BUS 475 Wk 2 – Practice: Internal and External Considerations

Required information

Skip to question

Internal Analysis: Looking Inside the Firm of Honda Corp.

The strategic actions managers take link firm resources and capabilities. For example, investments in R&D labs (managerial actions) are one mechanism that links the resource (engineers) with the firm capability (product innovation). This activity is important because when multiple resources and capabilities are aligned on a single goal, the firm may have a core competency. For instance, Canon’s ability in optics originates not just in the capability of its design engineers, but also in its precision in manufacturing. When a firm’s core competency is at the heart of the product it sells, that product can be considered a core product. In the case of Canon, optics are at the heart of such products as cameras, camcorders, scanners, and projectors.

The goal of this activity is look closely at Honda, and differentiate the important relationships between its firm resources, managerial actions, firm capabilities, core competencies, and core products.

Read the case below and complete the activities that follow.

Since 1959 Honda has been the world’s largest motorcycle manufacturer. It is also the world’s largest manufacturer of internal combustion engines—the core of many of Honda’s products including sport boats, marine engines, off-road power sport vehicles (e.g., ATVs, snow mobiles), an extensive line of power equipment (e.g., lawn mowers, electric generators, snow blowers), and cars. Over time, Honda has maintained as its core ability a dedication to the engineering and ongoing innovation of these small, reliable, and powerful internal combustion engines.

While Honda invested much in developing and maintaining this competency, in 1960, its management made an important decision that later became central to the creativity and productivity of its engineers and designers. The research and development division separated from Honda Motor Company to form the independent company Honda R&D. This management decision helped facilitate a unique corporate culture built on excellence in innovation and engineering.

Honda R&D continues to build on this important tradition by focusing on the spread of new ideas through cultural and regional diversity; as such, the firm now has five R&D centers located outside of Japan in North America, South America, Europe, Asia, and China.

After reading the minicase on Honda, select the correct category for each of the items listed.

1. Engineers

2. Honda R&D is a separate company

3. Powerful and reliable small engines

4. Design and manufacture of small, reliable, and powerful internal combustion engines

5. Small engine innovation and engineering

6. Strong R&D culture

7. Sport boats, marine engines, ATVs, and power equipment

8. Scale manufacturing

9. R&D centers created worldwide

Core competencies derive from the combination of resources and

Multiple Choice

internal environment.

activities.

capabilities.

competitive advantage.

intangible resources.

Honda Motor Company used its competitive advantage in small engines for lawnmowers to ___________ in resources and capabilities to build automobiles.

Multiple Choice

• perform a SWOT analysis
• create activities
• divest
• generate a feedback loop and invest
• create a cash reserve

Which of the following SWOT elements are internal factors for a business?

Check All That Apply

• StrenghtsStrenghts
• Weaknesses Weaknesses
• OpportunitiesOpportunities
• ThreatsThreats

Required information

Implications for the Strategist: Using SWOT Analysis to Gain Strategic Insight

When used effectively, a SWOT analysis can help the strategist deeply consider different strategic initiatives managers might take. The SWOT juxtaposes the firm’s internal Strengths (S) and Weaknesses (W) identified through a rigorous internal analysis, such as the application of the VRIO framework, with the external Opportunities (O) and Threats (T) identified through a comprehensive external analysis, such as the application of industry analysis. This activity demonstrates how internal (S/W) and external (O/T) concepts are appropriately captured in the SWOT and how strategic initiatives managers might take can be created from the juxtaposition of these internal and the external concepts.

Review the information found in section 4.5 of your text before completing this activity which addresses Learning Objective 4-9 on conducting a SWOT analysis to generate insights from external and internal analysis and derive strategic implications. It also incorporates understanding of a firm’s internal resources and capabilities (Learning Objective 4-1, 4-2 and 4-4).

Read the minicase on Beats Electronics and refer back to ChapterCase 4 to refresh your memory. Note that more SWOT items than are listed below are discussed in the case. This is a two-part activity. First, click and drag one of the four SWOT concepts to the appropriate SWOT box. Second, after assessing the juxtaposition of the internal and external concepts, click and drag the appropriate strategic initiative to the right location in the framework (one of the 4 boxes enclosed by the SWOT).

Minicase

Apple’s acquisition of Beats Electronics LLC for $3 billion is examined at the beginning and end of Chapter 4. From the discussion in the ChapterCase, we can create a SWOT analysis and use it to understand why Beats Electronics might have wanted Apple as a partner. The internal strengths and weaknesses for Beats Electronics as well as the environmental threats and opportunities are taken from the chapter. After completing the SWOT and placing the strategic alternatives, consider which strategic alternative you would have chosen.