Investment and Honda America Company Essay

Submitted By VictoriaS2
Words: 549
Pages: 3

Flexible strategies of Honda when faced risk in American
First of all, CSAS-FSAs matrix is a very appropriate tool that could be utilized to describe MNEs’ unique competitiveness and related strategies which rooting on the special positions. Honda and Chevron’s international competitive capabilities could be described through a combination of country-specific advantages (CSAs) and firm-specific advantages (FSAs). America provide a variety of country specific advantages, Honda is able to develop solid firm specific advantages with the support of America unique specific advantages. America as the fourth market for creating consecutive quarter of profitability, Honda America Company has contributed a huge part of profits in the North American automobile market. As foreign direct investment is built upon the premise of firm-specific or ownership advantage (Dunning, 1958; Hymer, 1976; Kindleberger, 1969), Honda was operating by the guide of differentiation strategy with strong CSAs in America before crisis happened. Based on its longstanding commitment, Honda has built more and more plants because of radical passion on the huge market, costumers, and various abundant materials. Rowley thought that through developing and build products close to the customer, Honda established many plants and operations for exploring R&D and new energy high-tech in America for differentiation product strategy (2005).

Country risk and foreign direct investment are negatively associated (Feinberg and Gupta, 2009). But the outburst of 2008 American crisis forced Honda to shift its position and restructure CSAs and FSAs. Initially, because of economic risk, Honda rolled into worldwide car industry slump due to the negative effect of America subprime crisis. Conventionally, costumers of a particular country follow its culture and tradition. Honda owns a high level of cultural factor associated CSAs. Through the analysis of America culture, it is clear that new American costumer more like to be unique and also small car types can attract young people’s respect for individuality. Managers changed their marketing strategies due to young ones preference has shifted toward crisis. Honda brand still enjoys some of the industry’s highest loyalty rates in America (Reed, 2010). Under the circumstance of economic crisis, customers in U.S. market trend to purchase small cars and…