Essay About Japanese Car Manufacturing Company Honda And General Motor’S Self

Analysing Financial Statement
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Chushi GuoSection EGeorge Chondrakis The news article recounted that the Japanese car manufacturing company Honda has recently invested in General Motor’s self-driving division Cruise to further develop its autonomous driving technology and push Cruise to stay ahead of other competitors in the self-driving race. Honda has already invested $750 million into the Cruise Division with a promise of a total $2.75 billion over 12 years. The high amount of funding coming from Honda is estimated to help Cruise scale up its autonomous vehicles development quickly and reach a competitive position in the industry. The action taken by Honda is reasonable and logical, especially under the analysis of macro-environment, industry, market, resources and capabilities and value chain. First, when we look at the macro-environment, we can see that there is a strong need to develop driverless cars to help cut traffic accidents and generate new business model such as robo-taxi-hailing service. From sociocultural perspective, as the living standards rise these years, people start to travel around more and demand more flexible transportation. Self-driving car serves as a very good solution to satisfy people’s need to commute at anytime and anywhere. Moreover, the high traffic accidents have also raised the public’s concern in driving safety and signaled a need to develop a safer technology to reduce road deaths. From an economic perspective, traditional car manufacturing industry has reached the inflection point where it is necessary to adjust themselves to the new business cycle and modify the current business models. Therefore, it is indispensable for automotive companies to enter the self-driving car industry in order to survive in the industry. From a technological perspective, the gradual maturity of artificial intelligence also drives the traditional car companies to step in the new industry and survive. As we see in the article, technology companies such as Google and Intel have already taken crucial role in developing self-driving technology and their strong capabilities in the advanced technology again demonstrates the need for traditional car companies to adapt the new vehicle business environment. Second, in the industry analysis, the traditional car manufacturing companies are facing intense rivalry and threat of new entrants. Waymo as the self-driving unit of Google’s parent company Alphabet is already a leading player in the autonomous driving sector. Threats coming from non-traditional car manufacturing companies like Google pose intense competition in the industry and also signal the need to take according actions to modify traditional automotive industry business. Third, by doing a competitor and market analysis, we can observe that companies from the same strategic groups as Honda have already announced plans to offer self-driving car public services, thereby affirming the need for Honda to take actions to stay in the market. It is said that Toyota wants the robo-taxis ready by the Tokyo Olympic Games in 2020, Ford plans a service by 2021 and Renault by 2020. Honda, Toyota and Ford belong to the same strategic group which aims at offering cars of affordable prices with standard quality. As the competitors from the same strategic group confirmed plans to roll out autonomous car services, having self-driving cars gradually becomes a minimum success factor for the traditional car manufacturers to stay in the market. It is very important for Honda to participate in the new strategic dimensions-driverless service in order to not be eliminated under the intense industry competition. At the same time, customers also demand a safer driving solutions, posing that engaging in the driverless markets is a key success factor to satisfy buyers’ needs.Fourth, when looking at resources and capabilities, Honda investment in GM’s Cruise division provides GM with ample resources that could facilitate its technology development and expand global presence. By promising to invest a total of $2.75 billion over 12 years in Cruise, Honda has provided GM with sufficient financial resource to improve its technology and consolidate its competitive position in the market. At the same time, Honda, as a Japanese company, can effectively help the US company GM to expand the geographical reach. Honda would be able to provide its physical resource in its home market Japan to help grow GM’s presence in Asia. Furthermore, Honda as a manufacturer with good reputation can also inject the intangible resource to GM to further enhance its brand image to buyers all over the world. At the same time, Honda’s large scale investment in GM also signals Honda’s approval of GM’s self-driving technology which further positively elevates customer’s perception to GM self-driving technology development.