CASE STUDY : HONDA
Honda has been the world’s largest motorcycle manufacturer since 1959, reaching a production of 400 million by the end of 2019,[4] as well as the world’s largest manufacturer of internal combustion engines measured by volume, producing more than 14 million internal combustion engines each year.
Honda was the first Japanese automobile manufacturer to release a dedicated luxury brand, Acura, in 1986. Aside from their core automobile and motorcycle businesses, Honda also manufactures garden equipment, marine engines, personal watercraft and power generators, and other products. Since 1986, Honda has been involved with artificial intelligence/robotics research 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 HondaJet, which began production in 2012. Honda has three joint-ventures in China: Honda China, Dongfeng Honda, and Guangqi Honda.
It was founded in 1946, by Soichiro Honda and subsequently incorporated two years later, followed by years of success and growth as a motor cycle maker. Away from its core business, the company’s 105 affiliates and 396 subsidiaries across the world provide financial services to thousands of its clients. It operates a four tier business model which includes the financial services division, motorcycle, automobile as well as power products.
Besides multi wagons, Honda also produces a range of passenger cars, SUVs, mini vans, passenger cars, mini vehicles as well as sports coupes among others. Honda’s flagship car and motor cycle models include the Accord, Civic, Legend, Insight, Acura CSX and Acura RL, CR-V, Cross Road, ASIMO Robots as well as the scooters among many others.
As Honda entered into automobile manufacturing in the late 1960s, where Japanese manufacturers such as Toyota and Nissan had been making cars since before WWII, it appears that Honda instilled a sense of doing things a little differently than its Japanese competitors. Its mainstay products, like the Accord and Civic (with the exception of its USA-market 1993–97 Passport which was part of a vehicle exchange program with Isuzu (part of the Subaru-Isuzu joint venture)), have always employed front-wheel-drive powertrain implementation, which is currently a long-held Honda tradition.
Honda also installed new technologies into their products, first as optional equipment, then later standard, like anti lock brakes, speed sensitive power steering, and multi-port fuel injection in the early 1980s. This desire to be the first to try new approaches is evident with the creation of the first Japanese luxury chain Acura, and was also evident with the all aluminum, mid-engined sports car, the Honda NSX, which also introduced variable valve timing technology, Honda calls VTEC.
In 2008, Honda increased global production to meet the demand for small cars and hybrids in the
U.S. and emerging markets. The company shuffled U.S. production to keep factories busy and boost car output while building fewer minivans and sport utility vehicles as light truck sales fell.[36] Its first entrance into the pickup segment, the light-duty Ridgeline, won Truck of the Year from Motor Trend magazine in 2006
Toyota’s sales have been on the rise despite through the global economic down turn that hit its American competitors, and largely driven by Toyota’s PR woes over alleged flaws in the breaking system in its flagship Prius model. This success is largely attributable to the company strategic preparedness. Case in point, in 2002, it launched a hybrid car model to tap into the ever growing environmentally conscious clientele, besides launching the Environmental Learning Center (based in Texas), while in 2004, the company entered into a strategic partnership with GE, that led into the development and production of a trail blazing light jet engine, suited for business jets.
In 2000, the company has embarked on an ambitious program to set up production plants in the emerging car and motor cycle markets, notably China, Argentina, Russia and the motor bike hot spot, Vietnam. The company prides itself with the twin principles of respect individuals and the Three Joys Principle i.e. buying, selling as well creating.
These values reflect the company does wish to build on each person’s unique abilities and its endeavor to ensure that everyone who comes by purchasing the products or by other means should have a great/joyous experience. Honda ensures this by relentlessly, lead in the creation of value, innovation, new products at accessible prices.
With car markets in the developed world already saturated, most car company’s are looking abroad in the emerging markets notably China, India and Brazil. A recent study shows that car buyers rate car makers more according to their CSR than those consumer in the first world, thus companies that perform better in this sphere stand a far greater chance of winning the hearts and minds of the new middle class is guaranteed success.
The company has undertaken numerous actions in an attempt to meet the challenges posed by global warming and climate change. With the reputation of the automobile industry and fossil fuels already damaged, due to its huge carbon footprints, and the growing fears among the public of air pollution, it is only reasonable that companies act in accordance to the wishes of the consumers. Honda has initiated the LCA system, which identifies and sets targets for the required actions. The company develops energy efficient models, adheres by the 3Rs (in design) and noise reduction etc. Honda’s corporate governance is a typical Japanese style bottom down structure, characterized by collective decision making and a collective sense of belonging among to the company that in turn reflects on the company’s performance.
Honda’s ability to meet high targets and post tremendous growth rates is largely due to its tendency to set stretched targets, which brings into direct competition with the biggest players in the automotive industry. In order to compete, it uses its resource base tocompete by either providing niche products or undercutting competitors on basis of cost advantages, attained through scale economies. This ability to leverage its resources offers the key to its success, as against the widely fabled Japanese management styles. This style is widely different from and more appealing that the western style corporate management is only suitable for the Japanese and Asian environments.
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. Honda put heartfelt 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, responsive service support, thorough maintenance and repairs. “Life with a Honda” Honda began unifying its multiple dealership channels into a single Honda sales channel, seeking to strengthen the Honda brand, enhance customer satisfaction, and help ensure lifetime customer loyalty.
The manufacturing and distributing system of Honda are also sources for the succession of Honda. With the global network, Honda’s global strategies somehow 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 mutual 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 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. Ever since, Honda’s automobile business has been filled with a challenging spirit for creating new value in every area including technology development and manufacturing. And now following Honda’s 2030 Vision, Honda will strive to electrify two-thirds of global automobile unit sales in 2030.
The COVID-19 outbreak impacted Honda’s customers and communities. Aware that many are also experiencing financial stress. Honda wants its customers to know that they have options to Help for Financial Hardship. The company is offering relief options for its Honda Financial Services (HFS) customers who are experiencing hardship
QUESTIONS:
1.Carry out the SWOT analysis of Honda in the automotive Industry (30 MARKS)
2. Identify the business strategy adopted by honda in the automotive industry according to Bowman strategy clock and according to Mintzberg (20 MARKS)
3. What were the drivers for Honda’s diversification (10 MARKS)
4.Describe the corporate strategy of Honda; Justify your answer. (20 MARKS)
5.Identify the strategic methods implemented by Honda; Justify your answer (10 MARKS)
6. Formulate two strategic recommendations to face the COVID crisis. (10 MARKS)
