Strategy and Operations Management
Company: Honda Motors
Generally, Honda Motors 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.
Accordingly, Honda as one of the popular business firms has devoted certain substantial process-oriented initiatives to its manufacturing and logistics strategy and even though there were a few of its rivals have been able to capture the strategic potential of such broader order to the operation process that can be considerable, especially as the industries involved in Honda’s business milieu are highly dynamic with tight profit margins and demanding customers with a lot of needs with such rapid changing requirements. As Honda’s manufacturing strategy or operations strategy support its ideal business objectives that is part of planning process that coordinates the company’s operational goals with those of competitor organizations (Cited from, ., 2001) and being used as competitive weapon in enhancing better relationship in support to Honda’s strategy and its operations management respectively (Cited from, and , 1994). Aside, in growing global marketplace when most business firms are competing with same technology operations as well as strategies, time-based company grow as such many times industry norms and are twice as profitable with the main competitors (Cited from, and , 1990).
Moreover, there are several forms of competitive advantage to be gained from focus on time such as increased responsiveness to customer needs, innovations, improved return on novel products, working capitals, development and quality costs, increased prices and productivity (Cited from, and , 1991; and , 1992). Then, Honda’s strategy can be viewed as the organized development of resources in achieving detailed objectives alongside competition from rival businesses such as Toyota and others. Thus, Honda will only be efficient if the management controls its interaction and wealth with desirable and amiable operations and strategic environment providing better stance at its business. Although, it is a fact that, there is reciprocal relationship between Honda’s operation environment and its used strategies to empower total quality management and such respected flexibility (Cited from, and , 1978; and , 1997). Then, Honda’s unique combination of resources and capabilities such as for example, the internal factors are to imply such critical link to its proper management principles. When Honda’s capabilities and resources are valuable as well as rare, also costly to imitate and substitute, the potential to competitive advantage realizes true value of Honda’s TQM and strategic implications (Cited from, and , 1989; , 1991, 1995; , 1996).
In addition, Honda Company has made apparent that their operations management is truly part of Honda’s corporate strategy and the value creating existence of valuable supplies need to be supported by other key organizational resource capabilities. Fallacious time based strategy formulation often comes from unrealistic assessment of the company’s resources, capabilities and such operational environment as there can be presence of such vigorous supply chain integration that has been must linked properly with Honda’s operation strategy. In designing supply chains configuration with positive timeliness implications, Honda recognizes the important of good match between its internal decisions and external events. The uniqueness and capabilities of the company’s strategic workforce will then depend on how easily Honda management is to obtain good business markets. Thus, knowing that strategic assumptions in operation will strengthen their workforce in terms of business competences in the areas of manufacturing and managing quality forces as being realistic in Honda strategies towards manufacturing as well as strategy formulation and customer selection (Cited from, and , 1989; , 1991, 1995; , 1996).
Henceforth, certain technology is not just means but most importantly good operations enabler and depending not much in technology alone as in the integration and application of technology to achieve amiable time for Honda customers. Developing robust business strategies, driven by the clear business needs at hand, the firm’s objectives and core competencies must take the lead in defining the role of time compression strategies and then the technologies to be used. Then, true of course that everything at stake will not be possibly effective without proper strategic leadership and appropriate operations managerial framework connecting to the people. Furthermore, there is the need for strategic balance while driving strategy innovation and maintaining Honda’s TQM and operation performance. This is to ensure that ultimate time-based strategies will prevail in competitive environments in which Honda Company operates. However, research (Cited from, ., 2001; , 1998) into the relationship of total quality management (TQM) and strategy has shown that the relationship between TQM, strategy and resultant operations is to be well documented in study and confusing certain managers involved in the operational improvement of the company. Accordingly, and (Cited from, 1995) found that continuous improvement did not permeate the strategic process in Honda’s research and development formation.
There can be possibility of having lack of focus on strategic goals where there were signs of data collection but, not systematically linked to improvement strategies. (Cited from, 1994) found that TQM was perceived as second and or third order strategy. Although, strategic management has existed for quite some time, there can be chances that the company is still missing the full potential of TQM by failing to link it directly to the corporate strategy and the development of resultant operational plans as opposed to viewing TQM solely from an operational perspective (Cited from, and , 1998; ., 1992). TQM provides the characteristics to respond to key economic trends and impacts and hence to form strategy (Cited from, ., 2000). Furthermore, TQM can be integrated with conventional strategic planning and design and that of utilizing innovative strategic architecture as through emergent strategy (Cited from, and , 1994). In addition, and (Cited from, 1994) and . (Cited from, 1999) point to the systems theory approach of TQM, which makes it innately integrative and strategic for Honda’s operation and strategic organization. Thus, the idea of TQM philosophy and its business derivatives, have been placed at center of Honda’s business decision making and influence as one of its strategic corporate issue (Cited from, , 1994).
Thus, the strategic integration of TQM, its focus and impact has then moved TQM beyond being an important element that needed to be coordinated solely at operational level, across Honda aspects and disciplines of its management process (Cited from, ., 1993; , 1995) and as necessity for Honda’s business survival (Cited from, and , 1996) as well as the core focus of Honda’s operational and strategic decision making (Cited from, and , 1997; , 1996). However, global markets are changing all the time as it does depend on the type of product the business produces, so then, Honda business needs to react or lose customers. Though Honda’s business does not want competition from other businesses, inevitably most will face a degree of competition as the strategic and operational drive of Honda business will need ample awareness of such corporate and social responsibilities through careful handling of business nature. These are the way they act towards the different parts of society that they come into contact with as well as converting better management input into output in order to make desirable sales and profits at Honda.
However, the business does not exist in full 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. 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. The knowing of workforce in terms of their competences in the areas of manufacturing and managing quality force Honda to be realistic in its major strategies towards manufacturing, strategy formulations and buyer selections (Cited from, , 1994).
Attempting to secure innovative areas, Honda has to overcome regulators’ appraisal on business propositions as well as socio-economical and environmental sentiments. The operation of Honda’s business strategies will be affected by how much materials it is having now and to an extent the best estimates on the next availability as it is resource-based, less diversified and its core business remains stable in the industry. In views of operating in uncertainty environments whereby the supplies are depleting and the core business is less diversified, Honda integrates its manufacturing, procurement and marketing functions to mitigate variation over the timeliness expectations from its various stakeholders as driven by the valuable procurements, the dynamic supply chains integration interfaces with stable demands, supplies and manufacturing processes, competence workforces and sound financial positions (Cited from, , 1995; , 1992).
Example strategy and supply chain integration
The company’s goal 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 general manager from the Board of Directors or an operating officer has been assigned to each headquarters and main division. 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. 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.
Furthermore, 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 their customers and society and the changes in its business environment. 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 innovative value-added products that meet specific needs in various markets around the world (Cited from, ., 1996; and , 1998). 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 increasing its capability of supplying high-quality products and make efforts to expand product lines through the innovative use of IT and to upgrade sales and service structure.
However, . (2001) contend that these operational improvement efforts are often limited by failure to recognize TQM as strategic methodology; hence there is a lack of strategic drive and intent to focus and sustain the operational improvement efforts. Furthermore, the TQM-based operational improvements can become misaligned with the business strategy, creating an impression that the TQM efforts are misusing vital resources, when in reality TQM has not been applied and understood at both strategic and operational levels (Cited from, ., 1996; and , 1998).
The strategic impact and operational impact of TQM
It was found that TQM can have an organizational impact by creating a focus on the customer at a strategic level, which also influenced and shaped the strategic formulation. The strategic formulation may then be influenced, as shown, by proactive change. In strategic formation, Honda’s TQM can act as better catalyst, rather than as direct driver, to transform the direction of the strategy and its emphasis (Cited from, ., 2001; , 1998). Amicably, other philosophies and techniques were used and adapted to develop new ideas and approaches and to boost enthusiasm for change in the organizations, all of which were under the TQM umbrella, as stated earlier. Thus, TQM programs in the organizations were found to be in a state of recycling or the constant rejuvenation to renew interest and keep momentum going. However, it was only one amongst many which are given consideration and assisted in data gathering during the process of strategic formulation (Cited from, ., 2001; , 1998).
The highest level of TQM application was at the strategic level. In this situation senior management commitment in the organization was given and TQM was fully understood by the management teams in its philosophical role as opposed to solely that of an operational tool. Thus, it has a major impact on strategic thinking, with resultant operations consistently applied throughout the organization (Cited from, ., 1996; and , 1998). Honda, in adopting TQM is seen by some companies as a necessity, to ensure that they are perceived as being on par with corporate peers in their adoption of leading edge business improvement issues. TQM’s role within the organization, its strategic and operational impact and its definition were not clearly articulated by either the quality managers or the managing directors. There can possibly be lack of understanding regarding TQM and its relationship with corporate strategy and resultant operations results in TQM’s benefits not being realized by senior management (Cited from, ., 1996; and , 1998). For certain reasons, TQM and its potential can be overlooked by senior management. TQM is used primarily at the operational level and it decreases in importance and application at tactical and corporate levels. TQM is not recognized at senior management level as valuable source of business environment information; therefore TQM has limited role in assisting in such corporate strategic processes as the identification and attainment of emergent corporate strategies.
The alignment of TQM with corporate strategy and policies from the corporate through the tactical to the operational level has been applied to a limited extent. In most cases where TQM is used in such a manner the responsibility for its implementation and functioning has been delegated by senior managers to the tactical, middle management level (Cited from, , 1994). The ideal process has been created an operational-strategic divide that is bridged by tactical function. The corporate strategy is translated at this tactical level to identify what must be achieved operationally to achieve the corporate strategy. TQM is perceived by all levels of staff and management as mainly an operational issue, with abilities only to impact on physical service and manufacturing processes and procedures. It is considered primary source of problem-solving tools and techniques used at the operational level (Cited from, , 1994). Then, Honda’s TQM enables the developing of strategic thinking due to its good disciplinary nature and market intelligence-gathering traits. For TQM to reach its potential it needs to be practiced and managed by senior management and in particular managing directors, so that its abilities can be realized by them and extended to assist in providing information for the corporate decision-making process.
Certain Key points of TQM application
The strategic application of TQM
The TQM environment
Honda conducts ample integration of its strategy and operations execution 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 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.
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