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Running head: SWOT Analysis Honda Motor Company
SWOT Analysis Honda Motor Company
Ivy Nimley
Davenport University
BUSN 520
Professor Shaps
March 22, 2015
1
Running head: SWOT Analysis Honda Motor Company
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Table of Content
Introduction and Overview………………………………………………………………..……….3
Strengths……………………………………………………..………………………………..…..3
Weaknesses………………………………………………………………………………………..6
Opportunities……………………………………………………………………….….……..…….7
Threats………………………………………………………………………………………..……8
External Factors Impacting Decisions………………………………………………………..……9
Recommendations for Changes in Leadership and Structure……………………………………10
Possible Future Scenarios…………………………………………………………………..……11
Conclusion…………………………………………………………….……………………….….12
Appendix……………………………………………………….………………………………….12
References……………………………………………………….………………………..……….14
Running head: SWOT Analysis Honda Motor Company
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Introduction and Overview
Honda motor company operates on four basic principles which influences its decisions
concerning its growth, these are “’Respect for the Individual’ and ‘The Three Joys’-expressed as
‘The Joy of Buying,’ ‘The Joy of Selling’ and ‘The Joy of Creating’” (Honda Worldwide, 2011).
Hondas belief has always been respecting uniqueness founded on their specific clients’
exceptional charms, whereas providing uninterrupted satisfaction through their merchandise.
Ever since its creation in 1948, Honda has remained faithful to these principles, this has made
them remain on top in the market. It is also credited to be top in the market because of its fresh
inventive equipment, merchandises of greater value at sensible rates, global buyer gratification,
and obligation to safeguard the environment and improvement of security in a peripatetic society.
Honda is just like any other corporation and it shares of in-house and exterior elements,
dictating its accomplishment and progress. Its strengths and opportunities favors the company
but there are the internal weakness and external threats from competitors that shadow the
company.in that case a SWOT analysis is mandatory to determine the weak points and strong
points for a better outcome.
Strength
To clearly portray the strengths of the company, one must one must classify the
company’s exceptional moments through its portfolio, accomplishment, and reputation. Its
portfolio is built on its diverse products and its global brand image. Honda’s brand is valued at
$17 million, it is also the company that makes the best automotive engines in the world. The
diversity of its products is another strength, it’s the largest producer of motorcycles, automobile
Running head: SWOT Analysis Honda Motor Company
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engines, garden equipment, scooters, generators, ATVs, solar cells, robotics and jets. This only
means that its main focus is not only on automotive vehicles but also other technological
advancements (Honda corporate, 2011). Another strength is form of organization, it has two
forms of organization divisional and decentralized. In the divisional form it makes sure that even
the lower management are given work according to their expertise, the decentralized form makes
sure groups units around products, customers or geographic regions, which is the essence of the
several factories that produce goods that are specific for different parts of the world (Bateman &
Snell, 2013). These forms of organization protect the company from any market or technological
disruptions because there are many fall back options. This means if one product goes down the
company does not collapse because there are other products, also if one store is not doing well
the others still support it (Honda Corporate, 2011).
Honda has had a very successful domination over other automotive companies, this
becomes an added strength, for instance its motorcycle dominates the Asian market giving it an
edge over any other company, this means that it can compete with any company for overall
shares and profits. The other strength is the fact that it has production plants and research centers
worldwide therefore they have the capability to improve their products as technology advances.
This means that they are ahead of others when it comes to modification of their products so that
they can compete with any new or more advanced products in the market. The involvement in
motorsport has also helped the company advance the performance of its engines. Honda is very
popular, this means that many people are familiar with its products and trust them which means
they recommend the product whenever they get a chance which is good for marketing. The
company has been around for a while therefore the products have reached every part of the world
due to efficient distribution, and continuous production. This could not be possible if the
Running head: SWOT Analysis Honda Motor Company
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products were not good or the customers were not satisfied, that therefore makes it a strength for
the company (Honda Worldwide, 2011).
Weakness
All companies has weaknesses, for Honda their main weakness is not being able to
dominate the truck industry compared to its competitors. This therefore means it has not fully
dominated the automotive industry. Hondas products are pricey yet they have been referred to as
“boring and bland”, this is really affecting their market especially among the youth who want
exiting, fancy, roomy, powerful, and exotic but cheap cars like what Nissan is now offering
(Honda Corporate, 2011). Recently Honda Motor Company has been suffering from bouts of
recalls which is affecting their reputation, the recalls has been from faulty parts and production
defects.
Another weak point is the lack of domination in the European market, this has led to a
significant lose in profits over the years, yet the company claims to be a global manufacturer
(Car Complaints, 2011). These issues are affecting the company globally leading to losses, there
has been a decline in its dominant markets like in Asia and North America. The other problem is
that people want cheaper cars and since the cost of raw materials is high it becomes hard for
Honda to provide that therefore its customers are now buying from companies that can provide
cheap products (Honda Corporate, 2011).
Opportunities
Honda has the opportunity to rise and dominate the market as it were before because of
the opening of a new market demand for environmental friendly, fuel efficient vehicles. This
means that people are looking for cars that are powered by hybrid systems of gas and electricity,
hydrogen or flexible fuel engines (Honda Engines, 2011).the other are is to get into the truck line
Running head: SWOT Analysis Honda Motor Company
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and produce a truck brand that can compete with other companies in the market. Lastly even in
the already existing brands there is always room for growth by making sure that they distribute
the products to markets that they have not fully exhausted like the European market. This means
producing new and existing products that fit the customers in those areas. They should also work
on inspecting and ensuring quality of the products being released to the market to avoid recalls
which reduces customer confidence in their products (Honda Corporate, 2011).
Threats
Every company faces threats for Honda it’s the recent increase in prices of raw materials
which raises the cost of production making the end product expensive, which is not particularly
attractive to customers. The increase and decrease of the currencies is becoming a problem
because the world market is becoming unpredictable. Honda is spending millions on research of
alternative sources of fuel, however recently the fuel prices have gone significantly low therefore
there is a threat their products will have no demand.
The other factor is that Hondas main market is in Asia and recently that part of the world
has been hit by one natural disaster after another therefore the company’s production plants are
under threat of destruction which could lead to major losses (Honda Worldwide, 2011). However
the biggest threat is from its competitors who are offering better and cheaper products making
customer shift, this is a major threat because to be on the same level they have to sell their
products at a loss which could be very bad for business (Honda Corporate, 2011).
External Factors Impacting Decisions
External factors affect a company’s growth and success both positive and negative. In
this case the negative external factors are affecting Hondas path to success and reaffirmation as a
global automotive power. The factors are the financial go-slow and antagonism in international
Running head: SWOT Analysis Honda Motor Company
7
automotive market, tightening emanation criteria, the spells of recall and escalating Yen against
US Dollar had lead a to abrupt reorganization of Honda’s front-runners and general business
methodology. The company is no longer driven by its principles of quality, uniqueness and joy
it’s now driven by survival. However they are trying to change this by changing management,
they recently replaced Takanobou with Takahiro Hachigo and also the other management has
been replaced with a much younger group of people all with the aim of giving the company a
new direction (Levin, 2015).
Recommendation for Change of Leadership and Structure
Honda motor company did not wait for a change of leadership to be recommended to
them instead they have listened to complains and decided to do a whole company shake up
where old employees chose to retire and give space to a younger breed, they even replaced the
CEO with a younger one. “In a release statement by soon to be former CEO of Honda, Ito
Takanobou, ‘Honda is ready to make a new leap forward. To do this, Honda needs to be led by a
new, younger team’” This approach is indeed a great example of strategic planning with “major
targets or end results that relate to the long-term survival, value, and growth of the organization”
(Bateman & Snell, 2013).
All this was done because of the public outcry that their products were boring and bland.
The new CEO is an expert in product design, procurement and operation hopefully his expertise
will help save the company (Levin, 2015). Hachigo will help attract more business from china
hence strengthening the Asian market. This is proof of the significance of international based
understanding that Honda is looking for as a remedy for its underprivileged worldwide
presentation in aforementioned years.
Possible Future Scenarios
Running head: SWOT Analysis Honda Motor Company
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The change in management will positively affect the company, hopefully they will
upgrade their products to make them more exiting and fancy especially in aesthetics. This is
evident since they have released the new Acura NSX which they discharged earlier because of
fuel cost, this will definitely excite young customers to make them gain trust in the company
again. The elected CEO has global experience from working in china therefore he will be able to
give ideas on how to capture the global market and capture opportunities that were taken for
granted. With China’s thriving populace, a substantial market share in motorbikes in the republic
will strengthen the corporation’s accomplishment and lessen many of the pressures the
corporation has had to deal with over the past several (Levin, 2015).
Conclusions
Honda motor company does not only focus on automotive it is a very diverse company that also
has its hands on manufacturing and technological fields. Its involvement in several areas ensures
that it remains relevant always, however with changing economic times there is no surety of
safety from losses and lack of sales. All we can do is wait and observe the new CEO will make
in the company to change its SWOT analysis in future.
Running head: SWOT Analysis Honda Motor Company
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Appendix
Internal
Factors
Valuable in Achieving Objectives
Detrimental to achieving Objectives
Strengths
Weakness
1. Diversified Product Portfolio
1. High End cost structure
2. Strong Brand Images
2. Boring and Bland Style
3. Largest Vehicle
3. Economic Down Fall
Manufacturer
4. Successful Motorsport
Program
4. Underpowered Vehicle
5. Lack of strong truck line
6. Recent Bout of Recalls
5. Powerful Research &
Development
6. Popular Company
7. Refined Production System
8. Innovation
9. Highly Experience
10. Well Known Reputation
11. Engines with high durability
12. HighCredibility
13. High Customer Satisfaction
External Opportunities
Threats
Running head: SWOT Analysis Honda Motor Company
Factors
10
1. Increasing Fuel Prices
1. Economic Slow Down
2. Positive Outlook for Global
2. Intense Competition
Motorcycle Industry
3. Growing Demand for
environmental friendly
vehicles
4. Growth through acquisitions
5. Offering of low emission
vehicles
3. Rising raw material prices
4. Natural disaster
5. Appreciation of Yen vs.
Depreciation of US Dollar
6. Decrease of fuel prices
Running head: SWOT Analysis Honda Motor Company
11
References
Bateman, T. S., & Snell, S. A. (2013). M: Management. New York, NY, USA: McGraw-Hill
Higher Education.
Levin Doron, (2015). Honda: This will be our year. Retrieved from
http://fortune.com/2015/01/15/honda-2015/
Honda Worldwide (2011). Philosophy Honda Worldwide : Honda Motor Co.,Ltd. Web.
Retrieved on Nov 13, 2015, from website http://world.honda.com/profile/philosophy/
Honda Corporate (2011). Historic Timeline Honda Corporate – Vision, Offices, Headquarters,
Corporate History. Web. Retrieved on July. 23 2011.
http://corporate.honda.com/america/timeline.aspx
Honda Corporate (2011). Vision, Offices, Headquarters, Corporate History. Web. Retrieved on
July 20, 2015, from website http://corporate.honda.com/
Car Complaints (2011). Car Problems, Car Complaints, & Repair/Recall Information. Retrieved
on July 23, 2015, from website http://www.carcomplaints.com/Honda/
Honda Engines (2011). Why Choose a Honda Engine?” Honda Engines – Small Engine Models,
Manuals, Parts, & Resources. Retrieved on July 20, 2015, from website
http://engines.honda.com/why/
…
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