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Honda Case Study

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Honda Case Study
1.0 Introduction
Honda is the second-largest automaker in Japan, after Toyota, and the world’s biggest motorcycle manufacturer. (Vault – Honda Motor Company Limited)
Honda has four separate business units as listed in Table 1.0. | SBU | Revenue (Yen Millions) | COGS and operating expenses (Yen Millions) | Operating Margin | 1 | Automotive Products | 5,822,742 | 5,899,948 | -1.3% | 2 | Motor Cycles | 1,348,828 | 1,206,226 | 10.6% | 3 | Power Products | 289,374 | 293,772 | -1.4% | 4 | Financial Services Business | 526,576 | 356,576 | 32.3% |
Table 1.0 Revenue, Costs and Operating Margin for Honda Motors 2012
With almost 73% of Honda’s global revenue generated through the sales of their automotive products but with an operating loss of 1.3% in 2012, this report will focus on the automotive business of Honda.
Using the Boston Consulting Group Matric (BCG Matrix) Honda’s automotive products are positioned as a ‘cash cow’, but edging close to being a ‘star’. With a brand value of $17.3 billion, Honda is the 21st most valuable brand globally and 4th most valuable automotive brand (Interbrand, 2012). Honda also retains 62% of its owners which is one of highest brand loyalty values in the automobile industry (J.D. Power & Associates, 2010). These contribute to Honda being a ‘cash cow’.
The automotive industry however is highly competitive and at no time can any manufacturer rest on their laurels. For this reason in particular Honda’s automotive SBU sits on the cusp of being a star. | | | | | | | | | | | | | | | Business Growth Rate | High | | | | | | | | | | ? | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Low | | | | | | | | | | | | | | | | | | | | | | | | | | | |


References: Bloomberg News (March 9th 2013) - China may increase subsidies for Hybrid Vehicles, Minster Says. http://www.bloomberg.com/news/2013-03-08/china-may-increase-subsidies-for-hybrid-vehicles-minister-says.html- Viewed 19th March Clean Technica (2012)- Electric Car & Hybrid Car Sales up 164% in June. Viewed 19th March http://cleantechnica.com/2012/07/23/electric-car-hybrid-car-sales-up-june-2012/ De Wit, B. And Meyer, R. (2010) Strategy process, content, context. Cengage Learning, Andover, UK. DieselNet – Emissions Standards for USA, Cars and Light Duty Trucks Hanssens, Dominique M; Johansson, Johny K. Rivalry as Synergy? The Japanese Automobile Companies ' Export Expansion. Journal of International Business Studies; Third Quarter 1991; 22, 3; ProQuest Central. pg. 503 Interbrand, 2012 – viewed March 16th 2013 http://businesscenter.jdpower.com/news/pressrelease.aspx?ID=2010238 The Star Online (Tuesday 8th January, 2013)
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