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Case Study: An Analysis of Competitive Advantages of Honda Corporation

There are several factors that can contribute to a firm’s ability to be competitive in its industry. Building blocks of a competitive advantage include efficiency, quality, innovation , and responsiveness to customers. A firm with a competitive advantage may experience higher profits than the average profit in the industry while competing for the same customers. In the case of Honda, this is true. Honda has many distinctive competencies based on its resource and capabilities that allow it to have a competitive advantage in the auto manufacturing industry. Three areas that give Honda a competitive advantage in the auto industry include Honda’s engineering and design, research and development, and brand equity.

Honda is unique in that its corporate structure is made of three companies. Honda Research and Development is in charge of research and development of innovative products for the company. Honda Motor produces, sells, and services the all Honda products. Honda Engineering develops manufacturing processes, systems and equipment used to build all Honda products. Honda’s superior design capability has enabled it to build high-quality reliable products and has also added value to the Honda brand. Honda’s efficient manufacturing processes have also kept production costs low relative to other automakers in the industry. In terms of value, Honda excels at using its engineering expertise and design skills to build reliable cars that simply work. This ability is quite valuable to the company and its industry. Although valuable, Honda’s engineering and design is not rare, because there are other car manufactures with excellent engineering and design capabilities. For car manufacturers who are not already competitive with Honda in its engineering and design ability, it would be very difficult to bridge the gap to competitiveness by imitating Honda’s success. Therefore, Honda’s engineering and design is inimitable. The final question to ask is whether Honda is organized, ready and able to take advantage of opportunities via its engineering and design. Honda’s organization is unique in its management structure in that it differs from most public U.S corporations. A board consisting of 21 directors runs the company, which allows for faster decision-making and execution in new product design. All of the company’s business units are aligned to take advantage of design breakthroughs, which leads to a conclusion that its engineering and design are a source of sustainable competitive advantage .

Honda’s focus on research and development is highly valuable and places it at the forefront of technology. This allows the company to incorporate technological breakthroughs and advancements into its wide line of vehicles. Honda also has a very high level of investment in research and development, which is not common in the auto industry. Honda’s level of commitment to research and development is also very rare compared to its industry peers. Honda possesses a strong first mover advantage over many competitors in this area because of the advanced nature of its research. Competitors not actively pursuing their own research find it very difficult to catch up to Honda, therefore the company’s R&D is considered inimitable. Organizationally, Honda keeps the R&D group separate from other divisions within the company giving its teams freedom to develop new technologies for the company across the board. Honda’s unique structure and its level of commitment to advanced quality research make its research and development a sustainable source of competitive advantage in its industry.

Honda’s brand equity is an extremely valuable source of its competitive advantage since consumers are willing to pay a premium for Honda’s vehicles because of the power of its brand and its association with quality and value. As a result, it has led Honda to have best-in-class repeat purchase rates. Honda has repeatedly been placed among the world’s top 20 most valuable brands according to a research conducted by Business Week Magazine. The Honda brand ranked 19th on the international list of one hundred most valuable brands in 2005, having a brand value of $15.8 billion. Honda has very strong brand loyalty as evidenced by the strong repurchase rate for Honda automobiles relative to the industry norms. 65% of Honda customers purchase another Honda automobile compared to only 48% for the industry. While it is highly valuable, Honda’s brand equity is not rare. Toyota also has strong brand equity in the same industry, but recent recalls may have deteriorated its value. Because Honda’s brand equity has been built over a long period of time, it would be very difficult for competitors to imitate. Honda’s reputation for reliable cars was not earned over night, making it highly inimitable. Honda takes advantages of the benefits given by its strong brand by using it as the flagship brand for the company. By supporting its brand value with superior engineering, design, and research and development, Honda is able to rely on its brand equity as a source of sustained competitive advantage.

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Lessons from Honda’s Early Adaptive Strategy

• Adam Richardson

My last post talked about how a little-known company, Grace Manufacturing, took a flexible and opportunistic approach to its strategy when its core business faltered. There are many parallels with this story and another from over 50 years ago when another then-little-known company, Honda, sought to expand its motorbike business into the U.S. We all […]

My last post talked about how a little-known company , Grace Manufacturing, took a flexible and opportunistic approach to its strategy when its core business faltered. There are many parallels with this story and another from over 50 years ago when another then-little-known company, Honda, sought to expand its motorbike business into the U.S.

• Adam Richardson is a creative director at the global innovation firm frog design and the author of Innovation X: Why a Company’s Toughest Problems Are Its Greatest Advantage . His background combines experience in product development, product strategy, and customer research.

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Honda Marketing Strategy 2024: A Case Study

Honda is a global automotive company that has been operating since 1948. Known for its production of automobiles, motorcycles, and power equipment, Honda has established itself as a market leader. In this article, we will delve into Honda’s marketing strategy, with a focus on digital marketing, brand strategy, and innovation. We will explore how Honda effectively engages a wide range of audiences, including the middle-income group and younger driver segments, and drives sales through strategic marketing initiatives.

Key Takeaways:

• Honda’s marketing strategy emphasizes digital marketing , brand strategy, and innovation.
• They successfully target a diverse audience, including the middle-income group and younger drivers.
• Honda employs a comprehensive marketing mix that includes product, pricing, place, and promotional strategies.
• Their promotional campaigns and social media marketing efforts have proven to be effective.
• Honda faces competition from major automotive manufacturers.

Honda Product Strategy

Honda has a diverse product strategy that focuses on enriching the lives of people through innovative and attractive offerings. With a wide range of motorcycles, scooters, and big bikes, Honda caters to different market segments and provides customers with ample options to choose from.

Honda Motorcycles

Honda is renowned for its high-quality motorcycles, which have earned them a strong reputation in the industry. They constantly introduce new models to meet the evolving needs and preferences of motorcycle enthusiasts. Whether it’s sports bikes, cruisers, or adventure bikes, Honda offers a diverse lineup that caters to riders of all types.

Honda Scooters

In addition to motorcycles, Honda has a strong presence in the scooter market. Their scooters are known for their reliability, fuel efficiency, and user-friendly features. Honda scooters provide a convenient and economical mode of transportation, especially for urban commuters and people looking for an easy-to-ride vehicle.

Honda Big Bikes

Honda also offers big bikes that cater to riders seeking power and performance. These motorcycles are designed for those who enjoy long rides, touring, and off-road adventures. Honda’s big bikes are equipped with advanced technology and cutting-edge features, ensuring a thrilling and comfortable riding experience.

Honda Price Strategy

Honda’s pricing strategy is designed to cater to its target market, specifically the middle-income group. With the aim of providing affordable options, Honda offers a wide range of products at various price points to accommodate different customer preferences.

Honda employs penetration pricing strategies as part of its overall pricing strategy to gain a significant market share. By setting competitive prices, Honda aims to attract customers and increase its sales volume.

Here is a breakdown of Honda’s pricing strategy:

By offering diverse pricing options across different product categories, Honda ensures that customers have the flexibility to choose a product that best suits their budget and requirements.

With a strong focus on affordability and competitive pricing, Honda has successfully positioned itself as a brand that delivers value for money without compromising on quality.

This image showcases Honda’s pricing strategy in action. It highlights the various price ranges for different product categories, emphasizing the affordability and options available to customers.

Honda Place Strategy

Honda follows a direct distribution channel that involves selling their products through authorized dealers. They have a strong dealer network and their products are available in showrooms across many major cities. Honda has established manufacturing hubs in different countries, allowing them to produce and distribute their products efficiently.

Authorized Dealership Network

Honda has built a robust network of authorized dealerships to ensure that their products are easily accessible to customers. These dealerships are strategically located in major cities, allowing customers to find Honda products conveniently.

Efficient Manufacturing and Distribution

By establishing manufacturing hubs in different countries, Honda optimizes its production and distribution processes. This global presence enables them to efficiently supply their products to dealerships around the world.

Ensuring Product Availability

Through their place strategy, Honda aims to ensure that their products are readily available for customers. By partnering with authorized dealers, Honda can meet the demand for their products in various markets.

Enhancing Customer Service

The direct distribution channel employed by Honda allows for better customer service. Authorized dealerships are trained to provide product knowledge, personalized assistance, and after-sales support to customers, enhancing the overall customer experience.

Overall, Honda’s place strategy focuses on establishing a strong distribution network and efficient supply chain to make their products easily accessible to customers. By partnering with authorized dealers and optimizing manufacturing and distribution processes, Honda ensures that customers can find their products in showrooms across major cities.

Honda Promotional Strategy

Honda implements a comprehensive promotional strategy that encompasses a range of advertising and brand campaigns. With the aim of capturing a larger audience and establishing brand awareness, television advertisements serve as a primary medium for Honda’s promotional efforts. Through impactful storytelling and captivating visuals, these campaigns effectively convey Honda’s values and offerings to a mass audience.

One notable example of Honda’s successful promotional campaign is the renowned slogan “You meet the nicest people on Honda.” This campaign revolutionized the perception of motorcycles, positioning them as a means of connection, socialization, and joy. The campaign’s memorable tagline and uplifting imagery greatly contributed to increasing sales and strengthening Honda’s brand image.

In addition to traditional advertising channels, Honda leverages social media platforms for targeted promotional activities. With a strong presence on platforms such as Facebook, Twitter, and Instagram, Honda engages with customers through innovative posts and campaigns. This approach allows the brand to foster a sense of community, interact directly with their audience, and generate further brand recognition.

To illustrate the effectiveness of Honda’s promotional strategy, let’s examine one of their impactful brand campaigns: “Precious as a gold.” Through this campaign, Honda emphasizes the enduring value and significance of their products, positioning them as trusted and cherished possessions. The campaign integrates compelling storytelling and emotional narratives, resonating with customers and further solidifying Honda’s brand reputation.

Comparative Performance of Honda Advertising Campaigns

Through these successful campaigns, Honda has demonstrated their ability to effectively communicate their brand message, engage customers, and drive sales. By leveraging a combination of traditional and digital promotional channels, Honda ensures a widespread reach that resonates with their target audience .

Next, let’s delve into Honda’s utilization of social media platforms for marketing purposes and explore their innovative social media marketing efforts .

Honda Social Media Marketing

Honda utilizes social media platforms, including Instagram, Facebook, and Twitter, as powerful tools for marketing their products and connecting with their target audience. Through strategic social media marketing efforts, Honda has successfully created brand awareness, engaged with customers, and expanded their online presence.

On Instagram, Honda shares visually appealing posts that highlight their latest products, innovations, and industry partnerships. They leverage the platform’s popularity among younger demographics, utilizing hashtags and engaging captions to increase their reach and connect with potential customers. Honda’s Instagram presence allows them to showcase their vehicles in dynamic and eye-catching ways, capturing the interest and attention of automotive enthusiasts.

Facebook serves as a platform where Honda can engage in meaningful conversations with their customers. They encourage user-generated content by featuring customer stories, testimonials, and photos on their Facebook page. Honda keeps followers updated on new models, promotions, and events through regular posts and updates. By actively interacting with their audience on Facebook, Honda fosters a sense of community and loyalty among their customers.

Twitter provides Honda with a real-time platform to share timely updates, industry news, and engage in conversations with their audience. Honda’s Twitter account is known for its witty and relatable tweets, often sparking discussions and generating user engagement. They actively respond to customer inquiries, feedback, and concerns, demonstrating their commitment to customer satisfaction and building trust.

Overall, Honda’s social media marketing efforts on platforms like Instagram, Facebook, and Twitter have allowed them to leverage the power of digital media to reach a wider audience, promote their brand, and strengthen customer relationships. By providing engaging content, actively engaging with followers, and staying on top of current trends, Honda has established a strong social media presence that aligns with their overall marketing strategy .

Honda Competitive Analysis

Honda faces tough competition from major players in the automotive industry. Competitors such as Volkswagen, Toyota, and Ford have a significant market presence and invest heavily in marketing and research and development. To stay competitive, Honda employs a strategic approach by continuously innovating and providing value to its customers.

Honda’s strong market base, particularly in Asia, has contributed to its success in the automotive industry. In the motorcycle segment, Honda competes with brands like Yamaha. These competitors challenge Honda to remain at the forefront of market trends and customer preferences, driving the company’s focus on quality, performance, and customer satisfaction.

Honda’s competitive analysis helps the company identify areas of improvement and opportuniites for growth. By studying its competitors, Honda can benchmark its performance, identify market gaps, and develop strategies to gain a competitive edge.

Honda’s Digital Presence

Honda has established a strong digital presence through various online platforms, enabling them to connect with customers and enhance their brand visibility. A key component of Honda’s digital strategy is their well-designed website, which serves as a hub for showcasing their products, providing valuable information to customers, and offering convenient online services.

By visiting the Honda website, customers can browse through the wide range of automobiles, motorcycles, and power equipment available, gaining insights into features, specifications, and pricing. The website also enables users to schedule test drives, request quotes, and even make purchases online, streamlining the customer journey and offering a seamless digital experience.

In addition to their website, Honda utilizes various social media platforms, including Instagram, Facebook, and Twitter, to actively engage with their audience. Through these channels, Honda shares updates, promotions, and engaging content to foster a sense of community and strengthen customer relationships. Their social media presence serves as a platform for customers to interact with the brand, ask questions, and share their experiences.

Benefits of Honda’s Online Presence

• Enhanced brand visibility: Honda’s digital presence allows them to reach a wider audience and establish their brand as a leader in the automotive industry.
• Convenient information access: Customers can easily access detailed product information, compare models, and make informed purchasing decisions.
• Streamlined customer journey: The online platform enables customers to schedule test drives, request quotes, and even complete purchases, offering convenience and efficiency.
• Engagement and community building: Honda’s social media presence encourages customer engagement, provides a platform for sharing experiences, and fosters a strong sense of community among Honda enthusiasts.
• Real-time updates and promotions: Through social media channels, Honda keeps their audience informed about the latest promotions, special offers, and upcoming events.

A Glimpse of Honda’s Digital Presence

Through their strong digital presence, Honda is able to engage with customers, build brand loyalty, and stay at the forefront of the automotive industry. Their well-designed website and active social media accounts contribute significantly to their marketing strategy, enabling them to connect with audiences on a global scale.

Honda’s marketing strategy serves as a compelling case study for entrepreneurs and marketers alike. Through their innovative approach to brand building and customer engagement, Honda has established itself as a global leader in the automotive industry. Their commitment to continuous innovation, localized production, and cultural sensitivity has played a crucial role in expanding their global reach and capturing the hearts of consumers worldwide.

One of the key factors behind Honda’s success is their unwavering dedication to customer satisfaction. By prioritizing the “Three Joys” philosophy – the joy of buying, selling, and creating – Honda has been able to build a strong brand image that resonates with customers on a personal level. This commitment to delivering exceptional experiences has earned them a loyal customer base and propelled their success in the highly competitive automotive market.

Entrepreneurs can draw valuable lessons from Honda’s journey. Firstly, Honda’s emphasis on innovation has been instrumental in propelling their brand forward. By constantly pushing the boundaries of technology and design, Honda has been able to stay ahead of the curve and meet the evolving needs and preferences of their customers. Secondly, Honda’s customer-centric approach highlights the importance of understanding and fulfilling the desires of the target market. By deeply understanding their customers and tailoring their products and services accordingly, Honda has been able to create meaningful connections and foster long-lasting relationships.

Lastly, Honda’s unwavering perseverance in the face of challenges serves as a powerful lesson for entrepreneurs. The journey to success is often marked with obstacles and setbacks, but Honda’s resilience and determination have allowed them to overcome adversity and emerge even stronger. This relentless pursuit of excellence has solidified Honda’s position as a visionary brand and serves as an inspiration for entrepreneurs aiming to make a significant impact in their respective industries.

What is Honda’s marketing strategy?

Honda’s marketing strategy focuses on digital marketing, brand strategy, and innovation.

What products does Honda offer?

Honda offers motorcycles, scooters, and big bikes.

How does Honda price its products?

Honda focuses on providing affordable options for their target market and utilizes penetration pricing strategies.

How does Honda distribute its products?

Honda follows a direct distribution channel and sells its products through authorized dealers.

What is Honda’s promotional strategy?

Honda’s promotional strategy includes various advertising campaigns and brand campaigns, using television advertisements and social media marketing.

How does Honda utilize social media for marketing?

Honda has a strong presence on platforms like Instagram, Facebook, and Twitter, where they promote their products, interact with customers, and create brand awareness.

Who are Honda’s competitors?

Honda faces competition from major automotive manufacturers such as Volkswagen, Toyota, and Ford.

How does Honda maintain its digital presence?

Honda maintains its digital presence through a well-designed website and active engagement on social media platforms.

What can entrepreneurs learn from Honda’s marketing strategy?

Entrepreneurs can learn the power of innovation, customer-centricity, and perseverance from Honda’s marketing strategy.

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Stand for Something More: The Power of Dreams

American Honda had been winning for decades on the strength of a better, more reliable product. They had always claimed a significant lead in quality ratings — it’s what their cars were known for and why they were always on the top of shoppers’ lists.

But as competitive brands fixed their quality issues, customers started to perceive most cars as being “good enough” — making differentiation on quality much more difficult to sustain. So what do you do when your main point of difference is under threat?

For Honda, the answer was simple. What set them apart wasn’t just the product attributes they had come to be known for, but something much more ownable in the long run: the company itself.

Throughout the company’s history, Honda has been driven by the Power of Dreams. Honda makes innovative vehicles that make people’s lives better. They are driven by imagination and determination.

The strategic insight was in getting back to Honda’s roots and shining a light on their history, beliefs and what they stood for. Simply put, we just needed Honda to embrace who they were and to share that story.

Honda believes in having the courage to bring imaginative ideas to life. We wanted this to be true in our marketing communications, just as it is in the products Honda sells. So we inventively brought the Power of Dreams to life across all media channels and touchpoints, including video, social, experiential — and even in Honda sales events.

Since they began rolling out Power of Dreams work in 2015, Honda has achieved some huge sales milestones. During this time, they achieved five record sales years in a row and, for a time, had the #1 SUV in America and were the #1 passenger car brand.

And they did it all while spending less per vehicle sold than the competition. That’s the Power of Dreams in action.

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Why Honda is spending more on ‘Power of Dreams’ marketing

Honda Packs 73 Years and 100 Products Into This Ad Celebrating Its Legacy

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Describes the history of Honda Motor Company from its beginning through its entry into and subsequent dominance of the U.S. market. The history is explained primarily in terms of strategic factors…

• Length: 9 page(s)
• Publication Date: Aug 23, 1983
• Discipline: General Management
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Describes the history of Honda Motor Company from its beginning through its entry into and subsequent dominance of the U.S. market. The history is explained primarily in terms of strategic factors and quoted from two sources: an earlier case and Boston Consulting Group report on the motorcycle industry. Should be used with Honda (B).

Aug 23, 1983 (Revised: Mar 16, 2011)

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General Management

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SWOT Analysis of Honda 2023

This is Honda Motor Company, Ltd. SWOT analysis. For more information on how to do a SWOT analysis please refer to our article.

Company Overview

Honda Motor Company (further Honda or Company) is a Japanese motorcycle, automobile, aircraft and engine manufacture. The Company was founded in 1948 by Soichiro Honda, as an automotive parts manufacturer. Honda later moved to manufacturing motorcycles and has become the world’s largest motorcycles manufacturer in 1959. [2]

In 1962, Honda started manufacturing automobiles and was the first company to launch a dedicated luxury brand, Acura, in 1986. The Company is now the 8th largest auto manufacturer in the world.

Over the years, the Company has ventured into many industries and is now manufacturing jets and robots.

Honda always highlighted that its core business is engines and all the products the company has ventured in is built around them. Company has been growing significantly over the past few years, mainly due to its automobile business.

You can find more information about the business in its official website or Wikipedia’s article .

Honda SWOT Analysis

1. competence in engine manufacturing – company’s core product.

All Honda’s businesses are built around the engines – its core product. The company’s first engines were built for motorcycles and power equipment, but were later produced for cars and marine vehicles. Honda is the world’s largest engine manufacturer, which produced over 27 million units of engines for automotive, motorcycle, marine, and power equipment products, in 2015. [3]

The company has lots of experience in manufacturing quality and well-performing engines. Its engines are praised for their durability, easiness to start, quietness, fuel efficiency and reliability. According to Reliability Index, [4] Honda’s car engines are some the most reliable in the industry.

Engines are the key to motor products and the company’s competence in manufacturing engines is a competitive advantage few rivals can match.

2. Diversified product portfolio

Honda operates 4 different divisions:

• Motorcycle business (12.3% revenue)
• Automobile business (72.8% revenue)
• Power product and other business (2.3% revenue)
• Financial Services (12.6% revenue)

Honda offers many products to consumers including engines, cars, motorcycles, jets, robots, generators, lawnmowers, water pumps, as well as many other power equipment products. While the cars generate the most revenue for Honda, its overall product portfolio is fairly diversified, when compared to Volkswagen, Toyota, General Motors, or Briggs and Stratton (in an engine industry).

Source: Honda’s Financial Report [1]

3. Dominance in motorcycle and engine industries leading to a high brand awareness

Honda is a huge company dominating in most of the markets it operates in, including engines and motorcycles.

The company is the leading manufacturer of small, general purpose engines for commercial, rental industry, and consumer applications. [5] Honda is also the leading global manufacturer of motorcycles having 22.1% of the total market share in the first half of 2016. [1] Company’s dominance in both of these markets have increased its brand recognition and reputation.

According to Interbrand [6] and Forbes, [7] Honda is the 21st and 23rd most valuable brand in the world, worth US$22.1 billion and US$25.2 billion, respectively. Brand value is closely related to brand awareness and its reputation and only few other companies, such as Toyota, BMW and Mercedes-Benz, can compare with Honda in terms of a brand value.

4. Strong position in Asia’s motorcycle markets

Motorcycle business generates 12.3% of total Honda’s sales and is the third largest revenue group for the company. The company has sold 17,592 units of motorcycles and all-terrain vehicles in 2016 alone and captured 22.1% of the world’s motorcycle market in the first half of 2016.

Asia is the main geographic segment for Honda’s motorcycle business, where the company has sold 15.1 million units or over 88.7% of its total motorcycles, generating ¥1,107.6 billion in revenue.

Asia-Pacific region, which includes such countries as China, India, Vietnam, Thailand, the Philippines, Malaysia, Indonesia, Australia and Japan, is the largest motorcycle region in the world and Honda’s strong position in it is a powerful competitive advantage.

1. Dependence on North America to generate most of the revenue

Honda depends on North America region, which mainly includes the U.S. and Canada, to generate 55.6% of the company’s total revenue.

Honda’s reliance on North America grew from 49.3% of the total sales in 2014 to 55.6% of the total sales in 2016. At the moment, North America is the main driver behind company’s growth where the motorcycle revenue grew 20% and the automobile revenue grew by 19%. Nonetheless, the U.S. and Canada are saturated markets and Honda will find it hard to maintain the same level of growth in these markets.

The company is also becoming more vulnerable to overall negative changes in North America’s markets.

2. Low investments in research and development (R&D) leading to fewer innovative products

Honda has spent US$5.4 billion for R&D in 2015. This amounted to 4.5% of the company’s total revenue.

Figure 3. Comparison of R&D expenditure – Honda and selected major competitors (in US$ billions)

Source: The respective companies’ financial reports [1][5][6][7]

Low investments in R&D lead to fewer innovative products and significantly undermine the company’s abilities to compete in the future. The company should focus its US$5.4 billion R&D investments to certain areas (like Hyundai does), which would erase company’s low R&D budget disadvantage and would result in innovative products.

Opportunities

1. increasing government regulations.

Many governments around the world are committed to reducing the greenhouse gas emissions and are encouraging fuel efficiency initiatives. Such environmental initiatives may increase production costs for the car manufacturers and these costs will be either passed to price sensitive consumers or will decrease the company’s profits. Honda may take advantage of this by introducing more car models running only Hydrogen fuel cells and bypassing all the government regulations associated with the greenhouse gas emissions.

2. Improving U.S. economy

Signs of an improving economy and rising consumer confidence have been reflected in the strongest increase in new vehicle sales for more than a decade in the U.S. market. 17.5 million new units were sold in 2015, a 5.7% increase over 2014. Interest rates in the U.S. have been low for several years and are forecast to remain that way for the foreseeable future. In such economic conditions, Honda has an opportunity to capture higher market share and increase sales in the U.S. automotive market.

3. Timing and frequency of new model releases

The market share of the automotive companies is significantly impacted by the timing and frequency of new model releases. Historically, new models have tended to have major upgrades every 4 or 5 years with only minor modifications in between. However, due to the rising consumer expectations in relation to in-car technology and the competitive nature of the industry, there is an argument to release upgraded models more frequently. Honda is well-positioned to be able to do this.

4. Low fuel prices are increasing the demand for pickup trucks and SUVs

Currently, fuel prices are the lowest in a decade. Such situation has encouraged consumers to buy big fuel-inefficient vehicles such as SUVs and pickup trucks. Traditionally, Honda’s main focus was on smaller cars like Honda Civic and sedans such as Honda Accord, but in the current situation, where fuel prices are low, the company has introduced its next generation pickup truck Ridgeline and redesigned its CR-V sport utility vehicle to meet the demand for the bigger vehicles.

The trend of low fuel prices is likely to stay and Honda should introduce more models of pickup trucks and SUVs to take an advantage of the growing market for these vehicles and to increase company’s profitability.

1. Increased competition

Honda is faced with an ever increased competition from the traditional automotive companies, the new players and saturation of its main markets. In Asia, the company’s key motorcycle region, markets are nearly saturated. In 2016, Honda’s motorcycle revenue grew by only 5.4% in Asia, compared to 20.3% growth in North America region. The company faces many new entrants in India and China, which offer similar quality motorcycles and scooters for lower price than Honda.

Honda’s automotive business is also experiencing the slowing growth of the automotive markets and the increased competition from the new Chinese manufacturers. The company’s international rivals, such as Toyota, Ford, General Motors, Volkswagen and Hyundai, all have larger budgets and could use them to aggressively take market share from Honda.

New companies, such as Tesla and even Google, which tries to build self-driving cars are also threatening the traditional automotive industry. The competition is further fueled by the fact that the global automotive production capacity far exceeds the demand. In 2015, there was an estimated global excess production capacity of 31 million units.[11]

2. Rising Japanese Yen exchange rates

More than 88% of Honda’s revenue come from international markets, which means that the company has to convert foreign currencies to Japanese Yen in order to calculate its revenues and send the profits back to Japan. Currency rates are volatile and the company’s profits and revenue highly depend on the fluctuating exchange rates. The company cannot control the currency exchange rates, therefore it is at risk, if Japanese Yen exchange rates would start to rise. In such case, the company’s profits would decrease significantly. The company itself identifies this as a key threat that will negatively affect the company over the next few years.

3. Natural disasters

Honda has manufacturing facilities in Japan, Thailand, China and Indonesia. These countries, including others, are often subject to natural disasters that disrupt manufacturing processes and result in lower production volumes and profits.

• Honda World (2016). Honda Financial Report 2016. Available at: http://world.honda.com/investors/library/annual_report/2016/honda2016ar-all-e.pdf Accessed August 30th, 2016
• Johnson, A. (2005). “Six Men Built the Modern Auto Industry” p.52
• Honda Engines (2016). Why Choose a Honda Engine? Available at: http://engines.honda.com/why/ Accessed August 30th, 2016
• Reliability Index (2016). Manufacturer Ratings. Available at: http://www.reliabilityindex.com/manufacturer/Engine Accessed August 30th, 2016
• Honda Invention (2016). World’s Largest Engine Manufacturer. Available at: http://www.hondainvention.com.au/engine-history.html Accessed August 30th, 2016
• Interbrand (2016). Best Global Brands 2016. Available at: http://interbrand.com/best-brands/best-global-brands/2016/ranking/ Accessed August 30th, 2016
• Forbes (2016). The World’s Most Valuable Brands. Available at: http://www.forbes.com/powerful-brands/list/#tab:rank Accessed August 30th, 2016
• Toyota Motor Corporation (2016). Form 20-F for the Fiscal Year Ended March 31st, 2015. Available at: http://www.toyota-global.com/investors/ir_library/sec/pdf/20-F_201503_final.pdf Accessed August 30th, 2016
• Volkswagen Group (2015). Annual Report 2014. Available at: http://www.volkswagenag.com/content/vwcorp/info_center/en/publications/publications.acq.html/archive-on/icr-financial_publications!annual_reports/index.html Accessed August 30th, 2016
• General Motors Company (2016). Form 10-K for the Fiscal Year Ended December 31st, 2015. Available at: http://www.gm.com/company/investors/sec-filings.html Accessed August 30th, 2016
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Moonka auto: growth strategies of a honda dealership description.

In February 2016, the owner of Moonka Automobile was struggling with the strategic decision he needed to make to increase revenue and improve profitability. Moonka Automobile had been in business as a full-service, two-wheeler dealership for eight years in India, had a strong customer base, a good reputation, and a positive relationship with the manufacturer, Honda. But, competition was increasing and business growth was slowing. The owner identified various alternatives for growth, but given the changes taking place in the two-wheeler market, the owner's limited resources, and his excellent relationship with Honda, he needed to make some difficult decisions. Atul Arun Pathak is affiliated with XLRI-Xavier School of Management. Gyanesh Mishra is affiliated with XLRI-Xavier School of Management.

Case Description Moonka Auto: Growth Strategies Of A Honda Dealership

Strategic managment tools used in case study analysis of moonka auto: growth strategies of a honda dealership, step 1. problem identification in moonka auto: growth strategies of a honda dealership case study, step 2. external environment analysis - pestel / pest / step analysis of moonka auto: growth strategies of a honda dealership case study, step 3. industry specific / porter five forces analysis of moonka auto: growth strategies of a honda dealership case study, step 4. evaluating alternatives / swot analysis of moonka auto: growth strategies of a honda dealership case study, step 5. porter value chain analysis / vrio / vrin analysis moonka auto: growth strategies of a honda dealership case study, step 6. recommendations moonka auto: growth strategies of a honda dealership case study, step 7. basis of recommendations for moonka auto: growth strategies of a honda dealership case study, quality & on time delivery.

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Case Analysis of Moonka Auto: Growth Strategies Of A Honda Dealership

Moonka Auto: Growth Strategies Of A Honda Dealership is a Harvard Business (HBR) Case Study on Innovation & Entrepreneurship , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Moonka Auto: Growth Strategies Of A Honda Dealership is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Moonka Auto: Growth Strategies Of A Honda Dealership case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Moonka Auto: Growth Strategies Of A Honda Dealership will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Moonka Auto: Growth Strategies Of A Honda Dealership case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Innovation & Entrepreneurship, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Moonka Auto: Growth Strategies Of A Honda Dealership, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Moonka Auto: Growth Strategies Of A Honda Dealership case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Innovation & Entrepreneurship Solutions

In the Texas Business School, Moonka Auto: Growth Strategies Of A Honda Dealership case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis. We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Moonka Auto: Growth Strategies Of A Honda Dealership

Step 1 – Problem Identification of Moonka Auto: Growth Strategies Of A Honda Dealership - Harvard Business School Case Study

The first step to solve HBR Moonka Auto: Growth Strategies Of A Honda Dealership case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Moonka Honda is facing right now. Even though the problem statement is essentially – “Innovation & Entrepreneurship” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Moonka Honda, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Moonka Auto: Growth Strategies Of A Honda Dealership. The external environment analysis of Moonka Auto: Growth Strategies Of A Honda Dealership will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Moonka Auto: Growth Strategies Of A Honda Dealership case study. PESTEL analysis of " Moonka Auto: Growth Strategies Of A Honda Dealership" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Moonka Auto: Growth Strategies Of A Honda Dealership macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Moonka Auto: Growth Strategies Of A Honda Dealership

To do comprehensive PESTEL analysis of case study – Moonka Auto: Growth Strategies Of A Honda Dealership , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Moonka Auto: Growth Strategies Of A Honda Dealership

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Government policies have significant impact on the business environment of any country. The firm in “ Moonka Auto: Growth Strategies Of A Honda Dealership ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Moonka Honda is operating, firms are required to store customer data within the premises of the country. Moonka Honda needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Moonka Auto: Growth Strategies Of A Honda Dealership has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Moonka Honda in case study Moonka Auto: Growth Strategies Of A Honda Dealership" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Moonka Honda in case study “ Moonka Auto: Growth Strategies Of A Honda Dealership ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Moonka Honda in case study “ Moonka Auto: Growth Strategies Of A Honda Dealership ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Moonka Auto: Growth Strategies Of A Honda Dealership ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Moonka Honda can compete against other competitors.

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Moonka Auto: Growth Strategies Of A Honda Dealership case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Moonka Honda needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Moonka Auto: Growth Strategies Of A Honda Dealership

Social factors that impact moonka auto: growth strategies of a honda dealership, technological factors that impact moonka auto: growth strategies of a honda dealership, environmental factors that impact moonka auto: growth strategies of a honda dealership, legal factors that impact moonka auto: growth strategies of a honda dealership, step 3 – industry specific analysis, what is porter five forces analysis, step 4 – swot analysis / internal environment analysis, step 5 – porter value chain / vrio / vrin analysis, step 6 – evaluating alternatives & recommendations, step 7 – basis for recommendations, references :: moonka auto: growth strategies of a honda dealership case study solution.

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Subjects Covered Business policy Competition Corporate strategy Learning curves

by Evelyn T. Christiansen, Richard Tanner Pascale

Source: HBS Premier Case Collection

9 pages. Publication Date: Aug 23, 1983. Prod. #: 384049-PDF-ENG

Honda (A) Harvard Case Study Solution and HBR and HBS Case Analysis

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