EXERCISE: 02

SWOT ANALYSIS OF HONDA 2023

 Sri Krishna Arts and Science College
Coimbatore – 641 008
Department of Commerce B.COM AF & M.COM IB

Course Code: 22AEC58 Course Title: Capstone Project

Rubrics for REPORT/ESSAY
39-
Criteria and Weighting 100-70 69-60 59-50 49-40 Score
30
Knowledge and Understanding
(10%)
Research (25%)

Analysis (30%)

Discussion (25%)

Presentation, formatting,
referencing, bibliography (10%)

Total Marks
ABOUT HONDA:

Honda Motor Company, sometimes known as Honda or Company, is a Japanese

manufacturer of motorcycles, cars, aeroplanes, and engines. Soichiro Honda established the
business in 1948 as a producer of automotive components. In 1959, Honda began producing
motorcycles and rose to the position of largest motorbike manufacturer in the world.

Honda began making cars in 1962 and was the first business to introduce the Acura luxury
brand in 1986. Currently, the Company is the eighth-largest automaker in the world.

The Company has entered numerous industries throughout the years and is currently a
manufacturer of robots and jets.Honda has long emphasised that engines are its primary
business and that all of the goods the company has produced are based on them. Over the past
few years, the company has experienced substantial growth, mostly as a result of its vehicle
industry.

PRODUCTS OF HONDA:

 HONDA CARS
 HONDA BIKES
 HONDA SCOOTERS
 HONDA B ENGINE
 HONDA C ENGINE
 GENERATORS
 GRASS CUTTING MACHINE
 HONDA JET
HONDA CARS

Honda is a reputable Japanese automaker that has been making vehicles since 1963. They
are renowned for producing dependable, fuel-effective, and expertly engineered automobiles.
Compact vehicles like the Civic and Fit, midsize sedans like the Accord, and SUVs like the
CR-V and Pilot are just a few of the many models that Honda provides.

The hybrid powertrains found in models like the Insight and Clarity are just two examples of
Honda’s cutting-edge innovations. The company is also renowned for its sophisticated safety
features like Honda Sensing, which includes adaptive cruise control, lane-keeping assistance,
and collision mitigation braking.

Honda’s cars are favoured by both people and families because of their reputation for quality
and dependability over the years. They are renowned for producing sporty cars as well, such
as the Civic.
HONDA BIKES:

Honda is a well-known Japanese motorcycle manufacturer with a rich history dating back to
1949. They produce a wide range of motorcycles, catering to various riders and purposes.
Here are some key points about Honda bikes

HONDA JET:

The Honda Jet is a small, advanced light business jet developed by the Japanese automobile
and motorcycle manufacturer, Honda. Here are some key features and information about the
Honda Jet.
HONDA SCOOTER:

Popular scooters including the Honda Activa, Honda Dio, Honda Grazia, and others are
available from Honda. These scooters have a reputation for dependability, fuel economy, and
cutting-edge technology. To accommodate diverse consumer preferences, they are available
with varying engine sizes, shapes, and colours.

Honda scooters often have comfortable seating, automatic transmissions, electric starters, and
four-stroke engines that are efficient. They offer a practical and comfortable form of
transportation and are created for urban commuting.

HONDA ENGINES, GENERATORS AND GRASS CUTTERS:

Honda is a renowned manufacturer of internal combustion engines used in a wide range of

applications, including automobiles, motorcycles, power equipment, and more. Honda
engines are known for their reliability, efficiency, and innovation.
Honda manufactures a line of generators designed to provide reliable and portable power
solutions for various needs . Honda produces lawnmowers or grass cutters designed for
maintaining lawns and landscapes.

SWOT ANALYSIS OF HONDA:

STRENGTH:
1.Competence in engine manufacturing – company’s core product
2. Diversified product portfolio
3. Dominance in motorcycle and engine industries leading to a high brand awareness.
4. Strong position in Asia’s motorcycle markets

WEAKNESS:

1.Dependence on North America to generate most of the revenue

2. Low investments in research and development (R&D) leading to innovative products

OPPORTUNITIES:

Increasing government regulations

Improving U.S. Economy

Timing and frequency of new model releases

Low fuel prices are increasing the demand for pickup trucks and SUVs

THREARS:
1. Increased competition
2. Rising Japanese Yen exchange rate.

Strengths:
Competence in engine manufacturing – company’s core product

Hoada’s operations are all centred on its core product, engines. The company first produced
motorcycle and power equipment engines, but subsequently also made engines for
automobiles and marine vessels. The largest engine producer in the world, Honda produced
approximately 27 million engines for vehicles, motorcycles, boats, and power equipment in
2015.

The business has a wealth of experience producing high-quality, effective engines. Its engines
are acclaimed for their dependability, robustness, ease of starting, quietness, and fuel
efficiency. Honda produces some of the most dependable automobile engines on the market,
according Reliability Index.The ability of the corporation to manufacture engines is a
competitive advantage that few of its competitors can match. Engines are the essential
component of motor products.

DIVERSIFIED PRODUCT PORTFOLIO:

Honda operates 4 different divisions:

1.Motorcycle business (12.3% revenue)

2.Automobile business (72.8% revenue)

3.Power product and other business (2.3% revenue)

4.Financial Services (12.6% revenue)

Customers can purchase a variety of products from Honda, including engines, vehicles,
motorcycles, jets, robotics, generators, lawnmowers, water pumps, and other power
equipment. When compared to Volkswagen, Toyota, Genera

Dominance in motorcycle and engine industries leading to a high brand

awareness

Honda is a huge corporation that dominates the majority of the markets it competes in,
including those for motorcycles and engines.

The business is the market leader in the production of small, general-purpose engines for
industrial, rental, and consumer uses With a 22.1% market share in the first half of 2016,
Honda is also the top motorbike manufacturer globally. Due to the company’s dominance in
each of these markets, its reputation and brand recognition have grown.

Honda is the 21st and 23rd most valuable brand in the world, valued at US$22.1 billion and
US$25.2 billion, respectively, according to Interbrand and Forbes. Only a few other firms,
such as Toyota, BMW, and Mercedes-Benz, can compare with Honda in terms of brand value,
which is strongly tied to brand awareness and reputation

Strong position in Asia’s motorcycle markets:

Honda’s third-largest revenue stream comes from the motorcycle industry, which accounts for
12.3% of the company’s overall revenues. The business took 22.1% of the global motorcycle
market in the first half of 2016 and sold 17,592 bikes and all-terrain vehicles in 2016.

Honda’s motorcycle business is mostly focused on Asia, where it has sold 15.1 million
motorcycles, or about 88.7% of its entire inventory, bringing in 1,107.6 billion in sales.

The largest motorcycle market in the world is the Asia-Pacific area, which includes nations
like China, India, Vietnam, Thailand, the Philippines, Malaysia, Indonesia, Australia, and
Japan. Honda’s strong position there gives it a significant competitive edge.

Weaknesses

Dependence on North America to generate most of the revenue:

For the purpose of generating 55.6% of its total revenue, Honda is reliant on the North
America region, which mostly consists of the United States and Canada.

From 49.3% of overall sales in 2014 to 55.6% of total sales in 2016, North America has
become increasingly important to Honda. Currently, North America is the key factor in the
company's success, where motorcycle sales increased by 20% and automotive sales increased
by 19%. Honda will have a difficult time maintaining the same rate of growth in the U.S. and
Canada due to their oversaturated markets.

Additionally, the corporation is growing increasingly exposed to broad-based negative shifts

in the markets of North America.

Low investments in research and development (R&D) leading to fewer

innovative products

2015 saw Honda invest 5.4 billion dollars in R&D. This amounted to 4.5% of the business'
overall earnings.Low R&D expenditures produce fewer novel items and severely limit the
company’s ability to compete in the future. The business should concentrate its US$5.4
billion in R&D spending in specific areas (as Hyundai does), which would make up for its
low R&D budget and produce creative products.

Opportunities

Increasing government regulations:

Numerous governments all around the world support measures to increase fuel efficiency as
part of their commitment to lowering greenhouse gas emissions. These environmental
activities may result in higher production costs for the auto industry, which will either be
passed on to price-conscious consumers or result in lower business profits. Honda might take
advantage of this by releasing additional vehicles that only use hydrogen fuel cells, dodging
all rules and restrictions related to emissions of greenhouse gases.

Improving U.S. economy:

The largest gain in new vehicle sales in the U.S. market in more than a decade has been
attributed to indications of a better economy and increased consumer confidence. In 2015,
17.5 million brand-new units were sold, a 5.7% increase over 2014. The United States has
had historically low interest rates, which are expected to continue for the foreseeable future.
In these financial circumstances, Honda has a chance to gain market share and sales in the
American auto industry.

Timing and frequency of new model releases:

The timing and frequency of new model releases have a considerable impact on the market
share of automotive firms. In the past, major improvements for new models have often
occurred every 4 to 5 years, with only minor changes occurring in between. There is a case to
be made for releasing improved models more regularly, nevertheless, given the increased
customer expectations in connection to in-car technology and the competitive nature of the
sector. Honda is in a good position to accomplish this.

Low fuel prices are increasing the demand for pickup trucks and SUVs:

Fuel costs are at their lowest point in ten years right now. Due to this circumstance, buyers
are buying large, inefficient
vehicles like pickup trucks and SUVs. Honda’s primary focus has historically been on smaller
vehicles like the Civic and Accord, but in the current fuel-price environment, the company
has introduced the Ridgeline, its next-generation pickup truck, and redesigned the CR-V sport
utility vehicle to meet demand for the larger vehicles.

Honda should release additional models of pickup trucks and SUVs to capitalise on the
expanding market for these cars and to boost the profitability of the company since the trend
of cheap fuel costs is probably here to stay.

Increased competition:

Honda is up against escalating competition from newcomers, established automakers, and

markets that are already saturated. The company’s main motorbike market, Asia, has
practically saturated markets. Only 5.4% of Honda’s motorcycle sales in Asia increased in
2016, compared to a 20.3% increase in the North American market. The business is up
against a lot of new competitors from China and India who sell bikes and scooters of a
comparable quality but at a lower cost than Honda.

The slowing expansion of the automotive markets and the escalating rivalry from new
Chinese manufacturers are both affecting Honda's automotive division. Toyota, Ford, General
Motors, Volkswagen, and Hyundai are some of the company's worldwide competitors. With
their higher marketing resources, they could fiercely compete with Honda for market share.

New businesses that attempt to create self-driving cars, like Tesla and even Google, are
posing a threat to the established automotive sector. The fact that the global automotive
manufacturing capacity vastly outpaces the demand further intensifies the rivalry. An
estimated 31 million units of excess production capacity existed globally in 2015.

Rising Japanese Yen exchange rates:

Honda generates more than 88% of its revenue from outside of Japan, thus in order to
compute its revenues and bring the earnings home, the corporation must convert foreign
currencies to Japanese Yen. The company’s profitability and income greatly depend on the
erratic exchange rates, which are characterised by significant volatility. The corporation is at
risk if Japanese Yen exchange rates start to climb because it has no control over currency
exchange rates. The company’s profits would suffer greatly in such a situation. The business
itself recognises this as a major danger that will harm it over the next years.
Natural disasters:

Thailand, China, Indonesia, Japan, and Thailand all host Honda production facilities. Natural
catastrophes frequently affect these nations as well as others, disrupting manufacturing
operations and lowering output levels and profitability.

CONCLUSION:

Honda is a brand that is reliable and unique in its own way, which clearly has the ability to
fulfil the demands and the requirements of the customers . some of its strengths are that the
company uses new innovative techniques and products in the market.