Competitive Advantages of Honda.
Bridge School of Management
This paper was prepared for OBL case study assignment.
A firm with a competitive advantage may experience higher profits than the average profit in the industry while competing for the same customers. There are several factors that can contribute to a firm's ability to be competitive in its industry. Building blocks of a competitive advantage include efficiency, quality, innovation, and responsiveness to customers. This Literature reviews the Honda for its sustained competitive advantages. For a general introduction of the company: Company background
Honda Motor Company, Ltd.
Automotive, Aviation, Telematics
Geographic areas served
¥7.948 trillion (2012)
¥211.48 billion (2012)
Daimler AG, Ford Motor Company, General Motors Company, Nissan Motor, Toyota Motor Corporation, Suzuki Motor Corporation, Volkswagen AG.
Competitive Advantages of Honda.
Honda is now one of the top choices for many buyers. As a brand, it continues to meet and exceed the buyers’ expectations every year. Honda has many distinctive competencies based on its resource and capabilities that allow it to have a competitive advantage in the auto manufacturing industry. Three areas that give Honda a competitive advantage in the auto industry include Honda's engineering and design, research and development, and brand equity. The Major Advantages of Honda, as many survey results have supported, are: Reliability: For both processes and parts, Honda has a remarkable reputation of Quality. This reputation has been consistently maintained by Honda and is well supported by the Consumer Reports.
Fuel Efficiency: Honda is an industrial leader in terms of Fuel Efficiency and this has propelled it to popularity because of high fuel prices.
Value: It is said and often true that you get a lot for your money when you buy a Honda. The offerings of Honda are at par with more expensive counterparts in the automobile industry.
Competitive Advantage in terms of Time
In terms of time, Honda has developed Efficient Production methods and Logistic Innovation as their competitive Advantage. Honda has such manufacturing differentiator as Just-In-Time parts delivery, quick die changes in metal stamping, rolling model changes to launch new vehicles without stopping production and a high level of flexible model production. Besides, most of the suppliers and customers are close to the plant. Competitive Advantage in terms of Investment
As per my study, the Investment model of Honda can be categorized into 3 parts which earn them lead from their competitors. Strong R&D investment: Honda’s investments in R&D reach as much as 5% of revenue. The business relies on these investments to achieve competitive advantage through various technologies, such as improved vehicle painting process, new hydrogen and hybrid engines or new welding technologies. In 2012, the company owned 42,000 patents and had pending applications for 29,000 more patents. Joint Ventures for Foreign market penetration.
Low levels of acquisition activity.
Competitive Advantage in terms of Interconnectedness of capabilities. Honda has improved its ability to turn resources into customer value and profit.Its efficient production and lean process has added to low manufacturing cost than its customers. Due to the high value for money product line and services, Honda have the best Brand value and loyalty (64.7% vs. 48% industrial average). It has developed its Global network keeping them interconnected. Honda business units are aligned to take advantage of design breakthroughs Competitive Advantage in terms of Causal ambiguity:
Honda is unique in that its corporate structure is made of three companies. Honda...
References: 1. http://dspace.lib.niigata-u.ac.jp:8080/dspace/bitstream/10191/983/1/18_0179.pdf
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