The SWOT of Honda Motors will elaborate the strength, weakness, opportunities, & threats for Honda Motor Company. By finding, measuring, and comparing these key factors, it will be easier to develop strategies for Honda Motors.
Company Overview
Honda Motor Co., Ltd. is a Japanese multinational conglomerate corporation commonly known as a manufacturer of motorcycles, automobiles, aircraft, and power equipment.
Mr Sochirio Honda, a Japanese man, is the founder of Honda Company. The greatest dream which inspired him was to be the maker of the most renowned racing car in the world. At first, he started his career as a technician in a garage. In the year 1947, he sold his repair shop and started his own company named Honda Motors.
Honda produces different types of related and direct products of automobiles such as cars, motorcycles, power equipment, engines, robots, aircraft, and mountain bikes.
SWOT Analysis of Honda Motors
Strengths of Honda Motors
One of the Largest Automobile Manufacturers – According to Priyanka Pai(2015), Honda is the 8th largest automobile manufacturer in the world. In Market News (January 29, 2016), it stayed in the same position (sold about 4.3 million vehicles).
Strong R&D Departments – Honda has strong research and development groups. It has an R&D department on every important location it has been operating its businesses. Additionally, for R&D purpose it collaborated with other different institutions.
Strong Brand Image – It has a strong brand image as the luxury and racing car. Recently it won Honda Wins KBB Brand Image Awards. Honda is known for its innovation and quality.
ISO Certification on Quality – for the quality and sustainability it provided, 54 Honda facilities around the world have acquired ISO certification.
Largest Manufacturer of Motor Bike – it is the largest motorbike producing company in the world.
Leading Automobile Company – it is the leading automobile manufacturer in the world which has been offering innovative products to its customers.
Strong Marketing strategies [Strong Capabilities] – has strong production process system & presence in the market. It has been developing quality cars for decades, never went for aggressive but slow marketing & promotional strategies, and always promoted its products precisely. It promoted the products in magazines and national newspapers.
Humber of skilled employees – It has around 200000 employees worldwide helping its operations, ha production base in 28 countries with 73 plants.
Eco-Friendly Cars – It has been reliable for providing advanced technologies and eco-friendly cars and enhanced the brand image as well.
Strong Operational Strategies – 6 admin regional group, pursues independence of local management & sales operations.
Exterior Design and Exclusive Interior – has been developing an attractive exterior and interior look.
Quality with Customer Satisfaction – Honda has always been working, along with its dealers, for increasing customers’ satisfaction. As the customers became concerned about the environmental changes, it provides good products to the customers with affordability, speed, and low CO2 emissions.
Related Diversification – Honda has related diversified product portfolio. The products are Automobiles, Commercial Vehicles, Luxury vehicles, Motorcycles, Scooters, Electric generators, Water pumps, Lawn and Garden Equipment Tillers, Outboard motors, Robotics, Jet aircraft, Jet engines, Thin-film solar cells, and Internavi. Unlike others, it does not only sell vehicles, but the diversified portfolio also provides stability in the profit margin.
Weaknesses of Honda Motors
High-Cost Structure/ Production Price – the cost structure of manufacturing these types of cars is high, as a result, these products become expensive in the market. So, they cannot provide the products at a lower price than the competitors. For example, the production cost in Great Britain is high.
Certain Quality Problem – recent safety issue and development delay in the year of 2014 demanded its chief executive to be changed. In that year, around 14 million vehicles were recalled by 11 automakers over rupture risks involving airbags manufactured by the Takata Corporation (a supplier of Honda Motors). The number is five times greater than the number of General Motors for its deadly ignition switch defect.
Upper Middle Segment [Customer Base] – as the cars are pretty expensive, the customer base of Honda is upper middle.
The Weakness of Civic – one of its bestselling cars recognized as a much problematic brand. It has been found out that Honda Civic has some major problems. According to Autos, great seven problems are Transmission Failure, Exhaust Manifold Cracking, Interior Problems, Engine Block Cracking, Sun-visor Problems, Premature Tire Wear, and HVAC Problems.
Lack of Advanced Technology Integration – as the production cost increased and the competition became intense in the market, it has not been capable of integrating advanced technology with its latest cars.
Costly Spare Parts – unlike Toyota, the spare parts of Honda is pretty expensive which increases the maintenance cost. This is one of the weakest points found in the SWOT Analysis of Honda Motors.
Opportunities for Honda Motors
Great People with Great Skills – Honda has been recruiting people from different geographical locations. If continues, it will be able to grab and recruit the most efficient human resource for the betterment of the company.
Hybrid cars – people became more conscious of the environment. If it develops efficient hybrid cars, it will be able to grab more market shares in future.
Aviation and Jet Technology – as the company has been providing these technologies, it will be easy for Honda to enter fully into this industry.
The Increment of Global Presence – if Honda starts working for mass-market like Toyota, it will be able to grab more recognition and market shares.
Favourable Government Policy – some governments have introduced a new policy on carbon emission which will make other companies entering specific countries. Honda can utilize this opportunity by offering eco-friendly and oil efficient cars.
The Introduction of Eco-Friendly Vehicles – this segment will increase the definite customer segment who are very much concerned with the environment.
Increasing demand for small cars – it has been seen that the demand for small cars was always on the increase.
Threats for Honda Motors
Govt. Policies – the carbon emission restrictions on cars will make a barrier for Honda to enter some target markets.
The entry of Reconditioned Cars – will decrease the sale as a certain group of people can have almost the same type of cars at a very low price.
Increasing Fuel Price – increasing fuel price will reduce the sale which may decrease the profit level, though Honda can stabilize the profit by developing hybrid cars.
Intense Competition – competitors and superior products in the market increase the competition.
Alternative Transportation – people are being dependent more on public transportation. If the overall economy of a country becomes more developed and the government of those countries offers quality and luxurious transportations, the small car making companies will experience the reduction in sales.
In Conclusion [Strategic Recommendation for Honda]
The business strategy for Honda can be developed by utilizing the findings above. Like other car companies, Honda Motors also has its strengths, weakness, opportunities, and threats. The most important facts in this Honda SWOT Analysis I found is are the threats of changing government policies and ensuring safety. The government policy can be utilized by introducing Eco-friendly and fuel-efficient cars, and by introducing hybrid cars. Finally, the safety must be assured for developing trust among the customers.
Related: SWOT Analysis of Tesla
Resources Used for Developing this Analysis
- https://en.wikipedia.org/wiki/Automotive_industry
- http://marketingdawn.com/swot-analysis-of-honda/
- http://www.slideshare.net/Umar111/honda-swot-analysis
- http://world.honda.com/RandD/
- http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=7697692
- https://news.markets/shares/toyota-remains-the-worlds-biggest-car-company-9737/
- http://world.honda.com/sustainability/quality/management/
- http://www.streetdirectory.com/travel_guide/59513/car_parts/honda_faces_problems.html
- http://www.businessinsider.com/strategies-that-make-honda-innovative-2014-7
- http://www.autos.com/car-buying/7-honda-civic-problems-every-buyer-needs-to-be-aware-of
Sheikh Faizul Haque is an internet entrepreneur and the founder of The Strategy Watch; Graduated from North South University with a double major in Accounting & Finance in Bangladesh.
With a strong interest in developing and improving Business Strategy and to Conduct Business Analysis.