Case Analysis

HONDA(A)

Initiation of Honda in motorcycle

segment

Japanese motorcycle industry was loosely defined by 247 participants most of which were
ill-equipped selling unreliable products.

In 1946 Honda motor company established the Honda Technical Research Institute to
focus on tech-focused innovations and strategies

In 1949 Honda introduced a lightweight 50cc, 2-stroke, D-type motorcycle and in 1951
Honda followed it up with a superior 4- stroke design.

Honda acquired a plant to become a fully integrated producer.

Honda Strategy
Japanese industry tends to minimize risk by investing in one winning design until it became
obsolete
Honda differentiated itself . Honda
offered a multiproduct line
took leadership in product innovation
exploited opportunities for economies of mass production by gearing designs to
production objectives.
It identified untapped market segment and designed product specifically for it.
Results:
The 50cc Honda was explosive success.
With a demand of just 3000 units per month Honda gambled and acquired a 30000 unit per
month manufacturing plant.

Honda Strategy(Entry in US Market)

Honda established a U.S. subsidiary, American Honda Motor Company, and developed the
market region by region.
Offered very small light weighted motorcycle in less than $250 retail

Advertising strategy appealed primarily to the middle class consumers with the tagline
you meet the nicest people on Honda.
Results:
Hondas US Sales rose from $500000 n 1960 to $77 million in 1965.
Achieved product advantage through:
Heavy emphasis on R&D and advanced manufacturing techniques which enabled it to
introduce new models at prices below competitors.

Interval between the conception and production of new products reduced to just 18
months.

Honda Strategy
Primary objective of Honda was to focus on sales volume and improve
market share position.

Honda invested heavily on sales and distribution and extensive dealer networks.

Honda improved product range in terms of comprehensiveness, features, and price which
easily attracted good dealers. Good dealers directly influence retail sales.

Premiums were very high for all the range of bikes which allowed for extra costs of duty,
freight, and packing in shipping bikes from Japan to US.

Focus was on long term profitability

SWOT Analysis
Strengths:
Advanced manufacturing techniques and
R&D, high production volume
diverse products and innovation capability
Extensive market research to tap untapped
markets
Huge sum spent for advertising and
promotions and building dealerships
Opportunity:
Can use its extensive research and
development techniques to optimize costs
Look for emerging markets
Extensive market research can be used to
gauge changing consumer behavior

Weakness:
Long term pay offs
High dependence on international
market

Threats:
Competitors with lower costs
Change in consumer tastes and
preferences towards other brands
People attraction towards premium
US brand

Way Forward

Should focus on other areas as well because competition may catch up to low cost in
future
Should expand operations to markets other than US and European markets
Should continue its current strategy of high production volume , improved productivity and
long term profitability
Should enter premium bike segment

Thank You