Honda Case

Executive summary

The economic situation in the United States over the past ten years has witnessed a multiple whipsaw in the overall Gross Domestic Product, with no sustained GDP growth for more than a period of five years. The United States witnessed two recessions within this period: the first recession being a result of the crash in the dotcom industry, and the second, fallout of subprime mortgage crash, which eventually spilled across the whole world. Economic growth after both recessions was relatively slow with Industries and service firms adjusting to market situations in order to remain in business. Despite being in a generic economic situation as other businesses, firms in the Automobile Industry reacted differently, with some weathering the storm through creative adjustments to their products and processes, and others being slow to adjust to a rapidly deteriorating economy had to receive financial bailout from governments during the downturn in the economy.

This report explains the Macro economic trends prevalent within the captured period, and the following travails of the Auto industry in response to a fast changing economy, with a detailed focus on Honda Motors Co. USA. The Auto Industry in the US has been dominated by General Motors, Ford and Chrysler, known as the Big three. The transplants from other countries mainly Japan have had an upheaval task in growing their business in the US, but as the economy began to change, there was a shift in consumer preference for the transplants, based on the peculiar characteristic of their automobiles. The big three faced industry travails, as the power of competition became more apparent as important forces and trends influence consumer decision for spending on vehicles.

As the economy begins to recover after its longest recession in recent years, business success in the auto industry will continue to move at the pace of economic growth overall, however, it will swing more in favour firms that are continuously nimble to consumer specific needs at a reasonable price based on the average populace income. Over the period analyzed, Honda Motor Co. US has proven to be at a vantage position to cement its steady growth, accentuated during the recession periods, by manufacturing more fuel efficient cars that are environmentally friendly, while not sacrificing the desired taste and preferences of its consumers. It is also evident that lean and effective production learning's from the recession period would be built upon, hence on the overall, the company is expected to continue on its growth path as the economy recovers, though it should be stated that they have huge task to break into the top three ranks.