Thirdly, Honda improves products quickly. At the beginning, Honda focuses on technology. The Honda Technical Research Institute was established in 1946. In order to compete with 4-stroke engine, which introduced by competitors, Honda promotes a superior 4-stroke design that doubled horsepower without additional weight. It has a strategy that takes leadership in product innovation.
Fourthly, a good selling and distribution system is another reason for Honda’s success. Honda consistently spent more than its competitors in advertising, and established the largest dealership network in the US. In order to build up an adequate selling and distribution network, Honda even could accept short-term loss. It also claims, “You meet the nicest people on a Honda.” This strategy was successful, because its American sales rose from $500,000 to $77 million in five years (Christiansen & Pascale, 2011). The comprehensiveness, features, price, and the selling and distribution system of the company will attract more good dealers, which will improve retail sales.
Fifthly, Honda has high productivity and low cost. After having the superior 4-stroke design, Honda acquired a plant. It became a comprehensive producer of engines, frames, chains, sprockets, and other ancillary parts crucial to motorcycle performance in two years. Some people have argued that Honda saves a lot of money due because the lower labor cost in Japan; however, the labor costs are higher than western companies. The relative high growth and scale make the total costs lower than its competitors. Besides, the price in the US is much higher than in Japan, because of the duty, freight, and packing in shipping from Japan to the US. That means Honda could set a lower price in the future by reducing this kind of cost.
In conclusion, this case explains Honda’s success for its clear long-term strategies. Honda emphasis on market share, and this primary objective brings high production volume, improved productivity, low costs, and also the higher profitability than competitors in the future.
Case B analyzes Honda’s success from the perspective of the company history. The development of Honda at the beginning was not good, because competitors had the more powerful 4-stroke engines than Honda, and the lack of financial management and technical basis. After the participation of Fujisawa, who brought financial expertise and marketing strengths, Fujisawa forced Honda to innovate engine, and build a full-scale manufacturer. Although Honda stayed at the second line due to the late entrance, they became successful in Japan because they find the special needs of small motorcycles.