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Introduction, Problem Statement, and Literature Review

Donte Walker

Department of Business and Technology, William Woods University

BUS 585- Intergrated Studies and Business Administration – Fall 2 2022

Dr. Leathers

November 20, 2022

Introduction

Japanese automaker Honda Motor Co., Ltd. is a publicly traded company. Unlike its competitors, it has not been limited to a single product over the course of its decades-long reign over the global market. The business's reach spans many fields, making it highly versatile. The corporation is best known for manufacturing automobiles, airplanes, motorcycles, and power equipment (Badhon, 2019). The Honda Motor Company, Ltd., was established in 1959, and since then it has become a worldwide leader in the production of bikes and accessories. Honda Motor Company, one of the world's largest automakers, offers a diverse lineup. For Honda, the United States and Canada are the primary sources of revenue (Muniandy et al., 2020). Honda's products have evolved throughout the years, and the corporation today provides a wide variety of cutting-edge innovations. But competition is heating up as more businesses set their sights on the global market.

Mr. Honda developed the idea of attaching an engine to a bicycle. There was an immediate demand for Mr. Honda's motorcycles. With the help of his friends, he was able to raise enough money to buy the materials necessary to build a motorcycle with significantly more range (Badhon, 2019). His primary means of financial support were motorcycles and bicycles, which he sold to black marketers and small cycling enterprises. Company founder Soichiro Honda has had a passion for cars since he was a young boy (Bahety et al, 2018). At the Art Shokai tuning company in Japan, he filled in as a specialist, making adjustments to cars and entering them in competition. Since he had no formal architectural training, he worked on a cylinder layout to pitch to Toyota. After receiving negative feedback on his preliminary design suggestions, Soichiro spent a great deal of time honing and completing his final design. After some years, Toyota awarded him a contract, and he built a factory to produce pistons for the corporation. Unfortunately, the factory was destroyed by an earthquake. Because of the wartime fuel shortage, Honda was unable to drive his car, However, the idea of mounting a small motor on his bicycle sparked widespread interest (Bahety et al., 2018). Soon after, he established the Honda Technical Research Institute to focus on developing and producing lightweight, 2-cycle cruiser engines.

Soichiro got enough capital to design and produce his first motorbike, the Honda Cub, by enlisting the support of 18,000 bicycle shop owners across Japan in the struggle to rebuild a country ripped apart by World War II. Founded in this year, Honda Motor Company would soon grow to become the largest motorcycle manufacturer in the world. The T360 pick-up truck, manufactured by Honda and released in August 1963, was the first manufacturing automobile anywhere in the globe (Badhon, 2019). The automobile was powered by a 356 cc gasoline straight-4 engine and qualified for the more affordable Kei car tax category. After the T360, in October 1963, Honda began production on the S500 sports car, their first mass-produced automobile (Badhon, 2019). A chain drives the rear wheels, recalling Honda's origins in the motorcycle industry.

According to company’s goal statement, Honda strives to "provide products of the best quality, yet at a reasonable price for international customer satisfaction while keeping a global perspective." The statement demonstrates the company's commitment to provide high-quality items at competitive prices. The structure is comprised of the following element: Improvement of life and Improving affordability (Badhon, 2019). Since the beginning, Honda has been committed to producing high-quality products, giving them an edge on the competition. Honda's success can be directly attributed to its corporate statements.

To "service people globally with the joy of enhancing their life's potential - Lead the advancement of mobility and empower people everywhere to enhance their daily lives," as stated by Honda, is the company's stated mission. Honda has been at the forefront of ground-breaking designs that enhance mobility across all modes of transportation, including land, air, and sea (Badhon, 2019).

While Hondas firm limited has expanded into the automobile industry and is now the third largest carmaker in Japan, the company orginally began producing bikes and is currently the largest motorbike producer in the world. The United States is their best market and where the company sees the most success. Most of Honda's revenue comes from selling automobiles, including the Accord, Civic, CR-V, and the high-end Acura brand (Bahety et al., 2018). The Accord is the country's second most popular car purchase, yet it tops the list of most stolen cars, making it the most "in-demand" automobile in the country. Some of Honda's motorcycle offerings include the Super Cub, Foresight, and Shadow 750. In addition to agricultural and industrial gear, portable generators, outboard motors, and all-terrain vehicles are produced by the company's power products section, which contributes to the company's annual revenues (Bahety et al., 2018).

The market challenges experienced by Honda are the primary focus of this essay. Honda Motors employees in China wanted to form their own union so that they could have a voice in the company. In addition, they sought a raise in pay and benefits. Nearly 1700 employees went on strike when the corporation refused to meet their demands. Management now faces a critical issue as a result of this predicament (BHARGAVI). The company's sales and revenue dropped, and Honda had trouble finding enough people to work in its factories. It also became a political issue, which hurt the company's reputation in the eyes of its target audience.

Literature Review

According to Badhon (2019), one of the most prestigious product segments in terms of revenue is the automotive sector, a term encompassing a wide range of businesses and trade groups involved in the design, development, manufacture, marketing, and exchange of motor vehicles, towed vehicles, two-wheeled vehicles, and mopeds. It's a major source of international trade and economic growth (Badhon, 2019). The term "automotive industry" typically excludes businesses whose primary product is a written providing to the support of autos and 1 subsequent thing rounded up to the end-user, such as repair shops and fuel-up stations.

As per Bahety et al (2018), there is a massive market for high-tech automobiles. Many American businesses rely on production, distribution, and maintenance. To compete in the luxury market, Honda removed all references to the company's origins from its vehicles. Customers did not connect Honda's rising prestige with the company as a whole (Bahety et al, 2018). Honda has finally released an encouraging product, and the success of this launch was measured by the company's profitability, market share, and the success of the new model thus far. The success of the expansion is heavily reliant on the advertising strategy that backs it. In light of these gains, Honda has satisfied the criteria for advancement necessary for vertical growth. The company credits its successful advertising strategy, which it says is vastly different from the advertising strategy it employs for its non-luxury businesses (Bahety et al, 2018). Honda enjoyed a perfect trait-relationship with its customer base in terms of quality and consistency, but the renown-relationship was less than stellar. Honda Motor Company felt it necessary to counter the negative glory relationship of the parent brand, in which the parent brand's name did not automatically convey prestige in the high-end market (Bahety et al, 2018). Honda came up with the Acura brand to combat this problem, and it has been incredibly successful for the company.

There have been more seamless openings in the supply chain as a result of the increased global trade of vehicle parts according to Muniandy et al (2020). Pakistan has swapped vehicles with a number of different economies. These days, it's not unusual at all to see recycled cars or auto parts manufactured in Asia or Europe. Due to their higher cargo costs, the value of imports has not yet diminished the advantage of local manufacturers (Muniandy et al, 2020). However, in Asia, this sort of trade is prohibited because of the high interest rates in countries like China and India. Auto manufacturing is the sixth largest assembly sector in Pakistan. During the past few years, it has experienced explosive growth, with year-over-year increases of over 100%. Every year, the automotive industry adds over $6 billion to the US economy. It generates roughly $0.82 billion in revenue for governments through indirect charges, and it directly creates 215k jobs. At the same time, this region contributes at least 16% to Pakistan's manufacturing sector (Muniandy et al, 2020). The auto industry in Pakistan is quickly rising to prominence as a driver of the country's economic growth and international trade because to the country's plethora of opportunities for workplace innovation and forward and backward connections in allied businesses. Suzuki, Honda, and Toyota are the three most well-liked automakers in Pakistan, accounting for 62%, 9%, and 28% of the market share, respectively.

According to Bhargava & Chandravathi, Honda operates in Pakistan's automobile sector under varying theories of diversification and specialized cooperative activity with leading global fabricates. It is also argued that there is a strong rationale for buying in from the nearest neighbors if the buy in of completed products is to be established at a greater value. The automobile industry in Pakistan might be considered to be under distinct control (Bhargava & Chandravathi). There's no denying that the top three automakers control the vast majority of the industry. It's also more likely that prices in an oligopolistic market will be set in stone. This rigidity could manifest itself if, for example, a price hike by one manufacturer isn't matched by others, or if a price cut by one manufacturer leads to a price cut across the board. Honda Pakistan brought this to customers' attention by offering price cuts of PKR 30,000 on the Honda Civic and PKR 40,000 on the Honda City (Bhargava & Chandravathi). For better or worse, fascinating times lie ahead for the auto industry and the three Japanese automakers in Pakistan. Honda, the smallest of the big three automakers, is now the brightest example. The company has grown steadily, utilizing only 50% of its present capacity, but its share of the automobile market has increased, from 9% in 2009 when it first began selling vehicles in the country to 20% in 2014.

As per Boiral et al (2022), it’s possible that Honda may become the industry leader in terms of both money and progress. In the past year alone, its stock price has risen dramatically. The company's redesign and introduction of a new Civic have been well received by consumers (Boiral et al, 2022). The most current data available (7MFY17) reveal that consolidated deals are up 51% year-on-year, and that January 2017 witnessed the most significant deals the company has sold in a month to date. Five-one percent of Honda's production is local.

According to Thomas (2019), the distribution industry relies heavily on achieving stronger restrictions, but this has become increasingly difficult due to surging crude material imports. Import prices will rise in response to any change in the dollar's parity with the rupee. Retailers have already begun petitioning for a waiver of the RD on steel component imports. It is impossible to construct confinement without massive volumes (Thomas, 2019). Each iteration of the model and layout necessitates a fresh round of innovation, which in turn necessitates massive investments of billions of rupees.

According to Chahande (2022), low numbers of coordinated efforts were another reason for not achieving desired results towards indigenization. Pakistan also pays a fraction of the cost that Malaysia, Thailand, Vietnam, and India do for eminences and specialized charges. Even that is difficult due to standard and federal spending regulations.

As per Park (2021), Honda of Pakistan is a joint venture between the Japanese and Pakistani branches of the firm. As was just described, Honda operates in Pakistan's automotive sector via two large, combined ventures, both of which are tied to the Atlas Group. Perhaps most interestingly, the Atlas Group owns a share in Honda in Pakistan exceeding 50%.

References

Badhon, M. (2019). Analysis on Market and Business Strategy of Honda, DHS Motors Limited.

Bahety, S., Moffitt, B., Pruchnik, W., & O’Rourke, J. S. (2018).  Honda motor company: communication and the takata airbag crisis. The Eugene D. Fanning Center for Business Communication, Mendoza College of Business, University of Notre Dame.

Muniandy, A. M., Kee, D. M. H., Izwan, S., Imran, M., Al-Amin, A. A., Kumar, S., & Singh, S. (2020). The key success factor: A study of Honda Motor.   Journal of the Community Development in Asia (JCDA),   3(2), 67-77.

BHARGAVI, T., & CHANDRAVATHI, K. A STUDY ON COMPARATIVE FINANCIAL STATEMENT ANALYSIS ON HERO MOTOR CROP.

Boiral, O., Brotherton, M. C., Rivaud, L., & Talbot, D. (2022). Comparing the uncomparable? An investigation of car manufacturers' climate performance.   Business Strategy and the Environment,   31(5), 2213-2229.

Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start- ups in the automotive industry–Lessons from Tesla Motors.   Journal of Cleaner Production,   235, 653-663.

Chahande, M. S. S.(2022)   “A study of various purches factor of Yamaha scooter and its impact on buying behavior vis-à-vis other competition in the segment (Doctoral dissertation, Rashtrasant Tukadoji Maharaj Nagpur University).

Park, Y. W., & Park, Y. J. (2021). Corporate Strategy for Corporate and Ecosystem Sustainability. In   Corporate Social Responsibility and Entrepreneurship for Sustainability (pp. 71-79). Springer, Singapore.