A swot analysis of Honda will show us that its;
Also it diversifies revenues by operating in a number of markets. They include Automobile market(80.2% of revenue in 07), Motorcycle market(12.4%), Power product and other(3.8%) and financial services(3.7%). Performing well in all these markets not only provides protection from loss in one market but also provides benifits from other market and all this led to a revenue stream of around $94 billion. Leading market position and brand, Honda is one of the leading manufacturers of Light vehicles in the world, it is the third largest in Japan and is the leading manufacturer of motorcycles in the world. In addition in 2007’s Fortune magazine’s list of America’s most admired companies Honda was ranked as number 6 in motor vehicles and parts industry. It was also ranked 37 by Fortune Global 500 list for 2007. Leading market position helps provide economies of scale and increases bargining power. Honda also has one of the leading automobile brands in the world reacing 19th in the annual ranking of the top 100brands by Bussiness Week in 2006. Their brand value stoodcat $17,049 million. This was achieved by consistent investment in advertising and technolically superior products, the Honda brand stands for quality and reliability. Engineering capability, Honda is synonymous with engineering excellence. The company is well known for its engineering excellence from its automobiles to robots. During 2007 they invested around $4.7 billion in research and development. The developed the world’s first humanoid robot capable of bipedal motion and the world’s first automobile engine to meet the US clean air act requirements.The company is also well known for its v-tech system and along with Toyota was the first to launch the hybrid car. The engineering capability of Honda is very strong even announcing a new brain-machine interface creating technology for manipulation robots using human brain activity. WEAKNESSES
Unfunded employee post retirement benefits, Honda provides pension benefits and other post-retirement health and life insurance benefits to employees. During 2007 they incurred around $297.7 million for the post rtirement benefit expenses. By the end of March 2007 the company’s projected pension and postretirement benefit obligations stood at around $13,918.8 million as compared to the planned assets at around $10,451.2. Sizeable unfunded post retirement benefits would force the company to make large cash contributions to paying this which would reduce cash available for growth plans. - **Product recalls, Although Ford had to recall many vehicles in 2007, Honda recalled over 81,000 of its Accord Sedans and 27,841 of its Odyssey models in 2007 due to issues with airbags and brakes. All of these vehicles were manufactured between October 2003 and August 2004. In addition, Honda Motor had to notify the Ministry of Land, Infrastructure and Transport that they were recalling 129,159 minivehicles for free repair due to manufacturing defects in the same month the Odysseys were recalled. The Acty, Vamos and Vamos Hobio models which were reportedly taken in for repair to their rear doors, also had a risk of cracking in their exhaust system and body frames that had not been welded properly, according to the Ministry of Land, Infrastructure and Transport. The many product recalls in 2007 indicate an inadequate quality assurance and quality control systems.
Lower inventory turnover ratios, Honda registered a weak inventory in 2006 in comparision to the industry average and its main competitors. At the end of 2006 Honda’s turnover ratio was 7.1 which was considerably lower the the industry average of 10 and that of Toyoya(11.2) and General motors(11.2). Having a lower inventory turnover increases the company’s holding costs and reduces its margins. OPPORTUNITIES Opportunities in India and China, There is a growing demand for more...
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