Macroeconomic environment of a business is essential to all its operations. This is because most of its present and future operation depends on the encompassing business environment. Honda has extended to adopt the changes that happen around its procedures to be able to ensure sustainability and profitability. The existing global motorcycle developing sector is full of competition. It therefore becomes critical for every make to evaluate their strengths and weaknesses and then identify the opportunities to exploit to be able to gain competitive advantage. Research and Development (R&D) and innovation in the developing process make the epitome of Honda's competitive benefit. It is very important for a corporation to loan company on its competitiveness and maintain it for the success of its product and services.
Macro-environment
A firm's macro-environment is made up of various areas of the firm's adjoining that have the capability to potentially impacts is business strategies. An organization's macroenvironmental factors have less effect on the firm's procedure as compared to the organization's process environment. The macroenvironmental varying contains sociocultural, economic, scientific, political and legal parameters. It is important for a firm to consider these variables in order to understand the many threats as well as opportunities that can be created by the precise variables. In addition they assist in indicating the way the strategic plans can be effectively altered so that a firm can acquire as well as retain a good level of competitive advantage. The microenvironment comprises of forces that emanates from outside the organization and can never be effectively changed by any form of actions of the company. This is to state that the organization can be inspired by the macroenvironmental makes but it can never impact these environmental pushes.
Socio-cultural and demographics
Lifestyles and societal ideals do change as time passes. There are several socio-cultural and demographics factors that straight impact the street motorcycle manufacturing industry. The actual fact that in this era women could work outside their homes and join the workforce means that they have an improved spending electric power (Newsweek, 2010) the upsurge in the spending ability of women is an economic factor that can effectively be used to develop products and services that focus on ladies in the motorcycle processing industry. The other socio-cultural factor is that need s to be considered is the frame of mind towards new technological marvels of becoming enviromentally friendly.
In conditions of demographics, the BRIC countries (Brazil, Russia, India, and China) that are experiencing exponential development give a perfect chance for the sales of motorcycles.
Demand for inexperienced products
The demand for renewable products is an integral part of the natural macroenvironmental force which can meticulously be associated with the much larger socio-cultural environmental makes that effect product sales. Nature is the key source of recycleables that are used in the production of most products. The recycleables could be alternative, depleting or infinite in its supply. It's important that all the raw materials be preserved and any form of wastage be curtailed. The ecology should be maintained by correctly minimizing pollution. That is by means of eco-friendly (green) technology. The concept of eco-friendliness and going green can effectively be employed by marketers in the motorbike industry to be able to win more customers. The concept of going green in the motorcycle industry involves the study and development of hybrid, e-motorcycles as well as hydrogen-fuel-cell motorcycles. The procedure has several merits. It however also has its fair talk about of issues as pointed out by Schwartzapfel (2008). The fact that companies such as Honda are already proven means that the incorporation of renewable technology in their production and marketing combine can effectively bring an optimistic jolt with their brand and corporate image. This would in turn be reflected on the performance. This is reinforced by the actual fact that green demand among customers is rapidly getting more powerful (PWC, 2008).
In regards to demographics, the statistical amount that seniors comprise of about 25. 8% of america society (Briand, 2009) is a factor for motorcycle developing industry to consider in their marketing mix. The fact they have higher income than the advertising United States inhabitants is another opportunity that can be exploited by the motorcycle manufacturers (Dell Web, 2010). The chance comes from the fact that seniors have a higher income and are constantly refusing to recognize that that are increasing age. This makes them a perfect focus on for luxury products and services. The hazard to the reliance in the forex market segment is dependant on the fact that the infant boomers eventually get too old to make use of the blissful luxury products that they thought were appropriate to their lifestyle thereby leaving a demand vacuum.
Legislation
Legislation is yet another important microenvironmental pressure that the motor bike making industry must reckon with. The legal environment that organizations are facing is swiftly becoming intricate and has a rather direct effect on their functions (Thomas, n. d). It has made it very hard for the firms to operate without being affected by way of a legal, compliance or legislation problem. The most important legislations that affect the motorcycle creation business are in the domains of positive consumerism, competitive routines, environmental issues and worker relations. Most of these laws are associated with several regulatory systems. They include Environmental Cover Agency (EPA), Equal Employment Opportunity Percentage (EEOC), and Occupational Basic safety and Health Supervision (OSHA). An research by Thomson Reuters' Governance, Risk and Conformity (GRC, 2011) indicated that the price tag on compliance is to keep rising with time. In the motorbike manufacturing arena, businesses such a Honda must comply with the various regulations that have an impact on their trade. The sound statutes for example are one of the regulatory compliances that they face. In the U. S foe example the federal government regulations require all motorcycles to acquire their noises below 80 decibels from a point located 50 feet away from the street motorcycle (Fredrix, 2007). This could negatively impact their sales. The regulatory requirements are very expensive to meet and keep maintaining. This is therefore a great threat to the motorbike developing industry.
Economic environment
The economical environment is vital for the sales and make of motorcycles. The existing status of the current economic climate is not very good therefore of the recent economical downturn. It is therefore important for Honda to understand the current monetary condition as well as predict the near future economic conditions. It is worth noting the current oil prices demands the manufacture of gasoline efficient motorcycles. The decrease in the median income also has an impact on motor bike sales. A written report by the Motor Cycle Industry Association (MCIA, 2010) indicated that the recent financial downturn reduced the deal of motorcycles by roughly 20%. The global overall economy is yet, in recovery however the high unemployment rate coupled with a decrease in the level of media income means that fewer people will probably enjoy the purchase of the high-end, luxury street motorcycle products and services.
Technology
Technology presents both a potential menace as well as potential opportunity to the established Honda products. Other competing businesses have launched and are in the process of producing new and sophisticated technology that is more enhanced making it extremely hard for Honda to evaluate their true market probable. The release and enforcement of the CAFe standards has seen the energy economy of autos and motorcycles improve. This has been in conjunction with the intro of hybrid variations of the vehicles and motorcycles as well as technology for different fuels such as hydrogen. The improvement of gasoline economy is important to the present global economy therefore of the decline in the median income as well as the ever rising price of fuels. The disadvantage of the hybrid technology is that a few of the hybrid automobiles and motorcycles may end up being more expensive in comparison with their standard counterparts. The chance offered by this technology is the fact that it can allow for the creation of more economical and energy efficient motorcycles to replace the expensive car whose maintenance has been worsened by the decline in median income, insufficient employment and exorbitantly high prices of gas.
Business Level Strategy
The business level strategy at Honda is consistent with its organization and corporate strategies. Within the motorcycle industry, the organization is striving to construct its products and services very near its customers in a complete of 21 vegetation that are spread across 21 countries. The organization also conducts Research and Development (R&D) in a complete of six countries. The study and development system is customized in its way in order to create products and services that are durable and reliable at exactly the same time. The emphasis of the Honda groundwork is to have three main sizes; social, economical and environmental issues. Which means that the organization strategy is to aid sustainability at all levels. The street bike manufacturing plant life are design to be easily convertible to automobile manufacturing plant life should there be a need associated with an exit strategy. The business strategy at Honda is to totally support the functions of globalization and show its characteristics. R&D has therefore been consistently been utilized by Honda to be able to truly have a competitive edge over its competition. The R&D system at Honda is extraordinary. It is because it is systematic in its method of challenges of longevity, product stability as well as performance. Honda has a proactive approach to the near future needs and demands while effectively caring for social, cost-effective and environmental issues (for sustainability). The research and development at Honda employs leading edge technology as well as an unparalleled commitment to the process of innovation in order to make better products for future range of motion. The other aspect of Honda's business level strategy includes the role enjoyed by the sellers. The production, syndication and selling are to be inspirited by the three joys. They are'
The Pleasure of Buying
The Delight of Selling
The Pleasure of Creating
These are Honda's beliefs as well as want to ensure that every individual dealing with Honda or interacting with the company and its own brand should experience a sense of happiness. The consumers should go through the joy of buying Honda products by receiving products and services that exceeds whatever expectations they had. The traders should experience the joy of reselling. There should be a creation of motivating experience for the customers, this will be coupled with a quick respond to the many changes in value in the needs of customers. The client relations must be improved through the sales force that is attentive and friendly. There should also be a detailed product maintenance as well as repair.
Honda motorcycles have competitive edge over its competitors.
For a while, Honda has managed to stay prior to the pack by trading lots of time and efforts in refining its competitiveness in the motor bike market. Hariri (2004) when analyzing the competitive benefits at Honda motorcycles realized that Honda started its quest for competitiveness almost 47 years ago when they first unveiled a little and lightweight bike that got an automated clutches, 30-swiftness transmitting as well as electric starts off. These bikes acquired superb handling and were deemed to have a rather safe and "friendly" appearance. They travelled forward to make it more comfortable for woman riders by including in their design, step-through frames. Their products were attractive to people from all walks of life. The appeals in conjunction with their affordability and slogan that read "You meet the nicest people on a Honda" proved helpful marvelously in their marketing campaigns. The huge demand for little motorcycles offered Honda the chance to unveiling as well as dominate the then relatively new market through the work of proprietary technology, productive production, regular release of extremely useful and top-notch, next technology models, increased innovativeness in their product design as well as product features as well as the a relentless improvement in their after-sale services. This made most of their competition (especially from European countries to fade away). There's been some competition from Harley Davidson and BMW but Honda has still managed to dominate by virtue of the momentum gained as time passes (Hariri, 2004). What Honda did in order to keep competitive advantages is to continuously differentiate itself in the motorcycle marketplace. They may have continuously made work to vary from their opponents while guaranteeing an unparalleled uniqueness in their product offerings. They have also made it their philosophy to ensure that they put in a lot of value in the merchandise and services that they provide their customers. Their competitive gain is also done to ensure uniqueness in product quality for the future markets. Honda has also managed to maintain competitive benefits by frequently boosting their products and services in order to meet what's desired by their clients as strong, useful and progressive. The innovative advancements at Honda in terms of product design, types of models and well as superb quality and service are what makes them unique and therefore have a competitive advantages over their challengers.
The company in addition has worked hard to be able to place environment and consumer safety as part of its agenda. Their goal surpasses conformity and rules but is targeted at bringing ability to move to the generations to come. This is achieved by way of a proactive development as well as launch of systems that are safe and environmentally friendly. The safety focuses on everyone (pedestrians, driver and also other motorcycles and motor vehicles). The business has taken activities aimed at making environment and consumer security as part of its agenda. Their goal surpasses conformity and regulation but is targeted at bringing range of motion to the generations to come. This is achieved by having a proactive development as well as introduction of solutions that are safe and environmentally friendly. The safety targets everyone (pedestrians, driver as well as other motorcycles and automobiles) All Honda motorcycles are fixed with environment-friendly and programmed fuel treatment system (PGM-FI). For safe practices purposes the Honda motorcycles include a combined braking system that has both traditional braking system and an anti-lock breaking system working along. On differentiation, the 2011 Honda CBR250R street bike has several patents (More than 18) related to its shape and a sophisticated fuel filter design that effectively reduces its weight as well as an advanced coolant system and a mix frame for increased rigidity (Wasef, nd).
Value String Analysis
Value chain analysis can be considered a great method for the management of an organization to recognize the main activities that occurs in the organization. The activities recognized are usually area of the organization's value string and besides, they enormously provide sustainable competitive advantages for the firms. Therefore, competitive benefit of a firm is lying down in its capacity to execute better the important activities along the value chain than the companies with which it is rivalling. It will also be mentioned that the aim of any business is to attain sustainable competitive advantage.
The framework of value chain that was laid down by Porter (1990) is "a mutually based mostly system or relationship of activities that are related by linkages". In the event the composition is carefully been able, the linkages are capable of as an important origin of competitive advantage (Pathania-Jain, 2001). Value string analysis is actually entailing the bond of two fields. To begin with, value chain attaches the worthiness of the activities of the organizations with the major useful parts. Second of all, the evaluation of the involvement of every part in the generally extra value of the working is manufactured (Lynch, 2003).
For a business to build and keep maintaining a competitive advantages over its rivals, it has to remember several areas of the firms and the businesses with which it is within competition. Given that the Honda Company has specified the businesses with which it is in competition, it is with the capacity of performing better than them. The actual fact that there are no leading opponents in the United State's street motorcycle market offers Honda an top hand. Having became aware that, the business is with the capacity of making good strategies that will make it to conquer all the other organizations like the Harley-Davidson whose market talk about is 28%. It is merely this company that is above it as far as the market talk about is concerned. The organization must also ensure that the other companies whose market stocks are below it should never be allowed to move it. Such companies will be the Yamaha whose market show is 17%, and Suzuki whose market share stands at 13%. While Harley-Davidson has the largest market talk about, it does not have the ability to enforce the guidelines of competition. Throughout the diversification of Honda, this can be a bigger and an extremely more profitable firm than Harley-Davidson despite the fact that the organization is having a wider market talk about than Honda. The diversification is capable of making Honda to develop and keep maintaining a competitive advantages over its opponents which is mainly Harley-Davidson.
Honda is also capable of building and keeping a competitive gain over its rivals by the fact that it's regularly checking the techniques of its challengers. Having tracked the full total net gain for Harley-Davidson which is standing at 259 million and contrasting it using its total net assets which was located at 6. 83 billion in 2010 2010, it is capable of working all round the clock to ensure so it beats the company through all means. It will ensure that its total net assets exceeds that of its rival company, mainly Harley-Davidson as well as the other competitors. Additionally it is having the capacity for preserving a competitive benefit through its taking good thing about the weaknesses of its competitors.
The company is with the capacity of keeping a competitive gain over its competitors through the evaluation of its marketplace. The target market refers to a given band of customers which the company is aiming at when it's producing its goods and services. The target market identifies the people who will almost certainly purchase or use the merchandise or the services that a company is producing. Honda has examined not only its market show but also the market share of its rival companies. Having known the market show of its competitors will likely make it to overcome the competing companies. They should endeavor to stay prior to the other organizations with which it is competing. They have to develop great strategies that will enable these to lead the other organizations.
Honda is with the capacity of keeping a competitive advantages through the extensive evaluation of its inbound logistics. Inbound logistics can be defined as the activities that are concerned with the reception of materials that comes from the suppliers, making certain these materials which can be purchased externally are well stored, and also ensuring that they are really properly handled within the company. Only then might it be capable of remaining before other firms on the market. Predetermined/Storage Costs: Because of the fact that both the fixed and storage space costs are comparatively high for several the rivals in this industry, Honda should make an effort to minimize its safe-keeping and fixed costs to be able to gain a competitive edge over its competitors.
Operations also need to be regarded by the organization so as to maintain a competitive benefit over other firms. Operations involve the activities that are linked to the development of services and goods. It takes on an essential role in the maintenance of the competitive advantage. All of the motorcycle companies have added capacity in huge increments. This has greatly increased competition. However, Honda also produced a herb in India. The vegetable is having a yearly production of approximately 600, 000 motorcycles. This capacity of production is exceeding the complete number of motorcycles that comes in america during the 12 months 2010. This expansion has greatly made the company to get a competitive advantage over its rivals. However, the firm should strive to end up being the leading supplier of motorcycles in america.
Outbound logistics must be looked at by the firm to keep up a competitive advantage in the other businesses. Outbound logistics refers to the activities that are mainly worried about the distribution of the end products to the consumers.
Sales and marketing are also not left behind when value string analysis has been looked at.
The region of sales and marketing is actually analyzing the various wants and needs of the customers. Besides, is accountable for the creation of recognition among the clients who are the main target of the organization. The clients should be kept updated about the goods and services that are given by the company. Generally firms ought to apply mechanisms of marketing communications such as publicity, sales promotions so as to pull many consumers to the products that are made by these firms. The fact that Honda is marketing its products is presenting it a competitive advantages over its challengers. Marketing and advertising distinguishes Honda's motorcycles. This can make the consumers desire to buy the best products. Indeed it is Honda's continuing marketing strategies that can make it to get a competitive gain over its opponents.
After sales services is also essential for value string analysis. The firms are obliged to offer after-sales service previous to or after the sale of the goods or service. Good Procurement procedures are also essential for the analysis of the value string. The procurement section is presented responsible for the purchase of items that are essential for the operations of the companies. An effective procurement department ought to be capable of obtaining the greatest quality commodities at prices which are extremely low.
The management of human resources is also vital for the worthiness chain research. The office that is concerned with the recruitment, training of the staff, determination and also providing rewards the firm's workforce. Workers are slowly but surely becoming a significant method for the attainment of ecological competitive benefit. The personnel ought o get thorough training in the client service. The staff should get both bonus items and also stock plan. This sort of reimbursement plan is capable of encouraging the workers to work best for the business to ensure that their value of compensation goes up. That is capable of resulting into employees who are definitely more productive thereby reducing the price of workers. Technological progression is also a field that is mainly dealing with technological improvement, training and the acquisition of knowledge and skills that are essential for the success of Honda. The Company's infrastructure is also participating in a key role in the worthiness chain examination. It includes effective planning and efficient control systems like accounting (Lynch, 2003).
Protection from the Five Forces
Threat of New Entrants
Economies of size: This menace to Honda is labeled as being medium. In conditions of the organizational (Internal) economies of range, there is the most cheap production level is referred to as Minimum Efficient Scale (MES). This point is where the cost of producing a product of a given product is at its minimum. That is to mean that it's the most cost efficient production level. If the Minimum Efficient Scale (MES) of confirmed firm be in the public domains, it would become totally possible to determine the degree of market share that might be necessary for competitors to hop in at a lower cost. Honda shields itself from the risk created by this form of threat of new entrants by causing the difference between the Minimum Efficient Size and the accessibility device cost to be very large. Honda also ensures that they maintain competitive gain through product differentiation and quality product and service delivery.
Access to Syndication Channels: This danger is graded as posing high menace to entrance. The possibility of a fresh entrant establishing its impartial dealership network to rival the main one is high but Honda has over time perfected its distribution channel. They have come up with a powerful and efficient digital distribution system within its value chain.
Cost Drawbacks that are Independent of Level: These are indicated as posing low hazard to entry to Honda. That is related to technology and intellectual property rights. In order to protect itself out of this form of menace, Honda has trademarked most of its ground-breaking solutions. The patenting of its proprietary corporate information helps Honda to minimize the level of risk of new entrants. Honda also strives to teach and retained its skilled workforce in order to reduce protect itself from the hazard possessed by new entrants.
Competition
In order to lessen the hazard posed by too much competition in the motor bike processing industry Honda has made efforts to distinguish itself from its competitors by differentiating its products and services in order to be unique and delightful it its products and services offerings. It has additionally trademarked its key technologies.
Substitutes
In order to protect itself from swap products, Honda has taken steps to require itself in the craze of the public to prefer public transportation (preferred due to its cost effectiveness and environment friendliness ), automobiles (carpooling) and leisure walking by positively involving itself in the embracing of lasting and energy conserving proprietary technology that counter the consequences of high fuel prices and environmental degradation. Honda has embarked in the development of fuel reliable engines and has embraced green technology (hybrid and e-machines/motorcycles).
Supplier Power
The concentrated dynamics of the motorcycle manufacturing market means that the existing suppliers have extremely low bargaining ability with the organizations they are already engaged with. The suppliers however, have high bargaining electricity with the actual new entrants to the motorbike manufacturing market because of this of the expense of turning. Honda has therefore custom-made its manufacturing techniques to be able to meet their requirements and for that reason an unprecedented swap would need a great deal of resources and costs to the afflicted supplier.
Competition
In order to protect itself from competition, Honda has placed emphasis in detailed research and development as well as creativity that are targeted towards solving the future flexibility needs.
Evaluation of the potency of how the Honda has chosen to control rivalry
Honda has effectively been able business rivalry (competition) through the career of certain specific goes that have sent major blows to its business competitors. A few of these are'
Emphasis on Research and development and innovativeness
Honda dedicates a lot of funds each year to R&D endeavors. In 2007 for example, it spent an estimated $5. 14 billion on R&D by themselves (Crain Communications, 2008). Their goal to resolve tomorrows range of motion problems coupled with good ground breaking techniques has ensured that Honda has looked after its sport as one of the better motorcycle companies in depends upon.
The building of relationships
The best corporations in depends upon must have proper associates. Honda too has tactical partners that are an integral part of its value chain. To be able to successfully complete, Honda has made an attempt to expose key players into its value chain process. This has been facilitated by the application of technology to form the online value string paradigm.
Business companions/transactions
In order for Honda to keep fairness and a sound romance with most of its business associates, it engages itself in reasonable and credible deals. Should they need a business partner, they select the spouse by carefully contrasting as well as evaluating the partners in a fashion that is impartial and with a awareness of their conditions and conditions. After the selection of a proper partner, no products will be given or accepted beyond what is considered appropriate. The misuses of positions as well as power are also prohibited. Business lovers are also not to give or get incorrect benefits.
Relationship with various governmental bodies/agencies
In order to truly have a strategic relationship with the main governmental systems/agencies, Honda must be fully compliant with the regulatory requirements as well as follow all the laws that are laid down in every country. The granting of excessive benefits and gift items is also prohibited.
Strategic management
The coverage as well as the preservation of intellectual property (IP) rights
The rigorous and extremely expensive process of research and development at Honda has earned it several patents and trademarks that are considered intellectual property. These patents are being used in the produce of almost all of its productive products. The patent contains the key to the future success of the corporation and must therefore be guarded by regulations. Honda therefore strives to safeguard its IP privileges in order to protect its procedures.
Improved value chain
Inbound logistics
For the inbound logistics the machine at Honda has been designed to have a detailed integration with all the current suppliers. This is critical because vender management is an integral element if the value chain process. This is based on the actual fact that over seventy three percent (73%) of the price tag on production is related to the component materials. It is therefore essential for Honda to ensure so it maintains a very tight control on the logistical costs while reducing the transactional costs incurred in the process of procuring materials components. They therefore employ the Just-In-Time approach to manufacturing, a idea that requirements very close level of coordination between your manufacturing operations/centers, the vendors as well as the ancillary products (Bagchi & Dhali, 2009). This process is a facilitated via an internet platform.
Manufacturing operations
Honda developing hubs are known to be on among the better JIT developing centers on earth (Bagchi & Dhali, 2009). They also employ Lean Developing which is in conjunction with the use of advanced of automation to be able to ensure that the amount of efficiency is high under low inventory costs but high cashflow. The operating and cash cycles are however reduced in an attempt of bettering the conditions for working capital. Honda contains the concepts of JIT, Low fat manufacturing and Integrated Supply chain to be able to boost efficiency in its production hubs.
Outbound logistics
Honda employs more developed stations of delivery from most of its plans to be able to ensure that the hanging around period is nominal.
The sales and marketing techniques
Honda has over the years involved itself in marketing promotions such as "Fill up it, Shut it, Ignore it" that have yielded excellent results under the umbrella of efforts focused on fuel overall economy with a low jogging (owning costs). Honda has consistently focuses on certain aspects and quality of its products to demonstrate they are reliable and covered the value your money can buy invested/spent to them. These have made the company to gain new customers as well as retain the old ones. Honda also created the customer devotion programs. Honda also never engages in price wars.
The exclusive value chain
The use of the online value string systems augments all the activities that happen in the Physical Value Chain (PVC) system. This aids in the free stream of information within the organization's value chain. Honda implements an SAP ERP program that has several necessary modules such as materials, creation, sales, assets, materials, marketing and syndication in order to allow for the faster handling and access of information from a single point. This aids in the minimization of instances of work duplication in various departments. This also supports the real-time link with all the vendors at any given time. The seamless circulation of information on products, components and procedures in places located far away from the other person makes the whole procedure for the motor bike more built-in and effective.
Recommendations
Honda should explore unexplored market segments in the BRIC (Brazil, Russia, India and China) countries and Africa in order to truly have a wider market bottom. More work should be dedicated in the building of better relationships with business associates as well as governments for the purpose of increasing sales and uninterrupted manufacturing process through the creation of an improved and better business environment. Honda should come up with better systems of protecting its intellectual property and acquiring more IP privileges from other resources apart from from its R&D program. This should be targeted at collecting the best proprietary information in the street motorcycle manufacturing and distribution sector. Honda should maintain steadily its lead in the domains of range of motion R&D for today's and future market segments while carefully improving and managing technology at most of its branches of procedures. In order to score saturated in sustainability. Honda should publicly adopt Triple Bottom level Reporting to be able to showcase its determination to sustainability. All initiatives should be positioned on going inexperienced and developing energy conserving motorcycles that are safe and affordable.
