Honda Motor Company, Ltd.
That is why the copying and matching is sometimes neither exact nor immediate” (Hansen, Johansson 1991).
2. 2. 2 Threats of new entrants: Low It is not easy for a new entrant to enter the automotive industry due to the high set up costs and the strong brand loyalty customers have with existing companies. Many AT ten excellent companies KICK to enter new markets Day aqualung excellent Drains. 2.
2. 3 Threats of substitutes: Low- Medium Possible substitutes include trains, airplanes, bikes, buses, etc.
Many of these are less convenient than cars- however buyers must also weigh up the considerations elating to the fuel, maintenance and insurance costs. Due to there being no direct substitutes the threat would be low-medium. 2. 2.
4 Buyers bargaining power: Medium Customers have a range of cars and brands to chose from depending on their choice of – design, cost to run, quality, technology, price etc. 2. 2. 5 Suppliers buying power: Medium Many of the suppliers in the fragmented automotive industry rely on one or two companies to purchase the majority of their products (Investigated- the Industry Handbook: Automotive).
Therefore, “if an automaker decided to switch suppliers, it loud be devastating to the previous supplier’s business.
As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power” (Investigated- the Industry Handbook: Automotive). However, Hand’s relationship with their suppliers is unique in that they invest their own capital, or place a Honda employee inside the organization as a means of reducing risk for its smaller partners (De Wit, Meyer 2010).
Honda builds a close relationship with its component suppliers- purchasing materials on their behalf or efficiency in cost, and intervening directly in internal activities when it becomes necessary (De Wit, Meyer 2010). 3. 3 Trends and Opportunities and in the marketplace 3. 4.
1 Governments’ push for safer, cleaner transportation Penalties and incentives will influence customer’s decision to own a vehicle and how it will be used. Penalties may include congestion and road user charging, and rebates as incentives (Ernst & Young – Mega trends in the light vehicle industry). . 4. 2 Collaboration among industry stakeholders Original equipment manufacturers (Memos) and Tier 1 suppliers will likely work gather to draft standards for emerging technologies, such as common protocols for in-vehicle connectivity and a common battery charging infrastructure for electric cars 3.
4. 3 New risks arise from globalization of the industry Memos are being challenged to devise radical operational strategies to tackle the new risks emerging from globalization.
From demand-supply misalignment and volatile raw material prices, to changing regulatory policies and shortage of qualified workers in developed markets, the automotive industry globalization efforts are facing a reality check today (Ernst amp; Young – Mega trends in the light vehicle industry). 3. 4.
4 Recession and Memos press Tier 2 and 3 suppliers toward new strategies Tightening of belts at the Memos and Tier 1 suppliers exposed the vulnerability of Tier 2 and 3 suppliers, in particular their relatively weak financial health and the absence of product, market and customer diversity.
However, ratter than slimly try to cope Walt Increasing means to 00 more Witt less, Tier 2 and 3 suppliers will need to become increasingly strategic. The winners are likely to Jettison non-core businesses for greater profitability and diversify their kiss by creating relationships with a range of Memos, and developing products that can serve customers, even outside the automotive ecosystem (Ernst & Young – Mega trends in the light vehicle industry). 3. 4 Critical Success Factors 3. .
5 Innovation In order to compete efficiently with other leading manufacturers, Honda needs to continuously invest in R&D and innovative technologies to come up with high quality, environment friendly and innovative vehicles. 3. 5. 6 Brand Equity Honda needs to maintain its strong brand equity globally. Hand’s brand is valued at U.
S $17. Billion which positions Honda as the 21st most valuable brand in the world and the 4th most valuable automotive brand. 3. 5. Operational Efficiency Extensive focus on operational efficiency and bottom line results, so that Honda can compete with other efficient manufacturers and offer high quality vehicles at lower costs. 3.
5. 8 Emerging Markets and Product Segments The ability to identify and penetrate market opportunities in new emerging markets such as India and China as well as emerging product segments such as hybrid and electric vehicles to maintain a consistent growth level in this competitive world. . 5. Manufacturing and Design Efficiency New designs must be brought to market to stay in line with modern and fresh appearance and manufacturing processes must be efficient to ensure demand is met.
3. 0 Honda Motors 4. 5 Porters Generic Model Due to the dichotomies that Honda continue to demonstrate it is difficult to define their strategy on one point of the Poster’s Generic Model. Honda has excelled at positioning themselves in the market as differentiating with technological innovative engines and products (De Wit, Meyer 2010).
Honda is also positioned in the market o a broad audience as a low cost manufacture- satisfying customers with originality, innovation and efficiency at a good price (De Wit, Meyer 2010). Differentiation Transliteration Lower Cost Honda Cost Leadership I Differentiation I Cost Focus I Differentiation Focus I Broad Target Narrow Target 4.
6 Company Overview Honda employs in excess of 180,000 people across 17 countries (Honda Manufacturing) and operates 35 major manufacturing facilities globally (Wackiness – Honda Motor Company). . 2. 1 Hand’s Reconciling Dichotomies There are many dichotomies of the Eastern world and the Western world when it moms to business methods and strategies. Honda is quite a unique organization in that over time, they have successfully managed to establish business methods and strategies that position them firmly between the two, creating a typical ‘best of both worlds’ situation.