A Profile Review of The American Honda Motor Company Essay

The American Honda Motor Company was established as a subsidiary byHonda in 1959. During the 1960's the type of motorcycles brought byAmericans underwent a major change. Motorcycle registrations increasedby over 800,000 in five years from 1960. In the early 60's the majorcompetitors were Haley - Davidson of U.S.A, BSA, Triumph and Norton ofthe UK and Motto - Guzzi of Italy. Harley-Davidson had the largestmarket share with sales in 1959 totalling a6.6 million dollars. Many ofthe motorcycles produced were large and bulky and this led to the imageof the motorcycle rider as being one who wore a leather jacket and wentout to cause trouble. The Boston Consulting Group ( BCG ) report was initiated by the Britishgovernment to study the decline in British motorcycle companies aroundthe world, especially in the USA where sales had dropped from 49 in1959 to 9 in 1973. The two key factors the report identified was themarket share loss and profitability declines an the scale economydisadvantages in technology, distribution, and manufacturing. The BCG report showed that success of the Japanese manufacturers startedwith the growth of their own domestic markets. The high production fordomestic demand led to Honda experiencing economies of scale as the costof producing motorbikes declined with the level of output. This providedHonda to achieve a highly competitive cost position which they used topenetrate into the US market. " The basic philosophy of the Japanesemanufacture is that high volumes per model provide the potential forhigh productivity as a result of using capital intensive and highlyautomated techniques. Their marketing strategies are therefore directedtowards developing these high model volumes, hence the carefulattention that we have observed them giving to growth and marketshare." (BCG p.59 ).The report goes on to show how Honda built up engineering competenciesthrough the innovation of Mr Honda. The company also moved away fromother companies who relied upon distributors to sell their bikes whenthe company set up its headquarters in the west coast of America. TheBCG found that the motorcycles...

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