Research Articles Base: Honda Motors Case Studies

Honda Motors

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.             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) Although first conceived in the 1950s, this system could not be established until 1967, due to union opposition. In order to retain its independence, Honda did not attempt to join a keiretsu with linked banks and industrial firms, nor to maintain close ties with the political world as Nissan had done. Neither did it form an ‘association’ of suppliers, to which it would have obligations. The company used Toyota’s and Nissan’s suppliers, and was able to profit from their experience and prices. Above all, Honda was careful to be self-financing and not become financially dependent upon the banks (1998).             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).             Another reason for the success of Honda was the consistency between their production organization, their employment relations, and their profit strategy. For Honda and other successful automakers, the new phase was an opportunity to reinforce these linkages.             During the 1970s and 1980s, Japanese carmakers, with Honda playing a lead role, were responsible for a significant shift toward the “world car” that their Western counterparts had been unable, or had not sought, to achieve. The superiority, in terms of high quality and low cost, of vehicles produced by the Japanese allowed them to override a number of previous differences between world regions; hence, smaller cars were introduced in North America, and there was partial globalization of front-wheel drive technologies (1997). 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 was now developing its own production system, learning from the much admired Toyota Production System but also including quite different principles. While a Honda Production System (HPS) was not made explicit, its principles became increasingly clear. The HPS is a push system with production planning based on market forecasts and product variety kept low (since Honda products were already ‘different’ in terms of technology and design). Hence production could be simplified and economies of scale generated. Products are designed to fit existing equipment with only jigs altered. Common ‘design philosophies’ are adopted (architecture of components invariant across models to facilitate assembly tasks and tool sharing) (1998).             Honda Engineering was formally established in 1970 to provide innovative manufacturing solutions. Factories are planned for structural flexibility, with long-term use of the same people, sites, and production equipment even as models and product types change. The HPS is not intended to possess ‘short-run’ flexibility to produce to ‘customer order’, but can be ‘rejigged’ and restarted quickly; this is Honda’s flexible mass production system (1998). It is not by magic whereby Honda is able to deliver high-quality cars, it is through good engineering.             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.             The period from 1982 to 1991 started with the opening of the North American automobile plant and the intensification of relations with Honda’s European partner following a serious return to compete in the Japanese market. For a decade sales grew in all three regions, yet expansion of manufacturing in North America dominated, posing questions about the transferability of Honda’s model and about the multinational form that would replace the 1970s ‘export’ model. Growth during the 1980s was financed by profits from North American production (as growth during the 1970s had been financed by profits from North American sales). Growth in Japan culminated in the ‘bubble economy, of the late 1980s (1998).             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. Even by the mid-1990s, Honda’s European distribution network, unlike North America, did not receive any Honda cars fully designed for Europe. Instead, basic Japanese products, of similar general size—though slotting uncomfortably in-between the actual size classes used by European producers—were tinkered with, the first being a partially successful 1992 Accord for Europe, the second being a more successful 1995 Civic for Europe – although this tinkering produced improvements over the Ballade and Concerto models that Honda had asked Rover Group to manufacture for it during the 1980s (1997). 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). Neither did the automobiles Honda had designed for North America fare much better In Europe. The 1989 Accord was not very successful in Europe as a near-luxury car because its midsized 2.01 engine proved underpowered in Germany. Thus while Japan was an important enough market to warrant its own products, and so was North America, Europe was not, and was accordingly fed an ill-fitting range of products designed and produced in Japan for Japanese and American markets or designed and produced in the United States for North American markets (1997).             Honda overcame these problems through their brilliant strategies. From the late 1980s, the central theme of Honda’s global car design process became the “total car concept.” The 1993 Accord model exemplifies the outcome. In North America, the Accord had now evolved into a large car with a clearly American-oriented design. A smaller automobile was developed for Japan (Accord Inspire/Ascot). This product became the basis for the “spin off” Accord for Europe (seats, suspensions, and some other features altered for European tastes). The same automobile, with a more radical body redesign, became the Rover 600, produced and marketed by Rover Group. At the same time, four-door, coupe, and estate/station wagon variants of the American Accord were exported to Europe for sale alongside the smaller (family resemblance, but still different) Europeanized Accords, and to Japan as a new and different model. Moreover, Honda’s first minivan recreational vehicle was designed as a direct spin-off from the American Accord, sharing 50% of its components (1997).             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).             The resulting ‘global local corporation’ was built on the foundations of the HPS and Fujisawaism, with their simplicity of model range, flexi factories, use of best technologies, and organizational flexibility. In 1987 Honda declared its aim to build a ‘self-reliant’ company in North America. ‘Self-reliance’ did not imply operational separation from Japan but a product development capability within a new division of labor between Japan – design and production of niche models, design of mass models; and North America – design and production of niche variants (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” (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. Within Europe, Germany was seen as the most difficult market. However, this strategy, a derivative of the product life-cycle approach and a close relative of the globalization model, began to cause Honda problems. The company’s internationalization had started with automobiles designed initially for Japan which found favor in North America (the Civic in 1972, then the Accord in 1976). During the 1980s, these cars were redesigned in steps with a clear focus on American market tastes, but as the Accord model became increasingly “Americanized” (much larger, and with gentle design lines), it began to fail in the Japanese market, where it was perceived as uninspiring in the late 1980s bubble economy atmosphere of euphoric consumption (1997). 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).   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 Motors

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

CORPORATE STRATEGY

Introduction              quotes, “To be able to compete… leave conventional corporate strategy… this is useless in a fast-changing and -moving frontier.  You will never know new competitor will be”.  Of course, the statement is relative to the nature of the industry wherein hi-tech firms are not protected by their fast cycle products.  But pondering further about globalization, dumping practices and the awakened China, industry exemption to such statement cannot be easily applied.  Presented in this paper is the effort of the writer to site specific global firms like General Motors, Toyota, Sony and, Procter and Gamble that make strategic decisions out of the ordinary method of determining the mission at the start of the business cycle.  Such type of decisions, which embody ’s call, are evaluated particularly on their effects to the organization.  In effect, at the end of this paper, the reader will have clearer grasp regarding this question, ”Is the failure to tag a strategy or decision as a mission-impossible beforehand have its advantages for the future of the organization?”                          General Motors Yes, General Motors (GM) is a big, multinational enterprise (MNE).  FORTUNE 500 even ranked it number 1 for thirty seven years in the first half of the past century ( 2006).  It was accounted for historic battles against Ford and won some of those which were fairly applause for a rival that is the pioneer and one of the masters in car assembly history.  Its almost 100-year experience in automobile industry would also suggest how its organization had developed an in-depth knowledge of the competition, industry and its own competitive advantages.  Bankruptcy seemed impossible rather a herald of profits.  However, last year’s performance will unfold the bad things in the offing.  Market share is down to 26%, a lost of .6B and a lingering turmoil of bankruptcy.                  In this difficult situation, GM had partially complied with ’s quotation.  It had closed some of its manufacturing sites including downsizing thousands of its labor force to cut down costs and operate in an efficient manner.  It also planned on selling some of the ownership in its financial subsidiary, GMAC, to a liquid buyer to avoid continuous downgrade of credit ratings.  The economies of scale, intellectual capital retention and equity financing strategies were given-up for the purpose of being liquid and solvent.  In effect, these actions would capitalize and support its aggressive introduction of new models that can fight Toyota’s continuous improvement regimes.                    However, its past-to-on going obligation to deliver health benefit package for its retirees is one of its previous strategies that cannot be shifted abruptly.  It had bear success with the scheme in its past operations, serving as motivation and retention plan, although in its present condition such became a headache to the management.  This is the other half of ’s requirement that is not met by GM.  As a result, the actions of the firm are still encapsulated within the bottleneck of the past.  And so, it cannot fully adjust to its competitive environment like face-to-face challenge over Toyota’s dynamic strategy of continuous improvement.               Apparently, this “lost of the other half” seemingly was the biggest obstacle for GM to resolve not only its cost-structure (since this has been addressed through downsizing and down scoping) but more importantly revenue prospects.  Its stiff financial condition due to pensioning despite loss barred it from developing new models and at the same time maintaining economies of scale.  In effect, Toyota is likely to outperform the still adjusting operations and financial structuring of GM by beating the latter on the quality and design of its models.  For its part, GM had to play the competitive field with either little liquidity (but integrated strategy) or large liquidity (but fragmentized/ vague strategy).    Obviously, it had started to put itself to the latter despite ambiguity.  However, its loosing position under obscure experience of plunging stock price (which was not felt since 1982) and neophyte smell of bankruptcy will inhibit it from realizing the optimal benefits of ’s advice rather temporary mitigation.  Beyond this, GM should sustain its survival mode until such time that it had fully adjusted its resources with the new use of dynamic strategy.  Perhaps, the organization should rethink its pension scheme for retirees as it prohibits flexibility especially when the firm is at financial burden like this present time.  Dynamic strategy is forward looking and experience-contemplator.  The instilled dogma that Toyota’s models are more reliable than GM, even though the latter had current test results to dispute such claim, had long been stored in the memory of most American buyers.  GM must not only prove such in one-time press releases or banners rather absorption of some looses would be necessary as trust needs waiting to be renewed.   Toyota             If there is one firm that had flourished within the framework of dynamic and sometimes uncertain strategy, that would be Toyota.  Oftentimes referred to as the most successful automaker these days, the firm’s adherence to continuous improvement strategy has well-blended the appetite of consumers.  Behind such strategy, there lies a combination of internal-to-external factors analysis and reconciliation.  The firm does not emit all external feedbacks and then streamline the inputs in its manufacturing backyard.  It can be illustrated by mentioning the relative success of GS 450h against the innovative gas-electric vehicles developed by Ford and Honda ( 2006).  The latter companies had emphasized on surging oil prices in the global market and so their new engine promises gas savings.  However, such dependence on outside factors had back clashed to the inability of the models to compete in price which made the models as expensive as if customers had already paid a premium for future gas savings.               Toyota, on the other hand, remained focus on internal-to-external reconciliation highlighting differentiation which is internally-stimulated decision.  It can be thought that the firm cannot afford high manufacturing costs to develop a gas-saving engine and so it opted to settle on providing an environmental-friendly and performance-based cars instead.  This is done as proxy to the lost of value-added gas-saver feature in other models.  Although Ford and Honda were on the right track to anticipate global escalation of gas prices, they were on the other side of anticipating the importance of internally-generated strengths.  Toyota had thought outside the box (since it was easy to know where gas prices will go) by viewing the global event as “given” and the purpose of manufacturers is to give the customers value so that their purchase, and subsequently, maintenance costs would be supported.                   Another unusual action by Toyota is its official entrance of rivaling Ford, Chevy and Dodge truck products.  The three brands were almost encrypted in the minds of customers particularly in the United States.  Nissan had dubbed the strategy as “too ambitious” for a firm that is only selling an old model truck for 150,000 more or less annually.  On the other hand, Toyota is planning to initially produce double of this quantity for its new full-size truck release.  The move is a departure from the conventional thinking of securing a market niche and be able to prevent competition in products that the organization has no or lacks competitive advantage.  Toyota may have its success in light vehicles and model cars but critics argued that (like Nissan) the plan would end not that too bold.               Toyota is well-known for its durability and quality generally.  The full-size truck expansion might have been underestimated.  As the firm adheres to dynamic way of resolving strategy issues, peculiar and sometimes foolish answers would have found.  Well, it is how Toyota confronts the competitive landscape.  And as for , this is one proof suggestive to auto-makers that “you will never know who your new competitor will be”.  Toyota is broadening its market base partly behind the reason of strong cash flows and bright investor prospect for the firm’s future health.  In this view, the move although risky and distortedly calculated for many, losses would be easily absorb not solely by the firm but the financial market as well.  With bolder and bolder plans developed by the firm, investors wanted to ride along its ship for mutual gains and losses.  Truly, being dynamic is worthy for a formidable firm like Toyota.                                Sony             The competitive world of Sony had long been transformed since its last superior stake of Walkman ( 2006).  The new era where it belongs involved Microsoft, Sharp and Apple Computer.  All of which are high-technology firms.  As a result, products are classified as fast-cycle wherein speed to market and innovation are key ingredients to success.  In the consumer electronics, Sony is fighting to get a fair share of the market for its line of differentiated products.  To do this, conventional strategists would highly require the firm to adhere to the mentioned key ingredients to assure success of every product being lunched.  The ingenuity of industry competitors to a specific type of product wherein they excel (Sharp: TV, Apple: MP3, Microsoft: X-Box) supports the conventional thinking.               However, the announcement that the newest model of video game console called Play Station 3 will take some deployment delay before the market disregarded such analysts’ disputes and competitor’s threats.  Sony might be on the verge of loosing the opportunity to enjoy the gains from meeting the short-run demand of customers.  On the other hand, it complied with ’s call of dynamic strategy which is out of the ordinary.  It is also within the estimate that competitors are not easily deciphered and can easily bite a firm in the back.  The query then is how Sony’s new product (to note: play station 2 is the best seller for console games) will gain and how much with the new strategy?               Before answering this question, it is helpful to mention that Sony had already built a name in gaming products.  The confidence level of the firm that consumers will still patronize the up-coming model is big.  However, X-Box might have eaten a large portion of the old model’s market, thereby, causing the delay huge amount of opportunity costs.  On the other hand, Sony might also want to exhaust the remaining stocks of its old models to be able for the new model achieves its optimal sales without cannibalizing the sales of the old model.  To settle the ambiguous reason, Sony disclosed that it was taking the peculiar action for the purpose of deepening the curiosity of customers thereby flaming their desire to purchase.              With this simple demand-based decision, resources of the firm including its potential revenues and upper hand in the fast-cycle industry were undermined in favor of a relatively riskier decision.  Highly differentiated competitors particularly Microsoft would have developed improved gaming console by the time the PS3 formally reaches the market.  In effect, product revenues are exposed to heavy competition between these two firms which is detrimental to the optimal prospect of the new PS3.  The new strategy transforms Sony into seemingly speculating entity ready to take the risks of loss when decisions do not meet expectations.                The ambiguous strategy of Sony apparently mimicked its environment in which it is exposed to uncertainty and excessive rivalry.  It serves as its clothing to mitigate such impacts.  The firm wanted to create its own unique competitive advantage in an industry where such is hardly sustainable in the long-run.  It uses its name and vast array of products (the latter is good for leveraging losses) to support its newly developed strategy.  In addition, the delay also provided the firm the opportunity to exploit the financial market since investors are encouraged to buy its share today prior to the on-set of the anticipated blockbuster product.  In effect, new funds will flow and would be the shield the firm would apply in case where the ambiguous strategy fails or becomes sub-optimal.  The new thinking, thus, submits itself to diverse functions including the anticipation of failure, exploitation of opportunities and mind-game.   Procter and Gamble             The case of Procter and Gamble (PG) somehow approached the new strategic thinking of .  It is the concern of the firm to integrate its activities vertically as to achieve market power or horizontally for economies of scale.  As a pre-condition, firms under mergers and acquisitions should be compatible with each operations either one will serve as a forward or backward supplier or simply provide strategic synergy with the other.  Such action becomes crucial when outsourcing is not efficient including the presence of risk from leaking the treasured business patent to competitors.               However, the previous acquisition of PG for Gillette (’s 2006) in the late 2005 (which is termed as the biggest acquisition of its history) (Procter stock tumbles as sales disappoint 2006) was a departure to either synergy or integration.  Gillette is a metal brand far from the portfolio of PG which is health care in general.  Apparently, it is doubtful that there is machinery that would compliment the operations of the two.  Although it can be argued that PG is a diversified firm, analyzing its line of products, one would say that it is doing a related-constrained diversification wherein it is in the middle of a dominant business and a much unrelated businesses.  More appropriately, the firm is indicative to exploit not the infrastructure of Gillette rather its name and earning potential.  In short, the firm wanted to hold a top-ranking brand in the business which is closely connected to its line of products.                               The move is not operationally strategic per se but more apparently it is financially strategic to the firm.  The interim effects of the acquisition contributed to the quarterly gain in profit of 37%.  This suggests that PG relies on the capability of Gillette to earn not on its capability to share its resources.  In addition, PGs unique strategy of acquiring known brands in replace of market power and economies of scale had initially paid when the giant retailer Wal-Mart reduced its store products and clutter in favor of customer’s bestsellers.  As a result, rivals such as Playtex and Spectrum had been adversely affected by the forward supplier’s call.  This heaven-sent announcement gave detergent and beauty products of PG a large snatch on the customer base even though its focus was acquisition rather operation in developing quality for brand names.               However, the non-conventional thinking of PG is partly reflective of some weaknesses.  First, the too much heterogeneous brands it has would result to inefficiencies and risks since human resources and machineries are differently functioning: an “earthquake” in one operation cannot be helped by the other.  There is also the problem of too much diversification where financial management could not resolve billion dollar failure of an acquisition.  Lastly, the path taken by PG requires time for benefits to emerge, therefore, patience is the key wherein investors could have little of.        Conclusion             Sample firms above exhibited vague strategic activities that forgo equity financing (GM), external signals/ market niche (Toyota), innovation/ speed-to-market (Sony), and economies of scale/ market power (PG).  These are fair proofs that are addressing the apprehension of  on a rapidly changing, fast moving and iguana-like competitive environment.  The general effect to these firms of adapting hybrid-dynamic strategy is obviously larger financial flexibility.  Except for GM, being financially stable gave these firms the intent and capability to depart from traditional corporate strategy.  In specific terms, they are rewarded with financial relaxation/ renewed chance to operate (GM), market expansion (Toyota), promising product launch (Sony) and distribution channel preference (PG).                Corporate strategy implies that firms’ resources and capabilities are integrated and coordinated into pre-determined set of goals to gain competitive advantages.  Due to departure of such firms to this, they have obtained flexibility in deciding operational and tactical issues that their firms are facing.  As a result, there is a need for strict environmental and competitive scanning/ monitoring that should be done to offset the adverse effects of blurred goals.  The advantage of corporate strategy against dynamic decision is that it minimizes organizational risks associated with the firm’s faulty decision or the environmental shocks.  It provides the ceiling and floor as the basis for maximum and minimum results the firm should expect.  The methodology of corporate strategy is like a thread that attaches resources, capabilities, core competencies and competitiveness in one single path.  It is a guide that the firm follows.                On the other hand, sample firms above exhibited risk-tolerant decisions as a result (and could be cause) of management shift of decision framework.  The thread turned to be fragmented while the organization takes every situation as a matter of opportunity or threat based on the real-time and industry-led perception.  Conventional thinking is dropped and a more challenging endeavor awaits every organizational leader.  Being global firms makes them realize the practicality of “let the environment question, and we answer” mind-set.  Others like GM used dynamic strategy as a manifestation of failed long-run success while the three used it to capitalize on their business strength and financial depth.  Whatever the reason would be, being dynamic stimulates the decision-making to view the broader side of success horizon due to the absence of being risk-averse.  The picture is clearer and the leadership including the investors could pull a bunch of profitable prospects.                                 It is a general rule in the stock market trading that for an entity to invest in a firm “the expected rate of return should equalize the level of risk in the transaction”.  As the model of Ohmae connotes substantial shouldering of a firm for environmental as well as internal risks, the cash and capital structure of the firm is highly regarded as pre-condition before corporate strategies are abolished in favor of dynamic ones.  The stance of sample firms especially Toyota’s new trucks are exposed to risk failures with little historic evidence of larger expected rate of return.  However, due to financial strength of the firm (unlike GM), it is able to embrace the idea with liquidity guarantee on risks that may happen.  And so, the ultimate effect of ’s model to the daring firm is either to substantially gain or modestly loose (Toyota) or substantially gain or go bankrupt (GM).  Finally, effects are relative to the extent of a decision in relation to liquidity.   Bibliography Credit:ivythesis.typepad.com

CORPORATE STRATEGY

Introduction quotes, “To be able to compete… leave conventional corporate strategy… this is useless in a fast-changing and ...

ORGANIZATIONAL STRATEGIC PLAN

Introduction   This essay provides a rundown on the basic application of generic strategies in two organizations that are in different industrial sectors.  In lieu to this essay, the chosen two organizations are both multinational companies and are manufacturer of goods that is primarily driven by the companies’ respective expertise on modern innovations.  The two organizations being chosen has proved their mark in the business, thus exploring on their current generic strategies is interesting.  Nike and Honda motors, are in the shoe industry and in automotive industry pertaining to the latter. Further, since both are not domestic organizations, accessibility to primary data are barely unachievable though the supporting data can still purport to the critical analysis that is to be made by the two organizations.  To begin with, an overview of the nature of generic strategies would be of help to better understand the whole context and useful in the formulation of critical analysis for the current generic strategies being employed by Nike and Honda.  Generic strategies was formulated by Michael Porter that has considered a category scheme consisting of three typed of strategies being employed by businnesses.  These are the level of differentiation, relative product cost, and scope of target market.  Further, these three generic strategies are defined along two dimensions namely strategic scope and strategic strength.  By strategic scope connotes the demand-side which focuses on the marketplace factors and the strategic strength on the other hand, connotes the supply-side in which it focuses internal environment of the company that would serve as the company’s competitive advantage.  However in the year 1980 in his classic book Competitive Strategy: Techniques for Analyzing Industries and Competitor ( 1980), he altered the category scheme into cost leadership, differentiaton and market segment or also known as the focus segment.  To simplify the three revised and simplified generic strategies category scheme for business, an illustration of the ’s generic strategies will be shown in the diagram below: Diagram is from to be accessed through    Cost leadership strategy place emphasis on efficiency through the production of high volumes and standardized products in order to take advantage the scale of economies and the curve effects being experienced.  Researches about the impact of profit on the market share indicated that firms with high market share were often profitable and so does with low market share, but for the firms with moderate market shares are the ones that is likely to be least profitable.   (1980) explains, high market shares were successful because they pursued a cost leadership strategy and firms with low market share were successful because they used market segmentation to focus on a small but profitable market niche.  The association of distribution strategy, on one hand, is in the acquisition distribution channels that is extensive, whereas, the promotional strategy, on the other hand, engages in the virtue from the low cost features of the products.  Several benefits can be reaped off from the successful implementation of the cost leadership strategies.  Among the several benefits that it can bring are the processing of engineering skills, the design of the products that provides easeness in the manufacturing process, sustainable accessibility to capital that is inexpensive, supervision of labour can closely be supervised, tightened control of the cose and the incentives based on quantitative targets. The second named generic strategy comes in the form of differentiation that pertains the creation of the product that is innovative.  The innovativeness of the products that will be created would mean that there is a tendency of reduction in the price elasticity of demand and customers are likely to be brand loyal due to the fact that customers’ in any sense is willng to spend more provided that they get a good deal of the products and that customer’s are getting back their money’s worth.  The last generic strategy to be previewed is the segmentation strategy wherein target markets are being filtered to come up with a selected and specialized markets.  Therefore, tailoring the marketing mix to these specialized market enables company to cater the needs of the selected target market which in turn can gain competitive advantage such that the demands of the target market are being meet. Despite of the great contribution Porter has made, criticisms rose and challenges the use of generic strategies claiming they lack specificity, lack flexibility, and are limiting. For the critics, the application of generic strategies is like trying to get everything be perfectly fit into a peg but the bottom line is that generic strategies would not be a perfect fit.   (1993) have modified ‘s three strategies to describe three basic “value disciplines” that can create customer value and provide a competitive advantage. They are operational excellence, product innovation, and customer intimacy.   Main Part   HONDA The redefinition of motor-cycle market in the United States is a classic case in corporate strategy.  The penetration of Honda in the United States market was being marketed under the slogan “You meet the nicest people on a Honda”.  Honda’s strategies succeeded because the strategy was an archetype of Japanese penetration on the Western Market (e.g. like that of Shiseido).  According to  (1975), the aggressive pursuit of domestic volume has established a low-cost in the expansion overseas.  On the contrary,(1984) asserted from his interview to Mr. Honda that “Mr Honda was especially confident of the 250 cc and 350 cc machines. The shape of the handlebar on these larger machines looked like the eyebrows of Buddha, which he felt was a strong selling point.”  Currently, the continuing commitment of Honda to make innovative automobile that not only provides consumers with reliable cars but also the manufacturing of automobiles that cuts the cost of fuel consumption by enhancing fuel efficiency.   Strategic scope and strategic strength               Honda as being in an automobile manufacturing industry markets to the people especially into the world’s major busy cities where buying an automobile is almost a must to keep going and stay away from the fuzz of commuting in the morning rush and in the late afternoon traffic. At Honda even though they are not the number one in automobile industry, they provide means in which to give people an alternative by introducing cars that is fuel-efficient in response to the unpredictable rise of fuel consumption.    The heart of Honda’s strategic strength is the capabilities to produce innovative yet simple, low-cost products.  Honda’s competitive advantage over the rest of automotive manufacturers is not the flashy design of automobiles but lies in the strategic differentiation strategy being employed by Honda especially in the quest of developing new innovative means to enhance fuel efficiency without the extra cost.     Cost leadership strategy   Honda as being founded by Japanese, the value for diversity is prevalent.  Mirrored from the core of Honda’s philosophy is the principle or respect for the individual with attached components of trust, initiative and equality that guides Honda in all of its business operations.  Accordingly,  says, “Action without philosophy is a lethal weapon; philosophy without action is worthless.”  Evidence from case studies also supports the view that firms of different national origins will tend to pursue different competitive strategies (1985;  1982). This may reflect different organizational cultures ( 1980; ,  and  1966), or alternatively, the formulation of competitive strategy in response to environmental conditions in the domestic market, which are then carried over to foreign markets.  In Honda the recognition of the need to embrace diversity as having a diverse workforce, diverse dealer body and diverse team of suppliers proves to be as one of their competitive advantage.  In the dealer aspect, Honda continues to enhance the number of minority-owned dealers via the dealer development programs.  Even though minority-owned dealers are considered to be a small time dealings, but in Honda they believe in the power of small time dealings making it big in the future that might as well spells profitability to Honda.  In line to the enhancing of the number of minority-owned dealers, Honda establishes the American Honda Dealer Investment program aims in lowering financial barriers for qualified dealer candidates.   Differentiation strategy The differentiation strategy is not at all easy to maintain since the expenditure of huge amount of money and resources should be pulled together to make the differentiation strategy to be effective.  Among the factors that constributes to the effectiveness of differentiation strategy are design, brand image, reputation, technology, product features, networks and differentiated customer service that can barely be imitated. At Honda they are very particular in inventing automobiles that is not harmful to the environment as part of their goal in making environmentally friendly products and Honda is being characterized by its simplicity that is evident as the brand image Honda wanted to project in the market.  Several milestones and recognition has been awarded to Honda in terms of the organization’s promotion of protecting the environment.  To name a few recognition that Honda received as being environment friendly are, the introduction of the first car to pass the emissions requirement of the Clean Air Act without a catalyst (CVCC Civic model), development of the first fuel cell electric vehicle in the world, the first gasoline-powered car sold in California to meet the Super-Ultra-Low Emission Vehicle standard, Named the cleanest internal-combustion vehicle on earth by the EPA, the development of a the car Civic GX that runs entirely on natural gas so it is therefore pollution free vehicle, and the certification from the international environment management standards ( 14001) to all major Honda plants worldwide.             The mandate by Mr. Honda “Do Not Imitate” is a challenge being given especially to the Resource and Development to constantly challenge themselves in seeking out for new initiatives and to remain as front runners in innovation.  In 2001, Tochigi R&D center was opened as the world’s first indoor all-weather facility.  Consequently in 2003, an Automotive Safety Research Facility featuring seven advanced safety testing laboratories.  Proving to the world of the commitment of Honda to quest for innovations that is a strong and valuable competitive advantage they have engulf in the organization.   Segmentation strategy Honda’s realization of the full use of segmentation and involved the creation of a distinctive distribution network and the differentiated products and services Honda has been offering.  The target market of Honda is the mass-market model such that they can exhibit its greatest impact on clean air and fuel economy.  The Power of Dreams embodied by Honda envisions the development of vehicles for the future while improving the existing technologies.  The introduction of continued advancement of internal combustion engine technology and new generation of gasoline engines would provide the world with extremely low emission levels and increased fuel efficiency. Conclusion The focus of Honda is in the generic strategies of differentiation and cost leadership strategies.  With great emphasis on the differentiation strategy, has equipped Honda strong points in what the future has yet to unfold.  The anticipation of the future will enable them to be very potentially potent to be emerging as the number one automotive choice in the world since their continuing efforts in innovating cars that is fuel efficient yet environment friendly.  Despite in the argument of  (1980) saying that cost leadership and differentiation are such fundamentally contradictory strategies, requiring such different sets of resources, that any firm attempting to combine them would wind up “stuck-in-the-middle” and fail to enjoy superior performance.  However, in support of the generic strategies being employed in Honda, (1988) argued that sustainable competitive advantage rests on the successful combination of these two strategies.       NIKE     Who in the world did not hear anything about Nike?  Nike as a very prominent brand in the shoe industry with a check mark as its trademark had started its operation 33 years ago that is founded by , the legendary University of Oregon track & field coach, and , a University of Oregon business student and middle-distance runner under .  Nike caters primarily to the athletes worldwide whose mission has always been to provide a competitive edge, to help athletes perform better climbing the inside the athletic mind, feeling every beat of the athletic heart, flexes, bends, twist and torque every inch of athletic sinew and muscle. It’s not easy, but it’s natural for us. We’re athletes. From the mission statement of Nike, the enduring commitment to athletes entails a mission to bring inspiration and innovation to every athlete in the world.  Similarly  quoted “if you have a body, you are an athlete.  Moreover, Nike’s total revenue for fiscal year 2005 reported an amount of .7 billion as their net revenue, a 12 percent increase from the fiscal year 2004.   Strategic scope and strategic strength               The strategic scope of Nike is to cater to every athlete and the aspiring athletes all over the world that will be characterized by innovative features from the shoes, to apparels and gears.  The market of Nike is very much diverse in nature yet the market is particularly promising such as the market is not only limited to athlete but the people from all walks of life who does exercise or just have fun in playing.               The strategic strength of Nike is in the innovation they have been creating for the people especially for the athletes who wants something new to show off and sports enthusiast who have a fetish for wearing unbelievably innovated shoes.  Like for example, the product Nike Shox who has a distinct feature that is capable of shock absorption.   Cost leadership strategy             Nike as being the number one footwear brand works with the top suppliers.  An issue that circulates in the contract factories of Nike has been pervasive and needs to look into. The disclosure of the contract manufacturing base opens for the prospect to a deeper level of collaboration with Nike’s stakeholders as a response to the working conditions in manufacturing industry and for the reason for the said disclosure is to enable brands sharing of information regarding about compliance performance and duplication efforts would be minimal.  Nike believed that the creation of mechanisms that enable corporate responsibility, in which Nike has been struggling, is when the forces of market enable corporate responsibility to occur in a widespread context.  In the corporate responsibility report (2005), Nike’s inability to gauge progress in the organizations goals necessitates them to established plans setting targets as key objectives for Nike team to pursue for this year (2006)     Differentiation strategy   Nike relies more on the differentiation strategy and presumably it is the strategy where they excel.  Versatility as the strength of Nike goes beyond its basic function of impact protection such that Nike can shape and tuned to cater the demands of athletes in a detailed manner.  Needless, to say Nike’s footwear are being customized to meet the standards of the athletes and the people in general.  Aside from the innovative features of their footwear, Nike’s apparel has had a share in the invention of innovative designs and high performance fabrics they have been using to produce their apparel products.  The FIT technologies regulates the management of temperature conditions and moisture to help athletes train and compete in any sort of conditions without affecting athlete’s performance.  Three FIT technologies are being used in Nike, the dri-fit, thermal fit and Nike sphere thermal.               Behind every innovative invention are the brilliance of the man and woman in the research and development combined with state-of-the-art research facilities.  In Nike, researchers are being subdivided accordingly to its field of expertise: these are the biomechanics, the study of human movement and related forces; the physiology, study of the integration of body’s energy system and responses to environmental stresses; and sensory/perception, the evaluation of subjective product attributes.  All of the specialized fields take into account the possible sources of confounding factors such as gender, skill level, geography and age.  Given these considerations before taking into account the dynamics of invention, Nike has been considered the master of innovation in shoe industry.  It is amazing to note that the careful and meticulous attention to details enables Nike to produce innovative features in their products that sometimes just gets people in awe as to how they are able to come up with such products especially to athletes.     Segmentation strategy               Nike has penetrated the market and was able to focus on the different facets of footwear.  In every stores and boutique, every Nike products are being sort out in the shelves according to it’s shall I say, function.  For example, the labeling of the shoes as being for basketball, tennis, cross-training or running, that enables customers to know exactly what they are looking for.  In the segmentation strategy, they have been very specific to their target market, whether for boys, girls, children, men and women.    Conclusion Nike’s total sales in the United States for the fiscal year 2004, accounted for 23 percent of total sales, whereas the non-U.S total sales accounted for approximately 13 percent, meaning, Nike may have done well in the United States market since Nike is from the United States and American people are fanatic with sports and has a high purchasing power.  Or perhaps, the reason lies in the defect in the cost leadership strategy which may have had affected Nike in terms of sale.  Price is out of contention in this matter, according to  (2000) found that price might be ignored as long as the product-customer fit is enhanced. U.S. firms have been found to place greater emphasis on product quality, and less on new product development, promotional expenditure or pricing in overseas markets (,  1987; 1983;  1983).   The reputation of Nike in the market is unquestionable.  Nike’s dominant generic strategy is in the differentiation strategy wherein the other two generic strategies may not be a prioritized strategy for Nike.  In support if Nike in the use of only one generic strategy, an experiment by  (1984) found that firms employing only one of ‘s generic strategies outperformed firms pursuing elements of more than one strategy       REFERENCES:   Credit:ivythesis.typepad.com

ORGANIZATIONAL STRATEGIC PLAN

Introduction This essay provides a rundown on the basic application of generic strategies in two organizations that are in different ...

HUMAN RESOURCES MANAGEMENT

TABLE OF CONTENTS     Brief Overview of Honda Motors ________________________ page 2   The Question answered (1b) ____________________________ page 3   A. Performance management of Honda ____________________ pages 4-7 B. Adopting a unique style of Management _________________ page 8 B.1 Management Organization ____________________________ pages 9-14   B.2 Preparing for the Future _____________________________ pages 15-20 C. References _________________________________________ pages 21                           Business organizations have been subject to enormous pressures over the past few years, with major underlying structural changes in industry sometimes concealed behind the short-term issues of recession. There will be no simple solutions and success will depend, as always, on the soundness of the strategic decisions taken by top management, and the ability of the organization to implement those strategies and would push the human resource aspects of the business to the fore, even without the added complication of continued change and the pressures that this brings. HRM needs to become even more strategic in the way it operates. In effect it needs to be driven by the business needs of the organization, but without losing sight of the critical value and importance of people in making strategies become reality.   Brief Overview of Honda Motors   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 their 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.           1b) Describe and critically assess the practices of your chosen organization in relation to two of the following:   a)     reward & recognition b)     performance management c)     employee welfare d)     work design e)     management style   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.       A. Performance management of Honda   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 Research and Development Center 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. 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.                     B. Adopting a unique style of Management The romantic image of the founder-millionaire wearing overalls. tinkering visibly with some mechanical marvel in workshop or lab, is often reality. So it was with Soichiro Honda, in many ways the least typical of the post-war Japanese economic victors: but simultaneously the most visible archetype of the success of Japanese business culture, though an eccentric one. ‘Mr Honda’, said one baffled journalist, ‘ is a management executive who always wears red shirts and tells naughty stories when drinking.’ The drinking was important to Honda. In his early sixties, the great man admitted that he didn’t understand computers. The fact that he couldn’t keep up with the technology was only one factor in his decision to take relatively early retirement. Five years later, Honda came of technological age with the Japanese market in recession, Honda invested in German, Swiss and American machine tools, reckoning that they were the best in the world. He then ‘reverse-engineered’ the European bikes he was copying – taking them apart to see how they were made: and discovering that their best was simply not good enough. European manufacturers believed it was impossible to run motorcycle engines with even faster bursts. Honda not only proved that you could, but also started to win Grand Prix races all over the world. Super-design went with super-efficiency in production engineering. At Honda’s motorcycle plants not a single storeroom existed for parts, raw materials, or finished machines; deliveries went in at one end, and finished bikes, up to one every seven seconds, moved straight on to double-decker trucks at the other.                 B.1 Management Organization of the Company’s Corporate Governance for Decision-Making, Execution, Supervision and Others       SOURCE:  (2006)   Putting the emphasis on easy access to colleagues signals that involvement figures high in the corporate values. Then, placing top executives in an open office signifies the intention to have an open style, in which rank and status have no practical importance. The round tables indicate that decisions are only to be taken after full discussion among colleagues who are always on tap. The proximity of the desks establishes that lines of communication are to be short and easily opened. The classic Western office layout, based on the ‘behind closed doors’ principle, is the antithesis of visibility and delivers an utterly contrasting message. The corporate vision statement is like the founder himself, enormously practical:   Ø      Quality in all jobs – learn, think, analyse, evaluate and improve Ø      Reliable products – on time, with excellence and consistency Ø      Better communication – listen, ask and speak up   Developing a philosophy built on the experience of a practical engineer, the founding father had created a corporate culture that would go on working towards his objective nothing less than becoming and remaining the world’s best motor manufacturer long after his own active day. His influence, like the man himself, is still highly visible. And the visibility is inseparable from the success.                       As the HRM for Honda business industry is considered an integration function supporting all the improvements of resource management and business functions. Sound HRM systems and strategies clearly contribute to productivity improvement. However, Honda cognitive differences of HRM will produce diverse HRM strategies, and the achievements of HRM reflect distinct business performance. This study proposes an approach to investigate the correlation of firms’ productivity and various patterns of HRM so as to improve a firm’s performance. The two critical factors, human resource compensation and maintenance, receive more attention and achievements from the organization but, human resource acquisition and development are the two factors with significant correlation to high productivity as this helps firms monitor the major factors of HRM and appropriately adjust their efforts to activate HRM subjects for improving industrial human productivity of Honda. Strong forces are shaping the environment in which Honda operates and old concepts of management have to be re-examined against the challenge of the world the organization live in today and the world Honda believe they will live in tomorrow. While there will always be many new issues in the external business environment which will affect the organization from time to time, and which will impact both the corporate strategy and HRM, Honda can also see some long-running trends which have been with us for some years, and which will continue into the future. Perhaps of more significance than the individual forces described here is the cumulative result: organizations face a period of almost continuous change. There is no escape from this, so the only solution is to learn to live with it, and this makes the people aspects of management even more significant than they have been in the past. Competition has increased, and for most industries it is no longer possible to define competition within the boundaries of a particular country.       There are few places where an organization can shelter from competitors, and many industries have been shaken up because their competitors have taken a global view of their markets. The demise of the motor cycle industry was in a large part due to the inability of the firms to imagine that anyone could gain great production advantages by thinking of manufacture for a global market, instead of the traditional approach of producing for the local market and the exporting of any surplus where there was a protective customs tariff. More organizations are compelled to think of Honda’s business in global terms and most others are subject to ever increasing intensities of competition. Aside, technology advances bring opportunities as well as threats. One example close to the hearts of HRM managers is the new opportunities offered by advances in computer technology, making e-learning a real option, and providing opportunities for other forms of e-HRM.   Common actions taken by Honda have included:   Ø      seeking a reduction of costs, with more attention being given to competitive positioning Ø      attention to time as a strategic issue, and attempts to reduce cycle times throughout the organization Ø      giving more attention to customer relationships Ø      new forms of relationship with suppliers, for quality, costs and strategic reasons Ø      attempts to change the culture of organizations to enable them to react faster and more effectively to market requirements       Honda business ways is now looking at human resources as a unique asset that can provide sustained competitive advantage. The changes in the business environment with increasing globalization, changing demographics of the workforce, increased focus on profitability through growth, technological changes, intellectual capital and the never-ending changes that organizations are undergoing have led to increased importance of managing human resources Thus, there were noticeable financial returns for the organizations whose human resource management (HRM) systems have achieved operational excellence and are aligned with business strategic goals to have better perceptual performance. Honda’s achievement levels and importance levels of HRM subjects contained in each factor are noted. The correlation between the achievement of each factor is determined. These critical HRM factors are then used to determine the HRM patterns of the sample firms vs. their associated productivity indices. HR managers usually endeavor to find efficient methods to perform their HR activities in supporting the organization’s HRM strategic initiatives as effective management of critical HR factors is the key for business sustaining competitiveness. The management ways and style of Honda is evident  that will likely continue to increase if the economic downturn continues in Honda’s major markets worldwide, leading to further increase pressure within Honda’s competitiveness, which will over time affect its results. The global culture 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. Furthermore, Honda will continue striving to earn even more trust and understanding from society through companywide activities. Along with efforts to develop effective safety and environmental technologies, Honda will have to enhance the creativity in its advanced technology and products and will have create and swiftly introduce new value-added products that meet specific needs in various markets around the world and must continue their efforts in the research of future technologies like the advancement of advanced humanoid robots and compact business jets and their engines. Importantly, to identify the changing nature of the employment relationship was addressed to differing degrees and with differing support provided for the points and have explained the changing context of employment and employee relations that requires a new framework for analyzing the employment relationship compared to old models of industrial relations. The increasing requirement for flexibility and fragmentation of the workforce. The diffusion of non-standard employment contracts, the rise of idiosyncratic agreements.                             B.2 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. Honda: a name that conjures images of high quality as the benchmark incorporates as the truth that Honda is really best-selling car in America being the highest resale value in its class as made with regularity concerning the Honda Accord – a vehicle that is always on the short list of the most popular cars in this country. ( 2001) Honda, as of now sitting comfortably at the top of the U.S. passenger car market, was not always in this successful position. As of the present, Honda is a model of such car companies such as General Motors as the car company try to emulate in order to increase their own sales.  The themes have contributed to Honda’s success in the United States: the company has seized on opportunities in the U.S. market and it has also tailored its practices to fit American culture as Honda is a benchmark by which other automakers are now measured to run its American operations.         Honda is a global company with manufacturing operations and sales networks as Honda 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. Honda’s business processes were not limited to its advances in the motorcycle market. Honda built its first automobiles and looked to enter the U.S. automobile market and faced several obstacles to its entrance: a strong reputation as a motorcycle manufacturer would not help Honda’s venture (). Instead, the company had to start its U.S. auto marketing strategy from scratch and aware of the fact that it would not be able to rely on its motorcycle reputation to sell its cars in the U.S., Honda required that its cars and motorcycles be sold separately like cars and motorcycles could not be sold at the same dealership as Honda carry enough weight as a legitimate carmaker to insist that dealers carry its cars exclusively (). Looking to build on its success with the Accord and Civic in America, Honda embarked on a bold and unprecedented plan to build cars in the United States as no other Japanese automaker had ever done ( and , ) and a small company like Honda seemed ill-equipped to battle the car giants in their home territory (). The motivation behind the decision was Honda’s desire to expand, compounded with Toyota’s and Nissan’s dominance of the Japanese market ( and , ).             Honda was able to produce high-quality automobiles successfully by adapting to the needs of its workers and not by forcing Japanese managerial policies to be practiced. Honda’s success in manufacturing in the United States can be attributed to its management philosophy, unique to both the Japanese and American auto industries (, ). The company operates with an openness that is rare in the world of business, where consensus and conformity are the rule. To boost communication, Honda has done away with executive lunch rooms and private offices, egalitarianism prevails: all Honda employees, right up to wear white coveralls with their names stitched in red lettering above the right breast pocket. (, ) In making its associates true team members, Honda increases productivity by seeking input from all levels of the company and not just management. Honda adapted to the business environment in which it operated, allowing it to be successful as result of three key plans of action. First, Honda exploited a market opportunity. Instead of trying to battle Toyota and Nissan in a saturated Japanese auto market, Honda started production in the United States, knowing that it could produce higher-quality products than its other counterparts. Second, Honda used unique marketing strategies to position itself as a motorcycle manufacturer and later a car company that would be appealing to a wide variety of Americans. Furthermore, Honda introduced a managerial strategy for its United States production facilities that was unique not only to Honda’s Japanese plants but also to American auto plants in general. In respect to business execution, Honda has established a system for operating its organizational units that reflects its fundamental corporate philosophy. 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. Honda promotes an environment where customer’s opportunities are analyzed and maximized by implementing business practices that increase loyalty, satisfaction and retain customer’s business over their lifetimes. Customers drive their business strategies to achieving success and excellence in everything Honda do and will continue to be its key focus for developing products and services that accelerate their capability to prosper in the car business. Identifying and meeting customer needs is key to Honda’s continued business success listening to customers is what determines its business strategies and drives Honda’s culture in creating and managing the customer relationship that can be a company-wide task. The company as a whole defines and clearly communicates to every employee what it wants to be the basis of the customer relationship like acquiring and updating knowledge about customer needs, motivation and behavior drive Honda’s approach toward customer excellence. Honda adheres in fostering an environment where highly motivated, action-oriented employees work together to continuously create and deliver high-quality, innovative products and services. Honda believes that a high quality players will help us maintain our leadership position and ensure that we remain one of the best places to work and innovative in the context of an ever-changing market environment. The management relies on teamwork by providing a collaborative environment that thrives on working across geographical and organizational boundaries, sharing information and finding new and better ways to support each other and its valued customers in continuing business success. Good communications both internally and with our customers and partners directly affects customer success. No matter how good Honda is – the one thing that can bring the company down is getting too far away from loyal customers as it gives emphasis on the success factors in fully realizing the company’s potential to influence the entire industry.     Therefore, customer satisfaction is essential to basically improve the effectiveness of its processes and to establish quality objectives and created customer satisfaction metrics to monitor customer success and level up employee compensation to achieving those metrics and used to determine the goals and strategies that make Honda successful in reaching such goals and enhance better services and support respectively. Honda Motors will then achieve a competitive advantage by managing the value chain better than other institutions in their industry. Managing the value chain implies increasing the quality of products and services, while reducing the institution’s costs and increasing revenue, thus increasing competitive advantage. Examining its value chain and comparing it to those of key rivals indicates areas of cost advantage or disadvantage within the decision to undertake certain activities that is directly linked to achieving competitive advantage such as wishing to outperform its competitors by differentiating itself through higher quality will have to perform its value chain activities better than the competition. By contrast, a strategy based on seeking cost leadership will require a reduction in the costs of Honda associated with the value chain activities or a reduction in the total amount of resources used in order to follow a focus strategy by targeting a specific market segment or a specific offering. Costs for an activity can be reduced only if the reduction does not adversely affect strategic advantage ( & , 2000).                     C. References                                   Credit:ivythesis.typepad.com

HUMAN RESOURCES MANAGEMENT

TABLE OF CONTENTS Brief Overview of Honda Motors ________________________ page 2 The Question answered (1b) _____...