Swot analysis of Honda. Honda Motor Corporation is a Japanese motorcycle, automotive, and power equipment manufacturing multinational conglomerate. Takeo Fujisawa and Soichiro Honda were the Honda Motors, and they laid the foundation of the company in October 1946. The headquarter of the company is in Minato, Tokyo, Japan.
According to an estimate, Honda has manufactured over 400 million motorcycles since 1959. It’s the largest motorcycle and internal combustion engine manufacturing brand worldwide. The company manufactures over 14 million combustion engines annually.
Honda was the 2nd and 8th largest automotive manufacturer in Japan and worldwide in 2001 and 2015. The automotive company has also been producing luxury vehicle brands like Acura since 1986.
According to a financial estimate, the annual revenue of Honda in 2020 was 122.122 billion dollars, and it has decreased by 13.73%. Out of which, the net income of the automotive company was 3.965 billion dollars, and it has decreased by 8.17%.
Today, we’ll discuss the swot analysis of Honda. It’s going to focus on the internal and external factors impacting the world’s leading automotive and motorcycles manufacturing company. For macro-environmental factors, check out the pestle analysis of Honda. Here’s the swot analysis of Honda as follows;
Strengths of Honda
Quick Response to Pandemic
The pandemic of covid-19 has shutdown businesses worldwide, and many companies faced a decline in the annual sale, revenue, and net income. However, Honda’s management made a quick decision of cutting down all the extraneous costs. It helped the company to maintain the trust and confidence of investors, and it didn’t impact the company’s stock value resultantly.
Honda has skilled engineers and automotive mechanics. They’ve expanded the company’s manufacturing performance to a great extent. That’s why it has allowed the automotive brand to launch various models of power products, automobiles, and motorcycles at the same time. Koto-zukuri and Mono-zukuri are some of the innovative strategies that the company uses.
Honda has a mission of improving the quality of its products/services along with its production processes. It’s because of these reasons the company has established a reputation of producing quality products.
The company follows Honda’s Philosophy. It means that every employee follows the quality standards and code of conduct that the management has laid down. Those standards are different from the operation level to the top management level.
According to an estimate, Honda is operating its business in more than 150 countries across the globe. The company has made alliances and partnerships with regional local distributors worldwide. In fact, the company has also established manufacturing and assembling units in different countries. Those production units work in collaboration with distributors to make the products available globally.
Honda has a strong market share in the motorcycle industry in Asia. Chinese motorbikes and automobiles are also popular because of the cost-effectiveness. But when it comes to motorbikes, no other brand could match up with Honda’s service quality.
Honda has a vast and diverse product portfolio. The company offers products like Internavi, Automobiles, thin-film solar cells, commercial vehicles, luxury vehicles, jet engines, jet aircraft, motorcycles, robotics, scooters, outboard motors, electric generators, rotary tillers, water pumps, and garden and lawn equipment.
Weaknesses of Honda
Honda has to suspend its manufacturing processes due to the pandemic and lockdown temporarily. It resulted in the form of a lower production rate because of the limited supplies due to the travel restrictions. It impacted the whole supply chain process of the company.
However, Honda had to shut down the manufacturing units in China, the USA, and many other parts of the world.
The most significant impact of the lockdown and shutdown of the businesses was that it declined the overall sale of the company. As a result, the annual revenue and net profitability of the company decreased to a great extent.
Reliance on the US/Japanese Market
Japan and the USA are the two main markets of Honda, and a majority of company’s automobile sale comes from both of these markets. They contribute a major portion to the company’s revenue. In other words, the brand heavily relies on the US and Japanese for its automotive industry.
Opportunities available to Honda
Expansion of Business Portfolio
The research and development department of Honda is researching areas like automobiles, AI, and robotics. The purpose of these researches is how to make the lives of people better by adding a new comfort element. If the company combines those features with other industries, it would increase the business portfolio of the company.
Honda believes in clean energy and the lowest carbon emission to the environment. The automotive brand has been working on the development of electric vehicles to address these issues. It’s a great initiative and the mass scale production and usage of electric vehicles would have a significant impact on the environment.
Self Driving Vehicles
Self-driving technology is the new technology that many competitive brands like Toyota, Tesla, Uber, and BMW are offering. Honda is also launching an autonomous driving model by the name of “Sedan Legend” in March 2021.
Threats Honda has to face
Global Economic Issues
Honda is a multinational brand and operating its business in more than 150 countries worldwide. Economic issues like credit risks, interest rates, and fluctuating currencies are some of the main issues that could impact the automotive company. Such economic factors affect the price of raw materials and distribution costs.
Honda heavily relies on its supplies for the supplies of production material. If they change their prices, delay the delivery of material, or limited supplies. It would disrupt the production process of the company.
The hackers hacked the main database of Honda; it resulted in the form of temporary suspension of various operations. It’s presenting a negative and weak image of the company in terms of safety and security.
After a careful study of the swot analysis of Honda, we’ve realized that Honda is indeed one of the world’s largest automotive and automobile manufacturers. Economic crisis, pandemic, an over-dependence on the US and Japanese markets are some of the main issues of the company. Honda should diversify its resources and address other issues.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.