Honda Motor Co. Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Honda Motor Co. Case Study Solution

Introduction

Honda Motor Co. Ltd is an automotive company that is well-known in manufacturing of automobile, aircraft, motorcycle, and other power equipment that includes Engine, Mover, Pumps, Tiller, Blower, Outboard engine, Lawnmower, Sprayer, Inflatable boat, Robotic lawn mower, Snow thrower, Trimmer, Generator & welding power supply, electric four wheeler and Compact house cogeneration unit(Business, Reference for;, 2017).

Soichiro Honda was the founder of Honda motor company and was incorporated in the year 1948. Till 1959 Honda was the largest manufacturers of the motorcycle. In the year 2000 Honda achieved the title of the Second largest manufacturers among Japanese’s automobile manufacturers and the eight largest automobile manufacturer among Toyota, General motors, Ford, Nissan, FIAT, Hyundai, and Volkswagen group. Takahiro Hachigo is currently leading Honda motors.

Honda Motor Co. Harvard Case Solution & Analysis

Civic, Accord, City, Crv, Fit and HIV are most popular models made by Honda in the automobile industry. Honda has aw holly owned subsidiary in aircraft industry known as Honda Aircraft Company since 2006. Manufacturing air jets since 2012 which allows new levels of reduced drag, increased aerodynamics and fuel efficiency thus reducing operating costs. In 2013 Honda Japan become the first exporter to export Acura a dedicated luxury brand of Honda and Honda model. Headquarter of Honda Motor based in Minato, Tokyo, Japan(Hoovers;, 2017).

Honda shares are traded on New York stock exchange and Tokyo stock exchange. Currently company have assembly plants all around the globe countries include United states, Pakistan, Canada, England, Japan, Argentina, Peru, New Zealand, Mexico, Brazil and Belgium. Industry in which Honda is dealing in requires continuous improvements and innovations. For which Honda almost spent 4% to 6% of their revenues in Research and Development(Parker, 2016).

Recent Performance of the Company shares and bonds

Currently Honda Company has financial gearing of 0.9 time debt against equity which is in agreement with the industry average.The share price of Honda has high fluctuations in this year as due to fluctuated Eps in each year. 2014 was the best year for the shareholders to recognise gain in investment,as share value reached JPY 5415,or through dividend income. Whenever higher the Earning per share results in higher the dividend on a share if companies maintain constant payout ratio(Honda, World, 2017).

The payout ratio is the ratio of distribution of wealth against earning, like Honda motor Ltd have maintained dividend yield on 2.78% on the share market, 2014 results in higher dividend per share of JPY 1242. The value of a share increase by taking effect of an increase in Equity reserves. Investors that are interested in capital gain consider Eps and P.E ratio but an investor who want affiliation with every year earning considers payout ratio. Eps depends upon net profit of the company and its share(Nasdaq;, 2017). Although in monetary terms 2014 was the most beneficial year for Honda but have not maintained the same pace in growth in net profit. 2016 was the unfortunate financial year for Honda as they have not controlled their operational costs which resulted in a decrease in their net profit. There is a high decrease in securities price..............

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