comparison of ford and honda and brief swot for both companies (1).docx

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COMPARATIVE STUDY OF SWOT ANALYSIS OF FORD AND HONDA

A

PROJECT REPORT

ON

COMPARITIVE STUDY OF SWOT ANALYSIS OF FORD AND HONDA

SUBMITTED BYSoham.A.Paringe

Under the guidance of DR. ANITA MANNA.

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF DEGREE OF

MASTER OF COMMERCE IN BUSSINESS MANAGEMENTSEM-3 (2013-2014)

K.M.AGRWAL COLLEGE,KALYAN(W).

K. M AGRAWAL COLLEGE OF COMMERCE, ARTS AND SCIENCE.

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DECLARATION

I Soham.A.Paringe student of K . M. Agrwal College hereby declare that I have completed my research

project titled “A STUDY ON COMPARITIVE SWOT ANALYSIS OF FORD AND HONDA ” as partial fulfillment of the requirement of the course curriculum for academic year 2013-2014 under the guidance of DR. ANITA MANNA.

The data that has been collected by me is truly

authentic and is not borrowed or copied from any

dissertain report. The project contains true and

complete information.

___________________

Soham.A.Paringe


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ACKNOWLEDGEMENT

I hereby express my heartiest thanks to all sources who have contributed to the making

of this project. I oblige thanks to all those who have supported, provided their valuable

guidance and helped for the accomplishment of this project. I also extent my hearty

thanks to my family, friends, our co-ordinator college teachers and all the well wishers.

I also would like to thanks my project guide for his guidance and timely suggestion

and the information provided by his on this particular topic.

It is matter of outmost pleasure to express my indebt and deep sense of gratitude to

various person who extended their maximum help to supply the necessary information

for the present thesis, which became available on account of the most selfless

cooperation.

Above all its sincere thanks to the UNIVERSITY OF MUMBAI for which this

project is given consideration and was done with outmost seriousness


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Comparitive STUDY OF SWOT analysis of

Ford and Honda.


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TABLE OF CONTENTS

SR.N

O

TOPIC PAGE

.

1. INTRODUCTION

1.1 Introduction about the study

1.2 Need for study

1.3 Objectives of the study

1.4 Scope of the study

1.5 Limitations of the study

1.6 Research Methodology

2. Company Profile

2.1 Overview of HONDA 2.2 Overview of FORD

3. SWOT Analysis of FORD


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4. SWOT Analysis of HONDA

5. FINDINGS

6. 6.1 RECOMMENDATIONS FOR HONDA 6.2 RECOMMENDATIONS FOR FORD

7. CONCLUSION

8. BIBLIOGRAPHY

ABSTRACT

The following report offers a comparison and contrast of two

of the world’s largest automobile manufacturers, Ford and

Honda. Both companies have experienced similar successes

in the hybrid vehicle market; additionally they are similar in

size, and in revenues. Honda Motor Company, a Japanese

company, has its largest customer base is in the U.S.,

alternatively Ford Motor Company, an American company,

has its largest customer base is in Asia. A SWOT analysis has

been performed for each company and the paper closes with

strategy suggestions for Ford and for Honda.


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CHAPTER -1

INTRODUCTION

1.1 INTRODUCTION ABOUT THE STUDY

Although both companies market themselves differently, Ford and

Honda are relatively similar in size and earnings. Together these two

companies are at the forefront of the introduction of hybrid vehicles

to the American public though each company has its own individual

strengths that have allowed it to succeed in the current economic

climate and also specific weaknesses that have affected their

abilities to grow as vigorously as it should.


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1.2 NEED FOR STUDY

Increasing competition, ever growing market, easy availability of the finances and

increasing population of young executives, with huge disposable incomes, over the past

few years has substantially increased the sales in the automobile industry. Also, the

competition among the dealers of the products has increased with each trying to maximize

their customer base. This makes it imperative for the dealers to provide the best of the

services and exceed the customer expectations to achieve customer delight and loyalty.

The study tries to understand the key service parameters and reflect the strengths,

weakness, opportunities and threats of Honda and Ford.


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1.3 OBJECTIVE OF THE STUDY

To understand the swot analysis of FORD.

To study the marketing strategies adopted by FORD.

To understand the swot analysis of HONDA.

To evaluate the marketing strategies of HONDA.

1.4 LIMITATIONS

The study is restricted in scope of owing to the following limitations:

Due to constraint of time only secondary data is used for the study.

The research is restricted to swot analysis of FORD and HONDA.


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1.5 RESEARCH METHODOLOGY

The research is based on study of comparative swot analysis of FORD

and HONDA. Basically the data which has been collected for the

research purpose is particularly of qualitative nature. It has been

collected from various sites, magazines and newspaper articles.


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CHAPTER 2

OVERVIEW OF HONDA

Company Name

Honda Motor Co., Ltd.

Head Office

2-1-1, Minami-Aoyama, Minato-ku, Tokyo 107-8556,

Japan

Tel: +81-(0)3-3423-1111

Established

September 24, 1948


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President, CEO & Representative Director

Takanobu Ito

Capital

¥86 billion (as of March 31, 2013)

Chief Products

Motorcycles, automobiles

Geographic Region Total Revenue( In

millions of Yen)

Japan 16,81,190

North America 59,80,876

Europe 12,36,757

Asia 12,83,154

Others 9,05,163

The company has assembly plants around the globe. These plants are

located in China, the United States, Pakistan, Canada, England, Japan,

Belgium, Brazil, México, New Zealand, Malaysia, Indonesia, India,

Thailand, Turkey, Taiwan, Perú and Argentina. As of July 2010, 89

percent of Honda and Acura vehicles sold in the United States were built

in North American plants, up from 82.2 percent a year earlier.


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Honda's global lineup consists of the Fit, Civic, Accord, Insight, CR-

V, CR-Z, Legend and two versions of the Odyssey, one for North

America, and a smaller vehicle sold internationally. An early proponent

of developing vehicles to cater to different needs and markets

worldwide, Honda's lineup varies by country and may feature vehicles

exclusive to that region. A few examples are the latest Honda

Odyssey minivan and the Ridgeline, Honda's first light-duty uni-

body pickup truck. Both were designed and engineered primarily in

North America and are produced there. Other example of exclusive

models includes the Honda Civic five-door hatchback sold in Europe.

Honda's automotive manufacturing ambitions can be traced back to

1963, with the Honda T360, a kei car truck built for the Japanese

market.[27] This was followed by the two-door roadster, the Honda

S500 also introduced in 1963. In 1965, Honda built a two-door

commercial delivery van, called theHonda L700. Honda's first four-door

sedan was not the Accord, but the air-cooled, four-cylinder, gasoline-

powered Honda 1300 in 1969. The Civic was a hatchback that gained

wide popularity internationally, but it wasn't the first two-door hatchback

built. That was the Honda N360, another Kei car that was adapted for

international sale as the N600. The Civic, which appeared in 1972 and


http://en.wikipedia.org/wiki/Honda_N360

http://en.wikipedia.org/wiki/Honda_1300

http://en.wikipedia.org/wiki/Honda_L700

http://en.wikipedia.org/wiki/Honda_S500

http://en.wikipedia.org/wiki/Honda_S500

http://en.wikipedia.org/wiki/Roadster_(automobile)

http://en.wikipedia.org/wiki/Honda#cite_note-tjra-27

http://en.wikipedia.org/wiki/Kei_car

http://en.wikipedia.org/wiki/Honda_T360

http://en.wikipedia.org/wiki/Honda_Civic_(eighth_generation)#Europe

http://en.wikipedia.org/wiki/Pickup_truck

http://en.wikipedia.org/wiki/Honda_Ridgeline

http://en.wikipedia.org/wiki/Minivan

http://en.wikipedia.org/wiki/Honda_Odyssey_(North_America)


http://en.wikipedia.org/wiki/Honda_Odyssey_(international)



http://en.wikipedia.org/wiki/Honda_Legend

http://en.wikipedia.org/wiki/Honda_CR-Z

http://en.wikipedia.org/wiki/Honda_CR-V

http://en.wikipedia.org/wiki/Honda_CR-V

http://en.wikipedia.org/wiki/Honda_Insight

http://en.wikipedia.org/wiki/Honda_Accord

http://en.wikipedia.org/wiki/Honda_Civic

http://en.wikipedia.org/wiki/Honda_Fit

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replaced the N600 also had a smaller sibling that replaced the air-cooled

N360, called the Honda Life that was water-cooled.

The Honda Life represented Honda's efforts in competing in the kei car

segment, offering sedan, delivery van and small pick-up platforms on a

shared chassis. The Life StepVan had a novel approach that, while not

initially a commercial success, appears to be an influence in vehicles

with the front passengers sitting behind the engine, a large cargo area

with a flat roof and a liftgate installed in back, and utilizing a transversely

installed engine with a front-wheel-drive powertrain.


http://en.wikipedia.org/wiki/Honda_Life#Life_Step_Van

http://en.wikipedia.org/wiki/Honda_Life

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OVERVIEW OF FORD

OVERVIEW OF HONDA

Company Name


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Ford Motor Co

Head Office

Dearborn, MI, United States of America

Established

June 16, 1903

President, CEO & Representative Director

Alan Mulally

Capital

$51.8 B

Chief Products

Cars, Financial Services.

The Ford Motor Company (also known as simply Ford) is an

American multinational automaker headquartered

in Dearborn, Michigan , a suburb of Detroit . It was founded

by Henry Ford and incorporated on June 16, 1903. The

company sells automobiles and commercial vehicles under

theFord brand and luxury cars under the Lincoln brand. In


http://en.wikipedia.org/wiki/Lincoln_Motor_Company

http://en.wikipedia.org/wiki/List_of_Ford_vehicles

http://en.wikipedia.org/wiki/Henry_Ford

http://en.wikipedia.org/wiki/Detroit

http://en.wikipedia.org/wiki/Dearborn,_Michigan

http://en.wikipedia.org/wiki/Multinational_corporation

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the past it has also produced heavy trucks, tractors and

automotive components. Ford owns small stakes in Mazda of

Japan and Aston Martin of the United Kingdom. It is listed on

the New York Stock Exchange and is controlled by theFord

family, although they have minority ownership.

Ford introduced methods for large-scale manufacturing of

cars and large-scale management of an industrial workforce

using elaborately engineered manufacturing sequences

typified by moving assembly lines; by 1914 these methods

were known around the world as Fordism. Ford's former UK

subsidiaries Jaguar and Land Rover, acquired in 1989 and

2000 respectively, were sold to Tata Motors in March 2008.

Ford owned the Swedish automaker Volvo from 1999 to

2010. In 2011, Ford discontinued the Mercury brand, under

which it had marketed entry-level luxury cars in the United

States, Canada, Mexico, and the Middle East since 1938.

Ford is the second-largest U.S.-based automaker and

the fifth-largest in the world based on 2010 vehicle sales. At


http://en.wikipedia.org/wiki/Automotive_industry#By_manufacturer

http://en.wikipedia.org/wiki/Mercury_(automobile)

http://en.wikipedia.org/wiki/Volvo_cars

http://en.wikipedia.org/wiki/Tata_Motors

http://en.wikipedia.org/wiki/Land_Rover

http://en.wikipedia.org/wiki/Jaguar_Cars

http://en.wikipedia.org/wiki/Fordism

http://en.wikipedia.org/wiki/Assembly_line

http://en.wikipedia.org/wiki/Ford_family_tree

http://en.wikipedia.org/wiki/Ford_family_tree

http://en.wikipedia.org/wiki/New_York_Stock_Exchange

http://en.wikipedia.org/wiki/Aston_Martin

http://en.wikipedia.org/wiki/Mazda

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the end of 2010, Ford was the fifth largest automaker in

Europe. Ford is the eighth-ranked overall American-based

company in the 2010 Fortune 500 list, based on global

revenues in 2009 of $118.3 billion In 2008, Ford produced

5.532 million automobiles and employed about 213,000

employees at around 90 plants and facilities worldwide.

COMPARING AND CONTRASTING FORD AND HONDA

A comparison of Ford Motor Company’s most recent

Form 10-K, filed February 25th 2010 for the fiscal period


http://en.wikipedia.org/wiki/Fortune_500

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ending December 31st 2009, and Honda Motor Company’s

most recent Form 20-F, filed June 24th 2010 for the fiscal

period ending March 31st 2010, indicates that Ford sells

about 20% of their vehicles in its local market while Honda

sells about 30% of its vehicles in Asia. Ford’s largest market

is now in the Asia/Pacific region, representing an increase

over time from equal sales in this market and the U.S. market

in 2005, to sales of almost 2.5 to 1 in 2009. Meanwhile,

Honda’s sale of automobiles in the U.S. in 2009 of less than 1

to 1 represents a decrease from when sales in the U.S. were

greater than 1 to 1 over Asia. Additionally, while Ford has

consistently produced more autos for sale in Europe than

they do in the U.S., and that number has been increasing

over the past five years, Honda’s sales in this market have

decreased in recent years from 30% to less than 15%. This

indicates that while Ford has extended its global reach into

the Asia/Pacific region and Europe, Honda’s reach into the

U.S. and Europe has substantially diminished. It should be

noted as well that while Ford sales in South America are

presented in their filings, Honda does not separate this data

in their filings and includes it with other markets. While both


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companies manufacture both cars and trucks, Ford’s total

market share in the U.S. in 2009 was 15.3% while Honda’s

was 10.8%, reflecting that while Honda may sell more cars to

U.S. consumers with a 6.5% market share compared to Ford’s

5.5%, Ford sells considerably more trucks with a 9.8% market

share compared to Honda’s 4.3%. According to these same

annual reports both companies generally own their

manufacturing facilities. Honda, based in Tokyo, currently

maintains automobile manufacturing facilities locally and in

the U.S. as well as in 11 other countries, while Ford, based in

Dearborn, Michigan, maintains manufacturing facilities

locally and in over 25 other countries but does not

manufacture in Japan. Both supply an extensive network of

dealerships numbering in the thousands worldwide.

Immediately prior to submitting these annual reports, Ford

had 3,297,413,605 outstanding shares of common stock

trading at about $6.00/share on the New York Stock

exchange, while Honda had only about one half the shares

1,814,602,736, although their stock was trading on the same

exchange at about $30.00/share. Honda notifies shareholders

in their annual report that under Japanese law shareholders


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do not have the same rights that they do under U.S. law and

that Japanese courts are generally unwilling to enforce the

same liabilities against Japanese companies that U.S. courts

enforce are able to do under U.S. securities laws.

Additionally, Ford and Honda have a similar numbers of

employees at 198,000 and 176,815 respectively, although

Ford lists 57 corporate officers with the parent company with

a total of 466 including subsidiaries, while Honda lists only

38 with the parent and a total of 178 including subsidiaries,

indicating that Honda has a much more streamlined

management structure, (Hoovers, n.d.). Most notably as

Honda is a Japanese company they do not have the same SEC

reporting requirements that Ford an American company has.

Additionally while American companies generally work for

the benefit of their shareholders, Japanese companies work

primarily for the benefit of the company and its employees

and are generally not concerned with paying benefits to

shareholders.

Both companies reported similar annual sales for the


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previous year with Honda reporting $92,552.1M and Ford

reporting slightly higher sales of $118, 308.0M, however

Honda’s gross profit margin at 27.34.% is substantially

higher than Ford’s at 19.29%, (Hoovers, n.d.). This is

probably attributable to the greater diversity of products

that Honda offers, most notably their motorcycle division.

The continued success of both companies hinges upon their

ability stay at the forefront of offering hybrid vehicles to

consumers and to continue their research and development

into additional alternative fuel sources.


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SWOT ANALYSIS OF FORD


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Strengths

1. Growth in Brand Value


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Ford’s brand value gained 19% last year globally, despite the

fact that brand value dropped overall in the car category by

15%; this was in part due to the fact that they were the only

American car company not to accept federal bailout money.

(Schept, 2010). Although with a brand value estimated at

$7,039M they did not make the BrandZ top 100 Global Brand

list, they fell just short as the 100th company on the list had

a brand value of $7,280M. Continuing their successes over

the last year in international markets should result in further

increases their global brand value. Ford is the only American

car company to be recognized by BrandZ for their global

brand strength, and their rise over the past year generated a

lot of discussion about the company in their 2010

publication. Additionally, as one of the three major

automobile manufacturers in the United States with their

pronounced history of manufacturing, their brand value as an

American company is a recognizable strength.

2. Globalization


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The Focus, the first American car produced globally, as part

of Ford’s strategy to build these automobiles near the

markets where they are sold. Ford has restructured itself to

become a global corporation through manufacturing hubs in

Detroit, London, and Shanghai. (Schept, 2010)

3. Marketing

Ford promoted the Fiesta in Europe through social media by

giving 100 cars away to bloggers in exchange for them

commenting about the car, the promotion generated 50,000

requests for information, (Schept, 2010).

4. Collaboration

Ford has recently begun collaborating with Microsoft to

deliver a voice activated music and information system called

AppLink that communicates from the driver’s Smartphone to


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their vehicle. Through this collaboration Microsoft will be

adapting applications directly from the driver’s mobile phone

for their vehicles, allowing them to keep up with the rapidly

changing technology, rather than Ford owners relying on

computers embedded in the automobile’s console.

Additionally Ford has engaged in many international joint

ventures that produce vehicles on common platforms,

(Hoovers, n.d.).

5. Financing

Ford Motor Credit Company is a wholly owned subsidiary of

the Ford Motor Company that operates both nationally and

internationally. In the current recession when many

consumers who are credit-worthy are having difficulty

securing credit for automobile loans.

Weaknesses


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1. Security

Greater controls are needed internally to prevent their own

employees from stealing and selling trade secrets. A Chinese

national recently pled guilty to stealing between $50M and

$100M worth of engineering documents and selling them to a

competitor. The documents stolen did not relate to the

employees own design work, it is therefore indicated that

Ford needs to maintain greater security control over

sensitive documents to prevent this from happening again in

the future.

2. Air Pollution

Ford was ranked the 8th of the top 100 most toxic air

polluter in March of 2010, by the Political Economy Research


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Institute, PERI, in the United States with 5.09 million pounds

of toxic air releases, (PERI, 2010). As consumers are looking

to themselves to contribute to the reduction of greenhouse

gasses through their selections of product, their expectations

for corporate accountability are increasing. Ford must work

to dramatically reduce not only the emissions from their

automobiles but also the emissions from their manufacturing

facilities both in the U.S. and abroad.

3. Nationalism

Ford is still seen internationally as an intensely American

brand rather than an international brand. As Ford introduces

different models in different environments designed to

compete with local manufacturers, rebranding the company

so that other cultures will have the perception that they are

not buying a local rather than an “American” automobile will

be a difficult but necessary task.

4. Shareholder losses


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Although they have witnessed a gradual increase per year for

the previous five years, at 5.5% in 2009, Ford still has a

dismally small share of the U.S. market for automobiles

which is a great loss for its shareholders. Additionally the

trading value of their stock at $6.00/share upon the filing of

their annual report represents additional shareholder losses

that the company needs to recover from.

5. Product Diversification

While other automobile manufacturers gain brand

recognition from producing other motorized vehicles in

addition to automobiles, Ford currently produces only cars

and trucks. There are a myriad of motorized products that

Ford could use their technological know-how to produce

including, but not limited to, recreation vehicles, all terrain

vehicles, golf carts, motorcycles, scooters, water vehicles,

and snow vehicles.


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Opportunities

1. Government Regulations

Continued government intervention internationally regarding

safety issues is likely to increase growth in the automobile

manufacturing industry. Although the U.S. has 100%

penetration of air bags and other safety devices many other

countries do not and the governments in mature markets are


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beginning to demand similar safety devises; the air bag

module business alone is valued at $9B in the U.S. while the

electronic safety module is valued at $5B in the U.S

(Haelterman, 2010).

2. Environmental Issues

Ford is generally seen as an environmentally friendly

company due to the success of their hybrid vehicles, however

there is much more that they be doing to decrease their

environmental impact. Following GM’s lead and introducing

zero-landfill manufacturing facilities would be a noteworthy

start. Ford has recently secured the approval for low interest

loans from the U.S. Department of Energy to begin

reengineering their U.S. plants to make them capable of

producing cleaner and more efficient engines, transmissions,

and vehicles, (Hoovers, n.d.).

3. Luxury Hybrids


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Ford has a substantial investment in and considerable

knowledge of hybrid automobiles. Having won many awards

for their Fusion, the newly introduced and critically

acclaimed luxury hybrid the Lincoln MKZ is garnering similar

accolades, (Luxury Hybrid, 2010). Higher fuel prices are likely

to drive demand for hybrid vehicles. Tapping into the luxury

hybrid automobile market where there is little competition,

and when the nation’s economy is showing signs of recovery

should be an opportunity for Ford to increase its market

share, especially as the hybrid MKZ sells for the same

amount as the solely gas powered MKZ.

4. Electric Vehicles

As Ford has successfully introduced electric delivery vehicles

into Asia, the development and introduction of electric

delivery vehicles suitable for other markets, including the

U.S., would seem to be a significant opportunity for Ford

especially as many companies in major American cities could


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take advantage of off-market utility prices to charge their

fleets.

5. International Growth

CSM Worldwide indicates that there has been a recovery in

2010 of light medium and heavy vehicle production over 2009

figures, this recovery is expected to continue through 2016

with the production of an additional 35 million plus light

vehicle units and 2 million plus medium and heavy vehicles,

(CSM Forecast by Region, 2010). Increasingly tapping into an

emerging global middle classes, especially in the BRIC

alliance, (Brazil, Russia, India, China), and identifying other

countries where consumers have increased spending power,

represents an opportunity for continued growth for

international automobile sales for Ford.


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Threats

1. Divergent Emission Standards


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Government issued emission standards are beginning to

change across different states in the U.S. and across

different countries. Foreign and State Government actions

and legislation could threaten Ford sales of trucks and large

SUVs as they have no medium to large hybrid vehicles

available for sale in the U.S.

2. Fuel Pricing

Oil prices have resumed upward movement since early 2009,

from a low of less than $40.00 per barrel to the current price

of over $80.00 per barrel, (USEIA, 2010). Oil prices should

continue trending upwards as the global economy continues

its recovery. Increased fuel prices could potentially mean

continued decreases in sales of new trucks, Ford’s largest

market share. This would be expected despite that fact that

it has introduced a more economical Super Duty Truck that

gets 30 mpg and has also developed an all electric delivery

truck for sale in Asia. Additionally, as consumers are apt to


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drive less as fuel prices increase, there will be an expected

diminished need for replacement vehicles.

3. Unions

Ford has taken steps to drastically reduce its inventory in

2010 to match lower demand as consumers are keeping their

cars longer to save money. Further reductions in excess

capacity would probably require the cooperation of organized

labor and may take several years to accomplish, and even

then might still only partially address the problem of

decreased sales. Additionally as Ford ships their automobiles

to dealerships approximately 20 days after an order is

considered firm and maintains no backlog, putting off

necessary further reductions in capacity may require them to

accumulate a backlog they cannot support.

4. Bailouts

The government bailout of Chrysler and General Motors could

upset the competitive playing field for Ford in the coming


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years as each of these companies had a significant amount of

debt forgiven. While Ford negotiated with creditors to reduce

their debt, their positioning as a competitor with these two

American companies as well as with foreign automobile

manufacturers is still at a disadvantage as these obligations

still exist.

5. International Competition

American automobile manufactures face increased

competition from international companies in other countries

in addition to the competition that they have faced in the

past from Japanese automobile manufacturers. By 2006 Ford

only had a 16% market share in the U.S. and had lost share

to Japanese competitors each year for the previous decade,

(Kundnani, 2006). 2009, in fact, was Ford’s first profitable

year in over five years. Now Korean brands are keeping

pressure on American mid-level automobiles as well, (Schept,

2010)


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FORD STRATEGY:

Scent recognition is the most powerful memory aid. In order

to more fully gain acceptance into international commercial

markets Ford should consider infusing their automobiles with


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scents that appeal to local nationals. Ford can take a lesson

that perfume companies have already learned that

modification of fragrances to suit a regional market is

necessary. Although this might be a radically different

approach, rather than equipping new cars solely with a “new

car” smell, Ford should consider equipping their automobiles

lightly fragranced with a barely detectable base scent that

will appeal to potential customers regionally. Ford could

ultimately make their cars seem less American and more

local by adopting this strategy.

Ramification Prospects:

Potential consumers will experience an immediate

satisfaction and identification with the product.


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As the scent will not be overt, customers may not initially

recognize that the vehicle is scented due to their familiarity

with the scent.

The scent can be blended with the “new car” aldehyde

fragrance so that it isn’t the initial scent noticed.

Consequence:

There will be certain consumers in these markets that this

strategy will not be effective with as they may not identify

with the cultural norms.

There is a certain “feminization” involved with perfuming a

car that some customers might object to.

Pregnant women may all of a sudden not like their cars as a

woman’s preferences for scents can change during

pregnancy.

The scent could clash with a customer’s chosen scent.

Evaluation:


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In test markets, some models can be equipped with the

fragrance while other models are not to see if this influences

the sale of the scented model over the unscented model,

success can be determined by actual sales statistics.

Additionally Ford can conduct focus groups in the test

markets to see which model consumers prefer.


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HONDA SWOT


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Strengths

1. Brand Value

Despite a decrease of 2% in the last year in brand value,

Honda still has the third highest brand value of all

automakers and is 46th overall in BrandZ’s list of Top 100

Global Brands, with their brand value estimated to be worth

$14,303M. (Schept, 2010)

2. Engines


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Honda is noted for their ability to produce highly efficient

gasoline powered engines that are economical to run. The

innate ability of this company to produce highly fuel

economical engines, combined with the introduction of

hybridization of the automobile engine has made them a

market leader for hybrid automobiles.

3. Product Diversification

Not only manufacturing automobiles, Honda also is the

world’s largest manufacturer of motorcycles, in addition to

manufacturing all terrain vehicles, personal watercraft, and a

myriad of power products. This type of product diversity

under the Honda brand name increases consumer awareness

of the company and can buttress diminished automobile

sales in a downturned economy.

4. Employee Loyalty

As Japan has a relatively weak social support network, as


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such employees are reliant upon and dedicated to the

companies they work for. Japanese companies are reluctant

to terminate employees and in turn reinvest much of their

earnings into employee social programs increasing employee

loyalty.

5. Customer Satisfaction

Citing that they are fun to drive, they retain their resale

value, and their safety as reasons, Honda retains 62% of its

owners, one of highest brand loyalty values in the

automobile industry, (J.D. Power & Associates, 2010).


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Weaknesses

1. Back Log

Not properly anticipating the effect the recession would have

on the sales of their automobiles, Honda currently has a six

month supply of Civic and Insight hybrids already delivered

to dealerships, (Luxury Hybrid, 2010).

2. Higher End Pricing


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Although their vehicles are noted to retain their value better

than other brands, Honda’s pricing is still at the high end of

the mid-level market despite the fact that their styling is

rather middle of the road, making the purchase of similarly

sized and equipped, but less expensive automobiles, an

obvious choice for recession-minded consumers.

3. Recent Quality Issues

Honda has recalled more than 1.2 million automobiles in the

U.S. since January of 2010 due to problems with air bags,

electric switches, power steering, and brake pedals,

(Hoovers, 2010). At this time Honda’s recalls have not

attracted as much attention as Toyota’s recent recalls, but

continued manufacturing problems will surely arouse public

safety concerns and cause consumers to question

manufacturing quality.

4. American Dependency


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Honda is overly dependent upon sales in the United States,

as witnessed by the recent economic downturn and the

decrease in sales since 2007, over dependence in one specific

region can result in a loss of growth.

5. International Luxury Automobile

Although Honda has introduced their Acura in North America

they have yet to introduce a higher end luxury vehicle into

any other market. Their brand appeal could easily be

translated into sales in other markets where there is an

emerging middle class.


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Opportunities

1. Latin America

Honda currently has automobile manufacturing facilities in


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both Latin America and South America but reported sales in

these areas under “other regions”; in both 2008 and 2009

this was their lowest geographical market indicating that

there is a lot of room to market and increase sales of their

automobiles to these consumers where they are already

manufacturing their product.

2. Toyota Customers

With the bad publicity surrounding Toyota’s recent recalls

and the company’s unwillingness to acknowledge fault or

assume responsibility, Honda as one of the big three

Japanese automobile manufacturers could attempt to market

directly to Toyota customers who are looking for replacement

automobiles and gain market share.

3. Shareholder Rights

As a Japanese company Honda has no obligation to increase

shareholder rights, however, they could voluntarily do so and


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in making such a commitment, purchasing shares in the

company would be more attractive to Americans.

4. Joint ventures

Honda currently controls almost all of their manufacturing

facilities with limited joint venturing predominantly occurring

within Asia.

Threats

1. Bankruptcies


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As Honda provides financing primarily to its North American

customers and dealerships, the increased financial instability

of the American population could lead to bankruptcy and

debt forgiveness that the company might not be able to

easily absorb or have made provisions for. Net charge-offs

from sales alone increased from .93% in 2008 to 1.15% in

2009 despite an increase in provisions of 10%.

2. FOREX

International sales, especially to the United States, are the

crux of Honda’s business. As such, fluctuation in the value of

the yen against other currencies exposes them to a high level

of risk. Specifically, if the U.S. dollar, as this is their largest

market, were to gain substantial value over the yen, Honda

would experience a rapid devaluation of products already

delivered to their dealerships.

3. California


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Under the U.S. Clean Air Act individual states are allowed to

determine their own emission standards that can be more

stringent that federal standards. California is currently

attempting to enforce the strictest emission standards in the

world and recent legislation in 2009 and 2010 are making

their standards even more stringent beginning as early as

2011. As the state represents 10% of the American

population this could potentially be a threat to Honda sales,

specifically those cars that are already in the pipeline.

4. Price Wars

Honda’s competitors in the United States are currently

jockeying for position with a limited number of potential

customers as the nation undergoes a prolonged economic

recovery, American competitors are more flexible in their

ability to offer discounted pricing that Honda is.

5. Shipping

Although Honda manufactures automobiles locally, many of


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their parts are manufactured at their Japanese facilities and

assembled abroad. As oil prices are expected to continue to

rise, Honda will continue to incur increased shipping charges

cutting into their profits.

Ramification

Prospects

Honda reduces the back log of automobiles currently at

dealerships in the United States.


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Honda will increase the future demand for their products in

Latin America as they have strong customer satisfaction and

brand loyalty.

Honda and their dealerships will incur less overall costs than

they would if the back log isn’t sold at all.

U.S. dealerships will become more solvent with debt

forgiveness.

Honda dealers will suffer initial losses incurred with

additional shipping, however this will be mitigated by debt

forgiveness and they should experience less overall loss.

Consequences

Honda will have to reduce the purchase price of these

automobiles so that they are affordable in less affluent

countries.

Americans wishing to purchase Honda automobiles at

discounted rates will travel to Mexico to do so.


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Evaluation:

This strategy can be evaluated by monitoring dealership

demands from Mexico to dealerships in the United States and

the U.S. dealership compliance. Surveys of Mexican and other

Latin American customers who have recently purchased

Hondas should begin immediately to determine their

customer satisfaction levels.

HONDA ALTERNATIVE FUEL VEHICLE STRATEGY:

Honda should develop a fully electric automobile with luxury

appointments suitable for introduction to the European

market. Honda has had considerable success with the

introduction of their luxury brand Acura in the United States

and intends to introduce a fully electric car next year in the

U.S. under the Honda brand called the Fit. By introducing a

luxury automobile to its European customer Honda fulfills

two needs, to improve their geographic range and to further

penetrate Europe. Europeans generally are less inclined to


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drive the long distances that consumers in the United States

and other countries do, the market is ideal for the

introduction of a vehicle that can travel about 100 miles on a

charge. Additionally the price of gasoline in Europe is about

four times the price of gasoline in the U.S. making market

entry even easier.

Ramification:

Prospects

Honda introduces its automobiles to more affluent European

consumers.

European consumers who previously purchased Hondas and

now desire higher-end vehicles can continue to their

relationship with Honda.

Honda increases its already pronounced brand value.

Consequences

The current European economy is probably not the best time

to introduce a luxury automobile.Consumers who are looking

for luxury may not be looking for the value an electronic car

can provide.


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Evaluation:

Honda will need to compare the sales of this vehicle against

low-end electric vehicles, but more importantly against

luxury hybrids and gasoline powered engines. Introduction in

a single market will need to be analyzed for a considerable

period before attempted introduction in additional European

markets.


60


FINDINDS FOR FORD AND HONDA

FORD needs to keep a watch on security. Should

develop more secured base, to protect valuable documents

and hence to be competent.

FORD should keep a watch on air pollution caused, by the

company as it can be soncluded that might loss of

shareholders faced by company.

Honda should reduce its dependency upon customers in

the United States and focus on increasing sales in other

regions. Specifically Honda already has established

manufacturing facilities in Mexico yet has limited automobile

sales in Latin America


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RECOMMENDATIONS

FOR FORD

A market analysis can be done to determine what base

fragrance appeals to consumers in specific regions.

Perfumers know that different cultures find different

fragrances appealing as our ability to smell is our earliest

developed sense. Attraction to scent is a learned response

and the sense of smell is developed at three months while we

are still in the womb. Additionally, the article notes that

vanilla is the most popular scent in Latin America, citrus

scents in the Mediterranean countries, spices in the Middle

East, sweeter fragrances in North America, and cleaner

fragrances in Asia. Additionally scents that are overtly

associated with food should be avoided. Introduction can be

limited to one region at a time and as success in this market

is gained another market can be developed. This strategy can

be tied in with a green marketing campaign for their hybrid

vehicles in various regions. Ford’s Fusion and their Lincoln


62


MKZ currently use visuals on their consoles to demonstrate

the vehicles efficiencies, as gas economy increases the

Fusion grows more leaves, similarly the MKX sprouts more

buds that turn into apple blossoms; this feature could

potentially be tied into the strategy as well.

RECOMMENDATIONS

FOR HONDA

Honda should survey current and potential European customers

to discover what appointments they would be looking for in a fully

electric automobile. Currently the United Kingdom has the top selling

electric car in the world, the Reva G-Wiz which is a relatively low end

automobile. The U.K. and many other European governments have

been making serious efforts to accommodate fully electric vehicles

and while there is a lot of competition for smaller automobiles, there

is in fact little competition for a luxury automobile. Honda should

perform a market analysis that includes determining which

consumers in European countries are likely to drive the fewest miles

per trip and which governments are the most conducive to the

introduction of electric vehicles.


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CONCLUSION

Although both companies are relatively similar and offer

similarly featured mid-range automobiles, Honda and Ford

essentially appeal to two different customers in the U.S. and

abroad. In addition to automobiles each company has

developed its own unique strength to further penetrate

markets, Ford with trucks and Honda with a variety of other


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products, most noticeably motorcycles. Together these two

companies will continue to be at the forefront of the

introduction on new vehicles into their respective markets by

capitalizing on the innovation that is inherent in their

organizations.

Bibliography

WWW.HONDA.COM

WWW.FORD.COM

WWW.GOOGLE.COM


http://WWW.GOOGLE.COM/

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