read and re write in your own words

SWOT Analysis Honda Motor Company

Ivy Nimley

Davenport University

BUSN 520

Professor Shaps

March 22, 2015

Table of Content

Introduction and Overview…………………………………………………………….....……….3

Strengths……………………………………………………..………………………………..…..3

Weaknesses………………………………………………………………………………………..6

Opportunities…………………………………………………………………...….….……..…....7

Threats………………………………………………………………………………………..……8

External Factors Impacting Decisions…………………………………...…………………..……9

Recommendations for Changes in Leadership and Structure……………………………………10

Possible Future Scenarios…………………………………………………………………..……11

Conclusion…………………………………………………………....……………………....….12

Appendix……………………………………………………….…...……………………...…….12

References……………………………………………………….……...…………...…..……….14

Introduction and Overview

Honda motor company operates on four basic principles which influences its decisions concerning its growth, these are “’Respect for the Individual’ and ‘The Three Joys’-expressed as ‘The Joy of Buying,’ ‘The Joy of Selling’ and ‘The Joy of Creating’” (Honda Worldwide, 2011). Hondas belief has always been respecting uniqueness founded on their specific clients’ exceptional charms, whereas providing uninterrupted satisfaction through their merchandise. Ever since its creation in 1948, Honda has remained faithful to these principles, this has made them remain on top in the market. It is also credited to be top in the market because of its fresh inventive equipment, merchandises of greater value at sensible rates, global buyer gratification, and obligation to safeguard the environment and improvement of security in a peripatetic society.

Honda is just like any other corporation and it shares of in-house and exterior elements, dictating its accomplishment and progress. Its strengths and opportunities favors the company but there are the internal weakness and external threats from competitors that shadow the company.in that case a SWOT analysis is mandatory to determine the weak points and strong points for a better outcome.

Strength

To clearly portray the strengths of the company, one must one must classify the company’s exceptional moments through its portfolio, accomplishment, and reputation. Its portfolio is built on its diverse products and its global brand image. Honda’s brand is valued at $17 million, it is also the company that makes the best automotive engines in the world. The diversity of its products is another strength, it’s the largest producer of motorcycles, automobile engines, garden equipment, scooters, generators, ATVs, solar cells, robotics and jets. This only means that its main focus is not only on automotive vehicles but also other technological advancements (Honda corporate, 2011). Another strength is form of organization, it has two forms of organization divisional and decentralized. In the divisional form it makes sure that even the lower management are given work according to their expertise, the decentralized form makes sure groups units around products, customers or geographic regions, which is the essence of the several factories that produce goods that are specific for different parts of the world (Bateman & Snell, 2013). These forms of organization protect the company from any market or technological disruptions because there are many fall back options. This means if one product goes down the company does not collapse because there are other products, also if one store is not doing well the others still support it (Honda Corporate, 2011).

Honda has had a very successful domination over other automotive companies, this becomes an added strength, for instance its motorcycle dominates the Asian market giving it an edge over any other company, this means that it can compete with any company for overall shares and profits. The other strength is the fact that it has production plants and research centers worldwide therefore they have the capability to improve their products as technology advances. This means that they are ahead of others when it comes to modification of their products so that they can compete with any new or more advanced products in the market. The involvement in motorsport has also helped the company advance the performance of its engines. Honda is very popular, this means that many people are familiar with its products and trust them which means they recommend the product whenever they get a chance which is good for marketing. The company has been around for a while therefore the products have reached every part of the world due to efficient distribution, and continuous production. This could not be possible if the products were not good or the customers were not satisfied, that therefore makes it a strength for the company (Honda Worldwide, 2011).

Weakness

All companies has weaknesses, for Honda their main weakness is not being able to dominate the truck industry compared to its competitors. This therefore means it has not fully dominated the automotive industry. Hondas products are pricey yet they have been referred to as “boring and bland”, this is really affecting their market especially among the youth who want exiting, fancy, roomy, powerful, and exotic but cheap cars like what Nissan is now offering (Honda Corporate, 2011). Recently Honda Motor Company has been suffering from bouts of recalls which is affecting their reputation, the recalls has been from faulty parts and production defects.

Another weak point is the lack of domination in the European market, this has led to a significant lose in profits over the years, yet the company claims to be a global manufacturer (Car Complaints, 2011). These issues are affecting the company globally leading to losses, there has been a decline in its dominant markets like in Asia and North America. The other problem is that people want cheaper cars and since the cost of raw materials is high it becomes hard for Honda to provide that therefore its customers are now buying from companies that can provide cheap products (Honda Corporate, 2011).

Opportunities

Honda has the opportunity to rise and dominate the market as it were before because of the opening of a new market demand for environmental friendly, fuel efficient vehicles. This means that people are looking for cars that are powered by hybrid systems of gas and electricity, hydrogen or flexible fuel engines (Honda Engines, 2011).the other are is to get into the truck line and produce a truck brand that can compete with other companies in the market. Lastly even in the already existing brands there is always room for growth by making sure that they distribute the products to markets that they have not fully exhausted like the European market. This means producing new and existing products that fit the customers in those areas. They should also work on inspecting and ensuring quality of the products being released to the market to avoid recalls which reduces customer confidence in their products (Honda Corporate, 2011).

Threats

Every company faces threats for Honda it’s the recent increase in prices of raw materials which raises the cost of production making the end product expensive, which is not particularly attractive to customers. The increase and decrease of the currencies is becoming a problem because the world market is becoming unpredictable. Honda is spending millions on research of alternative sources of fuel, however recently the fuel prices have gone significantly low therefore there is a threat their products will have no demand.

The other factor is that Hondas main market is in Asia and recently that part of the world has been hit by one natural disaster after another therefore the company’s production plants are under threat of destruction which could lead to major losses (Honda Worldwide, 2011). However the biggest threat is from its competitors who are offering better and cheaper products making customer shift, this is a major threat because to be on the same level they have to sell their products at a loss which could be very bad for business (Honda Corporate, 2011).

External Factors Impacting Decisions

External factors affect a company’s growth and success both positive and negative. In this case the negative external factors are affecting Hondas path to success and reaffirmation as a global automotive power. The factors are the financial go-slow and antagonism in international automotive market, tightening emanation criteria, the spells of recall and escalating Yen against US Dollar had lead a to abrupt reorganization of Honda’s front-runners and general business methodology. The company is no longer driven by its principles of quality, uniqueness and joy it’s now driven by survival. However they are trying to change this by changing management, they recently replaced Takanobou with Takahiro Hachigo and also the other management has been replaced with a much younger group of people all with the aim of giving the company a new direction (Levin, 2015).

Recommendation for Change of Leadership and Structure

Honda motor company did not wait for a change of leadership to be recommended to them instead they have listened to complains and decided to do a whole company shake up where old employees chose to retire and give space to a younger breed, they even replaced the CEO with a younger one. “In a release statement by soon to be former CEO of Honda, Ito Takanobou, ‘Honda is ready to make a new leap forward. To do this, Honda needs to be led by a new, younger team’” This approach is indeed a great example of strategic planning with “major targets or end results that relate to the long-term survival, value, and growth of the organization” (Bateman & Snell, 2013).

All this was done because of the public outcry that their products were boring and bland. The new CEO is an expert in product design, procurement and operation hopefully his expertise will help save the company (Levin, 2015). Hachigo will help attract more business from china hence strengthening the Asian market. This is proof of the significance of international based understanding that Honda is looking for as a remedy for its underprivileged worldwide presentation in aforementioned years.

Possible Future Scenarios

The change in management will positively affect the company, hopefully they will upgrade their products to make them more exiting and fancy especially in aesthetics. This is evident since they have released the new Acura NSX which they discharged earlier because of fuel cost, this will definitely excite young customers to make them gain trust in the company again. The elected CEO has global experience from working in china therefore he will be able to give ideas on how to capture the global market and capture opportunities that were taken for granted. With China’s thriving populace, a substantial market share in motorbikes in the republic will strengthen the corporation’s accomplishment and lessen many of the pressures the corporation has had to deal with over the past several (Levin, 2015).

Conclusions

Honda motor company does not only focus on automotive it is a very diverse company that also has its hands on manufacturing and technological fields. Its involvement in several areas ensures that it remains relevant always, however with changing economic times there is no surety of safety from losses and lack of sales. All we can do is wait and observe the new CEO will make in the company to change its SWOT analysis in future.

Appendix

References

Bateman, T. S., & Snell, S. A. (2013). M: Management. New York, NY, USA: McGraw-Hill Higher Education.