Business strategy Essay Example | Topics and Well Written Essays - 1250 words

Business strategy - Essay Example Careful analysis of the case study on Honda Motor Company shows that the company was never driven by the strategic purpose to survive in the domestic marketplace of Japan; rather, the company always thrived for excellence in the international marketplace. For example, in the initial years, the company realised they needed to manufacture efficient, lighter and powerful engines which could not only meet the demand of local customers but also attract international customers (refer to the Honda case study). SWOT analysis in the appendix 3 is showing that technological capabilities are the major strength of Honda and the company has used its strategic purpose to excel in international market. As mentioned in the PESTLE analysis done in Appendix 1, the Japanese government has created a significant amount of exchange restriction on Honda in order to prevent it from entering the USA market. In such circumstances, Honda has decided to increase penetration in the USA motorcycle market with its 50cc super cubs. The company targeted everyday Americans who want small capacity motorcycles and Honda was successful in catering to their demand. In the early 1960s, Honda used the export mode to penetrate in the automobile market of North America but in later years, the company decided to set manufacturing facilities in USA and decrease its export portfolio (by the end of 1996, total the American investment of Honda had touched $3.8 billion) (refer to the case study). The value chain and VRIN analysis done in Appendices 5 & 4 shows that technological resources have helped Honda to achieve competitive advantage in many cases. For example, the company has doubled its technological capabilities in the research and development section in North America, which has resulted in manufacturing Accord SE-i that is brilliant in performance but $10,000 cheaper than the competitors’ car with the similar capacity (refer to the Honda case study). The strategic purpose of Honda can be unde rstood by analysing its organisational structure which reflects its mission, vision and value system. Honda has stated its value as â€Å"proceed always with ambition and youthfulness† (refer to the Honda case study). Senior executives and the chairman of the company prefer to work together in manufacturing units in order to create the sense of belongingness among workers and ensure that the company is delivering technologically superior and quality products to customer. Such level of integrity and resilience has helped the company to revert the negative situation when export of cars from Japan to USA also dropped from 3.4 million to 1.7 million in 1992 in comparison to 1987 (refer to Appendix 6). Although the road to enter the international market was not an easy ride for Honda because the company faced a diminishing trend in demand in the USA market in the initial years, but later on product innovation such as its 50cc motor cycles, light duty trucks (T-360), sports truck ( S-500), CVCC engine (compound vortex controlled combustion) (Frank, 2003), or development of SED (sales, production, engineering and development) system has helped the company to become one of the market leaders in both the domestic and international markets (refer to the Hon