In the Auto Manufacturers segment Honda Motor Co., Ltd. is one of the leading companies. Over the years the company has redefined the methods of conducting business in the area of consumer goods having a capital of 50.54B USD. Honda distributes over 6 million power products yearly to clients in ore than150 nations. Honda is also evolving and manufacturing captivated goods beneficial in numerous aspects of life, transporting values
Honda is into the businesses of lease-sales as well. Honda Motor Co., Ltd will keep on catering its clienteles throughout world with supreme products that are accustomed and valuable, distributing the joy of usefulness by making the most of and following the potentials of its electrification and engine technologies.
Porters five forces for:
Degree of Competition
The competition amongst the standing companies is strong which can bring down the prices and reduce the general productivity of the business. Honda Motor Co., Ltd. functions in such a trade where the struggle with rivals does affect the total long term productivity of the business. Therefore it’s important to build up a supportable differentiation strategy and producing it on the economies of scale to compete strongly and cooperating with challengers to escalate the size of the market rather than only conflicting for market share.
Negotiating Authority of Customers
Customers are generally most demanding aspect of business. They require best product with lowest minimum price. This burdens the profitability of the company in long run. Honda has a large customer base which helps it fight with their bargaining power, it is also innovating which keeps the customer authority to minimum, by handling the shortcomings of existing products and increasing the demanded features by the customers. Therefore we can say Honda is powerful enough to handle its customer base with authority.
Negotiating Authority of Suppliers
The supplier base is diverse and varied in the Auto Manufacturing sector. Dominant position of suppliers can shrink the profits margins therefore Honda has built up proficient supply chain with several suppliers. The company can shift to one raw material to another through advancement in its technology. Many suppliers depend of Honda for their existence therefore they have less say in the companies’ policies or business.
Threat of New Entrants
The new entrants carries most innovations in the Auto Manufacturers segment, fresh means of doing things and fresh technologies can put burden on Honda Motor Co., Ltd. through lesser pricing strategy, dropping costs, and forwarding novel value proposals to the clienteles. Honda has to face many such encounters and form operative obstacles to protect its advantage against competitive. Honda has to face this challenge by continuously bringing innovative product, fresh technologies which not only gets large customer base but also make the present customer a motive to purchase Honda Motor Co., Ltd.‘s goods. The economies of scale should be adopted as a policy which meaningfully decreases the space of unexpected revenues for the fresh companies thus deject new performers in the business.
Threat of Substitutes
With the entry of every substitute product or service a need of a customer is addressed in a different manner, it suffers the profitability of the industry. The danger of a substitute is high if it bids a value offers that is exclusively diverse from current submissions of the business. The danger from substitutes is moderate for Honda Group. There are many competing brands; as well as there are other methods of public transportation which can act as substitutes well. Though, there are certain features that make the risk from substitutes moderate. These features comprise, marketing competences, and extensive range of products, brand image along with client belief and reliability.
Conclusion
Honda can face the challenges open to it by building volumes and with more spending on research and expansion. To keep away its biggest threat of new contestants and substitutes, as they are less likely to come in a energetic industry where the recognized companies such as Honda Motor Co., Ltd. retain significance and maintain the standards frequently.
References
• Global.honda. (2019). Honda Global | Company Overview. Accessed 2 Apr. 2019 https://global.honda/about/profile.html
• Honda Motor (2018), Annual Statement of Honda Motor.
• M. E. Porter, Competitive Strategy(New York: Free Press, 1980)
• O. E. Williamson, Markets and Hierarchies(New York: Free Press, 1975)