Toyota, Honda, and Jaguar UK have been the leaders on the market for several decades already. Nowadays environmental conservation is considered one of the leading management objectives, and the fulfillment of the demands for environmental conservation can contribute to future sustainable corporate activities. Rondinelli and Berry (2000, p.70) state that during the last decade there occurred alterations in the concept of sustainable development and now it includes “simultaneous consideration of economic growth and, environmental protection, and social equity” in matters concerning business planning as well as decision making. Morrow and Rondinelli (2002, p.159) state that multinational corporations “are adopting environmental management systems (EMS) and certifying them by international standards”. However, it is necessary to assess the effectiveness of the EMSs that can be successfully done using the EMSs of Toyota, Honda, and Jaguar UK.
Energy/fuel consumption
Scientists estimate that the approximate number of cars in ten years will constitute about 1.5 cars on the roads, which twice exceeds their current number (Komiyama et al., 2005, p.183). Komiyama et al. (2005, p.183) write about potential “vigorous economic growth, soaring electricity demand and progressive motorization [that] are going to expand the primary energy demand” and this issue draws attention to the environmental problem of energy management.
One of the challenges that are recognized by Toyota concerns diffusive energy and the company is planning to rely on alternative variants of fuel, they are working in the direction of biofuels, electricity, and hydrogen considering them to be the fuels of the future (Toyota Sustainability Report, 2008). Toyota has already introduced the first mass-produced petro-electric full hybrid vehicle, Prius, the primary aim of which is the achievement of fuel efficiency (Haan et al., 2006).
What is more, Toyota has already received general approval for the Prius of the third generation, introduced in 2009, and has proved to be even more economical, providing fuel economy improved by 14%. On the whole, Toyota’s position concerning fuels proves Williander’s (2005) idea: “Toyota demonstrates … enhancing assumptions and high aspiration towards new technology” (p.5). As for the environmental management system of Honda and its relation to energy, the company is working in two directions: fuel economy and fuel efficiency achievement.
As reflected in Honda Environmental Annual Report (2009, p.33), significant fuel economy is achieved with the introduction of “all-new Insight hybrid vehicle and other vehicles with enhanced fuel economy”. Thus, Honda has met “2010 fuel economy standards for all weight categories” with an average fuel economy that exceeded the last year’s index by 25.4% (Honda Environmental Annual Report, 2009, p.33). Besides, alternative fuels, such as bioethanol, which is considered a viable alternative to petroleum-based transportation fuels (Yuan et al., 2008, Blottniz & Curran, 2007), has received great attention of Honda that has an initiative of implementation of “production technologies for turning non-eligible cellulosic material …into bioethanol” (Honda Environmental Annual Report, 2009, p.37).
As for Jaguar, the company works for the development of diesel engines with lower emissions, better performance, and reduced fuel consumption that has been improved by 57% during the last 6 years (Jaguar Sustainability Report, 2007, p.2). Thus, the analysis of EMSs of the companies shows that Japanese car manufacturers have adopted similar strategies aimed at the introduction of alternative innovations, while Jaguar focuses on the improvement of traditional diesel engines. Besides, all these innovations are also aimed at the reduction of carbon footprint.
Waste recycling
As for the management of waste, one of the key directions of Toyota is waste reduction as the principle of elimination of waste is the core principle of Toyota’s production system. 2008 became the first year when Toyota’s European Manufacturing Companies “disposed absolutely of no waste to landfill” (Toyota Sustainability Report, 2008, para.14). Toyota treats waste as a useful resource and Honda’s environmental policy concerning waste is similar to Toyota’s. According to Honda Environmental Annual Report (2009), waste production was reduced by 1.5% in comparison with FY 2008 and the index even surpassed the planned 1.1% (p.39).
Jaguar Sustainability Report (2007) states that during six years total waste was reduced by 65%, they “recycled as much as possible of the remainder” (p.6). Though all companies are active in their work aimed at waste reduction, Japanese companies show better results.
Water conservation and recycling
Finally, water use should be considered. Toyota’s consumption of water in 2008 increased by 6.6% but the company has introduced such innovations as “installation of waterless urinals” (Toyota Sustainability Report, 2008, para.18). Honda has paid special attention to the reduction of water consumption and reduction of CO2 emissions with the outcome of water consumption reduction by 10.4% “though per-unit consumption increased” (Honda Environmental Annual Report, 2009, p.39). Jaguar EMS appears to be very productive in terms of water consumption, as one of the innovations implemented is the recycling of water that makes it possible to save about 10000 gallons of water a year. It shows that water conservation and waste reduction should become one of the leading directions of the companies’ research.
Conclusion
Finally, it is possible to state that EMSs of the companies have proved to be effective. Statistical information available shows that the companies have achieved significant results in environmental management. The analysis has shown that Japanese companies give preference to alternative technologies while Jaguar Cars adhere to traditional directions through the introduction of Jaguar EMS promises valuable results.
Reference List
Blottniz, H, & Curran, MA, 2007, ‘A review of assessment conducted on bio-ethanol as a transportation fuel from a net energy, greenhouse gas, and environmental life cycle perspective’, Journal of Cleaner Production, pp. 607-619.
Haan, P, Mueller, M, & Peters, A, 2006, ‘Does the hybrid Toyota Prius lead to rebound effects? Analysis of size and number of cars previously owned by Swiss Prius buyers’, Ecological Economics, vol. 58, no. 3, pp. 592-605.
Honda. Environmental Annual Report, 2009. Web.
Jaguar Sustainability Report, 2007. Web.
Komiyama, R, Zhidong, L, & Kokichi, I 2005, ‘World energy outlook in 2020 focusing on China’s energy impacts on the world and Northern Asia’, International Journal of Global Energy Issues, vol. 24, no. 3-4, pp. 183-210.
Morrow, D, & Rondinelli, D 2002, ‘Adopting corporate environmental management systems: Motivations and Results of ISO 14001 and EMAS Certification’, European Management Journal, vol. 20, no. 2, pp. 159-171.
Rondinelli, DA, & Berry, MA 2000, ‘Environmental citizenship in multicultural corporations: Social responsibility and sustainable development’, European Management Journal, vol. 18, no. 1, pp. 70-84.
Toyota Sustainability Report, 2008. Web.
Williander, Mats, 2005, ‘Absorptive capacity and Interpretation System’s Impact when ‘Going Green’: An empirical study of Ford, Volvo Cars and Toyota’, Business Strategy and Environment, vol. 10, no. 1002, pp. 479-491.
Yuan, JS, Tiller, KH, Al-Ahmad, H, Stewart, NR, & Stewart, CN, 2008, ‘Plants to Power: Bioenergy to fuel future’, Trends in Plant Science, vol. 13, no. 8, pp. 421-429.
The automobile industry is one of the industries that are advanced technologically. With the increase in economic integration, low-income countries have managed to venture into the global market more so on division of labour thereby putting a lot of competitive pressures on the countries relying on the tradition production of automobile. New automobile producers have emerged from central Europe, Asia, and Latin America.
The German and Japan automobile industries have gone to the extent of outsourcing for labour intensive segments to improve their value chain on the national level. Globalization has changed the face of automobile industry especially in the countries that relied on traditional production. The automobile industry is now flooded with new producers and exporters of its products and this has been made easy because of availability of outsourcing of skilled labour.
One of the effects of globalization is the increase in global warming. As production increases, a lot of gases is released to the atmosphere because most companies, not to mention the automobile company, use the fossils fuel as a source of energy. As a result of this, automobile companies are required to use technologies that emit very minimal amounts of carbon dioxide.
To respond to this, Honda motor company launched Hybrid electric vehicles. Instead of collaborating with other companies, Honda decided to Hybrid technology alone. This paper looks at the core competencies of Honda that makes suitable for the development of the new strategy. It also looks at the benefits and risks of this approach and concludes by giving the SWOT analysis for Honda motor company and the Hybrid technology.
Honda’s Distinctive Competencies
Honda uses effective technology to manufacture its vehicles and sells then at an affordable price for the consumer (Dewees 526). Its technology is based on four rights, that is, proving products using the right technology, at the right time, in the right place and for the right value to the customer. The company believes that it has a social responsibility as a global automaker and that is to provide right technology and at the same time meeting the customer and the society needs.
The company aims to be a “sincere eco-innovator”. It has involved itself in vigorous activities all of them aimed at achieving a sustainable environment. Many innovations have been made by the company on ways of reducing the impacts caused by its vehicles on the environment. The recent innovation is the hybrid technology that is aimed at boosting the company’s sales revenue.
The Hybrid Technology
Automotive companies often receive criticisms as a result of environmental degradation that emanates from the automobiles that they produce as well as the manufacturing processes of these products. Almost all automobile companies use fossil fuel in their production and they also produce vehicles that use fossil fuels.
As we all know, fossil fuel is a non renewable resource and once it is exploited it cannot be replenished (Anurag 6). This has prompted the companies to take responsibility by formulating and implementing strategies that are aimed at improving the global environment (Cramton & Kerr 20).
These strategies are aimed at enhancing the production of fuel-efficient vehicles. It was estimated that if all automobile companies agreed to produce fuel efficient vehicles, then the level of carbon dioxide emissions would reduce by 25% come the year 2020 and the fossil fuels would be preserved.
Currently, the world is changing at a very high rate and the economic situation continues to deteriorate, not to mention the growing environmental measures that are becoming a challenge to many businesses. To overcome these challenges, companies have to come up with creative environmental technologies in order to increase and strengthen their global competitiveness (Spatz 6).
Many automobile companies have realized the need to conserve the environment and are now producing vehicles that utilize other sources of fuels such as gasoline rather than relying on the fossil fuels.
Honda Company has recently been named as the world’s ‘Greenest automaker’ by the union of concerned scientists and has received awards for the same (Mike 2). It has introduced new vehicles called Hybrid electric vehicles which are run on a battery that does not release carbon dioxide. Some automobile companies have merged with others in order to fight with the problem of competition (Anon. 5).
Others have acquired smaller companies in order to increase their production capacity. However, Honda motor company has chosen to remain solo in its development of the hybrid technology. This approach has some benefits as well as risks for the company which will be discussed in this section.
Benefits and Risks of This Approach
One of the benefits associated with this approach is that hybrid vehicles are run on a battery that consumes very minimal amount of petroleum. Moreover, these vehicles use a lithium-ion battery which emits very little volume of CO2. With the current level of literacy and the advancement in technology, almost every person has been cautious of his/her health and the need to conserve the environment and the hybrid electric vehicles are the solution to the current effect of globalization in the automobile industry.
Vehicles manufactured through the hybrid technology can use two or more sources of power. These include compressed air, diesel fuel, solar, wind, among others. This means that the company can rely on the readily available sources of energy for instance the gasoline to manufacture vehicles that are environmental friendly (Cubby 5).
Due to the rapid developments in the hybrid technology, Honda stands to benefit more by going solo than if it had merged with other countries (Markus 1). Many people have become aware of the hybrid vehicles and demand for these vehicles is likely to rise.
One of the risks associated with this approach is that hybrid technology is expensive and Honda Company may face difficulties in financing its operations which would have been solved by collaborating with other companies.
The company has to meet the registration cost for manufacturing the hybrid vehicles which can be quite expensive. Moreover, these vehicles require a complicated system which makes the manufacturing process and maintenance quite expensive. This technology therefore requires experienced professionals which may be difficult to find.
These vehicles are also sold at a very high price thereby limiting the number of customers who are able to purchase these vehicles. Honda Company is likely to face stiff price competition from other companies such as Nissan motor company, and Toyota which have also adopted the hybrid technology.
Can Honda Reduce The Risk Of Going Solo?
Honda decided to go solo in order to have a direct process for addressing environmental problems. It did not join the other Automobile companies because of its desire to be the leader in the development of environmentally friendly automobiles. Honda is unlikely to reduce the risk of going solo because its culture requires it to retain complete control over its technology development as well as direction.
Honda is a global manufacturer of automobile which takes a lot of care to identify the impacts that the production process may have on the environment and takes necessary measures to minimize the negative impacts, such as, emission of carbon dioxide. The ultimate goal of the hybrid technology is to minimize the environmental impact caused by its operation and also from its vehicles to significant low levels that can be absorbed by the earth through natural practices
Honda’s Success in Its Approach
Honda Company was recently named the ‘Greenest automaker’ by the union of concerned scientists making it a five consecutive holder of the award (Union of Concerned Scientist 6). To achieve this end, the company has introduced cost effective cars. In addition, the Odyssey minivan and Accord made a remarkable contribution towards ensuring that the company achieves fuel economy through the use of more efficient low-friction engines as well as improved aerodynamics (Honda motor co. 3).
The company’s further dedication to ‘commitment to the future’ is displayed in its announcement in 2003 annual report that it would make every effort to contribute to preservation of human health through development of safety technology that is aimed at reducing emission and developing alternative forms of energy (Honda motors Co. 2). The company is likely to succeed in use of hybrid technology even after choosing to go solo.
SWOT Analysis
Strengths
A strong brand name- Honda’s name is internationally recognized.
Strategic leadership and effective management- It employs highly competent staff for leading and managing the company thus it is guaranteed of success in the hybrid technology.
Strong organizational culture- Honda practices task culture where every stakeholder is a valuable asset. Each employee is given a task which he is expected to accomplish within a given time; this can be applied for the hybrid technology.
Strong capital base- It has a large number of shareholders who are always ready and willing to contribute towards the success of the company.
High technological innovativeness- Hybrid technology is one example of the technological innovativeness of the company.
Weaknesses
Customers’ attitude towards new products- One weakness Honda is likely to face with the new technology is negative attitude from customers. Consumers have a tendency to fear new products and have to be assured of their effectiveness before they make a decision to purchase them.
Market uncertainties- the market is full of uncertainties, for instance market prices, and change in tastes and preferences of consumers
Low profit margins due to competition- Due to increased competition, the company can only offer the new products at low costs if it wants to retain its market share; this results in low profit margins.
Opportunities
International business expansion- With the new technology, Honda can expand its business operations into other countries that it has not been able to venture in.
Market development- It has an opportunity of introducing the new electric vehicles into new regions within its country of operation.
Increasing technological advancements- With the rapid growth in the international market and technological growth, the company is assured of technological advancements, for instance the recent recovery of the hybrid technology.
Emerging markets- People are becoming more and more conscious about their impacts on the environment so Honda Company is likely to attract a new market with the introduction of the hybrid vehicles.
Threats
Global competition- Increased global competition is likely to have adverse effects on Honda with the new technology.
Intense rivalry- Other motor companies are merging or collaborating amongst themselves and this is going to be a threat to Honda which has chosen to go solo.
Political and legal problems- Before being allowed to marketing the new vehicles, Honda has to fulfill some legal requirements which can be a challenge.
Price competition- Other motor companies, for instance Nissan, are in the process of introducing hybrid vehicles and so Honda is likely to suffer from price wars.
Conclusion
The contemporary economy is characterized by rapid advancements in transportation, communication and technology which have reduced the world diverse and geographically unattached economies into one global market. This has prompted regional authorities to formulate strategies through which they assist the process of restructuring and adjusting the automotive sector as well as the global economy as a whole with major focus on labour market policies and extensive training in leading technologies.
The process of production of motor vehicles involves the use of resources that are powered by fossil fuels. Honda automobile company is in the process of making more innovations to help the company achieve its environmental action plan otherwise referred to as Hybrid technology.
The purpose of this program is to see that a sustainable environment is achieved to enable vehicles and people to coexist with nature. In stead of collaborating with other auto mobile manufacturers, Honda chose to go solo. It is likely to succeed in its approach although it has to encounter many challenges among them being high costs.
Dewees, Donald. Emissions trading: ERCs or allowances? Land Economics, 2008, 77(4), 513-526
Honda Motor Co. “Honda Worldwide Site.” Honda, Web.
Markus Diehl. International Trade in Intermediate Inputs: The Case of the Automobile Industry, Kiel Working Papers 1027, Kiel Institute for the World Economy, 2001.
Mike, King. “Hybrid Cars Not Noisy Enough, Group Says”. The Gazette (Montreal), 2010. Web.
Spatz, Julius. “Globalization of the Automobile Industry- Traditional Locations under Pressure?” IDEAS, 2010. Web.
Union of Concerned Scientist. “Clean Energy Blueprint: A Smarter National Energy Policy for Today and the Future.” Union of Concerned Scientists, 2010. Web.
The marketing plan for Honda Accord Hybrid failed to take note of consumer attitudes and lifestyles. Their product positioning strategies were ineffective which made the vehicle lack a unique brand identity in the market. They failed to include strong attributes regarding the product in their plans. Engineers who designed the vehicle thought buyers would be impressed by the vehicle’s fuel economy capabilities but they did not take note of prevailing market conditions.
They did not take time to realize that vehicle buyers had become more conscious about prices and this influenced their purchasing habits (Kiley, 2007). The six cylinder Accord hybrid was priced at more than 9,000 dollars higher than the four cylinder gasoline version. The pricing strategy adopted for the vehicle discouraged buyers from buying the vehicle and they opted to purchase the gasoline version.
Honda also failed to engage potential buyers to understand the type of vehicle they wanted to satisfy their expectations. The firm did not offer customers a unique selling point that would motivate them to purchase the vehicle. The marketing had a false sense of hope that the Accord hybrid would follow in the footsteps of its gasoline version which had recorded high sales in the U.S. The firm failed to establish a unique brand for the hybrid model, which made it difficult for customers to understand its unique attributes (Kiley, 2007).
Customers were not able to distinguish the Accord hybrid from the gasoline version and this affected its performance in the market. Therefore, the firm had a high quality product which was not properly marketed and lacked a unique selling point. The firm also failed to initiate memorable marketing campaigns that would have given the vehicle a strong entry into the market.
Honda needs to overhaul its research and development processes to come up with hybrid vehicles that suit customers’ needs and lifestyles. The firm needs to the vehicle a different brand name to make it possible for potential buyers to distinguish it from the gasoline version.
This will make the product have its own brand identity that evokes positive feelings from potential buyers in the market. Some additional improvements should be done on the vehicle to add new features that give it the desired level of competitiveness in the market. The firm should take effective approaches to win the confidence of its customers.
This will strengthen their faith in the new product to help it maintain its competitive edge in the market (Karadeniz, 2009, p. 99). The design needs to take note of fuel efficiency and other attractive features to make it more competitive than other substitutes in the market. The firm needs to be aware that Toyota’s hybrid car, the Prius is performing well in the market. It needs to come up with effective strategies to help the vehicle get a larger market share.
Honda needs to communicate the vehicle’s strongest attributes to give it more publicity in the market. The firm should make customers aware of the unique features of this product and how it suits their lifestyles. The confusion generated by the previous model regarding fuel usage was one of the main reasons that made it perform poorly in the market.
The firm needs to clear this issue to make customers understand how much fuel the vehicle consumes. The pricing strategy needs to take note of buyers’ interests, incomes and lifestyles (Karadeniz, 2009, p. 102). This will make it possible for the improved product to be responsive to buyers’ interests. The firm needs to improve the way the vehicle is perceived by potential buyers to make it more attractive.
The new hybrid vehicle needs to have its own independent brand to make it more appealing to customers. The firm’s marketing campaigns need to make customers’ about the vehicle’s fuel consumption rates compared to other substitutes and other unique functional features.
This will ensure customers do not confuse it with the Accord gasoline version. The firm needs to develop effective marketing campaigns that appeal to the emotional psyche of prospective car buyers (Karadeniz, 2009, p. 104). Previous Honda models have performed well in the market because customers have a lot of sentimental attachments to them. The firm needs to use the loyalty it has built in the market over the years to help it register positive results in the market.
The firm’s marketers need to reverse misleading perceptions about the product in the market. The hybrid’s high price discouraged many customers from purchasing it because they felt it was beyond what they were able to afford. The marketing approach adopted for the new brand should adopt a suitable pricing strategy to encourage more prospective buyers to purchase it.
The firm needs to partner with good advertising companies to enable it create compelling adverts that connect with potential customers in the market easily (Karadeniz, 2009, p. 107). The advertising approaches used need to show customers the product’s unique selling point to encourage them to purchase this brand. This will help the product to overcome entry barriers in the market that made the previous model to register abysmal performance.
References
Karadeniz, M. (2009). Product positioning strategy in marketing management. Journal of Naval Science and Engineering, 5 (2), 98-110.
Kiley, D. (2007, June 5). Failure of Accord Hybrid is a marketing fiasco. Bloomberg Business Week. Web.
Most multinational corporations analyse the political risks associated with investing in a particular country in order to avoid the risk of financial losses.
However, it should be noted that, effectively managing political risk can also be beneficial to companies in that it can help them take advantage of opportunities that they may not have identified if they had not carried out the risk analysis.
This political risk assessment of the US business environment by Honda Corporation will therefore be carried for two purposes; to identify the risks facing the company and to identify the benefits that the company might realise in the event that they invest there (Jakobsen, 2010).
Political environment
It is very clear that country politics and the politicians do not operate separately from other affairs of a country and therefore most of the political changes that are experienced in a country are as a result of the various changes in the economic, social and cultural aspects of the country.
This shows that even though most regulatory measures such as tax rates are decided upon by politicians, these regulations and considerations will generally be based on the economic conditions such as the economic status of the country and the effect these new regulations will have on the economy as a whole.
This shows the importance of analysing the political environment of a country in relation to its effect on the operations of a multinational company planning to invest there.
Rules and regulations established by politicians in the course of normal legislative duties impact on the activities of a business in terms of influencing the operational costs. These regulations also influence the marketing and distribution strategies adopted by a company in that particular country (Jensen, 2006).
In the US, one of the major features of the economy is the way the private sector is allowed a lot of freedom to the extent that most of the economic decisions that determine the direction and the extent of production of the economy are made by members of the private sector.
This is made possible due to the relatively low levels of regulations on business activities and the low levels of government intervention on the activities of the private business sector. The court system is also a major contributor to this freedom as it is charged with the responsibility of enforcing contracts and protecting the intellectual property of business entities.
This freedom has contributed to the growth of businesses in the US and to the rapid growth of the economy of the country (Jensen, 2008).
One of the major influences of political regulations in the US is the enactment of the Sarbanes-Oxley – 2002 which brought about stringent regulations on the financial reporting of companies operating in the country (Jain & Rezaee, 2006).
This has the implication that if the management of Honda decides to invest in the US, then they have to comply with the requirements of this act. Analysing the business environment of the US today reveals that the government has always tried to develop the country’s economy based on free competition and capitalism.
This has been done through establishing laws and regulations that promote business operations in the country as well as the entry and operations of multinational corporations like Honda.
Conclusion
Based on the evaluation of the current business environment in the US, Honda Corporation can enter the US market because the country provides a good political environment for the business operations of multinational corporations.
However, the management of the company must prepare to comply with the regulations of the Sarbanes-Oxley Act 2002 which requires the restructuring of the financial reporting process to allow more openness and transparency.
Competition is also stiff in the US and therefore Honda must develop quality products and services in order to survive in business.
References
Jain, P. K., & Rezaee, Z. 2006, The Sarbanes-Oxley Act of 2002 and capital-market behavior: Early evidence. Contemporary Accounting Research, vol. 23 no. 3 pp. 629-654.
Jakobsen, J. 2010, Old problems remain, new ones crop up: Political risk in the 21st century, Business Horizons, vol. 53 no. 5, pp. 481-490.
Jensen, N. M. 2006, Nation-states and the multinational corporation, Princeton, New Jersey: Princeton University Press
Jensen, N. M. 2008, Political Risk, Democratic Institutions, and Foreign Direct Investment, Journal of Politics, vol. 70, no. 4, pp. 1040-1052.
The automotive industry produces and sells motor vehicles, which are goods. It is one of the highest revenue generating industries in the world.
Approximately 80.1 million cars were produced in 2011. The major industry players are Volkswagen, Toyota, Nissan and Honda. (OICA, 2012)
Company background
Audi is an automobile manufacturer based in Germany; it manufactures a wide range of vehicles. Volkswagen AG as a subsidiary owns Audi as a brand. The four rings in the Audis symbol represent the 1932 amalgamation of the four brands that formed the Auto-union AG.
The four brands were The Saxon brands of Audi and Horch from Zwickau, Wanderer from Chemnitz and DKW from Zschopau (Audi, 2012).
Toyota Motor Corporation is the manufacturer of Toyota Land cruiser S.U.V. Toyota has its headquarters in Toyota city, Aichi, Japan. Toyota deals in the automotive, robotics and financial services industries.
It is the largest automaker in the industry. Toyota was founded in 1937 by Kiichiro Toyoda, and has grown on since the production of AA Sedan in 1936 to become the largest car manufacture in the world (Toyota, 2012).
Product overview
The sports utility vehicles are vehicles build on light truck chassis and are accompanied by a four-wheel drive for on and off road use.
Toyota land cruiser is a vehicle designed to meet off road needs and urban roads. It is also luxurious vehicles. This is evident as, it has a V8 engine, which enables it to have off-road capabilities. In addition, it is luxurious and can carry up to eight passengers. It has a $77,955 price tag (Toyota, 2012).
Audi S.U.V A6 all road is a vehicle that is luxurious, and gives an off-road experience too, it is cheaper compared to the Toyota land cruiser S.U.V. Is offers more fuel economy as compared to the land cruiser as it has a $70,000 price tag (Audi, 2012)
Strategic marketing
Strategic marketing is the use of a company’s strategic plans to market its products. It entails the company to identifying areas where a firm has a sustainable competitive edge over the other firms in the market and it use them as their marketing strategy. (Procto, 2000)
Macro environmental forces
These environmental forces are outside the organization. They affect industries as wells as individual organizations. The organization has little or no control over these forces.
They include the following among others: politics, economics, social cultural factors, technology, Environment and the legal frameworks (Pride & Farrell 2012).
Micro environmental forces
Microenvironment is the organizational environment. It comprises of the internalities of the organization that is the forces the organization has some control over. They include among others, employees, Trade unions, local community, suppliers and customers (Pride & Farrell 2012).
SWOT analysis
SWOT analysis is the analysis of strengths, weaknesses opportunities and threats a firm is facing. It involves looking at factors that are both within as well as outside the firm.
Strengths and weaknesses are factors that affect the organizations internal environment, while opportunities and threats affect the organizations external environment.
An analysis of these factors is very important in formulating corporate strategic plan and the marketing and positioning plan for a product (Procto, 2000).
Market segmentation
Market segmentation is the subdividing of the market into distinct subsets of customers who are relatively homogeneous so that specific marketing mix strategies can be developed to secure each market (Pride & Farrell 2012).
Target markets
Target markets are the markets in which a firm wants to sell its goods and services. The firm chooses the market segments it wants to operate in according to its abilities.
This should be based on their current use, their potential for future growth, and competitors’ strengths (Procto, 2000).
Positioning strategy
Positioning is the process by which a company establishes an image of its products in the minds of the customer relative to the image of the competitors’ product offering.
Positioning strategy are the strategies that the firm is using to position itself in the minds of their consumers (Procto, 2000).
Toyota S.U.V cruiser and Audi S.U.V A6 are positioned as premium class vehicles. They are sold to the upper end markets, where consumers want luxurious cars for off and on road use.
Recommendations
This is the section where the recommendations about the report recorded. In the recommendation section, the writer makes his recommendations based on the facts preset in the report.
The recommendations give suggestion on possible solutions to what the report seeks to achieve (Bentley 2003).
References
Audi Worldwide > Home. (n.d.). Audi of America > Luxury Has Progressed . Retrieved from https://www.audi.com/en.html
Bentley, T. J. (2003). Report writing in business: the effective communication of information (Repr. ed.). London: Elsevier.
The purpose of this campaign was to research and analyse the key consumer behaviour issues towards an advertising campaign. The product that we chose was Honda Insight Hybrid vehicle. Following is a picture of the Honda Insight Hybrid car.
Honda Insight Hybrid
Honda wanted to target two categories of customers for their new vehicle launch. Firstly, the students and professionals within the age group of 20 to 29, who were interested in a stylish and safe mode of transportation. Secondly, the elderly above 55 years of age who preferred a technologically advanced and environment friendly vehicle.
The most favoured method of analyzing any product is the SWOT analysis. SWOT means the Strengths, Weaknesses, Opportunities, and Threats of that particular product or company. Following is an illustration of the SWOT analysis of Honda Insight Hybrid car.
SWOT Analysis of Honda Insight Hybrid
Strengths
Honda has a great brand image that will surely help in building up the sales. In today’s world, when the fuel sources are becoming limited and alternative sources of energy are being sought, the fuel efficiency of Honda Insight Hybrid is a welcome feature.
Commenting on a test drive, Ben Stewart said, “If gasoline prices continue to raise much beyond today’s $4 per gallon national average, both Toyota and Honda should see sales of these two hybrids skyrocket.
But if we could have just one of these cars to drive every day, our pick would be the slightly-more-fun Honda.” (Stewart, 2011). Honda has used the latest technology in manufacturing the car.
Another positive aspect of the car is that it emits less pollution and is environment friendly. As a result of these features, the car is expected to be favoured by the masses.
Weaknesses
The inclusion of new features has raised the cost of the car. Honda Insight Hybrid might be the preferred car but due to the high price, most of the people may not be able to afford it. The car hasn’t been tested yet for its on-road performance.
As such, people might resist buying it immediately. They would prefer to wait and watch. According to reports, one of the major drawbacks of Honda Insight Hybrid is its being light weight. Hence its on-road stability is uncertain.
Opportunities
Ours is a vast market. Proper marketing and making people aware of the new features can help in garnering good number of customers. Moreover, many of us are loyal to the brand of Honda. We know that Honda will always bring out the best. This popularity can be tapped to have good sales.
Threats
The major threat that Honda Insight Hybrid has is from its competitors like Toyota. The expected launch of Toyota’s Prius C by March 2012 might reduce the sales of Honda Insight Hybrid. In this regard, Larry E. Hall opined that, “But, it will soon be overshadowed by the 2012 Prius C when it arrives in March.” (Hall, 2012)
Conclusion
The overall behaviour of the people towards the new Honda Insight Hybrid is encouraging and if test reports are to be believed, the car has a bright future. In my opinion, to get an edge over its main competitor, Toyota, Honda should reduce the price of its new car to some extent.
There are several approaches to corporate social responsibility (CSR), the main ones being direct funding programs, targeting the needs of staff, non-financial support to the community, and investment in the environment.
Companies also choose to implement CSR for various reasons, be it pressure from within or outside the company, as a tool for risk management, improved accountability in the company or enhanced stakeholder management (Crane and Matten, 211). This paper therefore evaluates similarities and differences in Honda’s and Nissan’s CSR strategies based on their scorecards and CSR reports, and assesses their social accounts.
Nissan Motors, according to its CSR report (Nissan-global.com), aims to “Enrich People’s Lives”. Guided by its vision, the company makes efforts to grow with society by prioritizing on two objectives: sustainable profits for the company and development for society.
Nissan Motors first formulated a CSR policy in the fiscal year 2005, whereby it identified vital areas to focus on. To measure its performance in CSR related activities, Nissan developed a scorecard which has been published annually since 2007, so as to increase transparency and encourage feedback from all stakeholders.
In comparison, Honda (UK) first published a CSR report in 2007 since it recognized a need to communicate that it was a good corporate citizen (world.honda.com). The report highlighted Honda’s core philosophy, and the work it had done to promote them.
Honda has attached itself to a ‘2010 vision’, as per their CSR report, that is, “Committed to being a company that society wants to exist”. Although the company encourages feedback from all key stakeholders, Honda does not have a sustainability scorecard like Nissan; therefore the company doesn’t communicate the success or failure of its CSR initiatives.
Honda’s CSR report focuses on the company’s achievements in the environment, safety concerns, educational initiatives and the company’s relationship with the society. Nissan’s sustainability report is much wider in scope, whereby it illustrates the company’s approach to CSR by mentioning eight key areas of focus.
The eight key areas in the report are: corporate governance and internal control, the environment, safety, quality, employees, value chain, philanthropy, and economic contribution.
Honda, in its CSR report, claims to be the first manufacturer to volunteer a global target for carbon dioxide (CO2) emissions for all its products and manufacturing facilities.
In its Environment Statement (1992), the company says that it aims at developing products and facilities that have the lowest impact on the environment, by following four principles: first, Honda will ensure that it recycles materials and make efforts to save energy and resources at each stage of a product’s life cycle.
Second, the company will minimize waste and find appropriate solutions of doing away with waste at each stage of the product life cycle. Thirdly, each member of the company will strive to protect human health, and take up the assigned role so as to make sure that Honda as a whole is responsible. Fourth, Honda will evaluate its impact on the environment and society, and engage in ways that will boost its image in society.
To follow up on its Environment Statement, Honda aims to make improvements in exhaust emissions, noise reduction, recyclability of parts, and fuel efficiency in the production stage of each product. There is evidence to show that green factories and green buildings are used in production and administrative functions of the company, which aim at reducing CO2 emissions, air pollution, and efficient utilization of energy.
The policy also commits the company to recover and recycle parts of products that have reached the last stage of their life cycle. Honda’s CSR report quotes that the company has so far achieved in lowering CO2 emissions in 2007, as compared to levels reached in fiscal year 2001. The company has also set CO2 targets that it hopes to attain in the year 2010.
Nissan Motors, similarly, established an environmental philosophy in 1992. The company has also engaged itself in activities that aim to reduce CO2 emissions, and reduce air, soil, and water pollution. Like Honda, Nissan employs the use of green factories and offices, further proven by the fact that its global headquarters in Japan uses the best possible ways to ensure utilization of renewable energy.
The building takes advantage of sunlight so as to save on energy. 60 percent of complete vehicles in Japan are transported by sea, leading to further reduction in CO2 emissions. This model is currently in use in other Nissan manufacturing plants around the world.
While both car makers manufacture hybrid and electric cars so as to decrease CO2 emissions, Nissan has gone a step further by entering into contracts with different countries. The partnerships aim to endorse the introduction of zero-emission automobiles in those areas, whereby the states should target on creating the required infrastructure to support the mobility of such vehicles.
In its sustainability report, Nissan has set a 100 percent recyclability target rate for its vehicles by 2010. Furthermore, the company has a global environment planning office that checks on the company’s responsiveness towards the environment while communicating with its stakeholders.
Both Nissan and Honda, in their CSR reports, have developed technologies that provide a measure of safety for drivers, as well as pedestrians. The two car companies have a similar approach when it comes to preventing avoidable accidents (use of installed sensory cameras in the vehicles), pre-crash safety (allows drivers recover from dangerous situations), and post accident features (help in injury minimization).
The two car makers have reported to have participated in safety through education, where Honda has the safety challenge and Nissan held various safety activities in several locations around the world. Honda’s safety challenge, an in-house activity, cannot be ascertained while there is valid evidence in the sustainability report that Nissan engages in safety related activities.
Honda reports on having undertook a school of dreams initiative in 2007 and 2008. The two day educational program was meant to inspire children and improve teachers’ capabilities to match curriculum requirements in several subject areas.
The CSR report states that an independent post-research study was carried out thereafter. The group interviewed teachers who had participated in the program, and found out that all teachers concurred that the school of dreams had a positive effect on all the students. The claim has not been supported in the report; however, there is more detail about Honda’s apprenticeship program in the UK.
Nissan also engages in educative programs, such as school visits, while the names of the schools have been mentioned, unlike Honda. In the sustainability report, Nissan states that it has developed a partnership with WCN (Weather Caster Network) that aims on increasing awareness in environmental issues among children.
Comprehensive figures have been provided in the document to support the notion that Nissan donates or is in sponsorship arrangements with other entities that provide books and other reading material to young children.
Nissan’s involvement with the stakeholders is rather explicit, whereby the company elaborates on its relationship with its customers, shareholders and investors, business partners and with society in the CSR report. Strategies to provide for each stakeholder have clearly been distinguished and illustrated.
The company has established targets and feedback mechanisms that aim on enhancing customer satisfaction, as well the development needs of its employees. Honda’s CSR strategies have been summarized in the society section; hence an analyst would have a difficult time evaluating Honda’s performance.
To its shareholders and investors, Nissan commits itself to provide correct and detailed on its implementation strategies so as to enable them to make informed decisions.
The company came in first in a list of “Awards for Excellence in Corporate Disclosure of the Securities Analysts Association of Japan”, for the third time in a row, in the automotive and tires industry. This proves that the company is practicing the best accounting disclosure policies Japan’s motor industry.
While Honda’s CSR makes little mention of strategies that empower employees, Nissan’s sustainability report states that the company continually supports career designs for its employees.
The report states the company strives to develop a culture of learning and improves internal communication within the company. Nissan affirms that it has mechanisms that ensure diversity is respected within the organization, and policies against discrimination.
Nissan has a corporate citizenship steering committee that oversees environmental planning, as well as societal issues. The company focuses on three major approaches: encouraging the spirit of volunteering among its workforce, taking advantage of the company’s strengths and qualities, and collaborating with specialized NGOs so as to make sure its social contributions are efficiently used.
Nissan also reports use of third party audits that monitor its CSR activities, which implies that its records are more reliable than Honda’s. An ethical audit is an important evaluation of a company’s CSR programs, in a move to determine if the strategies are effective, and efficient.
Nissan complies with GRI (Global Reporting Initiative) guidelines in the preparation of its statements, while Honda does not. The sustainability report illustrates the company’s CSR strategy and profile, the management’s approach and performance indicators, evidenced in the scorecard. A sustainability report relates to the triple bottom line, that is people, profits, and the planet.
Honda, on the other hand, simply reiterates the car maker’s CSR initiatives, targets and achievements. There is no mention of failure to meet a target in Honda’s report, which means that the report has only highlighted on its positive aspects. On the contrary, Nissan has reported on several failures, such as failure to pay dividends to shareholders in 2009.
On this account therefore, Nissan can be said to have provided complete information regarding its CSR initiatives. Honda lacks a scorecard that illustrates its failures and achievements, important issues that can improve the reliability of the CSR report.
Whereas the two companies are multinationals, Honda’s report focuses primarily on the CSR activities of the company in the UK, while Nissan has documented initiatives carried out in different geographical regions, which provides a clearer picture of the company as a whole. Nissan’s sustainability report is therefore more detailed, and reliable, than Honda’s CSR report.
Works Cited
Crane, Andrew, and Dirk Matten. Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization. London: Oxford University Press, 2007. Print.
Honda (UK). Corporate Social Responsibility Report. 2008. Web.
Nissan Motor Co. Ltd. Sustainability Report. 2010. Web.
The study seeks to offer an attentive examination of the supply chain design in the auto-industry taking BMW as the case. In addition, this study will explore how supply chain design increases the competitive advantage to the firms within the auto industry.
With the use of theoretical and empirical studies, the paper will further explore the supply chain design that is appropriate for firms such as BMW. The conclusion drawn in the study is that appropriate design for the firm’s supply and distribution processes increases its competitive advantage. The study recommends further plans for potential studies in this field.
Introduction: BMW
BMW is one of the largest automobile products manufacturers around the globe. BMW claims larger market share in the automobile industry. Over the years, the company has managed to generate growth in profitability through establishing within the premium segment of the automotive market. To meet the needs of the market, the company has diversified its products.
Besides, the company has managed its supply chain to ensure its products take the least time to reach the customers. the company realized that proper management of its supply chain is one of the capabilities the company can utilize to remain competitive and increase its market share.
Despite the fluctuations that have occurred in the automobiles market, BMW has continued to register immense growth in production volumes as well as sales. In addition, to achieve growth and development, BMW has embraced the commercialization of sophisticated environmental expertise as well as reforming its organization to earn revenue.
Further, the company undertakes actions aimed at reinforcing its market share, particularly on the fast developing economies. BMW have also focused on delivering inexpensive quality automobiles to its clients as well as offering products with low harmful discharges in the environment.
BMW recognizes the need for close cooperation with suppliers in the provision of its products. As a result, it has established worldwide connections with suppliers to accomplish its pledge of providing quality and superior automobile product presentation. In addition, the firm has cultivated trust with its business partners through sustaining equity in their relations by valuing the existing rules and guidelines.
Further, BMW recognizes that all its partners as well as its suppliers should be offered equal prospects in business transactions. Moreover, the firm has been able to work with other partners in coming with standard prices hence achieving synergies in their operations to increase its growth potential.
BMW’s customer services operations have achieved immense gains in the realization of the best services to its customers globally. The firm has achieved this by giving customer satisfaction a priority in its operations. Further, the firm has approved a strategy of providing affordable, reliable as well as developing the efficiency in the production.
The company also undertakes various measures aimed at creating an environment where customers are able to address issues concerning the fulfilment they receive from the services. Through these initiatives, BMW has been able to increase its customer base in many parts of the globe such as in India, China, Brazil, and Nigeria among other fast-developing economies.
The Purpose of the Study
The current increased competitive environments in the marketplace have put a lot of pressure on the corporations to be innovative or be completely out of operations. Innovations reduce the time the products take in the market place and as a result reduce its life cycle (Pyke & Cohen, 2004).
Proper management of the product movement from the production point to the market place is highly needed in order to enhance its competitive advantage. With no appropriate management of the product lifecycle, the product returns will increase that subsequently leads to the increase in the cost of selling (Towill, 2006).
The increased cost of production means additional requirement of resources for the development of products. These additional cost problems are caused by long runs in the production and distribution of the products.
Emphasizing on the planning of logistics is the only way through which companies can do away with the difficulties caused by enhanced competition in the market place and shorter merchandise time span (Pyke & Cohen, 2004).
Designing appropriate supply chain procedures and processes will create appropriate distribution channels for the firm efficient operations environment (Ishii et al., 2008). Besides increasing efficient distribution channels, the efficient supply chain design will reduce the time the product takes in the market as well as increasing the product competitiveness.
The purpose of this study is to offer an extensive examination of supply chain design processes within the automobile firms that would enable them satisfy the customer needs. Precisely, the study will explore various ways of coming up with appropriate supply chain design applicable to the firm in order to meet the market needs.
The process of supply chain design will trace the path from the supply of the components, through the production process to the distribution process. In addition, the study also explores the planning of the logistical processes involved in the creation of the multigenerational products within the automotive industry particularly in BMW.
Background
The study will be both empirical and theoretical. The empirical study will determine the relationship between appropriate logistical plans and the increased competitive advantage of the products in the market.
In addition, the paper aims to determine empirically the relationship between the appropriate supply chain design and the product life cycle. The empirical studies will also determine the correlation between the supply chain plans and the increased productivity within the firm.
The theoretical objective of this study is to examine how the process of supply chain design has enabled the company increase its product presence in the market.
Moreover, the study aims to find different approaches in the supply chain design to ensure that the appropriate logistics is developed to help companies provide quality services to the customers. With the use of BMW as the case firm that have applied the appropriate supply chain design, the study will quantitatively explore how various firms have attained their supply chain processes.
The Scope of Investigation
The study will be both qualitative and quantitative. The qualitative part will be based on the literature review while the quantitative will be based on data collected through a survey. The survey will consist of a questionnaire that will be administered to the sampled population consisting of logistics and supply chain managers within the automotive firms.
In this study, some of the information will be obtained through the literature review of the scholarly articles as well as the materials pertaining to the supply chain and logistics firms as well as relevant information from the automobile industry industry. Moreover, the study will be limited to BMW with reference to the supply chain and logistics industry.
However, empirical studies will be conducted and the studies will be limited to the managers as well as supply chain and logistics managers in various departments within the company. In the empirical study, survey questionnaires will be the most suitable method of data collection since it is the best method of reaching the respondents within the target group.
In the empirical study, all logistics and supply chain managers are deemed viable. However, only 60 participants will be the selected depending on the frequency with which they have been involved in the supply chain planning as well as their knowledge in the supply chain design.
During the empirical study, the data collection should be given the least time possibly two weeks. However, to ascertain the results of the study, the survey will be conducted two times and therefore the study will take two months. The survey will be conducted online since this is the only way to get the respondents within the time span.
The Theoretical Framework
For this research to meet its obligations, it will be an exploratory research. The reason for the choice of this methodology is due to its innovation of novel ideas that is required in the supply chain design.
Through exploratory, the research will come up with new and clear concepts explaining the dynamics and processes in supply chain design, set up main concerns, build up on operational explanations and improve on the final research design.
Literature Review
A delivery chain is described as an incorporated procedure in which an amount of diverse production units such as sellers, producers, distributors and vendors function as a unit to obtain raw materials, change them into required manufactured goods, and to distribute the ready-for-consumption goods to the vendors (Wikner et al., 2011).
Conventionally, this chain is portrayed by onward flow of resources and backward stream of data. Practitioners and researchers have for years mainly examined different developments that are involved in the delivery sequence independently (Wikner et al., 2011). Nevertheless, in the recent times, there has been growing concern on the performance, blueprint, and the scrutiny of the entire delivery chain (Wikner et al., 2011).
A delivery chain consists of two fundamental incorporated processes at the top. These are the production planning and inventory control process, and the distribution and logistics process. These courses of action provide very essential foundation in the change and movement of raw materials into finished goods (Newhart et al., 2009). The former comprises the manufacturing and storeroom sub-procedures.
More precisely, the manufacture scheduling explains the design as well as the supervision of the whole procedure in the assembly ranging from resource planning and purchase, assembling process plan and planning, to material management plan and direction (Tzafestas & Kapsiotis, 2004).
Stock control explains the plan and organizing the luggage compartment guiding principles together with processes for raw materials, work-in-process stock, as well as often-consumable goods.
The latter shows the way goods are recovered and transferred from the depot to the vendors either directly or through other intermediaries who then transport them to the sellers. In this plan, stock recovery management, transfer and supply of end consumable goods (Tzafestas & Kapsiotis, 2004).
An interrelation between these processes gives rise to an incorporated delivery chain. The plan together with running of these processes establishes the degree to which the sequence of functions as a component to achieve the laid out performance objectives (Newhart et al., 2009).
For instance, BMW developed its supply chain that increases its competitiveness within the world market. In addition, the supply chain design enabled the company decreased most of its expenses within the distribution channel.
In order to optimize the upgrade conduit for its machinery and components from one point to another within the multiple product creation, the company designed a supply chain that reduced its development and production costs as well as component functionality necessities.
BMW Supply Chain Design
Supply Chain Design Within the Automotive Industry and Its Importance
The supply chain design with the automobile industry delivery series comprises a three-sequence of supply as well as a stage organization. A stage organization includes a constituent supplier, a unit supplier as well as an assembly plant. For instance, in the BMW’s production system, the components are assembled in units, which are then delivered to an assembly point.
In daily operations, new experiences come up and therefore there is need to develop new designs (Kouvelis & Gutierrez, 2007). For instance, given the new developments by automobile producers in terms of alertness as well as sensitivity, the supply chain design is developed as an approach to remain relevant in the automobile industry.
Through delivery chain redesign, several benefits accrue to the firm. For instance, proximity of the assembly plant to the manufacturer enables efficient decisions on quality as well as reaction to program alterations. In addition, with the new design, the abortion of in-shipment stock to the manufacturer is feasible thereby reducing expenses.
Moreover, due to supply chain redesign, the expenses incurred in terms of labor are minimized since the manufacturer’s plant is situated in an area closer to the labourers hence no need for transport (Kouvelis & Gutierrez, 2007).
Considerable decreases are achieved in the production costs due to the shortening of the gap between the different components and units to the manufacturing plant. Further, the new design is capable of meeting the demands of the consumers efficiently.
Methodology
The Study Design
In order to investigate the impact of quality in supply chain design in the firm’s production and distribution processes, this particular research study will utterly be a quantitative research. The requisite research data will be gathered across the study population through sampling strategy.
A research technique dubbed as survey method will essentially be drawn on while the process step levels will be applied to help analyze the obtained data. By employing these research methods, any ensuing unanticipated research hypothesis will possibly be suggested as well as formulated and the study will be much quicker and somewhat cheap (Cohen & Lee, 2008).
These research methods are sequentially considered to be amongst the best given that they rarely stand a chance of disqualifying any notable alternative explanations because they surmise to the event causations.
Sample and Sampling Procedure
In this particular study, all logistics and supply chain managers are deemed viable. However, only a small number of participants will be the selected depending on the frequency with which they have been involved in the supply chain planning as well as their knowledge in the supply chain design.
From the total number of supply chain managers that may be sampled, just one hundred supply chain managers will be selected via a technique dubbed as convenience simple online random sampling strategy and the research questionnaire will be administered to help in addressing the formulated research questions (Cohen & Lee, 2008).
Instrumentation
Data perceived to be containing the relevant research information for this study will be acquired from the primary as well as the secondary sources.
In fact, as a field survey and a study that involves self-administration of research questionnaires, the pertinent primary data that include the perceived quality information will have to be gathered. In essence, a comprehensive exploration instrument will be developed besides being satisfactorily tested prior to embarking on the actual quality services and organization’s success research study.
Data Collection
As one of the most important studies in the industry, the information will be collected through administering properly designed research questionnaires, observations alongside conducting well-structured in-depth online interviews to the unbiased selected participants. The soundly designed research questionnaire will be administered to one hundred participants.
Conversely, secondary research data will be acquired from the relevant industry records and other documents, which contain the of supply chain design. For this particular case, the study intends to trace the supply chain history and various models that have been applied in the designing supply chain plans.
Data Analysis Techniques
To obtain the best correlation approximation values, the study quantitative data analysis will be carried out by utilizing the integrated Statistical Analysis Tool (WISAT). Further quantitative data analysis techniques including spearman’s correlation, percentages, frequency distribution and deviations will be used to determine the research respondents’ proportions that chose various responses.
The method will be applied for each group of items available in the questionnaire that ideally corresponds to the formulated research question and objectives. Line graphs, tables as well as statistical bar charts will be used to make sure that quantitative data analysis is simply comprehensible (Cohen & Lee, 2008).
Findings Discussions and Analysis
From the study of supply chain of BMW, quantitative performance parameters are very vital in the determination of delivery chain’s output. The direct expenses, gains, or the clients’ reception determines the quantitative measures that are used. Based on costs, emphasis is put on production and allocation outlays. The study show that the allocation costs mainly arise from outlays incurred in transport.
As a result, in a haul-based arrangement, there is a possibility of abandoning the inventory level in the delivery series because supply is independent of the arrangement vibrancy. However, a change of existing restrictions of the units as well as modules influenced the conception of the idea about redesigning the supply series. The modular assembly unit is to be situated in an area with proximity to the assembly plant.
This reduces expenses based on transport, warehouse as well as inventory levels. There is evident indicating that alternating the current supply chain through cutback in the process constraints and changing positions come with substantial gains. In other words, the achievement of the customer satisfaction depends on the delivery of units where the firm embraces proximity to its customers.
Another critical point to success is the collaboration of the component traders in reduction of costs. As a result, the transfer of the assembly plant near the clients leads to increased gains to the firm.
In addition, the new design is advantageous because the modular assembly covers all aspects of the firm and therefore it is able to offer direct answers to its customers. The firm is thus able to be a resource of innovative business concepts that are able to be beneficial to the to the entire automobile business fraternity.
The Study Limitation and Anticipation
The research scope is limited to particular demographic group of supply chain managers and only one within the industry. The anticipation is that the outcome of the study will inform further research on the field.
Moreover, the outcome of the study should inform industry practitioners as well as those within the field on the appropriate supply chain design to be adopted by the corporations. Further, the study provides a historical and modeling framework that can be applied in the planning of appropriate supply chain.
Conclusion
Supply chain design is one of the most important processes in the production and distribution of commodities into the market. Appropriate supply chain design enables corporations attain the built-up expenditure reductions in their production and distribution processes.
In addition, it increases the effectiveness and efficiency in all the business processes, which in turn increases the firms’ competitiveness. Further, to attain cost efficiencies in multiple product creation, the company needs a supply chain design that reduces development and production costs as well as component functionality necessities.
References
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Towill, DR 2006, “Time compression and supply chain management – a guided tour,” Supply Chain Management, vol.1 no.1, pp.15-27.
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Wikner, J, Towill, DR & Naim, M 2011, “Smoothing supply chain dynamics,” International Journal of Production Economics, vol.22 no.3, pp.231-248.
Honda Motors Company has adopted a unique business model that seeks to satisfy the unique desires of every buyer and user of its products. As such it designs its products with the customer’s peculiar characters in mind (Honda motors 2011a). Honda Motors is headquartered in Tokyo Japan and has more than 390 subsidiaries in over 12 counties. It has established its business operations under three basic principles aimed at guaranteeing utmost joy to its customers. The company’s production philosophy is based on the desire to create a joyful experience of buying, selling, and creating. This philosophy asserts Honda Motors also desires to create not only a joyous experience but also the fulfillment of every person who enters into a contract with it. This has resulted in the creation of affordable products that add value to customers’ lives (Honda Motors 2011a).
Honda Motors Company’s first-quarter performance for the year 2010 was beyond what market analysts had expected. The company performed well beyond expectation due to cost cuts. The company recorded the highest quarterly profits compared to the last five previous quarterly earnings. As such the company outperformed established car makers such as Toyota (Kim 2010). Financially it recorded an impressive year with an impressive ¥8,579,174 million turnovers in the year 2010(Honda Motors 2011a). The company prides itself on having several environmentally friendly sustainable features. The company has designed and developed hybrid (electric-gasoline) and advanced combustion gasoline engines that reduce carbon dioxide emissions. Furthermore, the company has also developed engines that utilize biofuels as well as hydrogen fuel cell-driven engines (Siuru 2007). The result is that Honda motors have been voted the most environmentally friendly manufacture in the world (Honda Motors 2011b). The figure below shows Honda motor’s performance in the US market in the year 2010 to 2011.
Source: Wall Street Journal.
The motor vehicle industry is facing an uncertain future and as such Honda motors have had a paradigm shift to help it survive turbulent times. The company hopes to enhance its motorcycle production as well as enhance its global production chain, which will solidify its position in the global market (Honda Motors 2010). Furthermore, the company has invested in fuel-efficient products (Ito 2010). The company, in keeping with its desire to produce eco-friendly cars, has adopted a techno-centric approach in fulfilling this dream. Honda Motors see technology as the way to reduce the environmental impacts of its operations and as such is investing heavily in the latest technologies that do not use fossil fuels. The company, therefore, seeks to increase its efforts in investing in technologies such as the fuel cell as well as the solar cell (Honda Motors 2010).
The figure below shows the company’s performance in the world market from March 2009 to March 2010.
Source: Honda Motors 2010, company reports.
PEST analysis
Several factors affect Honda motors business internationally. In China, the company has moved in to capitalize on the latest economic gains in the Chinese economy zones (Rima 2010). The Chinese government has lifted the currency peg on the Yuan making it appreciate against major currencies such as the dollar, the EURO, and the Sterling Pound (Rima 2010). Furthermore, the Chinese Government has also created special production zones to help manufacturing companies operate at minimal costs. Honda motors have moved in fast and have established a joint venture with Guangzhou SOE, to establish a manufacturing plant in one of the Chinese manufacturing zones (Rima 2010). The issue of global warming is increasingly gaining political attention all over the world. Governments are increasingly becoming active in ensuring that the levels of carbon emissions are kept low by revaluating policies concerned with manufacturing as well as the increasing emission from transport means.
This has necessitated Honda Motors to increase its interest in the productions of bio ethanol-powered cars which have found an appeal in some markets especially the United Kingdom (Ward-Jones 2008). However, the company is likely to ruffle some political feathers in china as a result of the latest labor disputes in its factory in china (Bremmer and Stewart 2011). Honda motors have established its model on the ‘three joys’ philosophy: all aimed at satisfying the users of the company’s products. In the USA the company has introduced a delivery and manufacturing process that puts the customers first. Thus Honda Motors has become popular amongst different social groups in that market as customers not only drive Honda cars but do it “with their own expectations” (Modi, Zein, Kramer, Saudale, Banavadikar, Deshpande n.d.). Furthermore, some states such as California have implemented strict carbon emission control policies while at the same time giving tax-exempts to purchase environmentally friendly motor vehicles (An and Sauer 2004).
The state also promotes the use of hybrid cars thus reducing the amount of carbon emission. Honda Civic Hybrid meets this requirement and as such will be one of the eco-cars with high demand in this market (An and Sauer 2004). Furthermore, the company has enhanced efforts to produce ethanol from plants which it hopes to one day develop into fuel for motor vehicles (Plunkett 2006). The company has therefore established a plant to run a project testing ethanol-powered cars, which it hopes will yield positive results (Plunkett 2006). Moorvale the company is also looking beyond eco-friendly cars and has built an eco-friendly building in America (Honda Motors 2011a). The figures below illustrate external factors that affect Honda Motors Company operations.
Source: Narayanan and Fahey. 2001.Source: Narayanan and Fahey. 2001.
Honda Motors sustainable efforts
According to a 2005 environmental report conducted by Ceres, a national collation of investors in the USA and Europe indicates that the threat of ever-increasing global temperatures is real (Cogan 2006). Temperatures are rising while glaciers are melting at an alarming rate. This has lead to major governments all over the world coming together and signs intergovernmental agreements. These agreements stipulate the rules that manufacturers should follow to ensure that there is reduced emissions of greenhouse e gasses to the environment. In 2005 the then British premier, Tony Blair urged corporate as well as political leaders from all over the world to embrace the fight against global warming (Cogan 2006). As such Companies, especially motor vehicle manufacture have awakened to the reality that compliance with these rules is a costly affair that needs an urgent paradigm shift.
However, refusal to comply presents a further risk for motor vehicle manufacturers. Honda motors see the production of energy-efficient vehicles as one of its core corporate social responsibility. As such the company has introduced into the market highly fuel-efficient brands such as the Honda Civic hybrid which have been rated very highly. Other CSR initiatives include safety enhancement features for its new motor vehicles as well as its involvement in community activities to produce long-lasting rice in Asia (Honda Motors 2011c; Cogan 2006). A new environmental management policy and standards have been established by The International Organization for Standards, ISO. These standards stipulate the environmental management processes, evaluation, and regulations for manufacturers (Tibor & Feldman 1995). Because of the company’s ethical responsibility towards environmental management through its production of eco-friendly vehicles the company has received several international accreditations and awards (Honda Motors 2011d). These accreditations include the ISO 14000 (2010) for investing and producing cleaner motor vehicles (Honda Motors 2011d; Peng 2007).
Other awards include Americas UCS greenest carmaker (2007), highest EPA Fuel Economy Rating (2005) as well as the top ten finish for its Honda Insight in Kelley Blue Book’s (Used and new car brand recognition awards), 2010 greenest car category (Hinda 2011d). Honda Motors has gained a positive rating from the US environmental program agency. The agency uses a variety of parameters to test and accredit among other things motor vehicles for environmental compliance. For motor vehicles the agency tests for efficiency in Plug-In Hybrid-Electric mechanism as well as a test for Highway Fuel Economy (CHING and BYUN 2008). EPA has noted that Honda Civic Hybrid is one of the most fuel-efficient motor vehicles on American roads (Simpson 2006). According to a motor vehicle, environmental compliance report conducted by National Renewable Energy Laboratory in 2005 Honda Motors performed well overall, as well as coming second to Toyota motors in the motor company category with a score of 62 points (Simpson 2006).
In efforts to maintain the sustainable efforts Honda CEO, Takanobu Ito, explains that the company is planning to improve its Hybrid brands. Furthermore, the company has also made considerable in producing an all-electric car. Mr. Ito adds that the companies will add their hybrid brands to five (Meier 2010).
Source: Honda 2010b.
The carmaker is one of the major carmakers that shows concern for environmentally friendly products has made plans to reduce carbon dioxide emission in its production line as well as emissions from its cars. The company had targeted to reduce its carbon dioxide from its automotive production line by 30% (Honda 2010b).. Furthermore the company has recognized the need to conserve water and as such has made targets to reduce its water consumption by 30 % (Honda 2010b).. The figure below reflects on Honda motors carbon dioxide and water consumption reduction rates.
Issues of public concern
There are several issues of public concern relating to the company. The company which has, through its corporate outreach program, provided high utility vehicles during disasters and emergencies has been accused by the American public of doing too little to help America (Alsop 2002). Furthermore, the new Honda electric vehicles have also been subjects of public concerns (McGosh 2008). Some of the users have argued that the vehicles are too quiet that a driver has to be careful when coming from behind pedestrians or cyclists. Moreover, the Honda’s electric battery cost about US$ 30, 000 which is more than three times the price of a normal small car (McGosh 2008). Thus maintenance of this hybrid car is too expensive (McGosh 2008).
The benchmark for good practice
The production of a hybrid car is a very costly affair. It is estimated that manufacturers of hybrid cars are making losses for every unit of hybrid car they sell. Honda Motors was estimated to lose US$ 8000 for every hybrid insight it sold in the year 2008 to 2010 (Forster 2003). However, the company is using this as the benchmark towards the mass and profitable production of hybrid cars. The company expects to break even in a couple of years through the sales of the Insight. This is because as the prices of gasoline increase the demand for energy-efficient cars will grow (Keown 2007).. The company is using the Honda Insight as the benchmark in testing new technologies that will yield further knowledge on the production of improved hybrid applications that will be used in other cars (Keown 2007). In efforts to beat competition from other hybrid brands such a Toyota Prius, Honda has set new benchmarks in its new version Insight. The improved model has its Intelligent Power Unit strategically placed beneath its cargo boot, therefore increasing cabin space. Furthermore, it has a 1.3 L i-VTEC engine that improves fuel efficiency.
As such this increases cabin space and advantage over another hybrid (Honda 2011e). All this is at a reasonable lower price than the Prius. The Insight is selling at about US $ 19000, which is about the US $ 2000 below the Prius (Welsh 2009). Upon introduction in the market, the Honda Insight was the biggest challenger to the stylish and improved Toyota Prius. In the first month of the introduction of the year 2009, Insight recorded impressive sales at 18000 units in the global market (Welsh 2009). The record sales were because of the Insight’s considerable lower prices as compared to the Prius. Initially, Toyota was adamant and maintained its prices for the Prius but sooner it was forced to readjust its prices downwards to compete with Honda Insight (McGosh 2008). Honda hybrid however loses in comparison to the new all-electric Nissan Leaf (Boxwell 2011). Nissan Leaf is an all-electric car that reduces carbon emission as well as dependency on petroleum (Boxwell 2011). As such it is more environmentally friendly than Honda’s insight. (Boxwell 2011)
Honda is exposed to a variety of risks and uncertainties. As a result, it has developed several functional strategies to prepare for the tumultuous future. Because the future of the motor industry lies in environmentally friendly products, the company is planning to invest in research and development aimed at developing new application technologies to enhance its eco vehicle policy. To add to this the company is also overhauling its quality control strategy to ensure its products meet the best customer demands (Honda Motors 2010). Furthermore, the company has implemented several efforts to enhance its production as well as sales efficiencies, to help its products meet international market demand for environmental-friendly vehicles (Honda Motors 2010). These strategies coupled with the company’s capacity and increased effort to develop better engines represent the company’s sustainable framework for the future (Honda Motors 2010). The company’s bottom-line growth can be attributed to several factors (Tidd 2009). The figures below show the performance of Honda insight against other hybrids.
Source: Page and Rodriguez 2004.Source: Anthony 2008.
These include the company’s cost-cutting measures as well as increased sales of hybrid vehicles. However, its tendency to hedge in foreign exchange is threatening to negatively affect its bottom line growth in the recent past. Despite this, its bottom-line growth has been boosted by its increased growth in the sale across the globe (Tidd 2009).
Functional strategies
Honda motors have surprised many by the functional strategies it employs. The company seems to very well manage functional dichotomies that ensure successful business outcomes. Many companies seem to be either caught up in being learning or planning, developing the company’s internal resources or strategic market positioning, implementing product-related business models, or having a process-related model among other strategic moves. Honda on its part seems to successfully manage these strategic dichotomies. The company is a trendsetter in high-quality brands as well as efficient business and production processes. Furthermore, the company has innovated core competence business applications that have ensured a very strategic position in the global market (De Wit and Meyer 2010).
Sustainable mapping framework
The company has drawn up a framework for future sustainable business. The framework is informed by the company’s ability to manufacture its products with the consumer’s interest at heart. Furthermore, the sustainability framework has identified energy-efficient vehicles as to the future of the motor vehicle industry. As such the company has drawn up a map for sustainable business that attars with the leasing or sale of its new electric vehicles and motorbikes (Honda Motors 2011f).
Sweet spot analysis
The company has endeared itself to the customers by manufacturing not only efficient vehicles and motorcycles but also in manufacturing practicable and easy to use products. In the year 2010, Honda Motors Company has endeared itself to improve the new Honda Insight Hybrid and make it stand out in the hybrid car market. In this regard, the new insight has gained approval ratings by customers and motor vehicle analyst for practicality as well as affordability and fuel efficiency. For starters, the dashboard of the vehicle displays the efficiency level without interfering with the drive. Furthermore, the company has also found its sweet spot in juggling new engine dynamics that combine VE and cylinder pressure (Kojima 2002).
Triple bottom line
Honda motor company is the only manufacture of numerous products the meets market preferences. Since its inception, the company’s engineers have combined intellect, research, and ingenuity to manufacture no only techno-savvy products but also products the meet its triple bottom line people, planet, and profit (Shook 1988).
Hondas community engagement
The Company’s CSR efforts are not only concerned with the manufacturing of energy-efficient vehicles but also are concerned with engaging local communities. To do this the company has formed the Community Engagement Committee. The committee has the mandate to review charitable community requests. The committee does engage in initiatives that are concerned with health, diversity, and safety issues in communities in such locations as Indiana, USA. In this initiative that CEC wants to portray the company as one that looks beyond the profits (CSR Reports 2007).
Stakeholder concerns
The company has enlisted various stakeholders to improve its business worldwide. These include dealers, suppliers, manufacturers, associates as well as its customers. The company endeavors to establish and maintain a very good relationship with these stakeholders and thru reduce any negative effects that may hinder any relationship. Such efforts to improve relationships include strengthening support from dealers at the same time supplying them with sufficient information from market surveys. The company has also developed a privacy policy to endure confidentiality with its major stakeholders (CSR Reports 2007; Harrison and St. John 2010).
New markets
The company establishes that it needs to venture into new markets if it is to make any successful financial gains and also to survive turbulent times in this industry. As such it has had several initiatives to enter into a new market. Some of these initiatives include the company’s efforts to enter into the aviation industry. The company has therefore embarked and made tremendous progress towards manufacturing the Honda Jet (Honda aircraft 2011).
Recommendations
The natural environment is evolving to present new challenges to manufactures and users of manufactured products. The mining and utilization of natural resources are increasingly becoming a concern for the natural environment sustainability. as such the company needs to continues with its long-held reputation of manufacturing eco-friendly cars as well as adopting eco-friendly manufacturing processes. However, the new company hybrid make of automobiles are not as energy efficient as compared to its peers and rivals such as the Toyota Prius and Nissan Leaf. As such the company should look into the possibility of having all-electric care like the new Nissan leaf to compete effectively in the hybrid car market segment. Because the future of energy efficiency in the motor vehicle is in the development of a better energy conservation battery, the company should also concert its efforts into more research in this field.
Furthermore, the company has lost gainfully to Toyota Prius on the branding of hybrid cars. As such the company should also improve the outwards feel of its new Honda insight hybrid to ensure that its looks more like a finished product than a prototype. Because the company has been a trendsetter in the automobile industry innovations, the company should also exp0lrre the opportunities and possibilities of manufacturing hybrid engines for boats and other means of water transport. Furthermore e a hybrid motorcycle would be a good idea to automobile consumers who are becoming increasingly attracted to hybrid engines. The company’s sustainable future would not be complete without implementing a well-developed training program. The training should also focus on consumers. It would provide sufficient knowledge on how to consume and utilize Honda motors company’s products optimally. Furthermore, the company should focus only on developing affordable product s fro third world markets such as Africa, Asia, and the Central American
Conclusion
The Honda motors company has stood out in the world of carmakers. This is due to its efforts to manufacturing top durable brands that also assert the consumer’s desires. The company has had a successful recent pas. This is reflected in the company’s 2010 financial returns. The company recorded impressive profits of about ¥8,579,174 in the year 2010. These profits have been necessitated by several factors. The company is the leading manufacture of motorcycles all over the world with reputable brands from utility motorcycles, security racing, and leisure brands. Furthermore, the company’s efforts to produce energy-efficient motor vehicles have been rewarded greatly. This is because of the impressive performance of its hybrid brands such as the Honda Insight, a semi hybrid car that uses both electric engines as well as gasoline. Against other hybrid cars such as Toyota Prius, the Honda Hybrid has performed extremely well especially in the American markets. The company’s operations are affected by several factors in the company’s that it operates in. The company has moved in to capitalize on the country’s economic boost.
As such it has established manufacturing plants in one of the economic zones. Together with this, the company has seen its rating rise in the American market according to statements by the country’s Environmental Program Authority. Such statements have moved in to reinforce the company’s brand repudiation for production. The company also aims at producing motor vehicles that not only satisfy customers’ unique brand and environmental concerns but also give the best value for the clients’ money. However, the company’s progress has not been without some hindrances. In the recent past, the company’s social cooperate responsibility has been largely criticized in some communities for not doing enough to help those communities. However, the company’s CSR efforts are concentrated on the manufacturing of eco-friendly motor vehicles. Moreover, the company’s hybrid car has been criticized for not being too pocket-friendly as well as posing new accident risk to other nonmotor vehicle road users. Despite this, the company has been a winner of major international awards such as the ISO 14000 for environmentally friendly products. The company’s currently doing well and is looking to the future with a lot of optimism due to its solid past.
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Honda Motor is one of the most successful companies in the world. It has attracted massive interest due to its unique corporate strategy. Its sheer ability to recognize the forces, as outline by Michael porter 5 forces analysis, in its operating environment has contributed heavily to its success.
Like wise, it has been able to utilize the value chain and hence attain a competitive advantage. For a long time it has been recognized as leader in technology. Similarly in its operation activities it has been able to reconcile dichotomies existing between human dignity and efficiency by adopting an effective free flow production process.
However, its success has not come free of challenges. A good example is the fact that it has failed to reconcile the dichotomies existing between its internal resources and positioning. While it positions itself as an innovative and a leader in developing technically advanced cars. Plus, it also possesses resources and capabilities to do so.
The market reaction have not supported this fact, instead consumers have opted to buy simpler model. Balancing the global integration and pressure from local responsiveness is also another major challenge. Already, Honda has been accused of being ‘un-Japanese’ favouring the Global market more than the local one. This allegation holds true since most of its operation a located outside its home country.
However, it handles the cultural dimension in foreign countries by paying close attention to Whittington’s suggestion of systemic approach to strategic management. It has done this by successful partnering with companies operating in potential markets therefore gaining from their knowledge and skills. However, in any market Honda can benefit greatly by reconciling dichotomies existing between the classical and processual approach to strategy.
Introduction
Developing a strategic plan is an important component to any business. This is because it outlines the long term plan and explains how competitive advantage is going to be achieved. Various influential people have voiced their opinions on how a business should go about developing, planning and implementing their strategy.
As result, key dichotomies have emerged. However there some key organizations, like Honda, which have managed to reconciled some if not all dichotomies. As result they have achieved attention grabbing success. Therefore assessing how they incorporated the various opinions of strategic experts is a worthwhile endeavour.
Porters Analysis
Michael Porter 5 Forces Analysis
Michael Porter, a strategic management genius, has various key concepts under his name. The five forces analysis is an example of his influential concepts that has been highly adopted by scholars and businesses. Porter suggested that a business should conduct an analysis of firms offering similar services or product. By doing so, the strategic managers are able to determine the level of rivalry in the industry and hence take necessary measures.
Also analysing the threat posed by substitutes will establish what product and service can be developed to replace the current firm’s produce. In addition, if an industry poses the potential of providing high profit margin, it will motivate new firms to participate in it. Therefore an organization is likely to enjoy reasonable profits if its industry contains are number of barriers limiting entry of new firms (Morgan 2008).
Porter also considers supply power as important component of attaining competitive advantage since a powerful supplier can influence the organization cost of production and even the final price of the product. The finally Buyers bargaining power, describes the amount of influence consumer have on the firm.
It is mostly strong when all or either of the below situation occur. That is when; the buyers concentration is higher than that of the firm, the buyer purchases a significant volume of produce, the buyer is well informed about the state of firms industry, and finally if there is a high existence of substitute goods, just to mention a few. (Morgan 2008)
Value Chain analysis
Value chain analysis, is another model generated by Michael Porter. It outlines the various activities a firm gets involves in while creating value to its customers. Porter categorized this activities into two; the primary and supportive activities. The primary activities are; inbound logistics, this are the activities involved in receiving the inputs from the suppliers and storing them in the warehouse till they are needed.
The second group of activities is the operation, which involve manufacturing or transforming the goods to finished products. After the inputs are transformed to outputs, outbound logistic activities are employed. This involves distributing the goods through the necessary supply chain.
To inform the customer about the products and hence generate sales revenue marketing and sale activities are taken on. The latter stage involved guaranteeing the customer that the product would meet their needs. Therefore, essential services, such as customers support should be included. Porter went ahead and listed procurement process, human resource management, technology development and effective management of the firm’s infrastructure as the activities that support this primary activities (Morgan 2008).
The Case of Honda
Honda Motor is the one of the world’s most successful automobile company. Off late it has joined the ranks of IBM, General electric and other companies which have attracted sufficient interest of scholars and researches due to the success of their strategies (Wallnau & Feinberg 2008). Part of the success of this company can be credited to the understanding of Michael porter’s suggestion and applying them in the organization either by design or default.
For example, Honda has been able to curb threat from rivalry by adopting are unique strategy. This strategy involves reconciling the dichotomy existing between the management style of western firm and that of the Japanese firms. Japanese model of management and that of western countries have been cited to be on different ends.
Most managers prefer to choose one and therefore lose out on advantages offered by the other. However, Honda’s approach is never to accept any trade off’s and hence it has avoided the negative aspect of Japanese management style and incorporated some aspect of western culture. As result, it has increased its competitive edge globally avoiding rivalry especially in the home market.
It is the reconciliation of management style that enables partner effectively with foreign firms and hence diversify it market. A good example is the fact that it was the first Japanese firm to set operation in North America by successfully partnering with the now well known rover group (De Wit & Meyer 2004).
According to Porters, substitutes are products from other industries that can replace firm’s products (Morgan 2008). Arguably, there are few substitutes to automobile industry, which include train, air and sea/water mode of transport (Wallnau & Feinberg 2008). Luckily, this organization has sufficiently diversified its products to produce high power racing cars, motorcycles, small boats engines, power products, among others (De Wit & Meyer 2004).
Similarly, suppliers pose very little power since this industry is highly fragmented and therefore one supplier depends to a large extend on one or two automobile firms. This in turn gives the automobile an upper hand. The bargain power of the buyers is relatively low since averagely very few consumers buy in large volume.
However, the increasing buyer information have forced this company to advanced technological, coming up with products that do not destroy the environment, are fuel efficient, and still do not compromise on engine power. This approach of advancing and incorporating technology mirror the utilization of value chain analysis by strategic planner in the firm (De Wit & Meyer 2004; Wallnau & Feinberg 2008).
Advancement technology has enabled the company eliminate the tradeoffs associated environmental conservation and engine quality. Therefore, it has been heavily featured in Honda’s sales and marketing strategy.
Also, Honda uses technology in its model replacement strategy. This operation activity involves replacing the product feature seen by the customers first, then followed some years later with changes of those feature the customer cannot see. As a result the value of the products is increased while reducing the lead time of producing the car. This has in turn giving the firm a competitive advantage since competitors are unable to replicate it.
In addition, Honda recognizes the importance of managing its human resource with dignity. Therefore it reconciled the dichotomy existing between efficiency and dignity during the operation process. This it did by incorporating the free flow principle that reduce amount of work and give customers more control during the production process (De Wit & Meyer 2004).
Positioning versus Developing Internal Resources
Reconciling the dichotomies existing between developing the internal sources and effectively positioning is a mystifying task. This is because the two factors are found on different sides of the spectrum. For example, positioning involve creating a positive perception about the company and its products to an external viewer or environment.
However the fact that it is subject to the person viewing the organization has provide inconsistent results. Despite this, a proper analysis of the external environment can improve its chance of success (Morgan 2008). Honda, strategic planners have over the decade strived to position it as manufacturer of classy and technically innovative sporty cars (De Wit & Meyer 2004).
On other hand, developing internal sources involve incorporating company’s internal inputs to achieve the strategic objectives. A firm which utilizes its core competencies is likely to achieve a competitive advantage. According to Swinton (2006) core competence are unique abilities that a firm develops over a period of time as a result of continuous learning and accumulation of necessary skills.
They act as useful resources since they provide an organization with the power to exemplary add value to the customers needs. Adopting the internal resource-based approach involve paying enough attention to the value chain activities that increases the company’s competitive edge (Swinton 2006). For example, Honda motor advancement in technology and unique engine design provides the company with core competence (De Wit & Meyer 2004).
Honda has been successful in reconciling the dichotomies that are embodied in the value chain activities. To be specific, the dichotomies are mostly found in areas such as the supplier-buyer relations, efficiency versus employee’s dignity, and sequential production versus a simultaneous one, among others. However, when it comes to reconciling dichotomies associated with positioning versus developing internal resources, the organization seems to face hurdles.
For example the ability of Honda to use technology to produce high quality superior engines, and it effort to position itself as designer of sporty and innovative cars, has not been reflected in the consumers’ response. This is because most of its global sales are not derived from models that reflect these values, but it is from the simple less innovative and marketed brand (De Wit & Meyer 2004).
Pressure from Global Integration and Local Responsiveness
Despite how much an automobile industry might strive to confine itself to the local market, various influences makes globalization inevitable. Specifically this pressure can either be due to factors associated with the automobile market or those that surrounds the production process.
Global competitors and consumers are examples of factors affecting the automobile markets. They therefore force an automobile company to join the global arena. By doing so, the company is able to utilize its value chain in more effective way (Wallnau & Feinberg 2008; Swinton 2006).
Honda has been able to successful integrate globally. In fact, it has been so successful that it is considered a very small player in its home turf, but globally a multinational giant (De Wit & Meyer 2004). According to De Wit & Meyer (2004), only a third of its turnover comes from its home country.
The need to recoup the initial and operation massive investment is another factor that pushes such a company to integrate globally. Similarly, as local consumer enjoyed an increase range of option from global competitors, their bargaining power increases. Therefore, automobile companies are forced to such for consumers in other countries (Wallnau & Feinberg 2008).
However, sometimes different economies utilize their value chain different. In addition, the various factors in the competitive environment, as summarized in porter 5 forces analysis, result in a local responsiveness pressures (Swinton 2006). For example, a certain foreign economy might be dominated by either a variety of domestic firms or a single powerful firm. Similarly, some foreign markets are largely occupied by substitutes.
A case in point is venturing into an environmental conscience nation whereby most of its citizen either use public transport, such as buses and trains, or prefer motor cycles. Host Government regulation is another form of pressure, whereby automobiles have to adhere to certain regulations and specifications (Swinton 2006; Wallnau & Feinberg 2008).
Honda has faced various challenges and pressures in the local environment due to its management style. The fact that it has incorporated some western culture aspects, has led it to being considered ‘un-Japanese’. This is because some analyst considers it to have enjoyed a global integration to a point whereby its need for the local market has been minimized.
This factor can be supported by the fact that are huge chunk of its revenue figure is not from Japan. However, proponents of its management structure argue that by incorporating the good values of western management style and that of the Japanese, it has balance both global integration and local responsiveness need efficiently (De Wit & Meyer 2004).
Schools of Strategy Approach
The influential Whittington went a head to distinguish the various approach of strategy management. Classical and Processual are among the approaches he described. The classical approach implies that strategic managers are rational and therefore deliberately plan and organize various factors that will help in profit maximization. One major assumption under this approach is that in a free economy an efficient market is bound to occur.
Therefore, provided the organization has effective leaders who can objectively make sound and critical strategic choices, it is likely to succeed. The market environment will automatically present an opportunity and therefore implementing the chosen strategy will involve utilizing the corporate structure, process and policy to maximize on the presented opportunity (Swinton 2006).
Processual school of thought, on the other hand acknowledges the business environment is dogged by a number of factors. Therefore, the strategy that was initially developed might be altered by various factors during the implementation process.
Hence, instead of developing full strategic plan in the initial stages, manager should consciously develop a strategy based on utilization of internal competencies and analysing the external environment. Top managers therefore have a duty of constant improving their knowledge and experiences. Also to guarantee success, it is mandatory for them to enhance the internal process by improving the core competencies and capability (Swinton 2006).
Since the classical school of thought assumes top managers are rational, Honda encouraged few top executives to be in charge of key decision making. It enabled this by creating a facility layout whereby top executives shared an open office. Senior executives saw this as a way of encouraging horizontal sharing of information. However, after Kawamoto took over he initiated a processual approach. This is illuminated by the fact that he changed the organization decision making process to be inline with the changing business environment.
Although it could be easily assumed that the organization had abandoned its horizontal decision making process (across managers only), this was not case. Honda had now reconciled the dichotomy existing between the vertical and horizontal decision making process. Whether to make the decision vertical or horizontally, depended on the market situation. The now interchanging approach acknowledges the market is not efficient as it is affected by emerging factors (Swinton 2006; De Wit & Meyer 2004).
Applying Both the School of Thought
The reputation of Honda in reconciling management dichotomies might compel it to apply both the schools of thought. If it does so, it will avoid the limitation of either approach. At the same time, it will also eliminate the trade offs associated with choosing an approach over the other.
A good combination might be taking on classical fundamentals of profit maximization through rationally and intentionally planning. Simultaneously, adopting the Processual approach emphasizes for manager to develop core competence that will enable them simplify complex matters.
Here the manager should not only develop competence of only tackling the market environment but also, should improve the capability of managing the human resource. This is particular important since not every individual is driven by the desire to maximize the profit of the organization. Understanding and addressing the unique needs of each staff will result in an increase in competitive advantage (Swinton 2006;De Wit & Meyer 2004).
However, if Honda chooses to adopt only one approach, then it should go with the processual approach. This is because the approach does not merely assume the market environment is efficient, or either separates the process of strategy planning and implementing. It acknowledges that during the planning process there are number of factors that the strategist can miss out on.
The automobile industry especially faces various challenges that can alter the environment therefore distorting the strategy at hand. For example, Honda has effectively used this strategy and hence has been able to adapt to new demands easily (Wallnau & Feinberg 2008).
A good case in point is adopting new technologies that ensure fuel efficiency therefore avoiding environmental concerns. The fact that Honda has been able to reposition itself to the current market situation indicates that it has used its strategy plan not at as final document, but as guideline to help it achieve competitive edge (Wallnau & Feinberg 2008).
Systemic School of Strategy Approach
Hofstede threw a spanner to the management theories that implied management practices can universally be applied. Through his cultural dimensions theory, he challenged the notion that deep inside human being are the same. Therefore, he concluded that people from a specific region will react differently from those hailing from other region.
Whittington understood this when he was outlining the systematic school of strategy. According to this school of thought business should adopt strategies based on the environment they are operating in. the strategies adopted should be heavily influence by the culture and values of that environment. Therefore strategic managers should not strive to rational apply what they think is effective based on the knowledge of their origin.
What they have acquired from their home country might not hold true in this new environment. In addition, it is not only the customer who might be different, but also a cultural diverse workforce. The workforce does not have any less effect on the company’s competitive advantage. For that reason factors affecting their performance, such as cultural dimension, should be carefully considered (Swinton 2006).
As mentioned earlier, most of Honda’s revenue stream from different parts of the world. Therefore, its strategic planners should consider some, if not all aspects of the above approach. To shield itself from the implications of diverse cultural dimension, Honda adopted a philosophy of manufacturing vehicles in their target market (Wallnau & Feinberg 2008). As a result, most of its manufacturing plants are being operated outside its home country Japan (De Wit & Meyer 2004).
On the other hand, this factor presents the challenge of managing a diverse workforce. Even at its home country, the company has grappled with whether to incorporate certain ‘negative’ cultural aspects.
The founder Honda however decided to risk it all and adopt a system that awards individual contribution and hence motivate the younger employees to take more positive action. The Japanese culture on the contrary is not very conducive for the younger generation. For example, awarding is based on status quo, seniority and collective decision making (De Wit & Meyer 2004).
To effectively penetrated in different cultured countries, Honda will have to acquire skill that can enable it interact effectively with the customers there. A good way to do this will be either to partner with organization operating in the environment it is considering venturing.
Wallnau & Feinberg (2008), cite that it adopted this strategy, by buying small percentage of established motor cycle firms, to venture into the US market. Similarly it used the Rover partnership to enter the North American market an area which it had previous faced difficulties in understanding the consumers (De Wit & Meyer 2004; Wallnau & Feinberg 2008).
Conclusion
No doubt the corporate strategy determines to a great extent the level of success a company is going to enjoy. However, if a company is to enjoy sufficient triumph as that of Honda, it must adopt anew thinking. The traditional method of strategic management whereby an organization subscribes to one school of thought or management style is limiting. Honda has set the example of ascribing to a no trade-off policy.
This approach involves reconciling various management dichotomies. When presented with more than one options but forced to adopt just one, take the best of either side while neglecting the worst of each. Without a doubt this will pose some challenges but by persistence will ensure organization enjoy the fruits of its labour.
Reference List
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Morgan, K., 2008. Globalization and Strategic Management Issues. London: Palgrave.
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