SWOT Analysis of HONDA 2020


NameHonda Motor Co., Ltd.
IndustryManufacturing (Motorcycles, Automobiles and Power Products)
Founded1948
HeadquartersTokyo, Japan
President & CEOTakahiro Hachigo
Revenues¥15,889 Billion (2019)
Profits¥676.3 Billion (2019)
Leading CompetitorsFord Motor Co., General Motors Co., Toyota Motor Credit Corp.

Company Overview

Honda was founded in September 1948 and manufactures motorcycles, automobiles, and power products as its main products. Honda has three business operating segments, namely, motorcycle business operations, automobile business operations, financial services business operations, and Life creation and its other business operations. Overall, as of March 31, 2020, the company has already sold 29.83 million units (19.28 million of which were motorcycles, 4.85 million were automobiles and 5.70 million were power products). Units are being sold in China, Europe, the Middle East, Africa, North America, Japan, South America, Asia, and Oceania. Moreover, as of March 31, 2020, the company’s capital is at ¥86 billion and there are 218, 674 consolidated employees.

The company has 430 group companies in total, 357 of which are consolidated subsidiaries, and 73 are affiliates. They manufacture motorcycles for commuting purposes or even for sports purposes. When it comes to automobiles, the company manufactures a wide range of cars like their best-sellers which are the Civic and HR-V or the Vezel global models.

They also manufacture pick-up trucks, mini-vehicles, and luxury cars. The company sells over 6 million power products every year such as general-purpose engines, tillers, generators, snowblowers, lawnmowers, pumps, outboard engines, and portable power sources. In 2015, HondaJet was introduced and the company then started expanding in aircraft engines.

HONDA Strengths 2020:


  • High commitment to its philosophy and management policies.

    Honda’s business conduct uniformly observes and applies their so-called “Honda Philosophy”. This philosophy ensures that everyone in the company has a uniform understanding and adherence to the standards that have been set, from operations to management. The company highly values respect, equality, trust, initiative, and “the three joys” of selling, buying, and creating.
  • Continuous pursuit of the highest level of quality.

    The company continually strives to improve the quality of not only their products and services but also their company processes and activities. The company has been one of the most renowned companies over the years when it comes to manufacturing high-quality vehicles.

  • Strong capability to manufacture their various products and even create their own solutions.

    Honda has been manufacturing various models of motorcycles, automobiles, and power products. With this, Honda can maximize its potential in designing more products in the future because of its diverse expertise. 

    The company also added its very own solutions which include the so-called “Mono-zukuri” and “Koto-zukuri”. These solutions are being integrated as part of the company’s innovative strategies.
  • Highly strategic and quick response during this pandemic which helped the company remain strong.

    Despite the reported decreases in the revenues during early this year, Honda reported an increase of 28.5% in its operating profits for the fiscal 2nd quarter ended Sept.30, 2020. This was made possible by the company’s cost-cutting measures. The YTD stock performance of Honda also proves that Honda is able to navigate through the pandemic and continues to gain the confidence of investors.


HONDA Weaknesses 2020:


  • Decrease in sales revenues due to the COVID-19 pandemic.

    The pandemic has caused a decrease in the demand for the company’s products and services. The company’s sales revenues showed a year-on-year drop of 25.2%, as reported for the fiscal six months ended Sept. 30, 2020.

  • Temporary suspension of businesses in some locations.

    The pandemic has also affected the operations of the company due to the fact that some operations had to be temporarily suspended thus, reducing the production. There were delays as well in the supply chain aspect of the business due to travel restrictions and other guidelines imposed in various locations. The dealers of the company were also affected.

    They had to decrease the number of service hours or even suspend the businesses as well. Honda’s automobile factories located in the U.S. also needed to shut down production but resumed after May 11, 2020. The same thing happened to their factory located in Wuhan City, China.

HONDA Opportunities 2020:


  • Mass production of electric vehicles and more electricity-powered products.

    Honda also advocates for a clean and safe environment and the company can achieve this through its “Zero Emission Vehicles” and other potential products that use electricity as a power source [8]. Honda already has the initiative and resources to make this happen and one good possibility is the mass production of new ZEVs and sustainable innovations in the coming years. 

  • Adding a new business segment in the future.

    With Honda’s continuous efforts in the research and development in robotics, AI, and mobility, the company can potentially manufacture new innovative products that can help improve the lives of people all over the world. For example, Honda can integrate robotics with health care or aiding individuals with disabilities.

HONDA Threats 2020:


  • The business is prone to cyber-attacks.

    Last June 8, the company’s system was hacked. This caused a temporary suspension of the company’s operation. This kind of threat is very concerning in terms of the potential adverse effect on the competitiveness of the company.

  • Risk in buying and acquiring supplies.

    The company depends on its suppliers for products and materials that the business uses. It is important that those materials are priced reasonably and delivered on time. If a main supplier of the company for example shuts down, the company’s production and operations can be seriously affected.

  • Risks posed by economic fluctuations.

    Economic downturns, fluctuations in the currencies, interest rates, credit risks can also affect the company since it operates in various locations globally. These may affect the prices of raw materials sourced by the business and the level of demand which can also decrease company sales. You can find a blank SWOT template here

References:

Company Overview.” Honda The Power of Dreams,

“UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F.”

“Consolidated Financial Summary for the Fiscal 2nd Quarter Ended September 30, 2020.”

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