HONDA (A)

AMNA FAYYAZ
NEHA JAVAID
SARA KHAN
SECTION: B

Case Snapshot
1950s, the US market was dominated by players such as Harley Davidson
Motorbike riders were generally seen as outsiders
clad in leather jackets , riding in packs
an image played up by Hollywood
The Super Cub young buyers
who just wanted convenient, individual transportation for short trips
around town.
You meet the nicest people on a Honda

Tag Line

Presence in International Markets

Porters 5 Forces
Competitive Rivalry-HIGH
Many established players - strong hold & loyal
customer base
Market shares in USA
HONDA

40-50%

YAMAHA

15-25%

KAWASAKI

10-15%

SUZUKI

9-12%

Competitive Rivalry-HIGH
By 1996 Honda, Yamaha and Suzuki alone had 85% market share
Harley Davidson's sales increased from 16.6 to 29.6 million by 1965

Threat of Substitutes- HIGH

Different transport mediums such as Cars, buses, bicycles, etc.
People shift because of Low switching costs or higher quality

Threat of new entrants - LOW

Huge Capital investment
High Entry barriers (R&D, dealer network and advertising abilities)
Established players exist , difficult to change customers loyalties

Bargaining Power of
Suppliers- LOW
More than 16,800 service
suppliers support Honda's U.S.
operations.
suppliers are susceptible to the
demands of the manufacturers
and hold very little power

Bargaining Power of
Buyers-HIGH
Presence of a lot of competitors
people have more choices to
select the best quality products
which is why Honda tries to
make its products unique.

Internal Factor Evaluation (IFE) Matrix

Strengths

1. Honda is a fully integrated producer of engines,

frames, chains, sprockets and other ancillary
parts crucial to motor cycle performance.
2. Honda has product advantage through heavy
commitment to R&D and advanced
manufacturing capabilities.
3. Honda has strong dealer and distribution
network.
4. Honda has expanded its production facilities in
different parts of the world.
5. Honda has substantial amount of budget which
is solely dedicated to advertisement and
marketing.

Weight Rates Weight

s
ed
Score
0.05
4
0.2

0.25

1.25

0.2

0.8

0.2

0.25

0.05

Internal Factor Evaluation (IFE) Matrix

Weaknesses
1.

2.

3.
4.

5.

Honda has cost reduction policy. Over time if they

dont control this then Honda may not be able to
develop profit margins good in comparison to its
competitors.
Honda does not have unit cost performance data of
its competitors thats why it is difficult for them to
analyze their performance in terms of its
competitors.
Honda is catering to only middle class segment of
the society whether it is USA or any other market.
Since Honda continuously comes up with new
motor cycle. Some of its models have generated low
sales volume which has contributed to the huge
operating expense to the company.
Motor cycles are polluting the environment thats
consumers have high environmental concerns.

Total

0.05

0.15

0.03

0.03

0.05

0.1

0.05

0.05

0.07

0.14

3.97

External Factor Evaluation (EFE) Matrix

Opportunities

Weigh Rates
ts
0.1
5

Weighted
Score
0.5

2. Can do strategic alliance and joint

venture in order to
grow its market.

0.1

0.2

3. People above age sixty makes up over

50 million people in the USA and
represent almost 40% of all vehicle buyers.

0.05

0.15

0.05

0.2

0.1

0.3

1. Honda can develop hybrid motor cycles

which are fuel efficient.

4.

Enhance social media presence

5. Investment in environmentally friendly

vehicles and research and development
solely dedicated to environmental
sustainability.

Threats

1. Fierce competition by Japanese

and US motorcycle producers

0.15

0.45

2. Middle class consumers have

preference towards buying cars.

0.1

0.2

3. Oil and commodity prices are

increasing

0.2

0.4

0.1

0.2

5. Regaining the lead of low

emissions is a risky proposition
as other companies are coming
out with new and cost effective
ideas of producing low emission
vehicles.

0.05

0.15

Total

4. Appreciating Japanese Yen

against the USA dollar.

2.75

RECOMMENDATIONS
They should reposition their brand image
Cost has to be controlled.
Strategic Alliance with American Players
Production of Hybrid Motor Cycles
Environmental Safety and Concerns