Management Effectiveness of Honda Technology Resources using the Porters Five Forces
Many companies use Porter's Five Forces to assess their competitiveness and gains of their market evaluation. This method helps them to determine their strategic position in the market (Pearlson & Saunders, 2012). This essay will analyze the Management Effectiveness Using Technology Resources and the application of the Porter's Five Forces will be used.
Porter is a term used to refer to the controlling factor or force that brings an impact to the company with an aim of making a profit. Michael Porter details the Five Forces.
Threat of New Entrants
It shows how hard a new company can enter into the industries for better performance. In this aspect, it is difficult for the new company to enter the market. The company is not small because getting into a business of selling vehicle requires large capital to open. Therefore, in the case of Honda, it is evident that it used to face issues during its first plantation in Ohio region. The British, as well as European Markets, were the major shareholders of this company. To run the company at a better position, the new competitors in the market have to look for better new technology in their operations. The new entrants are attracted to the market. This is because better skills and management techniques have started taking over the market shares, European Markets being among them (Mair, 1997). There is no barrier to entry in the industry as long as the capital is available.
Threat of Substitute Products or Services
It is simple to substitute a product when the product being substituted is cheaper. Substituting a product in Honda will be a major problem and may not be easy. Before replacing the products, the company will have to consider certain factors that will favor the customers before buying the product. Forms of transport such as bikes and plane are the major factor. For example, if the fuel price rise, it might be advantageous to the Honda Company as it will also be considering the consumption. Some products could be alternatives to offerings; however, as their substitute becomes attractive, it becomes hard to such companies to generate profits. Thus, the replacement demand at times reduces the products and services of an industry. Therefore, picking a substitute that performs the same function will be the best substitute (Mair, 1997).
Bargaining Power of the Customers
The Bargaining power of the customers is determined by the strong position of the customer (the person buying the product) in most cases, customers have a strong bargaining power to reach the choice of their satisfaction. This gives the company pressure to provide more products or less cost on the market. A lot of the Honda manufacturers have a variety of styles in designing of their products. They design better features in their cars depending on the current technology. However, some customers have a little power of bargaining. Such customers never buy huge quantities of cars and thus never see the need for bargaining. Honda has to make use of these opportunities in its business through the combination of the fuel consumption of the cars, technology and also consider the customer satisfaction to reduce a lot of complaints (Mair, 1997).
The Bargaining Power of Seller or Suppliers
It is determined by the number of sellers available and how strong the company is in position regarding market. Honda is considered the most powerful seller or suppliers. This company intervenes directly to their consumers in their internal performance. Furthermore, the company has a lot of suppliers of cars raw materials. It is the seller’s mandate to decide on which commodity he or she need. Honda puts in order the purchases of different parts of the components as well as the raw materials. To take the largest control of the quality market, Honda will be required to stop its long relationship with other foreign or local partners. It is known that these partners are much sensitive to the highest demand and the necessities of the automobile industries because it keeps on ordering large quantities.
Intensity of Competitive Rivalry
It determines whether there is completion between the industries or not. Honda industry has a high completion rivalry. This is because the company is not the only one operating. However, its rate of innovation could put it a safer side due to much advertisement. Furthermore, since the rate regarding competition is high, Honda is considered to be an oligopoly firm (Mair, 1997). What makes it oligopoly is that the automobile producer recognizes the price. They know that the price does not lead to the rise of the quantity of the size of the market shares, nevertheless, earlier they were much innovative through issuing of long-term warranties to the commodity to retain their customers.
Honda through different designs offers a variety of classical models. Accord is one of the classical models they produce. This model has a good market position. For example, the Western market usual sets a full model where the designs are made and every component redesigned to generate a new model (Ettlie, 2006). Honda has a capacity of assembling major qualities of cars with low fuel consumption versus high fuel consumption at a favorable price. They produce high-quality cars because they have the knowledge and capability just like their production method as well as design. Honda firm is much liked by many. What makes it more interesting is that it capable of manufacturing low-pollution cars, electric cars, and even solar power (Ettlie, 2006). The company puts more consideration on the needs of their consumers.
Honda Company has a sustainable competitive advantage. It uses the main techniques of making error-free in a way that one task depends on the other (previous task) which helps them catch up with time. This technique provides a high chance of the selling opportunity to those who prefers to wait. It, therefore, puts the company ahead of the others (Ettlie, 2006).
The Five Forces of Porter is a controlling instrument that gives direction in a company’s power to be in a market. Honda has taken this instrument to be of help. It gives it a clear knowledge of their powers and also lays a foundation for success in both areas of strength in relation to their competitors' position. Therefore, for Honda, the future has to keep on moving.