Entrepreneurship

Course Project (Group#02)

Submitted To:
Ma’am Bushra Atta
Submitted By:
Muhammad Waqar uw-17-ce-bsc-010
Muhammad Ali uw-17-ce-bsc-026
Saadullah uw-17-ce-bsc-035
Shoaib Akhtar uw-17-ce-bsc-033
Asadullah uw-17-ce-bsc-020

DEPARTMENT OF CIVIL ENGINEERING

WAH ENGINEERING COLLEGE
WAH CANTT
 Table of contents

 Introduction
 History
 Vision
 Mission
 Competitor’s Analysis
a. The threat of substitute products
b. The threat of the entry of new competitors
c. Rivalry among existing competitors
d. The bargaining power of customers
e. The bargaining power of suppliers
 Customer basis
 Marketing
a. Product strategy
b. Pricing strategy
c. Placing strategy
d. Promotion strategy
 Conclusion
Introduction:
Honda Motor Company, Ltd. is a Japanese multinational corporation primarily known
as a manufacturer of motorcycles and automobiles.
Honda is the world’s biggest and leading manufacturer of motorcycles as well as the world’s
largest manufacturer of internal combustion engines measured by volume, producing more
than 14 million internal combustion engines per year. Honda surpassed Nissan in 2001 to
become the second-largest Japanese automobile manufacturer. As of August 2008, Honda
surpassed Chrysler as the fourth biggest automobile manufacturer in the United States of
America. Honda is the sixth largest automobile manufacturer in the world.
Honda was the first Japanese automobile manufacturer to release a dedicated comfort
brand, Acura in 1986. Aside from their core automobile and motorcycle businesses, Honda
also produces garden equipment, marine engines, personal watercraft and power
generators, amongst others. Since 1986, Honda has been involved with artificial
intelligence/robotics research and released their ASIMO robot in 2000. They have also
ventured into aerospace with the establishment of GE Honda Aero Engines in 2004 and the
Honda HA-420 Honda Jet, scheduled to be released in 2011. Honda spends about 5% of its
revenues into R&D. Its headquarters are in Tokyo the capital city of Japan and thus it
spreader almost all over the world. The Honda Company not only manufactures the cars but
also they produces various bikes and scooters.

History of the company:

From a young age, Honda’s founder, Soichiro Honda had a great interest in
automobiles. He worked as a mechanic at a Japanese tuning shop, Art Shokai, where he
tuned cars and entered them in races. A self-taught engineer, he later worked on a piston
design which he hoped to sell to Toyota. The first drafts of his design were rejected, and
Soichiro worked painstakingly to perfect the design, even going back to school and pawning
his wife’s jewelry for collateral. Eventually, he won a contract with Toyota and built a plant
to construct pistons for them, which was damaged in an earthquake. Due to a gas shortage
during World War II, Honda was unable to use his car, and his novel idea of attaching a small
engine to his bicycle attracted much curiosity. He then established the Honda Technical
Research Institute in Hamamatsu, Japan, to develop and produce small 2-cycle motorbike
engines. Calling upon 18,000 bicycle shop owners across Japan to take part in revitalizing a
nation torn apart by war, Soichiro received enough capital to engineer his first motorcycle,
the Honda Cub. This marked the beginning of Honda Motor Company, which would grow a
short time later to be the world’s largest manufacturer of motorcycles by 1964.
The first production automobile from Honda was the T360 mini pick-up truck. Powered by a
small 356 cc straight-4 gasoline engine, it was classified under the cheaper Kei car tax
bracket. The first production car from Honda was the S500 sports car. Its chain driven rear
wheels point to Honda’s motorcycle origins.
In the 1950s, Honda first exported its motorcycles to Europe. In 1961, Honda became the
first Japanese motorcycle manufacturer in Europe to establish a local subsidiary, and in the
same year, Honda won victories in the Isle of Man Tourist Trophy races, sweeping 1st
through 5th places in the 125cc and 250cc classes. In 1963, Honda opened a motorcycle
manufacturing plant in Belgium, the first such facility outside of Japan for the company,
followed in 1976 by a motorcycle plant in Italy. Now, Honda motorcycles are popular for
their dynamic performance, ease of riding, and environmental performance, earning the top
market share in many European countries. In fact, Honda earned top sales in eight of ten
Western European countries in 2008. Honda continues to expand its product lineup in its
determination to increase customer satisfaction in Europe.
Honda Motor Co., Ltd. operates under the basic principles of “Respect for the Individual”
and “The Three Joys” commonly expressed as The Joy of Buying, The Joy of Selling and The
Joy of Creating. “Respect for the Individual” reflects our desire to respect the unique
character and ability of each individual person, trusting each other as equal partners in
order to do our best in every situation. Based on this, “The Three Joys” expresses our belief
and desire that each person working in, or coming into contact with our company, directly
or through or products, should share a sense of joy through that experience.
In line with these basic principles, since its establishment in 1948, Honda has remained on
the leading edge by creating new value and providing products of the highest quality at a
reasonable price, for worldwide customer satisfaction. In addition, the Company has
conducted its activities with a commitment to protecting the environment and enhancing
safety in a mobile society

Vision:
Honda vision statement is “to serve people worldwide with the joy of expanding their
life’s potential – Lead the advancement of mobility and enable people everywhere in the
world to improve their daily lives.”

Mission:
A dynamic growth oriented company through market leadership, excellence in quality
and service and maximizing export, ensuring attractive returns to equity holders, rewarding
associates according to their ability and performance, fostering a network of engineers and
researchers ensuing unique contribution to the development of the industry, customer
satisfaction and protection of the environment by producing emission friendly green
products as a good corporate citizen fulfilling its social responsibilities in all respects.”

Competitor’s Analysis

The threat of substitute products:

That is defined as the existence of close substitute products increases the propensity
of customers to switch to alternatives in response to price increases (source from
Wikipedia.org). This does mean that when a Honda’s competitor can produce with high
performance and economical price rather than Honda’s. This product will replace Honda’s
product in the market. Hence, simultaneous reducing market share and profit of Honda are
the results. For example, for the product line of sport motorbike, R6 of Yamaha is the close
substitutes of Honda’s F4. If Yamaha can achieve an innovation to produce R6 with the
lower price against F4, It can actually replace Honda’s F4 on the market because customers
have the same expectation on both two products.

The threat of the entry of new competitors:

The theoretical meaning is that in marketing with many competitors existing, the profit
of each company will be lower than the maximum level. American Market as an example,
Ford and Honda aggressively compete together in this market. Honda cannot get the
maximum profit in this market because of the policies from American Government
protecting domestically Company. Additionally, Honda has to spend money on accessing to
distribution in American market. Moreover, it also finds difficulties in adopting the culture
differences, etc. those reasons will reduce the Honda’s profit level.

Rivalry among existing competitors:

Among five characteristics important to the automobiles industry analysis is the
competitive rivalry. Three main rivals that Honda has to compete fiercely are Toyota Motor
Corp. (TM), Ford Motor Co. (FM), and General Motor (GM). Whatever change in strategy of
one of these competitors can have influences on performance of Honda. At the end of fiscal
year 2007, FM reported 172,455 million dollars of sales and 16,418.5 million dollars of
market capability, while GM experienced 181,122 million dollars of sales and 11,853.3
million dollars of market capability. Toyota with 299,394 employees generated 202,864
million dollars of sales in the fiscal year 2007. Honda as well as its three rivals always keeps
on innovating, improving, researching and developing to compete effectively in this auto
industry. For example, whenever one of these four company releases a new model, the
others will catch up and have similar products to compete. Like when Honda has just
released its FCX Clarity, the next generation of its fuel cell vehicles, GM put their fuel cell
platform into the body of a Chevy Equinox SUV.
A famous model of Honda, Accord, has been competing with its chief rival, Toyota Camry
since its first appearance. Accord was released into market in 1976, and until 1983, Toyota
introduced its Camry. Since then, these two models have kept on competing with each
other. GM Malibu and Ford Fusion are also two models that GM and Ford use to compete
with Accord and Camry. For, Toyota, and GM all can replace Honda in this auto industry. So,
what Honda has to do is trying to improve its technology, research and development to
create a competitive advantage, maybe as a Greenest automaker.

The bargaining power of customers:

In business, if a company wants to exist it must create a good relationship with
customers. Honda is a global company, it means Honda have a lot of competitors. So
customers will confuse when they make decision for what Brand will be the best choice. It
depends not only the famous company but also the price and quality. For example, In
Vietnam on April 2007, Honda introduced Air Blade Scooter with functions like sport and
fashion model, more fuel-efficient engine technology. It rapidly attracted the youth , the
supply was not enough for demand. Then it made the shortage of Air Blade in the market
and pushed price higher. Customer want to buy it must order and wait around one to two
months. No longer after, Suzuki has utilized maximize the advantage of its competitors to its
product. On July 2007, Suzuki introduced new model – Hayate Scooter – that have the same
functions of Air Blade but set the amazing price (lower than 23%) and customer can take
their product immediately. As a result, many customers change of their mind, therefore the
market share of Honda to shrink.

The bargaining power of suppliers:

One of the factor helps the company competes against with other companies is the
ability to reduce the cost. Therefore, suppliers plays an important role to make the
company’s success. Suppliers may refuse to work with the firm or increasing prices for
unique resources. Realizing the serious element, Honda purchases raw materials and certain
components and parts, from numerous external suppliers. Moreover, Honda relies on some
main suppliers for the items and raw material that use in the manufacture of it products.
Honda has ability to obtain these supplies in an efficient and cost-effective manner is subject
to a number of factor. Some of which are not within Honda’s control, these factors include
the ability to provide a continued source of supply and ability to compete with other
company in obtaining the supplies. If Honda loss a key supplier, it may affect the capacity
and increase the cost.There are some key suppliers of Honda in term of Metal Stamping Part
: Takao Kinzoku Kogyo Co.,Ltd; Hirata Technical Co.,Ltd; Hongo Co.,Ltd; Kikuchi Co.,Ltd;
Marujun Co.,Ltd, ect,…Among these companies, Kikuchi Co.,Ltd deal with not only the
supplier of Honda but also Nissan’s supplier. If Nissan was willing to purchase with higher
price or had some benefit promotion than Honda, Honda might be affected on the capacity
and increase the cost.
Customer basis
In order to "Provide good products to our customers with speed, affordability and low
CO2 emissions." as stated in Honda's 2020 vision, the Customer Service Operations is
striving to realize optimal service operations in markets worldwide to pursue the priority
goal of creating and expanding customer joy worldwide through service. In order to achieve
this, we set our goals to be the undisputed No. 1 in customer satisfaction. "Undisputed no. 1
in customer satisfaction" refers to the creation of customer joy and excitement by providing
a level of value that not only satisfies the expectations that customers have when they
receive services based on their past experiences and information, but also exceeds them.
The experience of excitement through these services forges an emotional connection
between customers and Honda, ensuring that the company remains a mobility
manufacturer that customers choose based on their high expectations. To attain this goal,
services and parts divisions have adopted an activity policy of offering service in a friendly,
timely, reliable, affordable, and convenient manner; developing an advanced service
environment; and maximizing business efficiency and expanding business operations. They
are also focused on creating an environment allowing regional dealers—Honda's point of
contact with customers—to address customer satisfaction enhancement more effectively
and efficiently.

Marketing
Honda product strategy:
Honda is a leading manufacturer of automobiles and motorcycles. It is a global brand
that has brought several attractive car and bike models to the market. In the recent years,
its sales have grown fast. North America is its leading market accounting for a very large
part of Honda’s revenues in the automobile segment. Another important market is Japan;
the domestic market of Honda. There are several major competitors of Honda in the global
market including Volkswagen, Toyota and Ford. These brands have a large product portfolio
and invest aggressively in research and innovation. With economic growth in the Asian
region, demand for vehicles has also grown. Honda’s motorcycle sales are high in the Asian
region. Yamaha is a major competitor of Honda in the motorcycle segment. In the 21st
century, every brand is eager for faster growth. Each one is spending more on marketing as
well as research and development to acquire a larger market share and attract new
customers. Auto firms spend millions on advertising and promotions every year.
Honda Pricing Strategy:
Below is the pricing strategy in Honda marketing strategy. Honda has cars which target
every segment of the market. Honda has hatchbacks, sedans, luxury sedans and SUVs.
Hence, the pricing strategy in the marketing mix of Honda is based on various parameters
like competition, segment, features etc. These automobiles target customers from low
middle income level to high income level. Dealerships have limited flexibility over pricing.
Prices are determined by Honda and dealers enter into contracts with them. Base prices
around the world are similar and fluctuations may be due to currency, taxes and other
similar factors. Honda Motorcycles also have a wide range and cater to different segments
of the market. Honda uses economies of scale to meet growing demand at affordable prices
especially in emerging economies such as India, Brazil and Thailand. Honda builds huge
manufacturing hubs in developing countries and exports the bikes in developed countries
where cost of production is higher. Honda also provides luxury bikes and sports bikes which
are priced at the higher end.

Honda Placing and Distribution Strategy:

Following is the distribution strategy of Honda:
Honda has a robust sales network. Prior to 2006 Honda had three sales channels. These
were Honda Vernon, Honda Clio and Honda Primo. Honda Vernon sold established and
products of sporty nature. Honda Clio sold traditional Honda products and Honda Primo
sold Kei car i.e. small cars. All three were discontinued in 2006 and Honda Cars dealerships
were established. Honda sells genuine company accessories through Honda Access a retail
chain. Customers can also buy used cars directly from Honda through Honda Auto Terrace.
To sell key cars Honda established Honda Auto Terrace in 2912. Honda Cars has strong sales
and distribution networks in the markets in which it operates. In India the network includes
309 authorized dealership facilities in 197 cities.
Honda sells automobiles through a network of 740 retail dealers in Japan; 1,310 dealers in
the US; 1,580 dealers in Asia (excluding Japan); and 1,150 dealers in Europe as of 2014. As of
2014 Honda motorbikes had 6,900 outlets in Japan. Honda sells motorbikes using
independent dealers in US and Europe and Asia with 1,040 dealers in US, 14,070 dealers in
Asia and 1,400 dealers in Europe.
This shows the strong marketing mix distribution strategy of Honda motors.
Honda’s power products are sold in Japan through approximately 1,110 retail dealers;
through 8,000 independent local dealers in the US;) through 3,500 independent local
dealers in Asia (excluding Japan); and in Europe through a network of approximately 2,850
independent local dealers.
Honda Promotion & Advertising Strategy:
The promotional and advertising strategy in the Honda marketing strategy is as follows:
Honda used an innovative marketing campaign to change the way customers perceived
motorbikes. The slogan used was "You meet the nicest people on a Honda”, this campaign
showcased that Honda motorcycles were made for the common man. The campaign was
successful and increased Honda’s sales 90,000 motorcycles in 1963 alone. The promotional
strategy in the marketing mix of Honda is to be aggressive. Honda uses TV advertisements to
a large extent. Honda has released ads with different themes to attract customers. The ads
focus on Honda’s innovation and superior engineering such as the cog advertisement
released in 2003. Honda also released an advertisement showcasing the Honda founder’s
dream of producing high quality cars. Honda has a lot of promotion done through
motorsports like Motorcycle Grand Prix, Superbike racing and others in which the company
participates or supplies engines. Honda portrays that it builds cars which win such
tournaments. Honda sponsors such sporting events, it was the official sponsor of the 2006
FIA Formula 1 telecast on broadcaster channel "Ten". Honda also sponsors other sports such
as hockey and golf. Honda advertises in print media and participates in road shows to
showcase its products. Hence, this concludes the marketing mix of Honda.

Conclusion:
We have concluded that Honda is one of the largest manufacturers of automobiles
and motorcycles in the world. It is a Japanese multinational company which operates in
North America, Asia and Europe. Honda is also known for the manufacture of aircrafts
and power equipment. Since 1959 Honda has been the largest manufacturer of
motorcycles. It is also the largest manufacturer of internal combustion engines in the
world. Honda is also actively involved in advanced research such as robotics. Due to high
interest from customers into more fuel efficient and lower pollution cars, Honda can use
its strength to develop these kind of cars to suit customers’ needs.
These are the strength of Honda Company:
 Its strength is high innovation
 Its strength is manufacturing different products
 Strong brand equity
 Market share leadership