line of sport motorbike, R6 of Yamaha is the close substitutes of Honda‘s F4. If Yamaha can achieve an innovation to produce R6 with the lower price against F4, It can actually replace Honda‘s F4 on the market because customers have the same expectation on both two products.
The threat of the entry of new competitors.
The theoretical meaning is that in marketing with many competitors existing, the profit of each company will 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 accessing to distribution in American market. Moreover, it also finds difficulties in adopting the culture differences, etc…. those reasons will reduce the Honda‘s profit level.
Rivalry among existing competitors:
Among five characteristics important to the automobiles industry analysis 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 will catch up and have similar products to compete. Like when Honda has just released its FCX Clarity, the next generation of its fuel cell vehicles, GM put their fuel cell platform into the body of a Chevy Equinox SUV.
A famous 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 its Camry. Since then, these two models have kept on competing with each other. GM Malibu and Ford Fusion 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 good relationship with customers. Honda is a global company, it means Honda have a lot 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 Air Blade Scooter with functions like sport and fashion model, more fuel-efficient engine technology. It rapidly attracted the youth , the supply was not enough for demand. 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 company‘s success. Suppliers may refuse to work with the firm or increasing prices for unique resources. Realizing the serious element, Honda purchases raw materials and certain 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 Honda‘s control, these factors include the ability to provide a continued source of supply and ability to compete 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 Part : 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 Nissan‘s 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.
The key phrase
Together for tomorrow
Honda Philanthropy – Basic
Principles
- As a company with a global viewpoint, we are dedicated to contributing to the well-being of local communities around the world through our products and technologies.
- As a good corporate citizen, we will deepen our commitment to all local communities where we do business.
- We will contribute to the nurturing of a society where caring and energetic individuals actively participate in socially responsible activities.
Honda Philanthropy -Vision
Honda enriches the joy of sharing with people around the world through socially responsible activities in accordance with the Honda philosophy of respect for the individual and the encourages and helps children and youths so that they can create and develop their power dreams. Since 1998, Honda has organized children‘s Idea Contest in which children could draw a picture that may be cool and sent to Honda. After selection, some children will present in final round in order to encourage initiative thinking and confidence. In Thailand, Honda School Environment Challenge Awards has been held to help children to protect their local environment. Honda not only cares about children, but also creates career opportunities for students.
1. Environment initiatives.
Working on auto industry, Honda always understands its responsibilities for environment. This does mean Honda has been developing and innovating technologies to reduce waste and pollution. In Japan, Honda is pro-activities with many projects such as beach clean-up project. For instance, 19 beaches was cleaned by Honda in 2007. In China, Honda help Chinese to protect agricultural land before becoming desert. Other projects are Watershed Preservation in Japan, Spring Creek