Strategic Management – Report on a firm

(Honda Atlas, Ltd.)

Submitted to:
Dr. Sir Mubashir Mehdi
Submitted by:
1. Waheed Athar
2. Hamza Khadim

Program: MBA 3.5 Years

5th Semester (B - Section)

Institute of Business Management Sciences,

University of Agriculture, FSD.
Introduction of Honda (Honda Atlas)
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor
Company Limited Japan, and the Atlas Group of Companies, Pakistan. The
company was incorporated on November, 1992 and joint venture
agreement was signed on August, 1993. The company is listed on Karachi,
Lahore and Islamabad Stock Exchanges. On July 14, 1994, car bookings
started at six dealerships in Karachi, Lahore, and Islamabad. Since then
the Dealerships Network has expanded and now the company has sixteen
3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare
Parts) Pit stops network in all major cities of Pakistan.

Vision Statement:
“To be the first preference at every level of car lovers, and be the market
leader.”

Mission Statement:
“A dynamic growth oriented company through excellence in quality,
dedication to provide greater fuel efficiency at competitive prices, and
service ensuring attractive returns to equity holders, rewarding associates
according to their ability and performance, fostering a network of engineers
and researchers ensuing unique contribution to the development of the
industry, customer safety, satisfaction and protection of the environment by
producing emission friendly green products as a good corporate citizen
fulfilling its social responsibilities in all respects

Strategic Objectives/Goals
  Customers

Our Customers are the reason and the source of our business. It is our joint
aim with our dealers to ensure that the customers enjoy the highest level of
satisfaction from use of Honda Cars.

 Quality

To ensure that our products and services meet the set standards of
excellence.

 Technology

To develop and maintain distinct business advantages through continuous

induction of improved hard and soft technologies.

 Shareholders

To ensure health and viability of business and thus safeguarding

shareholders’ interest by maximizing profit. Payment of regular satisfactory
dividends and adding value to the shares.

External Factors Evaluation (EFE Matrix)

The purpose of an external audit is to develop a finite list of opportunities
that could benefit a firm and threats that should be avoided. As the term
finite suggests, the external audit is not aimed at developing an exhaustive
list of every possible factor that could influence the business; rather, it is
aimed at identifying key variables that offer actionable responses.

Key Opportunities:
1. People’s awareness about Global Warming.
2. Customer desire for hybrid and fuel efficient vehicles.
3. Increase in technology in automobiles forces customers to return to
dealer for service.
4. Introduction of ethanol fuel in Pakistan.
5. Increase in demand of small vehicles.
6. Growing Automotive Market.

Key Threats:
1. Political Instability.
2. Energy crisis.
3. Rising fuel and steel prices.
4. Inflation & Tax rates.
5. Depreciation of rupee against dollar.

EFE matrix allows the strategists to summarize and evaluate economic,

social, cultural, demographic, environmental, political, governmental,
legal, technological, and competitive information. The threats and
opportunities of Honda Atlas Company have been identified in the PEST
analysis and the ratings of the factors (1-4) have been done from the
brain storming and the facts and figures that have affected the company.
Key External Factors (Opportunities) Weight Rating Weighted Score

1. Awareness about Global Warming .07 4 0.28

2. Hybrid and fuel-efficient vehicles .10 3 0.30
3. Increase in technology .15 4 0.60
4. Increase in demand of small vehicles .15 2 0.30
5. Automobiles increasing .09 1 0.09
Key External Factors (Threats)
1. Political Instability .05 2 0.10
2. Energy crisis .07 3 0.21
3. Rising fuel and steel prices .10 3 0.30
4. Inflation & Tax rates .10 2 0.20
5. Depreciation of rupee against dollar .10 2 0.20
Total Score 1.00 2.58

From the above matrix calculation, we can see that the total
weighted score for Honda Atlas is 2.58, which is above of 2.50 by
0.08 points and shows that it falls in attractive segment.
 Internal Factors Evaluation (IFE Matrix)
The purpose of an internal audit is to focus on developing objectives and
strategies to capitalize on internal strengths and overcome weaknesses.
We list the organizations Key strengths & weaknesses so that we could use
them in a way to get positioned competitively. We try to overcome our
weaknesses and try to turn them in our strengths!

Key strengths:

1. Brand image
2. Strong R&D
3. Timely new models
4. Advance technology
5. Customer loyalty

Key weaknesses:

1. Costly spare parts

2. Dealership network
3. Shortage of trained technician
4. Limited product line
5. High Production Cost

This strategy-formulation tool (IFE Matrix) summarizes and evaluates

the major strengths and weaknesses in the functional areas of a
business, and it also provides a basis for identifying and evaluating
relationships among those areas. Intuitive judgments are required in
developing an IFE Matrix, so the appearance of a scientific approach
should not be interpreted to mean this is an all-powerful technique.
Key internal Factors (strengths) Weight Rating Weighted Score

1. Brand image 0.15 4 0.60

2. Strong R&D 0.10 3 0.30
3. Timely new models 0.07 3 0.21
4. Advance technology/equipment 0.20 3 0.60
5. Customer loyalty 0.15 3 0.45
Key internal (weaknesses)
1. Costly spare parts 0.08 2 0.16
2. Dealership network 0.05 2 0.10
3. Shortage of trained technician 0.07 2 0.14
4. Limited product line 0.08 1 0.08
5. High production cost 0.05 2 0.10
Total Score 1.00 2.74

From the above matrix calculation, we can see that the total
weighted score for Honda Atlas is 2.74, which is above of 2.50 by
0.24 points and shows the company is above the minimum point.

TWOS MATRIX
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix is an
important matching tool that helps managers develop four types of
strategies:
1. SO (strengths-opportunities) Strategies.
2. WO (weaknesses-opportunities) Strategies.
3. ST (strengths-threats) Strategies.
4. WT (weaknesses-threats) Strategies.

Following are the Honda Atlas’ important Strengths, Weaknesses,

Opportunities and Threats:

Strengths:
1. Brand image
2. Strong R&D
3. Timely new models
4. Advance technology/equipment
5. Customer loyalty
6. Smoother drive as compare to its competitors
7. Safety
8. Environment Friendly Cars

Weaknesses:
1. Dealership Network
2. Costly Spare Parts
3. Limited Product Line
4. Shortage of Trained Technicians
5. High Cost of Production

Opportunities:
 1. People’s awareness about Global Warming
2. Customer desire for hybrid and fuel efficient vehicles
3. Increase in technology in automobiles forces customers to return to
dealer for service
4. Budget friendly & economy cars
5. Automobiles increasing

Threats:
1. WTO (World trade Order) opening local markets for global
competition
2. Political instability
3. Energy crises
4. Depreciation of rupee against dollar
5. Increase in Petroleum and steel prices
6. Inflation
7. Declining quality of the infrastructure in the country.

ST strategies: Use a firm’s internal strengths to overcome external

threats.

1. Utilize research and development to minimize the steel prices

2. Energy crises can be minimize through advance technology (by using
more efficient Plants & Equipment).

WT strategies: Defensive tactics aimed at reducing internal weaknesses

and avoiding environmental threats.

1. Rightsizing
2. Strict employee policies to contain overhead and unfavorable
economic condition.
SO strategies: use firm strength to take advantage of external
opportunities.

1. By using technology hybrid and fuel efficient vehicle can be

manufactured.
2. Through R&D global warming can be minimize and customer
awareness program can be conducted.

WO strategies: Improving internal weaknesses by taking advantage of

external opportunities

1. Introducing new budget friendly small vehicles

2. Introduction of flexible fuel vehicle and going for product
diversification.

Market segmentation

Market segmentation can be defined as the subdividing of a market

into distinct subsets of customers according to needs and buying
habits.

Importance of segmentation:

The importance of market segmentation is that it allows a business to

precisely reach a consumer with specific needs and wants. In the long
run, this benefits the company because they are able to use their
corporate resources more effectively and make better strategic
marketing decisions
 Honda has made their segments based on the Following aspects:

1. Demographic:
 Income
 Occupation.
2. Psychographic:
 Personality
 Social class

Product Positioning
Positioning entails developing schematic representations that
reflect how your products or services compare to competitors’ on
dimensions most important to success in the industry.

High convenience

Honda
High customer Low customer
Loyalty loyalty

Low convenience

High price
 Honda

High quality Low quality

Low price

Conclusion:
After the analysis of Internal & External Factors as well the TWOS strategy
matrix, it is clear that it is appropriate and feasible for Honda firm to follow
the product diversification strategy.

In this context, the company will have to put new production plants in order
to produce new cars. This will include the arrangement of heavy budget
and extensive marketing of the new products. Since the monetary policies
of the country are tight at present, the company should arrange the capital
in form of equity by floating the shares in the market or wait for the interest
rates to fall down as the economic and inflationary situation of the country
stables. The products will contain product line of small cars i.e. 800 c.c. and
below.