Executive Summary
Business intelligence (BI) is among the most influential information and data collection mechanism of corporate and business organizations. The launching of 2008 Honda Accord Coupe and Sedan requires essential information as to ensure a competitive positioning in the global automobile industry and marketplace. By answering twelve important questions about competitors, this paper presents the most essential information and knowledge regarding Honda’s major competitors – Ford Motor Company, General Motors, and Toyota Motors. The critical intelligence needs range from competitors’ strengths; weaknesses; objectives and strategies; response to current economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive trends affecting the (automobile) industry; vulnerability of Honda’s alternative company strategy; vulnerability of Honda’s alternative strategies to successful counterattack by the major competitors; products and services positioning; extent of new firms entering and old firms leaving the industry; key factors in the current competitive position of Honda; projections in the sales and profit ranking in the previous years and underlying reasons; nature of supplier and distributor relationships; and extent of product substitution.
Discussion/Analysis
Considering the state of the global marketplace where hypercompetition (D’Aveni 1995, p. 26) is seem palpable, international business organizations must recognize the role of information in every aspect of business management and operations. The reformation of business practices and the indispensable use of information technology (IT) are necessary attributes in coping up with the demands and pressures of improving productivity and performance (van Dyk & Conradie 2007, p. 120). Business intelligence (BI) plays a significant role in leveraging the information assets particularly on making better or outstanding business decisions. On this case, the launch of a new product, that is, 2008 Honda Accord car model is taken into account.
The Concept of Business Intelligence
Thieruf (2001, p. 66) comprehensively described business intelligence as “computerized methods and processes to improve strategic, tactical, and operational (including financial) decisions using data, information, and knowledge from multiple sources as well as applying experience and assumptions to develop an accurate understanding of the dynamics surrounding decision making” (see Appendix 1). These computerized methods and processes vary from different levels, stakeholders and duration as well as efficacy in an organization such as operational intelligence, tactical intelligence, and strategic intelligence. A systematic analysis of these levels of business intelligence designates that they overlap, thereby forming a scale that underlies financial intelligence. Most of the time, business intelligence is interchange with various information systems like competitive intelligence (CI) and knowledge management (KM) and it causes heated argumentation in the business and academic world (Wright & Calof 2006, p. 453). Herschel and Jones (2005, p. 46) indicated that business intelligence has focused on similar information purposes but it differs on a specified advantageous position as it concerns itself with decision making using data warehousing and online analytical processing techniques (OLAP). Among the information systems that are directly related to business intelligence include knowledge management systems, on-line analytical processing systems, decision-support systems, and executive information systems (Thieruf 2001). All these facilitate comparisons, analysis trends and business patterns, and current and historical information presentation to the decision-makers of a particular organization. Hence, theses systems help decision-makers to make informed decisions that will affect all aspects of the operations of the company by providing thorough information and understanding of its long-term goals and objectives. However, the collection-analysis process of the concept of business intelligence is most critical when it comes to the strategic planning of the company particularly those that operate in the international market.
The Case: Launching 2008 Honda Accord[1]
Honda Motor Company, Limited or popularly labeled as Honda was established in 1948 by Soichiro Honda and tagged as the world’s largest motorcycle manufacturers and one of the leading automakers. At present, Honda comprises of more than 400 subsidiaries and affiliates that make their global network headed by Takeo Fukui as CEO and significantly recorded a total of US$93 billion revenue in 2006 (US$5.0 billion net income) while employing more than 160,000 people. With visions of value creation, ‘glocalization’, and commitment for the future, they offer a wide variety range of products ranging from small general-purpose engines and scooters to specialty sports cars. Up to the present, their consistency in providing products of highest quality that creates new values and reasonable price makes them outstanding in terms of worldwide customer satisfaction. These two attributes also serve as their competitive edge – high quality and reasonable in price.
This year, the Company introduced its latest addition to it extensive collection of automobiles – the 2008 Honda Accord in two versions, Coupe and Sedan (See Product Specification at http://automobiles.honda.com/2008-accord/). Before the launching of this new product, business intelligence analysis took place. Assuming that the product has approximately two months before it will become available in the market, the following analysis with regards to the essential information about its competitors and/or other stakeholders was conducted.
Critical Intelligence Needs
Today, most companies believe that it is impracticable to build any kind of sustainable competitive advantage based on items for consumption alone. Aside from a precise understanding of customer-based information, corporate firms, particularly those that are profit-oriented, invest on competitor and other stakeholder information accumulation and analysis in relation to company performance and productivity and the development of competitive position in the industry it chooses to operate. This is because in every business, an individual or group like Honda is determined to know what kind of work they would and would not do for their customers and, in turn, they carefully learn how to fulfill the needs of each kind of customer in their target markets. Hessan and Whitely (1996, p. 14) emphasized the idea to take advantage of the competitive situation not just by being better in how that product gets sold, serviced, and marketed at the customer interface. In doing this, it requires that companies like Honda create breakthroughs in how they interact with customers, and design a way of interacting that makes an indelible impression on customers, one that so utterly distinguishes them from others that it becomes a brand in itself.
An outstanding knowledge of the dynamics and conditions of the major competitors in the automobile industry, for instance, helps assess the potential opportunities of every business venture by differentiating the similar products or services offered by the company against other business organizations operating in the same industry. As such, it is necessary to realistically assess potential levels of profitability, opportunity and risk based on five key factors within an industry so as to determine the long-term profitability of a market or market segment (Porter, 1998). Porter’s Five Forces Model (see Appendix 2) is another way to leverage business information. For this case, Honda’s major competitors are Ford Motor Company (2008 Ford Focus), General Motors (2008 Pontiac G8), Toyota Motors (2008 Toyota Corolla) and other automobile manufacturers. The introduction of the 2008 Honda Accord Coupe and Sedan necessitates competitor analysis involving the three specifically mentioned rivals. In analyzing these competitors, the following questions are to be answered:
· What are the major competitors’ strengths?
Ford Motor Company as well as General Motors is identified to be American automobile companies in which bears an impression of superiority due to Americanization brought about by the hazards of globalization while Toyota is similar to Honda which is Japanese in origin. Traditionally, Ford's international operations were a source of strength that allowed the company to maintain its position as the second largest auto maker in the world and to respond to GM's competitive moves (Studer-Noguez 2002, p. 118). General Motors is the world’s largest manufacturer, Ford ranked third, and Toyota made its way to be the world’s largest automaker by revenue, production, sales (half of 2007) and profit outshining General Motors. Ford has an outstanding leadership as characterized by the development of Fordism – a system of mass production which combined the principles of "scientific management" with new manufacturing techniques, such as the assembly line, which is created more than improbable profits for the company and literally revolutionized industry on a global scale within twenty years of its implementation (Kalliney 2002) and a solid principles on corporate governance that keeps trust among its investors. General Motors, on the other hand, exudes an outstanding social responsibility evident on its remarkable social policies. Toyota excels in technological innovation on automobiles seen on its hybrid and plug-in hybrid technologies and other manufacturing facilities. For financial status, a direct competitor comparison from Yahoo! Finance is presented.
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Source: http://finance.yahoo.com/q/co?s=HMC
· What are the major competitors’ weaknesses?
All companies have its share of criticism ranging from leadership and managerial, management and employment and environmental issues. with the increasing global advocacy of protecting the environment from pollutants emitted from cars and other means of transportations, the issue of environmental protection is considered to be the major weakness of the identified competitors.
· What are the major competitors’ objectives and strategies?
Ford has entered the financial arena in a bid to create greater brand awareness and customer loyalty. The company has recently upgraded its money market account's web capabilities to offer customers a single place to obtain financial and automotive products and manage their accounts. It is a wholly owned subsidiary of Ford Motor Company and is the world leader in meeting the financial services needs of automotive consumers globally. General Motor, in contrast, from an interview with GM CEO Rick Wagoner, GM’s business strategy is mainly built on a model of cost cutting and keeping a full line on the market (Stein 2004). Toyota tries to preserve its home-grown economic model such as the values it practices in its business practices to be able to retain their competitive advantage. Indeed, it is a hard task for the company to preserve its locally conceptualized model while maintaining linkages with the global economy.
· How will the major competitors most likely to respond to current economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive trends affecting the (automobile) industry?
The continuous research and development (R&D) programs of each automobile company facilitates their response to emerging trends that affects their performance and productivity. Generally, the role of marketing research in every business environment is to provide information that is necessary in the decision-making processes for the development and benefit of the company (Patzer 1995; Betsch & Haberstroh 2004). In every difficulty that is encountered, the processes and various kinds of marketing management research come to the rescue.
· How vulnerable are the major competitors to Honda’s alternative company strategies?
Honda is known to be a leader in high quality standards and reasonable price/value. The Company’s philosophy revolves around four major specifications namely: (1) high expectations set for itself and its suppliers, (2) willingness to apply whatever resources necessary to get the job done, (3) commitment to cooperation and collaboration, and (4) unrelenting attention to detail. With these, the major competitors are susceptible in terms of economic trends, specifically to price war, as Honda holds the advantageous position on this aspect. Further, the Company’s high expectations set for itself and its supplier serve as the ultimate challenge as well as motivation for the global team. Honda excelled on cost management mechanisms. This is seen evidently on the sharing of resources both at raw materials and semi-finished products leads to additional cost reduction for the Company, at least to its consolidated financial costs. With this, benefits and incentives are far greater than the actual and potential (risks) costs of strategic alliances and FDI (Vernon 1996).
· How vulnerable are Honda’s alternative strategies to successful counterattack by the major competitors?
The aggressive counteractions and marketing initiatives of Ford, General Motors, Toyota and other auto manufacturers posed a great danger to the alternative strategy of the company. The stiff competition, diversity of location and managerial functions, and unstable economy of a region is among the factors that put Honda in a risky position particularly in marketing or launching the new product. But then again, with the proper implementation of the managerial functions, marketing strategies, and the dedication of supplying products of the highest efficiency yet reasonable prices and guaranteed worldwide customer satisfaction will make the Company more successful.
· How are Honda’s products or services positioned relative to major competitors?
The Company’s products and services are competitively positioned as it constantly competes with global leaders in the automobile industry. Honda’s commitment to cooperation and collaboration allows that whole Company and its mamagement to explore wider horizons that will lead them to productive economic ventures and human knowledge acquisition. Their given importance to affiliation and networking contributes to the continuous expansion of their branches and dealers. The expansion activities of Honda can be considered as optimal strategies with greatest amount of risks (Shrivastava 1995). Optimal because economies of scale, scope and cost-efficiencies are eminent although huge investments post risks. Further, the establishment of subsidiaries, regional offices, and joint-plants made it possible for exports and licensing grants to be possible due to location advantages (Mauri & Phatak 2001).
· To what extent are new firms entering and old firms leaving this industry?
With the stiff competition and inability to anticipate economic changes within industry as well as geographic levels, companies that operate in the automobile industry are experiencing significant drawbacks. This means that new firms entering the industry are less if not nonexistent while old firms is not actually leaving instead taking strategic management maneuvering in terms of the increasing strategic alliances through mergers and acquisition, partnerships, and others.
· What key factors have resulted in Honda’s present competitive position in this industry?
High quality and cost efficiency makes Honda a global automobile manufacturer. The willingness to apply available resources to get the job done provide cost efficiency to the Company. Today, the increasing amount of raw materials is one of the most unsettled problems of business organizations. As prices increase, the suppliers also go with the flow. The supply and demand chain affects the overall conditions of the business. As Honda cling to their available materials, financial stability is guaranteed. In terms of human resources, Honda management wants multi-talented individuals that are able to work in various positions and perform activities in high expectations. Training and development opportunities are thriving. Also, the value of open communication, positive attitude and teamwork is proliferated. The unrelenting attention to detail of the Company still proves to be effective. For instance, in addressing the global call of environmental friendliness in all automobile products, Honda worked hard in enhancing the environmental and safety aspect of their products. With this, it has direct impact on brand recognition and loyalty (Kotler 2003). In relation to their products, Honda implements continuous research and development, studies emerging trends and technology innovations, and at the same time plans their future products and operations.
Honda is different from other automobile companies because of the aforementioned philosophy that guides them in every decision and action at every level in the Company. With those, the success and market reputation of the brand is unquestionable. Additionally, the capability of the Company in addressing issues that concern the environment and customer satisfaction is always prompt and remarkable. The advantages in maintaining an international viewpoint are wider market scope for sales and production operations, brand awareness and development, international recognition, and ability to compete globally.
· How have the sales and profit rankings of major competitors in the industry changed over recent years? Why have these rankings changed that way?
There has been an interesting fluctuation of global sales among the said global automobile industry leaders. In a publicly accessed record of sales this year provided by Yahoo! Finance, competition is incessantly high. With the desire to gain competitive position as well as remarkable financial standing, major players in the automobile industry and their positions vary every now and then. For instance, Toyota’s leading position as No. 1 global automaker was obliterated by General Motors within 9 months (Isidore 2007; Kumar 2007). This case indicates the unrelenting change on the sales and profit rankings of major automobile manufacturers worldwide.
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Source: http://finance.yahoo.com/q/co?s=HMC
· What is the nature of supplier and distributor relationships in this industry?
Supplier and distributor relationship is based on strategic marketing initiatives inherent to each company. In the case of Honda in building and sustaining supplier relationships, the Company and its management can easily refer to the existing culture of supply chain management being utilized by their Company throughout the long years of operations. Integration and acquisition are potential methods to retain good supplier relationship. Also, the increase awareness to the conditions of affiliates and subsidiaries will somewhat determine the potency of the Company. With this, training and retention are deemed crucial to international success of subsidiaries (Hitt et al 2003, pp. 260-261). Innovation and research findings need not be strictly established in every subsidiary office (Anders 2002). Honda’s action to intensify R&D may not just suggest that it would try to personalize models in each country instead such strategy could be suitably suspected to maximize sharing of resources. The findings of one country can be applied to global operations since safety and environment issues are of general concerns. In such case, the firm had settled to invest heavily on R&D not to disqualify this claim but to prove its financial capability supported by joint-ventures.
· To what extent could substitute products or services be a threat to competitors in this industry?
“Substitute products” as those that are available in other industries that meet an identical or similar need for the end user. As more substitutes become available and affordable, the demand becomes more elastic since customers have more alternatives. The threat of substitutes often impacts price-based competition since substitute products may limit the ability of firms within an industry to raise prices and improve margins. Other concerns in assessing the threat of substitutes include the presence of new technologies that can contribute to competition though more diverse and economical substitute products and services. A segment is unattractive when there are actual or potential substitutes for a product (Porter 1998) particularly on the case of Honda and its new 2008 Honda Accord.
All in all, the identified information can influence the decision-making process particularly on the launching of 2008 Honda Accord Coupe and Sedan by serving as potential tools in coming up with the most effective marketing strategy. On this case, the introduction of a new product in the market requires a lot of knowledge and information management. The value added delivered by the business intelligence information collected is basic, that is, providing the precursors or determinants of constructing market entry strategy as well as other marketing and management mechanisms like integrated marketing communications, brand and product positioning, consumer-related programs, and overall competitive strategy.
References
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[1] All information regarding the Company and the product is obtained in the corporate website – www.honda.com
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