Honda Motors Case Study

The global car manufacturing industry is nowadays one of the world’s biggest business and like many other industries is full of competition on all fronts which makes it even more interesting to observe. Over the years the big competition among biggest motor companies, the hard work of all the managers and engineers from the different departments of the firms helped for reaching high level of production and innovation. Honda Motors is well known as one of the leading automobile companies in the world that spreads its operations all over the world and is best known among the customers for the quality of the products they make.

Honda Motors Company, Ltd. is a public company established on 24 September 1948 with headquarters in Tokyo – Japan. The company manufactures automobiles, trucks, motorcycles, ATVs, scooters and also private jet. The company operates under the basic principles of “Respect for the Individual” and “The Three Joys” – “The Joy of Buying,” “The Joy of Selling” and “The Joy Of Creating”. The first principal stands for respecting the unique character and ability of each person, trusting each other as equal partner in order to be successful.

The second principal reveals that not only all customers who come into contact with the company but also people working in it should feel a sense of joy through that experience (Honda Annual Report, 2012). Following this basic principles the company has been creating a new value along with providing high quality products maintaining a reasonable price. Developing, producing and marketing a wide variety of products, worldwide customer satisfaction – these are just small part of the things that earned Honda Motors an outstanding reputation as one of the leading automakers.

Looking at the company’s slogan ( Honda – “The power of dreams”) and the strategy that the company advocates – “The three Joys” we can notice that the main goal of the company is not only satisfying and providing excellent service for its customers but also creating a strong connection with its consumers. In other words their main goal is to provide Joy for those who purchase their products and produce their products. In that regard, the company’s main concern is about people. The first step of the company’s strategy is “The Joy of buying” for every person who purchases a Honda product.

This Joy is a step that exceeds customer satisfaction and as Honda managers define it, there are four steps that lead to it. The consumer must mainly understand the fundamental concept of the product and then he should accept the product and make a decision to buy it. And finally, after the customer is completely satisfied with the product he can experience “The Joy of Buying”. There is also “The Joy of Selling” and the most important thing for achieving this Joy is the strong relationship between customers and their products.

Honda products seek to respond genuinely to customers’ needs and desires. When the company provides excellent quality and high performance the distributors and dealers of Honda fell “The Joy of Selling”. And finally, there is “The joy of creating”. At Honda the production engineering, research and development, manufacturing are at a higher level which allows the company to maintain the high quality of the products and even exceed customers’ expectations (Honda Annual Report 2012). A closer look to Honda Motors’ management departments can reveal the links of collaboration between the managers.

Already performing the strategy “The three Joys” has helped the company to move in a positive direction. For instance dealing with reconciling dichotomies approach. Basically dichotomy stands for an argument between two or more competing interests, for example conflict between cost and quality or supplier buyer relations. Companies in the West handle with such situations simply by sacrificing the interests of one or more side in the name of a greater or lesser extent for the good of the company (De Wit & Meyer 2004).

On the other side is Honda Motors who have adopted a different approach which observes both sides of the conflict and finds a way for an overall improvement in the operation, quality and results for all parties involved in the dichotomy. The company manages to deal with something that was seen as relationship with a constant loser to a relationship between two winners. Honda adopted a different approach reconciling the cost quality dichotomy simply buy performing building- in quality in the manufacturing process. This way the company cuts its expenses for testing the quality of each product and also reduces the costs from wastage.

Car manufacturing business has changed over the years which lead to a goal that every company tries to reach – coming up with a new model of the product every year. One other example of the way Honda handles with dichotomies is the way in which Honda chooses to replace its models. In Western firms the policy is that he old model either receive a facelift or is completely replaced with a new better model. (De Wit & Meyer 2004). As a result the customer receives a new product but with easy to notice improvements and on the other side is Honda who developed a program in which every four years a model is given a change.

First two years the vehicle is refreshed with a new exterior design and two years later all the parts that are vital as for engine, transmission etc. This way the company resolved the facelift and new model conflict and also achieved faster lead time of the process of bringing new models and lower levels of pressure upon organizational resources. With the examples given a statement could be made – Honda Motors are successfully performing the built-in-quality and right-first time. This way the company satisfies its valuable customers by cutting the delivery time and presenting them quality products.

Honda Motors operates not only in automobile industry but also in motorcycle industry, in fact the company was founded as a motorcycle company. Such companies that enter a new market industry adopt diversification strategy. Competing in the motorcycle business the company develops a unique ability to produce high quality and reliable small engines. The success of Honda in automobile industry relies on their experience in motorcycles. The company has also diversified in the boat motor industry. One of the main benefits of the company is its R&D system.

The R&D system at Honda is remarkable. Researching plays a major role in Honda’s success over the years because that way the company can be always prepared to meet and even exceed the standards set by their rivals such as Volkswagen, Nissan, Toyota etc. R&D system is adapted in its approach in order to manufacture products and present services that perform high level of durability and reliability at the same time. Always thinking wisely about the future the Honda products care about issues of social, environmental and economic stages.

The company is involving in the research and development that mainly is to benefit people in the near future through innovative technology that could open up new opportunities in mobility. This means that corporate strategy aims to support sustainability at all levels. For example the motorcycle manufacturing plants are built in a way that can be easily converted to automobile manufacturing plants. Honda can be recognized as one of the leading producers of motorcycles. In this branch the company has differentiated itself in the market in order to lead the competition in manufacturing motorcycles.

Honda’s customers in this branch appear to be from all walks of life and that is exactly what the company aims to succeed in. Over the years Honda has kept on rising the value of its label by always offering something new, something different from other competitors, something unique only for Honda. Thinking about the future Honda Motors aims to develop a new market in the “fun” segment (Honda Annual report 2012). By developing a number of new motorcycle models the company offers its customers motorcycles that people ride for leisure and enjoyment.

Offering original value in the “fun” segment of the motorcycle business the company’s main goal is to attract new customers, while actively finding a new market place for its products (Honda Annual report 2012). Also observing the company’s policy in the motorcycle manufacturing industry it is to be mentioned that Honda’s engineers and managers are working hard in order to make their products eco – friendly and consumer safe. The safety targets everyone, not just only Honda consumers but all participants in the transport – for example pedestrians, drivers.

Taking a closer look in the “fun” segments of Honda it is noticeable that the latest motorcycle models are equipped with innovative eco-friendly and programmed fuel injection system called PGM-FI. Also a new combined braking system has been developed in order the safety issues to be handled. Considering Honda’s advanced research and developments system and outstanding performance in the motorcycle industry,the company is required to maintain strategy flexibility in order to be capable of easy shifting from one strategy to another.

By imputing more efforts in their R&D departments, providing exceptional quality in motorcycle engines and being close to their customers helps the firm to maintain mobility and always be ready to adapt and survive in a new environment conditions. Observing Honda’s performance in international level shows distinctly how the company connects its processes. The company’s policy is to be closely to its customers and therefor it expands in automobile business in Europe, America, China.

Manufacturing plants are being situated worldwide in order to improve the supply chain of materials and production processes. Raw materials in large quantities are ordered from more than 160 component suppliers all around the world in order to manufacture supports components for cars. The thing about Honda is that the company has made its supply chain very accurate. For example Honda was the first Japanese car manufacturer to assemble vehicles in America almost three decades ago. Today it has the capacity of making 1. 63 vehicles every year in North America.

During the last year 85% of Honda models sold in the U. S. were manufactured in North America and statistics show that this figure will grow up to 90% in the next few years (accessed: http:/www. globalautomakers. org/media/industry-news/2012/07/honda-to-focus-on-north-america-in-global-strategy). Figures show that maintaining this accurate supply chain is helping the company to cut costs from supply wait time and delivery time, which on the other side allows Honda to invest more funds in R&D department and stay ahead of competitors.

This way consumers’ expectation to see improvements in vehicle availability and pricing will be satisfied. On the other side this supply chain plan has its risks. During the past year, Honda faced challenging environment due to the floods in Thailand and the Great East Japan Earthquake. The earthquake, tsunami and the nuclear crisis in Japan in March, 2011 have thrown the global automotive industry out of gear. The component parts supply chains have paralyzed which lead to production shutdowns, work shift reductions and cancellations of orders.

The two natural disasters had negative impact in the company – supply chain disruptions and therefor decreasing the number of sales. In September 2012 Honda Motors and Toshiba announced Toshiba’s participation in conducting demonstration testing of Smart Home System. In this case Honda performs collaboration strategy where both of the companies pursue on goal – the optimization of energy generation and usage. In this project Toshiba will utilize its smart meter and provide energy management and Honda will provide energy generation and storage technologies.

This effort addresses global warming therefor commercial projects are being conducted all around the world aiming one goal – improvement of social infrastructure. Major role in this project again play Honda’s research and development departments. Combining different strategy the company acts global to become as the managers describe it “ a company that society wants to exist” (Honda Annual report 2012, http://world. honda. com/news/2012/c120921Toshiba-Honda-Collaborate/index. html ).

Adding value to its label the company is aiming to introduce different type of products than automobiles and motorcycles to the market. There are a few prerequisites for Honda’s success in new products as its customers already experienced exceptional services and quality at a reasonable price. The company knows well how to expand not only in different regions ( geographically) but also in different types of branches. From a certain time onwards global warming, energy sustainability and rising fuel prices are critical issues for the auto industry.

Most of the energy resources we consume nowadays are fossil fuels, including petroleum, coal and natural gas. The threat of exhausting these resources is growing closer. That is the main reason why Honda Motors focuses on the need to increase fuel efficiency and reduce CO2 emissions while improving the efficiency of the internal combustion engine. The company continues the expanding of its gas-electric hybrid vehicle technology, developing new, non-fossil fuel energy sources, including the ultimate solution, the fuel cell vehicle (http://world. honda. com/green ).

There will be a variety of power technologies in the car manufacturing industry in this decade and “green” cars are likely to represent a part of 30% of total global sales in developed car markets. Globally, Honda is one of the leading companies in the hybrid vehicles market with its models Civic and Insight Hybrids. Due to increased interest from consumers into more fuel efficient and lower pollution cars, Honda can use its strength in high R&D to develop these kind of cars to suit consumers’ needs. With China being a neighbor to Japan the company has cost innovation advantages to be exploited in its global strategy.

Honda has a reputation for producing high quality products, from cars and motorcycles to a flying jet. This variation of product gives the customer more choice and expands the company’s market dominance as not all car manufactures present products such as flying jets. This provides a wider choice and helps the company to increase its profits. Honda Motors has grown to become the world’s largest motorcycle manufacturer and one of the leading automakers. With a global network of 378 subsidiaries and 88 affiliates , the company develops, manufactures and offers a wide variety of products to