Company Background

Name

Honda Motor Company, Ltd.

Logo

Industries served

Automotive, Aviation, Telematics

Geographic areas
served

Worldwide

Headquarters

Japan

Current CEO

Takanobu Ito

Revenue

7.948 trillion (2012)

Profit

211.48 billion (2012)

Employees

179,060 (2012)

Main Competitors

Daimler AG, Ford Motor Company, General Motors

Company, Nissan Motor, Toyota Motor Corporation,
Suzuki Motor Corporation, Volkswagen AG and many
others.

Honda Motor Company is a Japanese business producing automobiles

and motorcycles. Honda is the largest engine producer in the world in
terms of units as well. The firm was the eighth largest automaker in the
world in 2011.
You can find more information about the business in its official
website orWikipedias article.

SWOT
Honda SWOT analysis 2013
Strengths

Weaknesses

1.

Diversified product portfolio

1.

2.

Huge investments in R&D

2.

3.

Strong brand image

4.

Motorcycle market share in

3.

Product recalls
Weak position in Europe
automotive market
Decreasing sales

Asia

Opportunities

Threats

1.

Increasing fuel prices

1.

Intense competition

2.

Positive outlook for global

motorcycle industry

2.

Decreasing fuel prices

3.

Rising raw material prices

4.

Natural disasters

5.

Strong yen

3.
4.

Growing global demand for

environmentally friendly vehicles
Growth through acquisitions

Strengths
1.

Diversified product portfolio.Honda unlike many other

automotive companies does not focus only on selling vehicles. It is the
largest producer of the engines and motorcycles as well. Therefore, 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 R&D 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. In 2012, the company owned 42,000 patents
and had pending applications for 29,000 more patents.
3.

Strong brand image. Honda has a reputation for producing the

best quality engines around the world. The companys brand 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. Over 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. Although, Europes market
share is declining at the moment and many companies experience
losses, the market is huge and firms can benefit from the economies of
scale.

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.

Increasing fuel prices. Hondas strong emphasis on engineering

fuel-efficient vehicles (Honda Insight and Honda Civic) with flexible fuel,
hybrid and hydrogen engines will pay off due to increasing fuel prices.

2.

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.

3.

Growing global demand for environment friendly vehicles. The

declining levels of fossil fuel sources and the rising CO2 emissions
became a major concern for many people and many governments.
Therefore, ecologically friendly cars, powered by hybrid, hydrogen or
flexible fuel engines became very popular. The market for such cars was
$33 billion in 2010. Hondas focus on hybrid and hydrogen fueled
engines is a great opportunity to capture the market share for this new
demand.

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.

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. Big companies
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.