Honda

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					    Presentation by: John Taubeneck
         Professor Robert Sanford
International Management: Summer 2009
                       Soichiro Honda
•   At early age, helped father the
    blacksmith with his bicycle repair
    business
•   At fifteen, traveled to Tokyo without
    any formal education, obtained
    apprenticeship in Garage as a car
    mechanic
•   After six years of building basic
    experience, headed home to start an
    auto repair business
•   At age 31, producing piston rings for
    small engines led him into producing
    them for motorcycles
•   Formed and was President of his own
    motorcycle business
    Honda Motor Company, Ltd.
• A partnership, founded in 1948
• Soichiro focused on
  engineering, while leaving the
  running of the company up to
  his most trusted friend, Takeo
  Fujisawa
• Close to bankruptcy:
  -Risk takers, invested in
  “State-of-the-art” machinery
  -Korean War was ending,
  contributing to an economic
  depression in Japan
           Early Accomplishments
•   Within five years, the two decided
    to enter their bike in the “Isle of
    man Tourist Trophy” race
•   Eventually made Honda’s name
    as an international motorcycle
    manufacturer
•   First international success: Honda
    50cc Cub
    -Trouble free, easy-to-ride
•   CB72 250 Hawk, CB77 305 Super
    Hawk, and the CL 72 250
    Scrambler
                 Coming to America
•   One of the most critical moves in
    history of the company
•   After becoming the world’s largest
    motorcycle manufacturer, wanted to
    expand internationally
•   Surveys suggested expansion towards
    Europe or Southeast Asia, because of
    their annual sales of only 60,000
•   Management ignored, claiming their
    new models would not compete
    directly with U.S.-preferred large-
    displacement models
•   Fujisawa claimed that the world’s
    consumer focused on U.S. acceptance
    in the American market would offer a
    base for world acceptance
                                        America
•   First storefront: Pico Boulevard, Los
    Angeles, California
•   Six employees
•   People told them their product would never
    sell their, which influenced them to hit the
    road looking for dealers
Issues:
•   Handling of Cash flow
•   Struggle to expand their dealer network
•   Redesigning motorcycles made for Japan’s
    slower roads to match with America’s high
    speed
•   High Staff Turnover
•   Biggest Obstacle: Renew efforts to replace
    America’s negative image towards
    motorcycling
            Marketing: A New Image
•   1962 Ad-Campaign: Changed perception with
    “You meet the nicest people on a Honda.”
•   General interest in magazine advertising
•   “Maintaining an international viewpoint, we are
    dedicated to supplying products of the highest
    efficiency, yet at a reasonable price worldwide
    customer satisfaction”
•   Focused on introducing the concept of
    motorcycling:
      – Socially acceptable vehicles
      – Small, affordable, easy-to-live with
      – Provides transportation and excitement

     –   Distinguished themselves as clean (didn’t
         leak oil), economical, dependable,
         durable, and easy to maintain
     –   Academy Awards Telecast: Spent
         $350,000 on two 90-second commercials,
         triggering millions in sales and national
         recognition
                   Success in America
•   Within four years, they became the largest
    selling brand of motorcycles in the United
    States
•   In 1961, the produced 100,000 bikes in one
    month
•   The C100 Supercub was the first Honda
    motorcycle sold in the U.S., and eventually
    became the world’s best selling vehicle
•   Acted as a catalyst in the formation of the
    motorcycle industry council (providing 50%
    of the funding)
•   Success in the global market relied on its
    display of commitment to continued
    investment in America
•   Served as a model for blending eastern and
    western philosophies
•   Management style emphasized recognition
    of all employees as “associates” while
    stressing teamwork rather than a potentially
    tense management versus labor
    coexistence
                               Changing Lanes
•   In 1962, Honda began moving into truck and
    automobile sales
•   First automotive import: N600 Sedan
•   Similar Issue: “What’s a motorcycle builder
    know about making automobiles?”
•   In 1973, both Soichiro Honda and Takeo
    Fujisawa decided to retire, 25 years after
    they had formed the company
•   Kiyoshi Kawashima was named the new
    President of Honda Motor Company
•   Spurred by the fuel crisis, the American
    public was willing to consider these energy-
    efficient Japanese compact cars
•   Introduced the Honda “Civic”
•   Civic reached its one-million mark, then
    Honda released the “Accord”
•   Became first Japanese manufacturer to
    move part of the process to America,
    opening a facility that built Accord’s in Ohio
                          Automobiles
•   As Honda continued to deepen
    their commitment to utilizing the
    United States, middle class
    Americans continued to look to
    them for high-quality, reliable and
    affordable cars
•   Decided to take on the luxury car
    market, releasing the Acura
•   Sales throughout Japan and
    America pushed them to one of
    the leading car manufacturers in
    the world
•   1990-1992: the Honda Accord
    was the best selling car in
    America
                 Competition
• In 1993, Accord sales
  decreased 35% due to
  the increase in sales of
  Pontiac’s Grand Am,
  Ford’s Taurus, and
  Toyota’s Camry
• Acura decrease 17% due
  to success of Toyota’s
  Lexus and Nissan’s
  Infinity
• 1993-1994: Dedicated to
  research and
  development
           Organizational Decisions
•   Scandal In 1993: it was publicized that Honda’s
    high ranked managers had accepted payoffs of
    up to $100,000 from dealers who “wanted
    Honda franchises and certain types of special
    treatment”
•   1991: Soichiro Honda died, and it was time for
    reorganization
•   Nobuhiko Kawamoto: Became new CEO and
    President of the company
     -Decided to reorder its Japanese, European,
    and North American units into “autonomous
    operations” to improve cost effectiveness
    -Arranged 50 employees from the Ohio plant to
    spend 2-3 years working in Japan to introduce
    more Americans to company management
•   Fortune and growth led them to open
    production facilities in many new locations
    around the world, such as India, Vietnam,
    Turkey, Indonesia, and Brazil
        Environmental Awareness
•   Became the first automobile
    manufacturer to follow the U.S.
    clean air act of 1975
•   In 1994, Honda’s power product
    engines were the first to meet
    California emission regulations,
    and led them to alternative power
    research
•   Introduced the first gasoline
    powered vehicle to meet ultra low
    emission vehicle standards
•   Created the “Insight,” a low-
    emission, fuel efficient car made
    out of an aluminum and plastic
    mix, powered by gasoline fuel and
    electricity
         Quotes by Soichiro Honda
•   “Recognize a need, create a unique way to
    satisfy it, incorporate unusual performance,
    quality and reliability, then build from
    expanding reputation into yet other areas”
•   “Dealers must give their customers the very
    best service. Quality and service are like the
    two wheels of a motorcycle without one, the
    vehicle will fail. It's the same in enterprise.
    We, the manufacturers and dealers, have
    worked together to run our business
    positively based on the universal truths I
    have mentioned. This is the reason we have
    been able to draw away from our business
    rivals. You have the world's largest market,
    while Honda is the world's Number One
    motorcycle manufacturer. If we combine the
    biggest market and the excellent Honda
    products - like the two wheels of the
    motorcycle - then we can easily develop
    ourselves to the utmost business in the
    world”
                               Bibliography

Gold, Bill. Vip Life. “Soichiro Honda.”
http://www.myviplife.com/lifestories/vipbusiness/Soichiro_Honda_bi.php?c=
3

Wikipedia. “Soichiro Honda.” http://en.wikipedia.org/wiki/Soichiro_Honda
Staff Writer. “Honda Motorcycles-A Five Decade Journey.”
http://www.motorhelmets.com/htm-
service/resources-motorcycle-articles-honda-history.htm

“History of Honda.”http://www.pipeline.com/~randyo/Honda%20History.htm

“Honda Motor Company
Limited.”http://www.fundinguniverse.com/company-histories/Honda-Motor-
Company-Limited-Company-History.html

				
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posted:8/7/2011
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