Strategic Management Paper

Honda Motor Company and Hybrid Electric Vehicles

By: Monita Wongsodirdjo Rosiani Tanujaya Lisa Wibowo William Tanuwijaya (01120080010) (01120080021) (01120080057) (01120080063)

International Business Management University of Pelita Harapan Surabaya 2011

Company Profile

Type Industry Founded Founder(s) Headquarters Area served Key people Satoshi Aoki (Chairman) :

: : : :

Public Automotive and Aviation 24 September 1948 Soichiro Honda and Takeo Fujisawa

Minato, Tokyo, Japan : Worldwide

Takanobu Ito (CEO)

Products Automobiles Motorcycles Scooters ATVs Electrical Generators Water pumps

Lawn and Garden Equipments Tillers Outboard motors Robotics Jets Jet Engines Thin-film solar cells

Revenue Operating income Net income Total assets Total equity Employees Subsidiaries

: : : : : : :

US$120.27 billion (FY 2009)[1] US$2.34 billion (FY 2009)[1] US$1.39 billion (FY 2009)[1] US$124.98 billion (FY 2009)[1] US$40.6 billion (FY 2009)[1] 181,876 Acura

Honda Aircraft Company Website : Honda Worldwide

Competitor Profile

Compare Side-by-Side
Remove Remove Remove Remove 2007 Toyota Priu 2007 Honda Civic 2007 Nissan Alt 2007 Ford Escape s Hybrid ima Hybrid Hybrid FWD Use Your Gas Prices & Annual Miles Switch Units: Gallons/100 Miles Liters/100 km Hybrid Vehicle Hybrid Vehicle Hybrid Vehicle Hybrid Vehicle

Estimated New EPA MPG MPG ratings for 19852007 models have been REGULAR GASOLINE REGULAR GASOLINE REGULAR GASOLINE REGULAR GASOLINE

46
48
City Combine d

42
45 40
Hwy City Combine d

35 45
Hwy City

34
Combin ed

33 31
Hwy City

30
Combine d

29
Hwy

revised Official EPA Window Sticker MPG

55
60
City Combine d

50
51 49
Hwy City Combine d

42 51
Hwy City

39
Combin ed

36 36
Hwy City

34
Combine d

31
Hwy

MPG Estimates from Drivers Like You Learn more about "Your MPG"
Average based on 168 Average based on 65 Average based on Average based on 22 vehicles. vehicles. 30 vehicles. vehicles.

46.5
Lo Hi Lo

43.4
Hi Lo

33.4
Hi Lo

33.0
Hi

34

75

29

68 26

45 25

39

View Individual Estimates

View Individual View Individual View Individual Estimates Estimates Estimates Fuel Economics $2.36 0.60 gal $43.84 465 miles 12.3 gal $1414 $2.91 0.74 gal $71.28 612 miles 20.0 gal $1746 $3.30 0.83 gal $53.46 405 miles 15.0 gal $1978

Cost to drive 25 Miles Fuel to Drive 25 Miles Cost of a Fill-up Miles on a Tank Tank Size Annual Fuel Cost*

$2.15 0.54 gal $42.41 493 miles 11.9 gal $1289

Based on 45% highway, 55% city driving, 15000 annual miles and Reg. Gas: $3.96 per gallon You may customize these values to reflect the price of fuel in your area and your own driving patterns.

Energy Impact Score Annual Petroleum Consumption (1 barrel=42 gallons) - Imported - Domestic Annual Tons of CO2Emitted
Personalize Annual Miles

7.4 barrels

8.2 barrels

10.1 barrels

11.4 barrels

Carbon Footprint

4.1
3.5 16.2 3.5

4.5
16.2 3.5

5.5
16.2 3.5

6.2
16.2

Air Pollution Score

EPA Air Pollution Score Not Available Show Scores for California and Northeast States Show Detailed Air Pollution Information

Safety EPA Size Class Engine Size (liters) Cylinders Transmission Drive Gas Guzzler Turbocharger Supercharger Passenger Volume Luggage Volume Engine Characteristics Trans Characteristics

Crash Test Results Midsize Cars 1.5 4 Automatic (variable gear ratios)

Crash Test Results Compact Cars 1.3 4 Automatic (variable gear ratios)

NA Midsize Cars 2.5

Crash Test Results Sport Utility Vehicle - 2WD 2.3

4 4 Automatic Automatic (variable gear (variable gear ratios) ratios) Front-Wheel Front-Wheel Drive Front-Wheel Drive Front-Wheel Drive Drive no No No no no No No no no No No no 96 ft3 (HB) 16 ft3 (HB) HEV NA 91 ft3 (4D) 10 ft3 (4D) HEV EMS 101 ft3 (4D) 10 ft3 (4D) HEV EMS NA NA NA VLKUP

How are fuel cost estimates and miles on a tank determined? Fuel cost estimates are based on 45% highway driving, 55% city driving, 15000 annual miles and the following fuel prices: Regular Gasoline: $3.96 per gallon You may customize these values to reflect the price of fuel in your area and your own driving patterns. Fill-up cost and the distance you can travel on a tank are calculated based on the combined MPG and the assumption that you will re-fuel when your tank is 10% full.

What's the difference between air pollution and greenhouse gas emissions? The Air Pollution score and Carbon Footprint measure different types of vehicle emissions. Air pollutants harm human health and/or cause smog. Carbon Footprint measures greenhouse gas emissions (primarily CO2) that impact climate change. Why do some vehicles have more than one air pollution score? Some vehicles are available in multiple emission versions that look the same but have different air pollution scores. Unfortunately, it is difficult to distinguish between similar models. If you click on the link "Show Detailed Air Pollution Information" above, it will display the emission standard and the 12-digit underhood engine ID. You can identify the cleaner car by matching the engine ID listed above to the Underhood Label Identification Number on the vehicle. Note: In some cases, manufacturers choose to certify identical vehicles to different emission standards. In these cases, the vehicles will have the same engine ID. The carbon footprint measures greenhouse gas emissions expressed in CO2 equivalents. The estimates presented here are "full fuel-cycle estimates" and include the three major greenhouse gases emitted by motor vehicles: carbon dioxide, nitrous oxide, and methane. Full fuel-cycle estimates consider all steps in the use of a fuel, from production and refining to distribution and final use. Vehicle manufacture is excluded. (U.S. Department of Energy, GREET Model 1.8, Argonne National Laboratory) Color vehicle photographs have been provided by the vehicle manufacturers or their representative and are used with their permission. Black and white photographs are as published in Ward's Automotive Yearbook(R), 1985-1999 and are used by permission of Ward's Communications, a world leader in automotive information.

Toyota Motor Company Profile Company Name : Toyota Motor Corporation

President and Representative Director Company Address Head Office Phone Tokyo Head Office Phone Nagoya Office Phone Date founded Capital Shareholders Fiscal Year : : : : 1 Toyota-Cho, Toyota City, Aichi Prefecture 471-8571, Japan (0565) 28-2121 1-4-18 Koraku, Bunkyo-ku, Tokyo 112-8701, Japan (03) 3817-7111 : Akio Toyoda

: 4-7-1 Meieki, Nakamura-ku, Nagoya City, Aichi Prefecture 4508711, Japan : : : : : (052) 552-2111 August 28, 1937 397.05 billion yen (as of March 31, 2010) Shareholder Composition From April 1 to March 31 of the following year : Motor Vehicle Production and Sales

Main Business Activities Business Sites :

Information on Business Sites : 320,590

Number of employees (Total in affiliated companies)

Organization Structure

SWOT Analysis

Strengths

High and powerful research and development R&D Innovation Best market share leadership Strong and powerful brand equity Different and unique products One major strength is the revolutionary engine technology with the help of which Honda is gaining success day by day

Popularity is termed as one of the best strength which results in betterment for the company

Weaknesses

Cost structure of Honda is high as compare to other automobile manufacturers Apart from Nissan & Toyota, Honda requires privileged purchase deposit Honda focus more on international deposits as compare to domestic deposits Civic model is consider as one of the major weakness for Honda Company\ Honda products are termed as inoffensive in terms of style and design Prices for non-luxury vehicles are far high as compare to other manufacturers In truck line, Honda Company is not offering strong products and proposals

Opportunities : Honda has the best opportunity to use its R&D in producing cars according to the needs and demands of their customer. This is only possible because of the increase in demand for less pollution cars. Emerging market is one of the best opportunity for this company Various models are there which caters the lower segment Fuel efficiency is now a days termed as one of the best opportunity which can results in the best productivity for the company Alliances are the best opportunities for Honda Company Honda can increase its production by focusing on sales and research They can gain more popularity by doing better research and development

Threats

: One of the major threat is the economic slowdown All the external changes for instance taxes, politics as well as government are the major threats for Honda Company

Another threat is the lower cost competitors Price war is also consider as an important threat for this compan Oil prices are contributing a lot towards the loss of Honda company

Second movers are the major threat for Honda company Substitute products are the major threats for the Honda company

Identification of the Problem

1. What is the prospect future of Honda Hybrid Vehicles? 2. What is the impact on the lack of collaboration strategies? Is Honda Hybrid better off

without collaboration?

Solution of the Problem

1. In this era, natural resources which are important for humans life is keep decreasing,

such as oil. Limited number of oil lead to an increasing price of this resource and forcing people to find new alternatives, especially the one used for fuel. Honda Hybrid is trying to provide answers for the fuel deficit problem. In some point, it has good prospect to replace the conventional vehicles, especially at the time that oil prices is no longer affordable. It also support the todays trend, it is environmentally friendly, which is the topic that has been talked and pursued by many people around the world, and likely to be talked more since global warming is an issue that people around the world is trying to solved. In other words, Honda Hybrid vehicles is very promising in the future, and even though it is still questioned when will the concept be accepted by people around the world, something that remains true, one day the resources will be gone, and in that day people will start looking for hybrid cars. And as long as Honda have a great financial performance as it is now, the research costs is worth for the profit that it will earned when the hybrid is booming all around the world. It is a risk that has to be taken for the long-run sustainability of the company.
2. For now, the strategy of not collaborating with other company which Honda is

implementing might not show different results or maybe worsen compare to Toyota.

But, in the long run it will give Honda a competitive advantage, because without collaboration, Honda is able to keep their technologys quality from other company, thus having the technology that no others have. Even though in short term, it may lose to Toyota, but with Honda financial strength, it will be able to sustain and in long term thrive with the technology that no other company have.

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