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Honda Motorcycles- A Strategic Perspective- By Sai Sankar

Honda Motorcycles- A Strategic Perspective- By Sai Sankar

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Published by Sai Sankar
A strategic perspective on Honda's motorcycle business, their issues, opportunities and possible alternatives for sustained growth.
A strategic perspective on Honda's motorcycle business, their issues, opportunities and possible alternatives for sustained growth.

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Published by: Sai Sankar on Mar 15, 2012
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01/27/2013

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STRATEGIC AUDIT
 
PREPARED BY: SAI SANKARDATE: 10
th
MARCH 2012
 
2
Table of Contents:An Overview of Honda and Honda Motorcycles 3Their Overall Management Structure and Its Strengths and Weaknesses 4
Strengths of the Management Structure 4Weaknesses of the Management Structure 5
Their Current Strategy: Global made Local 5
 Their Overall Global Strategy 5Japan 5North America 6Europe 6Asia and Other Regions 7
Honda’s Challenges, Opportunities
and Its Capacity to Handle Both 7
The Major Global Challenges 7The Major Global Opportunities 8
A Few Strategic Recommendations 8Report Summary 10References 10
 
3
An Overview of Honda and Honda Motorcycles:
Honda, a pioneer in the design, engineering and manufacturing of engines and the largest enginemanufacturer globally, has diversified into almost every business where the use of an engine isnecessary. Having carefully understood its founder, Soichiro
Honda’s vision, it has been able to remain
true to its core focus on engines, while expanding into nine major divisions and subdivisions rangingfrom Honda Automobiles and Motorcycles to their most recent venture into the business of corporateluxury aircraft.Honda currently has a market capitalization of approximately 67 billion dollars and had revenues of US $ 107 billion in the Financial Year 2011, with a net profit of US $ 6.8 billion in the same period.Honda has 4 major business divisions, Honda Automobiles, Honda Motorcycles, Power Products andFinancial Services and five other smaller subdivisions: Acura, Honda Marine, Honda racing, HondaPower Equipment and Honda Jets. However, when recognizing and disclosing revenue, it chooses todivide its revenue streams into four major headings: Honda Automobiles, Honda Motorcycles, PowerProducts and Financial Services. The largest proportion of their global revenues comes from theirautomobile business, followed closely by their Motorcycle division.Honda is the largest manufacturer of engines in the world by volume and the 6
th
largest automobilemanufacturer on the planet with assembly plants in China, the United States, Pakistan, Canada, England,Japan, Belgium, Brazil, New Zealand, Indonesia, India, Thailand, Turkey, Taiwan and Perú.They are currently headquartered in Tokyo, Japan and their current CEO Takanobu Ito reports to a boardof 12 directors (including 2 external directors) who work with a team of 5 additional corporate auditors.The Company has six administrative regions around the world and regional boards to make localizeddecisions in each of these six regions.This Strategic Audit will focus on the Honda Motorcycles division, which last year sold a little over11
million motorcycles in almost every corner of the globe. Honda’s motorcycle business, its first
business venture, has upended the businesses of several well-entrenched market leaders over the yearsand is seen as the benchmark brand in motorcycles of almost every size and engine capacity. In fact, thename Honda itself is often used as a synonym for a motorcycle in several parts of the world, owing totheir legendary performance, reliability and subsequent popularity.
Soichiro Honda’s passion for motorcycl
es, both on the race track and on the open road, combined with
Honda’s legendary reliability, technical prowess and massive production scale
, helped transform anindustry of otherwise well-entrenched players who had dominated their small, yet essential turfs.Honda, through dedicated attention to production technologies, thorough quality control and often verynimble moves to take advantage of opportunities, decimated entire motorcycle industries in certaincountries, while simultaneously expanding the overall size of the global motorcycle market over a periodof over four decades. They raised the bar for motorcycle performance and re-defined consumerexpectations about reliability, causing stronger competitors to catch up, while leaving the remnants of the weaker ones by the wayside.Having achieved several unimaginable feats over the past six decades, Honda Motorcycles stands at apivotal point in its existence. The world of motorcycles Honda created,
isn’t one with several players in
niche segments, but is more a world of consolidated, established brands with significant R&Dcapabilities, massive production volumes and well-known brand names. In addition to competition from

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