There are several factors that can lend to a house ‘s ability to be competitory in its industry. Constructing blocks of a competitory advantage include efficiency, quality, invention, and reactivity to clients. A house with a competitory advantage may see higher net incomes than the mean net income in the industry while viing for the same clients. In the instance of Honda, this is true. Honda has many typical competences based on its resource and capablenesss that allow it to hold a competitory advantage in the car fabrication industry. Three countries that give Honda a competitory advantage in the car industry include Honda ‘s technology and design, research and development, and trade name equity. In order to find whether Honda ‘s competitory advantage in these three countries is sustainable, we analyze and apply each one to the VRIO model.
Honda is alone in that its corporate construction is made of three companies. Honda Research and Development is in charge of research and development of advanced merchandises for the company. Honda Motor produces, sells, and services the all Honda merchandises. Honda Engineering develops fabrication procedures, systems and equipment used to construct all Honda merchandises. Honda ‘s superior design capableness has enabled it to construct high-quality dependable merchandises and has besides added value to the Honda trade name. Honda ‘s efficient fabrication procedures have besides kept production costs low comparative to other car manufacturers in the industry ( Snipes 2008 ) . In footings of value, Honda excels at utilizing its technology expertness and design accomplishments to construct dependable autos that merely work. This ability is rather valuable to the company and its industry. Although valuable, Honda ‘s technology and design is non rare, because there are other auto industries with first-class technology and design capablenesss. For auto makers who are non already competitory with Honda in its technology and design ability, it would be really hard to bridge the spread to competitiveness by copying Honda ‘s success. Therefore, Honda ‘s technology and design is inimitable. The concluding inquiry to inquire is whether Honda is organized, ready and able to take advantage of chances via its technology and design. Honda ‘s organisation is alone in its direction construction in that it differs from most public U.S corporations. A board consisting of 21 managers runs the company, which allows for faster decision-making and executing in new merchandise design ( Whiston 2010 ) . All of the company ‘s concern units are aligned to take advantage of design discoveries, which leads to a decision that its technology and design are a beginning of sustainable competitory advantage.
Honda ‘s focal point on research and development is extremely valuable and places it at the head of engineering. This allows the company to integrate technological discoveries and promotions into its broad line of vehicles. Honda besides has a really high degree of investing in research and development, which is non common in the car industry. Honda ‘s degree of committedness to research and development is besides really rare compared to its industry equals. Honda possesses a strong first mover advantage over many rivals in this country because of the advanced nature of its research. Rivals non actively prosecuting their ain research find it really hard to catch up to Honda, therefore the company ‘s R & A ; D is considered inimitable. Organizationally, Honda keeps the R & A ; D group separate from other divisions within the company giving its squads freedom to develop new engineerings for the company across the board. Honda ‘s alone construction and its degree of committedness to advanced quality research make its research and development a sustainable beginning of competitory advantage in its industry.
Honda ‘s trade name equity is an highly valuable beginning of its competitory advantage since consumers are willing to pay a premium for Honda ‘s vehicles because of the power of its trade name and its association with quality and value. As a consequence, it has led Honda to hold best-in-class repetition purchase rates. Honda has repeatedly been placed among the universe ‘s top 20 most valuable trade names harmonizing to a research conducted by Business Week Magazine ( Ferret 2006 ) . The Honda trade name ranked 19th on the international list of one hundred most valuable trade names in 2005, holding a trade name value of $ 15.8 billion. Honda has really strong trade name trueness as evidenced by the strong redemption rate for Honda cars relative to the industry norms. 65 % of Honda clients purchase another Honda car compared to merely 48 % for the industry ( Ferret 2006. While it is extremely valuable, Honda ‘s trade name equity is non rare. Toyota besides has strong trade name equity in the same industry, but recent callbacks may hold deteriorated its value. Because Honda ‘s trade name equity has been built over a long period of clip, it would be really hard for rivals to copy. Honda ‘s repute for dependable autos was non earned over dark, doing it extremely inimitable. Honda takes advantages of the benefits given by its strong trade name by utilizing it as the flagship trade name for the company. By back uping its trade name value with superior technology, design, and research and development, Honda is able to trust on its trade name equity as a beginning of sustained competitory advantage.