Case Study of Strategic Management at Honda
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Published: Wed, 03 Jan 2018
Why do you think Honda has chosen this strategy? Is this characteristic of the company and industry? Should Honda pick one upon which to focus its efforts or is it important for Honda to pursue synergies (and preserve its options) by developing and promoting multiple technologies?
The Honda is developing environmental friendly auto mobile and maintain global point of view with the loyalty of supply high quality product. Honda strategy has consistently emphasized innovation, environmental friendliness and independence.
Innovativeness they are always engaging with research and development to develop multi-technology and environmental friendly automobiles. As a result from 1946 to 2010 Honda had proven their capability. They are acknowledged leader in the development of hybrid cars and gains mars market acceptation.
An environmental friendly automobile was not a new strategy for them. In fact they work on developing cleaner transportation alternatives had begun decades earlier. Honda hybrid model are designed for fuel efficiency. It will be supporting to reduce natural recourse depletion. From 1999 Honda won the different accolades from environmental group.
Independence is other emphasizes strategy of their business. Honda choose not to collaborate or licensing its technology to others. They want to maintain their independences and essentially going solo.
How do I analyze the reason for choosing this strategy?
The reason for choosing this strategy is Honda will be supporting to reduce natural recourse depletion, to become environmental friendly. Since Honda has a long track proof of developing environmental friendly and multi technology automobile
In July 2002, Honda has succeeded in manufacturing the first fuel cell vehicle with applicable industry standards. It has taken 51 years as of 1997, for Honda Corporation to launch hybrid vehicle “Insight” ever though Honda was founded in 1946.
Starting from developing of engines for bicycles, then moved in to sports cars, establishment of 100 factories in 33 countries, while maintaining steadfastly independence of the company since 1956 and grown into one of the world’s largest automobile manufacturers not an easy task. I believe the bottom line of the story behind this is the “strategy” adopted by Honda.
Even though the numbers of hybrid vehicles sold in 2000 – 2004 were very small with many obstacles, when compared with the other traditional automobiles, I say, the achievement in 2002 is mainly due to the strategy adopted by the company as Honda steadfastly maintained its independence.
Final outcome of most of the research and developments takes time. It needs investment from the company as well as the high level support from the overall business strategy of the organization which involve risk but potentially profitable business opportunities in time to come.
Licensing and joint venture strategies are powerful strategies in common in any industry as well as practiced by Toyota in this case study. The hybrid product develop by Toyota also has its own advantages and disadvantages where the same situation applicable for Honda hybrid cars.
I agree, with the style of Honda’s management where they have kept the business development exclusively in-house with all aspects of a technology, from its strengths to its weaknesses. In addition to that in-house know-how has led to maintain competitive advantage which was difficult for competitors to imitate.
That is why Honda has succeeded in manufacturing the first fuel cell vehicle with all applicable industry standards in July 2002.
Is this characteristic of company or industry?
This is a characteristic of both company and industry, because there is demand for all types of vehicle. Honda stepped in to automobile industry at 1963. But Honda has quickly leads the superior of fuel economy, that’s the characteristic of industry. Since founding Honda they are gradually introducing new technology, there for their growth rate is superior, there stability and quality demonstrate the industry characteristic. Today the business environment is in highly turbulent and corporate strategy plays a vital role in a diversified firm. In order to achieve long term success of a firm they should lay down aggregated strategies in cost leadership, differentiation or focus on the right markets through their business strategy. Those are the bottom line characteristics of a company as well as in the markets.
Car manufacturing industry also has its own characteristics when compared the other industries. When acquiring new knowledge the company needs to win hearts and minds of the consumers as the competition is in full scale especially in car markets.
Therefore, it is understood and confirms the overall corporate strategy of Honda matches with the characteristics of a company as well as different markets. Otherwise Honda may not be able to sell cars in US, pass all industry acceptance tests.
1.3 How Honda should pursue synergies in the company?
Their investments basic research and development helps to the company to stable in the technology boundary and be a first mover when commercial versions of technologies are ready to be rolled out. Their culture seems to place immense value on introducing environmental friendly vehicles. By developing and promoting multiple technologies they believe ultimately are a dominant auto type. Company is an association of persons who are united for a common purpose. In the car manufacturing sector they transform raw materials to the finished goods on a large scale and expected to sell to the wholesalers or retailers where end users or the consumers purchase goods after launching.
Form the scraps to the finished product the company needs to work on a strategy and the overall Business strategy of a company should be cerate synergy and finally achieve competitive advantage as a whole.
Therefore Honda should know which business they should be in the expected markets. Finished goods have to undergo all types of economic systems at a profit without making losses under various policies and regulations adopted by deferent Governments of the respective market places.
Therefore company has to have overall business strategy while maintaining synergy. It usually arises when two persons or more than that works together. Different complementary skill creates synergy which can contribute a lot in achieving competitive advantage as a whole in an organization.
According to the data table given in the case study on “2005 Honda and Toyota U.S. Hybrid Sales” it is understood different models like Honda Accord, Civic, Insight has a market even though the sales figures are less when compared with sales in Toyota.
I believe being a mass car manufacturer like Honda should pursue synergies by developing and promoting multiple technologies for different target markets.
Does having a single environmental friendly car standard benefit or hurt consumers? Does it benefit or hurt car producers?
Standardization of a certain technology is the process of brining order into an otherwise chaotic system that adheres to no strict rules of conduct, thus entertaining a significant amount of freedom in expansion and growth. In my opinion, standardizations does more harm to a technology still in its infancy than good by bringing order and governance to the domain. Every scientific study and resultant technologies should be for the benefit of the mankind and its consumers, even though there are countless examples contradicting this fact. But with the dominance of the consumerism in current world, we cannot neglect to include the impact of standardization of these technologies in this discussion.
Having environmental friendly Hybrid eclectic vehicle is benefit as well as hurt to consumers. We can argue as both ways. Consumers are well educated and well informed over what they need and what they want. The marketing oriented management dictates that business organizations should listen to their customers and fulfill their requirements in order to generate higher profits and sustain customer equity. Since “Environment Friendly Motor Cars” is a relatively new market with fewer well versed consumers, it is important that they are allowed to explore and figure out what suits them the best. Current market situation is best used as a test ground for the new technologies and innovations. Once all the scientific tests are performed on a new technology, it should be subjected to the test of ubiquity and acceptance of the market. Therefore I strongly believe that availability of various options is for the best of consumers that this point. One standard means lesser confusion for the consumers for sure. But it would also limit the potential they can expect from their motor vehicles. Availability of many peer technologies under testing level at the same time in the market will make sure that an inefficient technology would not monopolize over an unsaturated and newborn market.
In the perspective of motor car producers, there is an overhead in funding resources on a number of technologies instead of one standard. But this gives them the flexibility to explore deeper into technologies and come up with better and efficient inventions. They don’t have to limit themselves with standards and risk being obsolete not adhering to a market accepted standard. Their investments may not always lead to successful and marketable inventions. But the knowledge and experience they gain by working on multiple technologies is invaluable and can be put to use for the betterment of future product developments as well for the growth of the industry as a whole. This will render both direct and indirect benefits for car producers in general without having to get stuck on one technology that could be standardized, yet soon rendered obsolete when the next breakthrough in the industry comes along.
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