Honda Motor Company
Porter’s Five Forces (Industry Analysis)
Bargaining Power of Suppliers:
The automobile supply companies have limited bargaining power. There are so many supply firms and there are so many parts that are required to produce an automobile, requiring numerous suppliers, one would think that the automakers would be at the supplier’s mercy. However, the suppliers really have very little power. The suppliers tend to rely on one or two automakers to purchase the majority of their products. If the automaker decides to change suppliers, the effects to the supplier would be devastating. With the JIT (Just in Time) manufacturing methodology Honda utilizes, there is a push-pull mechanism. This warrants a strong relationship between manufacturer and suppliers. This also can be quite profitable for both organizations.
Bargaining Power of Buyers:
The automotive industry is highly competitive, therefore buyers have some degree of control, as there are many automobiles from which to chose. Consumers have the greatest power in the relationship in the fairly standardized nature of the automotive commodity and the low switching costs associated with selecting from competing brands. Honda has a history of delivering high quality and fuel efficient vehicles. With the increase in fuel cost and the state of the economy, the consumers are seeking the best product for a good price. Honda has been a leader in producing fuel efficient and low emissions vehicles. As the world has a greater awareness of the need to protect the environment and to go green, Honda continues to improve the vehicles produced with this focus. In 1977 and 1983 the Honda Civic model ranked first in U.S. fuel-economy tests. Honda has introduced hybrid vehicles such as Insight, Civic, and Accord. In 2006, the Honda Insight was listed as the most fuel efficient car. These are just some of the examples of how Honda works to meet the demands of the consumers.
In the past history of automotive
Bargaining Power of Suppliers:
The automobile supply companies have limited bargaining power. There are so many supply firms and there are so many parts that are required to produce an automobile, requiring numerous suppliers, one would think that the automakers would be at the supplier’s mercy. However, the suppliers really have very little power. The suppliers tend to rely on one or two automakers to purchase the majority of their products. If the automaker decides to change suppliers, the effects to the supplier would be devastating. With the JIT (Just in Time) manufacturing methodology Honda utilizes, there is a push-pull mechanism. This warrants a strong relationship between manufacturer and suppliers. This also can be quite profitable for both organizations.
Bargaining Power of Buyers:
The automotive industry is highly competitive, therefore buyers have some degree of control, as there are many automobiles from which to chose. Consumers have the greatest power in the relationship in the fairly standardized nature of the automotive commodity and the low switching costs associated with selecting from competing brands. Honda has a history of delivering high quality and fuel efficient vehicles. With the increase in fuel cost and the state of the economy, the consumers are seeking the best product for a good price. Honda has been a leader in producing fuel efficient and low emissions vehicles. As the world has a greater awareness of the need to protect the environment and to go green, Honda continues to improve the vehicles produced with this focus. In 1977 and 1983 the Honda Civic model ranked first in U.S. fuel-economy tests. Honda has introduced hybrid vehicles such as Insight, Civic, and Accord. In 2006, the Honda Insight was listed as the most fuel efficient car. These are just some of the examples of how Honda works to meet the demands of the consumers.
In the past history of automotive