Honda Overview and Concepts
Honda Motor Co., Ltd. (TYO: 7267 , NYSE: HMC), is a Japanese manufacturer of automobiles, trucks, motorcycles, and scooters. They also make ATVs, water craft, electrical generators, marine engines, and lawn and garden equipment. With more than 14 million internal combustion engines built each year, Honda is the largest engine-maker in the world. In 2004, the company began to produce diesel motors, which were both very quiet whilst not requiring particulate filters to pass pollution standards. Honda's high-end line of cars are branded Acura in North America. It is arguable, however, that the foundation of Honda's success is the motorcycle division.
Honda is headquartered in Tokyo. Their shares trade on the Tokyo Stock Exchange, the New York Stock Exchange, as well as exchanges in Osaka, Nagoya, Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland. American Honda Motor Co., is based in Torrance, CA. Honda Canada is based in Alliston, Ontario.
Honda Company history
In 1959 the American Honda Motor Co. was founded. Soichiro Honda took advantage of a gap in the Japanese market that was decimated by World War II, Japan was starved of money and fuel, but still in need of basic transport. Honda, utilizing his manufacturing facilities, attached an engine to a bicycle, creating the cheap and efficient transport that was required.
The Honda piston manufacturing facilities were almost completely destroyed. Soichiro Honda created a new company with what he had left, giving it the unusual name of "Honda Giken Kōgyō Kabushiki Kaisha" which translates to "Honda Research Institute Co. Ltd." Despite its grandiose name, the first facility bearing that name was a simple wooden shack where Mr. Honda and associates would fit engines to bicycles. Interestingly, the official Japanese name for Honda Motor Co. Ltd. remains the same, in honor of Soichiro Honda's efforts.
Honda quickly began to produce a range of scooters and motorcycles and Soichiro Honda quickly recovered from the losses incurred during the war. By the late 1960s, Honda had conquered most world markets. The British were especially slow to respond to the Honda introduction of electric starters to motorcycles. By the 1970s, Honda was the largest producer of motorcycles in the world, a title it has never relinquished.
Honda began producing road cars in 1960, mostly intended for the Japanese market. Though participating in international motorsport (see Racing), Honda was having difficulty selling its automobiles in the United States. Built for Japanese buyers, Honda's small cars had failed to gain the interest of American buyers.
Honda finally established a foothold in the American market in 1972 with the introduction of the Civic—larger than their previous models, but still small compared to the typical American car—just as the 1970s energy crisis was impacting worldwide economies. New emissions laws in the US, requiring American car makers to affix expensive catalytic converters to exhaust systems, noticeably increased sticker prices. However, Honda's introduction of the 1975 Civic CVCC, CVCC being a variation on the stratified charge engine, allowed the Civic to pass emissions tests without a catalytic converter.
In 1976, the Accord was immediately popular because of its economy and fun-to-drive nature; Honda had found its niche in the United States. In 1982, Honda was the first Japanese car manufacturer to build car plants in the US, starting with an Accord plant in Marysville, Ohio. They now have three plants located in Ohio: Marysville, Anna, and East Liberty. They also have plants in Lincoln, Alabama (Honda Manufacturing of Alabama), and Timmonsville, South Carolina, and plan to open a new plant in Tallapoosa, Georgia. Honda's North American and U.S. headquarters are located in Torrance, California. Honda's Canadian and many US-market Civics are manufactured in their plant in Alliston, Ontario since 1985.
Honda was the first Japanese automaker to introduce a separate luxury line of vehicles. Created in 1986 and known as Acura, the line is made up of modified versions of Honda vehicles usually with more power and sportiness than their Honda counterparts.
In 1989 Honda launched their VTEC variable valve timing system in its production car engines, which gave improved efficiency and performance across a broader range of engine speeds. One of the first of its kind in passenger vehicles, it worked on the premise of tuning one engine to operate at two different 'settings' depending on load. Normal driving would use a "shorter" cam lobe that resulted in more efficient operation. A more aggressive, longer duration, cam engages when engine RPM reaches a set point resulting in more power during hard acceleration.
For the 2007 model year, Honda plans to improve the safety of its vehicles by providing front-seat side airbags, side-curtain airbags, and anti-lock brakes as standard equipment in all automobiles available in North America (except the Insight and S2000, which will not have side-curtain airbags). By 2006, Honda plans to have as standard equipment Vehicle Safety Assist and rollover sensors in all light trucks, including the CR-V, Odyssey, and Acura MDX. Honda also plans to make its vehicles safer for pedestrians, with more safely-designed hoods, hinges, frame constructs, and breakaway wiper pivots.
Honda Motorcycles
Mann Honda, being a race driver himself, could not stay out of international motorsport. In 1959, Honda entered five motorcycles into the Isle of Man TT race, the most prestigious motorcycle race in the world. While always having good power, it took until 1961 for Honda to tune their chassis well enough to allow Mike Hailwood to claim their first Grand Prix victories in the 125 and 250cc classes. Hailwood would later pick up their first senior TT wins in 1966 and 1967. Honda's race bikes were known for their exotic engine configurations such as the 5 cylinder, 22,000 rpm, 125cc bike and their 6 cylinder 250cc and 380cc bikes.
1981 saw Honda return to Grand Prix motorcycle racing with their exotic, monocoque-framed, four-stroke NR500. The NR500 featured oval shaped cylinders in an attempt to circumvent the FIM rules which limited engines to four cylinders. Honda engineered the oval cylinders in an effort to provide the valve area of an 8 cylinder engine, hoping their four-stroke bike would be able to compete against the now dominant two-stroke racers. Unfortunately, it seemed Honda tried to accomplish too much at one time and the experiment failed. For the 1982 season, Honda debuted their first two stroke race bike, the NS500 and in 1983, Honda won their first 500cc Grand Prix World Championship with Freddie Spencer. Since then, Honda has become the dominant marque in motorcycle Grand Prix racing.
Honda riders have also claimed 24 Motocross World Championships.
Honda Automobiles
In 1968, Jo Schlesser was killed in a Honda RA302 at the French Grand Prix. This racing tragedy, coupled with their commercial difficulties selling automobiles in the United States, prompted Honda to withdraw from all international motorsport that year.
In the late 1980s and early 1990s, Honda powered cars won six consecutive Formula One Constructors Championships. WilliamsF1 won the crown in 1986 and 1987. Team McLaren won the title in 1988, 1989, 1990 and 1991.
In 2003, Honda became an engine supplier to the Indy Racing League. In 2004, Honda-powered cars overwhelmingly dominated IRL, winning 14 of 16 IRL events, including the Indianapolis 500, and claimed the IRL Manufacturers' Championship, Drivers' Championship and Rookie of the Year titles.
Honda's strategy
During the 1960s, when it was a small manufacturer, Honda broke out of the Japanese motorcycle market and began exporting to the US. Taking Honda’s story as an archetype of the smaller manufacturer entering a new market already occupied by highly dominant competitors, the story of their market entry, and their subsequent huge success in the US and around the world, has been the subject of some academic controversy. Competing explanations have been advanced to explain Honda’s strategy and the reasons for their success.
The first of these explanations was put forward when, in 1975, Boston Consulting Group (BCG) was commissioned by the UK government to write a report explaining why and how the British motorcycle industry had been out-competed by its Japanese competitors. The report concluded that the Japanese firms, including Honda, had sought a very high scale of production (they had made a large number of motorbikes) in order to benefit from economies of scale and learning curve effects. It blamed the decline of the British motorcycle industry on the failure of British managers to invest enough in their businesses to profit from economies of scale and scope.
The second story is told in 1984 by Richard Pascale, who had interviewed the Honda executives responsible for the firm’s entry into the US market. As opposed to the tightly focused strategy of low cost and high scale that BCG accredited to Honda, Pascale found that their entry into the US market was a story of “miscalculation, serendipity, and organizational learning” – in other words, Honda’s success was due to the adaptability (and hard work) of its staff, rather than any long term strategy. For example, Honda’s initial plan on entering the US was to compete in large motorcycles, around 300cc. It was only when the team found that the scooters they were using to get themselves around their US base of San Francisco attracted positive interest from consumers that they came up with the idea of selling the Supercub.
The most recent school of thought on Honda’s strategy was put forward by Gary Hamel and C. K. Prahalad in 1989. Creating the concept of core competencies with Honda as an example, they argued that Honda’s success was due to its focus on leadership in the technology of internal combustion engines. For example, the high power-to-weight ratio engines Honda produced for its racing bikes provided technology and expertise which was transferable into mopeds.
Honda's entry into the US motorcycle market during the 1960s is used as a case study for teaching introductory strategy at many business schools worldwide.
Honda's Industry Leadership
Although a relatively small manufacturer in terms of vehicle sales, Honda is the largest engine maker in the world. Honda strives to be a leader in the industry and boasts a number of firsts in many categories, including first motorcycle equipped with an airbag, as well as the first pick-up truck with independent rear suspension (2006 Ridgeline).
Honda has also pioneered new technology in its HA-420 HondaJet that allows new levels of reduced drag, increased aerodynamics and fuel efficiency thus reducing operating costs.
Honda's robot ASIMO (see below) as an R&D project, showcases Honda's pure engineering depth, bringing together varying fields of expertise to create a robot that walks, dances, navigates steps, and otherwise demonstrates capabilities previously unachievable.
Honda's Creative Advertising
In 2003, Honda released its Cogadvertisement in the UK and on the Internet. To make the ad, the engineers at Honda constructed a contraption made entirely out of car parts from the Honda Accord. The ad depicted a single cog which sets off a chain of events that ends with the Honda Accord moving and the words, "Isn't it nice when things work?" The ad featured no computer effects. It took 606 takes to get it right.
In 2006, Honda released its Choir ad, again for the UK and the Internet. This ad featured a 60-person choir who sang the car noises as shots of the Honda Civic are shown.
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