Strategic Management At Honda

With over 182, 000 employees, ¥ 10, 011, 241 million in twelve-monthly revenues in '09 2009 in conjunction with up to $ 1370. 1 million$ and 1896. 4 in operating earnings for the FY 2008 and 2009 respectively, Japan's Honda is easily the industry's biggest manufactures of motor cycles, besides being a among the list of leading automobile manufacturers. Operating across the globe, Honda is mixed up in development, making as well as marketing and syndication of motor vehicles, motor unit cycles and a variety other ability products (Honda Ltd, 2010).

It was founded in 1946, by Soichiro Honda and subsequently incorporated 2 yrs later, accompanied by many years of success and development as a bike maker. From its central business, the business's 105 affiliates and 396 subsidiaries around the world provide financial services to a large number of its clients. It operates a four tier business design which include the financial services division, motorcycle, car as well as electricity products (Honda Ltd, 2010). Besides multi wagons, Honda also produces a range of passenger vehicles, SUVs, minuscule vans, passenger automobiles, mini vehicles as well as activities coupes among others. Honda's flagship car and motor cycle models are the Accord, Civic, Legend, Perception, Acura CSX and Acura RL, CR-V, Mix Road, ASIMO Robots as well as the scooters among many others.

The company documented sales of over 10, 114, 000 items mainly in Japan, THE UNITED STATES and Europe, representing an 8. 5% go up over the previous year's figures. Its sales have been on the rise despite through the global economical down switch that strike its American competition, and largely driven by Toyota's PR woes over alleged defects in the breaking system in its flagship Prius model. This success is largely attributable to the company strategic preparedness. Just to illustrate, in 2002, it launched a hybrid car model to tap into the ever before growing environmentally mindful clientele, besides starting the Environmental Learning Middle (based in Texas), while in 2004, the company entered into a tactical relationship with GE, that led into the development and development of a path blazing light plane engine, fitted to business jets.

Sethi and Swanson (1984), commencing in the year 2000, the company has embarked on an ambitious program to create production crops in the appearing car and motor cycle markets, notably China, Argentina, Russia and the motor bike hot spot, Vietnam. The business prides itself with the twin concepts of esteem individuals and the Three Joys Basic principle i. e. buying, advertising as well creating. These worth reflect the business does wish to build on each person's unique abilities and its try to ensure that everyone who comes by purchasing the products or by other means should have a great/joyous experience. Honda ensures this by relentlessly, lead in the creation of value, innovation, services at accessible prices.


Honda ltd's tactical technology is founded on a process of dichotomies reconciliation which include both learning and planning, placing on the market vs. internal resources development and finally, main competencies related to the merchandise against the primary capabilities related to the operations. These three dichotomies do representing divergent strategies etc that drive Honda as a firm since its establishment and through many years of exemplary expansion and enlargement. De Wit & Meyer (2010), assert a critical take a look at Honda's strategies tips especially its successful entry and dominance of new markets raises questions concerning whether, Honda's strategy and following decision making is solidly based on a meticulous, analytical and logical planning or whether its strategies are a direct result of the some decisions/ strategies reached at by the business, which evolved or became revised because of the environmental affects of the industry where the company manages.


While developing its strategies, the business has consistently implemented a rational way based on a critical analysis of the marketplace and the industry environment. This plan hinges on and it fitted to a seasoned industry player such as Honda, since it looks for to built on, and exploit the business's tremendous experience in the automotive industry (Johnson et al. , 2005). As a strategy, this can be an important lower part up strategy that uses the already gained knowledge to optimise the company's needs. Planning calls for into consideration both the company's resources as well as environmentally friendly factors, as such will likely utilize the company's set objectives within the constraints. Honda's essentially seen as having successfully applied the planning strategy while entering into new market segments notably while launching into the All of us motor cycle industry. Its recent proper alliances with GE as well as its design and launch of innovative services and extension of manufacturing plant life, in the best attainment of huge size economies and intensely law costs represent examples of inner planning.

Planning is largely visible from an outsider's viewpoint. However, interviews with the business's top management reveal a much different picture that implies at best a company that is definately not an overly rational, academic planning wanting to impose its commercial values and insurance policies on the market and the industry, but instead a corporation, with a management structure that is at all times ready to learn. It is evident and broadly accepted by many observers that Honda's strategies have developed, with out a clear plan or evaluation of the industry. Case in point, the huge success achieved by the business's 50 cc Supercab astonished everyone like the company's management. Mintzberg et al. (1998) discover that though the company's strategy may have looked analytical and well-planned, the management performed blunder severally until the market gave them the right formula.

Rational planning on its is hardly, suitable for many organizations and is in fact removed from your day to day running of your business as compared to learning, which permits management to continually develop and modify their regulations and strategies as they are applied, in the light of new experience (De Wit & Meyer, 2010). Honda's development of hybrid vehicles and energy efficient models e. g. the Honda Civic Sedan, in the wake of Toyota's success in the same field symbolize examples of learning from the surroundings. Honda has as well launched joint ventures in R&D with others. Using both strategies gives the company an advantage, not least because it only allows the formulation of strategies that best meet both the inside resources as well as environmentally friendly factors prevailing in the industry.


Honda's setting helps its brand to be associated with a given market segment. It is an evenly helpful guide to the business's other strategies, particularly the marketing strategy, not least because it does indeed clarify the fact of the brand and the helps the consumers to better identify the goals that the merchandise seeks to meet in a unique way. In setting a product or brand, managers must make decisions, wanting to appeal a given segment of the population, while at once risking getting rid of the other(s). Honda has located its various products based on benefit, target, circulation as well as prices. The company offers competitive prices due to its size and technology advantages, which in turn permits it to attain better customer franchises. This strategy does however; influence the prestige of the brand, besides reducing the profit margins. Target, circulation and benefit positioning, that has seen the advantages of renewable models to serve the needs of green conscious clients, coupled by Honda's extension into India, China and Vietnam, that was entirely intended at wedding caterers for emerging middle class in those countries.

As against, development of interior resources, Honda's product positioning allows it to utilize fewer resources but nonetheless reach the mark markets. It however, has substantial resources in capital, management, lowering production technology as well as manpower, that have driven the company's expansion throughout the world. More investment in R&D is, and has been possible, leading to greater development. While other smaller industry players struggle with limited resources constraining their R&D as well as development, bigger companies like Honda, Toyota and GM can attain a better edge on the market. Honda's has been able to go after both strategies due to the availability of niche products so it has successfully positioned e. g. motor cycles in Vietnam (over 400, 000 products in gross annual sales), coupled by its huge availability of resources which allows it rope for R&D, diversification and enlargement. This will not entirely maintain though, Honda spends simply a fifth of GM costs on R&D and launches fewer models than the last mentioned, yet it products/models are more lucrative than GM's.


Competencies are because of this of coordination of multiple creation skills and a complex coordination of numerous technologies. They provide a company access to newer markets; provide high obstacles for competitors to enter the marketplace, besides contributing substantially to the benefits associated with the end product(s). Honda's central competencies in regards to products are the driving push behind the development of the numerous, innovative person products. Hamel & Prahalad respect Honda's product competencies as a brilliant example of how a little company can break right into, and create itself in an adult, stable market. This year 2010 by itself, Honda has set up a solar H2 station (LA), unveiled the versatile iGX and GX engine unit series for standard purposes. The business has as well produced lithium-ion based batteries intended for the new range of hybrid motor vehicles, alongside an ELC to spear brain its green plan.

Honda is famed for its potential to recycle systems in every its range of products, affording it R&D efficiency. You will find elements of core capabilities associated with its operations, but perhaps considerably missing behind Toyota and a great many other industry players. These include efficient distribution stations, cost effective creation operations. It trains retailers, determines shop floor plans and has rigorous operating procedures among others. Central product competencies in the automobile industry are considerably superior to the method functions and Honda's success can be an outstanding testimony to the fact.


Japanese and Honda's management styles do differ from the American style in at least six distinct aspects. Included in these are variations in the interdepartmental interactions, communication patterns, and supervisory styles, mechanisms for control as well as lifetime of, or insufficient a paternalistic orientation. Corresponding to Hofstede (2004), these differences mainly stem from the inherent ethnic differences between your two countries, which in turn influence the respected corporate ethnicities.

Lifelong Tenure

Most of the firms in Japan do provide lifelong jobs with their employees, with greater emphasis being laid on not era, but also seniority. Promotions are thus much more difficult, equally there is higher job security for the individuals. Many organizations effectively retain the services of employees for the, and are thinking about the long term targets as against America's corporate world's obsession with short-term goals. Case in point, Honda's top management i. e. Satoshi Aoki (Chairman), Takanobu Ito, Koichi Kondo and Atsuyoshi Hyogo became a member of the business in 1968, 1978, 2000 and 1972 respectively, where time they have got increased through the ranks to reach the top management. On the other hand, the western corporate and business world is characterized by short term deals for both managers and workers, costed with meeting short-term objectives.

Teams v. Individuals

In compare with the American model where professionals are accountable for decision making and consequently in charge of the decisions reached, the Japanese system recognizes the importance of individual expertise, however the performance of the whole team is more emphasized than an individual's. In the european corporate world (Germany and American), certain employees have 'legend' statuses e. g. in Germany, the engineers play central roles to the success of motor unit companies. Some components of convergence can be found though. Long apprenticeships and cadres (seniorities in Japan) do exist both in Germany, France as well as the Netherlands. Employees attain positions, offers etc. through many years of internships, apprenticeships or memberships to given classes-attained through education and or experience.

Decision Making

While most american corporations are seen as a top down decision making, the Japanese design of management is largely characterized by collective decision making by specific groups. Honda's decision making is characterized by the "Ringi" system, where decisions are exceeded predicated on a consensus of all employees in a team or even the complete group. This management style is similar to that employed in Holland, except that the second option is anchored on existing deals or class variations of among the list of employees.


As from the largely bureaucratic communication, hierarchical channels characterizing western firms, which is basically effective and useful, the Japanese programs of communication bargain in large part of face-to-face communication. These comprise everything from provision of information regarding task of tasks, responsibilities, organizational goals and the development and rechanneling of feedbacks.

Implicit Device of Control

Honda ltd is concerned with building of its human relationships with it 'biggest possessions', the employees. Encouraged by its philosophy "Respect for the average person", the business always seeks to build up collaborative relationships with every single worker, where all mechanisms of control and supervision are largely informal. Supervisors work alongside other employees, who are participating, your choice making, which in turn renders decision making, execution of decisions and reception of responses a lot more expedient. On the other hand, Honda's competitors operate on a rigid, formal control device. This models goals, measurable, filled with targets that must definitely be fulfilled by departments, franchises and individual employees, while the Japanese system is anchored on the management philosophies that all employees as well as managers identify with.

Departmental Relationships

Pascale & Athos (1981), suggests that attainment of the goals established for a section etc requires inputs not only from the concerned departments, but perhaps most importantly, close cooperation with other departments in the business or even other organizations. Formal (necessary) associations largely attain these goals (feature of the traditional western model), as the Japanese style has an extra aspect; voluntary cooperation which is far more productive and results greater knowledge showing.

Paternalistic Orientation

Honda and a great many other Japanese companies are concerned by the alternative needs of each employee, including the concern for the well-being of their families (Culpan, 2009). This imposes a public support role on the professionals, an attribute which is basically absent in the western world, safe for a limited number of family organizations.


With car markets in the developed world already saturated, most car company's are looking in foreign countries in the emerging marketplaces notably China, India and Brazil. A recent analysis by TNS implies that car buyers rate car producers more according to their CSR than those consumer in the first world, thus companies that perform better in this sphere stand a far greater chance of receiving the hearts and minds of the new middle income is guaranteed success.

In 2005, Honda was rated the UK's best car company predicated on its communal responsibility initiatives, by the most important research company on automotives, TNS Automotive. It performs equally well in the US, Indonesia, Italy and Spain among other countries alongside BMW, Shell, Malaysia's Petronas, Michelin and Germany's Porsche (Nissan Corp. , 2010). Honda spent over 2. 3% of its gross annual revenues in 2009 2009, on its CSR commitments, with the environment taking the lion's talk about of the budget. The company has undertaken numerous actions so that they can meet the obstacles posed by global warming and environment change. Along with the reputation of the auto industry and fossil fuels already damaged, due to its huge carbon footprints, and the growing doubts among the public of polluting of the environment, it is merely acceptable that companies action in accordance to the desires of the consumers. Honda has initiated the LCA system, which identifies and sets focuses on for the required actions. The business develops energy efficient models, adheres by the 3Rs (in design) and noises reduction etc.

Honda's commercial governance is an average Japanese style lower part down structure, characterized by collective decision making and a collective sense of owed among to the company that in turn reflects on the business's performance (Honda Ltd, 2010). Any company's corporate and business governance does indeed determine the way so it assumes, which in the end shows on its financial performance.

Nissan's corporate viewpoint, governance as well CSR activities are not different from Honda's. It looks for to bring enrichment of the people's lives and the surroundings where they operate. They have made CSR an important part of its corporate management policies. They have devised its green purchasing guidelines, in conjunction with Nissan-Renault Suppliers Guidelines, which ensure that the business's entire supply string is inexperienced and acts the purposes of the guidelines placed by its top management.

Through its charitable arm, Chrysler's management makes gross annual donations to needy areas, projects and causes (Chrysler, 2010). In '09 2009, the company advanced up to $100000 to Good Harvest geared at combating food cravings. The company's CSR initiatives are not as intensive as both Nissan and Honda's partially because the business caters for the blissful luxury market segments that are in the main concerned about the quality and luxury as against a company's CSR etc.


Honda is basically touted by observers and various literatures in tactical management. Its strategies have generally been used either rightly or wrongly to back again up lots of conceptual dichotomies, with contracting positions i. e. learning v. analytical planning, primary features v competencies etc. Many of these assumptions, and evidences have however, proven erroneous owing to empirical mistakes that result into the over emphasis of the firms talents, while its mistakes go largely unnoticed. Further, strategies and explanations are indicated in form of reductionist, single-sided ideas that largely neglect to portray the genuine proper orientation of Honda. Honda's thrives on reconciling dichotomies. Thus many observers in the western world have largely overlooked out in learning, learning from and understanding Honda.

Rohlen (1974), it is noticeable that functions as well as competencies may possibly complement each other, building into one theory. The last mentioned does give attention to the production competence and technologies as the capabilities providing to enhance the whole chain of value. Capabilities are more obvious and easily valued by the clients than are product competencies.

Honda's capacity to meet high goals and post remarkable growth rates is basically because of its tendency to create stretched targets, which brings into immediate competition with the largest players in the automotive industry. In order to contend, it uses its source base to be competitive by either providing niche market products or undercutting competition on basis of cost advantages, gained through scale economies. This capability to leverage her resources supplies the key to its success, as contrary to the widely fabled Japanese management styles. This style is broadly not the same as and more desirable that the traditional western style commercial management is merely suitable for the Japanese and Asian surroundings.

There are aspects in both management styles that may beneficially be, and have largely been implemented by either side to the great benefit of the corporations, however, not the entire management plans as they will be utter failures in the other ones environment (Schein, 1981). Finally, this statement has demonstrated the value of corporate governance, coverage and CSR is important in the ever changing consumer likes as well as preferences, and most significantly, increasing consumer consciousness.


Increased spending and expansion of Honda's and other motor vehicle companies in CSR, environmental coverage and development of innovative green models should continue as the only way counter-top changing consumer needs as well as the changing times.

The American and Japanese styles of corporate and business management should be combined to suit both the practical and proper objectives of each organization.

Reconciliation of strategies is essential for success and helps companies reap the benefits associated with divergent strategies, thus companies must seek common grounds between strategies rather than opting for only one.

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