Honda Motor Company

Paper Summary:

This paper analyzes the Honda Motor company through a SWOT analysis, an acronym for "strengths, weaknesses, opportunities and threats." Each of these areas is explored and detailed. The author finds that Honda has many more strengths than weaknesses, which is partly based on the company's outlook. Honda's goal has been to make high efficiency cars at a low cost. The paper further details how Honda has gained advantage over its competitors. The paper also cites some of Honda's weaknesses. The writer also considers future opportunities for Honda and discusses threats to the company's long-term success. Despite these threats, the author considers Honda one of the most lucrative and best managed companies in the world.

From the Paper:

"While Honda has much strength to their name, they also suffer from some major weaknesses. The primary weakness of Honda is oftentimes one of their major strengths as well. By sticking to their guns as the technology innovator within their industry, Honda divests much of its resources in exploring new methods to enhance their products. However, they often conduct research and innovation in fields that have no practical application until long into the future (CorporateInfo, npg). Take for example their fuel efficiency research; Honda was the industry leader in fuel efficiency from 1985 to present (InvestorGuide, npg). However, only until recently did gas prices raise high enough to warrant the fuel economy as a significant advantage. Had Honda divested more of their resources to other high end upgrades such as competing within the SUV market, they might have made much more profits. Thus, finding the balance between future research and current profits is one of the major weaknesses with Honda. Another one of its weaknesses is that Honda relies on its "entry first, organizes later" strategy for new market penetration (Wright Report, npg). Its corporate strategy appears to be to enter established markets with their innovative products and develop an infrastructure and organization after they observe how the market reacts. Although this strategy has worked well in some cases such as Honda's entry into the light truck division, where its Ridgeline won Truck of the Year, however in other cases such as the launch of Acura success was met first by years of trial and error. Acura was launched in the mid 1980s, and it was the first Japanese produced luxury car, however it lacked many of the features that customers were looking for in high end vehicles and Acura went through almost five years of net losses before Honda finally figured out their design and distribution methods. Honda depends too much on their ingenuity and ability to adjust once a product enters the market, and as a result, they often make hasty and faulty decisions that they must then spend millions and years to fix."

Sample of Sources Used:

• Honda Motor Company Corporate Report. (2006, September). Retrieved September 28, 2006, from http://www.corporateinformation.com/corpinfo2.asp?cusip=C39290080
• Honda Motor Ltd. Earnings and Dividend. (2006, September). Retrieved September 28, 2006, from http://wrightreports.ecnext.com/coms2/reportdesc_EARNING_C39290770
• Investor Guide: Honda Motor Company. (2006, September). Retrieved September 28, 2006, from http://www.investorguide.com/stock.cgi?ticker=HMC

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