B2B Marketing - Batch 2020-22

Assignment 2

▪ Analyzing Purchase Order For Honda Motor Company, Ltd.

Submitted to: Submitted by:

Prof. Hitesh Manocha Siddharth Chauhan

JKBS/AICTE/2020/034
Honda Motor Company, Ltd.
Honda Motor Company, Ltd. is a Japanese public multinational conglomerate manufacturer of
automobiles, motorcycles, and power equipment, headquartered in Minato, Tokyo, Japan.
Honda has been the world's largest motorcycle manufacturer since 1959, reaching a production of 400
million by the end of 2019, as well as the world's largest manufacturer of internal combustion
engines measured by volume, producing more than 14 million internal combustion engines each
year. Honda became the second-largest Japanese automobile manufacturer in 2001.Honda was the
eighth largest automobile manufacturer in the world in 2015.
Honda was the first Japanese automobile manufacturer to release a dedicated luxury brand, Acura, in
1986. Aside from their core automobile and motorcycle businesses, Honda also manufactures garden
equipment, marine engines, personal watercraft and power generators, and other products. Since
1986, Honda has been involved with artificial intelligence/robotics research and released
their ASIMO robot in 2000.

Why Honda?
As the world's largest engine manufacturer, Honda, established in 1948, has wide experience in
developing and producing engines. Honda is recognised internationally for its expertise and leadership
in developing and making a wide variety of products - from small general purpose engines to sports
cars - which incorporate Honda's highly-efficient internal combustion engine technologies.

Honda technology
Honda's Over Head Valve (OHV) and over Head designs enhance combustion efficiency, help to
reduce fuel and oil consumption and ensure excellent thermal balance. Also the durability, reliability
and service life of the engine is extended. All Honda engines are equipped
with OHV or OHC technology. Advanced Honda technology is clearly seen in the features of the
intelligent iGX engines and the Mini 4-stroke engines.

Superior reliability and quality

Honda engines are built with high quality materials and purpose-made components which ensure
reliable long-term use.The GX-engines are covered by a 3-year warranty.

Easy starting
All Honda engines are equipped with an automatic decompression system which enables an easy start.
This system, connected to the camshaft, reduces compression by opening the exhaust valve slightly
when the engine is being started. This reduces the degree of force needed to start the engine.

Perfectly matching the OEM product

Honda engineers work closely with OEMs to make sure that Honda engines match OEM products and
that ‘Powered by Honda' products continue to exceed all customer expectations.

Environmentally friendly
Honda is well aware of its responsibility for the impact on the environment of its corporate activities and
its products and is committed to minimising that impact about Honda's efforts concerning environmental
issues.

Parts and service availability

The extended Honda service network offers maintenance, repair, original spare parts, warranty
handling and replacement engines. Honda offers a worldwide parts and service network.
 Purchase order

A purchase order is a document issued by the buyer company to the seller company for procuring
raw material, machinery, equipment, etc for the functioning of the organization. It is a legally binding
contract between both parties

This document includes PO number, purchase order date, vendor name and billing address, Buyer
name and shipping address, Additional contact information, such as phone numbers and email
addresses, Delivery date, Shipping method, Shipping terms Item name, Item description and technical
information, Item Quantity, Item unit cost, Line total, Taxes, Total price, Payment term, etc. for the
assurance of the legal contract between both the parties.

A purchase order is an official document requesting procurement of certain goods at a reasonable

time but both parties need to know the protections, such as terms and conditions for purchase orders
which are an essential component when you’re creating a legally binding agreement between a
company and the vendor.

• Purchase orders explain and confirm essential information to create a framework

• Purchase orders reduce the chance of litigation
Purchase orders encourage compliance with all applicable laws

Analysis of the various components of the purchase order

The purchase order starts with the description of the agreement which includes the date and parties
between whom the order is getting placed

• Scope of the agreement and agreement document

o Scope of the agreement- this gives the details of the product that are being supplied by the
company with the IMO no on it and a description of the technical specification is given.
o Agreement Document- In this the description of the sale and delivery is presented which shall
be construed as and form an integral and inseparable part of the Agreement
• Purchase price and terms of payment
o Purchase Price- this includes the purchase price of the goods however the purchase price
excludes and duties, taxes, VAT, stamps and fees applicable to the purchase of the goods.
o Currency- this includes any and all payments by the buyer to the supplier. That is in which
currency the transactions took place
o Terms of payment for the goods- this includes in how many no of instalments the
transaction will take place also the percentage of each instalment with the extended time
frame to make each instalment payment to cover the whole purchase price.
o Method of payment- what mode of payment to be made either via bank, bonds, things etc
o Interest on delayed payment- this includes if the instalment is not received on the due date
what is the rate of interest to be paid
• Delivery
o Delivery details- this includes the delivery conditions and in case of the shipyard location
changes for reasons beyond the control of the Buyer, the Buyer shall notify the supplier in
writing at the latest the date falling thirty
Ownership/insurance upon delivery- The ownership of the product shall be transferred to the buyer
at the date of delivery of the product to the Yard.
.
• Delays

o Builder’s notice of delay- If the supplier anticipates that it will not be able to deliver the
product at the time for delivery, the supplier shall forthwith notify the Buyer thereof in
writing, stating the reason, and, if possible, the time when delivery can be expected.
o Remedies for the supplier delay- this include the delay compensation to be made to the
buyer by the supplier in this case it is fine of 1% on the purchase price
• Warranty
o Supplier Warranty- this includes the warranty of the product that is in case of any defect in
the technicality of the product it should be clear by the supplier during a set period of time
this include the warranty for a period of 12 months of the product commissioning date, or
18 months from delivery, whichever comes first.

• Buyers obligation in relation to the yard- the arrangement of product in the same order as
promised in the specifications, the checking of the product and giving the confirmation of
acceptance after a clear inspection
• Product liability- The buyer shall be liable for personal injury only if it is proved that such injury was
caused solely by a defect in the product, the seller shall be liable for personal injury only if it is
proved that such injury was caused solely by a defect in the product.
• Intellectual property
• Confidentiality- The Parties must strictly ensure that all know-how, trade secrets or other
information of a confidential nature of which a Party has obtained knowledge as a consequence of
this Agreement should be kept confidential from any other party apart from the law if needed
• Supervision
o Scope and details for supervision
o Installation by buyer
• Commissioning
o Scope and details, costs
o Costs
o Certification
• Limitation of liability
o General limitation
o Exclusion and limitations of liability
o Extent of liability
• Force Majeure
o Force Majeure
o Notice
• Applicable law and jurisdiction
o Governing Law
o Arbitration
o Alteration of deliver date
• Term and termination
o The terms
Termination for material breach
Factor’s sellers need to be aware of when they interact with Business buyers

• The seller should understand the jurisdiction of the other country in terms of any void contract how
can he protect himself
• The seller should also keep proper set terms and conditions under what condition the fine of 1 per
cent are exempted like any force majeure which are affecting the timely delivery of order is not in
a control of the seller.
• The ownership transfer documents issuance as per the country rule and regulations
• The limitation of its liability of the seller like as per what limit the seller is liable under any
condition.
• The possible events that can occur keeping the country or the company to whom the product is
getting delivered

Analyses of their Marketing and financial implications

• The delay in the order affect the financials of the company as the company stop producing further
product if that delivering product is integral in the production system
• This can affect the marketing promises made to the customer
• The loss of finances is done if any loophole found in the purchase order terms and conditions

Key Learnings and Conclusion

• The importance of purchase order terms and conditions in the efficient completion of any business
orders/contract
• What companies in the automobile industry issue the purchase order
• What are the basic elements of the purchase order and what they actually meant to for
• What is the format of the purchase order and how it is formulated
• The importance of understanding the laws and jurisdiction of the countries with whom we are
coming into contract
• The parties should keep the purchase order keeping in mind the interest of both the parties
• The supplier party should set its limited liability so that he can be liable as per a limited amount not
all
• The purchase order terms and conditions are an integral part of any contract as they are the
decider in case of any fault in the contract.