Honda Case a

CSTR : Case 3 – Honda (A) Harvard Business School

What is the strategy that allowed Honda to be so successful in the motorcycle industry, particularly in the US? Honda achieved global success in the motor cycle industry by focusing on achieving cost leadership through volume production. The way it was able to achieve it was as follows: Focus Area Production Technology & Design Supplier Integration Distribution Honda’s Strategy Emphasized on market share and high production volume. Leveraged cost benefit of production in Japan and exporting to other nations. High level of capital investment in R&Dand leadership in product innovation. Very low gestation period from concept to production and design

Fully integrated producer of engines, frame, chains and other ancillary parts that are crucial to motorcycle performance Established a large dealership network region by region. Direction given to dealers was to have a long time horizon and to grow sales volume and not focus on short term profitability Heavy regional advertising to change consumers perceptions combined with Primarily targeted middle class consumers who could afford lightweight motorcycles. Later, it started targeting consumers looking for performance with higher CC bikes Offered multiproduct line in existing customer segments and created new customer segments through products such as Penetration Pricing - Introduced new models at affordable prices and below those of competitors. Reduced prices continuously as it gained market share to further lock price out existing competition or new rivals

Promotion Customer Segment Product Portfolio Pricing

What indications do you have, if any that the strategy was planned in advance?

Honda on achieving phenomenal success in the 50cc category consciously decided to adopt cost leadership. Some of the indications that this was going to be their long term strategy are in the following measures that it took:

1. Setting up of manufacturing plant with...