Sarkis H Mesrobian SWOT Analysis

Honda Motor Company

Honda SWOT analysis 2013 Strengths 1. Diversified product portfolio 2. Huge investments in R&D 3. Strong brand image 4. Motorcycle market share in Asia Opportunities 1. Increasing fuel prices 2. Positive outlook for global motorcycle industry 3. Growing global demand for environmentally friendly vehicles 4. Growth through acquisitions Weaknesses 1. Product recalls 2. Weak position in Europe automotive market 3. Decreasing sales

Threats 1. Intense competition 2. Decreasing fuel prices 3. Rising raw material prices 4. Natural disasters 5. Strong yen

Strengths 1. Diversified product portfolio. One of Hondas edges over its competitors is that Honda does not focus only on selling vehicles. HMC is the largest producer of engines and motorcycles, ATVs, marine engine, and even lawn mowers. Because Honda makes more products, it can tap into other markets for greater revenues, and also the company is not as susceptible as its competitors are to market cycles or technology disruptions. 2. Huge investments in R&D. Hondas investments in research and development reach as much as 5% of revenue. The business relies on these investments to achieve

competitive advantage through various technologies, such as improved vehicle painting process, new hydrogen and hybrid engines or new welding technologies. One example is Honda incorporating the Jewel Eye full LED headlight system in their luxury brand Acura. This feature provides the driver with day like near visibility without blinding oncoming traffic. 3. Strong brand image. Honda has a great reputation for producing one of the highest and best quality engines. When purchasing a Honda product, customers associate the brand with reliability, quality, durability, with a fair price tag. Honda was the 21st most valuable brand in the world valued at $17 billion and was only behind Toyota, Mercedes-Benz and BMW, according to Interbrand. 4. Motorcycle market share in Asia. In 2012, Honda sold 80.5% of its motorcycles in Asia, the market that has greatest growth potential. Having the largest motorcycle market share, Honda is well positioned to compete with other companies for the sales and profits. Weaknesses 1. Product recalls. Between 2011 and 2012, Honda recalled more than 1,000,000 vehicles to fix various faulty parts and manufacturing defects. Car recalls severely damages firms brand reputation and future sales. 2. Weak position in Europe automotive market. Honda holds a very weak position in the Europes automotive market and has maintained only 1.1% market share in 2012. 3. Decreasing sales. In 2012, Hondas revenue hit the lowest point in 4 years to 7.948 trillion. Honda sales were down by 11.2% in North America, which represents more than 40% of total Honda revenues. Revenue from Asia and Europe also declined by 21.3%, 15.5% respectively, signaling poor firms performance globally. Opportunities 1. Product recalls. Although Honda has had a rather high number of recalls, this can be a great opportunity for Honda to improve its self-image. HMC can incorporate stricter quality control standards, and more sample tests to insure less if not any recalls. When customers hear about what extensive procedures are taken to insure a quality product, they are more drawn to purchase that better product. 2. The pursuit of higher fuel efficiency. In an age of going green Honda is emphasizing on engineering fuel-efficient vehicles, such as the Honda Insight and Honda Civic, and Honda CR-Z with flexible fuel, hybrid and hydrogen engines. Their newest product, 2014

Accord Hybrid offers 50mpg city, and 45 mpg highway. This product will provide Honda a greater chance to tap into the Hybrid car market for an increased market share and increased revenues. 3. Positive outlook for global motorcycle industry. Motorcycle industry grew by 4.2% from 2011 to 2012 and is expected to grow by at least 6% to 2016. Honda is the worlds leading producer and seller of the motorcycles having more than 29% of the market share. Growing demand for the motorcycles is a great opportunity for the company to expand its global market share and grow sales. 4. Growth through acquisitions. Honda could greatly benefit from strategic partnerships or acquisitions of smaller competitors. The business would add new brands to its portfolio, achieve greater economies of scale and would benefit from synergies between different firms. For example, Ford purchasing Mazda. Threats 1. Intense competition. Honda faces more intense competition than ever. New small entrants are disrupting the market with their capabilities in producing electric vehicles or alternative fuel engines. Toyota recently introduced a whole new lineup of hybrid vehicles; from small compact to full size SUVs. Honda does not have products like Toyotas to compete on that scale. Big companies, such as Toyota, are restructuring themselves to become more efficient. As a result, firms like Honda are suffering from competition from both big and small players. 2. Decreasing fuel prices. Some analysts forecast that future fuel prices will drop due to extraction of shale gas. This would negatively influence Honda because the company is focusing on hydrogen fuel, hybrid and flexible fuel engine cars, which are not so attractive to consumers when fuel prices are low. 3. Rising raw material prices. Metals are the main raw materials used in vehicle and motorcycle manufacturing and the rising price of the raw metals raises overall production costs for Honda. 4. Natural disasters. Honda has manufacturing facilities in Japan, Thailand, China and Malaysia. These countries, including others, are often subject to natural disasters that disrupt manufacturing in the facilities and decrease Hondas production volumes. 5. Strong yen. Honda earns most of its profits outside Japan and appreciating yen poses a great threat to Hondas profits.

Sources Jurevicius, Ovidijus. "SWOT Analysis of Honda." Honda SWOT Analysis 2013. Strategic Management Insight, 12 Apr. 2013. Web. 03 Mar. 2014.