Business Management Report
Subject: Business Management
Topic: Investigative Study Report On Honda
Honda motor company is a multinational manufacturer of motorcycles and automobiles based in Japan. Since 1959, Honda has been the world’s biggest motorcycle company. Each year the internal combustion engines it manufactures are more than 14million.As of 2010 Honda ranked seventh as the largest manufacturer of automobiles behind, Nissan, ford, Hyundai, Volkswagen AG, General motors and Toyota. In 1986, Honda was the first automobile manufacturer in Japan to release a luxury brand, which it called Acura ( Alex III , 2008).
The core products of Honda are motorcycles and automobiles but beside those Honda also deals with the manufacture of power generators, personal watercraft, marine engines and garden equipment. Additionally, since the year 1986, Honda has been in the process of research concerning robotic and artificial intelligence. Honda went on to release their first ASIMO robot in 2000.Honda is also involved with aerospace motors and have established the GE Honda Aero engines in 2004 and are planning to release the Honda HA-420,this year 2012.5% of Honda’s revenues are spent into R&D.
The hypothesis of this investigative study is that Honda is a global company which is equidistant from all its key customers. This report seeks to find the credibility of this statement by conducting a research and listing the outcomes in order to come up with a well informed conclusion.
2.0 Literature review
The term equidistant as relates to how Honda views itself means that the managers at Honda Company don’t view their markets as Japan vs. overseas, they are as sensitive to their markets overseas as they are to their markets at home (Japan).This is as opposed to other firms which focus on the local departments and country customers and focus less on their overseas business (Scott, 2010).
Figure 1.1 Market quality enhancement system
2.1 Enhancing customer satisfaction
Honda aims to establish lasting, satisfying, relationships with its overseas customers. To achieve this, Honda proactively conducts surveys to evaluate customer satisfaction in all its product lines including; power products, automobiles and motorcycles. The survey results are the keenly analyzed and returned to their respective departments. Practical suggestions for improvement are formed and then applied to use in the usual running of the company. In the overseas automobile Honda operations, the results acquired in the survey are used to come up with customer satisfaction index, abbreviated as CSI, for each region and product. In Japan questionnaires are distributed to purchasers of brand new automobiles and also to the buyers of second hand automobiles (Falloon, 2005). A survey was also introduced in FY2008 to observe the vies of purchasers whose automobiles would soon be up for the periodic inspection of automobiles which is a requirement by the government in Japan.
Honda company also has a customer relations center. This is available to both its local and overseas customers. The slogan of the center is very popular and straight forward: “For the customer”. The mission of the Honda customer center is to handle queries from its customers in a quick, clear and polite way. The center also provides feedback to survey requests by the government of Japan also answers to queries from the consumer advocacy institutions.
The center gets response from customers in the form of requests, suggestions, and questions all year round. In the year 2011, it received and reacted to 241,945 requests. The company ensures that this information is put to good use by sharing the information in a timely fashion with the company’s service departments, manufacturing, sales departments, and the company’s R&D. In handling this personal information, the company takes care to comply with the rules and regulations and the company’s own policies. This information is also made accessible to the directors and other relevant business associates. Additionally Honda seeks to enable personal problem solving by having set up a website and a mobile site (Dream) to respond to customer queries all around the world. The site’s aim is to meet the needs of customers in a timely manner.
In Honda’s foreign automobile business, its business activities concentrate on the “3Ps” for the purpose of meeting the customer needs and expectations. These strategy aims at improving the quality of service for customers by approaching things from a customer’s perspective and discovering and solving local problems in all the points of contacts between Honda’s customers and itself. These are product, people and process or premise(Frank,2003).
Honda has earnestly pursued the later for several years in locations worldwide. The result has been that the quality of service has improved considerably. A third party survey on customer satisfaction that targeted customers in ten major nations in Asia showed that Honda was placed at number one in 3 countries .Honda seeks to continue with its good reputation by conducting new surveys that are keen on individual customer satisfaction and focus on increasing the global application of procedures to nations which are currently emerging.
Figure 2.2.Customer satisfaction and the 3Ps
2.2 Quality initiatives
Honda aims for 120% product quality. The Honda company group of managers considers it unacceptable if even one customer purchases a defective product. The founder Soichiro Honda said this about the organizations’ basic perspective on quality, “This is what it means to be a company that the society needs, Honda is determined to reach the highest standards of product quality so as to meet and even exceed the expectations of its target market”. Honda has established a quality cycle in order to improve the trust of customers (Ohnsman, 2010). This cycle continuously increases quality at every stage: development, design, sales, and production and after sales services.
The sourcing of materials and production of parts continues to expand globally, making it necessary to enlist a shared global quality assurance standard to ensure that everything Honda continues to support the 120% target of product quality. Honda came up with the Global Honda Quality Standard (G-HQS) to meet this need in April 2005.Based on the certification standards of Japan and around the world (ISO 9001*1 and ISO/TS 16949 *2)the G-HQS helps to communicate the large amount of information Honda has acquired in manufacturing quality products and also assist prevent problems from recurring.
Honda will continue to comply to ISO standards of certification.43 out of 46 Honda manufacturing facilities have already acquired ISO certification as of March 2011.The remaining three facilities all new are undergoing the certification process. The G-HQS is formulated to intensify the quality of products manufactured at Honda and sold across boarders globally. Quality is achieved in production activities and distribution services by making sure that all facilities are in line the required standards. Honda offers a training syllabus in Japan, which is divided into four courses.
The courses are allocated according to individual qualifications and the level of an individual worker’s responsibilities of quality control so as to improve the workers skills in quality assurance.( Mangion,2003). When the Managers at Honda determine that product problems need action, they promptly refer the issue to the relevant governing authorities in compliance with each country’s regulations. Honda has also founded a quality center for the purpose of bringing the various parts of the company concerned with quality assurance assisting the company to enhance its global ability to prevent problems related to quality and quickly detect and solve them in case they arise. Honda also applies development expertise and design to develop and mass produce their products in order to facilitate creation of drawings formulated to enable manufacturing and formulate control techniques of manufacturing that limit variations in the process thus facilitating Honda to deliver a level of products of impeccable quality(Frank, Aaron 2003).
2.3 Developing safety technologies
Honda is committed to the safety of everyone, both in Japan and worldwide. This concern is not only for the car and motorcycle drivers but also includes the pedestrians and passengers in other words everyone on the road. Honda’s strategy is dedicated to enhance technologies in order to supply their motorcycles and automobiles with the most effective, advanced, safety innovations possible. The aim of Honda is the safety of everyone who uses the road in the mobile society. Honda, aiming for global safety is handling safety issues from both educational and product perspectives.
They are working to see to it that their automobiles provide the highest level possible of road safety. Honda is also campaigning for safe driving habits and awareness among their customers globally(Johnson, Richard, 2005)Honda has always been at the for front of safety, applying intelligent innovations to introduce safety technologies to its customers. Many safety systems used in today’s cars were first introduced by Honda. Including collision mitigation brake(CMBS) system, vehicle stability assist(VSA),SRS airbag system and Anti-lock brake system(ABS).
Honda has been a pioneer in coming up with both passive and active safety innovations including car body makes which are designed to intensify both pedestrian and occupant safety. In line with these efforts, Honda is conducting tests in Europe, North America and Japan related to the creation of technologies made to sensitize drivers to possible safety issues. In Japan, safe driving skills are taught at seven traffic learning centers by knowledgeable specialists. Honda recently established community groups at its facilities to work with local associations to develop safe community based driving activities targeting all generations from the young to the old.
In locations outside Japan, the plants in 36 nations conduct safety precautions based on traffic standards which are specific in each region around the globe. For example, In Thailand Honda held a “Road safety for kids” promotion, in china Honda conducted a safety seminar at dealer, In Japan Honda conducted an automobile training at Suzuka circuit traffic education center, in Vietnam Honda held a safety seminar with similar at dealer, In Brazil Honda conducted a motorcycle training in traffic education center, and in Nigeria Honda held a motorcycle training for taxi riders(Grant, Robert ,2003).
2.4 Environmental issues
Honda reacts to environmental issues comprehensively under rules and regulations for every global operation. To locate priority issues, it reviews the significance of currently apparent environmental issues. As a supplier of mobility products to customers around the globe, Honda views energy issues and climate change as the most significant environmental global issues. Carbon dioxide (CO2) has been identified as the number one cause of climate change (Frank, 2003 ).Honda has established targets to reduce carbon dioxide emissions in all locations in order to realize those targets. Honda has formulated plans for specific programs in each domain and region to solve these issues.
2.5 Returning profits to shareholders
Honda always seeks to run their operations globally and enhance its corporate value. As concerns redistribution of profits to its shareholders it considers it as one of the most vital issues of management and its main policy for profits is to distribute dividends after reviewing its performance of long-term earnings. The company acquires its individual shares at the optimal time with the aim of enhancing capital structure efficiency. The present goal of Honda however, is to raise the return ratio of shareholders to possibly 30 %( Scott, 2010).
Figure 2.3 Profit distribution policy
Source: Honda website
2.6 Strengths and weaknesses of Honda’s business strategy
There are many strengths to Honda’s overseas business strategy. One of the things Honda is most proud of is its R&D system. With a wise commitment to the future, Honda is keen about social, environmental, and economical issues, this results in a steady presence in America and Europe. Honda creates products that are unique under the slogan “Three joy”(the joy of selling, production and buying” which make Honda products so inspiring to the consumer. Honda also created the slogan “Life with a Honda” in line with bringing together its several facilities in attempts to enhance the Honda brand, and ensure customer loyalty and satisfaction.
Honda has earned respect for producing excellent quality automobiles. In fact Honda is the biggest motorcycle manufacturer in the world. Honda has earned many prizes for customer satisfaction and initial quality. Their automobiles are fuel efficient and reliable. Their keen research has awarded them a competitive edge in innovative technology. Honda’s strategy has made them pioneers in manufacturing low emissions engines and hybrid systems. Honda has been able to spread out into other types of production other than
Road vehicles. The Asimo robot and a high achieving motor sport program translate to innovations that help them gain press and consumer recognition all over the world. Honda ranked second in the F1 championships and won the title for Moto Gp manufacturers.
Honda’s business strategy is to enhance value through global sales by use of innovation in manufacturing and sales. Instead of manufacturing its products in one plant, Honda uses a strategy of manufacturing products in the region where they are sold. By so doing, production is increased where demand is high. This strategy has paid of and resulted in over a hundred manufacturing firms in over thirty nations. They have called this process “globalization”. They are also guided by a loyalty to the future .This goal is expressed in various ways. Manufacturing plants that are environmental friendly are one example, another is production of low emission vehicles as well as quality and efficiency. Honda also has expanded in India and china. This expansion saw Honda quadruple its production in 2006.In India there is a motorcycle that costs less than 2000$.This is a wise business strategy as it is suited with Honda’s manufacturing in the region of sales.
Figure 2.4 Honda’s customer satisfaction Strategy
However there are weaknesses to Honda’s strategy. For starters, Honda’s products are fairly lackluster in terms of design or styling. Also comparing to other manufacturers worldwide, Honda’s products sell for higher prices. Also Honda has no strong provision for a truck line. Honda has threats in strategy by the name of competitors. Honda’s greatest rival is Toyota Motor but other competitors include Mazda, Ford, Nissan, Hyundai, General motor, and Volkswagen. While this offers the advantage of creating an unmatched work ethic in the industry, It provides a challenge in Honda’s strategy to remain on the lead or else be overtaken if it remains constant. Weaknesses are also presented in the form of external factors such as, USD, depreciation, oil price raising, political recession among others. For example in Europe, a variety of factors disadvantaged Honda’s operations in the fiscal year 2001,the pressure of pricing in the united kingdom, the appreciation of the yen and the weakness of the euro compared to the sterling pound. Due to this hostile environment automobile unit sales decreased in Europe by 23.3% to 191,000 units. The net sales also declined by 30.8% to 311.2 billion .Also due to the Asian currency crisis in the year 1997,Honda was forced to cut down local production to enable sales return profits within a reduced production volume. Some challenges cannot be completely dealt with, they can just be managed.
Honda is truly a global company but there are still opportunities of growth for Honda. Firstly, Honda should offer a pickup type vehicle. This would be profitable even if they sell lower than competitors. Pickup type vehicles have among the highest returns of profits. Another opportunity for growth would be to continue offering low emission automobiles .While they have achieved some success in this area ,the products are still very expensive for the average consumer, and the infrastructure is nonexistent. Another area they should venture in is developing nations which offer large markets which would buy affordable and dependable transportation. Honda needs to take a keener focus on the aesthetic value of its products so that they improve on the styling of automobiles. Even if Honda’s automobiles are of high quality and are highly efficient, they need to unveil new designs with a styling edge. Honda should come up with something outstanding for them to be recognized from all their major competitors. For example if Honda goes fuel cell and its competitors go full electric, they face a major disadvantage.
3.0 Research methodology
This chapter aimed at investigating the Honda Company as a global company which is equidistant from its customers. variety of research methodologies were applied with respect to the sampling design, research design ,sampling methods and procedures ,study population, data collection techniques and also data reporting and analysis.
The inquiry was planned and a strategy formulated for finding the solution to the problem. This chapter attempted to show the plan of the investigation used to solve the structure of the problem. The research was conducted using secondary data and descriptive statistics were applied. A survey design was used as a data collection tool in order to address the issue of Honda as global equidistant company.
This refers to the sum of all elements about which the researcher made some inferences. The population inferred to Honda Company in all its global branches.
The main source of information for this research project was secondary data. There were several data sources that were available for my research during the gathering of information about Honda Company. Secondary data was a vital tool in gaining initial knowledge on my research problem. Secondary data can be classified in two ways according to its source. These are external or internal data. In-house or internal data is information acquired from within an institution where research has been carried out. External secondary data is is acquired from sources other than within an institution.
The advantages of using secondary data were, the process of research can be finished up quickly. A large amount of secondary information can be acquired in a period of few days by a skillful researcher. Also when the secondary information is available, the researcher only needs to find the source of the information and extract the necessary information. Another advantage is that it is less expensive to conduct secondary research. This is because secondary research does not make use of highly trained or specialized personnel or equipment. Moreover, expenses of secondary research are only incurred by the originator of the data.
The disadvantage of secondary data is that in some cases, information relevant to the research project is either missing or is available in quantities that are not sufficient. Also, information by secondary sources maybe lacking in reliability and accuracy. Sometimes even trade magazines and government brochures may be misleading. At times data may be found in different units or formats that are not relevant to a particular research topic. Some secondary information may be several decades old and thus may not show the real state of the market. For example trade journals approve articles six months before their publication this may be detrimental as the research may have been conducted several months or years later.
Internal data sources can be used in research in the form of internally researched pricing and sales data. The use of this information is to identify the competitive condition of the firm and evaluate a business strategy a firm made use of in the pastor acquiring a better knowledge of the organization’s committed customers. The main sources of internal information are accounting and financial records, sales and marketing reports and miscellaneous reports. Sales and marketing reports include data on things such as Location of end user, application by product, price, amount of purchase, date of purchase, sales person, sales territory, product or product line, method of payment, type of end user industry segment and type of product or service sold.
Accounting and financial records are very useful in predicting, identifying and clarification of certain problems. Accounting data is used to review progress and success of various strategies in marketing e.g. profit margins from a direct marketing promotion. The downside to these records is that it takes several months before the accounting statements are publicly available .This timeline makes their accuracy and reliability questionable. Miscellaneous reports include such information as number (compensation and qualification of staff) R&D reports and production reports .The company’s customer enquiries and business plan can be useful sources of relevant information.
External sources include; Academic publications, library sources, computerized bibliographies, federal government, provincial/state governments, trade associations, statistics agencies, annual reports and general business publications.
Honda operates in the global market. To support this fact, there are 134 manufacturing plants in 28 nations and at least 31 R&D plants in 15 countries. Honda has roughly 167000 personnel and associates attending to 23 million consumers globally. Honda’s worldwide activities are divided into sic administrative locations responsible for smooth running of operations. The admin hires and involves the people in philanthropic activities locally in the regions that Honda operates. Honda’s goal is making their local management and sales operations independent for each region. This ensures that they reach a worldwide customer satisfaction.
The distribution and manufacturing system of Honda include the Globalization characteristic. Honda has set up self dependent local operations around the globe. By doing so Honda has managed to push proactive efforts and local autonomy to suit unique local needs in all regions with mutual concern and understanding. Thus, Honda is a truly global company which is equidistant to all its customers.
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