Paste your text in here.Honda is one of the biggest and most successful automobile companies with a global reputation. In 2015 it was rated on Forbes list as the 23rd most valuable brands in the world. This is no surprise to customers as it is seen as a reward for excellence, hard work, borne out of a desire to satisfy consumer needs.
The company principle itself is bound by its mission statement, that is 'Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction. With this in mind, the company always dedicated to providing the best available services for its loyal customers.
COMPANY PHILOSOPHY
Honda prides itself on its philosophy, which is 'providing joy to the world through new challenges and the realization of dreams.' It is important to note that the ideals behind the dreams of the company is purely consumer satisfaction, other things are secondary.
The Company's philosophy was created by the founder of Honda Motor himself, Mr. Soichiro Honda. The ideals of the brand are supported by two important philosophies; Respect for the individual and The Three Joys. The Three Joys are as follows:
* The Joy of Buying
This is normally accomplished by producing produces and services that often supersedes the expectations and desires of every customer. This is only possible if the need of every costumer is treated as a 'person' rather than a 'group'.
*The Joy of Selling
This happens when the personnel in charge of Honda products develop and sustain a good rapport with the costumers based on mutual respect and trust. Through this, the company's associates derive pride and joy in the costumer's satisfaction.
*The Joy of Creating
This is possible when company associates and suppliers involved in the development, engineering, design, and manufacturing of company products develop a sense of joy in costumers, as well as dealers. This only happens when quality products supersedes expectations and pride is been derived from a job well executed.
The motivation and main concern of the brand is the people and the company is obligated to make a difference by doing only what is right for the customers and it is the desire of the company that every company in which business is carried out will want Honda therein.
SWOT ANALYSIS; CORE COMPETENCES AND STRENGHTS OF THE HONDA BRAND
Honda since inception has excelled in various areas of production, from automobiles to motorcycles and power equipment. Honda has also ventured into producing garden equipment, marine engines, power generators and personal watercraft. Honda also ventured into aerospace in 2004 and are renowned for their involvement in artificial intelligence.
With all its accomplishment and exploits in the production of first class automobiles, the primary sector in which Honda has a competitive advantage is in the motorcycle industry. Honda has a competitive advantage in the production of motorcycles and it has been the largest motorcycle manufacturer in Japan since it started production in 1955. Because it does not focus solely on selling vehicles unlike its counterparts, it remains the largest producer of motorcycles as well as the engines, making it unsusceptible to market cycles or technology disruptions
As a result of the strong brand name, its reputation for producing the best quality engines around the world is always upheld through hard work and sheer determination, it is no coincidence that it is been rated by Forbes as the 21st most valuable brand in the world, valued at over $17 billion, only behind notable brands like Toyota, BMW and Mercedes-Benz in the automobile industry.
With the largest motorcycle market share in Asia, the Japanese brand has the greatest potential for growth, having sold over 80% of its motorcycles in Asia. The fact that it has the largest motorcycle market share positions the company at an absolute advantage to compete alongside other brands for sales and profits.
Furthermore, huge investments in research and development have so far proven to be beneficial. With 5% of its revenue going into investments, Honda relies on these investments to achieve competitive advantage via different technologies, for example new hydrogen and hybrid engines and improved painting process.
WEAKNESSES
Like every major brand that has experienced exponential growth rate, the Honda brand also generally has its downside. This does not necessarily impede production; rather it reduces profit as a result of low demands. Below are three downside that is usually associated with the brand.
1. Weak Stance in Europe. The Honda brand holds a very weak spot in Europe's automotive market and has so far been only able to maintain a 1.1% market share since 2012. Even with the decrease in Europe's market share and several companies complaining of losses, the market remains large enough for companies to gain from the economies of scale.
2. Decrease in Sales. The company's revenue hit the lowest point in 2012. Company sales also went down in North America, which was about 40% in total of the company's revenue.
Sales in Europe and Asia were also on a low which was generally a poor performance on a global scale.
3. Recall of Products. A total of over one million vehicles were recalled in 2011 and 2012 as a result of several manufacturing issues. This led to a severe damage of the company's brand and global reputation, which in turn affected future sales.
HONDA AND THE OPPORTUNITIES IN THE AUTOMOBILE INDUSTRY
With a solid brand name, large resource base and vast technology, various opportunities are readily available since the company actually reflects costumer choice rather than fleet sales. Honda's strategy guarantees the product would always have a say in the marketplace. Below are a few opportunities the brand could benefit from.
1. Hike in Fuel Price.
Honda's strong emphasis on engineering fuel-efficient vehicles (Honda Insight and Honda Civic) with flexible fuel, hybrid and hydrogen engines will pay off due to increasing fuel prices.
2. Global Resurgence of Motorcycle Industry.
Motorcycle industry grew by 4.2% from 2011 to 2012 and is expected to grow by at least 6% to 2016. Honda is the world's leading producer and seller of the motorcycles having more than 29% of the market share. Growing demand for the motorcycles is a great opportunity for the company to expand its global market share and grow sales.
3. Demand for Environmental Friendly Automobiles
The declining levels of fossil fuel sources and the rising CO2 emissions became a major concern for many people and many governments. Therefore, ecologically friendly cars, powered by hybrid, hydrogen or flexible fuel engines became very popular. The market for such cars was $33 billion in 2010. Honda's focus on hybrid and hydrogen fueled engines is a great opportunity to capture the market share for this new demand.
4. Increase through Acquisitions.
Honda could greatly benefit from strategic partnerships or acquisitions of smaller competitors. The business would add new brands to its portfolio, achieve greater economies of scale and would benefit from synergies between different firms.
THREATS
A lot of factors can be said to be responsible for the threats the brand faces till date. Below are few of the most notable threats the company struggles with in the marketplace.
1. Extreme Competition. Honda faces more intense competition than ever. New small entrants are disrupting the market with their capabilities in producing electric vehicles or alternative fuel engines. Big companies are restructuring themselves to become more efficient. As a result, firms like Honda are suffering from competition from both big and small players.
2. Downturn in Fuel Prices. Some analysts forecast that future fuel prices will drop due to extraction of shale gas. This would negatively influence Honda because the company is focusing on hydrogen fuel, hybrid and flexible fuel engine cars, which are not so attractive to consumers when fuel prices are low.
3. Hike in Prices of Raw Materials. Metals are the main raw materials used in vehicle and motorcycle manufacturing and the rising price of the raw metals raises overall production costs for Honda.
4. Environmental Hazards. Honda has manufacturing facilities in Japan, Thailand, China and Malaysia. These countries, including others, are often subject to natural disasters that disrupt manufacturing in the facilities and decrease Honda's production volumes.
5. Rise of Chinese Yen. Honda earns most of its profits outside Japan and appreciating yen poses a great threat to Honda's profits.
Applying Michael Porter's Five-Forces Model
Michael Porter developed the Five-Forces model and it goes a long way in aiding companies review their market position based on 'the five key forces'. Based on this model, Honda has remained a successful brand on a global scene.
The five forces are: Threat of New Entry, Supplier Power, Threats of Substitution, Buyer Power, and Competitive Rivalry. Below is a diagram we will be using to apply Porter's model to the Honda brand for better analysis
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