Hondas Strategic Management Case Study Business Essay Example

million in one-year grosss in 2009 coupled with upwards of $ 1370.1 million $ and 1896.4 in operating net incomes for the FY 2008 and 2009 severally, Japan 's Honda is easy the industry 's biggest industries of motor rhythms, besides being a among the taking car manufacturers. Operating across the Earth, Honda is involved in the development, fabrication every bit good as selling and distribution of motor autos, motor rhythms and a scope other power merchandises ( Honda Ltd, 2010 ) .

It was founded in 1946, by Soichiro Honda and later incorporated two old ages subsequently, followed by old ages of success and growing as a motor rhythm shaper. Away from its nucleus concern, the company 's 105 affiliates and 396 subordinates across the universe provide fiscal services to 1000s of its clients. It operates a four grade concern theoretical account which includes the fiscal services division, bike, car every bit good as power merchandises ( Honda Ltd, 2010 ) . Besides multi waggons, Honda besides produces a scope of rider autos, SUVs, mini new waves, rider autos, mini vehicles every bit good as athleticss coupes among others. Honda 's flagship auto and motor rhythm theoretical accounts include the Accord, Civic, Legend, Insight, Acura CSX and Acura RL, CR-V, Cross Road, ASIMO Robots every bit good as the scooters among many others.

The company recorded gross revenues of over 10,114,000 units chiefly in Japan, North America and Europe, stand foring an 8.5 % rise over the old twelvemonth 's figures. Its gross revenues have been on the rise despite through the planetary economic down bend that hit its American rivals, and mostly driven by Toyota

's PR woes over alleged defects in the breakage system in its flagship Prius theoretical account. This success is mostly attributable to the company strategic readiness. Case in point, in 2002, it launched a intercrossed auto theoretical account to tap into the of all time turning environmentally witting patronages, besides establishing the Environmental Learning Center ( based in Texas ) , while in 2004, the company entered into a strategic partnership with GE, that led into the development and production of a trail blaze light jet engine, suited for concern jets.

Sethi and Swanson ( 1984 ) , get downing in the twelvemonth 2000, the company has embarked on an ambitious plan to put up production workss in the emerging auto and motor rhythm markets, notably China, Argentina, Russia and the motor motorcycle hot topographic point, Vietnam. The company prides itself with the duplicate rules of regard persons and the Three Joys Principle i.e. purchasing, merchandising every bit good making. These values reflect the company does wish to construct on each individual 's alone abilities and its enterprise to guarantee that everyone who comes by buying the merchandises or by other agencies should hold a great/joyous experience. Honda ensures this by unrelentingly, lead in the creative activity of value, invention, new merchandises at accessible monetary values.

RECONCILIATION OF DICHOTOMIES

Honda ltd 's strategic invention is founded on a procedure of dualities rapprochement which include both learning and planning, positioning on the market vs. internal resources development and in conclusion, nucleus competences related to the merchandise against the nucleus capablenesss related to the procedures. These three dualities do stand foring divergent schemes etc that thrust Honda as a company

since its constitution and through old ages of model growing and enlargement. De Wit & A ; Meyer ( 2010 ) , assert that a critical expression at Honda 's schemes points particularly its successful entry and laterality of new markets raises inquiries as to whether, Honda 's scheme and subsequent determination devising is solidly based on a punctilious, analytical and rational planning or whether its schemes are a direct consequence of the some decisions/ schemes reached at by the company, which evolved or became modified due to the environmental influences of the industry in which the company operates.

Planning v. LEARNING

While planing its schemes, the company has systematically followed a rational attack based on a critical analysis of the market and the industry environment. This scheme hinges on and it suited for a seasoned industry participant such as Honda, since it seeks to construct on, and exploit the company 's huge experience in the automotive industry ( Johnson et al. , 2005 ) . As a scheme, this is an of import underside up scheme that uses the already gained cognition to optimise the company 's demands. Planing takes into consideration both the company 's resources every bit good as the environmental factors, as such will most likely use the company 's set aims within the restraints. Honda 's mostly seen as holding successfully employed the planning scheme while come ining into new markets notably while establishing into the US motor rhythm industry. Its recent strategic confederations with GE every bit good as its design and launch of advanced new merchandises and enlargement of fabrication workss, in the ultimate attainment of immense graduated table economic

systems and highly jurisprudence costs represent illustrations of internal planning.

Planning is mostly evident from an foreigner 's point of position. However, interviews with the company 's top direction uncover a far different image that suggests at best a company that is far from an overly rational, academic planning seeking to enforce its corporate values and policies on the market and the industry, but instead a company, with a direction construction that is at all times willing to larn. It is apparent and widely accepted by many perceivers that Honda 's schemes have evolved, without a clear program or analysis of the industry. Case in point, the immense success attained by the company 's 50 milliliter Supercab surprised everyone including the company 's direction. Mintzberg et Al. ( 1998 ) observe that though the company 's scheme may hold looked analytical and good thought out, the direction did drop the ball independently up until the market gave them the right expression.

Rational planning on its ain is barely, suited to many organisations and is in fact removed from the twenty-four hours to twenty-four hours running of a concern as compared to acquisition, which permits direction to continually develop and set their policies and schemes as they are implemented, in the visible radiation of new experience ( De Wit & A ; Meyer, 2010 ) . Honda 's development of intercrossed vehicles and energy efficient theoretical accounts e.g. the Honda Civic Sedan, in the aftermath of Toyota 's success in the same field represent illustrations of larning from the environment. Honda has every bit good launched joint ventures in R & A ; D with other companies. Using

both schemes gives the company an advantage, non least because it merely allows the preparation of schemes that best meet both the internal resources every bit good as the environmental factors predominating in the industry.

`` Placement '' VERSUS `` DEVELOPMENT OF INTERNAL RESOURCES ''

Honda 's placement helps its trade name to be associated with a given market section. It is an every bit helpful usher to the company 's other schemes, peculiarly the selling scheme, non least because it does clear up the kernel of the trade name and the helps the consumers to better place the ends that the merchandise seeks to run into in a alone manner. In positioning a merchandise or trade name, directors must do determinations, seeking to appeal a given section of the population, while at one time put on the lining losing the other ( s ) . Honda has placed its assorted merchandises on the footing of benefit, mark, distribution every bit good as monetary values. The company offers competitory monetary values owing to its graduated table and engineering advantages, which in bend permits it to accomplish better client franchises. This scheme does nevertheless ; impact the prestigiousness of the trade name, besides cut downing the net income borders. Target, distribution and benefit placement, that has seen the debut of green theoretical accounts to function the demands of green witting clients, coupled by Honda 's enlargement into India, China and Vietnam, which was wholly meant at providing for emerging in-between category in those states.

As against, development of internal resources, Honda 's merchandise placement allows it to utilize fewer resources but still make the mark markets. It nevertheless, has

tremendous resources in capital, direction, cutting production engineering every bit good as work force, which have driven the company 's enlargement across the Earth. More investing in R & A ; D is, and has been possible, taking to greater invention. While other smaller industry participants struggle with limited resources restraining their R & A ; D every bit good as enlargement, bigger companies like Honda, Toyota and GM can achieve a better border in the industry. Honda 's has been able to prosecute both schemes owing to the handiness of niche merchandises that it has successfully positioned e.g. motor motorcycles in Vietnam ( over 400,000 units in one-year gross revenues ) , coupled by its immense handiness of resources which allows it rope for R & A ; D, variegation and enlargement. This does non wholly keep though, Honda spends merely a fifth of GM outgo on R & A ; D and launches fewer theoretical accounts than the latter, yet it products/models are more successful than GM 's.

CORE COMPETENCIES ' VERSUS 'CORE CAPABILITIES '

Competences are as a consequence of coordination of multiple production accomplishments every bit good as a complex coordination of legion engineerings. They give a company entree to newer markets ; supply high barriers for rivals to come in the market, besides lending well to the benefits of the terminal merchandise ( s ) . Honda 's nucleus competences as respects merchandises are the driving force behind the development of the legion, advanced terminal user merchandises. Hamel & A ; Prahalad regard Honda 's merchandise competences as a superb illustration of how a little company can interrupt into, and set up

itself in a mature, stable market. In 2010 entirely, Honda has set up a solar H2 station ( Los Angeles ) , introduced the versatile iGX and GX engine series for general intents. The company has every bit good produced lithium-ion based batteries intended for the new scope of intercrossed motor vehicles, alongside an ELC to spear caput its green docket.

Honda is famed for its ability to recycle engineerings in all its scope of merchandises, affording it R & A ; D efficiency. There are elements of nucleus capablenesss associated with its procedures, but possibly far missing behind Toyota and many other industry participants. These include efficient distribution channels, cost effectual production processes. It trains traders, determines shop floor programs and has strict operating processs among others. Core merchandise competences in the car industry are far superior to the procedure capablenesss and Honda 's success is an outstanding testimony to this fact.

Management STYLES

Nipponese and Honda 's direction manners do differ from the American manner in at least six distinguishable facets. These include differences in the interdepartmental relationships, communicating forms, and supervisory manners, mechanisms for control every bit good as being of, or deficiency of a paternalistic orientation. Harmonizing to Hofstede ( 2004 ) , these differences mostly stem from the built-in cultural differences between the two states, which in bend influence the several corporate civilizations.

Lifelong Tenure

Most of the companies in Japan do supply lifelong occupations to their employees, with greater accent being laid on non age, but besides senior status. Promotions are therefore much more hard, merely as there is greater occupation security for the workers. Many organisations efficaciously hire employees for the, and are

interested in the long term aims as against America 's corporate universe 's compulsion with short term ends. Case in point, Honda 's top direction i.e. Satoshi Aoki ( Chairman ) , Takanobu Ito, Koichi Kondo and Atsuyoshi Hyogo joined the company in 1968, 1978, 2000 and 1972 severally, during which clip they have risen through the ranks to make the top direction. On the contrary, the western corporate universe is characterized by short term contracts for both directors and workers, charged with run intoing short term aims.

Teams v. Persons

In contrast with the Western theoretical account where directors are responsible for determination devising and later accountable for the determinations reached, the Nipponese system recognizes the importance of single expertness, but the public presentation of the full squad is more emphatic than an person 's. In the western corporate universe ( Germany and American ) , certain employees have the 'star ' positions e.g. in Germany, the applied scientists play cardinal functions to the success of motor companies. Some elements of convergence exist though. Long apprenticeships and cells ( senior statuss in Japan ) do be both in Germany, France every bit good as the Netherlands. Employees attain places, publicities etc. through old ages of internships, apprenticeships or ranks to given classes-attained through instruction and or experience.

Decision Making

While most western corporations are characterized by top down determination devising, the Nipponese manner of direction is mostly characterized by corporate determination devising by single squads. Honda 's determination devising is characterized by the `` Ringi '' system, where determinations are passed based on a consensus of all the employees in a section or even the full organisation. This

direction manner is indistinguishable to that practiced in Holland, except that the latter is anchored on bing contracts or category differences of among the employees.

Communication

As against the mostly bureaucratic communicating, hierarchal channels qualifying western corporations, which is mostly effectual and efficient, the Nipponese channels of communicating via media in big portion of face-to-face communicating. These comprise everything from proviso of information sing assignment of undertakings, duties, organisational ends and the development and rechanneling of feedbacks.

Implicit Mechanism of Control

Honda ltd is concerned with edifice of its relationships with it 'biggest assets ' , the employees. Inspired by its doctrine `` Respect for the Individual '' , the company ever seeks to develop collaborative relationships with each and every employee, where all mechanisms of control and supervising are mostly informal. Supervisors work aboard other employees, who are involved, the determination devising, which in bend renders determination devising, executing of determinations and response of feedback a batch more expedient. On the contrary, Honda 's rivals run on a stiff, formal control mechanism. This sets ends, mensurable, complete with marks that must be met by sections, franchises and single employees, while the Nipponese system is anchored on the direction doctrines that all employees every bit good as directors identify with.

Departmental Relationships

Pascale & A ; Athos ( 1981 ) , states that attainment of the ends set for a section etc requires inputs non merely from the concerned sections, but possibly most significantly, close coaction with other sections in the company or even other organisations. Formal ( necessary ) relationships mostly accomplish these ends ( characteristic of the western theoretical account ) , while the Nipponese manner has an excess

dimension ; voluntary coaction which is far more productive and consequences in greater cognition sharing.

Paternalistic Orientation

Honda and many other Nipponese companies are concerned by the holistic demands of every employee, including the concern for the well being of their households ( Culpan, 2009 ) . This imposes a societal support function on the directors, a characteristic which is mostly absent in the western universe, safe for a limited figure of household organisations.

Corporate GOVERNANCE AND SOCIAL RESPONSIBILITY

With auto markets in the developed universe already saturated, most auto company 's are looking abroad in the emerging markets notably China, India and Brazil. A recent survey by TNS shows that auto purchasers rate auto shapers more harmonizing to their CSR than those consumer in the first universe, therefore companies that perform better in this sphere stand a far greater opportunity of winning the Black Marias and heads of the new in-between category is guaranteed success.

In 2005, Honda was ranked the UK 's best auto company based on its societal duty enterprises, by the foremost research company on automotives, TNS Automotive. It performs every bit good in the US, Indonesia, Italy and Spain among other states alongside BMW, Shell, Malaysia 's Petronas, Michelin and Germany 's Porsche ( Nissan Corp. , 2010 ) . Honda spent over 2.3 % of its one-year grosss in 2009, on its CSR committednesss, with the environment taking the king of beasts 's portion of the budget. The company has undertaken legion actions in an effort to run into the challenges posed by planetary heating and clime alteration. With the repute of the car industry and fossil fuels already damaged, due to its immense

C footmarks, and the turning frights among the populace of air pollution, it is merely sensible that companies act in conformity to the wants of the consumers. Honda has initiated the LCA system, which identifies and sets marks for the needed actions. The company develops energy efficient theoretical accounts, adheres by the 3Rs ( in design ) and noise decrease etc.

Honda 's corporate administration is a typical Nipponese manner bottom down construction, characterized by corporate determination devising and a corporate sense of belonging among to the company that in bend reflects on the company 's public presentation ( Honda Ltd, 2010 ) . Any company 's corporate administration does find the way that it assumes, which finally reflects on its fiscal public presentation.

Nissan 's corporate doctrine, administration every bit good CSR activities are non different from Honda 's. It seeks to convey enrichment of the people 's lives and the environment in which they operate. It has made CSR an of import portion of its corporate direction policies. It has devised its green buying guidelines, coupled with Nissan-Renault Suppliers Guidelines, which guarantee that the company 's full supply concatenation is green and serves the intents of the policies set by its top direction.

Through its charitable arm, Chrysler 's direction makes one-year contributions to destitute communities, undertakings and causes ( Chrysler, 2010 ) . In 2009, the company advanced upwards of $ 100000 to Good Harvest geared at battling hungriness. The company 's CSR enterprises are non every bit extended as both Nissan and Honda 's partially because the company caters for the luxury market sections that are in the chief concerned about the quality and

luxury as against a company 's CSR etc.

Decision

Honda is mostly touted by perceivers and varied literatures in strategic direction. Its schemes have mostly been used either justly or wrongly to endorse up a figure of conceptual dualities, with undertaking places i.e. larning v. analytical planning, nucleus capablenesss v competences etc. Most of these premises, and groundss have nevertheless, proven erroneous owing to empirical errors that result into the complete accent of the companies strengths, while its errors go mostly unnoticed. Further, schemes and accounts are expressed in signifier of reductionist, single-sided theories that mostly fail to portray the existent strategic orientation of Honda. Honda 's thrives on accommodating dualities. Therefore many perceivers in the West have mostly missed out in analyzing, larning from and understanding Honda.

Rohlen ( 1974 ) , it is apparent that capabilities every bit good as competences can perchance complement one another, organizing into one theory. The latter does concentrate on the production expertness and engineerings while the capablenesss functioning to better the whole concatenation of value. Capabilities are far more seeable and easy appreciated by the clients than are merchandise competences.

Honda 's ability to run into high marks and station enormous growing rates is mostly due to its inclination to put stretched marks, which brings into direct competition with the biggest participants in the automotive industry. In order to vie, it uses its resource base to vie by either supplying niche merchandises or undercutting rivals on footing of cost advantages, attained through scale economic systems. This ability to leverage her resources offers the key to its success, as against the widely fabled Nipponese direction manners. This manner is widely different from

and more appealing that the western manner corporate direction is merely suited for the Nipponese and Asiatic environments.

There are facets in both direction manners that could beneficially be, and have mostly been adopted by either side to the great advantage of the corporations, but non the complete direction bundles as they will be arrant failures in the other 1s environment ( Schein, 1981 ) . Finally, this study has demonstrated the importance of corporate administration, policy and CSR is of import in the of all time altering consumer gustatory sensations every bit good as penchants, and most significantly, increasing consumer consciousness.

Recommendation

Increased disbursement and enlargement of Honda 's and other automotive companies in CSR, environmental protection and production of advanced environmentally friendly theoretical accounts should go on as the lone manner counter altering consumer demands every bit good as the altering times.

The Western and Nipponese manners of corporate direction should be blended to accommodate both the practical and strategic aims of each organisation.

Reconciliation of schemes is important for success and helps companies reap the benefits of divergent schemes, therefore companies must seek common evidences between schemes instead than choosing for merely one.