Honda Motor Company: Impacts of Globalisation

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Table of Contents

Introduction
Handling Environmental Issues
Globalization Effects On Health
Conclusion and Recommendations
Reference List

Introduction

In an era prevalent with global competition, it is widely recognized that the rapid changes in technology and competition has transformed numerous traditional rules that orient economic activities towards economic accessibility to enable firms compete from anywhere across the globe (OECD, 2007). The term globalization has increasingly become loaded with some people associating it with almost every contemporary change evident in the world today that spells out progress and prosperity while others associate it with deprivation and disasters (Scholte 2000). Globalization in this context concentrates on the integration of the world’s economy. This generally means that the world economies are integrated into one market which constitutes interdependent means of production, consumption of relatively similar goods and unified responses to similar impulses (Williamson 1998).

Globalization is represented by the movement of goods and services, capital, and labour across the globe in managed and coordinated institutionalized networks, which involve establishment of global associations that ensure efficient utilization of the scarce resources at the disposal of mankind (Milward 2003). In the modern society, the term is commonly used to refer to the process of expanding the world’s markets of consumption, investments, and production on a global scale as well as expansion of social relations and social activities across different nations of the world (Milward 2003).

Globalization is evidenced by the remarkable growth achieved in the world trade as a proportion of the world output where the gross world product grew from 7% in 1938, 10% in 1970 and above 18% in 1996 (Williamson 1998). These trends have remarkably escalated ever since. Further, the foreign direct investments in developing countries have increased from 2.2 billion in 1970 to $154 billion dollars in 1997 (Williamson 1998). Globalization has further resulted in integration of the national capital and financial markets and the amount of foreign exchange taking place on daily basis has reached remarkable heights.

Clearly, the availability of cheap and reliable means of communication is the key driving force for globalization efforts which not only facilitates the integration of international capital markets but also promoting growth in multinational corporations (Williamson, 1998). Good communication and means of travel facilitates exchange of goods and services as well as promoting labour mobility across the globe. In addition, stable political condition is a necessary determinant for effectiveness of globalization.

International cohesiveness induces economic agents to exploit the opportunities presented by globalization while political instabilities and regional disagreements discourage such efforts. International integration efforts have therefore played an important role in promoting globalization. Further, trade liberalization programmes exposes domestic consumers producers to foreign competition and may force them to expand output consequently reaping benefits from economies of scale (Greenaway 2008).

Globalization enables companies to avail their goods on almost every region of the world while standardizing the manufacturing technology across all locations of production. In various regions of the world, the automotive sector has been a key source of employment as well as a major source of linkage between other sectors in the global economy (Organization for economic cooperation and development 2007). Policy makers in this industry are aware of the current changes that have taken place in the automotive value chain.

These changes constitutes considerable shifts in the production and consumption cycle whereby a higher value added is increasingly placed on the components of the automobile design and innovations in engineering and less of the actual manufacturing of automobiles (Organization for economic cooperation and development 2007). The changes have 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 (Organization for economic cooperation and development 2007).

Honda motor company has developed a multinational organization strategy which stems from globalization efforts (Schick & Book 1997) and the company is the leading global automobile manufacturer dealing with development, manufacturing and marketing general purpose engines, motorcycles and sports cars among other automobile products (Infogrok automotive 2010). The company has a decentralization organizational structure and develops its products in all the regional markets in which it operates (Herbert 2009).

Honda Company has over 500 subsidiaries across the globe and is headed by an executive council based in Japan (Herbert 2009). Its operations are divided across six regions which facilitate the company to sell products most suited to the preferences of each region. In addition, manufacturing vehicles in various regions by the company increases the local consumer confidence on the products hence increasing sales and profitability of the company due to existence of a large consumer base (Herbert 2009)

Handling Environmental Issues

The structures of international systems have significantly changed with the onset of the process of globalization leading in changes in production and finance (Kutting 2004). The world is constantly interacting at various levels resulting in negative effects associated with such interactions. Although the point of interaction between the environment, trade and economics is not clearly defined, the relationship between the two remains a major contentious issue facing both economists and environmentalists (Lofdahi, 2002).

Some of them have argued that if a country makes the choice to proceed with manufacturing processes that promote environmental damage, then that should be treated as its prerogative. On the other hand, economists argue that such countries should be penalized for engaging in such activities while the environmentalists totally disagree with such reasoning and advocate for complete conservation of the environment (Lofdahi 2002).

Spread of environmental risks across the globe and the consequent migration of environmental policy is a key aspect of globalization (Speth 2003). Globalization in its economic understanding has considerable effect on the environment whereby the interactions between different regions of the world may cause harm to the environment as well as hindering sustainable development (Speth 2003). Environmental degradation is likely to occur as a result of widely shared resources and ecosystems and since the atmosphere and climatic system are essential for ecosystem survival there is increased need for preservation of environment from pollution (Held & McGrew 2002).

Automotive companies often receive criticisms as a result of environmental degradation that emanate from the automobiles they produce as well as the manufacturing processes of these products (Anonymous 2010). Increased criticisms have prompted the companies to take responsibility by formulating and implementing strategies that are aimed at improving the global environment. The automotive companies such as Honda motors and General Motors are now aiming at producing vehicles that utilize fuel more efficiently such as ethanol and hybrid versions (Anonymous 2010). The companies are also shifting to greener power supplies such as solar energy in attempt to conserve energy.

Honda Company was recently named the United States ‘Greenest automaker’ by the union of concerned scientists making it a five consecutive holder of the award (Honda 2010). This award is clear evidence that the company has achieved the lowest combined scores of smog forming and green house gas emissions in its US automobile fleet relative to other automotive companies in the country. The company constant efforts to improve fuel efficiency on its automobile products has seen the company gain 1 mpg in US corporate average fuel economy in 2009 (Honda 2010).

In order to achieve fuel economies, the company has introduced the insight as the world most cost reduced and affordable hybrid car and the CR-Z which is an electric automobile as the world’s first production sports hybrid coupe. Honda received remarkable increases in sales as a result of its adoption of environmental friendly policies since the policies were efficient and attracted public interests (Honda 2010). In the United States, the sales in hybrid cars has been increasing over time and in April 2008, the market share reached 25% which was the highest level that the company had attained since 2004 (Anonymous 2009). Further, by the end of 2008 fiscal year, the number of hybrid cars sold all over the world exceeded 250000 units (Takeo 2008).

Honda Company continues to produce alternative fuel vehicles. The Civic GX Sedan which utilizes natural gas had its retail sales expanded to various regions around the world such as Utah and Oklahoma (Honda 2010). The company also manufactures the FCX Clarity fuel cell electric vehicles. These models are among the world’s most advanced zero emissions vehicles as they have zero tail pipe emissions and fuel efficiency that is three times that of a gasoline powered automobile (Honda, 2010).

Earlier this year, the company unveiled a plan to introduce a battery electric car commuter sized vehicles and plug in hybrid technology for mid sized vehicles and larger vehicles in the country (Honda 2010). In addition, the company is developing its own infrastructure to the alternative vehicle equations. In early 2010, the company began operating the next generation solar powered hydrogen production and refuelling station in California. The station utilizes power derived from Honda developed and manufactured thin film solar cells to provide fuel for daily commuting in a carbon free energy cycle (Honda 2010).

Through the green factory initiative, the company aims at reducing the impact on environment by improving its manufacturing processes. The company has put on measures to reduce energy and water use, generation of waste materials, carbon dioxide and air emissions (Anonymous 2010). The company also encourages its suppliers to adopt the same mechanisms. Further more, the company is continuously looking for ways to make positive contributions to the communities where its consumer base lies. The company engages in community based environmental education as well as preservation and restoration efforts in form of corporate charitable foundation giving, in kind donations and company support of volunteer efforts by its employees (Anonymous 2010).

At the annual Earth Angel award ceremony which honours automotive companies that have well established environmental initiatives, Honda Company was honoured with the award of the most environmentally progressive automaker in terms of environmental initiatives in 1999 (Anonymous 2010). The American Honda Company motors Inc CEO, Testuo Iwamura confirmed that the company is working towards reduction of environmental footprint on their operations with the same passion as the one the company demonstrated in its efforts to develop new technologies that reduce environmental footprints of their products (Anonymous 2010).

The Kyoto protocol which is a United Nations protocol focusing on the convention on climate aims at global minimization of green house gas emissions in order to prevent global warming. The protocol aimed at minimizing the levels of green house gas emissions from by 5.2% from the levels that were prevailing in 1991. In 2009, one of the directors revealed that Honda had managed to reduce its motor vehicle emissions by 6% since 2000 through its adoption of green factory strategies (Honda 2010)

Globalization Effects On Health

The most fundamental resources for human survival and health comprises of the constituents of the ecosystem such as air, water land etc (Yach & Bettcher 1998). Rapid industrialization and increased connectivity through globalization has amounted to exploitation and destruction of resources such as energy resources and other non renewable resources towards their extinction. Through the waste products emitted during the industrialization process, human health as well as the life of other living organisms in the planet is adversely affected.

The entire domain of globalization includes numerous interrelated phenomena and risk factors that affect the well being and health sustainability of the populations in both developing and developed countries (Yach & Bettcher 1998). However, we should not completely dismiss globalization as negatively impacting on the health of society. If the continent would address the risks and negative aspects associated with globalization, it is possible to sustain the process of economic globalization by turning the risks into opportunities hence improving future health prospects (Yach and Bettcher 1998).

Energy is the most essential component for powering automobiles and most of this energy is derived from burning of fossil fuels in the automobile’s engine. (Pollution probe 2009). The waste products from the combustion process pollute the air and have devastating effects on human health. Scientists have argued that the green house gas emissions pose considerable threat to future generations (Kao 2009). Green house gases are composed of carbon dioxide which is generated vehicles, power plants, oil, and gas etc, carbon monoxide, and oxides of nitrogen among others.

These gases have the effect of warming the atmosphere which leads to the major problem of global warming (Kao 2009). Carbon dioxide is released from the combustion process and persists in the environment for more than 100 years. The process further releases volatile organic compounds that are also harmful to human health which include Oxides of nitrogen which when produced pose danger to human health by impairing lung functioning and lowering resistance to respiratory infections.

Inhaling nitrogen dioxide may result in coughing, shortness of breath and wheezing (Pollution probe 2009). Carbon monoxide on the other hand is released as a result of incomplete combustion and it inhibits the body’s ability to transport oxygen from the lungs consequently adversely affects people with heart diseases. The gas can cause immediate death and people with anaemia, pregnant women and children are highly vulnerable to its effects (Pollution probe 2009)

The federal clean air act which was passed in 1970 in the State of California in the United States to regulate national air pollution and control effects requires automotive companies to produce cars that emit one tenth the level of carbon monoxide and hydrocarbons as the existing cars by 1975 (George n. d). Honda was the first company to build a car model whose engine met the federal standards without using a catalyst converter.

The Honda civic 1500 was the first car to utilize the compound vortex controlled combustion engine that used two combustion chambers hence significantly reducing the amount of emission (George n. d). The companies 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 aimed at reducing emission and developing alternative forms of energy (Honda motors Co 2003).

Honda Company is also taking the necessary measures to ensure that its vehicles are safe for human utilization. Some people are under the implication that increased weight and size of a vehicle increase its safety but this is not true (Anonymous 2003). While large cars prevent people from being crashed in cases of accidents, they are more likely to loose control at high speed and may roll over more easily compared to small cars.

The Honda engineers have therefore designed car bodies that shaped and formed to be stronger and more stable without necessarily increasing their weight (Anonymous 2003). In addition, the company’s engineers biologically treat its industrial wastewaters and sludge to ensure efficient utilization of water resource (Honda annual report 2009). Honda Company cut its total water consumption in its manufacturing process by 12.2% in 2010 from its previous year while the average water utilization per unit of automobile production was reduced by 2.5% (Environmental leader 2010)

Further, Honda Company actively participates in community support programs hence promoting improved living conditions and health. In Australia, the company supports the light house foundation, an organization that provides stable family environment to the less fortunate youths (Honda n. d). In addition, the company also makes considerable donations towards disaster management such as the monetary assistance to the government to provide relief to the affected population (Honda n. d).

The company produces diesel powered vehicles. France and Austria have had a high preference of diesel powered vehicles due to their efficient fuel consumption. The diesel engines have lower fuel consumption costs and lower raw emissions relative to spark ignition engines (Anonymous, The hybrid catalyst, a new catalyst concept to improve utilization of exhaust gas energy and increase the efficiency of diesel catalyst system, n. d).

However, treatment of diesel engine emissions is made difficult by the existence of very low temperature resulting from large amounts of air and additional energy from exhaust gas extracted by the exhaust gas turbo charger (Anonymous, The hybrid catalyst, a new catalyst concept to improve utilization of exhaust gas energy and increase the efficiency of diesel catalyst systems, n. d). Diesel powered automobiles are popular in Europe and the trend has been increasing over the years (Honda annual report 2007). ). In 2000, high powered diesel cars accounted for 49.1 % of the company’s market share in France and 33.3 % Belgium’s market share and the trend has continued to increase over time (Anonymous, Honda in Europe, n d). This substantially promotes environmental conservation which is necessary for persistent of good health among the population.

Conclusion and Recommendations

The increasing need to protect the environment from the negative impacts of globalization has prompted Honda Company to develop environmental strategies aimed at conserving the environment. This positively impacts on the overall performance of the company since a lot of consumers in the modern world prefer to utilize products from companies taking up corporate responsibilities to protect and conserve the environment.

Further, the company has achieved remarkable efficiency in production through utilization of energy and water conservation methods as well as other environmental management efforts that have considerably cut costs in the company’s automobile production. As clearly established in our study, the company has gained considerable sales through its production and sale of automobiles that use alternative sources of fuel and utilization of green factory manufacturing process. The popularity of products has further been intensified by the numerous environmental awards that the company has received which has served to increase consumer confidence and loyalty.

Honda Company sets an example for other automotive companies by demonstrating corporate responsibility in environment conservation as well as promotion of human life. This is important because the automotive industry is one of the major industries believed to cause widespread environmental damage. Through its numerous efforts to conserve the environment, the company has not only gained increased recognition by various environmental groups but has also achieved remarkable heights in overall company’s performance.

In addition, the company has renewed consumers confidence and has significantly influenced their attitudes towards the automotive industry. Further, the company’s environmental strategies such as production of automobiles that are fuel efficient as well as its efficient water policies have significantly promoted the performance in the global market making it the leading automotive company.

I recommend other corporations in the automotive industry to learn from the efforts of Honda Company in conserving the environment. These companies should take responsibility of preserving the environment by ensuring that their manufacturing processes as well as the products they are selling to consumers are safe and cause minimal (if any) pollution to the environment.

Companies should adopt Green strategies which would help them in cost cutting especially in the hard economic times. Since the modern economy is characterized by widespread globalization which serves to expand and diversify company’s markets, these corporations should take the necessary measures to contain the environmental problems associated with globalization in order to conserve the environment for todays and future generations. In addition, Honda Company should continue implementing the strategies for environmental conservation in order to maintain its good performance.

Reference List

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