Honda and Honda Hybrid - Case Study Example

Honda and Honda Hybrid Table of Contents 3. Corporation & SBU background 2 History 2 Honda Organizational Structure 2 Performance 4 3.2 SBU 5 Strategic marketing plan 5 4.1 SBU Corporate Appraisal 6 Senior Management 6 Corporate Culture 6 How Corporate Stakeholders affect Honda’s operations 8 How Corporate Resources affect Honda’s operations 9 Past Performance review 10 5. Conclusion 11 6. Bibliography 12 3. Corporation & SBU background History Honda Motor Company is a Japanese Multinational which majors in cars, Motorcycles, sport utility vehicle (SUVs), Scooters, Electrical generators, All-terrain vehicle (ATVs), Lawn and garden equipments, Tillers, Kei car, Kei truck, Water pumps, Robotics, Jet aircrafts and Jet engines among others. The Honda motor company has been rated as the major motorcycle manufacturer in then world since 1959, in addition to being the leading internal combustion engine manufacturer in terms of volume, “manufacturing above 14 million internal combustion engines every year”.1 In 2001, Honda was named the second-biggest Japanese automobile producer. “In 2011 Honda was the eighth leading car producer globally behind General Motors, Toyota, Volkswagen Group, Ford, Nissan, Hyundai Motor Group, and PSA”.2 Honda Organizational Structure The Honda Company uses the matrix organizational structure. This kind of structure is dynamic, since it enables different organizations facets to be combined together. For instance: the arrangement of environmental factors. From the chart, “Honda Company favors geographically delineated divisions with the operating units being locally marketed, because of dedicated local understanding of customers”.3 All together, it could still want overall product division in charge of the global coordination of product manufacturing and development while taking advantage of specialization and economies of scale. For instance, Asia region experiences numerous air pollution challenges. Honda’s organization tends to be centralized, with numerous levels of management that manage the organization by upholding a high degree of authority; that is the power of decision making relating to business undertakings. Honda emphasizes on top-down management, in which top managers communicate information to the middle managers who pass it to the first-level managers.4 It is the first level managers who instruct staff on what is expected of them. Honda is a formal organization too with rules and policies written out and implemented together with regulations. These rules and policies are implemented within the organization and are to be adhered to by every worker regardless of their status within the organization. This structural transformation is a component of Honda’s continuous attempt to build up the core attributes that makes Honda exceptional, and its aim is to keep on creating and improve technologies and brands that are distinctive to Honda, that in turn will allow Honda to keep on being an organization that society wishes to exist.5 Performance Performance is a necessity in a fast changing market. In the current demanding automobile market, with so several different car manufacturers, which one would you settle for? With increasingly demand for prevailing fuel-effective cars that do not cost much money just one name show up. This corporation is a Honda motor company. Hondas attempt to realize a competitive advantage by means of strategy implementation has helped enhance the company performance. Honda has expended all levels of the organization in the recent years. Sales have increased in automobiles, motorcycles and power products. Honda has challenged itself to expand its organization towards the future with its manufacture of robots and innovative devices and they satisfied that promise. It not only demonstrates exceptional performance ability, but it also costs much less compared to its competitors. In addition, “all Honda vehicles are Low Emissions Vehicles or Ultra Low Emissions Vehicles”.6 3.2 SBU Strategic marketing plan There are three factors of the current corporate strategy that are designed concerning their overall effects on the marketing plan of Honda Company. They include the mission statement of a statement, the company goals and Core Competency and Sustainable Competitive Advantage.7 In the company, Honda seeks to maintain a global opinion; while dedicated to supply its customer with high quality products at a reasonable price which satisfy their needs. Therefore, the organization aims at realizing the long-term but stable expansion in future, and this is believed to be in harmony with several factors: the considerable environment, local communities served, global economy and the stakeholder’s environment.8 The company has dedicated itself to providing of hybrid choices for each model that is offered in the marketplace. This is intended at making the organization “to make an overall sale of 1 million hybrid automobiles in a year”.9 Apart from core competencies Honda has lined up a number of hybrid cars for its target markets which is mainly in Europe. Its four largest markets in European market include UK, Germany, France and Italy. These hybrid cars include the Honda Accord Hybrid, 1.3L, CR-Z Hybrid 1.5L and Insight Hybrid 1.3L. Since customer satisfaction and value is what is intended, the company believes that Honda Hybrid cars designed with a lot of space and versatility will satisfy customer needs. Pricing strategy Honda used is geographical pricing since this a price for clients situated in various parts of the world. For instance in “Malaysia its prices were RM94, RM99, 800.00 for Insight Hybrid, 800.00 for Honda Accord Hybrid and RM115, 013.00 for CR-Z Hybrid”.10 The company also uses corporate social responsibility as part of its marketing strategy to increase its customer base and compete to dominate market share. For instance, in 1997, the organization started the Green Factory Project to react to the New Recycle Project and recycling-based society programs to enhance recycling programs for the circulatory application of resources. 4.1 SBU Corporate Appraisal Senior Management A powerful force behind the growth at Honda is derived from its leadership who were its founders of, Mr. Soichiro Honda and Mr. Takeo Fujisawa. Senior management is the strategic planners who are all professional within the company are charged with responsibility of strategic planning for things that influence the organizational performance. Honda has a top-down form of management with top managers, middle level managers and first level managers who steers the organization to create a competitive advantage over its competitors. These managers also act advisors and recommends improvements and business solutions for the current business, procedures and policies towards improving the profitability and growth for the company. Corporate Culture Most valuable virtues that their founders gave to the organization were the philosophy which is then translated into corporate culture. It is this philosophy that operates as the foundation of corporate culture for future business endeavors. Honda is involved in business undertakings across the globe. It is essential for “Honda associates globally to appreciate, share, respect and embrace the unifying philosophy”.11 In the contemporary corporate culture the competition level is increasing on a daily basis. The key objective of every organization is to boost its performance and to reach sustainable competitive advantage edge with regard to its competitors. Change is a continuous in current corporate culture. In such changing situation having a one strategy is not adequate for organizations prosperity Honda adopt the various corporate cultures in order to maintain a good relationship with its clients. These cultures include Respect for the people and three joys. Respect for the people emanates from a primary belief in the individuality of the Human. Honda consists of people working with a common ground. This contribution by every associate in the organization is what develops into success. Each associate is significant; therefore each associate is respected; each associate has been offered an opportunity to achieve their full potential; each associate has been given a chance to contribute to an organization’s success; each associate has been in the past honored for their contributions and efforts. Honda’s beliefs in Respect for the people include initiative, equality and trust12. In its initiative, Honda believes that its associate should not be restricted by conceived concepts, but ought to think innovatively and act according to their individual initiative and judgment, whilst appreciating that they ought to be responsible for the outcome of their actions. Honda is committed to the principle of developing equal opportunities for every individual regardless of sex, religion, race, and educational background, national origin and economic and social status. The Honda Company deals with both its employee and clients on a mutual trust. They create trust by recognizing one another as individuals, assisting where these individuals are cannot own their own. They also share knowledge and making an honest effort to meet their responsibility to their clients. How Corporate Stakeholders affect Honda’s operations Decisions are one of the corporate stakeholder’s issues that affect the operations and performance of the Honda. Regulation concerning vehicles’ level of emission of fuel, noise and safety, fuel economy are factors that affect Honda’s operations.13 These regulations normally changes are frequently more restrictive, especially in the recent years, “owing to growing concern in regards to global warming.14 The costs to adhere to these regulations have had significant disadvantages to Honda’s operations. Honda reliance on external suppliers is another issue that affects the operations of the company”.15 Honda buys raw materials and spare parts from many external suppliers and depends heavily on these suppliers in order to manufacture its products. Honda’s capability to continue obtaining these supplies in a cost-effective and efficient way depends on several factors of which are not in Honda’s control; they include the capability of suppliers to maintain providing the raw material and the ability to compete with different users in acquiring the suppliers. Therefore, loss of major suppliers in this process could affect the operations and increase the cost of production. Even though, Honda keeps internal controls by means of established processes to “confidential information as well as its customer information, employees can adversely disclose such information to its competitors”.16 In this case, Honda may be affected and could face damage claims from customers or the affected parties. This kind of act could results to “Honda’s loss of competitiveness”17. How Corporate Resources affect Honda’s operations At Honda, the funds for financing projects in production and sales are mainly provided by banks, money generated from operations and the commercial issuance. When the company still owes banks and its debtors they may not be loaned until they refund the previous loan; this may lead to inadequacy of fund thus stalling company operations.18 The company relies on the raw material and parts from external suppliers in order to operate. Since external suppliers are not reliable because they may opt to work with competitors, this may affect the operations of the company. When raw material resources are not supplied on time or at all, it may be difficult for the company to continue operating. With the ever changing organizational culture, technology and the nature of work, it may be costly for Honda to maintain the status quo; therefore, Honda is normally forced to always carry out training. Training is costly and time consuming therefore affecting operation. Past Performance review Honda is the largest automobile producers which are recognized for its latest inventive concept adopted in quality engineering in automobile platform. Honda succeeded in getting pictures of leader across the world as the best automobile makers19. This performance by combining various factors such as the use of different implementation approaches, innovations and engineering. ‘Following this success the CEO, Soichiro enhanced the business activities by marketing and exporting the cars’20. In 1959 Honda became the popular largest auto manufacturer all over the world. In late 1963 Honda entered into four wheel automobile market making cars S500 sports car and model T360 mini. Honda became the largest car industry, surpassing the regional automobile giants such as GM, Ford, and Chrysler among others. Being the first among the Japanese automobile companies to grow its operations internationally, Honda experienced several challenges in making its brand good enough for European and American clients who used to big and expensive cars. Honda represented low cost, higher quality, less fuel consuming automobiles, and currently the majority of its sales volume is generated outside the local region. In 1999, Honda released the first viable hybrid electric car targeting the U.S. market called the Honda Insight, just a month ahead of the launch of the Toyota Prius. The first-generation Insight was first sold at US$20,000. Total worldwide sales for this amounted to just around 18,000 cars.21 Honda released the second generation Honda Insight in its native market in Japan 2009, and launched it in different markets since 2009. Ever since 2002, the company has been marketing and selling Honda Civic Hybrid in U.S. this was followed by the release of Honda Accord Hybrid and Honda CR-Z in 2010. Honda manager disclosed in an interview in 2011 that Honda manufactures roughly 200,000 hybrids per year in his native home, Japan.22 In spite of some failures experienced in its operation and marketing, the overall performance is satisfactory, setting pace for other company on the way to perform during downslide periods. 5. Conclusion Hybrid automobiles are seen as the automobiles in the future. As a result of the increasing cost of fuel, hybrid cars are certainly appropriate in current fuel economy. When one owns hybrid cars he or she will be able to reduce consumption of fuel by half.23 This means that one is able to effectively go past 60 miles precisely using 1 gallon of gasoline. In the competitive setting to make a brand more successful there will be other factors excluding price and product functions while making a buying decision. Increasing brand awareness whilst maintaining brilliant customer relationships will help Honda achieve company objectives in future. 6. Bibliography Armstrong, G. & Kotler, P. Marketing: an introduction (International edition). New Jersey: Prentice Hall, 2002. Chithra, Gopal. “Global Automobile Industry: Changing with Times.” 4-u-auto, Nov 23, 2006. Accessed May 20, 2013. http://www.4uauto.com/uploadfile/2011/1123/20111123123442785.pdf Figge, F. and Schaltegger, S. what is Stakeholder Value? Developing a Catchphrase into a Benchmarking Tool. Lüneburg/Geneva/Paris: University of Lüneburg/Pictet/ in association with United Nations Environment Program (UNEP), 2000. Falloon, I. The Honda Story, Production and Racing Motorcycles from 1946 to the Present Day. New York: Haynes Publishing Group, 2005. Grant, Robert and Neupert, Kent. Cases in contemporary strategy analysis (3rd ed.). London, Wiley-Blackwell, 2003. Honda. Honda profile. Last modified May 2013, http://world.honda.com/profile/philosophy/ Jerry, Garrett. The Once and Future Mileage King. The New York Times, 2006. Miller, E. 2008, “First motorcycle airbag earns takata and Honda 2008 automotive news pace innovation partnership award." Last modified 18 April 2008, http://ohio.honda.com/pressroom/View_Release.cfm?articleid=174 Post, James. Redefining the Corporation: Stakeholder Management and Organizational Wealth. Stanford, Stanford University Press, 2002. Sperling, Daniel. and Deborah, Gordon. Two billion cars: driving toward sustainability. New York: Oxford University Press, 2009. Read More