The marketing plan for Honda Accord Hybrid failed to take note of consumer attitudes and lifestyles. Their product positioning strategies were ineffective which made the vehicle lack a unique brand identity in the market. They failed to include strong attributes regarding the product in their plans. Engineers who designed the vehicle thought buyers would be impressed by the vehicles fuel economy capabilities but they did not take note of prevailing market conditions.
They did not take time to realize that vehicle buyers had become more conscious about prices and this influenced their purchasing habits (Kiley, 2007). The six cylinder Accord hybrid was priced at more than 9,000 dollars higher than the four cylinder gasoline version. The pricing strategy adopted for the vehicle discouraged buyers from buying the vehicle and they opted to purchase the gasoline version.
Honda also failed to engage potential buyers to understand the type of vehicle they wanted to satisfy their expectations. The firm did not offer customers a unique selling point that would motivate them to purchase the vehicle. The marketing had a false sense of hope that the Accord hybrid would follow in the footsteps of its gasoline version which had recorded high sales in the U.S. The firm failed to establish a unique brand for the hybrid model, which made it difficult for customers to understand its unique attributes (Kiley, 2007).
Customers were not able to distinguish the Accord hybrid from the gasoline version and this affected its performance in the market. Therefore, the firm had a high quality product which was not properly marketed and lacked a unique selling point. The firm also failed to initiate memorable marketing campaigns that would have given the vehicle a strong entry into the market.
Honda needs to overhaul its research and development processes to come up with hybrid vehicles that suit customers needs and lifestyles. The firm needs to the vehicle a different brand name to make it possible for potential buyers to distinguish it from the gasoline version.
This will make the product have its own brand identity that evokes positive feelings from potential buyers in the market. Some additional improvements should be done on the vehicle to add new features that give it the desired level of competitiveness in the market. The firm should take effective approaches to win the confidence of its customers.
This will strengthen their faith in the new product to help it maintain its competitive edge in the market (Karadeniz, 2009, p. 99). The design needs to take note of fuel efficiency and other attractive features to make it more competitive than other substitutes in the market. The firm needs to be aware that Toyotas hybrid car, the Prius is performing well in the market. It needs to come up with effective strategies to help the vehicle get a larger market share.
Honda needs to communicate the vehicles strongest attributes to give it more publicity in the market. The firm should make customers aware of the unique features of this product and how it suits their lifestyles. The confusion generated by the previous model regarding fuel usage was one of the main reasons that made it perform poorly in the market.
The firm needs to clear this issue to make customers understand how much fuel the vehicle consumes. The pricing strategy needs to take note of buyers interests, incomes and lifestyles (Karadeniz, 2009, p. 102). This will make it possible for the improved product to be responsive to buyers interests. The firm needs to improve the way the vehicle is perceived by potential buyers to make it more attractive.
The new hybrid vehicle needs to have its own independent brand to make it more appealing to customers. The firms marketing campaigns need to make customers about the vehicles fuel consumption rates compared to other substitutes and other unique functional features.
This will ensure customers do not confuse it with the Accord gasoline version. The firm needs to develop effective marketing campaigns that appeal to the emotional psyche of prospective car buyers (Karadeniz, 2009, p. 104). Previous Honda models have performed well in the market because customers have a lot of sentimental attachments to them. The firm needs to use the loyalty it has built in the market over the years to help it register positive results in the market.
The firms marketers need to reverse misleading perceptions about the product in the market. The hybrids high price discouraged many customers from purchasing it because they felt it was beyond what they were able to afford. The marketing approach adopted for the new brand should adopt a suitable pricing strategy to encourage more prospective buyers to purchase it.
The firm needs to partner with good advertising companies to enable it create compelling adverts that connect with potential customers in the market easily (Karadeniz, 2009, p. 107). The advertising approaches used need to show customers the products unique selling point to encourage them to purchase this brand. This will help the product to overcome entry barriers in the market that made the previous model to register abysmal performance.
References
Karadeniz, M. (2009). Product positioning strategy in marketing management. Journal of Naval Science and Engineering, 5 (2), 98-110.
Kiley, D. (2007, June 5). Failure of Accord Hybrid is a marketing fiasco. Bloomberg Business Week. Web.
It is important for a potential buyer to compare different car models before the actual purchase. Many such buyers compare prices only while disregarding other important factors. While price is so basic a factor, other factors must be well known and used to make the last decision. This essay seeks to show how hard it is to choose between the 2013 Toyota Camry and 2013 Honda Accord based on different considerations.
Cost
All in all, the most basic factor is cost. Cost here refers to the Manufacturers Suggested Retail Price (MSRP). When MSRP is the basis on which to base our considerations, Toyota Camry is relatively cheaper than Honda Accord. The MSRP for the former ranges between 22,235 to 30,465 US Dollars while the later is in the range of 21,680 to 33, 430 US Dollars. However, there is no difference when comparing their Destination Charge the cost of transporting the car from the dealer to the buyer (Newcars.com).
Comfort
In regard to comfort offered by the vehicles, Toyota Camry has more space for passengers than the Honda Accord. Their headroom and legroom are not any much different (newcars.com). A closer look, however, reveals that Toyota Camry has unsupportive front seats while the Honda Accord have improved support for the back besides better bolstering. The Honda Accord beats Toyota Camry in offering a better outside view (Halvorson).
Fuel Economy
Fuel economy is another critical factor. On this front, Toyota Camry wins over Honda Accord. This arises from the fact the Camry Hybrid is easily available and has accomplished gas-distance ratings of 43 mpg city, and 39 on the highway (Halvorson).
Road Noise Reduction
It is such an awesome experience to drive a car with reduced road noise. The Honda Accord is the clear winner where noise insulation is concerned. The Honda manufacturer has installed Active Noise Control and Active Sound Control which goes a long to eliminate road noise (Halvorson). However, this is only comparatively and does not imply that the Toyota Camry is very noisy on the road.
Dimensions
When compared to the Honda Accord, the Toyota Camry is a little bit slender in the width dimension. As such, it is a lot easier to move into and out of a tight parking bay when driving Toyota Camry (newcars.com). In effect, this means that it would not be so easy for one to park the Honda Accord in a similar situation. However, where the length of the cars is concerned, the difference is negligible especially when thinking about the garage.
Drive train
Every driver desires a powerful car. According to Dictionary.com, Drive train is the power train of an automotive vehicle consisting of all the components between the engine and driving wheels and including the clutch and axle, as well as the components of the driveline. Where drive train is concerned, the Honda Accord is better compared to the Toyota Camry (Newcars.com). This is informed by the fact that the Toyota Camry has a lower vortex which hinders it from conveying capacity to the wheels in comparison to the Honda Accord.
Handling
It is easier to make a circular turn or the commonly called u-turn while riding the Toyota Camry than when riding the Honda Accord. In other words, the Toyota Camry has a lesser turning radius than that of the Honda Accord (newcars.com). A turning radius refers to the constricted turn that a car can make. It therefore becomes easier for one to navigate tight spots while using Toyota Camry. Honda Accord has a bigger turning radius than Toyota Camry.
Overall safety
Safety is of utmost importance to everyone riding a car at any given time. Under safety, when the two are compared, they offer some sophisticated advanced safety technology, including Forward Collision Warning (Halvorson). They serve to warn the driver of the host car of an impending collision in front of the vehicle. It is important to note that Toyota Camry has ten basic airbags for increased safety. It has also brought impressive crash-test results. All in all, the Honda Accord got better crash-test ratings than the Toyota Camry.
Utility
The higher the number of seating a car has, the better. However, both Honda Accord and Toyota Camry tie on this aspect. They both accommodate the same number of passengers. Precisely each model carries five passengers seated comfortably. Over and above, both carry the same amount of shopping items (Newcars.com).
Connectivity
In regard to connectivity, Honda Accord wins over Toyota Camry. Both models cater for connectivity. They both have basic Bluetooth hands-free calling, Bluetooth audio streaming and a USV port (Halvorson). All in all, Honda has slightly surpassed that by including SMS text capability, Pandora audio streaming, dual-zone climate control and an eight-inch i-MID display (Halvorson 2013).
Speed
Though it is hard to say what speed is comfortable, in comparison, Toyota Camry is slower than the Honda Accord. This is explained by the fact that the Toyota Camry has less horsepower compared to the Honda Accord (Newcars.com). The Honda Accord is rated at 185 horsepower while the Toyota Camry has a horsepower of 178. All in all it is worth noting that the 2013 Toyota Camry handles pretty to satisfaction and accelerates in a responsive manner. Handling in Honda Accord is crisp and inspires enough confidence.
Warranty
Both models come with warranty. On this front, both models win. Included in the warranty are the following: basic warranty of 36/36,000, Power train warranty of 60/60,000, unlimited corrosion perforation warranty, roadside assistance of up to 25,000 miles, maintenance up to 25,000 miles and accessories up to 36,000 miles (Halvorson 2013).
Styling
Where Toyota Camry and Honda Accord are concerned, the buyer is advised not to expect either of the models to excite the senses in a great way. However, the Honda Accord looks more appealing and better in proportion on the outside than the Toyota Camry. In addition, the Honda Accord has a more premium look from the interior.
Features
Toyota Camry has got upper trims a well as base trims which are so valuable. Honda accord affords the customer the traditional preferential treatment. Its up to the customer to debate on features, depending on own preferences (Halvorson).
Quality
In regard to quality, the Toyota is quiet, has enough space and the riding in it is so smooth. The Honda Accord has cabin appointments.
In conclusion, it is important to note that the two models are both American made. As such, the manufacturers are likely to look at what each is doing. The differences might not be so pronounced. It boils down to the customers preference.
Innovation is change and for any change to be effective, it must be built on the previously existing systems and confer better results. Managers have to be keen on the innovation network for it to yield the desired results. There is also a need to involve other firms with the same vision as innovation is continuously being brought forward through collaboration.
If innovation is successful, then it serves the parent company as well as the industry at large. For this to happen, there has to be a lot of interdisciplinary networking, a seamless chain of operations that minimizes wastage in terms of both resources and time.
Innovation management is thus, the coordination of management and engineers with a view to the realization of set company goals through a laid out process. With a stable management process, opportunities arising both internally and outside of the company can be seized and new ideas presented and in the end, new innovative products.
Innovation management is not only a management or engineer issue but also a process that is inclusive of all staff regardless of where they work.
It is an evolutionary process and not a one off thing and hence, management must develop the culture of innovation by building the channels that encourage it in the company. A series of activities that include search, select, implement and capture must (Trott 2005) be instigated for there to be good innovation management.
Innovation can either be pulled or pushed, with the push coming from already invented or existing technologies that the company aims at cashing in on whereas the pull process comes from the realization that a vacuum exists where customer needs are not being adequately met. The company thus focuses its efforts in trying to close that vacuum by innovating new products for that set of market.
Both processes can only be achieved if enough information is acquired and teams that are versatile invested in. Due to the stiff competition in the market, product lifetimes have been greatly reduced and hence, innovation managers have to be faster in coming up with better products that improve on the quality of existing ones.
In this paper, we are going to critically analyze the process of innovation management in Honda using the tools of search, select, implement and eventually capture. Finally, we are going to make recommendations that are aimed at improving the management of innovations.
The reason we focus on Honda is that it has been a market leader in the motorcycle industry since 1959. Additionally, there was sufficient information on the company available for this research.
Honda is also the leading manufacturer of internal combustion engines by volume in addition to it being the largest producer of motorcycles globally. In 2001 it became the second largest vehicle manufacture in the Japanese market only exceeded by their perennial rivals, Toyota, the fourth largest automobile manufacturer in the US and sixth largest globally (Taylor 2008).
They were the first to manufacture a luxury vehicle in Japan and have since diversified their products to include generators, gardening machinery, marine engines and aircrafts. The company spends about 5 percent of its revenue on R&D (research and development).
Honda released the first hybrid electric vehicle one month before Toyotas release of the prius, touted to be the best hybrid. The EPA had it as the most fuel efficient vehicle commercially produced in the US. The problem arose from the failure of a follow up market plan to raise necessary awareness for the products to be well received in the market and also the release of the prius which was an improvement on the Honda model.
Honda thus shows sustainability where it comes to innovation and industry change. It has produced products that continually seek to change the dynamics of the market. In this research, I shall discuss various steps of innovation management namely; search, selection, implementation and capture.
Finally, I shall make recommendations as to the best practices on the same. Through this format, it shall be easy to see how successful innovation management is done.
Search
The 21st century is one that is characterized by many challenges. Traditionally, a company solely focused on delivering high quality products to their customers incurring the least costs while increasing efficiency. In this century however, the green movement has taken the forefront in advocating environmental responsibility.
Global warming and dumping of wastes pose a challenge for environmentalists globally and the world at large unanimously accepts that the time for action is now, if the future of generations to come is to be secured.
It is in the backdrop of these challenges that companies are working round the clock to come up with innovative ways of reducing emissions that are touted as the leading causes of ozone layer damage and consequently global warming. The companies that will manage these innovations most effectively are the ones that are likely to come out on top. In this chapter, we will focus on searching for opportunities for innovation.
As carbon emissions are the leading pollutants of the environment, automobile companies and other manufacturing firms need to take the lead in looking for ways of building alternatives to carbon.
The reduction in emissions alone is not the greatest motivator of innovation but also the total process of bringing positive impacts into the environment as a whole including reduction of other wastes used in the manufacturing process, recycling water and land reclamation.
This thus poses an opportunity for Honda to capitalize on and lead the way into the future of manufacturing without pollution. Honda can handle these issues by utilizing manufacturing methods that emit less carbon dioxide e.g. by using renewable energy instead of coal.
Human life is very valuable. Therefore, automobiles need not be ambassadors of death but rather helpful gadgets with a multiple of useful ways.
There is hence a need to make automobiles with increased safety features that reduce the risk of accidents and whose major priority is the reduction of fatalities resulting from automobile crashes. An opportunity thus arises that challenges automobile manufacturers like Honda to develop cars that prevent crashes a break from the crashing cars of today.
With technology dictating nearly all aspects of our lives nowadays, the future can only present opportunities for better technological innovations that improve our lives further.
Honda is not solely a vehicle and motorbike manufacturer, but rather a company with a wide range of products aimed at improving the lives of people. The future, with good management insight, will offer the company better opportunities to grow their range of products.
Another avenue that presents an opportunity for innovation is the discovery of new markets. Infrastructure varies from country to country depending on a wide range of factors including the income levels of the residents and the natural conditions like the geography, topography or the climatic conditions of those areas.
To build efficient machinery, a company must be able to face the challenges new markets pose and in so doing, remarkable innovations may arise. For example, vehicles that are primarily built with cold areas in mind cannot be expected to utilize the same cooling mechanism as those adorning the desert. Therefore, entry into new markets can challenge a company to be more innovative.
In the meantime, as the world is tirelessly searching for an alternative source of energy and move away from petroleum, companies are choosing to take baby steps towards this goal by producing gadgets that are fuel-efficient. The company that develops the most efficient vehicle with no emissions detrimental to the environment is going to be the market leader in technological advancement.
A multinational company looking to be the best in the market must also develop ways of producing its parts efficiently. This poses a challenge for the management in deciding where they source their raw materials centrally or individually. Innovative ways of managing this money-saving venture, can be developed and may be adopted by other companies in the future.
In addition, Honda managers should encourage competition amongst staff. This could be through the setting up of bonus schemes and performance based benefits. This could act as a trigger for innovation.
Finally, Honda should outsource those parts of its manufacturing processes that are bulky and unprofitable. This should enable the firm to focus more on issues such as research and development that require innovation but have higher returns.
Select
To choose what opportunities to capitalize on, management has to be on toes to ensure that priority is given only to those it deems most profitable and also those which champion the course of the company best and have the best interest of the wider society at heart including the environment. Strategies must therefore be crafted, which actions are going to be taken and why they are the best from the choices available.
Since every company in the world is adopting the green concept, Honda has also joined the fray with a number of noteworthy interventions.
The management has developed several plans over time aimed at the maximization of the available raw materials with minimum wastage and in line with the set international standards. It is important for the company to examine this option critically as it may be the difference between future success and failure.
A company should venture into aggressive marketing (Tidd and Bessant, 2009) to communicate to its customers its products, philosophies and other information that may give it the cutting edge it requires to make headway into the future and win customer loyalty.
Honda does market its products on different media, but rather than have a central point, their marketing techniques are disjointed and are not reflective of the collective outlook the company would like to project but rather reflect the company branches individually. To develop a successful product, regardless of where it is being marketed, there is need to set a common ground that the customers can identify with.
Investment is the driving force behind the most innovative teams because it gives engineers the confidence to experiment without any financial constraints. The fear of failure usually caused by lean budgets and rigid company policies can stall innovation and in turn retard company growth (Arnold et al 2009), missing opportunities to make headways and in the long run loosing business.
It is therefore important for a company to push for innovative thinking by encouraging failure as long as they learn from it. It is said that success only amounts to 1 percent of the effort made; otherwise, the other 99 percent is failure which preceded the success. Honda encourages its engineers and designers to challenge themselves and develop new ideas.
This concept may sometimes backfire as usually the best way to correct a mistake is to go back to the beginning and examine the basics once more rather than persisting on the same path leading to inevitable failure, ruing wasted company funds.
A lot of research work is needed to ascertain what the customer desires are. If the company products are parallel to the expectations of the customer, then the company is doomed to fail. Therefore, there is need for investment in market research and also in technology research as new materials are being developed, which may improve designs and systems tremendously.
Honda has been successful in the development of products that are widely accepted by clients e.g. the minivans and courier motorbikes, albeit against the backdrop of immense failure. For example, the first type of motorcycles that were successful in Japan was not as nearly successful in the United States due to the differences in roads structures.
In summary, Honda seems to be focused on the four areas of fuel, process, design and end-use when it comes to selecting what to capitalize on. However, Honda should not lose focus of innovation outside what is considered conventional.
Even within the four areas, Honda can still come up with ideas that can lead to a new competitive edge such as recycling of old motor vehicles which can be much cheaper than direct production. Other ideas could include designing electric bikes or those that can utilize hydrogen and other commonly found elements to fuel them.
Implement
This is the part that deals with the actions taken in order to meet the set goals and with the recommended methods. Implementation can be relatively easy depending on the information provided or it can be difficult if the information is insufficient or looks good on paper but unattainable.
Honda has over time developed a number of machines. From their initial identity as motorcycle manufacturers, they have diversified to other kinds of machinery and are even the largest manufacturers of engines. This growth can obviously been attributed to the size of investment in money, labor and technology.
The company developed its first jet which has 35 percent more efficiency in fuel consumption in comparison to jets of similar make. This was achieved by the utilization of superior materials, developed by the company, compounded by better aerodynamics, more efficient engine and body designs.
This can be considered as a landmark achievement for the company worthy of commendation. However, poor marketing has led to the low sales of this particular product.
In order to achieve the goal of achieving the car that protects against crashing, Honda developed a CRW model that featured improved systems that informed the driver if he was too near to the next car and would retract the safety belt if the driver moved forward.
This navigation breaking system, albeit with wonderful designs, has not been largely accepted by the customers as it is not easily controllable and demands too much of the driver. Many people prefer their own judgments while driving and this has contributed to the low reception that has greeted this model.
Honda has developed a pioneer humanoid robot which has intelligent capabilities after over 20years of experiments. This is a fast for the company on its many innovative fronts.
More research is needed for this model known as ASIMO as it has received massive criticism from the humanists who claim that the company is aiming at substituting the human functions, however, the company claims that the development of this robot is meant to be of assistance to humans but cannot substitute the human basic senses which we heavily rely on.
The only natural gas vehicle, which is sold in the US, is the Honda Civic GX (Gable 2008). This car has been in the market and it is the most green. With the emphasis on being green, you would expect this car to be the most sought.
On the contrary, it has received a very low reception from dealerships and consumers alike although this has been coupled by the lack of a marketing strategy from the company for this invention. Consumers sight the hefty amount of money required to buy the car and the lack of natural gas fueling stations as the reason they have not considered the car.
In an attempt to be green, Honda has outsourced its services having nothing to do with the actual manufacture of cars. The company has further set procedures it says are meant to reduce distractions in the manufacturing plants by having all staff in white laboratory coats. This they say, being a standard in all their plants worldwide, is aimed at making their operations uniform around the world (Dogson 2008).
Their plants are also very well attended to and have well-trimmed gardens, and other aesthetics not typical of manufacturing plants. In furthering their green course, they do not expend any waste as all their material are recycled or converted into sources of energy.
They have adopted a clean and green mantra and assert that what is produced under unclean circumstances cannot be expected to be of high quality. However, going green is yet to rake in actual profits for Honda, in fact it seems to be more of an obsession rather than an upgrade of operations.
Capture
This part involves getting the benefits from the actions taken during the implementation stage. It involves a coordinated efforts aimed at quantifying the monetary and the other benefits that accrue from the implementation of the innovations.
Companies mostly apply the tactic of aggressive marketing to inform customers of their products. This is also a coordinated effort that requires extensive research, planning and budgetary allocation to be successful (Wang 2009).
All innovation would be in vain if the products developed do not get the required attention in the market. In order to capture the markets attention and reap the benefits, there needs to be a relentless campaign that focuses on getting vehicles off the factory and onto the roads where they are required.
Honda has outsourced its maintenance department that deals with the upkeep of their plants in a bid to eradicating distractions that may arise from these activities.
This is a laudable maneuver, as engineers are not expected to fully concentrate on their innovative obligations and simultaneously undertake the maintenance of the facilities. The benefit of having an expert in plant maintenance is that hazards that may arise from otherwise trivial occurrences are minimized.
Innovation leads to the discovery of better materials that reduce environmental pollution. In order to attain the required levels of emission, Honda has endeavored into the production of lighter materials for their jets, which are recyclable with minimal wastages. The environmental benefits can be immense not only for the company presently but for even the future undertakings.
Honda has the best concept in the world for a vehicle that solely relies on natural gas and therefore very environmental friendly. In order for the obvious benefits to be realized from the sale of this model, the company needs to adopt a strategy that aims at reducing the purchase price of the vehicle and also availing the necessary ingredients needed for the model to run properly.
This maneuver can ensure that people invest their money on this model. Considering that the model has been in the market since 1998 and has neither been embraced by the customers nor the dealerships, there is a need to refocus on the part of the company.
Recommendations
Employees are undoubtedly a valuable resource in any company whichever level they serve at. Therefore, for Honda to make great strides towards a better future, employee involvement in matters of management is paramount. Lack of a coordinated effort that aims at giving a voice to employees can spell ultimate loss of the innovative edge. It is not the engineers who have the greatest view of what vacuum exists in the market!
It might be the staff member who is not involved in the manufacture of the vehicles but uses them on a daily basis as he commutes to work. In the past, when Honda was introduced into the US, the company was marketing motorcycles with large engine capacities.
However, the company staff used scooters to commute to and from work. It is the scooters, rather than the big engine motorcycles that elicited interest fro the local folk. The company thus endeavored into the manufacture of the Supercub which was very well received by the US consumers.
Hondas management should venture into aggressive marketing of their products so that the customers are aware of the range of products they have. They have too many inventions that the low-key reception of some of their products point towards poor marketing strategies rather than the lack of a market.
The company, in this respect should be in a position to determine what their competitors are working on and have times when they release their products into the market. Clogging the market with many new products simultaneously may be counter productive and forces customers to adopt a wait and see attitude, in anticipation for a better design of the product from the same company.
Honda sources most of the parts they use in their assembly plants from Japan. This move is both laudable and regrettable. It is laudable in the sense that there is standardization in the manufacture of the parts and hence uniformity is possible for all models.
The move is however, a miscalculation on the part of the company as shipments from Japan into other countries are subject to delays and other unforeseen occurrences (Yoshio 2011).
Most recently, there was an earthquake in Japan that caused massive destruction and logistical nightmares and the company was inevitably affected. There should therefore be decentralization of production factors in a bid to spread risks and shelter the company from unnecessary losses.
The natural gas driven car was a good concept for this era. It has however gone against the grain of expectation and while this may point towards the lack of a marketing strategy, it also points towards the lack of adequate investment in the support facilities required to run this car.
Japanese models usually have a reputation for being affordable to customers and this is largely due to the adaptation of the concept of scale economies, where massive numbers of a product are manufactured attracting investments for support facilities, making the spare parts for these models available and affordable and consequently eliciting interest from customers.
Honda should have implemented the concept of scale economies in order to realize more sales from a better reception of this model.
Conclusion
From the above, we can draw the following conclusions:
Honda is one of the most innovative companies in the market today and this reputation has been built over a long period of time
Its success can be attributed to visionary leaders who relentlessly continued to push for better products and more involvement.
The company is just beginning to compete on a scale with other market leaders.
The firm lacks a solid innovation management plan
As initially stated, innovation management is not just the production of new technologies or products but rather the whole process including manufacturing and marketing (Burns et al 1991). It encompasses broadly all factors leading to the successful use of a product domestically or commercially without it posing a risk to either the consumer or the environment.
With the shift of the market towards the reduction of over-reliance on petroleum, there is need to have a solid innovative plan that seeks to eradicate all sources of energy tied to petroleum. For example, when constructing a hydrogen-run car, there is need to ensure that the hydrogen used is not sourced from fossil fuels (Fackler 2008).
This requires critical thinking and a total shift from the current way of thinking. To maintain sustainability, Honda should look into more long-term measures since their current policies do not seem to appreciate future challenges such as the insecurity of relying on petroleum products.
If the company was to implement the recommendations outlined in this report, then it could be on the verge of a brighter and more productive future.
References
Arnold, H. et al. (2009) Applied Technology and Innovation management. London: Springer Heidelberg Dordrecht
Burns, T. and Stalker, G. (1991) The management of innovation. New York: Oxford University Press.
Dogson, M et al. (2008) The Management of technological innovation: strategy and practice. New York: Oxford University Press
Fackler, M. (2008) Latest Honda Runs on Hydrogen, Not Petroleum. New York Times
Gable, C and Gable, S. (2008) Natural Gas Vehicles (NGVs) Available. About.com: Hybrid Cars & Alt Fuels. Web. Web.
Taylor, A. (2008) Americas Most Admired Companies: Honda. Web.
Tidd, J. and Bessant, J. (2009) Managing Innovation: Integrating Technological, Market and Organizational Change (4.ed). Chichester: Wiley.
Trott, P. (2005) Innovation Management and New Product Development. Prentice Hall.
Wang, W. (2009) Guangzhou Honda adopts new brand strategy to grab market share. Web.
Yoshio, T. (2011) Honda Exports from Japan Unlikely To Decline Soon. Dow Jones newswire. Web.
In an era prevalent with global competition, it is widely recognized that the rapid changes in technology and competition has transformed numerous traditional rules that orient economic activities towards economic accessibility to enable firms compete from anywhere across the globe (OECD, 2007). The term globalization has increasingly become loaded with some people associating it with almost every contemporary change evident in the world today that spells out progress and prosperity while others associate it with deprivation and disasters (Scholte 2000). Globalization in this context concentrates on the integration of the worlds economy. This generally means that the world economies are integrated into one market which constitutes interdependent means of production, consumption of relatively similar goods and unified responses to similar impulses (Williamson 1998).
Globalization is represented by the movement of goods and services, capital, and labour across the globe in managed and coordinated institutionalized networks, which involve establishment of global associations that ensure efficient utilization of the scarce resources at the disposal of mankind (Milward 2003). In the modern society, the term is commonly used to refer to the process of expanding the worlds markets of consumption, investments, and production on a global scale as well as expansion of social relations and social activities across different nations of the world (Milward 2003).
Globalization is evidenced by the remarkable growth achieved in the world trade as a proportion of the world output where the gross world product grew from 7% in 1938, 10% in 1970 and above 18% in 1996 (Williamson 1998). These trends have remarkably escalated ever since. Further, the foreign direct investments in developing countries have increased from 2.2 billion in 1970 to $154 billion dollars in 1997 (Williamson 1998). Globalization has further resulted in integration of the national capital and financial markets and the amount of foreign exchange taking place on daily basis has reached remarkable heights.
Clearly, the availability of cheap and reliable means of communication is the key driving force for globalization efforts which not only facilitates the integration of international capital markets but also promoting growth in multinational corporations (Williamson, 1998). Good communication and means of travel facilitates exchange of goods and services as well as promoting labour mobility across the globe. In addition, stable political condition is a necessary determinant for effectiveness of globalization.
International cohesiveness induces economic agents to exploit the opportunities presented by globalization while political instabilities and regional disagreements discourage such efforts. International integration efforts have therefore played an important role in promoting globalization. Further, trade liberalization programmes exposes domestic consumers producers to foreign competition and may force them to expand output consequently reaping benefits from economies of scale (Greenaway 2008).
Globalization enables companies to avail their goods on almost every region of the world while standardizing the manufacturing technology across all locations of production. In various regions of the world, the automotive sector has been a key source of employment as well as a major source of linkage between other sectors in the global economy (Organization for economic cooperation and development 2007). Policy makers in this industry are aware of the current changes that have taken place in the automotive value chain.
These changes constitutes considerable shifts in the production and consumption cycle whereby a higher value added is increasingly placed on the components of the automobile design and innovations in engineering and less of the actual manufacturing of automobiles (Organization for economic cooperation and development 2007). The changes have prompted regional authorities to formulate strategies through which they assist the process of restructuring and adjusting the automotive sector as well as the global economy as a whole with major focus on labour market policies and extensive training in leading technologies (Organization for economic cooperation and development 2007).
Honda motor company has developed a multinational organization strategy which stems from globalization efforts (Schick & Book 1997) and the company is the leading global automobile manufacturer dealing with development, manufacturing and marketing general purpose engines, motorcycles and sports cars among other automobile products (Infogrok automotive 2010). The company has a decentralization organizational structure and develops its products in all the regional markets in which it operates (Herbert 2009).
Honda Company has over 500 subsidiaries across the globe and is headed by an executive council based in Japan (Herbert 2009). Its operations are divided across six regions which facilitate the company to sell products most suited to the preferences of each region. In addition, manufacturing vehicles in various regions by the company increases the local consumer confidence on the products hence increasing sales and profitability of the company due to existence of a large consumer base (Herbert 2009)
Handling Environmental Issues
The structures of international systems have significantly changed with the onset of the process of globalization leading in changes in production and finance (Kutting 2004). The world is constantly interacting at various levels resulting in negative effects associated with such interactions. Although the point of interaction between the environment, trade and economics is not clearly defined, the relationship between the two remains a major contentious issue facing both economists and environmentalists (Lofdahi, 2002).
Some of them have argued that if a country makes the choice to proceed with manufacturing processes that promote environmental damage, then that should be treated as its prerogative. On the other hand, economists argue that such countries should be penalized for engaging in such activities while the environmentalists totally disagree with such reasoning and advocate for complete conservation of the environment (Lofdahi 2002).
Spread of environmental risks across the globe and the consequent migration of environmental policy is a key aspect of globalization (Speth 2003). Globalization in its economic understanding has considerable effect on the environment whereby the interactions between different regions of the world may cause harm to the environment as well as hindering sustainable development (Speth 2003). Environmental degradation is likely to occur as a result of widely shared resources and ecosystems and since the atmosphere and climatic system are essential for ecosystem survival there is increased need for preservation of environment from pollution (Held & McGrew 2002).
Automotive companies often receive criticisms as a result of environmental degradation that emanate from the automobiles they produce as well as the manufacturing processes of these products (Anonymous 2010). Increased criticisms have prompted the companies to take responsibility by formulating and implementing strategies that are aimed at improving the global environment. The automotive companies such as Honda motors and General Motors are now aiming at producing vehicles that utilize fuel more efficiently such as ethanol and hybrid versions (Anonymous 2010). The companies are also shifting to greener power supplies such as solar energy in attempt to conserve energy.
Honda Company was recently named the United States Greenest automaker by the union of concerned scientists making it a five consecutive holder of the award (Honda 2010). This award is clear evidence that the company has achieved the lowest combined scores of smog forming and green house gas emissions in its US automobile fleet relative to other automotive companies in the country. The company constant efforts to improve fuel efficiency on its automobile products has seen the company gain 1 mpg in US corporate average fuel economy in 2009 (Honda 2010).
In order to achieve fuel economies, the company has introduced the insight as the world most cost reduced and affordable hybrid car and the CR-Z which is an electric automobile as the worlds first production sports hybrid coupe. Honda received remarkable increases in sales as a result of its adoption of environmental friendly policies since the policies were efficient and attracted public interests (Honda 2010). In the United States, the sales in hybrid cars has been increasing over time and in April 2008, the market share reached 25% which was the highest level that the company had attained since 2004 (Anonymous 2009). Further, by the end of 2008 fiscal year, the number of hybrid cars sold all over the world exceeded 250000 units (Takeo 2008).
Honda Company continues to produce alternative fuel vehicles. The Civic GX Sedan which utilizes natural gas had its retail sales expanded to various regions around the world such as Utah and Oklahoma (Honda 2010). The company also manufactures the FCX Clarity fuel cell electric vehicles. These models are among the worlds most advanced zero emissions vehicles as they have zero tail pipe emissions and fuel efficiency that is three times that of a gasoline powered automobile (Honda, 2010).
Earlier this year, the company unveiled a plan to introduce a battery electric car commuter sized vehicles and plug in hybrid technology for mid sized vehicles and larger vehicles in the country (Honda 2010). In addition, the company is developing its own infrastructure to the alternative vehicle equations. In early 2010, the company began operating the next generation solar powered hydrogen production and refuelling station in California. The station utilizes power derived from Honda developed and manufactured thin film solar cells to provide fuel for daily commuting in a carbon free energy cycle (Honda 2010).
Through the green factory initiative, the company aims at reducing the impact on environment by improving its manufacturing processes. The company has put on measures to reduce energy and water use, generation of waste materials, carbon dioxide and air emissions (Anonymous 2010). The company also encourages its suppliers to adopt the same mechanisms. Further more, the company is continuously looking for ways to make positive contributions to the communities where its consumer base lies. The company engages in community based environmental education as well as preservation and restoration efforts in form of corporate charitable foundation giving, in kind donations and company support of volunteer efforts by its employees (Anonymous 2010).
At the annual Earth Angel award ceremony which honours automotive companies that have well established environmental initiatives, Honda Company was honoured with the award of the most environmentally progressive automaker in terms of environmental initiatives in 1999 (Anonymous 2010). The American Honda Company motors Inc CEO, Testuo Iwamura confirmed that the company is working towards reduction of environmental footprint on their operations with the same passion as the one the company demonstrated in its efforts to develop new technologies that reduce environmental footprints of their products (Anonymous 2010).
The Kyoto protocol which is a United Nations protocol focusing on the convention on climate aims at global minimization of green house gas emissions in order to prevent global warming. The protocol aimed at minimizing the levels of green house gas emissions from by 5.2% from the levels that were prevailing in 1991. In 2009, one of the directors revealed that Honda had managed to reduce its motor vehicle emissions by 6% since 2000 through its adoption of green factory strategies (Honda 2010)
Globalization Effects On Health
The most fundamental resources for human survival and health comprises of the constituents of the ecosystem such as air, water land etc (Yach & Bettcher 1998). Rapid industrialization and increased connectivity through globalization has amounted to exploitation and destruction of resources such as energy resources and other non renewable resources towards their extinction. Through the waste products emitted during the industrialization process, human health as well as the life of other living organisms in the planet is adversely affected.
The entire domain of globalization includes numerous interrelated phenomena and risk factors that affect the well being and health sustainability of the populations in both developing and developed countries (Yach & Bettcher 1998). However, we should not completely dismiss globalization as negatively impacting on the health of society. If the continent would address the risks and negative aspects associated with globalization, it is possible to sustain the process of economic globalization by turning the risks into opportunities hence improving future health prospects (Yach and Bettcher 1998).
Energy is the most essential component for powering automobiles and most of this energy is derived from burning of fossil fuels in the automobiles engine. (Pollution probe 2009). The waste products from the combustion process pollute the air and have devastating effects on human health. Scientists have argued that the green house gas emissions pose considerable threat to future generations (Kao 2009). Green house gases are composed of carbon dioxide which is generated vehicles, power plants, oil, and gas etc, carbon monoxide, and oxides of nitrogen among others.
These gases have the effect of warming the atmosphere which leads to the major problem of global warming (Kao 2009). Carbon dioxide is released from the combustion process and persists in the environment for more than 100 years. The process further releases volatile organic compounds that are also harmful to human health which include Oxides of nitrogen which when produced pose danger to human health by impairing lung functioning and lowering resistance to respiratory infections.
Inhaling nitrogen dioxide may result in coughing, shortness of breath and wheezing (Pollution probe 2009). Carbon monoxide on the other hand is released as a result of incomplete combustion and it inhibits the bodys ability to transport oxygen from the lungs consequently adversely affects people with heart diseases. The gas can cause immediate death and people with anaemia, pregnant women and children are highly vulnerable to its effects (Pollution probe 2009)
The federal clean air act which was passed in 1970 in the State of California in the United States to regulate national air pollution and control effects requires automotive companies to produce cars that emit one tenth the level of carbon monoxide and hydrocarbons as the existing cars by 1975 (George n. d). Honda was the first company to build a car model whose engine met the federal standards without using a catalyst converter.
The Honda civic 1500 was the first car to utilize the compound vortex controlled combustion engine that used two combustion chambers hence significantly reducing the amount of emission (George n. d). The companies further dedication to commitment to the future is displayed in its announcement in 2003 annual report that it would make every effort to contribute to preservation of human health through development of safety technology that aimed at reducing emission and developing alternative forms of energy (Honda motors Co 2003).
Honda Company is also taking the necessary measures to ensure that its vehicles are safe for human utilization. Some people are under the implication that increased weight and size of a vehicle increase its safety but this is not true (Anonymous 2003). While large cars prevent people from being crashed in cases of accidents, they are more likely to loose control at high speed and may roll over more easily compared to small cars.
The Honda engineers have therefore designed car bodies that shaped and formed to be stronger and more stable without necessarily increasing their weight (Anonymous 2003). In addition, the companys engineers biologically treat its industrial wastewaters and sludge to ensure efficient utilization of water resource (Honda annual report 2009). Honda Company cut its total water consumption in its manufacturing process by 12.2% in 2010 from its previous year while the average water utilization per unit of automobile production was reduced by 2.5% (Environmental leader 2010)
Further, Honda Company actively participates in community support programs hence promoting improved living conditions and health. In Australia, the company supports the light house foundation, an organization that provides stable family environment to the less fortunate youths (Honda n. d). In addition, the company also makes considerable donations towards disaster management such as the monetary assistance to the government to provide relief to the affected population (Honda n. d).
The company produces diesel powered vehicles. France and Austria have had a high preference of diesel powered vehicles due to their efficient fuel consumption. The diesel engines have lower fuel consumption costs and lower raw emissions relative to spark ignition engines (Anonymous, The hybrid catalyst, a new catalyst concept to improve utilization of exhaust gas energy and increase the efficiency of diesel catalyst system, n. d).
However, treatment of diesel engine emissions is made difficult by the existence of very low temperature resulting from large amounts of air and additional energy from exhaust gas extracted by the exhaust gas turbo charger (Anonymous, The hybrid catalyst, a new catalyst concept to improve utilization of exhaust gas energy and increase the efficiency of diesel catalyst systems, n. d). Diesel powered automobiles are popular in Europe and the trend has been increasing over the years (Honda annual report 2007). ). In 2000, high powered diesel cars accounted for 49.1 % of the companys market share in France and 33.3 % Belgiums market share and the trend has continued to increase over time (Anonymous, Honda in Europe, n d). This substantially promotes environmental conservation which is necessary for persistent of good health among the population.
Conclusion and Recommendations
The increasing need to protect the environment from the negative impacts of globalization has prompted Honda Company to develop environmental strategies aimed at conserving the environment. This positively impacts on the overall performance of the company since a lot of consumers in the modern world prefer to utilize products from companies taking up corporate responsibilities to protect and conserve the environment.
Further, the company has achieved remarkable efficiency in production through utilization of energy and water conservation methods as well as other environmental management efforts that have considerably cut costs in the companys automobile production. As clearly established in our study, the company has gained considerable sales through its production and sale of automobiles that use alternative sources of fuel and utilization of green factory manufacturing process. The popularity of products has further been intensified by the numerous environmental awards that the company has received which has served to increase consumer confidence and loyalty.
Honda Company sets an example for other automotive companies by demonstrating corporate responsibility in environment conservation as well as promotion of human life. This is important because the automotive industry is one of the major industries believed to cause widespread environmental damage. Through its numerous efforts to conserve the environment, the company has not only gained increased recognition by various environmental groups but has also achieved remarkable heights in overall companys performance.
In addition, the company has renewed consumers confidence and has significantly influenced their attitudes towards the automotive industry. Further, the companys environmental strategies such as production of automobiles that are fuel efficient as well as its efficient water policies have significantly promoted the performance in the global market making it the leading automotive company.
I recommend other corporations in the automotive industry to learn from the efforts of Honda Company in conserving the environment. These companies should take responsibility of preserving the environment by ensuring that their manufacturing processes as well as the products they are selling to consumers are safe and cause minimal (if any) pollution to the environment.
Companies should adopt Green strategies which would help them in cost cutting especially in the hard economic times. Since the modern economy is characterized by widespread globalization which serves to expand and diversify companys markets, these corporations should take the necessary measures to contain the environmental problems associated with globalization in order to conserve the environment for todays and future generations. In addition, Honda Company should continue implementing the strategies for environmental conservation in order to maintain its good performance.
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This report gives a concise marketing and the management analysis of Honda Motors that internationally positions sixth in car industry. The essential of this task is to think about and basically investigate the distinctive key system identifying with Honda Motors. Through the various aspects of market division, we have made an endeavor to perceive the objective clients.
Stakeholders comprehended as the elements, additionally assume a key job in the organization’s decision-making procedure and exercises. Key spotlight is laid on Marketing Mix Strategy (4Ps-Product, Place, Promotion, Price), Sustainable Management Practices and we have likewise basically analysed every one of these parameters, to get a more profound comprehension of Honda Motors. It was likewise seen that these 4Ps and the key strategies profoundly impact the organization’s accomplishment. Through this report we have tended to the benefits and faults of the management rehearses pursued by Honda Motors.
Background
Honda Motor Co., Ltd, Japanese Multinational Corporation, known as a maker of Automobiles and Motorcycles, was found on 24th September 1948 by Mr. Soichiro Honda and Mr. Takeo Fujisawa.Honda in Japanese strict importance is root field or beginning field. Soichiro Honda had an incredible attached to racing just as he was an entrepreneur, and a maker. However, over all these he was a flawless visionary and has an exceptional inventive personality. He used to consider improved methods for assembling cylinder rings, built up a little business, and began fabricating field. Mr. Soichiro filled in as a specialist at Japanese tuning shop, Art Shokai, since in his young age. At that point in a self-trained designer, he structured his first drafts of piston plan and sold to Toyota, yet it was rejected. In light of deficiency of gasoline World War II, he was not ready to create in delivering the car. After that he set up The Honda Technical Research Institution in Japan of little motor for 2 bikes. Also, his first motorbike was Honda Cub; first car was T360 mini pick-up truck.
Mission Statement
Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction. 2030 Vision Statement:
To improve operational elements of worldwide headquarters.
To emphatically advance mutually complimentary inter regional relationship.
Serve individuals worldwide with the delight of growing their life’s potential.
Lead the headway of versatility and empower individuals wherever in the world to improve their everyday lives.
Honda’s Key Marketing Strategies
Honda pursues a holistic marketing for organization’s marketing purpose. Holistic marketing is the plan and usage of promoting activities, process and programs that mirrors the broadness and interdependencies of their effects (Keller and Kotler,2006). Holistic marketing perceives that ‘everything matters’ with marketing for example customers, employee, other companies, competition, as well as society as entire and that a broad, integrated viewpoint is essential.
Honda is certainly not a top-down organization, constrained by central station. Rather, Honda manufacturing units for all intents and purposes wherever around the globe work as self-ruling organizations, planning and creating vehicles dependent on local conditions and consumer behaviour.
Product Strategy
Automobiles
Honda’s line-up shifts by nation and may highlight vehicles restrictive to that region. Honda’s worldwide line-up comprises of the City, Fit, Civic, Accord, Insight, CR-V, and Odyssey. The automobiles are demographically segmented into top executive, executive and young executives.
Motorcycles
Being the biggest motorcycle maker in Japan, Honda began its generation in 1955. Honda achieved its top in 1892 for assembling right around 3 million motorcycle every year. Honda’s worldwide line-up consists of Gold Wing, CB1100, CBR1000RR, Rebel, VFR800F and Super Cub. The motorcycles are demographically segmented into teenagers and females.
Power product & Engine
The company started engine production in 1953 with H-type. Honda power equipment reached record sales in 2007 with 6,4 million units. Its quality completes line of generators for commercial and consumer applications.
Price Strategy
Honda Motors is a sales-oriented organisation, it emphasises more on sales of the products. Utilizes market penetration pricing strategy. According to Dean (1969) penetration pricing strategy is lowering pricing as an entering wedge to get into mass markets early.
Promotion Strategy
Honda has been exceptionally cautious and exact in their promotions. Honda promoted their products in greater part print media. The clients were constantly mindful of the organization strategies of giving most recent innovation and overhauling at whatever point vital and furthermore redesigning the whole model after certain time-frame. The promotion was increasingly focused to the organization’s mechanical progressions and eco-friendly picture which separated Honda from the competitors.
Honda focuses on personal selling. Personal selling is face‐to‐face connections with at least one imminent buyer, to make deals (Rowley,1998). The sales person assists customers in the process of vehicle selection by convincing the customers to choose Honda because of its quality.
Place Strategy
Honda uses agents and retailers as marketing channels for marketing at different locations. For cars and motorcycles Honda uses selective distribution method. For any one interested in jets and aircrafts engine Honda uses exclusive distribution.
Management Strategies
Life Cycle Assessment (LCA) is a critical tool to analyse the product life cycle for means of identifying the impact of products and operations on the environment. The product life cycle is separated into six distinct areas: development; purchasing; manufacturing; sales and service; in use; end of life.
Honda engineers considers environmental factors in every phase of development and design. They account for factors such as part remanufacturing, reducing the substances of concern and dismantling issues. Honda maintains a minimum 90% and 95% level of design recyclability for all Honda automobiles, powersport and power equipment respectively. With advanced government regulations Honda’s effort to reduce SOCs is consistent. All suppliers giving items, parts and materials to any Honda producing element are required to enter information into the International Material Data System to track the utilization of chemical compounds on a corporate-wide basis. The Honda Chemical Substances Management Standards is utilized to recognize the chemical that should never be utilized again, those for which an eliminate period has been distinguished and those that Honda is observing for potential disposal. All providers are relied upon to reference the SOC management manual for data in regard to Honda’s chemical management strategies to meet the most recent revealing necessities and regional prerequisites.
Honda aims to have a PVC free interior in all the automobiles. They are consistent in their efforts to search high quality and cost-effective substitute for PVC.
Honda made ‘Green Purchasing’ rules to help improve the natural effect all through Honda’s all-inclusive supply chain. Reduced CO2 emissions by avoiding unnecessary travel miles by:
Every day load planning guaranteed on-time conveyance and putting smaller orders onto any available trailer space to make sure trucks were fully loaded before departure.
Collaboration with suppliers and combining the routes helped them in reducing the emissions.
Also, CNG filling stations were established on or close to Honda properties along the suppliers and logistic system, supporting the utilization of CNG as a fuel among the logistics partner.
To Honda waste generation by manufacturing is an efficient use of raw materials. They aim to use raw material in an efficient manner to eliminate waste and implement reuse, recycle and energy recovery to avoid sending waste to landfills.
Honda has worked with different organizations to grow progressively proficient methods of transportation and have kept on embracing cleaner strategies for transport to reduce CO2 emissions. It has made an effort in expanding modal shift which involves the shipment by rail and ship which lead to an decrease in CO2 emissions by 27% and 65% respectively when compared to truck transportation.
Honda identified increments in fuel economy and decreases in tailpipe emissions as two of the most ideal approaches to diminish the GHG emissions produced by a vehicle over its lifecycle which occurs during its in-use phase.
The key component of Honda’s zero-waste-to-landfill strategy are its recycling programmes. The recycled materials include wheels (including aluminium and steels), engines, catalytic convertors and Nickle-metal hydride batteries. They use rescued materials from the li-on batteries for nickel-metal-hydride (NiMH) units. Honda takes the positive terminal material from the li-particle battery and reuses it as the negative cathode material of the NiMH battery. Electrolyte from the li-ion battery is additionally reused.
Sustainability at Honda
Sustainability means incorporation of economic, social and environmental performance (Lee and Farzipoor Sean 2015) into operational decisions. It is, in general terms, defined as economic practices which meet the needs of the present without compromising the ability of future generations to meet their own needs (WCED 1987). In order to achieve sustainable development, organisations must redesign their processes and adopt new technology, even though this might change the business models in supply chain management (Nidumolu, Prahalad, and Rangaswami 2009). Following are the sustainable practices by Honda Motors:
Collaborations with sustainable brands
Green consumption
Green Marketing
Green Purchasing
Innovative Methodology
Stakeholder Involvement
Sustainable distribution
Sustainable Technology
Total Quality Management
Honda has since a long time ago sought after its own innovative improvement and has immovably kept up the freedom of the organization, however at this point collaborating up with different enterprises has turned into another methodology for the maker. In the cutting-edge world, Honda perceives that creation more noteworthy utilization of outside thoughts and advances is unavoidable, with automakers around the globe racing to grow new items, for example, electric cars, self-driving vehicles, and cars with direct access to the web.
Honda has exchanged expendable transport bundling that was cardboard boxes and steel cases to reusable plastic compartments to eliminate utilization of steel cases.
Honda Motors publicize their items conveying the subject of new innovations that are naturally friendly, featuring enthusiastic tunes and youthful craftsman which occupies the interests of the clients.
Honda has a planned purchasing strategy which are environmentally concerned and serves to reduce the CO2 emissions during the process and also supports the suppliers to use the alternative fuel by establishing a CNG filling stations near to the suppliers and logistic partner.
Honda uses the programmed fuel injection feature for various vehicles in efforts to make the motor more fuel efficient and to minimize air and sound pollution.
Honda speaks concerning issues encompassing manageability exercises and exhibitions to the partners annually. Thinks about the need and requests of the stakeholders, while likewise giving a comprehension of changes and dangers in the social condition.
Honda oversees its LCA utilizing sustainable distribution while considering all the natural impacts amid its development, purchase, packaging, sales, use and disposal stages. The significant effect was seen from the modal shift in transportation for conveying the vehicles.
Honda brought hybrid vehicles into the market place, illustrating that impressively improved fuel economy can be accomplished at a sensible cost and in this way the hybridization is being built up as the cutting-edge car standard (Frank, 2007).
Honda Motor Company, has the motto, “From a global perspective, Honda undertake to respond to customer needs by producing low-priced products of superior performance”. Honda company voice their concerns about quality and they have a unique philosophy of people-based management (Mak,2000).
Success of Honda Motors on Sustainability
The focal point of ecological management has moved from the organisation level to the supply chain level (Linton, Klassen, and Jayaraman, 2007) in Honda Motors. Honda’s pricing strategies by using market penetration pricing had permitted them to attract a substantial quantity of purchasers and keep up an expansive piece of the pie. Their dimension of distribution for example selective and exclusive has helped them in securing the merchant services, promote item differentiation, support conniving conduct in assembling and expand price discrimination. They have accomplished in decreasing the CO2 discharges by the modal shift in transportation and by actualizing longer bearer vehicle for transport over little transporter vehicle clubbing the conveyance for 2 sellers together. The organization has executed activities with contemplations for the environment, safety, human rights, compliance and social obligations among others in association with its providers around the world. The organization reuses the batteries to make innovation that advances reusing of car li-particle batteries, particularly as interest begins to develop for vehicles fuelled by such units.
Conclusion
To conclude I would say that in spite of having a large infrastructure that is spread all over the world, Honda is managing its supply chain in a highly effective manner. Honda’s policy to localise the product is taking the company to higher platforms worldwide. Honda’s approach for a sustainable management is highly efficient with its efforts for consistent improvement. Its innovative methodology and sustainable technology is making it strong to distinguish from its competitors.
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Operations and the industry processes and the characteristics of Honda’s market has a several key parts and sectors which are needed to be known like suppliers, marketing channels, competition, market attractiveness, and many other factors. So, the first one will be the suppliers, who is the main suppliers, their number, and what they do.
Honda is one of the biggest motorcycles manufactured company that working on manufacturing the internal combustion engines in the word specially in Japan under the name model of civic, the most famous car in Honda as longest-running for the Japanese automakers.
Honda became the first-choice car in Japan by 1986 which encouraged them to invest in the research and development to get involved in the robotics industry, and eventually Honda released the first electric car by 1999. This evolution opened the chance for Honda to establish new ventures in China, Mexico, and Argentina.
Marketing Channels
Functions of business set of independent of business units that are connected to each other also connected to the business manufacturing products consumption that followed by number of stages from the manufacturing to agencies to wholesalers and retailers to be delivered to the end customer to satisfy their needs or wants.
Honda is using a different channel of distribution like authorized showrooms and cars dealerships through service centers that has the authority to do direct selling agents, also the channel of-commerce sites to make the products of Honda available online to customers in several countries like US, Argentina, Brazil, and north America like Mexico however Honda cars have a wide range of selling in Canada as a long standing car with high stability and quality of several options and models.
Marketing Attractiveness
Visibility campaigns and branding strategies helped Honda to create TOMA ( top of mind awareness ) in the mind of customers through building high relationships with them with the high quality of products with different models including the high intensity of the cars and motorcycles stability also the after selling service that would help in the technical supports when the customers need it, otherwise thespare parts that are provided widely and cheaply in all it is markets. Honda has not stopped with this strategy but also they decided to enter new markets in different countries with different models and options to fit the different cultures, this opened a wide range for Honda to maximize their selling, also the web and tv advertising with slogans like “ the power of dream” which increasing the brand awareness and the attractiveness of customers through increasing the word of mouth between people.
Competition
Honda is a huge company known for manufacturing motorcycle, automobiles, aircrafts, and power equipment to deliver the full satisfaction to customers, and combustion engines with the strategy of maintaining the business operations from design the production process also they providing after selling service to maintain the customer satisfaction, otherwise the company has the idea of developing it is product through a huge number of research and development which is taking a big part of the production process, to ensure that every vehicle have been produced by the high level of technology. Honda company is controlling a huge share of the automobiles market in different countries, but also it has a huge number of strong competitors:
Ford for automobiles. Ford is a strong company for automobiles industry in US and in north America because it is providing a huge value of it is products that meets the security and quality that the user’s needs, otherwise the brand value of this company is about $19.771 billion as per the report of Brand Finance which is a sign for the successful of this company.
Mercedes Benz. Mercedes is a German international company that is represents the luxury and high quality also high performance of different designs and models of automobiles, the main strength of Mercedes is that it has a strong brand value and is a financially strong company with performing a great innovation of using the diesel engines, also Mercedes automobiles is now in more than 20 countries around the world.
Competitors Strengths and Weaknesses
Ford company strengths: 1) high value products; 2) strong production team; 3) expensive brand value. Ford company weaknesses: 1) not widely known in many countries; 2) don’t have after selling service; 3) limited number of varieties.
Mercedes strengths: 1) strong international company; 2) huge finance; 3) existed in more than 20 countries. Mercedes weaknesses: 1) is not strong involved in R&D; 2) required strongly in Europe only.
Honda Management
Money is made in Honda through the selling of different products from motorcycles, automobiles, power equipment and aircrafts in different countries that creates a huge number of sales with Civic sales were 50,000.In US, and the vice president and the executive president of manufacturing that allow them to control the industry with the help of managers at every sector like the finance department.
Political Factors: these elements can influence Honda’s long-haul productivity. These components are spoken to in the accompanying:
-Incentives and Taxation: Tax rates change from country to another and that impact the product market cost which is going to affect purchasing buying power of Honda’s customers.
-is it safe to work there? There are a few nations in which Honda might want to put resources into and work there however would it be protected to produce its vehicles in there? For instance, it won’t be ok for Honda to put resources into some eastern/South American/European nations, for example, Yemen, Syria, El Salvador, Ukraine. These nations would be viewed as a gigantic market for Honda however because of it isn’t sheltered Honda won’t almost certainly construct and produce there. What’s more, as these nations simply rely upon bringing in the Honda vehicle and gets no opportunity of getting the vehicle made in their territories, this makes Honda a costly vehicle for them because of transportation.
Socio-cultural factors
Demographics & numerous nations: Each nation has its own statistic changes which impacts the vehicle’s business, in addition to that, they are financially steady however the development, for the most part, occurs in the nations in which they are not monetarily steady so that does not so much help Honda/all vehicle organizations to open new markets in these countries like: India.
Age structure/Family structure: Honda as an organization is entirely adaptable organization were, they produce vehicles focusing on specific ages. For instance, Honda produces the CR-Z display and different games releases autos focusing on ages from 18-28. Furthermore, the SUV vehicles focusing on families where they need gigantic autos for transportation
Economic factors: Honda as an organization does about fare to the entire world. As Honda fabricate numerous sorts of vehicles, Cheap and costly ones with the goal that implies they have a market in every nation.
Tariffs: Tariffs can influence the organization’s business in a specific area. For instance, nation like Nepal includes a high duty rate of 11.66% (Source: World Bank, 2016 information) while the salary of every individual isn’t that high, that is done intentionally to urge individuals to purchase the residential items. So, obstructs the street before Honda to contend there as individuals there would lean toward purchasing Suzuki and Tata engine vehicles.
The stability of Honda’ home country currency and fluctuations in exchange rates has an impact on the company producing process in addition to the exports and imports of Honda
Technological forces: Advancement now a days accept an imperative occupation in the field of vehicle’s industry. There are certain inventive parts impacting Honda execution, and they are:
Competitors development upgrades: it’s a fundamental thought facing Honda as they need to fit the front line progresses which are from contenders.
New Technology influence on the cost structure: new progressions have more effect on the cost structure of the association as they need to spend more to get the new examples in vehicles development.
Environmental Factors: Distinctive markets have diverse standards or natural principles which can affect the gainfulness of an association in those business sectors, these variables include:
Weather Conditions: the climate varies from a nation to another so that affects the organization method for creating their vehicles, for instance the center eastern part has its own particular autos as they can bear the cost of the high temperature contrasted and the cool nations need another sort of autos.
Demanding towards sustainable power source and green items is as of now expanding: Honda faces the expanding of the green items in this way, people extraordinarily in Europe and North America are earth neighborly, that is the reason they mean to buy vehicles which does not hurt the earth like more the autos that is utilized by electric vitality more than fuel vitality.
Legal factors: Honda ought to comprehend numerous lawful elements to enter any new market as: wellbeing and safety laws, Patents and the work laws.
Industry and Market characteristics
Value chain analysis:
In bound logistics:
Honda has a worldwide suppliers with an extraordinary stable relationship, since they may embrace in the nick of time fabricating reasoning that control and diminish raw material use and conveying cost.
Operations:
Honda’s utilizing high level of technological methods to guarantee the most outstanding quality outcomes, in other hand it utilizes human sources in assembling lines, as they may suggest new ideas and options that could be used in the future products.
Outbound logistics:
Honda has promised to provide the customer with the highest quality of products with the highest value required from the customers, also introducing the products that are highly friendly with the environment. As well as Honda is tied by providing prospective packaging to the spare parts with the preservation of engines as after selling service. Honda is developing the business operations to retain customer satisfaction and spreading the brand globally to guarantee that the customers had a great experience in using Honda products. Otherwise Honda is reducing the time of delivering products to the minimum to sustain the Just in time inventory system toward the customer which will create a high efficiency in products.
Marketing and sales:
Honda is playing the role of satisfying customer needs and wants through provide the customers with experienced cars to represent the customer experience toward the cars which is so important to consider the result of these experiments to the buyers from customers, police cars that might be bought from Honda, also the retailers dealership to make it available customer to reach, on the other hand for the transportation companies like Uber. Honda is marketing their products through heavy marketing campaigns and advertising, also Honda is enjoying the advantage of the variety of products on their website which will allow customers to choose according to their demands. Also developing the technology in the production process which the new trend nowadays.
Services:
Honda’s primary concern is the after-sale service by giving the administration focuses and make the vehicle parts affordable for the clients to be found and they offer free oil and tire change for one after purchasing it’s vehicle beside the engine services, promotions and offers with discounts, likewise they offer a café in the administration services center to guarantee that they give their clients the best customer service while they’re waiting for their vehicle to complete its service.
How is money made:
Money is made through selling different products in different markets with specific features that co-op with the demands of the customers which are defined by their cultures in order to satisfy their needs and wants with give them the sense of great experience in Honda products through selling motorcycles and automobiles to different types of buyers.
Porter’s 5 forces:
Bargaining power of Customers:
Today the internet has a lot of information about any kind of vehicles which allowed any person who looks to buy a new or even a used car find all the specific features and defects in any products so the customer now is very well-educated about any kind of product in the market in addition to that these customers has many choices now a days in the market which will make them able to transfer to any other competitors in the markets. So the buyer power is high as they are well educated about Honda vehicles and has many other alternatives as Toyota, Hyundai and Chevrolet.
Threat of new entrants:
Honda is a very strong vehicle brand which has a high valuable reputation in the market, beside that the brand name is well-known as many people across the world know what is Honda and its position in the global market, So the other new entrants not easy for them to reach Honda’s class level of vehicles even in the long-term, Honda is a global company works in many different countries around the world, and they meet many countries government policies which are way difficult for any new company to meet all of these policies in all of these countries, therefore the threat of new entrants is very low as its difficult for any new company to compete with Honda.
Supplier bargaining power:
Honda is a huge company in the field of vehicles manufacturing. Honda is like all other big companies, they tend to deal with the international popular suppliers like all other companies do. But sometimes it comes to a point were the international suppliers are not able enough to satisfy the just in time need due to many requests from other several companies too. The JIT product delivery is very essential for a company like Honda. That’s why Honda might need to deal with local suppliers too in order to get what they are missing of supplies. The local suppliers might exploit the chance of dealing with Honda and take in consideration that they are in need of these supplies urgently and increase the price of the supplies. On the other hand, there are also many other local suppliers in front of Honda to start dealing with if one is too expensive. So that the supplier bargaining power would be assessed as, Moderate.
Threat of substitutes:
Nowadays, there is a significant boost in gas prices as it is an exclusive source which is going to come to an end. Even though, the people using cars are taking also in consideration the money they pay for parking too, and the money they pay for the vehicle’s annually / monthly services. That’s why people nowadays go for public transportations as it is considered much cheaper. So that, the power of substitutes would be assessed as: High
Rivalry among the Existing Competitors:
There are several competitors in the global market such as General Motors, Toyota, Volkswagen, Mitsubishi, Nissan, and Ford are targeting the same customer segments and have their global market characteristics. These mentioned companies provide the same kind of technology and applies it to their vehicles. Whoever of these companies will be able to apply the latest technologies with the least price would be able to take the market’s lead. So that the rivalry among existing competitors would be assessed as high.
Consumer/buyer markets characteristics:
It is very important to analyze the market characteristics to identify the attractiveness of Honda let’s start with a chart shows the revenues and sales of Honda in many different regions to understand the Geographic markets and which region has the highest sales and lowest sales through the last years
Referring to the chart above shows that the company most sales focuses on North America nation compared to other nations as there is a smoothly increase in the sales through the past years and the sales in Asia countries enjoys a very high stable level of sales such as China , and the sales in japan which is the host country of Honda decrease as it means that interest in the Japanese market is gradually decreasing.
North America has 56% of the total revenues and according to the researches by (Source: Company’s filings) the market in North America is focusing primarily on specific models as Honda HR-V and Civic which indicates that this market looks for the high-middle class of cars as high features which middle price and SUV trucks to be suitable with the weather and long drives but Honda doesn’t have the highest market share in North America because they are facing a very strong GM ( General Motors ) which has the highest market share in North America , in contrast with the host country has 12% of the total revenues of the company which is way lower than it was in 2012 by 19% (Source: Company’s filings) but Honda is not alone who is suffering a sales decline in their host country, Nissan and Toyota has reported the same decline in their sales[footnoteRef:1] [1: PARKER, J. (2016, June 20). Honda Motor Company: Understanding Key Business Segments. Retrieved from https://articles.marketrealist.com/2016/06/honda-motor-company-understanding-key-business-segments/]
Market demographic characteristics:
There are main elements any company should use in order to analyze their demographic characteristics such as age, income and gender so through this analysis, it will show which gender or age prefers to buy which kind of cars and then Honda will be able to recognize which cars they should produce in order to target a specific kind of people. so starting by the age and gender group indicators globally:
Ages
SUV
Sedan
Truck
Electric
Hybrid
24 or younger
less than 1%
1%
less than 1%
less than 1%
less than 1%
25 to 54
43%
51%
50%
46%
54%
54 to 64
26%
21%
23%
22%
22%
64 and up
31%
27%
26%
32%
23%
Gender
SUV
Sedan
Truck
Electric
Hybrid
Male
57%
56%
86%
75%
75%
Female
43%
44%
14%
25%
25%
Source: Hedges Company (January 2019)
So as the table above shows that there is a significant low of the group age between 24 or younger buyers as refers to the students between the high school and university education so Honda doesn’t care too much about this market segment as not all of the people in that age have their own driving license or even if they have, there are many choices for them other than Honda to buy. Secondly, the table shows that the vehicle industry has too much demand for the people who their ages between 25 to 54 on many types of vehicles but there are simple ratios between the types of vehicles, from the age of 54 to up they have closely different proportions in type of cars percentages. Secondly, the gender group indicators show that female buyers are lower than male gender and there is a very low percentage of female compared with male in buying trucks, electric and hybrid cars which indicate that females prefer the SUV and sedan cars more than any other car types. The income average of the people different from country to another and its necessary for any company to enter any market and provide a new product to study the people income to be able to provide a car that could be suitable and affordable for the consumer market needs.
Behavioral and psychographic characteristics: there are many ways that Honda use to attract their consumers to buy their vehicles and in order to reach the attractiveness of the market, nowadays most of people they care about the new technologies and features with a low price, some of the people looking for luxurious cars which will suit their attitudes and their class level, other people looking for motor performance as they want a modified car to be as super cars so in terms of all of these attitudes and behaviors through many people in the market so Honda should study the consumer market in terms of the above characteristics which are Geographic, Demographic, Behavioristic and psychographic.
Internal Analysis
(Strength and weaknesses)
Organizational performance to-date for Honda Company
Organizational performance
Honda operates in the worldwide market with 134 manufacturing amenities in 28 international locations and at 31 R&D facilities in 15 countries, about 167000 Honda personnel and associates serve 23 million customers worldwide annually. Honda’s international operations are divided into 6 administrative regions responsible for operating.[footnoteRef:2] Hiring and engaging the human beings and philanthropic initiatives locally in the communities that Honda operates. Honda is pushing the independence of their neighborhood administration and income operations, at the equal time with integrating and forward-looking plan for each region. They operate beneath the conduct suggestions that assist member companies and mates in evaluating and managing risks, complying with legal guidelines and regulations, preserving a high degree of transparency in operational level, that’s all to maximize the global client satisfaction. [2: Essays, UK. (November 2018). Analysis of Honda’s Business Strategy. Retrieved from https://www.ukessays.com/essays/business/honda-is-the-worlds-biggest-and-leading-manufacturer-of-motorcycles-business-essay.php?vref=1]
Organizational health
Honda is working on the strong intensive motivation toward the work through rewarding system and badges for employees of the month, also doing an annual convocation in order to reduce the number of employees turn over and build a strong organizational structure, on the other hand the managers maintain the utilization of work and attach them to the resources to develop the rhythm of the job. Employees are submitted to hard trainings to achieve the core values of the operations which are the most important aspects to reach the organizational goals. As for the management system Honda have a strong schema for the management to hire all the employees in the right place that fit with their abilities and assigned them to tasks according to their capability and power for doing the work whether it is individual tasks or in group tasks. As a result, the main goal for Honda organization is to gather all the employees to do the job in a followed tune.
Honda current strategy
Goals:
Market Domination: Honda’s current goal is to dominate the affordable vehicle’s market and apply the latest innovations to their vehicles.
Provide a unique after sale service: Through the customer service agents, Supply the market with the vehicle’s spare parts needed for repairs and add vehicle repair shops specialized in repairing the Honda vehicles.
Value proposition:
Affordable prices: Honda’s value proposition is to provide its customers with the best products with the cheapest prices.
After sale services: It is represented in the services in which Honda does provide for its customers after they purchase their vehicles, like free oil change and tires replacement for One year after the duration of purchase.
Ecological products: Provide ecofriendly vehicles, Like the hybrid electric vehicles. which meets the demands of its customers in North America and Europe.
Latest technology: Honda tends to innovate and create the latest technologies and apply it to their vehicles.
Core activities:
Services:
Honda offers after sale services for their customers by giving promotions and free services (Ex: free oil change, engine service, tire change, brakes and maintenance) to reach the best level of customer satisfaction.
Resources and capabilities:
Honda produce motorcycles and automobiles as it’s not a single market focus and that’s due to its expertise in development and manufacture of engines.
Honda’s current resources mainly concerns in (Human resources, tangible resources and intangible resources)
Honda’s current capabilities concerned in (Corporate functions, information management, research and development, operations, design, marketing, sales and distribution and service).
-Values:
Honda respects the three joys of (Selling, creating and buying), also Honda set The Individual concept of fairness and equality in every Honda operation around the world. A diversity of ideas and talent is the purpose of what makes Honda great.
Product market focus:
Customers: Honda’s main customers are the people who are willing to buy cars with relatively low prices
Products: Honda tends to manufacture several types of vehicles like the sports cars, Family cars and Hybrid electric vehicles which means that they have a wide variety of products.
Markets: Honda mainly tends to localize not globalize, they aim to take the lead of the North American market. By manufacturing the vehicles which meets demand of the local people in North America.
Channels: Honda tends to reach its customers through online ordering, and retailer where they are the ones responsible for the distribution.
Diamond-E framework
Resources
Human resources
Honda is hiring sufficient and skilled employees like accountants and marketers for business activities and high level of engineers for manufacturing activities. Honda also providing training, experience, adaptability, and loyalty for employees.
Tangible resources
Financial resources: starting with a big capital for business and manufacturing process, after that the generation of internal funds.
Physical resources: Honda is a source of materials and assets for itself and a supplier at the same time, for example: providing tar materials, iron and non-iron metals, steel plates, liquid aluminum, consumable supplies, and hardware equipment parts for its final products. Honda use recycling of useful old equipment and material resources like aluminum, iron and resin that can be used from scraped cars.
Intangible resources:
providing intangible technologies like patents, copyrights, and research and development facilities.
Providing a good reputation like customer loyalty and reputation
[image: Supplying raw materials, Manufacturing, Sales, Recycling][footnoteRef:3] [3: Honda. (2019). Our Business. Retrieved March 20, 2019, from http://americas.hondatrading.com/en/business/index.html?fbclid=IwAR3vhcsW6Kn-kXQI59A_Ry7HmsAFGrngAODyWzpLjPqXUsOOxbkAECn3PKM]
Capabilities
Corporate functions
International management for instance: in North America like U. S and Canada, in Europe, and Middle East…. Etc.
Strategic innovation: there are strategies for doing developments and technologies.
Management development: developing the management options with the changing that happens in markets.
Financial control.
Information management: Using good IT employees to collect economic, technological and financial information from markets.
Research and development of Fast cycle new products and research every year.
Operations
Operating efficiency: the company focus on how to measure management ability to generate sales (revenue) and costs (expenses).
Continuous improvement of products every year.
Flexibility and speed of response with the changes that happens inside and outside Honda.
Design
New styles every year.
New tangible and intangible technology every year.
New safety functions of products for example cars and other labor machines.
Marketing
Honda brand management.
Building a reputation for Honda quality.
Sales and distribution
Effective sales promotions and execution.
Speed of distribution.
Efficient, fast order processing.
Service: Providing customer services like resolve any issues or concerns for customers, present a solution for the customer, understand all the customer needs.
Competitive advantage
Honda localize don’t globalize: Honda not a very top, or a very down company, it provides customers with products and designs based on local conditions and consumer behavior to achieve the goals of providing all types of products to all types of customers.
Robots: Honda is using robots for employment in dangerous areas because it is a way to maintain productivity and reduce costs.
Engineers: Honda employee’s priority is for engineers, even the company CEOs are professional engineers. That because they have large knowledge about manufacturing and designing, and the technical products that the company sell and managing the supply chain. They more know about research and development imagination activities.
Factory flexibility: Honda can produce multiple autos on a single production line, one after another in a short time. By contrast, it can take months for Honda’s competitors revise a factory for a new vehicle.
Fuel efficiency: Honda is a leader in helping the customers to save their money against the high price of gas energy. [footnoteRef:4] [4: Rothfeder, J. (2014, July 29). 5 Brilliant Strategies That Make Honda One Of The World’s Most Innovative Companies. Retrieved March 20, 2019, from https://www.businessinsider.com/strategies-that-make-honda-innovative-2014-7?fbclid=IwAR0P9I4AYNnafd-vtgyGaJ6PpEbSFFtwQAf8D4unuY3LGR4Td8G-mxmqGUU]
SWOT Analysis
Strengths
Weaknesses
Localize don’t globalize
Fuel efficiency
Robots Employment
Hiring efficient professional engineers
Factory flexibility in changing lines of production
Strong brand awareness
After sales services
Pricing options
Dependence on North America to generate most of the revenue as we mentioned in the analysis 56% of the total revenue
Hondas’ R&D is assessed to be relatively low compared to its competitors
Opportunities
Threats
Honda has a great opportunity to expand and compete in the rest of the world as they compete in North America.
Honda has to give attention to the B2G business. And start supplying governments with civil protection cars like, [ Police cars, Ambulance cars and firefighting cars]
The demand on the automobiles is highly increasing.
Competition among existing competitors.
Threat of substitutes, like public transports.
As fuel prices are relatively high, this caused a threat and decreased the demand of customer’s to buy new vehicles.
[bookmark: _Toc36383668][bookmark: _Toc16449]The purpose of this report is to build a marketing strategy plan for Honda, for their upcoming motorcycle model CBR1000RR-R Fire blade. So, it can enter those target segments in which Honda can create Superior customer value and gain a competitive advantage over rivals.
1.1 Company Background
Honda Motors ltd , is a Japanese base company, established by Soichiro Honda in 1946, first started by producing combustion engines (Miller, 2008) then began manufacturing motorcycles with complete engine design in 1949, with the name of dreams by 1964 it becomes the biggest selling luxury motorcycle in the globe (Grant, 2003). The rapid growth of the company gives a benefit to competing with the other companies. There are some crucial values that hold the company through mission, vision, and also the Honda concept. In 1982 Honda founded its first US. Subsidiary by the name of American Honda company who also manufacture motorcycle. Honda has 368 subsidiaries by the end of 2018. By 2019 its production of motorcycles reaches up to 400 million. The overall motorcycle industry is estimated to increase by 9% per year from 2015 to 2020 for which a study has discovered that 75% of existing bike rider lovers would opt for luxury motorcycles that are more sophisticated (Global Motorcycle Infotainment System, 2016).
1.2 product offering
The Honda company mainly manufactures motorcycles and cars, but also further expands their products offering worldwide such as scooters, power equipment, engines, ATVs, and Gardening equipment. Honda has been engaged in artificial intelligence, such as robot study, and launched their ASIM robot in 2000. As there are other companies such as Toyota, Mercedes Benz, and Nissan, offering similar products in the identified target market. So, Honda motors develop the diversification products of Honda financial facilities. Now by 2020 Honda once again differentiated itself by launching the new sporty motorcycle model ‘’Honda Fireblade’’ CBR1000RR-R and creating a new history of the born-to race. Honda invests 5% of its profit in R&D (Honda,n.d.).
2.0 Segmentation, Targeting, and positioning (STP)
The STP model is used to describe the target market suggested for Honda. So, in this case, Honda must carefully design their customer-driven marketing strategies that can help to develop a competitive advantage over competitors (Kotler, 2016).
2.1 Segmentation
Market segmentation is the process of identifying, evaluating, and choosing identical groups of individuals, regardless of whether they are buyers or not, with the intention of creating and implementing competitive strategies towards them ( Sarabia, 1996) customer attributes within each segment are distinct from those shared by other segments ( Recklies, 2018). As there is no one way of segmenting a market so marketers need to use various segmentation factors such as geography, demographics, psychographics, and behavior (FURSE, D.H. & GREENBERG, B.A., 1975)
Honda is offering one product type, to the market that its targets. For that cause, Honda uses more advanced methods that help in segmenting. First is grouping techniques are intended at clustering groups of buyers that are identical to their segmenting range into the same segments. Honda motors implement this method in every part of the world to measure demographic attributes which is one of the most repeatably used types of market segmentation (Beane, & Ennis, 1987).
For the “CBR1000RR-R Fireblade” model Honda can emphasize on factors such as income, wealth, and age. Firstly, income and wealth are factors that should be intimately observed because they will give the perception of the buying power of buyers.
The “CBR1000RR-R Fireblade” some consumers might find it expensive and those who have low discretionary salaries cannot buy it. Hence, it would be recommended for Honda to target medium to high-income buyers. Secondly, as product usage requires a certain age limit it’s the main key in promoting the products more so for this model.
For example, the sporty outlook of the CBR1000RR-R “Fireblade” motorcycle more probably appeals to the younger consumer the millennial in the age group of 20-30. Another method of dividing the target market is geographical, this is one of the most fundamental types of segmentation. It segments the target market based on region, population, or climate. A factor of geographic segmentation involves the region of the buyers.
This could play a crucial role in the victory of Honda“CBR1000RR-R Fireblade” as the survey has shown the ownership of motorcycles is more general in Asia and Europe, while it is uncommon in the Middle East and Africa (Poushter, 2018) The segmentation can also happen according to weather that various countries have. For example, in a few countries, there is excess rainfall, which makes the roads, slide and makes the traveling risk for motorcycles. Hence the possibility that the individual goes for motorcycles over the car is low. Even though Honda has created numerous safety characteristic that exists because of its electric system that assures safety, however of the climate affects the state of the roads.
2.2 Identification of target market & reasoning
Target marketing is the process of accessing all market segments and selecting the segment that is most profitable and appealing to the company to enter with their specific products or service (Law, 2016). Based on the above analyses, the most appealing target market would be the demographic segment. Demographic segmentation is one of the simplest methods to arrange people into groups and also it can be measured more exactly compared to other segmentation variables (Schiffman, & Wisenblit, 2014).
The First reason behind choosing the demographics is that is not difficult to identify the target market segment as it can be known in terms of buyers’ age, income, gender, social class and religion (Schiffman, & Wisenblit, 2014). Honda aims to target eco-friendly middle-high income gainers who are youth.
The Second, justification for choosing the demographic segment is because it is a considerable segment. The demographic segment is significant in size to uphold the resources to be an effective target. For instance, in Malaysia, there are a total of 14.8 million enrolled vehicles in the year 2005 lots of them are motorcycles (Hays, 2015).
The third reason for selecting a demographic segment is that it is persistent and growing. For instance, the motorcycle industry is anticipated to increase by 9% per year from 2015 to 2020 (Global Motorcycle Infotainment System, 2016). However, in China, research supported by National geographic in 2009, demonstrated that consumer interest is growing to be environmentally friendly in comparison to the past years ( Kan, 2010). Based on the information that the demographic segment is consistent and growing, this will assist the marketers of Honda to prevent any uncertain market trends and have cause to anticipate the demand for motorcycles.
The last justification for choosing the demographic segment is because it is appropriate to the company objectives and resources. For instance, Honda is targeting medium to high-income buyers as the company is manufacturing lavish motorcycle models which are high-priced. A company should select a market segment that matches the Firms long-term objective (Plengdut, 2017).
In a nutshell, Honda has a market segment that is acknowledged, considerable, consistent, increasing, reachable, and appropriate to its resources and goals.
2.3 Positioning
Positioning is the process of arranging the company offering to take a clear and different place in the target market,s mind ( Kotler, 2000).
Honda positioning map
High price
Honda
High-quality low quality
Low price
Fig 1 Diagram of Honda positioning (Hamza, Rana,2019)
Honda kept the global viewpoint in positioning itself. As the company believes in supplying quality offerings, so Honda can charge a reasonable price for its Worldwide customer satisfaction. (Global Honda,2010).
In a nutshell, there are many benefits of STP, Firstly of all, it helps the companies to obtain an excellent understanding of the customers’ needs and wants as well as a competitor, and tailored their marketing programs according to it (Camerilli, 2016).On the other side, it has drawback also if there is extra segments it will not lead to excellent financial performance and homogeneity also be exceeded(Hunt,&Arnett, 2004).
3.0 Marketing Mix
3.1 Product
Motorcycles are often seen, as exposing riders to a greater amount of danger and a higher possibility of injuries or even died in relation to driving a car (Huber, 2017). Even an elevated death number is not sufficient to dissuade people from purchasing a motorcycle. While keeping in mind these numbers, Honda Motors has taken measures in ensuring less danger of accidents and death when customers ride motorcycles. Every “CBR1000RR-R Fireblade motorcycle model comes equipped with safety features such as an Anti-lock braking system (ABS), and mechanical stability control (MSC) system. A secure motorcycle does not mean that it functions slow, as Honda always put a performance on the top. Even when manufacturing and designing “CBR1000RR-R Fireblade” motorcycles. Honda is offering this model in two electronic variants as “CBR1000RR-R Fireblade and another is” CBR1000RR-R Fireblade SP. Both will be accessible in two color designs HRC- motivated Grand Prix red and Matte pearl black. It is developed with the most powerful embedded four-cylinder engine that Honda has ever developed. Honda uses the same bore and stroke as it for “RC213V-S. This “CBR1000RR-R Fireblade” provides the full power of 160KW at 14500rpm, a high torque of 113Nm at 12500pm(Honda,2019).
3.2 price
The “CBR1000RR-R Fireblade”will cost between Rm 91,999, and Rm 114,999 in Malaysia for instance, but it’s different from country to country. The company uses the premier positioning against its rivals. At this price level, Honda thinks that its products are worthy to charge higher than its competitors as it uses the best features the industry has to cater at a reasonable price for this category of motorcycle and can simply match and outperform its rivals. The Company also firmly believes that because of its unique attributes it will be the best seller in the industry (Honda Global, 2019).
3.4 place
Honda Motors intends to have its own service centers, in every capital of each country across the world, in order to reach its customers. Where they market their products and customers can come and familiarize themselves in the environment of Honda Motors, by testing the bikes rides before buying. The staff has been highly trained to provide a high standard of work that generates quality products. Honda motors have distributed plants internationally that best helps to work with the retailer’s indirect distribution channels to sell their products that’s how Honda decreases cost and saving can be passed on to its customers ( Honda,n.d.).
3.5 Promotion
Honda Motors advertise “CBR1000RR-R Fireblade” as broadly as possible, Honda can hold events locally to advertise the “CBR1000RR-R Fireblade”in either their service centers or main shopping malls. Honda can also advertise this new model by having displays in few hit movies as hero vehicles of the said movie. Honda should advertise this bike model in sports events by supporting some sporting teams. Honda should promote this in lifestyle magazines as well as newspapers with the intention to sell this product to customers in their 20s,30s and 40s who have the desire for motorbikes along with sufficient income. Honda motors use a utilitarian method for advertisement, which is obtained by giving customers the chance to for a test ride their products and then make their mind on purchasing based on the happiness the products brings to them (Darmadi,2014).
4.0 branding
Honda adopts a brand positioning strategy over the years to establish strong brand equity. Honda has successfully positioned their brand in the mind of the target customers at three levels as at lowest level, Honda place the brand on product qualities by providing most powerful engines and unique safety features in both motorbikes and cars. But attributes alone are not enough for customers they want more in terms of product benefits. So, Honda goes beyond the characteristics and come up with an eco-friendly and low-emission system in its products. As Honda is one of the strong brands so it will not stop until the benefit positioning. Honda also position itself at an emotional level by connecting customers on powerful belief and values the brand holds such as using the concept of “power of dreams “those dreams go on as Honda brings them to life and move the community forward (Honda official portal,2012).
5.0 Marketing Audit
Today, companies such as Honda in this case realize the significance of marketing audits, which allow them to evaluate the external and internal environment and also enable them to plan appropriate marketing strategies to consider these environments (Chirilă & Funar 2010).
5.1 External environment analysis
5.2 Swot
By looking at Swot analysis of Honda we are analyzing the internal factors such as strengths and weaknesses as well as external factors like a threat and opportunities it faces in the market environment.
Strength
Honda is one of the leading producers of motorcycles and automobiles in the globe, furthermore, the company has earned recognition for being consistent in building competencies in design and production over its rival product offering, which help Honda to be steady in its sales over the past year (Honda annual report,2010).
Weakness
Although a broad geographical presence, Honda is heavily relying on a single area which may hamper the company’s sale in a situation of economic downfall. Secondly, it’s harder for Honda to keep their cost low on non-luxury products compared to other manufacturers models (Honda, 2012).
Opportunities
As Honda recorded a huge sale all over the world so it intends to grow its production volume as it expects increasing demands for its products in the developing markets of South America and Latin America. In the coming future Honda is planning to set up plants in Canada and US and also further committed to developing a sophisticated production system by lowering its environmental footprint (Honda annual report, 2010).
Threat
There are many factors that have a negative effect on Honda’s operations such as when there is an economic downfall the fuel price automatically increases which may cause loss of customers for Honda. Secondly, Honda is facing threats from the breach of environmental regulations (Honda annual report, 2019).
5.3 Competitors Analysis
Honda faces strong competition in the automobile and motorcycle industry, from the top domestic player like Toyota, Nissan Motors, and Suzuki. The other rivals include Hyundai motors US-based Ford as we Europe BMW, Fiat, and Volkswagen. Although Toyota is the main rival of Honda that holds the world automotive industry market share of 10.24% against Honda who is only able to capture 5.46% (Statistics, 2019) Another basic rival is Nissan motors a Japan-based holds market share of 5.15%.
6.0 Conclusion
Overall Honda Motors should provide more innovative products to decrease human problems in their life. Life without Honda, has no meaning, stay with Honda dreamers comes real.
THOENI, A.T., MARSHALL, G.W. and CAMPBELL, S.M., 2016. A resource-advantage theory typology of strategic segmentation. European Journal of Marketing, 50(12), pp. 2192-2215.
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GÂDĂU, L., 2017. Marketing Audit and Its Importance in Achievement of Marketing Objectives of a Company. Journal of Advanced Research in Management, 8(1), pp. 38-43.
Honda Motor Company: 2010 company profile edition 2: Chapter 6 SWOT analysis. 2010. Bromsgrove: Aroq Limited.
Honda Motor Company Ltd. is a Japanese multinational corporation that was established in 1948 by Soichiro Honda, who oversaw the expansion of manufacturing motorized bicycles, motorcycles and multinational automobiles. Honda was the first Japanese automaker to create and build engines and transmissions in the U.S. as well as the first to export U.S.-built cars to overseas markets in 1987. Even though Honda operates in 150 countries, the Honda headquarters is in Minato, Tokyo, Japan. Honda currently employs 215,638 people globally, 27,000 of those are in employed in the U.S. Honda currently operates 12 State-of-the-art U.S. Manufacturing plants and 14 Research and Development facilities across the US under the President of Honda R&D Americas, Inc: Frank Paluch. Honda also operates 27 global R&D centers throughout the world including the countries of, Japan, China, Asia, Europe & South America. When it comes to customer satisfaction, Honda has ruled the Fobes List many years over, currently ranking #28: World’s most valuable brands, #36: Top regarded company 2019, #31 in Sales, #100 in Profit. Honda is a family household name when it comes to reliable vehicles worldwide, they had about 5.3 million automobile sales in the 2019 fiscal year. Our case article highlights the beginning of Honda and Japans investments in the U.S. automobile industries from interviews of Mr. Obisan, who worked for Honda (starting in1962) and published the book “Two Decades” focusing on the process of Keiretsu, suppliers and Hondas comprehensive approach to the Honda slogan “The Power of Dreams”.
What is Honda’s problem, and how do they want to mediate it? Honda’s problem began with wanting to expand its brand around the world. However, in doing so it would require domestic suppliers in the regions they set up shop. Honda’s policy and commitment to long term relationships criticized as being ‘too loyal,’ and Honda will go to ‘ridiculous lengths’ to maintain a supplier relationship before severing ties. Honda considered the following: quality, cost, and delivery criteria are the most important criteria to maintain supplier. They are always looking for better suppliers who can produce parts locally — looking to supply change management for a single sourcing supplier or dual sourcing supplier to avoid delay of supplies. Also, ask questions like, ‘Do suppliers meet at least 1-2 times per year, where they present quality and cost reduction awards to suppliers?’. All the while, making a global supplier very efficient in research & development, equally competitive across multiple global locations, equally proficient in cost and quality.
Honda does build long-term relationship with its suppliers, but not use the form of institutional mechanism, for example family relationships and supplier association. In the purchasing activities, Honda intervenes directly in the activities carried out by its component makers. For a number of components Honda arranges the purchase of the raw materials two or three tiers back along the supply chain, which enable the suppliers gain advantage of price and quality, on the other hand, Honda often dispatched experts to support the suppliers and solve the problems relating with components delivery and quality. This kind of partnership assures continues supply of materials at a reasonable cost and involves the supplier to materials innovation and improvement which will facilitate the organization to produce products with variety. A striking point is the reconciliation with multiple and single resourcing strategy. For example, Honda purchases two different types of seats for one automobile model from supplier A and supplier B separately. This method enables Honda to gain the advantages of single supplier, (for example, deliveries can be scheduled easily, long-time partnership can be established), and multiple supplier, a flexibility of volume, the risk of a disrupted supply, better service and price. By using a Single-Sourcing method Honda is able to ensure that the contract lasts the life of the vehicle but there may not be enough capacity. Honda can also use a Dual-Sourcing method when a delivery problem arises and although it is not the preferred method it is necessary to have to ensure that any delays are avoided. To ensure that problems are kept to a minimum with suppliers, it is recommended to have a meeting with them 1 to 2 times a year at minimum. By holding these meetings, the party’s involved will be able to communicate with each other and strengthen their business relationship.
How does Mr. Honda’s history with suppliers relate to Honda’s current supply management strategy?
The current supply management strategy reflects Honda’s long-term goal of manufacturing products where they sold, and its corollary goal of buying parts where it manufactured vehicles (MacDuffie).
Increased local content is mainly due to purchases Honda makes from many of the over Japanese automobile supplier firms that established during the second part of the 1980s.
Focusing on four regional markets – has allowed Honda to develop strong sales, research and development, and manufacturing operations in each region – to ensure that the product mix in each region is appropriate to the needs of the region. Using the United States market as an example, “Honda’s commitment to global trade and the positive benefits that result for U.S. jobs, suppliers, consumers and exports.”
Developed a comprehensive approach to teaching the principles of lean production suppliers.
Uses the Japanese Concept Of Keiretsu The Article states, “Mr. Obi provided the viewers with a book that was recently published by the Japanese Automobile Manufacturers Association (JAMA) called “ Two Decades…”” Which involves a close-knit network of commitment to localize production, vendors that continuously learn, improve, and prosper along with their parent companies. If cost negotiations stagnate, Honda, send in its engineers to help the supplier find a way to meet the cost target while maintaining acceptable profit margins.
Suppliers are involved in the development process to the extent that asked and invited to submit suggestions about how specific designs could be made better, faster, with less weight, or less expensively. Today, purchasing by the Honda research and development department. Negotiation and purchasing are key elements in ensuring the lowest price and quality. However, communication with supplier can make cost lower along with shorter production time.
1. Why is purchasing so important at Honda?
The International Purchasing Division of Honda Corporation has full responsibility for coordination between Honda and its overseas plants. Honda’s purchasing department carries out the localization strategy.
This Strategy Involves
Finding and qualifying local suppliers
Developing a second source when volume doubles, or when quality or on-time delivery problems occur
In situations in which the goals or the philosophies of the Honda and the supplier are mismatched, Honda will respect its contract to do business with the supplier.
Providing feedback to suppliers regularly to help them to understand, control, and to improve their performance in terms of component deliveries to Honda.
Financial condition and cost structure involve relationships that link banks, manufacturers, suppliers, and distributors with the Japanese government.
Purchasing Operations procure the parts used, conduct quality and cost management, and are also involved in promoting the development of new technologies.
Along with Q (quality), C (cost), D (delivery), and D (development), Purchasing has added M (management) and E (the environment) to supplier evaluations and are advancing the procurement of parts that consider the environment.6) Purchasing results in lower cost, higher quality, and more reliable sources of supply.
3. How does purchasing rank in the corporate structure at Honda?
Purchasing ranks highly in the corporate structure at Honda. It is in charge of local purchasing which decides the local suppliers as well as the global sources. It also has the option of adding a second source of supply. The adding of a second source is done in case of delivery problems occur. For example, orders are based on forecasting. A dual source may involve a local Japanese supplier and an overseas supplier manufacturing the same part. This is done to avoid supply shortage problems as well as the delivery problems. Having strong relationships with local and global suppliers is key to bringing a product together. Honda is very critical when choosing the right suppliers and also having great communication between them. Honda and its suppliers meet twice and year. These discussion’s majorly focusses on opportunities for commodity and standardization, co-ordination with marketing’s export strategy, new product planning, cost management, and technology transfer issues within the supply base. Having this in place ensures that every entity in the supply chain is in the know which creates strong partnerships amongst the organizations involved.
4. How is Honda organized globally? How does this help/hinder the purchasing function at Honda?
Honda Organized Globally
Leading automotive exporter
Localization of production
Sensitive to international requirements
Taking advantages / creating opportunities with Government intervention
Partnership with competitors (sharing of product & process engineering)
Maintaining relationships with suppliers
Virtually live in suppliers’ facilities
Help/hinder the purchasing function at Honda
Create buying & selling power
Neutralizing the effect of currency rate
Legalized contract & strategy through Market Oriented Strategies agreement (MOSS)
Get to share same suppliers from the competitors
Assurance of quality & services
5. What are the key elements of Honda’s supplier evaluation policy? How does it differ from others (e.g. the Big Three)?
Honda handles responsiveness & involvement of suppliers at early stage of product development. Whereas other companies maintain partnerships to control the entire supply chain.
The supplier evaluation is handled by Honda R&D while other companies evaluate if they should continue to assemble their own products or if they can outsource production entirely.
Honda recognizes supplier’s existing customers and the product supplied. Many other companies reduced their number of suppliers and/or chose specific suppliers to stay in long-term contracts with.
In order to commit to top excellence, Honda visits their top & low tier suppliers/vendors while other companies encourage their top-tier vendors to manage their lower tiers.
Efficient in R&D
Equally competitive at any-and-all global locations
Honda is always equally proficient in cost & quality the produce at all the plants, whereas other companies drive for the immediate benefits of low wage costs, therefore outweighing the long-term benefits of investing in quality and relationships.
6. What is Honda’s policy on new product development and supplier involvement? How does it differ from other automotive companies?
In 1986, MOSS- Market Oriented Strategies agreement was initiated and created for the Japanese and American governments, which required companies to report and of their import and localization volumes within that year 1986.
In 1995 PAC (the re-assigned Pacific Automotive Cooperative) This new policy and joint venture which included Japanese Automakers and 32 shareholders to meet political objections and production for North America, thus attempting to collaborate in industrial cooperation to help Canadian Suppliers become involved and competitive.
How does it differ from other automotive companies?
Hondas quality designs follow what consumers want, all while Honda keeps and maintains their own new quality designs.
Honda saves consumption energy but improves in high quality performance, unlike other competitors. Low consumption energy is a very valuable advantage over other competitors.
Honda created a unique feature that required “new tooling, etc.” for the Honda Civic in Europe, with European components they were able to create and constitute a “European-made car”. Seeing that the components were made from European components, European countries accepted this car more readily. Unlike one of Hondas competitors, Nissan who was in the UK and had lower domestic content.
Honda created a body assembly plant which composed of welding robot technology at a Rover plant in Europe. This was the first ever plat in Europe that was essentially a replication of the Japanese line.
7. Does Honda support local sourcing from domestic suppliers? What are the advantages / disadvantages of this approach?
Yes, Honda does support local sourcing from domestic suppliers.
The advantages are as follows:
Kaizen is easy to implement in domestic suppliers due to the locality and the fact that it will eliminate many unnecessary costs.
Domestic suppliers better understand customer culture and market trends
“Think global, act local”
The disadvantages are as follows
Not all domestic suppliers may be able to provide the specific raw material necessary
Not every country has the same taste as others.
Domestic suppliers may only supply to domestic markets
Differing designs between domestic and global may be an issue
8. Honda’s policy and commit to long-term relationships has been criticized as being “too loyal”, and Honda will go to “ridiculous lengths” to maintain a supplier relationship before severing ties. What do you think about these criticisms?
Although Honda’s policy has faced criticism, I do not see there being an issue in them having a long-term relationship with their supplier. Their profits do not seem to be affected nor do their levels of production. Criticism will always come from anybody who does not see eye-to-eye and does not always prompt change. Honda is always looking for a supplier who can produce parts locally. On top of that, the most important criteria that Honda looks for when picking a supplier is one that can meet their levels of quality, cost, and delivery.
9. The “keiretsu” system in Japan has been described as having advantages and disadvantages. Does Honda have a keiretsu (answer: no, not really)? What are advantages of a keiretsu? Discuss the case of Nissan: their keiretsu is breaking up under ownership by France’s Renault. What do you think this means for Japanese buyer-supplier relationships in the automotive industry?
Advantages of Keiretsu:
The mutual stockholding among the group members improves their stability
Honda company produces products of high quality, at reasonable cost worldwide for the satisfaction of the customers. It is the third largest automobile company in the world. Now it has also introduced products for agricultural, industrial and domestic purpose. Soichiro Honda and his partner Takeo Fujisawa are the founders of this company. Both of them formed the company in 1948 with combined efforts, Fujisawa provided financial, marketing strategies, assets and capital for the establishment of the company. Honda has spread from Japan to various parts of the world, in USA it was established in 1959. ((N.A.), (N.D.), Honda Motor Company Ltd, Paras. 1,2)1. In 1969, it was founded in Canada. Then in 1986 Alliston plant was established in Ontario. In 1994, Canada exported products to north America, Brazil, in 1997 to China and 1999 to Japan. Then in 2010, its new head office was established in Markham, Ontario. (William, E., 2016, November 3, Paras. 2-5)2.
Products Manufactured
Honda company is a manufacturer and supplier of various products like automobiles, diesel engines, battery-operated vehicles, robotics to make work of people easier. It also produces machines for disabled to move from one place to another, generators, snowblowers, lawn movers. Power products like water pumps, grass cutters sprayers, pressure washers. ((N.A.), (N.D.), Honda Motors Co Ltd., Para. 5)3.
Sourcing, Manufacturing facilities and Distribution:
Honda company presently is sourcing from many suppliers for raw material which are located in Canada, USA, Japan. These suppliers provide raw materials to manufacturing plants located in Ontario, Canada. Second is in Greensburg, USA. The third plant is in Marryville, Ohio and east Liberty, USA. These manufacturing plants are sourcing from different suppliers of different countries. Manufacturing facilities provided to employees are flexible and focus on the future. Honda company manufactures products based on concept of green factory. With the establishment of manufacturing plants, this company has introduced innovations with more efficiency, less time consumption and less cost effectiveness. Recycling of material to obtain aluminium for the production of a 4-cylinder engine in 2008 made manufacturing easy. (Essays UK, 2015, June 22, Para. 4)4.
The manufacturing process includes various steps to produce final finished products for sale. Then vehicle quality shipped to dealer. Distribution of manufactured product means how it is introduced for sale in the market. Automobiles are distributed from wholesalers and then to retail distributors which are finally supplied to customers.
Flowchart:
Operation Strategy:
Honda’s operation strategy is related to corporate and business strategy. The main mission is to produce good quality products at a reasonable price. Its strategy includes goals, objectives, vision, mission of the company. It has helped this company to spread globally with the establishment of manufacturing plants. The main aim of Honda relates to creation of new ideas, and innovations with hardwork and determination. For operational success focus is made on the cost, quality, speed. For example, Research and development department ensures good quality by testing, analysis, evaluation of equipment and machinery. All practices are ensured that they are performed efficiently. Raw materials are evaluated, to be available as per requirement in abundance. Use of raw material is analysed, for efficient production. Collaborative teamwork is examined to be effective, to attain success at the international level. Honda is one company that focuses on environment. For example, it is the first company to produce fuel less cars to prevent air pollution, thereby increasing the efficiency of fuel, the performance of car. Innovations like robots, machined for disabled, have helped people to move form one place to another by making their work easier. (Essays UK, 2015, June 22, Paras. 8,10,11)5.
Supply Chain Strategic design:
Supply chain strategy means making plans with objectives for designing, management processes, so as to reach business goals. These strategies are followed with accuracy like operational strategy which includes design, quality distribution and transportation of manufactured products to warehouse. Honda company is following supply chain strategy for distribution, sourcing. All work is divided among different departments and supervised for productivity. Better communication among workforce, and departments provide competitive place in marketplace. Its process includes Plan- plans are made to manufacture products according to demands in society, to accomplish requirements of customers. Suppliers- suppliers are contacted, selected to obtain raw material in bulk, with low cost expenditures. Manufacturer- products are manufactured in factories according to designs proposed in plans. Modifications, additions are brought about as per demands. Warehousing- manufactured products are stored in huge quantity in Toronto. These products are preserved and kept secure for delivery. Distribution- dealers/wholesalers obtain manufactured products from factories by road, rail or air transportation to sell to customers. Just in time delivery assures confidence, trust of customers, increasing efficiency of company. Buying policy- for example, Honda company introduced pre-owned program for products that considers only those products which pass through 182-point inspection. Warranty is offered for every product depending on its function. Customer satisfaction- Honda dealers are concerned not only with distribution, but also satisfy customers with long term relationships, so as to develop marked position in marketplace. (Alnasser, A.M., 2013, December, Paras. 9-14)6.
Product design:
Product- One of the most used product manufactured by Honda is snow blowers. First it was introduced in 1981 to make life of the people easy. It was of three types which were single stage, dual stage and the hybrid stage snow blowers. Single stage snowblower is compact, easy to operate and lightweight. It is basically used for the homes purpose. Dual stage snowblower is preferred for large areas with heavy snow. Hybrid snowblowers have better snow cleaning capacity. Design- It is easy to use. The controls are accessible with ease have 4 stroke engine which makes process quick and easy. Dual snowblowers has low temperature rubber tracks and gripping cleats, it can clear snow in steps, sidewalk, steep inclines. Single lever is used for ground speed without affecting rotation speed. Height and direction of snowblower discharge is with joystick control. It has electric starter of 120-volt ac. Some models have 12-volt dc electric starter. It has long lasting durable design to tackle cold and has 36 months warranty. ((N.A.), (N.D.), Honda Snowblowers, Para. 1-5)7.
Honda Civic sedan is famous most commonly used automobile having following features, Exterior- it has standard led daytime lights and led headlights. There are 17 inches aluminium alloy wheels. Fog lights to have visibility in fog are present. One touch power moon roof with tilting feature is present. Interior- heated front and back seats are available for winters. Leather covered steering with audio, cruise controls is present. 8-way power drivers seat and four-way power passenger seat is available. And for automatic control of climate dual zone is present. Technology- forward collision warning system, helps to detect vehicles in front by audible, visual alerts. Lane departure warning system, monitors lane position by visual alerts. Adaptive cruise control system and low speed follow, is designed to keep speed constant. Honda satellite linked navigation system, gives direction and detect speed limit. Rear view camera helps to look back while reversing. It has two earth dream 4-cylinder engines. ((N.A.), (N.D.), 2018, Honda Civic Sedan, Features)8.
Sourcing strategy:
Raw Material Sourcing- Raw material required by company is iron for steel to make body, roof, panel of various manufactured products, aluminium is used for light weight wheels. The glass, rubber for the tires, belts, plastic (obtained from petroleum products) for door handles, dashboards which are highly durable. These are supplied by suppliers to manufacturing Honda company for production of various appliances, products. (Maverick, B.J., 2017, December 11, Paras1-7)9.
Supplier, Customer Strategy- Honda has followed philosophy to be frank, have open communication and collaborative work with cooperation for suppliers. All these approaches have ensured their targets to be achievable. Negotiations have done many contributions, as said by Rick Mayo, purchasing manager at Marysville Honda plant. Cost modelling process constitutes determination of cost of various components by integrated process. They overcome problems, issues faced by suppliers by providing better resolution. Manufacturing plants are located close to suppliers for convenience. Strategy followed by Honda company organises various programs, activities related to development of suppliers and awards for them. To develop good supplier relationship, company devotes most of its time, money, investments for construction work of suppliers. For example, Honda applied BP process for Tower automotive, which is supplier of welded assembled parts, stamped parts. It helped this supplier for renovation, redesigning of its working cell for making assembled parts for automotive. Redesigning included all like front and back door, roof connecting to floor. This doubled production of about 63 to 125 parts per hour. As a result of establishment of fixed position, the wear and tear of welding gun from welding tips reduced and increased welds from 50,000 to 250,000. Communication with suppliers for productivity, quality of products and its delivery to customers, is made by open discussions. Expectations of suppliers have listened patiently and honestly. Company tries to sort out problems faced by suppliers related to quality, delivery, by organising timely meetings to give suggestions. This leads to less time and cost consumption. Long term commitments motivate suppliers to do work willingly, and appraisals from manufacturing companies encourages them and build strong relationships. ((N.A.), 1998, November 9, Automotive News, Paras. 4-23)10.
Logistic Functions:
From manufacturing plant products are produced with the help of raw material taken from the suppliers. Then these products with final finishing, are delivered to warehousing areas, by road transportation where these are stored, the packaging is done to deliver them to dealers or distributers by road or by air.
Midwest Express Inc is strong globally spread consolidation centre. It includes warehousing, consolidation/deconsolidation, export packaging and vendor services. Located in east liberty, Ohio it provides transportation facilities to Honda company in Indiana, Greensburg, Alabama. It supports 13 Honda products to assemble at a time covering 2,833,902 sq. feet area for warehousing. ((N.A.), (N.D.), Midwest Express, Inc., Paras. 2,3,8)11. Komyo logistics in America provides warehousing, distribution facilities, and consolidation packaging to Honda company. Transportation is done by road by fleet of trucks. ((N.A.), (N.D.), Warehousing Distribution, Paras. 1,2)12.
One more, Simcoe parts service Inc. is located in north of Toronto area, Alliston. It is member of group of Honda logistics. Transportation is done by road. They ensure accurate delivery of automotive parts at right time. ((N.A.), (N.D.), Simcoe Parts Service Inc., 2018, Paras. 1-5)13. Classic Honda in Canada is famous dealer for distribution of Honda products. ((N.A.), (N.D.), Classic Honda)14. Norm reeves Honda superstore in California is distributer of Honda products in USA. ((N.A.), (N.D.), Norm Reeves Honda)15. Carson Honda in Los Angeles is another Honda distributer in USA. ((N.A.), (N.D.), Carson Honda)16. Lindsay Honda is distributor of products in Midwest, Ohio in USA. ((N.A.), (N.D.), Lindsay Honda)17. From all these dealers customers easily purchase products manufactured by Honda company.
References
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