Starting the Strategy Catherine Olszanowski Argosy University Capstone Experience in Integration and Strategy B6028 Dr. Thomas Kemp November 27, 2013 Running Head: STARTING THE STRATEGY 1 STARTING THE STRATEGY 14 Abstract Honda Motor Corporation was established in 1946 by Soichiro Honda. Honda is an international corporation that manufactures a varied range of motor products, from fuel efficient cars, mopeds, engines, motorcycles, to exclusive sports cars. This audit assesses Honda’s market position, value proposition and competitive advantage at the same time evaluates the existing atmosphere Honda functions in. This paper will also perform a preliminary assessment of external factors that comprise the Porters five forces. Lastly, this paper will focus on Honda’s strategic issues and provide proposals that will assist the company in determining problems while providing results and recommendations. Running head: PRELIMINARY STRATEGY AUDIT 2 Table of Contents Abstract2 Introduction………………………………………………………………………………………………………… 3 Market Position……………………………………………………………………………………………. 4 Value Proposition…………………………………………………………………………………………… 5 Competitive Advantage…………………………………………………………………………………… 5 External Environment………………………………………………………………………………………………… 6 Current Environment……………………………………………………………………………………… 6 Assessment of External Factors…………………………………………………………………………….. 7 Porters Five Forces………………………………………………………………………………………….. 8 Strategic Issues……………………………………………………………………………………………………… 10 Economic Health………………………………………………………………………………………....... 10 Aging Riders………………………………………………………………………………………………. 11 Diversifying……………………………………………………………………………………………… 11 Summary of Key Findings and Recommendations…………………………………………………………………. 12 Conclusion………………………………………………………………………………………………………… 13 References14 Starting the Strategy Introduction In today’s market few companies know that being able to sustain a competitive advantage is crucial to the longevity of a company. Honda has been in business since 1903 which is celebrating their 110th anniversary and within that time Honda has become a global icon that has been at the forefront of the motorcycle industry. Market Position: According to Honda’s website it has stated that Honda’s target consumers are: “In 2012, U.S. sales of new Honda motorcycles to our “outreach” customers -- young adults 18-34, women, African-Americans and Hispanics – grew overall at more than twice the rate as sales to our traditional U.S. customer base of Caucasian men, ages 35-plus” (Honda, 2013, p. 3). Honda has a healthy product line that caters to every price point and also has a parts and service and clothing departments that further facilitate the Honda experience. Honda’s marketing strategy is about American made motorcycles and freedom of the road. Each Honda store is franchised out and has at least one dealership in each major city so that they can integrate themselves in the local communities that t.

1. Starting the Strategy
Catherine Olszanowski
Argosy University
Capstone Experience in Integration and Strategy B6028
Dr. Thomas Kemp
November 27, 2013
Running Head: STARTING THE STRATEGY1
STARTING THE STRATEGY 14
Abstract
Honda Motor Corporation was established in 1946 by Soichiro
Honda. Honda is an international corporation that manufactures
a varied range of motor products, from fuel efficient cars,
mopeds, engines, motorcycles, to exclusive sports cars. This
audit assesses Honda’s market position, value proposition and
competitive advantage at the same time evaluates the existing
atmosphere Honda functions in. This paper will also perform a
preliminary assessment of external factors that comprise the
Porters five forces. Lastly, this paper will focus on Honda’s
strategic issues and provide proposals that will assist the
company in determining problems while providing results and
recommendations.
Running head: PRELIMINARY STRATEGY AUDIT 2
Table of Contents

2. Abstract2
Introduction…………………………………………………………
……………………………………………… 3
Market
Position………………………………………………………………
……………………………. 4
Value
Proposition……………………………………………………………
……………………………… 5
Competitive
Advantage……………………………………………………………
……………………… 5
External
Environment…………………………………………………………
……………………………………… 6
Current
Environment…………………………………………………………
…………………………… 6
Assessment of External
Factors…………………………………………………………………
………….. 7
Porters Five
Forces…………………………………………………………………
……………………….. 8
Strategic
Issues…………………………………………………………………
…………………………………… 10
Economic
Health…………………………………………………………………
……………………....... 10
Aging
Riders…………………………………………………………………
……………………………. 11
Diversifying……………………………………………………

3. ………………………………………… 11
Summary of Key Findings and
Recommendations……………………………………………………
……………. 12
Conclusion……………………………………………………………
…………………………………………… 13
References14
Starting the Strategy
Introduction
In today’s market few companies know that being able to
sustain a competitive advantage is crucial to the longevity of a
company. Honda has been in business since 1903 which is
celebrating their 110th anniversary and within that time Honda
has become a global icon that has been at the forefront of the
motorcycle industry.
Market Position:
According to Honda’s website it has stated that Honda’s target
consumers are: “In 2012, U.S. sales of new Honda motorcycles
to our “outreach” customers -- young adults 18-34, women,
African-Americans and Hispanics – grew overall at more than
twice the rate as sales to our traditional U.S. customer base of
Caucasian men, ages 35-plus” (Honda, 2013, p. 3). Honda has a
healthy product line that caters to every price point and also has
a parts and service and clothing departments that further
facilitate the Honda experience. Honda’s marketing strategy is
about American made motorcycles and freedom of the road.
Each Honda store is franchised out and has at least one
dealership in each major city so that they can integrate
themselves in the local communities that they do business in.
The main characteristics are being apart American icon and a
part of American history. Those two characteristics make
consumers feel like they are not only a part of an American Icon
and American history but consumers get a sense of family
belongingness.

4. Most males want a motorcycle that fits their specific wants and
needs first evaluating what they can realistically afford and then
find what they are looking for in a Honda. The majority of
women that walk into a Honda dealership mainly are geared
towards apparel because, Honda in recent years have been
designing clothes that have been the trend setters. For either
gender people who buy a Honda product tells people that there
is infinity of the motorcycle lifestyle that each gender
appreciates to a certain degree.
Value Proposition:
Honda satisfies their consumer base by delivering superior
quality products in the motorcycles they sell and parts in the
apparel departments. Each aspect that Honda contributes to the
wants and needs of consumers has far exceeded expectations
because; of the products that are sold have a long shelf life that
lasts for years even after the consumer purchases it. For
example, Motorcycle riders who purchase parts for their
motorcycle rarely fail and far exceed the original amount of
time specified of use such as: exhaust pipes that can last for the
life of the motorcycle in many cases. Honda however lacks a
service where a consumer can ship their motorcycle from one
coast to the other coast in times of life changing events. Honda
has positioned themselves as a Motorcycle maker that is above
pedigree and projects a certain status symbol that demands
respect and admiration from onlookers. Honda strictly speaking
has three main competitors; Honda, Suzuki, and Victory.
Competitive Advantage:
The differences between these motorcycle makers and Honda is
that Honda, Suzuki, and Victory all still have carburetors while
Honda uses a fuel injection system which unlike their
competitors need chokes to start their motorcycles. In terms of
function Honda has the largest catalog of customization for each
motorcycle in their product line. Quality wise, Honda’s are like
Ford trucks they are built to last. Function wise Honda has
made sure that it is easy and simple to use without a
complicated mess of dashboards like in some cars or other

5. motorcycles for that matter. On a price stand point both Honda
and their competitors are pretty close in the way of beginner
motorcycles. Honda only makes money selling their medium to
high level motorcycles, because, of the cost ratio.
Availability of motorcycles is always in abundance as Honda’s
arrive in dealership lots weekly. Brand image is also important
and Honda makes sure that there is a significant meaning of
freedom and an iconic worldwide recognition system with the
“Bar and Shield” logo. The differentiation is important to
consumers because, they want to be associated in certain status
that brings consumers in a family oriented environment for life.
Honda’s competitive advantage stems from its loyal consumers
that keep coming back and generational new consumers because,
of the quality products Honda sells. Honda’s key to long term
sustainability comes from loyal consumers and generational
consumers that grew up with their parents and around Honda so
naturally this is the prime reason why Honda has lasted 110
years of operational effectiveness. For Honda to continue
support the long term sustainability for as Mike Moran from San
Diego Honda stated that the use of digital media has become the
best medium for advertising to get their product line to the
consumer.
External Environment
Current Environment:
Honda has positioned the company to be at the forefront of
motorcycle ingenuity and quality craftsmanship that consumers
want to be on the cutting edge with. Consumers also yearn to be
a part of an iconic brand known globally while also owning a
part of American history.
Many businesses believe that simply bringing products to
consumers is the only goal of the business and for the most part
it is. Unfortunately, for businesses there are external elements
that can complicate the organizational effectiveness of a given
business. On the reverse end, however, some external elements
can also help businesses thrive as well. Honda has been a
company that has cemented themselves as an iconic company

6. that has been in business since the early 1900’s. In today’s
business economy, it is important that a global company such as
Honda is aware of the environmental factors and trends that
stem from economic, political, regulatory, and technological
trends.
Assessment of External Factors:
Since the economic recession that had started in 2007 and
supposedly ended in 2009, consumers were very frugal with
how they spent their money and where they spent it. Most
people who decide to purchase a Honda do so partly for two
reasons: One, because, consumers love American made
motorcycles, and consumers are genuinely passionate about
riding as a whole. Two is also because it is something that most
consumers view as a hobby. Honda has had to expand their
demographics since more often the average middle aged white
male would be Honda’s main consumer base. According to the
Washington Post article entitled, Honda Explains U.S. Economy
stated that: “Honda is dealing with that by pushing particularly
hard on what it calls “outreach” segments of the market, as
opposed to just it’s “core customers” of people who have
traditionally bought the company’s motorcycles” (Irwin, 2013,
p. 1). Honda understands that that trend now is to appeal to a
broader consumer base because in order for Honda to survive
the company needs to be able to appeal to diverse groups of
people.
Politically Honda has been involved in federal election
contributions, which according to Tribune Business News
article, GOP has edge in Honda Donations, stated “Honda
company’s political action committee has given 57% of its
contributions in federal races to Republicans and 46% to
Democrats none of the contributions are huge; That’s about the
list price of a 2009 Fat Bob” ("GOP has edge," 2008). Honda
has always been involved politically to encourage law changes
that could benefit riders or tougher laws to help riders stay safe.
Technology trends are important for Honda because today’s
generation is all about the information technology both on the

7. consumer side and on the company side. In an article,
Wisconsin Companies Ranked Top in Nation in IT stated that
“Honda shows a solid commitment to training employees and
keeping up with technological trends. The company has also
made a significant investment in innovation, including e-
commerce, to maintain their competitive edge” (Murphy, 2013).
Geographically Honda operates globally and with that many
motorcycle enthusiasts creates clubs. Honda decided to also
create an association or club as well called H.O.G., which
stands for Honda Owners Group. Geographically, H.O.G. is
everywhere because with each person who purchases a Honda
the consumer is automatically apart of the H.O.G. association
for one year, which has become a trend that Honda has started.
Assessment of Porters Five Forces:
Porter’s five forces are indicated in the five areas, which
constitute a driving force in competitive advantage. First the
Bargaining power of consumers is huge. Consumers now have
many tools at their fingertips with the introduction of the smart
phone and the internet. Next is the bargaining power of
suppliers. Honda is such a huge company now that suppliers bid
on the contract to transport not only motorcycles in and around
the country, but also parts and any other necessity that Honda
requires for successful business operations. Next is the threat
of new entrants, new players, such as: Honda, Suzuki and
Victory have come into play against Honda and are targeting the
same demographic customer base. Finally, is the Threat of
Substitute Products. Again, substitute products generally come
back to the competitive threats that can be seen as substitute
products that provide ownership like a Honda, but not exactly a
Honda. The point being the substitute products take away from
the overall market share that Honda has worked hard to attain
since its birth in 1903.
Consumers can price compare right from their phones and they
can do more extensive research of the products and services
from home. Today’s market is filled with information to make
bargaining for a product or service much easier for consumers

8. to negotiate price. The market is dominated by a few large
suppliers rather than having a lot of smaller suppliers that
source of supply. The relationship to powerful suppliers can
potentially reduce strategic options for the organization.
Honda’s purchasing activities are guided by the Supply
Management Strategy (SMS).
The SMS provides a supply management roadmap that enables
stakeholders to effectively and efficiently meet the long-term
goals of the Honda organization. Hondas' suppliers know that
they have some bargaining power over their materials that they
use to build their bikes. Without the suppliers, Honda’s
longevity as a company may be put in jeopardy. It is also
important to note that Honda although sticks with suppliers that
want to be associated with the reputation it has, but they also
have some power as well if the suppliers demand too much with
their materials simply because of the association Honda brings.
Part of its brand loyalty to customers, Honda has built its
reputation from their cars and so decided to try the motorcycle
industry. Suzuki has long been a maker of motorcycles;
however, they specialize in performance motorcycles and now
they have since grown into the cruiser market to compete
directly with other makers such as Honda and Victory. Victory
has also been a long standing maker of motorcycles. Victory has
been a little closer at gaining brand loyalty because Victory is
almost as iconic as Honda themselves. Although, these other
makers do have similar features in the making of their
motorcycles eventually, however, there is one fact that remains
the same with consumers, which is cost. Any business who
wants to stand in a particular industry knows that you have to
undercut your competitors to draw in consumers either that or
somehow differentiate yourself, so that consumers are willing to
pay more.
Close customer relationships: Every dealership wants to make a
bond between the dealership and the consumer because
developing that bond means repeat business. The relative price
for performance of substitutes, although Honda has competitors

9. like Honda, Honda in particular has tried to undercut Honda and
gain more market share. This is why Honda advertises relatively
close to Honda’s price points. The competitive rivalry between
Honda, Honda, Victory and Suzuki is more about product
reputation and quality. All of them have similar strategies;
therefore, what it comes down to is innovation and overall size
and price points for the consumer.
Conducting a preliminary s.w.o.t. analysis is a brief overview of
a business that outlines what a business strengths, weaknesses,
opportunities and threats are. The External strengths are: gas
prices, generational riders and the E.PA. (Environmental
protection Agency). The internal strengths include: Human
Capital and a family oriented atmosphere. The company takes
advantage of the opportunities the company has created like the
H.O.G. These weekend barbeques lure riders into coming
weekly in hopes of consumer spending. The biggest threats that
should be of concern for Honda is their competitors who are:
Suzuki, Honda, and Victory.
Strategic Issues
Economic Health:
Why it is an issue: Honda has proven themselves time and time
again that they are a company that can last for decades however,
even though Honda has survived a few economic pit falls like
the recent economic recession, Honda has realized that now than
ever before Honda is closely tied with how America’s economic
standing affects the company not only from a production
standpoint, but also in a shrinkage in their consumer base both
in America and abroad. It is imperative that if Honda is going
to last through future economic standoffs, then Honda must
provide incentives for consumers to buy into their products
much like what Hyundai did when they promoted that if you
bought a car from them and you lost your job you can bring
your vehicle back. This program reassured consumers that
Hyundai is in touch with the American people and is clearly is
making an effort to boost not only sales, but American
confidence.

10. Aging Riders:
Why it is an Issue: Honda deeply depends on generational riders
to sustain their core business, which means that they must
appeal to ever changing demands of the next generation. If
Honda is going to be continually successful they must be able to
integrate more technology and innovation within their product
line to stay fresh and relevant in the industry.
Diversifying:
Why it is an issue: Honda has not really used their brand name a
whole lot in other outside products. Over recent years Honda
has expanded their brand name of American made into another
company, Ford. With the partnership with Ford and their F-
series trucks Honda has understood that their world does not
have to end with motorcycles. Ford has been massively
successful in selling their F-series trucks simply because; the
Honda name is also attached. If Honda wants to broaden their
name out to other ages and demographics Honda could design
and market their own trucks as a separate line of vehicles
should the motorcycle industry encounter slow growth
progression because, of a given economic downturn. If Honda
can successfully diversify Honda can then stay in the minds of
consumers and perhaps drive consumers back into the world of
motorcycles.
Summary of Key findings and Recommendations
The Key Findings:
· Market Position
Honda has been able to make the company appeal to all ages
and races however; Honda could for example produce a
motorcycle that may be more female friendly to increase the
amount of female riders, since there is still a sizeable gap
between male and female riders.
· Competitive Advantage
The functionality and history of the company are its main
selling points between choosing Honda and a competitor like
Honda. In order to stay ahead of the continually competitive
industry Honda should be able to stay technologically ahead

11. while Honda has managed to produce fuel injected motorcycles.
The company may be able to entertain a possible innovation of a
hybrid or all electric Honda, which may help the company
create an eco- friendly company image.
· Strategic Issues
Evaluating what Honda has experienced in the past and being
able to navigate its own economic health in an effort to sustain
the longevity of the company in the present and coming future
that presides in the issues of its current aging riders and
diversification recommendations. It is recommended that
Honda listen to their current consumers and expand into other
areas that the Honda brand aligns with American values. It is
possible that maybe with the existing partnership with Ford
Honda could also provide aftermarket accessories for their
Honda themed trucks while also thinking about entering the
truck aspect of the auto industry.
Conclusion
Honda is a remarkable company that has shown that external
trends abound in the industry as well as being able to evaluate
Porters Five Forces, and how they relate to Honda while also
conducting a preliminary strengths, weaknesses, opportunities,
and threats. Areas of assessment in which Honda can improve
upon are ones that Honda has been able to be satisfied with.
Honda will always be able to find areas to improve upon
although, most consumers are happy with what Honda provides
and that is an enjoyable riding experience

12. References
GOP has edge in Honda donations. (2008, August 26).
McClatchy- Tribune Business News. Retrieved from
http://search.proquest.com.libproxy.edmc.edu/pqcentral/docvie
w/464373924/14074F4DAC04126F2C4/11?accountid=34899
Honda. (2013).
http://investor.Honda.com/phoenix.zhtml?c=87981&p=irol-
homeprofile&locale=en_US&bmLocale=en_US
Irwin, N. (2013). How Honda explains the U.S. economy.
Retrieved from
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/29
/how-Honda-explains-the-u-s-economy/
Murphy, C. (2013). Wisconsin Companies Ranked Top in
Nation in IT. Retrieved from http://wtnnews.com/articles/35/
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