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The American Honda Motor Company was established as a subsidiary by Honda in 1959 During the 1960s the type of motorcycles brought by Americans underwent a major change Motorcycle registrations increased by over 800000 in five years from 1960 In the early 60s the major competitors were Haley - Davidson of USA BSA Triumph and Norton of the UK and Motto - Guzzi of Italy Harley-Davidson had the largest market share with sales in 1959 totalling a66 million dollars Many of the motorcycles produced were large and bulky and this led to the image of the motorcycle rider as being one who wore a leather jacket and went out to cause trouble The Boston Consulting Group BCG report was initiated by the British government to study the decline in British motorcycle companies around the world especially in the USA where sales had dropped from 49 in 1959 to 9 in 1973 The two key factors the report identified was the market share loss and profitability declines an the scale economy disadvantages in technology distribution and manufacturing The BCG report showed that success of the Japanese manufacturers started with the growth of their own domestic markets The high production for domestic demand led to Honda experiencing economies of scale as the cost of producing motorbikes declined with the level of output This provided Honda to achieve a highly competitive cost position which they used to penetrate into the US market The basic philosophy of the Japanese manufacture is that high volumes per model provide the potential for high productivity as a result of using capital intensive and highly automated techniques Their marketing strategies are therefore directed towards developing these high model volumes hence the careful attention that we have observed them giving to growth and market share BCG p59 The report goes on to show how Honda built up engineering competencies through the innovation of Mr Honda The company also moved
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