Honda Motor Co., Ltd. (Honda Giken Kōgyō Kabushiki Kaisha) (NYSE: HMC (http://www.nyse.com/about/listed/lcddata.html?ticker=HMC)) is a Japanese manufacturer of automobiles, trucks, motorcycles, and scooters. They also make ATVs, electrical generators, marine engines, and lawn and garden equipment. With more than 14 million internal combustion engines built each year, Honda is the largest engine-maker in the world. In 2004, the company began to produce diesel motors, which are very quiet and do not require particulate filters to pass pollution standards. Honda's high-end line of cars are branded Acura in North America. Honda is headquartered in Tokyo. Their shares trade on the Tokyo Stock Exchange, the New York Stock Exchange, as well as exchanges in Osaka, Nagoya, Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland. Company history Soichiro Honda began by manufacturing piston rings in November 1937. He quickly became a sub-contractor to Toyota. Honda then expanded into other engine parts and even airscrews. On September 24, 1948, Soichiro Honda took advantage of a gap in the Japanese market. Decimated by World War II, Japan was starved of money and fuel, but still in need of basic transport. Honda, utilizing his manufacturing facilities, attached an engine to a bicycle, creating the cheap and efficient transport that was required. Honda quickly began to produce a range of scooters and motorcycles. By the late 1960s, Honda had conquered most world markets. The British were especially slow to respond to the Honda introduction of electric starters to motorcycles. By the 1970s, Honda was the largest producer of motorcycles in the world, a _title_ it has never relinquished. Honda began producing road cars in 1960, mostly intended for the Japanese market. Though participating in international motorsport (see Racing), Honda was having difficulty selling its automobiles in the United States. Built for Japanese buyers, Honda's small cars had failed to gain the interest of American buyers. Honda finally established a foothold in the American market in 1972 with the introduction of the Civic—larger than their previous models, but still small compared to the typical American car—just as the 1970s energy crisis was impacting worldwide economies. New emissions laws in the US, requiring American car makers to affix expensive catalytic converters to exhaust systems (noticeably increasing sticker prices). However, Honda embarassed everyone with the clever engineering of their 1975 Civic CVCC. CVCC, a variation on the stratified charge engine, allowed the Civic to pass emissions tests without a catalytic converter. In 1976, the Accord was immediately popular because of its economy and fun-to-drive nature; Honda had found its niche in the United States. In 1982, Honda was the first Japanese car manufacturer to build car plants in the US, starting with an Accord plant in Ohio. They now have plants in Marysville, Anna, and East Liberty, as well as in Lincoln, Alabama (Honda Manufacturing of Alabama), and plan to open a new plant in Tallapoosa, Georgia. Honda's North American headquarters are located in Torrance, California. In 1989, Honda launched its VTEC variable valve timing system in its car engines, which gave improved efficiency and performance across a broader range of engine speeds. This technology is now standard in most Honda cars. For the 2007 model year, Honda plans to improve the safety of its vehicles by providing front-seat side airbags, side-curtain airbags, and anti-lock brakes as standard equipment in all automobiles available in North America (except the Insight, S2000, and Acura NSX, which will not have side-curtain airbags). By 2006, Honda plans to have as standard equipment Vehicle Safety Assist and rollover sensors in all light trucks, including the CR-V, Odyssey, and Acura MDX. Honda also plans to make its vehicles safer for pedestrians, with more safely-designed hoods, hinges, _frame_ constructs, and breakaway wiper pivots. Racing history Soichiro Honda, being a race driver himself, could not stay out of international motorsport. In 1959, Honda entered five motorcycles into the Isle of Man TT race, the most prestigious motorcycle race in the world. While always having good power, it took until 1961 for Honda to tune their chassis well enough to allow Mike Hailwood to claim their first race victories in the 125 and 250 cc classes. Hailwood would later pick up their first senior TT win in 1966. Honda also surprised everyone by entering Grand Prix racing in 1963, just three short years after producing their first road car. They began development in 1962 of the RA271 and startled the European-dominated Formula One garages with their all-Japanese factory team (except for American drivers Ronnie Bucknum and Richie Ginther). More startling was the fact that Honda built their own engine and chassis, something only Ferrari had traditionally done. In only their second year of competition, Honda reached the coveted top step of the podium with Ginther's win in the RA272 at the 1965 Mexican Grand Prix. Honda backed up their Grand Prix victory by dominating the 1966 Formula 2 season, winning every race that year with Jack Brabham's team. In 1968, Jo Schlesser was killed in a Honda RA302 at the French Grand Prix. This racing tragedy, coupled with their commercial difficulties selling automobiles in the United States, prompted Honda to withdraw from all international motorsport that year. They returned to Formula One in 1983 as an engine supplier for Spirit and stayed in the sport for a decade, at various times teaming with Lotus, McLaren, Tyrrell and Williams. Honda supplied engines to six constructor champions, as well as five driver championships, before dropping out of the sport again. But they returned again to F1 in 2000, providing engines for BAR; after a tough few years, they were able to achieve second place in the 2004 Formula One season. In all, Honda-powered cars have won 75 Grand Prix. Honda's strategy During the 1960s, when it was a small manufacturer, Honda broke out of the Japanese motorcycle market and began exporting to the US. Taking Honda’s story as an archetype of the smaller manufacturer entering a new market already occupied by highly dominant competitors, the story of their market entry, and their subsequent huge success in the US and around the world, has been the subject of some academic controversy. Competing explanations have been advanced to explain Honda’s strategy and the reasons for their success. The first of these explanations was put forward when, in 1975, Boston Consulting Group (BCG) was commissioned by the UK government to write a report explaining why and how the British motorcycle industry had been out-competed by its Japanese competitors. The report concluded that the Japanese firms, including Honda, had sought a very high scale of production (they had made a large number of motorbikes) in order to benefit from economies of scale and learning curve effects. It blamed the decline of the British motorcycle industry on the failure of British managers to invest enough in their businesses to profit from economies of scale and scope. The second story is told in 1984 by Richard Pascale, who had interviewed the Honda executives responsible for the firm’s entry into the US market. As opposed to the tightly focused strategy of low cost and high scale that BCG accredited to Honda, Pascale found that their entry into the US market was a story of “miscalculation, serendipity, and organizational learning” – in other words, Honda’s success was due to the adaptability (and hard work) of its staff, rather than any tightly formed, long term strategy. For example, Honda’s initial plan on entering the US was to compete in large motorcycles, around 300cc. It was only when the team found that the scooters they were using to get themselves around their US _base_ of San Francisco attracted positive interest from consumers that they came up with the idea of selling the Supercub. The most recent school of thought on Honda’s strategy was put forward by Gary Hamel and C. K. Prahalad in 1989. Creating the concept of core competencies with Honda as an example, they argued that Honda’s success was due to its focus on leadership in the technology of internal combustion engines. For example, the high power-to-weight ratio engines Honda produced for its racing bikes provided technology and expertise which was transferable into mopeds. 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