Honda motor company is non an mean Nipponese auto maker. Through its advanced strategic direction Honda is one of the best every bit good as taking companies in car industry, which is bring forthing good with the aid of all the latest and advanced engineerings. Apart from car, Honda is one of the best and the largest manufacturer of engine including bike. It ‘s been argue that Honda ‘s success seems to be of a series of fortunate happenstances or are those fortunate happenstances good planned in the first topographic point.
In this study, we will therefore,Examine Honda ‘s strategic place within a given concern and industry internally and externally by utilizing SWOT and PEST analysis.Critically measure the procedure of ‘reconciling dualities ‘ at Honda motors with mention to Whittington ‘s school of ideaExplain advantages of international trade and its possible impacts of limitations on planetary car industry.Measure the deductions for strategic direction of each of the Stacey ‘s four cringles.
In the context of the procedure of strategic analysis, sketch what PEST and SWOT techniques are, and explicate their practical relevancy to strategic contrivers at Honda Motors.
Plague and SWOT analysis are the most recognized utile techniques to develop their schemes and programs for organisation ‘s aims.
Basically, PEST stands for “ Political, Economic, Social and Technological analysis ” and depict a model of macro-environmental factors used in the environmental scanning constituent of strategic direction. Next technique which is SWOT analysis is scan of the internal and external environment factors. Internal to the organisation can be classified as strengths ( S ) or failing ( W ) and those external to the organisation can be classified as Opportunities ( O ) or menaces ( T ) . ( Stephen P. Robbins, Mary Coulter 2007 )Honda is one of the taking companies in car market every bit good as in bike market.
Their concern is non merely limited to domestic market but besides planetary market. Since its origin, Honda has expanded their concern country to power merchandise including engine and go one of the best and largest engine makers in the universe. Analyzing internal and external factors every bit good as macro-environmental factors will be important for Honda to achieve better and productive consequences in today ‘s complex and competitory environments. Both factors can be analyzed by PEST and SWOT analysis as below:
Restriction on the figure of autos being sold in many statesHigher revenue enhancements or duties on imported autosStricter environmental ordinance that requires cleaner emanations – It will add more advantage to Honda since Honda has advanced engineering in bring forthing cleaner emanation engine.
Exchange rate – Recently Yen become really strong against major currencies ( USD/EUR/GBP ) .
Honda ‘s autos become more expensive.Degree of employment and GDP – Unemployment rate and recognition default rate has been gone up. Peoples tend to pass lesser.Cost of fuel – Honda is bring forthing more economical and eco-friendly autos than any other auto shapers.
Attitudes to foreign merchandises and services – Some state ‘s auto industry are dominated by their ain manufactured auto. Honda needs to develop particular schemes to perforate into this sort of markets.Desire for smaller and economic autos – Honda needs to present newer theoretical accountsStrong sentiment on green issue – Honda should pass more on R & A ; D to contrive loanblend or emanation free autos.
Safety demands – Honda has to develop important safety characteristics like car brake system and so on.
Intelligent auto developments – Tonss of German autos have intelligent systems like satellite pilotage system and car pilot. Honda should catch this up in their newer versions.Environment friendly auto – Honda invented i-vtec that has fuel economic system, clean emanations.
Good repute as dependable and fuel efficient.
Advanced engineerings supported by strong R & A ; DBusiness variegation ( Motorcycle/Automobile/Power merchandises )
Higher monetary values ( for non-luxury vehicles )Limited types of theoretical accounts ( no commercial vehicles )Weak inside & A ; exterior designs
Increasing demands in intelligent and high engineering vehicles: Use Honda ‘s strong R & A ; D and advanced engineerings to bring forth such autos.New merchandise developments such as commercial vehicles, alternate power beginnings and low emanation vehicles.Penetration in emerging markets like China and India.
Economic crisis – rise in oil and natural stuffs monetary values.Rivals are catching up with better engineerings and even lower cost.All external alterations – revenue enhancements and duties, political relations, ordinances alterations on international trade policy and so on.
Critically measure the procedure of ‘reconciling dualities ‘ at Honda Motors with mention to the product-related nucleus competences versus process-related nucleus capablenesss dichotomy.
Honda had really different manner of thought and attack on its direction comparison to western directions. Honda ‘s success is resulted from its advanced and pioneering direction schemes, known as ‘reconciling dualities ‘ . For case, western direction has assumed that tradeoff between merchandise quality, cost and bringing which means that high cost more and took longer. However, Nipponese direction developed different attack to pull off these dualities by dressed ore on the method that cut down costs through doing less waste and downtime, and apologize production with minimum stocks, therefore cut downing bringing lead times excessively.
Honda was seeking to incorporate the best manner of profiting from both sides instead than tradeoff or rejects the other.Honda ‘s strategic invention procedure, accommodating dualities can be seen at Honda across a broad scope of activities as follows.
Honda ‘s Solution
Individual – GroupIndividuality and competition were non stressed. Honda push in a manner that maximize the part each person can do while minimising negative impacts of overemphasis on either single or group.
Vertical – HorizontalHonda pursues web-like organisational signifiers blending group and single procedures that cut across perpendicular and horizontal constructions, formal and informal relationships.
Product related competences – procedure related capablenesssTechnology V DesignHonda ‘s organisational attack to the merchandise development procedure based on squad work reduces development lead times and its peculiar theoretical account replacing system.Efficiency vs DignityIn assembly line, Honda seeks to unite the advantages of the Western theoretical account with the advantages of the Nipponese theoretical account.Large-lot mass production vs one-piece-flow’Small batch ‘ production system based around the cardinal figure of 60 and its factors.
Push system vs Pull systemHonda ‘s attack is the coincident operation of pull and push based production be aftering systems.
Relationship with constituents shapersVertical integrating V market relationshipsHonda make a relationship with constituent shapers based on close control and unfastened, commercial relationship, making construction which defies the polar types in traditional positions of purchaser – provider relationships.Dual/multiple V Single sourcing schemeHonda ‘s sourcing scheme is based on elements both. It induces providers to spread out their markets due to indirect competition.Core capablenesss constitute a competitory advantage for a company in a given market.
They have built up over clip and can non be easy imitated. As it shown in above tabular array, Honda ‘s process-related nucleus capablenesss in pull offing the whole value concatenation from natural stuffs to dealer webs via merchandise design and production procedure were really different from other rivals.On the other manus, Honda dressed ore on merchandise related nucleus competences in mechanical engineerings by uniting high quality autos with low cost merchandise design and production procedures. Honda direction did non concentrate on all activities of the concern but they did concentrate on competences that truly affect competitory advantage. Besides, their merchandise related nucleus competences change in response to alterations in the company ‘s environment.
For case, Honda tackled conventional duality and associated trade off which is fuel economic system versus engine power by contriving VTEC engine that gives both fuel economic system and engine power.
Explain the chief advantages of international trade and the statements for curtailing trade in the context of the planetary car industry.
International trade is merely explained as exchange of goods, services and capital between different states or parts in the universe.
With the aid of industrialisation and globalisation, international trade is turning and distributing really fast and it becomes indispensable portion for growing of state ‘s economic system peculiarly for developing states like China and India. ( University of Sunderland 2005 )International trade can be good for all states since it has a batch of advantages as below ;Enhance the domestic fightExtend gross revenues potency of the bing goodsIncrease gross revenues and net incomes by deriving a planetary market portionStabilize seasonal market fluctuationsEasy entree to goods and services that non available in their ain statesAllow a state to utilize their resources more expeditiouslyGive an chance to take part in a planetary economic systemThe benefits of international trade have been the major drivers of growing for the universe economic system peculiarly automobile industry but the limitations to international trade on the planetary car industry such as enforcing duties or presenting import quotas would do tonss of important jobs. It will restrict the handiness of autos to domestically have manufactured autos and it is possible to do a deficit in auto supply. Those states that do non fabricate a auto will hold serious jobs in equilibrating the supply and demand of autos and it will take to other jobs in the state ‘s economic system since a auto is one of the most of import agencies of transit.
Besides, it will impact economic growing for some states that have a high dependance on international market like Germany, Japan and Korea. For these states, exports in car industry history for big portion of state ‘s GDP and by holding important impacts on a state ‘s economic system, it can be linked to a planetary economic crisis and recession. It ‘s like a concatenation reaction.International trade on car industry opens up tonss of chances for economic growing and quality life for many states in the universe and it will be good for each person and state. Benefits of international trade on car industry can be reaped farther, if there is a considerable lessening in trade barriers between states. Peoples should see more about the benefits and advantages of international trade instead than merely protecting their ain manufactured merchandises.
Explain your apprehension of Whittington ‘s Evolutional ‘ and ‘Systematic ‘ Schools of Thought in the context of scheme development at Honda Motors.
Honda became one of the taking car makers in the universe after the company entered the car industry. However, some people argue that Honda ‘s success is by fortunate circumstance instead than by good planned scheme. This statement can be explained by two attacks in Whittington ‘s theory which are evolutional and systematic attack.
Whittington identifies four chief attacks of scheme preparation which are classical, evolutionary, systemic and processual. He differentiated these attacks in footings of results of scheme and procedures.In footings of results, the evolutionary attacks view the net income maximization as the result of scheme, whereas the systematic attacks allow for extra results other than net income ( Whittington 2001 ) . The evolutionary attack has as its nonsubjective endurance in the market. It takes a more fatalistic position of the universe. Companies are seen to be unable to foretell and respond to environmental alterations.
Not merely do directors neglect to put end product at the theoretically profit-maximising degree where fringy costs precisely equal fringy gross, but most directors have no thought what their fringy cost and gross curves are. With this position of the universe, it is the market that makes the picks non the company. The best result is to optimise the current tantrum between the company and the concern environment.In footings of procedure, the Systemic attacks holding that scheme may be deliberate while Evolutionary theoreticians see scheme as ’emerging from procedures governed by opportunity, confusion and conservativism ( Whittington 2001 ) .
The systemic school of idea is more modern-day, and more optimistic in its mentality. While it recognises plurality in coveted results, it besides recognises that these are sociologically sensitive, that cultural influences will play a major portion in their finding. These cultural influences affect the agencies and the terminals of action, specifying what is appropriate and sensible behavior for their members. Therefore, personal histories which include educational background, faith, gender, household place, and ethnicity all shape economic activity.Honda ‘s chief scheme is to make gross revenues and value through expanded gross revenues via invention in research and fabrication.
Honda has a great committedness for future by passing immense sum of financess into R & A ; D. They did non merely concentrate on net income maximization but optimisation of its resources by fulfilling client ‘s and employee ‘s demands which are something more than net income. As a consequence, Honda ‘s strategic direction pattern becomes a guide line of successful direction of corporations in the universe.
I believe that Honda ‘s advanced strategic direction was non merely come by a opportunity or fortunate fortunes but their well planned scheme that beyond the rivals ‘ thought. This Honda ‘s scheme is good known as ‘reconciling dualities ‘ .
Critically measure how you might use the two Schools of Thought to Honda Motors. Explain and research which school of idea you prefer, and why?
Honda motor company is non merely average Nipponese auto maker but Honda is one of the best every bit good as a taking company in the market. Originally they start the concern in bike and now they manufacture autos, bikes and power merchandises like lawnmowers and little boat engines. Honda ‘s success can be attributed to its corporate civilization which includes elements from the Nipponese theoretical account every bit good as the western theoretical account, and besides its strategic directions which known as accommodating dualities.Honda was the first Nipponese maker to do its merchandises in Europe and North America.
Honda took the hazard of come ining into a long term schemes with a European company that considered one of the least capable car makers in the West, British Leyland. Merely 25 old ages subsequently from its concern origin subsequently Honda becomes one of the universe ‘s top 10 manufacturers.[ Growth of Honda ‘s global car production, 1960 – 1995 ]Honda ‘s success is non merely come by a series of fortunate fortunes but its good strategic direction.
In the position of evolutionary attack, competition is non overcome by degage computation and analysis but by changeless battle for endurance ( Cuizon, 2009 ) . It calls that Honda ‘s successful schemes merely emerge as the procedure of the natural choice delivers its judgement and it suggests that distinction or variegation is a manner to last in the market. Originally, Honda was involved in merely bike concern until 1963, but they started to spread out their concern country to autos and power merchandises. Besides, Honda did non restrict their concern country to the domestic market, Japan but they expose themselves to planetary markets such as U.S. , Europe and UK which means that Honda accepted early and rapid internationalisation than other planetary and domestic rivals.
Honda ‘s direction tried to optimise their tantrum between the company and the concern environment by merchandise and concern country variegation and it leads to a great success of Honda.( *Source: Honda ‘s Annual study 2010 )However, Systematic attack has a relativist place. It believes that organisation is able to be after and move efficaciously. It is much more optimistic than evolutional attack about its ability to specify scheme irrespective of market forces ( Whittington, 2001 ) . The attack argues that schemes must be sociologically efficient to understand the company ‘s environment.
This means that there should be no separation between economic activities and societal factors to guarantee success. Honda ‘s success resulted from its advanced strategic direction described as accommodating dualities. Honda took the different position of direction school of idea comparison to Western direction school of idea that assumed tradeoffs between merchandise quality, cost and bringing. In fact, Honda focuses on how to construct in quality to merchandises instead than trial in quality. They try to keep a planetary point of position with the dedication to provide the highest quality merchandises at a sensible monetary value for world-wide satisfaction. Their organisational construction and procedure were really advanced and good planned. Through all of these activities and programs, Honda has been survived since its origins of concern and now go one of the top 10 car makers in the universe.
These two strategic attacks have pros and cons. In my point of position, nevertheless, systematic attack is more preferred attack than evolutionary attack in quickly altering environment. It will be hard to conceive of a successful scheme without understanding of market environments and understanding of market environments is non all about a successful scheme. There should be a clear usher map to program and achieve ends for development and growing instead than go forth it to market environments and allow them make up one’s mind the company ‘s hereafter and endurance. The systematic attack to place and suit the company into its environment will take to success and protect the company from any sudden alteration.
In Honda instance, it can be said that Honda ‘s success was by its strategic direction which is distinction and variegation of its merchandises and concern country. However, if Honda did non hold the advanced strategic direction which is accommodating dualities and its corporate civilization, no 1 can vouch their success. It will be important for company to analyse the internal and external environment and do an effectual program and scheme for its success.
“ Stacey ‘s ( 1996 ) integrated theoretical account of decision-making and control comprises of four cringles: the rational ; the open political relations ; the covert political relations ; and the civilization and knowledge.
” ( Stacey, R.D. ( 1996 ) Strategic Management and Organizational Dynamics, Second Edition, Pitman, London, cited in SIM336 Module Workbook, 2010. Unit 6 page 156 )
Using your apprehension of Whittington ‘s ( 2000 ) ‘Processual School of Thought ‘ , critically measure the deductions for strategic direction of each of the four cringles.
Processual attack is similar to evolutionary attack in the sense that it doubts the value of rational long term planning but it does non hold of go forthing the profit-maximising results to the market since market is full of muss and confusion ( Cuizon, 2009 ) . It adopts a realistic position taking to do the sophisticated procedures simple in visible radiation of the fact that the environment is non ideal or perfect.
The scheme is seen to be the consequence of the procedures of political activity among interested directors and stakeholders and it believes that people are excessively different when it comes to involvement, cognition, attending, reason and can therefore non hold on an optimum program and accept pluralism.Deductions for strategic direction of each subdivision of Stacey ‘s incorporate theoretical account of decision-making and control are as follow:
The rational cringle
discover-choose and act or classical or incremental attack
many different universe positions ; bounded by reason ; unitary cringle
scheme hence unfolds over clip.
The open political relations loop
choose possible classs of action ; bargaining for resources to accomplish its ends through different functional activitiespeople may exercise their power separately to act upon eventsscarceness of corporate resources
The civilization and knowledge cringle
find procedure or shared mental theoretical accountsfor illustration, different strategic contrivers freshly appointed, challenge the civilization or attack with different theoretical accounts of how the universe works.unitary ( stockholder ) begins fragment into pluralism ( stakeholder )
The covert political relations loop
how single respond to contradiction and struggle ; organizational defense mechanism modus operandis ; get bying mechanismsthe new & A ; endangering state of affairs provokes anxiousness and responses are made mostly unconsciousorganizational defence everyday – people covertly form confederations to experience saferStacey ‘s strategic direction is start from the rational cringle.
Initially, they discover about organisation in relation to its environment and bring forth the necessity to take from many possible manner of action. However, as processual attack believes that environment is non ideal and perfect, their appraisal should non be based on its environment. The pick and actions are should be supported by rational and logical statement and grounds and related to company ‘s aims.
Besides, should non be limited to unitary scheme but accept pluralism since each person has different position and sentiments on scheme or program.In the open political relations loop, they believe that when there are scarce organisational resources, the rational cringle can be undermined because every person has strong principle on the possible classs of action or program. Peoples may exert their power separately for their ain involvement. The direction ‘s judgement and appraisal should be based on rightness and reason of its proposal instead than single power or personal relationship.
In the cultural and knowledge cringle, it states that if there are alterations in the environment, the stableness of the civilization is disturbed. It ‘s the clip that the unitary organisation starts to divide into pluralism. Learn about different and perchance more successful ways of carry oning concern is will be good for company since the environment is non the chief determiner of organisation ‘s place and hereafter.Stacy has mentioned about organisational defense mechanism modus operandis in the covet political relations loop where people covertly form a group or confederations and take action to do themselves experience safe. Organizational defense mechanism can non be healthy in footings of strategic direction.
There should be a clear leading and guide line in response to struggle and contradiction, so that people can travel frontward with existent understating of what is an appropriate strategic direction.
In presence of assorted schools and attacks to scheme, there is a demanding demand to a consolidative attack to simplify the understating of strategic pattern and do it more executable and effectual for company. Schemes should deeply understand their dynamic concern environment and work their strengths efficaciously to stay competitory. In the absence of a consolidative theory, strategians should implement advanced steps in following a mix of the most appropriate attacks to accommodate the alone features of its concern.
To sum up, it is non the scheme which will find the company success but the company ‘s effectivity in utilizing its capablenesss and human resources to implement the scheme.