Honda Corporation: start up

CASE A Soichiro post-war: downsizing Hondas ambitions from automotive industry to motorcycle field; technologically manageable and economically affordable 1946: Honda Technical Research Institute; foundation technologically based strategy CASE B Soichiro post-war: technology as way to restore Japan, desperate need of transportation 1946: Honda Technical Research Institute; foundation to build transport Japan needed

Opportunity: Hondas competition was Livelihood: no means of support, low, Japan loosely defined motorcycle purchased 500 war surplus engines to industry, hampered by inferior technology modify and materials = unreliable products

Honda Corporation: Early Growth

Case A
1947, first 2-stroke engine, however 1949 expanded presence as its reliable engine coincided with intro of quieter and more powerful engine by larger competitors 1951, superior 4-stroke engine, exploit this advantage purchased plant = manufacturing expertise of producing engines, frames, chains, sprockets and essentials for motorcycle performance Instead min risk by investing in one winning design, Honda simultaneously: -multiproduct line -leadership in product innovation -focus economies mass production, designs with production objectives Honda identified niche segment: small unintimidating motorcycle for local deliveries; onehand control enabling handle machine while carrying packages

Case B
1946, created A design, many defects = sales did not materialise. 1947, company lost money. 1948, grossed only $55,000

1949, raised $308,000, developed more reliable engine = short period of popularity

1949, Honda set out to raise additional financing as competitors had introduced quieter and more powerful engine = Banks refused

Late 1949, accepted a partner (Takeo Fujisawa) who invested $7500. 1951, no further capital could be raised, prompted focus on 4-stroke design. Unveiled breakthrough design.

Honda Corporation: US Entry

Case A
Explosive success 2-stroke = unit sales 3,000 per month after six months on market = product of the future, investment manufacturing plant 10 x in excess of demand 1959, entered US market as worlds largest motorcycle producer Established US subsidiary, American Honda Motor Company (foreign producers relied on distributors) Began push offering very small lightweight motorcycles, selling for significantly less than the bigger American or British machines

Case B
Explosive success 2-stroke = 70 employees, unit sales of 100 per month. But short lived success, limit unit sales 80 per month to maintain high margins

1950s, success provided confidence and finance for new quest, turn to US by process of deduction 1958, arrived in US Kihachiro Kawashima (president American Honda Company) discouraging reaction Had no strategy other than to sell but Fujisawa believed in Kawashima and gave $1 million for the venture. Chose LA due to its large Japanese community and suitable climate for motorcycle use Initially focused on all 4 products, but machines experienced problems damaging Hondas reputation. 50cc attracted attention, had to overcome hesitance to sell.

Developed market region by region over four to five years through concerted advertising , spending $150,000 on regional advertising, targeting middle class consumers with heavy backing