Analysis of Honda's Business Strategy


Honda Electric motor Company, Ltd. is a Japanese multinational firm mainly known as a manufacturer of motorcycles and automobiles.

Honda is the world's biggest and leading maker of motorcycles as well as the world's greatest manufacturer of inner combustion engines assessed by volume, producing more than 14 million interior combustion motors per calendar year. Honda surpassed Nissan in 2001 to become the second-largest Japanese automobile manufacturer. As of August 2008, Honda surpassed Chrysler as the fourth biggest car manufacturer in the United States of America. Honda is the sixth largest automobile producer on the globe.

Honda was the first Japanese automobile manufacturer release a a dedicated comfort brand, Acura in 1986. Aside from their core automobile and bike businesses, Honda also produces garden equipment, marine machines, personal watercraft and electric power generators, between others. Since 1986, Honda has been involved with artificial brains/robotics research and released their ASIMO robot in 2000. They also have ventured into aerospace with the establishment of GE Honda Aero Engines in 2004 and the Honda HA-420 Honda Aircraft, scheduled to be released in 2011. Honda spends about 5% of its income into R&D. Its mind quarters are in Tokyo the capital city of Japan and thus it spreaded virtually all over the world. The Honda company not only companies the vehicles but also they produces various bikes and scooters.

History of the company

From a young age, Honda's creator, Soichiro Honda got a great involvement in automobiles. He worked as a mechanic at a Japanese tuning shop, Art work Shokai, where he tuned cars and got into them in races. A self-taught engineer, he later worked on a piston design which he hoped to market to Toyota. The first drafts of his design were turned down, and Soichiro worked well painstakingly to master the design, even going back to school and pawning his wife's rings for security. Eventually, he gained a contract with Toyota and built a herb to construct pistons for these people, which was destroyed within an earthquake. Due to a gas shortage during World Warfare II, Honda was struggling to use his car, and his novel notion of attaching a little engine to his bicycle attracted much attention. He then set up the Honda Complex Research Institute in Hamamatsu, Japan, to build up and produce small 2-pattern motorbike engines. Dialling upon 18, 000 bike shop owners across Japan to be a part of revitalizing a nation torn apart by battle, Soichiro received enough capital to engineer his first motorbike, the Honda Cub. This designated the start of Honda Motor Company, which would grow a short while later to be the world's most significant maker of motorcycles by 1964.

The first development vehicle from Honda was the T360 minuscule pick-up truck. Run by a tiny 356 cc upright-4 gasoline engine unit, it was categorised under the cheaper Kei car duty bracket. The first production car from Honda was the S500 sports vehicle. Its chain driven rear wheels indicate Honda's motorcycle origins.

In the 1950s, Honda first exported its motorcycles to Europe. In 1961, Honda became the first Japanese street motorcycle manufacturer in European countries to establish a local subsidiary, and in the same yr, Honda acquired victories in the Isle of Man Visitor Trophy races, sweeping 1st through 5th places in the 125cc and 250cc classes. In 1963, Honda exposed a motorcycle manufacturing plant in Belgium, the first such service outside of Japan for the company, implemented in 1976 by a motorcycle flower in Italy. Now, Honda motorcycles are popular because of their dynamic performance, simple operating, and environmental performance, gaining the most notable market share in many European countries. Actually, Honda attained top sales in eight of ten Western European countries in 2008. Honda is constantly on the expand its product lineup in its dedication to increase customer satisfaction in European countries.

Honda Electric motor Co. , Ltd. operates under the essential guidelines of "Admiration for the average person" and "The Three Joys" commonly portrayed as The Pleasure of shopping for, The Joy of Selling plus the Joy of Creating. "Respect for the average person" demonstrates our need to respect the initial character and capability of each individual person, trusting the other person as equal companions in order to do our best atlanta divorce attorneys situation. Based on this, "The Three Joys" expresses our idea and desire that each person working in, or coming into contact with our company, directly or through or products, should share a feeling of joy during that experience.

In series with these basics, since its establishment in 1948, Honda has remained on the leading edge by creating new value and providing products of the best quality at a reasonable price, for worldwide customer satisfaction. In addition, the business has conducted its activities with a committed action to protecting the environment and enhancing safety in a mobile society

Basic Principles

Respect for the average person. The Three Joys (buying, offering and creating.

Company Principle

(Mission Assertion)

Maintaining a global viewpoint, we focus on providing products of the best quality, yet at a reasonable price for worldwide client satisfaction.

Management Policies

  • Proceed always with ambition and youthfulness.
  • Respect audio theory, develop fresh ideas, and make the most effective use of their time.
  • Enjoy work and encourage available communication.
  • Strive constantly for a harmonious movement of work.
  • Be ever mindful of the worthiness of research and endeavor.

Dreams inspire us to set-up impressive products that enhance range of motion and benefit world. To meet the particular needs of customers in different regions round the world, we bottom our sales systems, research and development centers and processing facilities in each region. Furthermore, as a socially in charge corporate citizen, we make an effort to solve important environmental and safety issues. And by the entire year 2008 honda company is the 6th major company of automobile industries and strongly suggested industry.



Enterprise Strategy

The Mission Statement of Honda is make an effort to maintain a worldwide viewpoint, with the commitment to supply the best quality products at a reasonable price for worldwide client satisfaction.

Moreover, taking new challenges with the pursuit of Effort, Technology and Quality, Honda is chasing their 2010 Eyesight: Striving to be always a company society wants to exist through creating new value, globalization, and determination for the future.

Corporate Strategy

Honda's portfolio includes three businesses: Cars business, Motorcycles business, Power business. Despite the fact that stepping into Car industry rather past due at 1963, Honda quickly leads the industry with characteristics like superior gas economy, optimum safety, and generating pleasure. Honda's sales and development in this industry prove successful steadily not simply in U. S. but also in many areas worldwide.

Meanwhile, motorbike business is the first business of Honda, from 1963 with the function of the first oversea plant in Belgium, Honda has dedicated in a single basic rule: build products close to the customer. Honda has controlled efficiently in 28 motor bike place in 21 countries, as well as Honda R&D operations in the U. S. , Italy, China, Germany, Thailand, and India. In 2005, the 150-millionth Honda street bike created, its business goal is to make Honda cycles more popular than ever before.

The first Electric power Product engine were only available in 1953, and now has extended - includes tillers, lightweight generators, outboard machines, lawn mowers, vitality carrier. Cumulative production of electric power products has exceeded 70 million units (May, 2006). Electricity Products are produced at 11 plant life in 9 countries worldwide, sold in 156 countries, and used by around 5. 5 million people yearly. Honda is now expanding into automatic robot industry with ASIMO, reaching the sky through Hondajet, providing financial services worldwide to improve sales increasing. They all create an extremely promising and potential Honda in the foreseeable future.

Business Strategy

R&D is sharpening the business good thing about Honda, together with the fierce competition between Honda and competitors, and they all define the business enterprise Strategy of Honda. Among the proudest things about Honda is its R&D system. Together with the systematic way of resembling, focus on durability, consistency and basic performance to establish a creative and innovative technological foundation.

With the wisely approach to the future, the Honda products do care about the inexpensive, environmental, and sociable issues - This causes a increase constant in North american and Europe lately meanwhile the complete industry is certainly going down by some external factors such as U. S. D. depreciation, Petrol price raising, political downturn. Honda is keeping affecting in the research and development that gain people in the future through leading-edge technology and determination to advancement that opens up new options in range of motion.

With "The Enjoyment of Providing" The dealership of Honda is also one of its strengths. Through creating products and services offering the core beliefs that produce Honda unique, the Honda's affiliates around the world keep creating such motivating experience because of its customer. Honda put heartfelt endeavors into services, responding to changing principles and progressively more complicated needs of customer worldwide. Its services give attention to improving customer relationships, with friendly and attentive sales, reactive service support, comprehensive maintenance and maintenance. "Life with a Honda" Honda commenced unifying its multiple dealership channels into an individual Honda sales channel, seeking to fortify the Honda brand, enhance client satisfaction, and help ensure life-time customer loyalty.

The developing and distributing system of Honda are also options for the succession of Honda. Together with the global network, Honda's global strategies in some way include the globalization characteristic. Honda has established independent local operation round the world and forced local autonomy and proactive initiatives to localize the needs regional with common understanding. The competition between Honda as well as others speed up time by year. That is somehow hold the win/lose characteristic.

The world Auto market is being considered by Asian Brands. In the U. S. market, the foremost threat to U. S. car designers is the introduction of Toyota, Honda, and Nissan that are threatening directly to the riches being of these Big Males here, Basic Motors - the world's current major car manufacturer, Ford - the pioneer of automobile industry, and some others big children of Detroit. The increase of Honda and Toyota struck General Motor unit the most because they arrived so strong many years ago.

Honda's greatest rival of all time worldwide is Toyota Motor, however the competition across the world involve Hyundai, Volkswagen, Nissan, General Engine, Ford, Kia, Mazda. The rivalry against these top car manufacturers on earth has generated a work ethic that is unmatched in the North american auto scene. With their constant improvement on their cars, the healthy competition - that mostly in Japan - leads just how for the creation of vehicles that gets increasingly more a long way per gallon.

Operational Strategy

Honda manages in the worldwide market - with 134 creation facilities in 28 countries and at 31 R&D facilities in 15 countries, about 167000 Honda employees and associates serve 23 million customers worldwide yearly. Honda's global functions are divided into 6 administrative locations responsible for working. Hiring and participating the people and philanthropic initiatives locally in the neighborhoods that Honda performs. Honda is driving the independence of their local management and sales businesses, at the same time with integrating and forward-looking plan for every single region. They operate under the conduct rules that help member companies and affiliates in analyzing and managing dangers, complying with laws and regulations, keeping a high level of transparency in functional level, that's all to maximize the worldwide client satisfaction.

The Individual Strategy

The individual strategy of Honda is shown through the Honda's beliefs - The Three Joy

  • The Joy of buying:- the Honda's affiliates must try their finest to go over the customers' expectation.
  • The pleasure of selling:- which matter not only about the relationship between the dealers and their customers, however they also feel the pride of experiencing a positive romance using their customers.
  • The happiness of producing:- comes from developing, research and development. by producing quality products that gratify customers worldwide, the Honda's employees can experience satisfaction in exceeding the expectation with their customers.

That all bring the strategies of Honda of their enterprise level, through organization, business, operational level, to individual strategy level, that pass on the Honda's tactical spirit throughout the business.


The future of a corporation or the ways of be made to keep an company alive in future can be framed by keeping in mind the surroundings and the problems that are anticipated to appear in forseeable future. So we will analysis the near future policies of the business by firmly taking Potter's 5 power model for environment and difficulties that may occur in future

ENVIRONMENT:- Potter`s 5 drive model

The threat of substitute products:

That is defined as the presence of close substitute products escalates the propensity of customers to change to alternatives in response to price raises (source from Wikipedia. org). This does indeed mean that whenever a Honda's rival can produce with high performance and cost-effective price alternatively than Honda's. The product will replace Honda's product in the market. Hence, simultaneous reducing market show and earnings of Honda are the results. For instance, for the merchandise line of sport motorbike, R6 of Yamaha is the close substitutes of Honda's F4. If Yamaha can perform an innovation to produce R6 with the low price against F4, It could actually replace Honda's F4 on the marketplace because customers have the same expectation on both two products.

The risk of the accessibility of new competitors.

The theoretical meaning is the fact in marketing numerous competitors existing, the profit of every company will be less than the maximum level. American Market as an example, Ford and Honda aggressively compete together in the forex market. Honda cannot get the maximum profit in the forex market due to policies from North american Government protecting domestically Company. Additionally, Honda must spend money on accessing to distribution in American market. In addition, it also confirms difficulties in implementing the culture differences, etc. those reasons will reduce the Honda's income level.

Rivalry among existing challengers:

Among five characteristics important to the cars industry evaluation is the competitive rivalry. Three main competitors that Honda must remain competitive fiercely are Toyota Electric motor Corp. (TM), Ford Motor Co. (FM), and General Motor unit (GM). Whatever change in strategy of one of these opponents can have affects on performance of Honda. At the end of fiscal 12 months 2007, FM reported 172, 455 million dollars of sales and 16, 418. 5 million us dollars of market capacity, while GM experienced 181, 122 million us dollars of sales and 11, 853. 3 million dollars of market functionality. Toyota with 299, 394 employees made 202, 864 million dollars of sales in the fiscal yr 2007. Honda as well as its three rivals always maintains on innovating, strengthening, researching and producing to compete effectively in this auto industry. For example, whenever one of these four company releases a new model, others will get up and have similar products to contend. Like when Honda has just released its FCX Clearness, the next technology of its gas cell vehicles, GM put their gasoline cell platform into the body of a Chevy Equinox SUV.

A famous style of Honda, Accord, has been contending with its main rival, Toyota Camry since its first appearance. Accord premiered into market in 1976, and until 1983, Toyota launched itsCamry. Since then, these two models have continued competing with each other. GM Malibu and Ford Fusion are also two models that GM and Ford use to contend with Accord and Camry. For, Toyota, and GM all can replace Honda in this automobile industry. So, what Honda has to do is wanting to improve its technology, research and development to make a competitive advantages, maybe as a Greenest automaker.

The bargaining power of customers:-

In business, in case a company would like to can be found it must develop a good marriage with customers. Honda is a worldwide company, this means Honda have a whole lot of competition. So customers will confuse when they make decision for what Brand would be the best choice. It depends not only the famous company but also the price and quality. For example, In Vietnam on Apr 2007, Honda introduced Air Blade Scooter with functions like sport and fashion model, more fuel-efficient engine technology. It swiftly attracted the youth, the supply was not enough for demand. Then it made the scarcity of Air Blade in the market and pushed price higher. Customer need it it must order and hold out one to two months. No more after, Suzuki has implemented maximize the benefit of its competitors to its product. On July 2007, Suzuki created new model - Hayate Mobility scooter - that have the same functions of Air Cutting tool but place the amazing price (less than 23%) and customer may take their product immediately. Because of this, many customers change of their mind, therefore the market talk about of Honda to reduce.

The bargaining ability of suppliers:-

One of the factor helps the company competes against with other companies is the capability to reduce the cost. Therefore, suppliers plays an important role to make the company's success. Suppliers may won't work with the organization or increasing prices for unique resources. Noticing the serious element, Honda purchases recycleables and certain components and parts, from numerous external suppliers. Additionally, Honda relies on some main suppliers for the items and raw material that use in the produce from it products. Honda has potential to obtain these supplies in an useful and cost-effective manner is subject to a number of factor. A few of that are not within Honda's control, these factors include the ability to provide a continued source of supply and capability to contend with other company in obtaining the equipment. If Honda loss an integral supplier, it may affect the capacity and increase the cost. There are a few key suppliers of Honda in term of Steel 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 offer with not only the provider of Honda but also Nissan's dealer. If Nissan was happy to acquire with higher price or got some benefit advertising than Honda, Honda might be influenced on the capability and boost the cost.


In this globally competitive business community, every firm must face many obstacles, and Honda

does, too. There are four common problems that Honda must face: issues that cannot be resolved, managing intangibles, taking care of diversity, and dealing with new issues for which managers and corporation are ill-prepared. In this part, we will discuss more about these problems of Honda.

Challenge 1: Issues that cannot be resolved but must be managed.

Honda has to face some troubles that cannot be fixed completely; they just can be monitored, like these two illustrations below.

In Europe, several factors adversely impacted automobile functions of Honda during fiscal 2001, including the understanding of the yen, the weakness of the euro resistant to the sterling pound and pricing pressure in the United Kingdom. Due to this business environment, Honda's car unit sales in European countries declined 23. 3%, to 191, 000 devices, and net sales declined 30. 8%, to Ґ311. 2 billion ($2, 512 million).

Because of the Asian currency problems in 1997, Honda needed to streamline local operations to ensure success in just a small-scale production volume level. These attempts include cost reductions, technology transfers, human resource development and exports to other parts. These work have allowed Honda to improve its success and presence in this region.

Challenge 2: Taking care of intangibles. Building relationships

Most of firms that want to become industry management or be competitive globally will need to have strategic associates, and Honda is not an exception. Building relationship (with business lovers and governmental agencies) is a task that Honda has to face to efficiently compete internationally.

Business Transactions: To maintain a fair and sound marriage with business lovers, Honda conducts good and sound deals. Honda begins with the selection of business partners. If they need to purchase products or services, they will decide on a business partner by looking at and evaluating in an impartial manner the terms and conditions provided by various business associates. After selecting, in their dealings with business companions, they will neither offer nor agree to gifts or benefits beyond that normally considered appropriate. In addition, in addition they prohibit on improper exercise of positions and authorities. They will not exercise positions or regulators inappropriately to exact inappropriate benefits from business companions; nor will they provide business partners poor benefits.

Relationships with Governmental Agencies: To make strategic human relationships with governmental businesses, Honda abides laws and regulations for ethics. They work in a manner that recognizes government representatives' ethics and what are considered conflicts of interest under the relevant regulations. Furthermore, prohibition on abnormal items and benefits is also conducted. They don't offer government officials any gift idea or profit exceeding the social custom or socially accepted limits.

Honda is reliant on the cover and preservation of its intellectual property: Honda has rights in a number of patents and trademarks relating to the merchandise it manufactures, which were obtained over a period of years. These patents and trademarks have been of value in the growth of Honda's business and could continue being of value in the foreseeable future. Honda will not regard any of its businesses as being reliant on any solo patent or related band of patents. However, an lack of ability to safeguard this intellectual property generally, or the against the law breach of some or a sizable group of Honda's intellectual property privileges, would have an adverse influence on Honda's businesses. So, handling these intellectual properties is also a challenge for Honda.

Challenge 3: Handling diversity

Honda is a global organization. Its associates result from many places all around the globe, so variety certainly occurs and needs a whole lot of attention. How to approach diversity is absolutely a difficult challenge for Honda.

Respecting variety- an open-door occupation plan, is the insurance policy that Honda choose to control its variety. Even since the times when Japanese firms tended to prefer using only graduates of a few elite educational institutions, Honda has had an available - door career policy, employing the most in a position and encouraged individuals available. In addition to hiring new graduates, they also welcome talented individuals in mid-career, enriching the business with a diverse mixture of personalities and experience.

Challenge 4: Responding to new issues for which managers and organizations are ill-prepared. Some problems have just occurred recently, but did not before, give Honda's professionals considerable difficulties, because they are not well-prepared for these people. Climate change is an excellent example because of this situation.

Climate change and the increasing demand for mobility

The problem of weather change is of global range it cannot be fixed through isolated local measures alone. The entire world must interact to face this problem. However, there is still a significant distance between developed and developing countries in conditions of access to convenient vehicles. Improvement in the grade of mobility is indispensable to the betterment of people's lives. Consequently, the demand for automobiles and other method of transportation will likely continue to increase. Honda is attempting to apply advanced systems to help take care of the conflicting issues of climate change and the growing demand for range of motion.

Products: enhancing global average energy economy

Since the internal combustion engine seems more likely to remain the principal source of electric power for human freedom until at least 2020, enhancing its fuel overall economy and overall efficiency can be an issue of vital importance. In the US, Europe and other areas, automakers are being necessary to enhance the average fuel market with their products through compliance with tough expectations like the united states Corporate Average Gas Economy (CAFE) legislation. However, environment change is a worldwide issue and must be dealt with on a global level. Honda is shifting from a local technique to one based on a global perspective; and from power economy focuses on for product by weight or model to worldwide goals for all those product categories.

Swot research of Honda company

  • Its power is high innovation
  • Its strength is manufacturing different products
  • Strong brand equity
  • Market talk about leadership


  • It has high cost structure
  • It has high deposit structure where It varies from Toyota and Nissan.
  • Some cars are extremely high in cost so that only some people can buy.
  • Due to high interest from customers into more energy efficient and lower air pollution cars, honda may use it's durability in high R&D to build up these kind of cars to match customers needs.
  • less rate competition or imports
  • economic sluggish down
  • There may be exterior changes like federal, taxes, politics.
  • Price wars.

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