Research Topics: Honda Motors Strategy Development

A Case Study : A Critical Evaluation of Strategy Development at HONDA MOTORS

Assessment: Individual Assignment (60% of the module marks) Case Study:   Source: De Wit and Meyer, R. (2004) Strategy, Process, Content, Context: An International Perspective, Third Edition, pp. 663 – 679, Thomson.   Learning Outcomes 1.         Critically review and apply relevant concepts, terminology and theoretical models associated with international business policies and strategies. 2.         Understand the holistic nature of strategy and apply analytical techniques to solve complex problems 3.         Analyse how strategic decision making enables an organisation to relate to its business environment 4.         Critically evaluate and monitor the business mission, objectives and policies of international organisations Introduction This individual assignment will be assessed by means of a 3000 ± 10% word report. This assignment has been designed to allow you to develop and use your skills in understanding key strategic issues relating to the nominated organisation. You will be required to apply the strategic concepts studied in this module. Task Your task is to carry out a critical analysis and evaluation of the strategies adopted by Honda Motors to date, with the information provided and other materials researched. You will be expected to select and apply appropriate theories, techniques and models studied during the module whilst having regard to the practical aspects of strategy development. Your assignment should be presented in a business report format and should not exceed 3000 ± 10% words (excluding executive summary, references and relevant appendices). The report should include a title page and executive summary and be fully and consistently referenced, using Harvard Referencing style. You must also submit a floppy disk or CD containing an electronic version of the report. This should be clearly labelled with your name, your course and the name of the case study. It is recommended that you research information additional to the case study to support your arguments. This may be obtained from a diverse range of sources and you are encouraged to research the issues in whichever way you deem appropriate.   Assessment Criteria This assignment carries a weighting of 60% of the overall module marks. The assessment will focus on the level of ANALYSIS carried out. That is, the application of THEORETICAL CONCEPTS studied in the module to the ‘practical’ case study presented. In other words, you should proceed beyond a DESCRIPTION of the company and it’s actions. You should be analysing ‘why’ rather then describing ‘what’. The assignment will be assessed and moderated by two members of staff in accordance with the marks allocated to each of the questions detailed below. 10% of the marks are set aside for the ‘presentation’ criteria. Academic Rigour ·         your ability to isolate the key strategic issues ·         the coherence and depth of the analysis of those issues ·         the ability to analyse the strategy context within which Honda operates ·         the ability to critically review and evaluate strategic decisions made by Honda Methodology ·         the use of relevant evidence, from material provided and personal research to support any statements made ·         the appropriateness of the methods used and theoretical models and frameworks applied ·         the breadth and depth of research undertaken Evaluation of data ·         the ability to make sound recommendations or conclusions arising from the analysis ·         the soundness of arguments put forward Presentation ·         the summary of arguments ·         report layout and format ·         use of illustrative material and evidence to support arguments ·         the appropriateness of length ·         the quantity and accuracy of referencing Honda Motor Co. Ltd., was established in 1948, since then it has remained on the leading edge by producing high quality products that create new values, at a reasonable price, for worldwide customer satisfaction. Honda still continuous to conduct its operations with a commitment to environmental protection and enhancing safety in a mobile society. It has become the world’s largest motorcycle manufacturer and one of the leading automakers. Honda has a global network of over 400 subsidiaries and develops, manufactures, and markets a wide variety of products ranging from small general-purpose engines and scooters to specialty sports cars, to earn the company an outstanding reputation from customers worldwide. Maintaining its commitment to achieving the visions of “Value Creation,” “Globalization” and “Commitment for the Future,” Honda aims to share joy with its customers worldwide, thus becoming “a company that society wants to exist.”   ATTEMPT ALL QUESTIONS QUESTION ONE: – Reconciling Dichotomies Underlying Honda’s innovative strategic thinking is a process that might be described as ‘reconciling dichotomies’. Using data/information from the case study in addition to your own personal research critically evaluate the process at Honda with reference to the following three key dichotomies: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; margin-top: 6.0pt; margin-bottom: 6.0pt"> Planning vs. Learning </li> <li class="MsoNormal" style="text-align: justify; margin-top: 6.0pt; margin-bottom: 6.0pt"> Market Positioning vs. Developing Internal Resources </li> <li class="MsoNormal" style="text-align: justify; margin-top: 6.0pt; margin-bottom: 6.0pt"> Product-related Core Competencies vs. Process-related Core Capabilities </li> </ul> Your answer should demonstrate understanding of relevant concepts and application of appropriate analytical techniques.   [35 % marks]   QUESTION TWO: – Strategic Decision-making With reference to Honda’s four key products: Automobile, Motorcycles, Power products, and Honda Jet, critique the use of Boston Consulting Group (BCG) Matrix as an analytical technique for effective portfolio management. You are expected to highlight the key problems with using BCG matrix and other similar techniques in generating alternative competitive growth strategies. You will find relevant additional information on these products on the company’s website – www.honda.com [30 % marks]   QUESTION THREE: – Strategic Change/Leadership Compare and contrast Japanese and Western strategic leadership models by reference to Table 5 in the case study (De Wit and Meyer, 2004, p. 671) and Honda’s mission to supply products of the highest quality at a reasonable price for worldwide customer satisfaction. You are expected to comment on the extent to which these models will impact on the future strategic decisions of Honda post 2006 [25% marks]   Note: Overall presentation of the report accounts for [10% marks]    - End of Assessment –   Credit:ivythesis.typepad.com

A Case Study : A Critical Evaluation of Strategy Development at HONDA MOTORS

Assessment: Individual Assignment (60% of the module marks) Case Study: Source: De Wit and Meyer, R. (2004) Strategy, Pr...

CASE STUDY – EXAM : HONDA MOTORS CO. LTD

Honda Motor Case Study   Honda Motors Co. Ltd is considered the world’s largest motorcycle manufacturer and one of the world’s leading automakers, since its founding in 1948 by  (‘’ 2006, p. 1). It produces a wide variety of products ranging from small general-purpose engines and scooters to specialty sports cars, and remains on the leading edge by providing products of the highest quality that create new values, at a reasonable price, for worldwide customer satisfaction (‘ ’ 2006, p. 1). In addition, the company also makes the commitment of providing environmental protection and enhancing safety in a mobile society by improving the fuel economy in all vehicles and make emissions even cleaner (‘’ 2006, p. 1). In its aim to protect the environment, Honda has expanded their line up of hybrid models, by leasing of Japan and the United States of the FCX, which is a fuel cell vehicle developed in-house, incorporating the company’s original next-generation fuel cell stack (‘’ 2006, p. 1). In the United States, Europe and China, Honda increased its sales by introducing new models in the light truck segment, responding to the high demand of diesel-powered vehicles, and continued to expand and achieve remarkable growth with the high profile of the Honda brand (‘’ 2006, p. 1). On the other hand, Honda responded to the low demand in Japan by strengthening the appeal of their products and their sales system to ensure customer satisfaction and raising the company’s profitability (‘’ 2006, p. 1). The visions of Honda include “Value Creation”, “Glocalization” (globalization plus localization), and “Commitment to the Future”, and sets them apart from other companies by following their philosophy, which aims to focus on the customer, being creative, respecting fresh ideas, enjoying the work, and understanding that change is good (‘ 2006, p. 2). Their philosophy is different from other companies, for it is based on the concept of the “challenging spirit” in the company principle, which intends to “maintain an international viewpoint, in dedication to supplying products of the highest efficiency yet at a reasonable price for worldwide customer satisfaction” (‘’ 2006, p. 2). This goal of Honda is achieved by setting high expectations for itself and for its suppliers, by its willingness to apply whatever resources is necessary to get the job done, by its commitment to cooperation and collaboration, and by its unrelenting attention to detail (‘’ 2006, p. 3). This philosophy is being perpetuated by evaluating the total cost of their product, improving its quality by extensive research and cooperation, and focusing on the needs of their customers. In line with the company’s philosophy and consistent with setting such high expectations, Honda’s meticulously detailed cost-modeling process demands discipline and rigor from both the company’s purchasing staff and its suppliers (‘’ 2006, p. 3). This means that both the company and its suppliers present costs evaluation to each other to agree on certain matters in product development. Honda’s philosophy of frank, open communication, cooperation and collaboration with suppliers extends even to sharing cost-modeling data (‘’ 2006, p. 3). Furthermore, the cooperative approach insures that targets are achievable and excellent, for the cost-modeling process extends well beyond simply determining the cost of a part or component, but is an integrated process that takes into consideration every factor that contributes to the total cost (‘ 2006, pp. 3-4). With the ability of Honda to develop cost modeling as methodical and precise, it has now evolved into an organizational capability deployed throughout the company (‘ 2006, p. 4). As mentioned, Honda has a large number of suppliers, and it continually builds and maintains their relationship for the benefit of the company and the consumers as well. It has been reported that 400 supplier companies throughout North America have been supplying more that 80% of the parts and materials for the automobiles, motorcycles, engines and components the company manufactures, and for this, Honda makes sure that every supplier is totally in sync with the company’s philosophy (‘ 2006, p. 4). This relationship also leads to supplier development, in terms of perceiving their work and in doing business with Honda. Example of this is when Honda applied its Best Practices process at Tower Automotive, a supplier of stamped parts and welded assemblies, and helped them to redesign the work cell for making a B pillar, the stamped metal part between the front and back doors connecting the roof of the floor plan (‘ 2006, p. 5). In relation to this, Honda’s aim for supplier development extends also to the point of demonstrating a willingness to commit significant resources towards solving problems when needed, for Honda’s approach to building and sustaining supplier relationships extends well beyond productivity improvement programs and on-the-spot problem solving (‘’ 2006, p. 5). Moreover, for Honda, a cooperative, collaborative relationship is a two-way street requiring clearly expressed and understood expectations, performance measurement, attention to detail and ongoing communication (‘ 2006, p. 6). In relation to this is the aim of Honda to control or leverage its suppliers in research and development programs, by developing a process called Design In, wherein Honda will “invite” guest designers from its outside supplier organizations to assess the very early stages of a new project (‘’ 2006, p. 6). This process is critical to insuring that Honda will successfully integrate the best thinking and the latest technology into its new products, pick up their latest technology and incorporate it into the vehicle (‘’ 2006, pp. 6-7). Another leverage technique is by developing technology road maps, sharing them with suppliers, informing them of the direction Honda is going, and asking the suppliers to help the company (‘2006, p. 7). These techniques enable the company to reduce costs and improve the quality and technology of their vehicles (‘ 2006, p. 7). Investing in the talent and the skills of the company’s employees is also essential in boosting the reputation of Honda. It has been reported that Honda is good at rounding people out, is good at challenging the skills and talents of its employees, and expects them to have a well-rounded knowledge and experience in different aspects (‘’ 2006, p. 8). Moreover, the atmosphere of open communication maybe the primary reason for the high confidence level of individuals in the company to step forward and contribute, leading to a strong undercurrent to make continuous improvement (‘’ 2006, p. 8). Respect for the individual and a de-emphasis on hierarchical differences among Honda workers also contribute to a highly motivated, involved work force (‘ 2006, p. 8), which generates teamwork and cooperation. Honda also invests in training and development opportunities (‘’ 2006, p. 8) to ensure the success of the company.             Honda Motor Co. Ltd creates a positive advantage by modeling the firm as a chain of value-creating activities, having primary and a secondary activities. One of the primary activities of the company is modeling their total cost, by starting with high expectations in cost management (‘’ 2006, p. 3). As with the example of the 1998 Accord, the purchasing personnel of Honda determined the selling price up front by deducting their profit, and the result was what the cost should be (‘ 2006, p. 3). The company then broke out all those costs by component, such as the chassis, engine and other parts, and set targets for each area and each part (‘ 2006, p. 3). With this, the quality of the car was build, to maintain high levels of customer loyalty and good resale value (‘’ 2006, p. 3), meaning, the reduction of the price of the 1998 Accord would still compensate its quality. In addition, another primary activity includes knowing the cost structure of the suppliers, for by determining the cost of the suppliers, Honda can estimate their cost also (‘’ 2006, p. 3). This is done by showing each others’ logic in coming up with the cost, thus ensuring a cooperative approach, by determining first the initial cost of the product and asking for the opinion of the supplier (‘’ 2006, p. 3). In essence, Honda’s cost modeling process extends well beyond simply determining the cost of a part or component, as it is an integrated process that takes into consideration every factor that contributes to the total cost (‘’ 2006, p. 4). Moreover, the purchasing function of Honda is unique, where all its employees are fully involved with the product for they are located on the plant sites, see the problems, understand the issues, know the cost implications, and in touch with manufacturing every day (‘’ 2006, p. 4). It has been reported that Honda has been able to develop its methodical, precise cost modeling capability over time due to its willingness to apply the resources required to get the job done right, and to its central focus on customer satisfaction (‘’ 2006, p. 4). These activities are essential in creating value exceeding the cost of providing Honda’s product and generate good profit.              Part of the secondary activities of Honda is managing the suppliers of the company thru supplier development programs, such as giving out supplier awards or incentives and “winning their hearts” (‘ 2006, p. 4). This is to reach the company’s goal of productivity improvement by helping the supplier through the charted 13-week program designed and led by Honda staff members (‘’ 2006, p. 5). With the implementation of this program, the supplier’s associates start to see improvements right away (‘’ 2006, p. 5), and see the yearning of the employees to also improve their performance. The 13-week program also focuses on involving the supplier’s associates directly in the process, by taking some of their first ideas and putting them into place immediately for faster action, leading to the success of the program with their rapid execution and action (‘ 2006, p. 5). Another focus of Honda’s secondary activities is the use of its technology to assist their suppliers, such as Tower Automotive. An example would be when Honda proposed using fixed position welding stations, with simple pick-and-place robots moving the parts between stations, rather than having a sophisticated welding robot move around the part (‘ 2006, p. 5). The new cell design nearly doubled the production output, from 63 parts an hour to 125, and because the fixed position of the welding gun reduced wear and tear on the welding tips, their useful life was extended to 250,000 welds from 50,000 (‘2006, pp. 5-6). With the company’s attention to detail and focus on performance measurement, Honda uses a comprehensive program evaluation and gathers data to set new goal and measure future success (‘ 2006, p. 5), thus increasing the success and the profit of the company from the market. In addition, Honda aims also on giving the suppliers the chance to be involved in production. By the process of Design In, it successfully integrates the best thinking and the latest technology into Honda’s new products (‘’ 2006, p. 6). Another point is that Honda also uses technology road maps, to obtain their supplier’s latest technology and to keep up with Honda’s performance to get the final product to the market (‘’ 2006, p. 7). This gives them the advantage of leveraging its suppliers in removing cost, study each component, prioritize them and start focusing their work on developing them (‘’ 2006, p. 7). Furthermore, the edge of Honda over other companies is on their investment in their employees and by encouraging them to contribute their ideas in the development of the company. One realization is the working environment in Honda where one employee is expected to be a well-rounded person in terms of knowledge and experience (‘’ 2006, p. 8). In addition, respect for the individual is high and hierarchical differences are never emphasized, as all employees of the company wears the same identical white uniforms (‘’ 2006, p. 8). This working environment highly motivates and involves the work force, as every employee is given a lot of respect (‘2006, p. 8). In addition, open communication among the employees is encouraging, and the primary reason that every individual has the confidence to step forward and contribute (‘’ 2006, p. 8). In relation to open communication is the investment of Honda to the training and development opportunities of employees for future success (‘’ 2006, p. 8). Moreover, Honda implements a no layoff policy, which values the ideas of its employees and their alumni, sustaining their relationships (‘  2006, p. 8). Due to the high regard of Honda with its human resource management, the company was able to sustain their success in the market, maintain their reputation, and exceed their expectations. The execution and the implementation of its philosophy, Honda has established itself in the market, and satisfy their customers in terms of their products and services in different parts of the world.        Reference:         Credit:ivythesis.typepad.com

CASE STUDY – EXAM : HONDA MOTORS CO. LTD

Honda Motor Case Study Honda Motors Co. Ltd is considered the world’s largest motorcycle manufacturer and one of the world’s leading a...

HUMAN CAPITAL

It is very clear that human capital entails a crucial usage to almost all global organizations and Honda Motors is not an exception to the fact that they have to incorporate better human capital models and concepts in order to keep their business structure strong and successful in the global market economy. Thus, the economy has moved from agriculture to industry to a knowledge-based system focused on productivity shifting from land to machines to the human mind, therefore managers, human resources professionals and accountants struggle to place value on human capital (1993) Honda’s accounting function strives to apply its financially oriented principles to the human capital assets and its decision-makers are challenged to determine how much to invest in human capital. Honda – having had a manufacturing presence in the United States for more than 40 years, Honda’s growth and expansion has a significant impact on the U.S. economy in terms of both dollars and numbers of employees and that much of Honda’s success turns on the company’s respect for individual employees (1989)         Human Capital: The Competitive Advantage, Honda motors have access to such key success factors such as: (Mohrman, Galbraith, Lawler and Associates, 1998). Ø  Financial resources are available with a viable business model Ø  Access to technology is equal as the information technology society can readily adapt technology to a given situation or business model Ø  Businesses have access to customers, Honda having entry and access to a customer database is not necessarily a competitive advantage What makes Honda difference possible, is the human capital in which they are applying to with relatively equal access to resources, it is logical to conclude that the human resources are where a strategic advantage can be developed but having capable human resources is no guarantee of success. what is important is the way those assets are managed to maximize the return on investment in the human capital of the organization (1989; 1979) The wealth of convincing and intuitive evidence of the importance and value of human capital and its contribution to Honda company success continues to grow and that investing in human capital is good.         The importance of building high performance public and private organizations is stressed. Human capital and the development of organizational capabilities and core competencies are fundamental to creating high performance organizations in today’s highly competitive environment. In order to develop high performance organizations many of the traditional bureaucratic approaches to management need to be discarded and replaced by approaches which move information, knowledge, power and rewards to employees (1996). While there are a number of theories as to why wages increase over an individual’s work life, a commonly accepted interpretation is that upward sloping wage profiles reflect investment in human capital, particularly investments in job training. The traditional human capital model predicts that training lowers the starting wage and increases wage growth (Veum, 1995) from estimating starting wage regressions indicate that there is not a negative relationship between starting wages and current company training. Also, the data indicate that off-site company paid training is portable across employers and suggest that the firm rather than workers pay for general training, which is inconsistent with the standard human capital model. (1995)         Henceforth, training that is company financed has a positive impact on wage growth independent of tenure at the current job that takes place outside the work place is particularly effective in enhancing wages. (1991) Honda makes solid, high quality, reliable products. It has a culture of respect for the individual’s contribution to the team, to the overall organization, and, significantly, to society. It aspires to be a company that society wants to exist, to protect the environment as its Research and Development is focused on understanding fundamentals. The firm has done great research on the human/machine interface and why the human being needs to stay in the loop – the mind does simultaneous track management that contributes a sense of alternatives, (1991) acceptable tolerances, and social values and combines respect for values with profit. It’s hard to formulate, but there’s almost a certain pragmatic heroism to its culture, that comes from realizing the need for intelligence and teamwork in an exposed and ever changing world.               The HR aspect is about new innovation-focused understandings with labor, cross-functional work groups and job rotation, managerial accounting applied to the whole product life cycle by managers rather than accountants, and use of return-on-sales rather than return on investment as a strategic goal. The accounting aspect is about things like target costing (2001). Honda incorporates necessary safeguards to ensure that all dealers are treated equally, something of great importance, it also incorporates unique links back into product and production engineering and provides daily feeds of warranty claims information for analysis. (1990; 1987) Indeed, human capital is critical with respect to two issues in the area of strategy as Honda is effective in formulating an effective business model for a complex; challenging and knowledge focus business activity that is committed to high levels of employee involvement, strategy ideas and formulation taking place throughout the firm. Furthermore, Honda Motors need not to look passively at the environment when it comes to human capital but try to shape the environment so that it creates the kind of human capital that organizations need to succeed. In order for employees to work in a tedious environment, they need problem solving skills and they need to understand the basic economics of the business, group process and a host of other skills and needing human capital that has the knowledge, skills and ability to perform, as Honda need individuals who are committed to the ultimate success of its core business process. (1990; 1987)   Credit:ivythesis.typepad.com

HUMAN CAPITAL

It is very clear that human capital entails a crucial usage to almost all global organizations and Honda Motors is not an exception t...

Critical analysis of external economic environment of a firm. Main aspects – Industry in which the firm operates in, its structure, conduct, indicators of performance and the market of firms output

The Firm: Honda Motors Ltd.   ABOUT HONDA Honda Motor Co., Ltd., operates under the basic principles of “Respect for the Individual” and “The Three Joys”-commonly expressed as The Joy of Buying, The Joy of Selling and The Joy of Creating. Respect for the Individual” reflects our desire to respect the unique character and ability of each individual person, trusting each other as equal partners in order to do our best in every situation. Honda Motor Ltd., has remained on the leading edge by creating new value by providing products of the highest quality at a reasonable price, for worldwide customer satisfaction. The Company has grown to become the world’s largest motorcycle manufacturer and one of the leading automakers. Honda develops, manufactures and markets a wide variety of products ranging from small general-purpose engines and scooters to specialty sports cars, to earn the Company an outstanding reputation from customers worldwide.         OVERVIEW A business does not function in a vacuum. It has to act and react to what happens outside the factory and office walls. These factors that happen outside the business are known as external factors or influences. Markets are changing all the time. It does depend on the type of product the business produces, however a business needs to react or lose customers. Though a business does not want competition from other businesses, inevitably most will face a degree of competition. The business also needs to be aware of their social responsibilities. These are the way they act towards the different parts of society that they come into contact with. A business converts inputs into outputs in order to make a profit. However, the business does not exist in a vacuum, it exists within an external environment consisting of the actions of other players who are outside the business. Competitors’ actions affect the ability of the business to make profits, because competitors will continually seek to gain an advantage over each other, by differentiating their product and service, and by seeking to provide better value for money. The economic system is the organization of the economy to allocate scarce resources. The economy tends to go through periods of faster and slower growth. Businesses prosper when the economy is booming and living standards are rising.     Monetary activity is based around earning, spending, saving and borrowing. Money has been likened to the oil that lubricates the wheels of commerce. Monetary activity involves businesses in a web of relationships involving financial institutions (e.g. banks and building societies), creditors, debtors, customers and suppliers. A key monetary influence for business is the interest rate. Higher interest rates increase business costs and act as a break on spending in the economy. The political/legal system creates the rules and frameworks within which business operates. Government policy supports and encourages some business activities e.g. enterprise, while discouraging others e.g. the creation of pollution. The environmental system is the natural system in which life takes place. Increasingly businesses have become aware of the relationship between their economic activities.                     THE HONDA STRUCTURE:  (as of April 1, 2006)       SOURCE: Honda Organization Structure (2006)       Honda has introduced an operating officer system, aimed at strengthening both the execution of business operations at the regional and local levels and the supervision by the Board of Directors. The term of office of each director is limited to one year, and the amount of remuneration payable to them is determined according to a standard that reflects their performance in the Company. Our goal in doing this is to maximize the flexibility with which our directors respond to changes in the operating environment. With respect to business execution, Honda has established a system for operating its organizational units that reflects its fundamental corporate philosophy. For example, separate headquarters have been set up for each region, business and function and a general manager from the Board of Directors or an operating officer has been assigned to each headquarters and main division. In addition, the Management Council deliberates important matters concerning management, and regional operating councils deliberate important matters concerning management of their respective regions. Honda’s basic policy emphasizes the appropriate disclosure of company information, such as by disclosing financial results on a quarterly basis and timely and accurately giving public notice of and disclosing its management strategies. Honda will continue raising its level of transparency in the future.         Management Organization of the Company’s Corporate Governance for Decision-Making, Execution, Supervision and Others   SOURCE:  (2006)   The Board of Directors consists of 20 directors, including two outside directors, and determines important items that are related to business execution or that are designated by law and supervises business execution. In June 2005, the Company introduced an operating officer system aiming at strengthening its business execution and improving flexibility in decision-making at the Board of Directors. The Company also plans to increase the number of outside directors to strengthen the supervisory functions of the Board of Directors.   HONDA’S CONDUCT GUIDELINE   Guided by Honda Philosophy, Honda has expanded its business globally based on the pursuit of new dreams and the determination to make them come true. Through these efforts, we have shared a “joy” and established a trust with customers and society around the world. In order to further advance our global business in each region, every Honda associate in various countries around the world needs to share a common value at Honda and become even more self-reliant. The “Honda Conduct Guideline” represents the important values that have guided our actions to date. With each one of us sharing these values, we will be able to further gain the trust of our customers and society, helping Honda strengthen our position as “a company that society will want to exist.”     Dreams inspire Honda to create innovative products that enhance mobility and benefit society. To meet the particular needs of customers in different regions around the world, they base their sales networks, research and development centers and manufacturing facilities in each region.   HONDA’S INDICATORS OF ITS PERFORMACE   Creating advanced new technologies and products Through leading-edge research and development, Honda continuously creates original technology that opens up new possibilities in mobility. Honda is always tackling new challenges for the current and future benefit of individuals, society and the environment.   Research and Development for the future Honda is constantly involved in the research and development of technology that will benefit people in the future. These technologies range from new materials and new sources of energy, including mass-produced solar panels, to new power trains that maximize joy while minimizing environmental impact. They also include advances in biotechnology, such as Honda’s work in decoding the rice genome for application in various fields. Honda is studying human anatomy and physiology, as well, in its efforts to produce innovative products that enhance safety in various ways.     ASIMO lends a hand In 1986, Honda began conducting original research and development toward the creation of biped humanoid robots that will serve society in harmony with humans. The latest ASIMO, introduced in 2005, employs new posture control technology that allows it to run and move in concert with a human partner. Able to carry objects, it can also handle various reception and delivery tasks. ASIMO continues to evolve and will soon acquire the abilities to turn around and run 6km/h, making it an even better partner for humans.   Reaching for the skies One of Honda’s earliest dreams was the development of jet planes. In pursuit of this dream, Honda recently established Honda Aero Inc. and developed a compact jet engine that has passed the experimental stages. The manufacture and procurement of components for this jet engine will be handled by a joint venture between Honda and General Electric.   Next-generation power trains Honda’s Automobile R&D Center (Tochigi) in Japan includes research facilities dedicated to the development of next-generation power trains. Here, Honda engineers are developing new means of propulsion that may one day contribute to human mobility.     Financial Data   SOURCE:  (2006)     On April 26, 2006, the Board of Directors declared a two-for-one stock split of the Company’s common stock. All shareholders of record on June 30, 2006 will receive one additional share of common stock for each share on July 1, 2006. Information pertaining to shares and earnings per share has not been restated in the accompanying consolidated financial statements and notes to the consolidated financial statements to reflect this split. This information will be presented effective after the stock split is made.   Consistent quality worldwide Honda is a global company with manufacturing operations and sales networks all over the world. Furthermore, our products are enjoyed by people in numerous countries. This global success is built upon the renowned quality of Honda’s products and made possible by the passion and dedication of Honda associates everywhere. Wherever you are, you can always count on the quality of Honda products. Localizing production to meet local needs Honda began manufacturing motorcycles in Belgium in 1963. In 1982, Honda became the first Japanese automaker to produce passenger cars in the U.S. Since then, Honda has established independent local operations around the world for research, development, marketing and production. Through the introduction of Honda’s flexible manufacturing system, Honda continues reducing the time and resources necessary to launch new models into production and improving the efficiency of manufacturing operations that meet regional needs. Moreover, the grouping of production processes into cohesive units has improved the working environment, raised product quality, and further accelerated production. In the future, Honda plans to further localize the production of engines and key components for automobiles, motorcycles, and power products, while simultaneously raising quality and efficiency and accelerating our response to the dramatically changing world.   Inspiring their customers By creating products and services that highlight the core values that make Honda unique, we would like to provide our customers with joy and excitement beyond their expectations. Honda will continue to create such inspiring experiences for our customers by offering mobility that is always ahead of the times. In this way, Honda products will be loved and enjoyed by customers of all generations. Expanding New Values for customers worldwide The ultimate goal of Honda’s sales activities worldwide is to satisfy our customers so that they will continue to come back for more Honda quality products. That’s why they put heartfelt effort into our services, responding to changing values and increasingly sophisticated needs. They’re always working to improve the quality of our customer relations providing friendly and attentive sales, responsive service support, thorough maintenance and repairs so customer satisfaction constantly grows. Honda also continues to develop sales and service systems best suited to community needs. In that way, “life with a Honda” brings new joy to people and places worldwide. Starting in Japan in 2006, Honda will unify our multiple car-dealership channels into a single Honda sales channel seeking to strengthen the Honda brand, enhance customer satisfaction and help ensure lifetime customer loyalty.     PROOF IN THE MARKET OF HONDA’S OUTPUT Operating Data SOURCE:  (2006)           SOURCE:(2006)                   Preparing for the Future As for the global economy, the U.S. and Asian economies are expected to grow steadily, and Japan and Europe are also expected to maintain their moderate economic recovery. However, the global environment in which Honda’s management operates still lacks transparency because of global political and economic uncertainty, fluctuations in oil and raw material prices, and currency movements. It is under these circumstances that Honda will strengthen its corporate structure quickly and flexibly to meet the requirements of our customers and society and the changes in its business environment. Also, in order to improve the competitiveness of its products, Honda will endeavor to enhance its R&D, production and sales ability. Furthermore, Honda will continue striving to earn even more trust and understanding from society through Companywide activities. Along with efforts to develop even more effective safety and environmental technologies, Honda will enhance the creativity in its advanced technology and products, and will create and swiftly introduce new value-added products that meet specific needs in various markets around the world. Honda will also continue efforts in the research of future technologies, including the advancement of advanced humanoid robots and compact business jets and their engines.     Honda will establish efficient and flexible production systems and expand production capacity at its global production bases, with the aim of increasing its capability of supplying high-quality products. Honda will continue to make efforts to expand product lines through the innovative use of IT and to upgrade sales and service structure, in order to further satisfy its customers. Responding to increasing consumer demand, Honda will upgrade its quality control through enhancing the functions of and coordination among the development, purchasing, production, sales and service departments. Honda will develop safety technologies for accident prediction and prevention, technologies to reduce injuries to passengers and pedestrians from car accidents, and technologies for reducing aggressively, as well as expand its line-up of products incorporating such technologies. Honda intends to enhance its contribution to traffic safety in motorized societies, including Asian countries. Honda also intends to remain active in a variety of traffic safety programs, including advanced driving and motorcycling training schemes provided by local dealerships. Honda will step up its efforts to create better, clean, fuel-efficient engine technologies and to improve further the recyclables throughout its product lines. In addition to continuing to provide products incorporating Honda’s advanced safety and environmental technologies, Honda will continue striving to earn even more trust and understanding from society by, among other things, undertaking activities for corporate governance, compliance, and risk management and contributing to society.   Relating to Honda’s Industry Honda conducts its operations in Japan and throughout the world, including North America, Europe and Asia. A continued economic slowdown, recession or sustained loss of consumer confidence in these markets, which may be caused by rising fuel prices or other factors, could trigger a decline in demand for automobiles, motorcycles and power products that may adversely affect Honda’s results of operations. Prices for automobiles, motorcycles and power products in certain markets may experience sharp changes over short periods of time. This volatility is caused by many factors, including increasingly fierce competition, short-term fluctuations in demand from underlying economic conditions, changes in import regulations, shortages of certain supplies, high material prices and sales incentives by Honda or other manufacturers or dealers. There can be no assurance that such price volatility will not continue or intensify or that price volatility will not occur in markets that to date have not experienced such volatility.           Overcapacity within the industry has increased and will likely continue to increase if the economic downturn continues in Honda’s major markets worldwide, leading to further increase price pressure. Price volatility in any or all of Honda’s markets could adversely affect Honda’s results of operations in a particular period. Honda has manufacturing operations throughout the world and exports products and components to various countries. Honda purchases materials and parts, and sells its products in foreign currencies. Therefore, currency fluctuations may affect Honda’s pricing of products sold and materials purchased AS currency fluctuations have an effect on Honda’s results of operations and financial condition, as well as Honda’s competitiveness, which will over time affect its results. Thus, regulations regarding vehicle emission levels, fuel economy, noise, safety and noxious substances, as well as levels of pollutants from production plants, are extensive within the automobile, motorcycle and power product industries. These regulations are subject to change and are often made more restrictive. The costs to comply with these regulations can be significant to Honda’s operations.           Honda’s financial services business offers customers various financing plans designed to increase the opportunity for sales of its products. However, customers can also obtain financing for the lease or purchase of Honda’s products through a variety of other sources that compete with its financing services, including commercial banks and finance and leasing companies. The financial services offered by us also involve risks relating to residual value, credit risk and cost of capital. Competition for customers and/or these risks that are specific to the financing business may affect Honda’s results of operations in the future. Honda purchases raw materials and certain components and parts, from numerous external suppliers, and relies on some key suppliers for some items and the raw materials it uses in the manufacture of its products. Honda’s ability to continue to obtain these supplies in an efficient and cost-effective manner is subject to a number of factors, some of which are not within Honda’s control. These factors include the ability of its suppliers to provide a continued source of supply and Honda’s ability to compete with other users in obtaining the supplies. Loss of a key supplier in particular may affect our production and increase our costs. Honda conducts its businesses worldwide and in several countries through joint ventures with local entities, in part due to the legal and other requirements of those countries.       These businesses are subject to various regulations, including the legal and other requirements of each country. If these regulations or the business conditions or policies of these local entities change, it may have an adverse affect on Honda’s business, financial condition or results of operations. Honda conducts its businesses worldwide, and its operations may variously be subject to wars, use of force by foreign countries, terrorism, multinational conflicts, natural disasters, epidemics, labor strikes and other events beyond its control which may delay or disrupt Honda’s local operations in the affected regions, including the purchase of raw materials and parts, the manufacture, sales and distribution of products and the provision of services as delays or disruptions in one region may in turn affect Honda’s global operations and Honda’s business, financial condition or results of operations may be adversely affected.   _________________________ Credit:ivythesis.typepad.com

Critical analysis of external economic environment of a firm. Main aspects – Industry in which the firm operates in, its structure, conduct, indicators of performance and the market of firms output

The Firm: Honda Motors Ltd. ABOUT HONDA Honda Motor Co., Ltd., operates under the basic principles of “Respect for the Individual...

Honda Corporate Strategy

Honda Corporate Strategy   Introduction             Honda Motors, initially a maker of motorbikes, succeeded in becoming an automobile producer after all others, in the mid-1960s, by implementing a strategy of innovation and flexibility and by constructing an industrial model enabling it to avoid or limit the risks peculiar to that strategy. The firm’s success owed much to the mechanical and commercial imagination of Soichiro Honda himself. Based on the long-standing philosophy of, “building products in the markets where they are sold,” Honda now has more than 100 manufacturing facilities in 33 countries.             The successful Honda model as a whole could continue to function dynamically without strong high-technology challenges that engineers could meet in the form of automobiles that succeeded in the market. But still, there is a need for a continued search for ‘holy grail’ technologies that would be needed to make the Honda model work through the fast changing times. Notwithstanding Honda’s leading technological position in the world automobile industry, it remained to be seen whether the Honda research and development engineers could at last create a ‘breakthrough product’ which would translate this leadership into significant competitive advantage; there were now strong echoes of the late 1960s, which produced the CVCC engine. If there was to be no such breakthrough, a key element of the industrial model that had guided Honda’s trajectory for fifty years would remain unproven.             The aim of this paper is to carry out a critical analysis and evaluation of the strategies adopted by Honda Motors to date, with the information provided and other materials researched.   Context             Honda was unusual in having already created an industrial model by the time it entered the automobile industry. Twelve years after it was founded in 1948, Honda had become the world’s largest motorcycle manufacturer, on the basis of a strategy which focused on product innovation and production flexibility and on the mass production of products which had in effect opened new market segments.             Other non-Japanese carmakers ask: why do the Japanese learn better from experience than we do? Is it because they stress company wide continuous improvement? For example, Japanese executives worry less about whether overhead allocation reflects the precise demands that each product makes on corporate resources than about how it affects the cost reduction priorities of middle managers and shopfloor workers. American executives often dismiss Japanese management accounting techniques as misguided, or even simplistic (1995). Yet, these same Japanese management styles were the ones that helped Honda become successful in today’s fast changing world.             The issues that Honda handled so successfully are the central questions of strategy. Honda had to consider what markets to enter, how to position their products within these markets, how to build relationships with dealers and component manufacturers. The subject of strategy analyses the firm’s relationships with its environment, and a business strategy is a scheme for handling these relationships. Such a scheme may be articulated, or implicit, pre-programmed, or emergent. A strategy–like that of Honda –is a sequence of united events which amounts to a coherent pattern of business behavior (1995). The firm’s success owed much to the mechanical and commercial imagination of Soichiro Honda himself. His associate, Takeo Fujisawa, who was in charge of the organization and its finances, had been concerned from the start to find the resources needed to overcome the difficulties inherent in this profit strategy. Besides loss of capacity to innovate over the long term, the risks of the strategy included of course the inevitable failures, the over- or under-estimation of demand and the refusal of investors in banks to finance projects. Industrial models which are to be consistent with part of a strategy of ‘flexibility and innovation’ must therefore give the firm the resources to counter these risks or reduce their impact (1998).             As a means to encourage creativity and get flexibility accepted, Honda and Fujisawa developed a company compromise which was not dependent upon group spirit and loyalty as at Toyota but rather on the recognition and gratification of individual talents as well as good work and employment conditions. Inventiveness and expertise were first valued by a promotion path and wage scale, named the expert system, which ran in parallel to the traditional lines and scales. This seemed a good idea since reliance on promotion has affirmative incentive properties because workers can anticipate that differential talent and degrees of cooperativeness will be rewarded (2000)             By 1967 Honda had become a proper car manufacturer. It opted for an innovative automobile niche and exportation in order to create a place for itself among Japanese producers. Given that Honda cars were seen as practical and fuel efficient, the company was ideally positioned to exploit global (and, above all, US American) markets during the 1970s oil price crises (2003)             Honda also had a strategy consistent with the Japanese mode of growth, although for other reasons. Honda had chosen to respond to new types of demand and to export its products as the means to stake its place as an automobile manufacturer. Its export success was due in part, of course, to competitive prices and to the quality of its cars, but more so to its innovative car model, the Civic, of which 3 million units had been produced by 1982. Honda was able to expand its range to six models without commonizing their platforms, to give each its own clear personality. By 1985 it exported or produced abroad 63.4 per cent of its worldwide production. Before being obliged to invest in the USA to increase its sales, Honda had already decided to do so. The company made its first cars in the USA in 1982 (1998). For its part, Honda continued to seek ways to maintain and indeed increase its capacity to innovate and to make its production apparatus more flexible. In particular, Honda decided always to seek two solutions to the same problem, so as not to become prisoner to a premature decision. Conversion of its production lines to other models was made easier, and the principle of producing homogeneous lots of thirty to sixty vehicles was retained (1998).             Honda claims to have a ‘human-centered’ approach to work, less rigid in defining standard operations than Toyota. Employees rotate tasks; indeed they must be flexible, changing posts, models, departments, and product types. But the HPS does not rely on unplanned long shifts to make up lost production. When needed, Saturdays are used. Working hours are the lowest in the Japanese automobile industry (1998). Focusing on employees is a good strategy. Employees after all are the backbone of a company, and without them it is impossible for any company to succeed (1987). Employees at Honda Motors were therefore viewed as a ‘fixed’ asset, consistent with the ‘flexi factory’ operations strategy.             Honda also continued to promote individualism, youth, and a certain equality while Japanese culture emphasized the opposites – groupism, respect for age, status. The constant theme at Honda remained how to overcome the organizational rigidities that Japanese culture was believed to foster – ‘big business disease’ (1998). Honda the business leader appears to have a contemporary and dynamic appeal. Striking remains the extent to which his and his company’s approach to business and management – and indeed to life generally – so contradict many of the stereotypical images of Japanese management styles (2003). Yet conditions of employment at Honda remained typical of other large companies in Japan (with the notable exception of fixed working hours in the factories), and were still viewed as consistent with Fujisawaism.             There are two views on Honda’s achievement in the U.S. market. In one, Honda‘s strategy was an archetype of Japanese penetration of Western markets. The aggressive pursuit of domestic volume established a low-cost base for expansion overseas. This was the conclusion of a Boston Consulting Group study for the British government. A rather different account was given by Richard Pascale, who went to Tokyo to interview the elderly Japanese who had brought the first Honda machines to the United States. As they recalled it, Honda had aimed to secure a modest share of the established US motor-cycle market (1995).             In Europe, by contrast, Honda’s strategy required few resources. There were persistent problems in Europe. Honda found it difficult to understand the subtle differences among European markets. Further, unlike their American counterparts, European competitors already offered high-quality, small, and low-cost products (though not always in the same vehicle). These factors, combined with lower levels of Honda sales in Europe (11% of global turnover in the early 1990s) than in Japan (33%) or North America (43%), meant that fewer resources were devoted to product development for Europe. Rover entered into collaboration with Honda in order to secure new model designs and engineering capabilities without which it could no longer survive. Honda’s main interest in the collaboration was more offensive, seeing Rover as providing a bridge into the European market. Moreover an alliance which starts off with primarily defensive intentions can become offensive in nature if it is successful in the market (1998). The latter is an alliance in which each partner possesses expertise, information, or skill which is of value to the other, an example being General Motors’ cooperation with Toyota on lean production manufacturing in the USA which benefited the latter’s access to the American market. Applying the logic of game theory, Kay concludes that, in a common objective alliance, cooperation is a dominant strategy for both partners–it pays both partners to put the maximum effort into attaining the common objective. In the case of a mutually beneficial-exchange alliance, however, the dominant strategy for both partners is to hold back–in other words, to get as much as possible while giving as little as possible (1998).             The key to the Honda new system was ‘single status’ employment, in which all employees shared the same uniforms, parking lots, restaurants, and private health-care. All offices were open-plan and many had windows so that they could be viewed from production areas. All production workers were placed in one category (with separate categories only for maintenance workers and team leaders) and received the same wage with no allowance for seniority, job done, or individual merit. This un-Japanese system was consistent with Western principles of equality. Consistent with Fujisawaism, it reduced obstacles to managerial authority, individual initiative, transparency of merit, and open communications. Also consistent with Western ideologies, there was a measure of democracy. Workers voted on the organization of the working day (breaks, leaving hours), holidays, and when to make up for any lost output. A panel of production associates reviewed management dismissals of workers and had the power to reinstate; one in five were reinstated. More challenging than getting American workers to accept this system was to ensure that American managers could work in it (1998).             Honda’s practice is explored along numerous dimensions of corporate globalization—localization strategies: products, research and development (R&D), production, parts sourcing, production methods, employees, and so on. There is some localization of R&D, as in product design appropriate to particular local road conditions, but basic research and product technology have been retained in Japan. There is some localization of production with respect to particular markets, but some production is also for markets elsewhere, depending in part on the global output of particular models. Disaggregation of the different dimensions themselves also helps in understanding parts sourcing strategies: in the United States and in general, the more sophisticated parts, like the electronic, are brought in from Japan. And while hard technology and organization have been globalized, local incentive structures are molded significantly by on-site managerial staffs with the local cultural environment in mind (1997).             There is, in brief, a pattern of what is called as “strategic localization,” rather than the melting away of national boundaries foreseen by the more vigorous of advocates of a new globalized economic geography. National-specific practice remains significant. Some aspects of production have been globalized and others are less so (1997).             The globalization model is represented by the “world product” (for instance, “world car”) concept, in which the same product is produced for sale in all (or at least many) world markets. The alternative localization model involves production of distinct products for each market, which was the traditional pattern in the automobile industry (1997).             In this process of creating a global local car, similarity of design lines and sharing of components is taken as far as possible. The various aspects of car design are logically separated into (schematically) (1) the power train technology (engine and transmission), (2) the engine compartment (which gives the dimensions of the front of the vehicle), (3) the basic design shape (aesthetics), (4) detailed aspects of seats, suspensions (handling characteristics), and (5) other expensive components like instrument panels and exterior lights. The engineering and managerial puzzle, and hence the key issue in the strategic localization of product design, is to put all the pieces together for each local market in a way that both meets requirements in that market—fitting the demands of localization—and also permits economies of scale and acceptance of the product in other Honda regions—fitting the demands of globalization. Thus an American model, for instance, may share power train technology and expensive components with a Japanese model but differ in all other respects. Or a European model may share everything but handling characteristic components and minor style cues with a Japanese model (1997). Until the late 1980s, Honda adopted a strategy of conquering the “most difficult” markets first with its automobiles, in the expectation that the others would follow “naturally” (Jackson & Tomioka, 2003). The company’s view was that the United States was the most difficult market in the world until the mid-1980s, and that Japan took its place in the late 1980s. Far from creating a post national company, strategic localization at Honda has meant the adoption of a series of new nationalities, as suggested in the citation from Honda itself. Some of these nationalities are themselves being reinvented along the way, delivering that cutting edge of sociopolitical and economic change for which multinational enterprises have long been well known. Set against this deeper understanding, simple and reductionist ideas about post national enterprises and global corporations operating in borderless worlds do not offer very helpful interpretations of Honda’s international strategy. Moreover, other potential routes to globalization of operations, such as the “world car” and global sourcing strategies pursued by some of Honda’s Western rivals during the 1980s and 1990s, have run into serious difficulties. Honda’s new global local corporation, by contrast, helped the company to weather the storm caused by the collapse of the Japanese bubble economy in the early 1990s (1997)             Honda therefore built effective strategies in support of their competitive strategies. Honda has not only extended its distinctive capability into other markets but has added new distinctive capabilities. Honda has added reputation to its critical distinctive capability. By specializing in engine technology, it has achieved some success in innovation as well. The company has chosen a positioning somewhat up-market of its principal Japanese rivals, and supported its entry into most major geographical markets with a plant in the United States and an extensive relationship with Rover in Europe ( 1995).             Many works describe the application of systems theory to production planning. Based on works, authors group organizational problems into four kinds. Its principle is that an organizational problem may result from having erroneously specified either one of or many among the output of the system, the input to the system, the production process itself, or even the entire system. Within a firm, problems can occur singly or in combination as well as within specific organizational tasks, such as quality control. This grouping scheme can help managers and planners characterize most business problems ( 1995).             Managers have some idea of what’s hooked up to what among the variables pertinent to a firm’s strategic situation. This knowledge constitutes their mental models of the connections among variables as well as among variables and their consequences. Yet, the dynamic consequences or implications produced by a system’s causal relationships are virtually impossible to predict through simple observation. Managers need tools to help them gauge the assumptions that underlie their mental models about the future (Acar & Georgantzas, 1995).             To improve Honda’s decision quality, they became more aware of their assumptions, including assumptions about the way strategic variables are affected by and cause changes in other variables over time. The resulting confrontation between devil’s advocates and proponents of a particular system structure that causes a dynamic behavior pattern becomes a learning experience for Honda Motors. Institutional learning opportunities abound when rational confrontation becomes lively in a team because of an analytical approach ( 1995).             To encourage and to make learning an integral part of management technology, we must lift our sights from the short term. To design strategy, we must learn to search for and to identify patterns of change over time. To practice strategy design and to act proactively, we should replace our transaction-driven calculus with scenario analysis. Learning is not a luxury; it is how firms create their own future. Creating the organizational capability of and ambiance for learning will lead to a truly sustainable advantage.             Both the mind-set of scenario-driven planning and the emerging understanding in the strategic management literature contend that, to speed up institutional learning, we must articulate our mental models through formal analysis. A recent article argues that formal analysis of managers’ cognitive maps will help them to overcome personal assumptions and to assess possible ramifications ( 1995).             A product’s Market Perceived Quality is a driving force that increases market share. They further it is argued that when superior quality and large market share are both present, profits are virtually guaranteed, changing the “competitive positioning” of the product (1994).             To increase its aggregate market share, Honda introduced high-quality, high-priced Accura models through dealers different from those that handled its regular Honda models. Other Japanese automakers are now emulating Honda’s example. Japanese auto makers are successfully competing with European auto makers like Mercedes Benz and BMW, thus getting a lead in their market positioning.             A company like Honda with widely recognized and appreciated brand has positional advantage over other companies in the automobile industry whose brands are weaker. A strong brand lets the firm command premium shelf space, wider customer attention, and higher prices (2002). A company such as Honda which is with an established reputation for “fair trading” and consistent high quality has a positional advantage over firms whose customers think that the firm is being opportunistic. These are just some of the many factors that give Honda its competitive marketing advantage. Since the inception, Honda used one of the most competitive strategies in order to increase market share by having a first mover’s advantage in the development of core products using their core competency in engine technologies.             Many of the changes that have taken place in the strategy field of Honda Motors have been a matter of shifting attention between external and internal analysis, and it has been a characteristic of most approaches to strategy that they have primarily emphasized either an externally oriented perspective or an internally oriented perspective. Honda also focused on developing its internal resources.             To the essentially conservative posture of the responsible leader there is a concern for change and reconstruction. This creative role has two aspects. First, there is what is called the ‘institutional embodiment of purpose.’ Second, creativity is exercised by strategic and tactical planning, that is, analyzing the environment to determine how best to use the existing internal resources and capabilities of the organization (1997).             Honda’s expertise in engines gave the company an opportunity to be able to exploit this core competency to develop a variety of quality products from lawn mowers and snow blowers to trucks and automobiles.             There are three factors to identify the core competencies in any business. First, a core competence provides potential access to a wide variety of markets. Second, a core competence should make a significant contribution to the perceived customer benefits of the end product. Finally, a core competence should be difficult for competitors to imitate ( 2002).             To explain further, Honda’s expertise in engine technology as a core competency satisfies all the above three factors. Honda used their expertise in engines to come up with gasoline engines for different industries such as automobiles, motorcycles, boats, and generators. To top all of that, Honda’s reputation satisfies the third factor which makes hard for competitors to keep imitating.             Conclusion   Many industry observers have wondered how Honda is able to respond to the increasing competition it constantly faces from traditional rivals and new start-ups. The answer sounds relatively simple – through its strong and effective corporate strategy. It may sound simple but it definitely is not. The Honda models underwent crisis was real, but was due largely to one vital element; and other elements in fact helped Honda overcome the crisis. Most significant is that the element in crisis was the one most associated with Mr. Honda: the self-image of a company led by product technology and sporty vehicles. Fujisawaism with its organizational creativity and flexibility, the HPS with its flexible mass manufacture of high quality cars, and the global local corporation with competitive advantage from global interaction between local production and marketing bases all triumphed.             How Honda was able to survive through all the years despite strong rivalry and competition from other Japanese and Western automakers can solely be attributed to their corporate strategy. Honda built effective strategies in support of their competitive strategies. Honda has not only extended its distinctive capability into other markets but has added new distinctive capabilities. Honda has added reputation to its critical distinctive capability. By specializing in engine technology, it has achieved some success in innovation as well. Honda the business leader therefore appears to have a contemporary and dynamic appeal   Credit:ivythesis.typepad.com

Honda Corporate Strategy

Honda Corporate Strategy Introduction Honda Motors , initially a maker of motorbikes, succeeded in becoming an autom...