Examining management accounting within the Honda company


In this report, first I will talk about the background of the Honda Company and the history of its development. Second I would like to say what the management accounting is and how management accounting can supply information to assist the management of the organization and the organization or the manager can choose a real one solution to make more profits. Third through the example I will point out the strengths and weakness of the manager who make the plan for the company. Last, I will give some recommendation and to make it better.


From the internet I realized the background of the Honda Company and the solution they undertake how to face the financial crisis in 2007 so I know how the management accounting is important for the company. They help company make the plan on how to do the product and the number of the marker need. Besides they always tell the manager about how to manage the company can live though when the crisis coming and they will calculate how to spend less money and get more products to make the large profit for the company. So the management accounting like an indicator light for the company.


The background of the HONDA Company

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Guangzhou Honda Automobile Limited Company which is also called Guangzhou Honda was established in July 1, 1998. It is made by the Guangzhou Automobile Group and Japan's Honda Motor Limited Company. Regard to the funding, the two sides each have 50% of the shares and the co-operation life is 30 years. There are currently two subsidiary companies; one is Huangpu factory and the other is Zengcheng factory and these two factories total annual production capacity reached 360000, the total area of 1.6 million square meters. Guangzhou Honda currently employs a total of 6800 people. Guangzhou Honda now mainly produces the product series Accord sedan, Odyssey multi-series sedans, Fit Series sedan and City-feng Fan Series sedans which were four series of 21 models.

July 19, 2007, Guangzhou Honda Company set up a center which called Automotive Research and Development Center. This is the first independent investment by a joint venture to operate as an independent legal entity automobile research and development institutions; it included conceptual design, vehicle test, development and other parts of the vehicle, including the independent development capabilities. With the Guangzhou Honda Automobile Research and Development Limited Company was established, it marks that the formal own brand for the Chinese auto industry to enhance the autonomy of Research and Development capability is of great significance, while the future changes in the pattern of China's auto market is bound to have far-reaching influence.

April 20, 2008, Guangzhou Honda has launched its own brand-'Idea' brand indentify. It has a sense of science and technology and the future sense of silver-based color, Brand identity graphics spiral, like a DNA molecule to express the 'Idea' of the brand leader in the pursuit of science and technology, and never stopped spirit. Meanwhile, Guangzhou Honda announced the 'Idea' of the first concept car; it is rooted in the 'Futuristic' and 'dream' Design concept. This is the best way to interpretation of fashion and trends of the future life of the wind direction and inspires new generation of Chinese for a future of unlimited imagination, to create unparalleled sensory impact and unique wave of the future. December 12, 2008, Guangzhou Honda unveiled a new corporate slogan--'a sense of moving the world', at the same time announced its entry into mid-size car market and pushed out the first mid-size car-CITY-feng fan. 'A sense of the world's moving,' it represented of the Guangzhou Honda and every employee attitude: on the emotional needs of consumers and the social environment changes, insight into the nature of change leading to a unique approach to challenge new things, to create a new trend to create a new value, and is full of surprises to share with consumers moving.

In the domestic car market, the Guangzhou Honda developments a path which is 'market-oriented, less investment, quick output, and rolling development' The past ten years, Guangzhou Honda adopts a rolling development model, to achieve a production capacity from 10000 to 360000 leaps, and the products from the Accord a brand expanded to Accord, Odyssey, Fit, Feng Fan under four brand names, product line coverage of high-class cars, Chevrolet, economic Model, MPV, etc all levels. Guangzhou Honda to achieve one-year production and sales to a new level, to the December of 2008, Guangzhou Honda has more than 1.5 million cumulative automobiles production and sales to become the fifth cumulative production in China which become the sales of 1.5 million passenger super-car companies. In April 2005, 2006 and 2008, Guangzhou Honda third won the Management Case Center of Peking University and the Economic Observer newspaper named 'China's most respected companies'.

What is Management Accounting

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Management accounting is separate from the traditional accounting and stand side by side with the financial accounting, management accounting focus on enterprises to improve management, increase economic efficiency services to an enterprise accounting branch. The object of modern management accounting cash flow, cash flow runs through the modern management accounting from beginning to end.

Of modern management accounting functions, from the simple financial accounting extended to resolve the past, control the present, planning for the future of organically combined. (1) Resolved in the past. Management accounting analysis of financial accounting in the past mainly for the information provided for further processing, conversion and extension to better meet the planning needs of the future and control now. (2) Control now. Management accounting play an important role in controlling through a series of indicators, amendments in time and correction in the implementation process deviations, so that the enterprise's economic activities in strict accordance with the predetermined decision-making. (3) Planning for the future. Forecasting and planning for future decision-making is the main form of modern management accounting in this role are: full use of the available wealth of information to carry out rigorous quantitative analysis, assist management in an objective grasp of the situation so as to enhance the scientific nature of prediction and decision-making.

How management accounting plays his role

The finical crisis in 2007 is the best example for explanation how to through the management accounting to help the company to overcome the problem. When the crisis comes, the company's export is slowdown, the domestic automobile market demand slowdown on the impact of independent brands, and enterprises are facing their own brands fierce competitive environment intensified. So what should we do when we faced such serious problems? The manager through the market visiting and consider the case which the company faces and use the knowledge of management accounting and the technology to developed plans for solve the bad solution.

The solutions are first, in products, in accordance with the product and technology introduction, with the world and fit the principle of China's national conditions, Guangzhou Honda one start on the introduction of the latest technologies in the world today, and rolling technology development, and maintaining the level of synchronization with the world. Guangzhou Honda introduced the Accord, Fit, Odyssey, Jeffrey Fan series cars, in environmental protection, safety, energy efficiency, are at the domestic level models with the leading level, put the world's newest technology to the Chinese consumer. From the research the management indicates that the company should develop its product not only in China also the world. In the production of technology, Guangzhou Honda Factory Whampoa owns a domestic highest level of flexible production lines; production lines can be a total of Accord, Odyssey, Fit and four-feng Fan product line. This is one of the few in China. Guangzhou Honda is based on the scale of production at different stages of development, in accordance with changes in technology, integrated operating environment, the extent of people's homework, the best cost, best match degree, quality assurance and many other factors, the full potential of employees and machinery reasonable role striving to achieve the optimal combination of people and machines. At present, Guangzhou Honda Factory Whampoa production line can achieve the one-lane two-class Nissan 1000 Units per 51 seconds to produce a trolley, which is currently the highest level.

Second, Guangzhou Honda quality does not have a single department; put the quality management functions into the formation of product quality in the relevant department. The management accounting points out that Guangzhou Honda not only focus on production process quality control, and the first in China to put quality management to the supplier and the market at both ends of the extension, and the whole process of full implementation of quality management. First of all parts of the procurement, in line with the common fate of the strict control the quality of the concept of parts and components, Guangzhou Honda's supplier of parts and components in accordance with the strict selection process, in terms of quality, price, delivery, research and development capabilities, management level and production technology, such as six aspects (QCDDME) to conduct a comprehensive evaluation of the results based on the evaluation and then select a suitable supplier. Through these measures, and strictly control the quality of parts and components.

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Third, Guangzhou Honda will take the lead in the domestic import to the after-sales service as the center, set vehicle sales, after-sales service, spare parts supply, information feedback of the special four-in-one sales and service model. Buyers through the provision of a comfortable environment, professional sound after-sales service, genuine parts and components, allowing users to buy a car to the car from the whole process of service have been excellent. At the same time, Guangzhou Honda distributor through the management of extension services and customer support and long-term good cooperation relationship of mutual benefit and seek common development. At excellent quality to put the user at the same time, Guangzhou Honda also bring a new Chinese consumer service concept.

Fourth, Guangzhou Honda to set up at the early stage of setting up its own Research and Development Center engaged in mass production of test models and testing work. In the use of their own research and development center at the same time, the Guangzhou Honda joint venture at independent research and development on the Chinese automotive industry to create the first of its kind, was set up by the first joint venture to invest in their own independent brand development automotive research and development company - Guangzhou Honda Automobile Research & Development Limited companies, China's automobile industry has opened up a brand new idea of construction. The study covers the car in all areas of technology research and development; will import advanced equipment, construction, environmental, safety, environmental protection, collision, noise, emissions and power functions, such as the pilot test, and a large-scale major test field, wind tunnel test chamber and other facilities, is committed to become a "to promote the China Automotive Technology and upgraded to the goal, self-reliance self-innovation to develop the technological level with the world's leading automotive products DreamWorks Technology."

Fifth, All along, the Guangzhou Honda to energy conservation and environmental protection are the responsibility of the rich sense of social responsibility to become the "environment-friendly" enterprise. Guangzhou Honda Factory Zengcheng at the beginning of project preparation, "the new energy saving and environmental protection construction Factory" Factory Zengcheng is one of the objectives of the project construction. At the idea of energy-saving environmental protection, under the guidance of Zengcheng Factory at the design and construction process, Guangzhou Honda has taken a full account the issue of environmental protection, in the treatment of industrial and living "three wastes" and noise reduction has invested heavily into the most advanced environmental technology, and strive to build the most influential Green Factory. So these are the solutions that the Honda Company taken by and it exert the biggest function and we can see the importance of management accounting in company.

The weakness and strengths of analysis

I think from the analysis of the Honda Company we can see the strengths of the company is that they have done well in itself such as visiting the market and getting information and using the management accounting to analysis and solving the problems. But I want to point out that the weakness of the company is when they suffered the difficult problems, ourselves is the better way but combine with other company and jointly come up with a solution to the problem. This way not only directly but make the two company closer than before.


Now, I think we will have a clear definition of the function of company management accounting. It functions is not only this and I believe management accounting will play the most important role in struggle of the science and technology in the future. So we can say that the management accounting is a beacon of a company.


So, not only for ourselves but the company, we should also learn about the management accounting and learn how to use it. Just like this we can use the knowledge to solve the problems. It will help us spend less and earn more. The manager of the company also should know the situation of the company and the market that can help they make decision as soon as possible.