The worldwide automotive industry is in a state of oligopolistic competition where every producer is trying to generate growth at the cost of other competitors. In a bid to promote competitive advantage, firms in the industry seek to provide consumers with new, improved, and cheaper products that their rivals cannot provide. Companies promote technological innovation which plays a major role in improving productivity and developing new products. Management of technological innovation is a critical activity in achieving a competitive advantage in the automotive industry. The secret behind Honda Motors’ success lies in its development of new, attractive, and cost-efficient products as well as its diversification in automotive products such as cars, motorbikes, lawnmowers, etc. Through innovative technology, the company develops environmentally friendly and cost-effective products such as hybrid cars, diesel-powered cars, natural gas vehicles, and fuel cell cars.
Reason’s for Honda’s strategy
Honda is committed to the development of innovative technologies which are intended to meet future global demands (Honda 2011). In a market highly conscious of growing environmental issues, the automotive industry is viewed as a major source of environmental degradation. Therefore, companies in the industry strive to improve the image of their products by inventing cars that use alternative sources of fuel, developing low emission vehicles, producing safe and reliable vehicles as well as producing them at the least cost. Honda’s vehicles are designed to meet consumer demands, promote safety, and promote environmental preservation.
Honda and Toyota Motors were the first companies to produce hybrid cars which use a combination of gasoline and electric engines to operate. Honda produces environmentally friendly vehicles and it is renowned for delivering greenness at a relatively lower cost (Honda 2011). Honda’s low-priced hybrid cars are not only affordable but also reduce operating costs for consumers as oil and gas prices in most parts of the world continue to soar. Indeed, the wall street journal indicated that Honda Insight, one of Honda’s hybrid models posed a major threat to Toyota. Clean diesel technology has gained increased popularity in the modern market. To exploit this opportunity, Honda Motor Company launched a new diesel-powered vehicle model. This was primarily due to the efficiency associated with diesel-powered cars and the fact that the diesel option can add less cost per vehicle in comparison to hybrid cars. In addition, the diesel engine creates more power than a gasoline engine given the same amount of fuel. Honda’s 2.2 CTDi diesel-powered civic was rated 55.4 Miles per gallon compared to 50mpg for the hybrid powered Civic and 33 mpg for the gasoline powered civic making it more preferable (Honda 2011).
The natural gas-powered Honda Civic GX offers multiple benefits to the company, consumers, and the environment. This includes a 20% reduction in carbon dioxide emissions, near-zero emissions, high reliability and durability, and home refueling cost savings and conveniences (Honda 2011). The third-generation Honda Civic GX has a driving range of over 200 miles and is certified as a California advanced technology partial zero-emission vehicle due to its inherent low emissions. Honda further believes that this innovation will play a critical role in bridging the gap between gasoline and other alternative sources of fuel such as hydrogen which provides a mechanism for the industry and the government to gain a greater understanding of the challenges and opportunities associated with gaseous fuels and home refueling. In addition, the company has developed hydrogen fuel cell vehicle technology. Honda’s FCV technology delivers almost twice the fuel efficiency of Honda’s gasoline fuelled hybrid electric technology and contains considerably fewer proportions of harmful exhaust emissions.
Honda Company has established The Honda Strategic Venturing, an arm of the global Honda Research and Development Organization which invests in technology venture companies that have the potential to create synergy with Honda’s long-term research and development strategy (Honda 2011). Honda can only create value and maintain its competitive advantage in the industry by focusing on all the industry sectors from which it can derive a competitive advantage. This includes developing and managing technological innovations in diverse areas such as the development of alternative energy sources, production by use of advanced materials, creation of safety, comfort, and convenience, as well as the development of products that can interact with the modern means of communication (Honda 2011). The company should be open to new ideas and should pursue synergies to continuously promote and improve its products.
Effect of a single environmental standard on consumers and producers
Environmental standards concerning automobiles have evolved to govern the production and sale of motor vehicles across world regions. Companies that have been able to develop environmentally friendly cars have gained a competitive advantage both nationally and internationally. The existence of environmental regulation standards encourages innovation of clean technology and pollution-reducing products which is beneficial to consumers. Having a single environmental car standard makes it easier for consumers to make choices between varying companies’ products that conform to a common set of standards. However, this limits consumer choices and overlooks certain key aspects that may impact negatively on the consumers. Since motor vehicles are associated with all kinds of environmental pollution, a single environmental standard would only serve to regulate a single aspect of the pollution. For instance, setting standards for carbon emissions would only reduce carbon emissions while overlooking other environmental issues such as fuel depletion.
Companies are becoming increasingly aware of the benefits associated with green production. A single environmental standard may afford the company production advantages since all its resources are dedicated to a single innovation. This promotes specialization and innovation hence improving the company’s overall performance. However, implementing new technologies is associated with increased costs. For instance, reducing fuel consumption in cars will increase the cost of producing vehicles and consequently the retail price. High production cost coupled with high retail prices significantly reduces sales returns. Implementation of multiple strategies such as reducing fuel consumption while adopting other sources of fuel would strategically reduce overall costs of production.
Honda Motor Co., 2011. Honda Worldwide Official Website. Web.