Honda Motor Co. Case Study

Honda Motor CO.

Honda began in 1946 when Soichiro Honda established a Honda Technical Research Institute. It incorporated in 1948. The head office moved to Tokyo in 1952 and the following year Yamato Factory (now Saitama Factory Wako plant) was established.

With continued growth, Honda established its first overseas subsidiary, a motorcycle marketing company, in the US in 1959.

Honda gradually strengthened its presence in Europe after 1961, when it became the first Japanese motorcycle maker to establish a subsidiary in Germany. The foundations of Honda's business in South America were also laid in the 1960s with the arrival of the company's motorcycle business in the region.

In 1963, Honda constructed its first overseas manufacturing facility, a plant for small motorcycles in Belgium. The company continued to expand domestically and internationally, and by 1980 Honda had achieved annual unconsolidated net sales in excess of one trillion Yen.

In 1982, Honda became the first Japanese automaker to manufacture a passenger car in the US. Further expansion occurred in 1993 when Honda

signed a business agreement with Isuzu Motors for product complementation.

The year 1997 was the first year in which a Honda model, the Civic was manufactured and sold in Brazil.

During 2000, the company established Honda South America, a full service company catering to the expanding South American market. The subsequent year, a new subsidiary called Honda Motorcycle & Scooter India was set up and its first 100cc scooter, the Honda Activa, rolled off the assembly line. In July Honda began conducting fuel cell vehicle testing on public roads in Japan. November saw the establishment of Honda Motorcycle Korea, a subsidiary for motorcycle wholesale and retail sales in Korea.

To further enhance Honda's automobile manufacturing activities in the UK, a second factory was brought into operation in the fall of 2001.

The following year, Honda introduced the Ape100, a new mini sports bike in February2002.

Two months later, Honda released the XL230 sports bike, an easy-handling motorcycle that featured a vintage off-road look and a water-cooled, 4-stroke OHC single-cylinder 230cc engine.

Two new snowblowers were released in June 2002, the 9hp and 11hp Snowra i. They used Honda's original hybrid technology that combined a gasoline engine to power the snowblower apparatus and charge the battery, with electric motors for forward locomotion.

Honda Motor Europe revealed a new European Accord at the Paris Motor Show inSeptember 2002, targeted at the quality sports saloon market. In November the FCX fuel cell vehicle received approval from the Japanese Ministry of Land, Infrastructure and Transport and in December, Los Angeles City Hall, California and the JapanesePrime Minister received the first FCXs.

In January 2003, Honda developed a mountain bike for downhill competitions and the company's Taiwan subsidiary began production of the CR-V.

In April Honda Motorcycle R&D China began conducting motorcycle research and development activities, while in Japan, Honda released a new SUV called the Element. In June 2003, the company announced a full-model change for the Japanese model, the Inspire that would integrate its Saber and Inspire sedans. Production of the Fit saloon model began in China in September 2003. November saw the Honda Jazz begin production in Thailand.

In December 2003, the HondaJet, an experimental compact business jet equipped with Honda-developed HF118 jet engines, successfully completed initial flight tests at Piedmont Triad Airport in North Carolina, US.

In early 2004, Honda of Canada Mfg achieved a milestone when it produced its three millionth vehicle.

In April 2004 Honda Motor Co., Ltd. announced the establishment of a fully owned subsidiary in Russia to strengthen its local motorcycle, automobile and power product sales operations in the rapidly expanding Russian market. The subsidiary named, Honda Motor RUS LLC is located in Moscow and is responsible for strengthening Honda's sales operations as well as overseeing logistics, after-service, advertising and public relations functions.

Honda's subsidiary in Korea, announced plans to begin the import and sales of automobiles in the Republic of Korea. Sales began on May 20, with the Accord Sedan. Honda Motor Co., Ltd. Announced in July 2004 that its engineering subsidiary, Honda Engineering Co., Ltd., plans to establish a local subsidiary in China. The new operation will enable Honda Engineering to better support Honda's manufacturing facilities in China to smoothly achieve capacity expansion, new model launches, and

other activities necessary for their growth.

SWOT ANALYSIS

Honda Motors Company, based in Tokyo, Japan, is the world's largest motorcycle manufacturer and it is also the third largest auto manufacturer in Japan. The company produces and develops a broad spectrum of products, such as passenger cars, motorcycles, and general-purpose engines for specialty sports cars. The company has more than 130 subsidiary and affiliates worldwide. Honda Motor, which enjoys a global presence, has used the strategy of 'glocalization' to boost its sales performance. In line with this, it serves the requirements of local markets by not only establishing regional sales networks but also developing and manufacturing products locally. The company stands to benefit from the expanding motorcycle market in Asia. Honda has been taking aggressive sales and marketing efforts in the region, which resulted in significant sales increase in Asia during fiscal 2004. This growth is likely to continue in the future too.

Strengths: 'Glocalization' strategy, Asian operations, Financial results

Weaknesses: Weakening financials, Poor presence in pick-ups, Non-core activities

Opportunities: Expanding Asian market, Environment-friendly products, Technological breakthroughs, Production increases

Threats: Exposure to currency risks, Counterfeit