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Honda Motor Company Analysis

Eric Christopher Tingson Garcia

BUSN 520 Marketing and Management

Davenport University – School of Business

March 8, 2015

Professor Phil Shaps

Table of Content

Honda Motor Company, scope of its current business, current products and subsidiaries……….3

Historical Perspective on Honda Motor Company………………………………………………..4

Scope of Honda Motor Company’s market distribution – are they global or regional etc………..5

Overview of the Honda’s leadership and management structure and individuals ………………..6

Current Issues that may affect the future of the Honda Motor Company…………………………7

References……………………………………………………………...………………………….8

Honda Motor Company, scope of its current business, current products and subsidiaries

The Honda Motor Company is a multinational based company in Japan that deals with manufacturing power equipments, automobiles and motorcycles. The company has been the biggest seller of motorcycles for years and has also been the biggest manufacturer of internal combustion engines in the world, selling more than 14 million engines per year. Today the company is among the 8 biggest manufacturers of automobiles in the world. Although the aforementioned items are amongst its biggest offerings, they are not the only ones. The company also manufactures and sells marine engines, garden equipments, generators and watercrafts. Furthermore, there have also been steps in commercializing artificial intelligence, robotics, aerospace technology and aero engines, an interest which the company has been having recently. “Honda also has an excellent record of financial health, never once falling into the red since its inception” (Mie, 2015).

In the automobile market, the company has had tremendous success thanks to the different customer oriented vehicles they have come up with. The automobiles are also manufactured with consideration to the different regions that forms their market. For instance, a car in North America might not look like the international car of the same model. Motorcycles are also among the company’s highest revenue earners. Although the company reduced its production from 3 million every year to just over 500000 every year from 2006, it is still among the highest manufacturers of these vehicles. From there the company is again interested in engines in general, robots, aircraft solar cells, mountain bikes and ATV in that order.

Honda happens to have a number of subsidiaries that are responsible for the different interests that the company has in new fields. One of the first subsidiaries from the company was its dedicated luxury brand which was known as Acura. This brand was released in the year 1986 and as the first of its kind in Japanese automobiles. Another subsidiary of the company is known as the Honda Aircraft Company which is concerned with aerospace and the related aircraft technologies. The subsidiary is responsible for the new technology in aero-dynamics and fuel efficiency. In the solar cells market the company has a subsidiary known as Honda Soltec which was the first to sell the thin-film solar cells for both industrial and public use. Honda also has a Brazilian subsidiary known as “Moto Honda da amaonia” which is responsible of launching versions of Honda brands that are fuel-flexible. There are also a number of other subsidiaries which are grouped in accordance to what a particular purpose (Sakiya, 1982).

Historical Perspective on Honda Motor Company

The company came to be as a result of the founder, Soichiro Honda who supplied Toyota with Piston Rings, and learnt about engines under a company known as Tokai Seiki. Following World War two, the company was bought by Toyota, and Soichiro Honda went on to open the Honda Research Center. From this point, they started researching and developing engines that could be attached to bicycles and motorcycles. In 1949, the company produced a full motorcycle that was known as Model D. This led to the success of the company and within the year 1964, it became the biggest seller of motorcycles in the world. However, they did not indulge in the development of automobiles until 1963 when they put up the T360 mini pick-up truck for both public and industrial use. Its s500 sports car was then developed and had a chain linking the vehicle’s engine and its back wheels. This is the possible origin of the design that motorcycles went on to acquire. The company then went on to expand and sell the two developed vehicles to different markets for the next decade. It is during this time that the company opened a subsidiary in America that was known as the Honda of America.

Due to the design of the vehicles, the company became successful as it opened branches throughout the entire world. The company went on to unveil their Acura brand which was successfully launched as a luxury brand in the American market. The sports utility vehicle and truck boom that took place in the globe, as well as the death of Honda’s founder, led Honda to become outpaced by other Japanese automakers. At this time, the company had a lot of financial woes and was on the brink of a hostile takeover by Mitsubishi Motors. However, the former CEO of the company back then, decided to change their working culture so as to meet the requirements of the buyers, instead of making vehicles that only the engineers will love to see. This gave birth to recreational vehicles such as the CR-V and the odyssey (Kato, Omae, & Nagao, 2005). Also, in the year 1995 the company officially birthed the Honda Aircraft Company which had the aim of producing aircraft bearing Honda’s name.

Scope of market distribution – are they global or regional etc.

The company is an international company and has its market spread across different countries. The company has divided its market segments into three main ones; Japan, international market and sports. The Japanese market was the first one for the company and was competitive between Nissan and Toyota. As a matter of fact it is as a result from the competition between these two that Honda was forced to spread into an international market. Apart from Japan the company has also advertised and opened a number of stores and manufacturing plants all over the world. The UK, New Zealand and Argentina were the first countries where the vehicle company first advertised their products. In the year 2007 the company was a significant sponsor in the ITV’s coverage of the Formula one race in the UK.

Furthermore the company specifies some of their vehicles to ensure that they fit the particular segment of the market. This and the numerous stores the company has strategically show the attention the company is giving its international market. Another market segmentation that the company has is related to sports. This is one of the most important marketing segments to the company as it forms a significant target of the clientele. Ever since its initial years the company has took part in racing activities such as the Indy racing league where it was directly involved and also in other events that it sponsors in one way or another.

Overview of the leadership and management structure and individuals

The company was founded by one Soichiro Honda and is today being headed by Takahiro Hachigo. In the philosophy that guided the company was ideas that were not only innovative but also imaginative; this is the condition that the top management strived to create in the organization. The combination of both innovation and imagination ensured that the company experienced a number of benefits such as being able to analyze things from more than one perspective. This helps one look at the problem from multiple dimensions that give the individual the best strategy to approach the issue at hand. This strategy also puts into essential consideration the horizontal decision making mechanism in the organizations which are also important. It was also able to operate in a flexible state since the task forces and the teams can be put to different tasks regardless to serve the needs. Lastly, the structure of the company is optimized in such a way that both the individual and the organizational freedoms are in coherence. The top executives of the company form a matrix that promote complimentary relationships and promote both individual initiative and team strategy (Mito, 2012).

Current Issues that may affect the future of the organization

There are a number of things that are currently happening in the news today that might affect the future of the company. One major situation is that Honda Motor Company is planning to manufacture and export more than 100000 motorbikes manufactured in Vietnam by this year of 2015. The company is trying to double its current Vietnamese export in an ambitious plan that seeks to become the biggest shareholder of motorbike in Asian countries. Furthermore, the company is also seeking to revamp its customer offerings, by introducing high end bikes where the old ones were purchased before. This will increase the number of sales than the company would have expected in such a short amount of time. The company is expected to push for and find new clients, informing them of new available motorbikes. If there are no clients, the company will be forced into a loss considering their input in the different strategy that has been used.

Perhaps the biggest issue right now for Honda is its recent bouts of recalls, most notably due to faulty airbags, made by its Japanese supplier Takata. These recalls have forced the company to replace its president. “Mr. Ito will be replaced by Takahiro Hachigo, 55, whose recent duties have included overseeing the automaker’s European and Chinese operations. The change will take effect after Honda’s annual shareholders meeting in June, Honda said. Mr. Ito will remain on the board, with the title of senior adviser” (Soble 2015). Although little is known about Mr. Hachigo outside of the company, many deemed him as similar to previous presidents that Honda have had, which is a complete opposite of Mr. Ito. How would he lead in the face quality problems Honda has been having in the following years, will dictate the direction the company is heading into.

References

Sakiya, T. (1982). Honda Motor: The Men, the Management, , the Machines . New York:

Kodansha International.

Kato, T., Omae, A., & Nagao, D. (2005). U.S. Patent No. D512,001. Washington. DC:

U.S. Patent and Trademark Office.

Mito, S. (2012). The Honda book of management: A leadership philosophy for high

industrial success.

Soble, J. (2015) Honda, Grappling With Quality Problems, Will Replace Its President.

Retrieve on February 23, 2015 from website http://www.nytimes.com/2015/02/24/business/international/honda-replace-president-chief-executive-takanobu-ito.html?ref=topics

Mie, A. (2015) Behind the Wheel: Honda thinks outside the box. Retrieved on January , 2015

from website http://www.japantimes.co.jp/news/2015/01/03/business/behind-wheel- honda-thinks-outside-box/#.VP0P9uG89VY