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Department of Aerospace Engineering

R.V. College of Engineering, Bengaluru -560059.
(An Autonomous Institution Affiliated to VTU, Belgaum)

Foundations of Management and Economics – 16HEM61

Self-Study Report on

Problems Faced and Strategies Employed by Honda and Apple

Pradyumna Bhandiwad 1RV16AS033

Sathyanarayanan S 1RV16AS048

04-04-2019

Submitted to,

Prof. Nandini B
Assistant Professor
Department of IEM, RVCE.
In the partial fulfillment for,

6th Semester Bachelor of Engineering Degree

DEPARTMENT OF AEROSPACE ENGINEERING

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CERTIFICATE

Certified that the Assignment report titled ‘Problems Faced and Strategies Employed by
Honda and Apple’ is carried out by Sathyanarayanan S (1RV16AS048), Pradyumna
Bhandiwad (1RV16AS033), who are bonafide students of R.V College of Engineering,
Bengaluru, in partial fulfillment for the award of degree of BE of the Visveshwaraya
Technological University, Belagavi during the year 2018-2019. It is certified that all
corrections/suggestions indicated for the internal Assessment have been incorporated in the
report deposited in the departmental library. The report has been approved as it satisfies the
academic requirements in respect of assignment work prescribed for the course by the
department for the said degree.

Maximum marks Marks obtained

10

Signature of Course In-charge

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Table of Contents

Certificate i

1. Introduction - Honda 4

2. New Challenges 5

3. Strategies 6

4. Introduction – Apple 7

5. Challenges Faced 7

6. Strategies Employed 10
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INTRODUCTION

Honda is a Japanese public conglomerate primarily manufacturing motorcycles,

cars, aircrafts and power equipment. Honda has been the world's largest
motorcycle manufacturer since 1959, as well as the world's largest manufacturer
of internal combustion engines measured by volume, producing more than 14
million internal combustion engines each year. Honda became the second-
largest Japanese automobile manufacturer in 2001.

Honda was the eighth largest automobile manufacturer in the world in

2015.Honda was founded by Soichiro Honda in the year 1946. Honda has been
pioneers in the automotive industry for long. Honda was the first company to
launch a hydrogen powered car. Honda has always been innovative in their
products.

Honda was among the first foreign automobile companies to enter the Indian
market after the economic reforms introduced in early 1990’s which allowed
foreign players to start direct operations in the country. Honda entered the
Indian market in 1984 in a joint venture with Kinetic Engineering Limited to
manufacture scooters.

Together they released the model ‘Kinetic Honda’ which was a massive hit.
Honda entered into another joint venture with Hero Motorcorp Ltd. Together
they manufactured a slew of motorcycles for the Indian market. The Indian
market was very sluggish at that time. People at that time perceived scooters to
be safer than motorcycles.
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Figure 1- The Kinetic Honda

NEW CHALLENGES

 In 2011, Honda India started to face a lot of issues. There was a lot of
competition from Volkswagen, Suzuki. This caused a decline in sales for
Honda. Some of its high selling models were overtaken by the
competitor’s models. In 2011, Volkswagen Vento replaced Honda City in
the sedan segment as the leader within 8 months of launch.
 This was bad news for Honda which had ruled the market for many years.
Honda later started to face competition from Maruti Suzuki with their
product Ciaz which some time now has been outselling Honda’s flagship
sedan the Honda City.
 Honda have had a rollercoaster ride in the Indian market with few years
of being the leader and rest of the time playing catch up with other
manufacturers.
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Figure 2- Honda City (Flagship Sedan from Honda)

SETTING STRATEGIES RIGHT

 Analysts believe that the main reason for the decline in sales was a lack
of long-term strategy for the Indian market. They had said Honda had
become too complacent due to the good performances of its models and
the brand value it enjoyed in the Indian market.

 In August 2012, Honda completely bought out stake in Honda India and
made it its 100 per cent subsidiary. After the stake sale, Honda Siel Cars
Ltd became Honda Cars India Ltd. Honda wanted to have full control
over its Indian operations to further improve its fortunes in the Indian
market. Honda created a long term plan for the Indian market and started
to put that in action.
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PRICE CUTS AND OTHER INITIATIVES

 Apart from launching a slew of new models, one of the important steps
Honda took was to drastically reduce the prices of all its vehicles in India.
It slashed the price of Honda city up to Rs 66000 depending on model in
June 2011 to compete better in the market.

 In August 2011, Honda introduced a new Jazz which was Rs 150000

cheaper than the existing model. Honda slowly started to gain ground.
Honda then slowly introduced the Amaze, Brio, BR-V. Though the Brio
didn’t pick up well, Amaze and BR-V had good sales. Honda were slowly
starting to show profits.

THE ROAD AHEAD

 Newly launched vehicles from Honda started to give good results to the
company. Honda Mobilio, Amaze were in a lot of demand. The
production capacity had reached maximum level. The demand of its many
models had exceeded the expectations of the company and Honda India
started second shifts in its manufacturing plants.

 Honda have a lot of new cars to launch yet. The new Civic was just
launched a few weeks ago. A lot of its existing models are getting their
face- lifts which add to the appeal and a whole lot of new features are
being introduced by Honda in their cars. The all new Honda accord which
is a hybrid has a lot of features that are brand new and it’s showing how
future of mobility is going to be.
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INTRODUCTION

Apple is the world’s first company to be valued at 3 trillion dollars. It was founded
by Steve Jobs and Steve Wozniak in 1976. It’s headquartered in Cupertino,
California. When Apple had entered the Indian market, it had started by selling
used phones and its new models were a bit costly. Apple soon picked up in the
Indian market and started to sell more models. People started to buy Apple phones
because of thee fluidity of the software, security and Apple ecosystem.

CHALLENGES FACED

Apple didn’t have any manufacturing facility in India. Importing phones made
them costly. This resulted in decline of sales. Apple started to perform badly in the
Indian market. Apple couldn’t bite into the share of Android phones as almost
80% people cannot afford an iPhone. There are five challenges Apple faced. They
are explained below:

1. PRICING
 Apple’s products got too expensive as each model was released. Apple
started to lose market share after many Chinese phone makers were able to
give the same features at a very low cost. Apple’s iPhone X , XS and XS
Max didn’t sell very well. Apple started to lose more market share.

 Apple didn’t have any manufacturing facility in India so the taxes placed on
its phones made them even more costly. People were not upgrading their
phones. Apple iPhone prices have only been escalating since the first
edition.

 The latest iPhone XS Max priced between INR 100000-150000 category is

well out of the reach of the common man in India and falls short of meeting
the demand of majority of consumers. Apple's other offering such Apple
Watch, MACs as well as accessories all come under high-end
categories. Chinese opponents such Xiaomi and Huawei have much cheaper
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offerings and Apple stands to face stiff competition from such brands in
India.

Figure 3- Apple iPhone XS and XS Max

2. DEMAND
 Meeting the demand of the world's second-largest country will not turn out
to be as easy it appears to. Majority of India’s population is yet to acquire
smartphones and with Indian Prime Minister Narendra Modi’s Digital India
drive, an increase in cheaper versions of smartphones has begun.

 Apple CEO Tim Cook recently said that Apple was witnessing double-digit
growth in both Mainland China and India and the company is attracting a
very high percentage of first-time tablet buyers. However, the demand for
Apple’s tablets may not continue as expected since smartphones are slowly
emerging as a popular choice among new digital-savvy customers.

3. TIMING
 Apple is late to the party! While almost all smartphone makers fiercely
battling to take a larger chunk of the market by offering cheaper versions,
Apple also lost out on the opportunity it saw in selling second-hand phones
in the Indian market. Last year, the Cupertino-based smartphone maker
faced rejection from the Indian government on selling used phones to
prevent dumping of hazardous electronic waste.

 One could argue when Apple’s products for the Indian masses would be
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available such that they can be readily bought by the country’s consumers.
By the time Apple sets shop, hope it doesn’t get too late for it to establish
dominance.

4. COMPETITION
 Post widespread saturation in the western nations, Apple is aiming to start
manufacturing in India to boost sales.

 Cheaper upcoming brands such as Oppo & Vivo and home-grown ones
such as Micromax have seen significant interest from the large smartphone
user base in India. Chinese companies including Gionee and ZTE are also
clawing into India at a fast pace.

 This may put Apple in a position where it will only be limited to the
wealthy. This is a problem for Apple as wealthy people in India are less
compared to middle class people. Apple’s market share will be limited.

5. MAKE IN INDIA
 Apple plans to manufacture iPhones in India will bring some brownie points
to the company. However, Cook’s attempts to enter the aggressive Indian
market have been seeing hindrances by the company’s demands of a 15-
year tax holiday on imports of components and equipment.

 While the Indian government has agreed to a manufacturing unit in the

country, no incentives have yet been finalized.

 At a time when every global giant wants to set it’s foot in India’s growing
market, the Indian government is unlikely to relent to Apple’s demands and
may go ahead with pushing home-grown companies to produce high-quality
products.

 Indian-make companies such as Karbonn Mobiles, Lava International,

Micromax Informatics and LYF are producing smartphone of the common
man and have bee riding on the Make in India drive.

 Apple has now started a factory in Tamil Nadu and will be manufacturing
high end phones. We might soon expect lower prices for Apple phones.
STRATEGIES
 Apple has now started a factory in India to manufacture its smartphones
in India so no more import costs will be added. Apple will soon be
making high end phones such as XS, XS Max in India. Apple was stuck
in a trade war between US and China. This made Apple phones even
more costly.

 The US Dollar rose against much country’s local currency. Apple has
decided to take the conversion cost on themselves and sell the iPhone X,
XS and XS Max at 1000$. Whatever the extra cost is it will be taken by
Apple. Apple has also decided that it wants to be a premium smartphone
brand. So they might be targeting only the rich people in India.

 Apple have started to offer limited time offers on all its phones. Apple
have started to make the iPhone 7 in India. Soon XS and XS Max will be
made in the factory. Only time will tell whether Apple’s strategy is a
success or failure.