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A Brief Look at Honda

In: Business and Management

Submitted By IrishTexan
Words 592
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Honda today remains the world's largest producer of motorcycles and is a growing company in small engines, lawn mowers, and portable generators. Honda passed Chrysler to become the third largest U.S. seller of cars, but Toyota is close behind and even surpasses Honda when trucks are included in sales figures. The success of the company has been based on its selling of two cars in the U.S. for every one it sells in Japan, and the Accord has been the number one selling car in the United States for the past three years. However, the U.S. market share has dropped to less than 9 percent because of weak sales in California and inroads made by Ford's Taurus, Toyota's Camry, and Pontiac's Grand Am, undercutting sales of the Accord in spite of heavy sales incentives. Sales of Honda cars have also been much reduced in Japan, where the company has fallen from number three to number five, with a 7.6 percent market share. In order to promote sales, Honda has reorganized its North American, European, and Japanese auto operations into autonomous units that are more cost efficient. The company has also worked to introduce more Americans into management, and to accomplish this task some 50 employees from the Ohio plant are spending two to three years in Japan learning the Japanese methods.
Honda manufactures products in 40 countries, and four of its seventeen largest manufacturing plants are located in the United States--Marysville, Ohio; Anna, Ohio; East Liberty, Ohio; and Swepsonville, North Carolina. The 1991 sales picture was as follows:
As noted, though, these figures are much reduced for 1992. The basic business is motorcycles and automobiles, but the company also produces power products including all-terrain vehicles, general purpose engines, lawn mowers, lawn tractors, outboard motors, portable generators, power tillers, snow blowers, and water pumps.
Honda is not the only Japanese company encountering problems in the U.S. market today. The Japanese share of the U.S. auto market had been rising steadily for more than a decade to reach almost a third of the cars sold here, but the growth has topped out in recent years. After reaching 30 percent penetration in 1991 and 1992, the Japanese share of the U.S. car sales figures dropped to 27 percent for the first two months of 1993, while the Big Three's share rose three percentage points to 68 percent. In late February, Honda reported that it had a 103-day supply of unsold Accords, which contrasts sharply with last year when it had no more than a 30-day supply. Honda also lost its number one ranking in 1991, and the Accord dropped to the No. 7 position in January 1993, with the Taurus now No. 1. One problem foreseen for all Japanese automakers is that they do not have strong products in America's fastest-growing automotive segment, that of light trucks, including pickups, minivans, and sport-utility vehicles. Honda in fact does not make trucks at all (Miller and Mitchell, 1993, A1).
Honda developed as a company with a strong basis in technology, achieving a technological advantage through the dedication to engineering of founder Honda. He created a management structure that enabled him to spend his time on the engineering tasks he valued, and this paid off as he created a number of new products that achieved a high market share almost as soon as they were introduced. He left the management to a strong team and undertook the creation of a strong engineering team himself.…...

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