Honda Case Study Questions
The business level strategy is to keep an effective pacing in automobile launching and promotions catering on how Honda will keep its financial targets due to business strategies like the realization and presence of Honda’s global business related expansion emphasizing on putting more of Honda’s corporate strategies around the globe. These relate to dichotomies in CSR resulting in desirable integration of Honda accounting to global standards because of careful handling of Honda putting actual application and execution base. Reconciling dichotomies at Honda happened due to a trade off on individual and group dichotomy from wherein corporate management need to rethink over issues and consideration that matters in a sacrifice. The impact of too much debt and potential for product synergies at Honda can focus on its strategic venture as one strategic investment arm of Honda’s research and development area wherein Honda make investments in technology business companies which can create synergy with Honda's enduring corporate level strategy. Western management is more of strictly based approach which tends to be not for effective manner and outcomes. While, Japanese management is more responsible oriented in giving the best leadership wherein Honda follow, factor for Honda in leading the automobile industry.
Honda in its essence of business can be subject to effective business even if underlying Honda business challenge issues the latter deal with. Thus, it was not easy for Honda management in terms of allowing decisions in strategic manner and stature from within assimilating values of Honda business to have ample effectiveness in operations for expatriates manifestation of functions from with Honda will determine aspects of effective performance, pushing promptly useful and known aspects of Honda’s business nature, giving reasons for effectiveness and ineffectiveness of Honda workers. The effective management of CSR need to be realistic and reliable to achieve into as how Honda management execute people management and approaches does impact performances as strategically noted from within aspects of the business from the importance of Honda in supporting and helping strategies produce effective inputs and outputs into actual work setting, allowing Honda business to create better global strategies and formation, reflecting corporate social responsibility upon the exercise effective means at Honda.
Critical Analysis and Evaluation
Using the information given in the Honda case study and your own understanding of the different levels of 'strategy':
a) Compare and contrast the meaning of 'business level strategy' and 'corporate level strategy' in a global context.
Business level strategy
Business level strategy at Honda is referring to manufactured based operation that can put access to gaining sales and profits in product diversification and marketing activities and planning. The business level strategy is to keep an effective pacing in automobile launching and promotions catering on how Honda will keep its financial targets due to business strategies like the realization and presence of Honda’s global business related expansion emphasizing on putting more of Honda authorized customer services and branches around the globe. Furthermore, Honda became one of business leader in car manufacturing and a well known automaker of latest car models. Honda develops, manufacture and market wide variety of products ranging from small car engines in order to earn outstanding reputation from its loyal customers. Honda, being popular automobile business company that have devoted certain substantial process oriented initiative to its manufacturing and logistics strategy and even though there were a few of its rivals have been able to capture the strategic potential of such broader order to the operation process that can be considerable, as car industries involved in Honda’s business milieu are highly dynamic with tight profit margins and demanding customers with a lot of needs with such rapid changing requirements.
Corporate level strategy
Thus, Honda’s corporate level strategy supports the overall operation strategy, imperative part of corporate planning process that coordinate Honda’s car operational goals with those of competitor car makers (Chase et al, 2001), enhancing better relationship in support to Honda corporate strategy and its operations management. Honda grows many times industry norms and is twice as profitable with the main competitors. There are competitive advantage to be gained from Honda focus on time such as increased responsiveness to customer needs, innovations, improved return on novel products, working capitals, development and quality costs, increased prices and productivity, Honda’s business and corporate strategies can be viewed as the organized development of resources in achieving detailed objectives alongside competition from rival businesses such as Toyota and many others. Honda business will be efficient if the management controls its interaction and wealth with desirable and amiable operations and strategic environment providing better stance at its business (Mehra et al, 2001). Honda’s unique combination of resources and capabilities for example, the internal factors are to imply such critical link to its proper management principles. Honda capabilities and resources are valuable as well as rare, costly to imitate and substitute, the potential to competitive advantage realizes true value of Honda marketing base and strategic implications. The uniqueness and capabilities of the company’s strategic workforce will then depend on how easily Honda management is to obtain good business markets. Thus, knowing on strategic assumptions in operation will strengthen Honda workforce in terms of business competences in the areas of manufacturing and managing quality forces as being realistic in Honda strategies towards manufacturing, strategy formulation and customer selection base.
b) Critically evaluate the process of 'reconciling dichotomies' at Honda Motors' with reference to the 'product-related core competencies versus process-related core capabilities' dichotomy.
The 'product-related core competencies
Indeed, because of product process on reconciling dichotomies at Honda, innovation has been a major driver for Honda product competencies development and the developing portfolio of automobile production formation as designed to provide core competence for instance, in the areas of customer satisfaction experience. The management of technological innovation is involved in process competence that can help bring out quality automobile products and proper corporate decision making. Honda might exploit dichotomies on its product competencies alongside its process capabilities wherein Honda is to achieve sustained competitive advantage, the ability to create manufacturing effectiveness depending on how Honda can keep its core strategies balanced in reconciliation of Honda dichotomies put from within business innovation and success (De Wit and Meyer, 2004). Honda adopting on product strategies more than on its diversified process, sustain Honda’s strategic market position, adhering to fast changing corporate circumstances. Agreeing that “Honda's strategy has been used to illustrate and support apparently contradictory positions on a series of conceptual dichotomies, pointing on analytical planning versus learning, market positioning versus resource-based and core competencies versus core capabilities. Thus, revealing of empirical inaccuracies and then focus on Honda's strategic successes to the neglect of several failures. Some explanation and strategy implications are couched in terms of reductionist one-sided theory, tendency which is deepened when strategy thinkers debate ‘the meaning of Honda’ (Burnes, 2000). Ideally, there has been imperative strategic capability of which there appears an act of precise reconciliation of dichotomous management concepts at Honda management. There places an enormous opportunity for Honda to develop an appropriate and productive paradigm for its strategic standing in keeping standards on product competencies than process capabilities because in achieving ample stature of product core competence, process capability is of strong evidence mostly in the areas of automobile manufacturing and production base linking deeply to Honda’s strategic goals.
The process-related core capabilities' dichotomy
There has been process related dichotomies in buyer seller relations resulting in desirable integration of Honda strategies that accounts for market relationships because of ideal work environment and a careful handling of business ways put into actual application and execution duties. There has been significance, considering Western managers significance because of the novel method and ideas were developed in an updated and constant manner. Reconciling dichotomies at Honda happened due to a trade off on individual and group dichotomy from wherein corporate management need to rethink over issues and consideration that matters in a sacrifice. Honda product based competencies can be affected by Honda’s change management handling upon keeping the elements well projected and accepted and in particular bring forth Honda’s very peculiar way of thinking. Thus, looking on the strategic approach to manufacturing, positioning and many others that thereby provides an innovative impetus to Honda’s strategic management and process functioning. The process related dichotomies is reflected in putting a strategic drive on each of the areas at Honda like, in terms of leadership management, it has been a process for CSR to select and choose the best employees to lead the manufacturing and production process which holds manpower in a positive inclination that set forth innovation and culture adaptability in the side of Honda’s latest technology facilities and materials.
Using Information from relevant literature on 'network-level strategy', your own understanding of 'Merger and Acquisitions', and appropriate examples from Honda Motors; critically evaluate the impact of the following factors on Mergers and Acquisitions (M&A) in the global automobile industry:
a) too much Debt and Risk of Bankruptcy
The impact of too much debt at Honda can be more on its automobile leadership status wherein it may directly or indirectly have a negative connotation on Honda’s corporate imaging and automobile branding power and success. This may hamper sales and promotions at Honda and may affect preferences of potential car buyers and enthusiasts believing in its marketing tactics and the quality of its automobile products and services. Thus, lowering industry volumes and also massive decline in Honda sales can possibly put a few of automotive suppliers at risk of bankruptcy not just Honda management. For instance, bankruptcy concerns for the Detroit Three domestic automakers are overblown, despite recent credit downgrades by the major debt rating agencies. Honda maybe exposed to increase in raw material costs without ability to pass on to its loyal suppliers and customers in the long run. The decline in Honda industry has such volume and shift more fuel efficient vehicles in creating massive ripple effect in automobile supply chain and will only make Honda supplier cash flow problems difficult to manage. The bankruptcy process carries too many risks, so they're going to have to look at all financing options available, including government loans, joint ventures, foreign investment and other financing in capital markets. The target will be to have enough cash to get Honda power beyond 2010, such as when its product lines will be more accustomed to customer perception and demands. Honda is likely being a candidate for business bankruptcy, but for different reasons: the value of its assets like assembly plants, its parts and service business and its retail network. Thus, can be due to the fact that debt financing would increase bankruptcy risk, thereby increasing the risk of management loss of power. In order to reduce bankruptcy risk, Honda can reduce business expense and or invest more carefully overseas however, increased in debt at Honda may lead to less investment activities. “Honda shareholders' goals are similar, and the firm will have a strong incentive to invest in high risk projects. This is because if the projects are successful, shareholders would reap most of the profits. If the projects are unsuccessful, then the losses are mostly born by the creditors. Since the tolerance for high risk will reduce the risk threshold for investment projects and expand the investment opportunity set, this asset substitution phenomenon is a symbol of excessive investment incentive” (Mauer and Sarkar, 2005 p. 322).
b) Potential for Product Synergies
The impact of potential for product synergies at Honda can focus on its strategic venture as one strategic investment arm of Honda’s research and development area wherein Honda make investments in technology business companies which can create synergy with Honda's enduring corporate level strategy. The advantage on Honda’s product innovation by certain activities with technology of interest to Honda and share with outside entrepreneurs Honda’s unique corporate spirit fostered from Honda’s dream power. Product synergy allow ample conceptualized application of Honda’s corporate strategy has been regarded with compelling forces are currently at work, leading Honda management to carefully examine synergy based attitudes (Robbins and Barnwell, 2002). Honda’s synergy potential can be realized through interrelationships between business units with high product or market affinities. Thus, enabling Honda executives of diversified products and process to identify automobile related empathy and determine critical interrelationships and be able to evaluate as well as realize Honda’s enduring synergy potential. The synergy potential links to human resources of the company wherein there has been synergy into the overall human structure and team building is a key factor to get the best of Honda’s synergy intact and working with values and principles in the automobile industry.
c) Access to New Technologies and Emerging Markets
Honda based technology breakthrough often come from its innovation as there look for advanced material technologies at Honda and access to technologies and markets would be able to distinguish, reflect and act to augment safety, expediency and comfort that Honda automobile brings. The interests in technologies that would make Honda communication more reliable and efficient as always and in any stage that have innovative technologies as well as great potential to succeed by collaborating with Honda and its technology is macro based environment variable which has influenced the development of Honda Motor products. The innovative technologies benefit Honda customers and the company, wherein customer satisfaction rises, Honda services can become personalized and convenient (Datamonitor Report, 2003). Honda might be utilizing the following technologies:
- Wireless devices
- Intelligent scale
- Electronic packaging and manufacturing labeling
- Radio Frequency Identification
Thus, along with certain adaptation of electronic point scanners that can greatly improved the efficiency of Honda distribution and the company activities, with needs being communicated almost in real time to Honda suppliers (Finch, 2004). New technologies and emerging markets would mean expansion of Honda and a possibility to embrace merger and acquisition if needed to stay on top with the presence of competition in the car industry for instance, Toyota and General Motors are not left behind in terms of recent applications on technology like launching of a more customized car systems and models.
a) Using information from relevant literature on 'Corporate Social Responsibility (CSR)', and appropriate examples from global automotive makers and suppliers; explain the impact of CSR on organisational performance in both financial and non-financial areas.
Corporate Social Responsibility assumes empowerment in every organization resources and diverse roles to make known of the business practices and principles. Indeed, foundation of organization involved in such business functions and its CSR success domains and that success in business not just happen to be in operations influence over various products and services but, a business can’t fully exercise the overall stature of the business without the presence of CSR or what is known as the ‘Corporate Social Responsibility’, as defined by Waldman and Siegel. Waldman (2006. p. 218) indicated that, “firms must have visionary leaders who are able to "connect the dots" and understand how various stakeholders, and the satisfaction of their needs, represent interrelated challenges. For example, the strategic management of human resources is related to customer satisfaction, and it is essential for firms to attempt to understand and deal with this connection”. The importance of CSR will imply that corporate leaders can act more socially responsible without using large expenditures of corporate funds. The organizations adapting to the process of CSR are ideally committed to the production of safe, reliable and innovative services in from within changes that are strategically involved into the organization’s application of the CSR.
The social responsibility amiably determines strategy in management upon mapping business impact and leadership effects within the realm of certain economic as well as environment emergence. The presence of success into the CSR ways have to be well motivated from within some motivation factors such as for example, good leadership imposed by the executives and the organization receives motivation due to leadership being known, from within there outcomes into socially responsible decision patterns (Master and Heresniak, 2002). Thus, having effective corporate leaders for instance, managers as leaders have moral obligation to pursue profit and engage in social responsibility only when there is precise investment, leaders are driven by ample sales and profits and from having good CSR ways upon maximizing change and behavior modification. Organizational leaders are amiably engaged into the CSR from within strategic choice, also there astounds some ability to charge a premium price for a particular business product as well as selecting qualified workers does assume potentials for CSR, to be part of organization domains.
The feasible consideration of
effective CSR management of performance, there indicate Honda's capability for
collating and choosing high quality expatriates to form standards of manpower
factor. In addition, opportunities for career management as well as performance
training, do satisfy Honda expatriates, there links to effective performance
aspects, the required human resource practices is vital for effectiveness of
expatriates into the work setting, related to developing expatriates potential
knowledge, the capability of promoting product and service productivity at
Honda. When effective CSR management of performance is higher (Nankervis,
Compton and Baird, 2002), Honda’s competitive is of better formation into human
resource functioning. Also, compensation aspect integrates to precise effective
notion of factor loading to work safety and benefit system helps the expatriates
to work on diverse environment from within flexible working conditions and
reward-related indices, the human resource compensation factor adhering to
Honda’s encouraging options to maintain ideal relationships from within there is
pressing reality that CSR work in great value due to contentment of
compensation, as well as incentives and reward schemes into Honda’s ability to
support expatriate labour conditions and bonus giving to the employees.
Moreover, CSR maintenance on management conforms to expatriates working with
synergy and teamwork idealism, from Honda practices vary into performance
upheaval keeping Honda business on the edge into global markets and CSR
influence. The aspect of CSR effectiveness at Honda business industry were
considered to have integrative function supporting expatriates to continually
improve their craft and be of ideal performance ratio determining definite goals
and functions of the business milieu. Honda’s ideal CSR process and financial
system will help Honda in bringing effective management performance of CSR,
providing ample attention on corporate and business strategy and social
responsibility of having high end financial and non financial tools and
materials for keeping Honda’s leadership skills in best form, continuing the
known leadership of Honda in the global market. Honda’s operation specifications
and success points does increase the influencing work synergy toward the
performance category, CSR at Honda is to shape well into their products and
services environment. Moreover, creativity and power of Honda’s social
responsibly will bring in product performance effectiveness linked in human
resource approach respectively.
b) Compare and contrast Japanese and Western strategies leadership models by reference to Table 5 in the Honda case study. Explain which of the two models you prefer, and why?
Japanese strategies is more of a positive outcome oriented meaning, parties involved are deeply rooted with human capital system, giving value and honour to employee motivation and performance. Thus, being fully concerned with the business as a whole, keeping Honda community aware of social responsibilities that are present anytime, on the other hand Western strategies are more on technology rooted, meaning, they lack humanly understanding nature of workers and does not have a flexible attitude in providing a state of leadership conformity. Western is more of outcome application in terms of human resource, laws are followed on what the contract has been told. For instance, if an employee contract expires despite of versatile performance at work he is automatically fired up for no human consideration. The style of management is select and hire and repeats and so on and so forth. There is grand division between Western firms and management methods and that theorists and practitioners held to ideas that Japanese firms are fundamentally different from Western firms and Honda testifies to that idea to be of true sense. Difference in organization structure, cultures, labour relationships and many others and there was creation of a Japanese model in classic dual fashion to the Western model. This is due to the fact that localization strategies works in automobile companies through an intact process of culture and diverse economies speaks in production and process for Honda competencies and strategies known at. The manufacturing of Honda runs throughout the world. I would choose the Japanese management model since, issues are tacked for instance Honda in Japan did deliberately stressed out decentralized management structure and praise achievements of individuals which may be not present in Western models that rewards the process of promotion and keeps in social responsibilities at close to the management base. Also because of flexibility rather than Western standardized principle and values manpower effectiveness and not hire then fire policy. Western management is more of strictly based approach which tends to be not for effective manner and outcomes. While, Japanese management is more responsible oriented in giving the best leadership as possible wherein Honda follows and a factor for the company to stay leading in the automobile industry even in these recent time.
Therefore, Honda needs to become 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. There is a need to think first if Western leadership is more ideal for Honda rather than keep its Japanese leadership nature which is more human resource friendly and flexible in all its aspect. Furthermore, it is imperative for Honda to keep a right pacing and execution measures when it comes to reconciling dichotomies, there has to be balanced in the treatment and attention given to product related competencies put in car packages and many others as well as to process related dichotomy that will allow Honda to always stay in focus despite issues on competition, mergers and acquisitions may not be of enough leadership standing and CSR lacks esteem and confidence used that will affect its Japanese management style in the long run. There is need for Honda to keep at pace with its business strategies and corporate strategies so that they can value the true meaning of leadership and success in the car business industry.
Burnes, B. (2000). Managing change: A strategic approach to organizational dynamics. (3rd ed.). Harlow: Financial Times Prentice Hall.
Chase, B.R., Aquilano, J.N., Jacobs, R.F. (2001), Operations Management for Competitive Advantage, McGraw-Hill, Boston, MA, Vol. Vol. 9
Datamonitor Report (2003) Company Profile: Toyota Analysis, October
De Wit and Meyer, R. (2004) Strategy, Process, Content, Context: An International Perspective, Third Edition, pp. 663 - 679, Thomson
Finch P. (2004) Supply chain risk management, Supply Chain Management: An International Journal, Vol. 9 Issue 2, pp.183-196
Mauer, D. C., and S. Sarkar. “Real Options, Agency Conflicts, and Optimal Capital Structure.” Journal of Banking and Finance, 29 (2005), 1405–1428
Mehra, S., Hoffman, J., Sirias, D. (2001), "TQM as a management strategy for the next millennium", International Journal of Operations & Production Management, Vol. 21 No.5, pp.855-76
Nankervis, A., Compton, R., & Baird, M. (2002) Human resource management: Strategies & policies, (4th ed.). South Melbourne: Nelson
Robbins, S.P., & Barnwell, N. (2002). Organization theory: Concepts and cases. (4th ed.). Frenchs Forest NSW: Pearson Education.
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