Honda’s Business Plan Essay
Hypothesis: Business planning is the process of creating goals for a company and strategies to meet those goals. Business plan is required by the Company that have large-scale to reach their goals with some of strategies that called strategy plan. To reach their goals, they have to make a plan for their strategy business and it called strategy planning . For the sample we wrote about business plan of Honda Company. And it will tell us about how much this business plan have an influence for the growth and development of the company. BUSINESS PLAN OF HONDA COMPANY
The focused company for the business plan proposal is Honda Company as there shows market growth and stability in terms of business operations and management, implying assumptions for better finances for balancing sales and profits and adopting to a suitable and conducive business milieu for Honda’s management board, employees, target groups as well as customer base ranges. The five levels of strategy of Honda company Enterprise Strategy The Mission Statement of Honda is try to maintain a global point of view, with the dedication to supply the highest quality products at a reasonable price for worldwide customer satisfaction.
Moreover, taking new challenges with the pursuit of Initiative, Technology and Quality, Honda is pursuing their 2010 Vision: Striving to be a company society wants to exist through creating new value, globalization, and commitment for the future. Corporate Strategy Automobile Industry – Superior Fuel economy – Optimum safety – Driving Pleasure – World wide Motorcycle Industry – Build product close to customer – 28 plant, 21 countries, R;amp;D 6 countries Power Business – First business of Honda – Expanded – 11 plant, 9 countries, sold 156 countries, used by 5. 5M people – ASIMO – Honda jet Business Strategy “The Joy of Selling” – Dealership – Create inspiring experience for its customers – Response to changing value – Increasingly complicated needs of customers – =;gt; Improve customer relations • Friendly and attentive sales • Responsive service support • Thorough maintenance and repair – =;gt; “Life with Honda” Operational Strategy • Divide 6 administrative regional group • Pursue independence of local management and sales operations • Operate under conduct guidelines =;gt; keep evaluating and risk managing • High level of transparency Individual Strategy • “The Three Joys” are: – The Joy of Buying The Joy of Selling, Not only relationship ,but feel pride by positive relationship – The Joy of Producing, Pride in exceeding the customer expectation Organizational Process Of Honda Company – Organization culture – Innovation Management Organization culture It respects for the Individual and The Three Joys “Respects for the Individual”: – Initiative: Encouraging creative thinking – Equality: Fairly treating – Trust: Good relationship between employees Innovation Management • Honda Developing new technologies of manufacturing system. • It also Building environmentally responsible and people-friendly plants.
Managing people – Environmental training – Ensuring diversity in employment Environmental training • Part of Honda’s training curriculum • Deepen associates’ understanding about Honda’s policy toward environmental • Training programs are continuously provided to associates • Promote activities focusing on energy and resource conservation and recycling Ensuring diversity in employment • Provide human rights education, based on Honda’s principal of respect for individual • Opendoor employment policy, hiring based on individual merit • Employ people with disabilities Reemploy retirees, create opportunities for those who reach the retirement age of 60 Soichiro Honda’s Business Strategies For Growing His Small Business Into Global Corporation How was Honda, an ordinary apprentice boy, able to create the multi billion dollars business empire that the Honda Motor Company is today? What were the strategies that he implemented that brought him success, and took his small business into every part of the world? That is what I want to reveal to you in this article – some golden secrets of business success as proven by Honda.
Be aware that these strategies are still very much relevant to business success today, and you can freely apply them to your business. Whether you are running a small, medium, or large business, these strategies are for you, and your business will definitely experience a monumental growth if you apply them – I’m damn sure of that! Honda’s Business Strategy One: Knowledge is Key To Business Success To achieve success in business, and indeed anything in life, adequate knowledge of the thing is needed. Soichiro Honda got himself thoroughly prepared for his business before setting out by getting the needed knowledge.
As an apprentice automobile mechanic for six years, Honda was able to study the automobile industry from the basics, acquiring great deal of knowledge about the workings of machines, and the common faults in automobiles. And when he was having difficulty making piston rings, he realized he needed a higher knowledge, and he went to get it at a technical school. The huge knowledge of automobile machines, and the problems consumers have with their motorcycles, without doubt enabled Honda to create motorcycles that are of high quality, light, easy, fun and exciting to ride; as well as effortlessly to maintain, and affordable.
These qualities in Honda motorcycles, made possible by Mr. Honda’s knowledge of the industry doubtlessly made his motorcycles a global success. As with Honda, your knowledge of your industry can actually be one of your strongest competitive advantages, as it will enable you to create products and services that meet and even surpass what your market want. It will also enable you to create systems to run your business efficiently and successfully.
To succeed in business therefore, it is important to have adequate knowledge of your industry, which you have to continue to update to remain abreast of modern trends. Honda’s Business Strategy Two: Expanding Into Other Lands Another strategy that Honda implemented in his business that made it hugely successful was to expand it into foreign lands. Honda’s coming to the US market allowed it to explore a massive market with great purchasing power. This enabled him to sell much more of his motorcycles than would have been possible if his business had remained in Japan only.
To hit success big time and grow your small business, do not restrict your operation only to your immediate environment, for your product or service may even be more valuable and needed by people in other places than you know. It is therefore important to include expansion strategy in your business plan, and determine where, how, and when to spread. Expanding your business undoubtedly brings huge reward as your sales are enormously increased and your business firmly rooted. Honda’s Business Strategy Three: Identifying Virgin Lands
The ability to see good business opportunities to profit before everyone else does is an asset that every successful business owner has and uses to dominate their industry. When everyone thought the US market was a ‘no go area’ to sell motorcycles, because of the low image of motorcycles then in the US, the Honda Motor Company thought the opposite. They saw a huge market in the US to develop and dominate. And in just five years Honda had achieved their dream in the US. They had replaced the negative image of motorcycle with that of fun and excitement, making millions of Americans happily desiring to own theirs.
As a business owner or manager, you must develop the ability to quickly spot business opportunities that other people have not seen, and go for it. This will allow you to be first choice on people’s minds when that business opportunity fully matures. Honda’s Business Strategy Four: Avoiding Direct Competition It is extremely unwise to come into a market newly with similar product or service as the market leaders. Your small business may not have the resources to knock them off the position they are already occupying in the consumers’ minds.
And if competition is stiff in that industry, they could easily and mercilessly over run your business. But why go through all that trouble when what you should do is look for a niche and differentiate your business and what you are offering clearly from the competition. That was exactly Honda’s strategy for entering the US market. They were not trying to be another large-displacement models, which were already in the US market, but a small, affordable, easy-to-live-with machine, that provided transportation and excitement.
Honda’s Business Strategy Five: Having A Business Philosophy Honda’s success from a small business to a world giant wouldn’t have been possible without their business philosophy, which everyone in the company knew and believed in. Everyone’s work in Honda was guided by the business philosophy: “Maintaining an international viewpoint, we are dedicated to supplying products of the highest efficiency, yet at a reasonable price for worldwide customer satisfaction. ” The philosophy helped them to know exactly what kind of products they want to make and who is it for.
With this philosophy, every worker knew he or she is working to satisfy the global market and so must upgrade his or her performance to international standard, as well as to keep an eye on cost of production. Having a business philosophy is a must if you want your work force to be galvanized into a winning team, working with a singular motive. Honda’s Business Strategy Six: Defining Your Target Customers A business owner who is crystal clear about who their customers are will surely be successful. It will enable him or her to concentrate his or her resources in understanding the needs of the customer, and to look for how best to satisfy them.
Naturally, the customer will pick such businesses first before others, because they know, and meet the needs of the customer more than other businesses. Applying this strategy, Honda was very clear about who their customers were: people who wanted small, light, easy to handle and maintain two-wheeled vehicles. Know that it is not possible for you to sell your product or service to everybody in your market. Don’t even attempt it because there is no such product that everybody needs! You must have a clear understanding and definition of who your product or service is exactly for.
That way, you will be focused at really satisfying those people. And consequently, you will also reach success just like Honda did. Honda’s Business Strategy Seven: Setting Big, Achievable Goals The Honda Motor Company was out to sell a staggering 12, 000 motorcycles a month even though they were then new to the US market. Although they did not achieve this immediately, they were however motivated by this goal, and four years later they had even surpassed it. Don’t limit yourself, but set big and achievable goals. This will give you the purpose and the motivation to work harder.
You will be amazed to see how much more you can achieve if you sought more. There is a wise saying that says, “Aim at the moon, if you miss you will land on one of the stars. ” Apply this strategy and see your business jumping to greater heights. Honda’s Business Strategy Eight: Preparing For Delayed Success Though the ultimate desire of any business owner, be it small or large, is to be successful quickly, the success however may not come that soon. There may be initial set back, but if you keep pushing, you will get there.
The Honda Motor Company was not discouraged for venturing into the American market even though they made a loss in their first year of operation because they had a strategy in place to expect initial loses, with their eyes fixed on the possible future gains. Honda’s Business Strategy Nine: Giving Your Customers Great Quality And Service Giving their customers high quality products complemented by great service have been one of Honda’s most effective strategies in taking their business to the pinnacle of success in their industry.
Mr. Honda himself revealed this strategy in his business when, while addressing his dealers from the US in 1961, he said, “Dealers must give their customers the very best service. Quality and service are like the two wheels of a motorcycle, with one, the vehicle will fail…. This is the reason we have been able to draw away from our business rivals. ” Whatever business you are in, and whether it’s a small business or big, this is a strategy you must never fail to inculcate in it if you desire success.
Honda’s Business Strategy Ten: Demonstrating The Efficiency Of Your Product To Consumers It is not enough to state what your product can do in an advertisement; publicly showing proof of its strength and abilities is a more effective advertisement. The Honda Motor Company realized this strong marketing strategy and took advantage of it to clear American consumers’ minds about Japanese products being inferior when in 1962 three Honda’s motorcycles survived a week-long-24-hour-per-day Maudes Trophy endurance test in England. If you eally want people to give you attention and buy your product or service, you have to find a way to show them, or to demonstrate to them how effective and efficient it is, rather than just saying it. Honda’s Business Strategy Eleven: Advertising, A Major Key To Success The impact of advertisement to business success cannot be over emphasized. People need to first be aware of what you are offering before they can decide whether to patronize you or not. It should therefore be of top priority in your plans and budget to advertise your business exhaustively.
However, it is important to come up with strategies that will make your advertising efforts effective and worth the money you expend. For example, you will need to be sure how much impact the media you are choosing for any campaign will have, and the message you are communicating to the public. Honda’s advertising strategy in the US was to use media, such as general interest magazines, that could reach a huge number of the population, and to change their unfavorable mindset about using motorcycles by making them see motorcycles as a fun and exciting thing to have.
And when the opportunity to reach even greater number of their target customers presented itself during the 1964 Academy Awards telecast, American Honda didn’t fail to seize it, even though at a very high cost, because it fell right on their strategy to reach a massive audience with their message. As a small business owner, you may not have enough advertising budget to hire an agency to help you design your campaigns, and to advertise on big platforms like the Academy Awards, but there are lots of smaller and far cheaper platforms you can advertise your product on.
Honda Announces Business Plan Honda Motor Co. , Ltd. announced its business plan for calendar year 2003, including Honda’s plan to increase its customer base from the 2002 forecast of 15. 27 million customers to 17. 35 million customers in 2003. Honda announced its mid-term business plan in July 2002, calling for a further advance of the global activities it has vigorously pursued in order to provide new value-added products for 20 million customers in the fiscal year ending March 31, 2005.
Based on its mid-term plan, in 2002, Honda completed innovating the production operations at its major automobile plants in Japan, the U. S. , and Europe to the “New Manufacturing System,” enabling those manufacturing lines to respond more quickly and flexibly to changes in the marketplace. Capitalizing on these improved characteristics, Honda has utilized its worldwide resources to steadily expand “Made by Global Honda” activities which ensure procurement and production in the most efficient locations to achieve quick delivery to customers.
In 2003, through “global networking,” Honda plans to invigorate its entire worldwide operations with the type of energy and vitality inherent in Asia, where the market is expected to continue to expand. Based on the concept and activities of “Made by Global Honda,” Honda aims to achieve motorcycle sales of 9. 25 millions, automobile sales of 3. 1 million, and power product sales of 5 million ? resulting in a total of 17. 35 million customers in 2003. Target Market and Customer Base The target market and customer base of Honda is actually diverse as the company has various business operations not just in one country but several of them.
Thus, for instance in Japan in which their customer base is high, the company have its plans to integrate the company’s three existing domestic automobile sales channels – Primo, Clio and Verno into one Honda channel last March 2006. This integration enabled the Honda customers to purchase and service any Honda brand automobile at a single Honda dealer and to maintain a continuous relationship with the same dealer for future sales and service needs as a means to achieve a high level of satisfaction.
In addition, Honda announced plans to introduce its luxury brand, Acura, in Japan, by fall 2008. The Acura brand will offer distinctive products with a core focus on advanced, leading edge technologies that are always ahead of the times. The goal of sales channel strategy are to maintain Honda’s ability to respond to changes in society and the automobile market and to continue to provide the diverse values desired by customers and meet increasingly sophisticated customer needs.
In turn, this will enable Honda to maximize the joy and satisfaction of existing customers earned through the three channel structure in Japan as Honda aims to restructure and strengthen its domestic automobile dealer network by creating new value for the customer through Acura brand products and through efforts, Honda steadily increased the number of Honda customers and made significant progress in achieving the autonomy of its dealers.
The Japanese automobile market has now entered a stage of increasing maturity, and the surrounding society and marketplace are in a transition stage as well. In this increasingly competitive environment, the most important factor is to always continue improving the lifetime satisfaction level for the customers who have already chosen the Honda brand.
Honda decided to integrate its existing channels into one Honda channel where customers will be able to purchase and service any Honda brand automobile and to continue receiving high quality sales and service from the same dealer for future needs whether that be replacing their current vehicle or adding another one. Honda also aims to build a dealer network that places the Honda brand at the forefront by maximizing use of existing facilities and manpower and by optimizing the location of sales facilities.
Aside, introducing Acura to create new value for the customer and to continue to achieve further growth and to take a big step forward in Japan Recently, the values desired by the customer have become even more diverse and customer needs are becoming increasingly sophisticated in the automobile market and will enable Honda to achieve further growth and take a big step forward in its home market of Japan as well as accelerate its effort to maximize customer joy and satisfaction and by challenging, Honda will pursue the goal of consistently achieving annual sales of more than 800,000 units. Corporate December 14, 2005
Honda Announces New Automobile Sales Channel Strategy and Introduction of Acura(*1) Brand to Japan — Focus will be on maximizing customer joy and satisfaction and creating new value – Customer selection process Honda expects to lease several dozen FCX Clarity models per year in the U. S. and Japan to reach the total of about 200 units in the first three years. Since its Tokyo concept debut, Honda has received requests from more than 50,000 individuals who have indicated their interest in receiving further updates about the vehicle and about being considered as future customers of Honda fuel cell technology.
The company is now working to narrow the list through a four-step customer qualification process: * Step 1 — Based on respondents’ residential location, the list of potential customers has been narrowed to approximately 500 people living in very close proximity to publicly-accessible hydrogen fueling stations, including planned or existing stations in Santa Monica, Torrance and Irvine. * Step 2 — Customers meeting the geographical criteria will receive an e-mail prompting them to take a customer selection survey if they are serious about wanting to lease an FCX Clarity. Step 3 – The survey will qualify customers based on driving patterns, vehicle needs, vehicle storage and financial criteria. * Step 4 – Customers qualify for the next steps, including an interview with American Honda. Everyone who has expressed an interest in the FCX Clarity will be kept abreast of new developments via the FCX Clarity web site and by e-mail communications. All interested prospects’ information will be retained for future consideration. Source of Competitive Advantage
Honda conducts its operations in Japan and throughout the world, including North America, Europe and Asia. A continued economic slowdown, recession or sustained loss of consumer confidence in these markets, which may be caused by rising fuel prices or other factors, could trigger a decline in demand for automobiles, motorcycles and power products that may adversely affect Honda’s results of operations. Prices for automobiles, motorcycles and power products in certain markets may experience sharp changes over short periods of time.
This volatility is caused by many factors, including increasingly fierce competition, short-term fluctuations in demand from underlying economic conditions, changes in import regulations, shortages of certain supplies, high material prices and sales incentives by Honda or other manufacturers or dealers. There can be no assurance that such price volatility will not continue or intensify or that price volatility will not occur in markets that to date have not experienced such volatility.
Overcapacity within the industry has increased and will likely continue to increase if the economic downturn continues in Honda’s major markets worldwide, leading to further increase price pressure. Price volatility in any or all of Honda’s markets could adversely affect Honda’s results of operations in a particular period. Honda has manufacturing operations throughout the world and exports products and components to various countries. Honda purchases materials and parts, and sells its products in foreign currencies.
Therefore, currency fluctuations may affect Honda’s pricing of products sold and materials purchased AS currency fluctuations have an effect on Honda’s results of operations and financial condition, as well as Honda’s competitiveness, which will over time affect its results. Thus, regulations regarding vehicle emission levels, fuel economy, noise, safety and noxious substances, as well as levels of pollutants from production plants, are extensive within the automobile, motorcycle and power product industries. These regulations are subject to change and are often made more restrictive.
The costs to comply with these regulations can be significant to Honda’s operations. Honda’s financial services business offers customers various financing plans designed to increase the opportunity for sales of its products. However, customers can also obtain financing for the lease or purchase of Honda’s products through a variety of other sources that compete with its financing services, including commercial banks and finance and leasing companies. The financial services offered by us also involve risks relating to residual value, credit risk and cost of capital.
Competition for customers and/or these risks that are specific to the financing business may affect Honda’s results of operations in the future. Honda purchases raw materials and certain components and parts, from numerous external suppliers, and relies on some key suppliers for some items and the raw materials it uses in the manufacture of its products. Honda’s ability to continue to obtain these supplies in an efficient and cost-effective manner is subject to a number of factors, some of which are not within Honda’s control.
These factors include the ability of its suppliers to provide a continued source of supply and Honda’s ability to compete with other users in obtaining the supplies. Loss of a key supplier in particular may affect our production and increase our costs. Honda conducts its businesses worldwide and in several countries through joint ventures with local entities, in part due to the legal and other requirements of those countries. These businesses are subject to various regulations, including the legal and other requirements of each country.
If these regulations or the business conditions or policies of these local entities change, it may have an adverse affect on Honda’s business, financial condition or results of operations. Honda conducts its businesses worldwide, and its operations may variously be subject to wars, use of force by foreign countries, terrorism, multinational conflicts, natural disasters, epidemics, labor strikes and other events beyond its control which may delay or disrupt Honda’s local operations in the affected regions, including the urchase of raw materials and parts, the manufacture, sales and distribution of products and the provision of services as delays or disruptions in one region may in turn affect Honda’s global operations and Honda’s business, financial condition or results of operations may be adversely affected. Configuration of resources Business organizations have been subject to enormous pressures over the past few years, with major underlying structural changes in industry sometimes concealed behind the short-term issues of recession.
There will be no simple solutions and success will depend on the soundness of the strategic decisions taken by top management and the ability of the organization to implement those strategies and would push the human resource aspects of the business to the fore, even without the added complication of continued change and the pressures that this brings. Honda Motor Co. , Ltd. operates under the basic principles of “Respect for the Individual” and “The Three Joys”, commonly expressed as The Joy of Buying, The Joy of Selling and The Joy of Creating.
Respect for the Individual” reflects our desire to respect the unique character and ability of each individual person, trusting each other as equal partners in order to do their best in every situation. Honda Motor Ltd. has remained on the leading edge by creating new value by providing products of the highest quality at a reasonable price for worldwide customer satisfaction. The Company has grown to become the world’s largest motorcycle manufacturer and one of the leading automakers.
Honda develops, manufactures and markets a wide variety of products ranging from small general purpose engines and scooters to specialty sports cars, to earn the Company an outstanding reputation from customers worldwide. Honda has introduced an operating officer system, aimed at strengthening both the execution of business operations at the regional and local levels and the supervision by the Board of Directors. The term of office of each director is limited to one year, and the amount of remuneration payable to them is determined according to a standard that reflects their performance in the Company.
The goal in doing this is to maximize the flexibility with which directors respond to changes in the operating environment. With respect to business execution, Honda has established a system for operating its organizational units that reflects its fundamental corporate philosophy. For example, separate headquarters have been set up for each region, business and function and a general manager from the Board of Directors or an operating officer has been assigned to each headquarters and main division.
In addition, the Management Council deliberates important matters concerning management, and regional operating councils deliberate important matters concerning management of their respective regions. Honda’s basic policy emphasizes the appropriate disclosure of company information, such as by disclosing financial results on a quarterly basis and timely and accurately giving public notice of and disclosing its management strategies. Honda will continue raising its level of transparency in the future. Market Research Creating advanced new technologies and products
Through leading-edge research and development, Honda continuously creates original technology that opens up new possibilities in mobility. Honda is always tackling new challenges for the current and future benefit of individuals, society and the environment. Research and Development for the future Honda is constantly involved in the research and development of technology that will benefit people in the future. These technologies range from new materials and new sources of energy, including mass-produced solar panels, to new power trains that maximize joy while minimizing environmental impact.
They also include advances in biotechnology, such as Honda’s work in decoding the rice genome for application in various fields. Honda is studying human anatomy and physiology, as well, in its efforts to produce innovative products that enhance safety in various ways. ASIMO lends a hand In 1986, Honda began conducting original research and development toward the creation of biped humanoid robots that will serve society in harmony with humans. The latest ASIMO, introduced in 2005, employs new posture control technology that allows it to run and move in concert with a human partner.
Able to carry objects, it can also handle various reception and delivery tasks. ASIMO continues to evolve and will soon acquire the abilities to turn around and run 6km/h, making it an even better partner for humans. Reaching for the skies One of Honda’s earliest dreams was the development of jet planes. In pursuit of this dream, Honda recently established Honda Aero Inc. and developed a compact jet engine that has passed the experimental stages. The manufacture and procurement of components for this jet engine will be handled by a joint venture between Honda and General Electric. Next-generation power trains
Honda’s Automobile Research and Development Center in Japan includes research facilities dedicated to the development of next-generation power trains. Here, Honda engineers are developing new means of propulsion that may one day contribute to human mobility. Consistent quality worldwide Honda is a global company with manufacturing operations and sales networks all over the world. Furthermore, our products are enjoyed by people in numerous countries. This global success is built upon the renowned quality of Honda’s products and made possible by the passion and dedication of Honda associates everywhere.
Wherever you are, you can always count on the quality of Honda products. Localizing production to meet local needs Honda began manufacturing motorcycles in Belgium and became the first Japanese automaker to produce passenger cars in the U. S. Since then, Honda has established independent local operations around the world for research, development, marketing and production. Through the introduction of Honda’s flexible manufacturing system, Honda continues reducing the time and resources necessary to launch new models into production and improving the efficiency of manufacturing operations that meet regional needs.
Moreover, the grouping of production processes into cohesive units has improved the working environment, raised product quality, and further accelerated production. In the future, Honda plans to further localize the production of engines and key components for automobiles, motorcycles, and power products, while simultaneously raising quality and efficiency and accelerating our response to the dramatically changing world. Inspiring their customers By creating products and services that highlight the core values that make Honda unique, we would like to provide our customers with joy and excitement beyond their expectations.
Honda will continue to create such inspiring experiences for our customers by offering mobility that is always ahead of the times. In this way, Honda products will be loved and enjoyed by customers of all generations. Expanding New Values for customers worldwide The ultimate goal of Honda’s sales activities worldwide is to satisfy our customers so that they will continue to come back for more Honda quality products. That’s why they put heartfelt effort into our services, responding to changing values and increasingly sophisticated needs.
They’re always working to improve the quality of our customer relations providing friendly and attentive sales, responsive service support, thorough maintenance and repairs so customer satisfaction constantly grows. Honda also continues to develop sales and service systems best suited to community needs. In that way, “life with a Honda” brings new joy to people and places worldwide. Starting in Japan in 2006, Honda will unify our multiple car-dealership channels into a single Honda sales channel seeking to strengthen the Honda brand, enhance customer satisfaction and help ensure lifetime customer loyalty.
Business Format and Structure Considering that Honda is encountering a number of organizational issues, changes in its operations should be done to overcome them. In order to carry these out, change management should be done. This concept is defined as the development and integration of organizational change in a systematic process. Change management can also be defined as the response of different business to various pressures brought about by environmental influences in which organizations have minimal or absolutely no control over.
The main purpose of conducting organization changes is to introduce innovative means and systems in the organization. This can similarly be compared to the application of certain information technologies in the company or the adoption of new marketing strategies. Businesses must normally undergo change in order to evolve to a higher level of stability, management or production. While change is induced to bring better business outcomes, introducing change is a challenging task. This is due to the number of factors that could hinder its successful induction.
One of which is the hesitance of some employees and managers in considering change within the company. Among various reasons, the most common of which is that some employees are afraid of risks and are already comfortable with their current status. Other managers on the other hand, feared the lost of control over the changed management and the responsibilities it will entail. Management Organization of the Company’s Corporate Governance for Decision-Making, Execution, Supervision and Others SOURCE: (2006) There are approaches that are more focused on what is needed to be changed; others emphasize on how change can be accomplished.
Leavitt had defined three approaches to organizational change management, which includes structure, technology and people ( 1964). New formal guidelines and procedures like organization chart, budgeting methods, rules and regulations can be considered as structural approaches on inducing change. On the other hand, rearrangements in work flow through new physical layouts, work methods, job descriptions and work standards are examples of technological approaches. Some organizations stress on inducing organizational change through the people approach which includes alterations in attitudes, motivation and behavioral skills.
This can be done through new training programs, selection procedures, and performance appraisal schemes. Other approaches to manage change had also been introduced. These approaches had been categorized into three: the unilateral power, which focuses on changing a component of the organization; shared power that emphasizes on addressing change through group discussion and agreement; and delegated power in which certain change catalysts or agents are in charge of disseminating change. It has been mentioned that change management is done order to improve specific organizational aspects.
In the case of Honda, strategic innovation is necessary in order to help the company adapt to various environmental pressures and to improve its human resources. The need for the retailer to implement changes is the same reason for implementing a change concept known as reengineering. Reengineering is a strategy for organizational change done for a number of reasons. Higher performance, acceptance of new techniques, greater motivation, more innovation, increased cooperation and better employee relations are some of the common purposes for organizational reengineering.
However, the conduction of reengineering in a company has two main goals as organization management cannot entirely control its environment, they constantly induce internal changes to enable them to overcome new challenges including competition, advances in technology, new government legislation, and pressing social demands. Organizations do not operate through computers but through people who can make decisions and every organization has its unique patterns of decision-making behavior.
These patterns stem from both formal and informal ground rules which indicate how an effective manager or employee should behave in dealing with others and in making decisions. The learning experience of the personnel also helped the company in improving its image to the consumers. With improved services, competent staff and more organized systems, customers are able to recognize the efforts of the business to serve its targets better. As a result, the employees were able to help out the company’s profit growth. Management/ Personnel qualities and experience
The romantic image of the founder-millionaire wearing overalls. tinkering visibly with some mechanical marvel in workshop or lab, is often reality. So it was with Soichiro Honda, in many ways the least typical of the post-war Japanese economic victors: but simultaneously the most visible archetype of the success of Japanese business culture, though an eccentric one. ‘Mr Honda’, said one baffled journalist, ‘ is a management executive who always wears red shirts and tells naughty stories when drinking. ‘ The drinking was important to Honda.
In his early sixties, the great man admitted that he didn’t understand computers. The fact that he couldn’t keep up with the technology was only one factor in his decision to take relatively early retirement. Five years later, Honda came of technological age with the Japanese market in recession, Honda invested in German, Swiss and American machine tools, reckoning that they were the best in the world. He then ‘reverse-engineered’ the European bikes he was copying – taking them apart to see how they were made: and discovering that their best was simply not good enough.
European manufacturers believed it was impossible to run motorcycle engines with even faster bursts. Honda not only proved that you could, but also started to win Grand Prix races all over the world. Super-design went with super-efficiency in production engineering. At Honda’s motorcycle plants not a single storeroom existed for parts, raw materials, or finished machines; deliveries went in at one end, and finished bikes, up to one every seven seconds, moved straight on to double-decker trucks at the other.
There are few places where an organization can shelter from competitors, and many industries have been shaken up because their competitors have taken a global view of their markets. The demise of the motor cycle industry was in a large part due to the inability of the firms to imagine that anyone could gain great production advantages by thinking of manufacture for a global market, instead of the traditional approach of producing for the local market and the exporting of any surplus where there was a protective customs tariff.
More organizations are compelled to think of Honda’s business in global terms and most others are subject to ever increasing intensities of competition. Aside, technology advances bring opportunities as well as threats. One example close to the hearts of managers is the new opportunities offered by advances in computer technology, making e-learning a real option and providing opportunities. Financial Forecasts Honda Motor Co. , Ltd. announced that in the third quarter of the current fiscal year, it realized an all-time record for consolidated net sales and other operating revenue for any quarter due to increased sales in all business areas.
Honda also realized an all-time record for consolidated operating income for the fiscal third quarter, mainly because of increased revenues, cost reduction effects, positive effects from the depreciation of the Japanese Yen. Income before income taxes decreased by 11. 6 percent due to a negative effect from rapid depreciation of the Yen which caused difference in the exchange rate applied for transactions rate and sales rate, and a change in fair value of convertible bond and others. Net income for the period decreased by 11. 7 percent, although an all-time record for any quarters in income of affiliates was realized.
Results for third quarter ended Dec. 31, 2005 | Yen ( billions )| | 3rd Quarter ended Dec. 31, 2004| 3rd Quarter ended Dec. 31, 2005| Difference (% change)| Net sales and other operating revenue| 2,133. 8| 2,472. 0**| + 338. 1 (+15. 8)| Operating income| 157. 6| 194. 9*| + 37. 3 (+ 23. 7)| Income before income taxes| 187. 9| 166. 0| – 21. 8 (- 11. 6)| Equity in income of affiliates| 29. 3| 29. 6**| + 0. 2 (+ 1. 0)| Net income| 150. 7| 133. 1*| – 17. 6 (- 11. 7)| Basic net income per common share| JPY 161. 78| JPY 144. 81| JPY -16. 97 (- 10. 5)| ( Honda’s average rates: JPY 117 = U. S. dollar 1 JPY 140 = Euro 1 ) Motorcycles: 2. 88 million units (+12. 3%); mainly due to an increase in sales of parts for overseas production bound for affiliated companies in Asia and finished products in North America. (Approximately 600,000 motorcycles with local procurement rates of 100% which were procured and sold by affiliates in China and India are not included in the financial results, in conformity with Generally Accepted Accounting Principles in the U. S. ) Automobiles: 816 thousand units (-0. 1%); almost the same level as the corresponding period in 2004 was realized by the increase in the overseas sales which offset the decrease in the domestic market.
Power Products: 1. 134 million units (+8. 6%); the increase was due primarily to sales growth in Europe and Japan. Consolidated net sales and other operating revenue increased to JPY2,472. 0 billion (+15. 8%) , an all-time record for any quarter, and a sixth consecutive all-time record for the third fiscal quarter were attributable to the increase in all business areas. Consolidated operating income totaled JPY 194. 9 billion (+23. 7%), an all-time record for a third quarter, mainly consisting of increased revenues, cost reduction effects, and positive effects from the depreciation of the Japanese Yen.
These factors offset an increase in selling, general and administrative (SG;amp;A) expenses and research and development (R;amp;D) expenses. Income before income taxes decreased to JPY 166. 0 billion (-11. 6%), primarily due to a negative effect from difference in the exchange rate applied for transactions and the sales rate, and a change in fair value of convertible bond, held by Honda for the purpose of onboard telecommunication services. Equity in income of affiliates increased to JPY 29. 6 billion (+1. 0%), an all-time record for any quarters, and fifth consecutive all-time record for the third fiscal quarter.
Forecasts for Fiscal Year Ending March 31, 2006 A sixth consecutive all-time record is forecast for consolidated net sales and other operating revenue based on the unit sales plans of 10. 38 million motorcycles, 3. 425 million automobiles and 5. 73 million power products. (Unit sales of motorcycles, with local procurement rates of 100% which are produced and sold by affiliates in China and India, are expected to increase by 1. 69 million units to a total of 2. 69 million units, but are not included in the sales plan total and financial forecasts to be in conformity with Generally Accepted Accounting Principles in the U.
S. ) Honda aims to set an all-time record for operating income, income before income taxes, equity in income of affiliates, and net income. The consolidated forecast for the fiscal year ending March 31, 2006 is as follows: | Yen (billions)| | Year ended March 31, 2005| Current forecast for year ending March 31, 2006| Difference (% change)| Oct 27, 2005 forecast| Net sales and other operating revenue| 8,650. 1| 9,740. 0| +1,089. 8 (+12. 6)| 9,600. 0| Operating income| 630. 9| 860. 0| +229. 0 (+36. 3)| 675. 0| Income before income taxes| 656. 8| 825. 0| +168. 1 (+25. )| 655. 0| Equity in income of affiliates| 96. 0| 99. 0| +2. 9 (+ 3. 1)| 94. 0| Net income| 486. 1| 605. 0| + 118. 8 (+24. 4)| 490. 0| (Honda’s average rates for the FY2006:| JPY 112 = U. S. dollar 1 JPY 136 = Euro 1)| Corporate January 31, 2006 Consolidated Financial Summary for the Fiscal 3rd Quarter Ended Dec 31, 2005 ;amp; Revised Forecast for Fiscal Year All-time quarterly records for net sales and other operating revenue and net income, and equity in income of affiliates. Record as a third quarter for operating income. Fiscal year forecast revised upwards. Appendices
According to the company’s annual report of 2006, it says that Honda operates under the basic principles of Respect for the Individual and The Three Joys, expressed as The Joy of Buying, The Joy of Selling and The Joy of Creating. (, 2006: ) Honda has remained on the leading edge by creating new value by providing products of the highest quality at a reasonable price, for worldwide customer satisfaction. In addition, Honda manufactures and market products ranging from small general-purpose engines and scooters to specialty sports cars, to earn an outstanding reputation from customers worldwide.
Honda is a global company with manufacturing operations and sales networks as Honda products are enjoyed by people in numerous countries as this global success is built upon the renowned quality of Honda’s products and made possible by the passion and dedication of Honda associates everywhere. (, 2006) The company as a whole defines and clearly communicates to every employee what it wants to be the basis of the customer relationship like acquiring and updating knowledge about customer needs, motivation and behavior drive Honda’s approach toward customer excellence. (, 2006)
Following are the directions of Honda which will pursue to improve the efficiency of its engines for our motorcycles, automobiles, and power products: Motorcycles ; * Achievement and plans for fuel economy improvement for motorcycles: Honda has been promoting the introduction of FI (fuel injection) systems and the replacement of 2-stroke engines with 4-stroke engines for all categories including scooters and small and large motorcycles. As a result, by 2005, the fuel economy of Honda motorcycle products was improved approximately 34% compared to the level of 1995.
For the 9th Mid-term, in addition to existing technologies, some new engine technologies will be introduced. * Super-low-friction engines: Honda is developing the world’s top level low friction engine for the 100cc to 125cc class – the largest volume segment in the world. The low friction engine achieves improved combustion efficiency by introducing two spark plugs while friction is reduced completely. This new innovation improves the fuel economy by 13% compared to the level of 2005. VCM (Variable Cylinder Management) engines for motorcycles: Honda has developed new VCM engines for large motorcycles, applying cylinder cut-off technology that was first applied to automobile engines — while customizing it for motorcycles by integrating it with a HYPER VTEC system. This VCM system achieves both excellent driving performance and fuel economy by freely controlling valves in four stages from 2-cylinder/2-valve to 4-cylinder/4-valve. With this new technology, Honda aims to improve the fuel economy of large motorcycle engines by 30% compared to the level of 2005.
Honda will apply these new technologies to mass-market products by the end of the 9th Mid-term and then expand the number of models equipped with these technologies in order to improve the environmental performance of motorcycles. Fuel economy improvement goals Super low friction engine : 13% improvement (vs. 2005) VCM engine for motorcycles : 30% improvement (vs. 2005) Automobiles ; * Achievement and plans for fuel economy improvement for automobiles: With introduction of the all-new Civic this year, Honda will complete the shift to its next generation i-series engines for almost all models.
With VTEC technology at the core, Honda has established distinctive technologies to improve fuel economy, including VCM. As a result, this new series of engines has achieved approximately a 20% improvement in fuel economy. For the 9th Mid-term, Honda will further advance VTEC technologies, introduce new technologies to control air intake with a continuously variable valve control system, and further advance existing VCM technology. These new technologies will be applied to key models within this Mid-term.
Power Products/general purpose engines ; * Achievement and plans for fuel economy improvement for power products: Honda has been an industry leader in providing engines with high environmental performance. Honda has introduced GX and GC series engines which use OHV (overhead valve) and OHC (overhead cam) technologies. Also, Honda has introduced a cleaner, 4-stroke, 360-degree inclinable engine –-M4 series— to the handheld market where 2-stroke engines were the mainstream.
Moreover, with the iGX engine, by incorporating intelligent control through an electronically-controlled STR (Self Tuning Regulator) as a core technology, Honda achieved the industry’s best environmental performance and ease of operation. Honda will continue to expand application of STR technology through a series of engines, while continuing development of further engine advances. * Honda is currently developing an innovative next-generation general propose engine. This high expansion ratio engine has a mechanism to vary the intake/compression stroke, and expansion/emission stroke.
This newly developed engine has already proved operational in the test lab. This innovative technology achieves an ideal Atkinson cycle and makes it possible to improve fuel economy by 20%. * For the 9th Mid-term, Honda will expand application of intelligent technology and introduce an innovative high expansion ratio engine to the market. Honda will continue to be an industry leader in the area of environmental technologies for general purpose engines. Fuel economy improvement goals: Further application of STR technology: 15% improvement (vs. 2005) High expansion ratio engine: 20% improvement (vs. 2005)
New Business Plan: New Civic ; * The Honda Civic, a true global car, will undergo a full model change this year. * The all-new Civic was developed with four body types to meet the unique requirements of each region. For the Japanese market, an emotional and stylish sedan which goes beyond the concept of the traditional Civic was developed. For the U. S. market, 2-door and 4-door types were developed, while a 4-door was also developed for Asia and 3-door and 5-door types were developed exclusively for Europe. The all-new Civic, developed under our approach of creating products to meet the needs of local customers, is a rue global car with sales of more than 600,000 units annually in 160 countries in the world and with production in six regions, now to include China, where Civic production will begin next year. For the new Civic, Honda will offer an advanced powertrain lineup that includes various fuel options including gasoline, diesel, hybrid, CNG and ethanol – to meet the unique needs of each region. Regional Operations ; * Japan Through in-house production, Honda has created the latest powertrain technologies for the all-new Civic, including a new hybrid motor, CVT (Continuously Variable Transmission), and clean diesel.
For example, the motor for the hybrid system is being produced at Honda’s Suzuka plant. Honda is the only automaker in the world that produces its own metal belt for the CVT. In addition to procuring belts from external suppliers, Honda produces metal belts at the Suzuka plant. Further, Honda adopted the semi-solid production method for the i-CTDi diesel engine, which is a unique production method for the engine block. This highly sophisticated aluminum casting process will be transferred from Honda Engineering Co. , Ltd. , to Suzuka before the end of the year, further strengthening Honda’s mass production capability.
As a part of the initiative to strengthen the “Leader Function” of our factories in Japan, advanced technologies for internal combustion engines will be developed, manufactured, and improved by in-house efforts at Honda. To strengthen core capabilities that make Honda unique in the area of sales and service, relevant operations currently scattered across Japan will be centralized at Honda Motor headquarters. By fully utilizing information technologies, Honda headquarters will be directly connected with Honda dealers to create leading edge sales and service activities.
In addition, Honda recently established a new subsidiary, Honda Consulting Co. , Ltd. , which will focus on career development and strengthening of Honda associates who are the driving force of sales and service efforts “at the spot. ” In the areas of production and sales, Honda will further strengthen both our capability “at the spot” and the core characteristics that make Honda unique. * North America Honda is strengthening the foundation for light truck sales in North America. The second line in Alabama will reach full capacity before the end of the year due to strong sales of Odyssey and a minor model change for Pilot this fall.
Further, in addition to the recently introduced Ridgeline, Honda will also begin production of the CR-V in North America. Moreover, the Acura brand will be further strengthened by expanding its product lineup with the introduction of a new SUV model, also to be built in North America. Honda will introduce the fuel efficient Fit as an entry level model in North America. Fit models manufactured in Brazil will be introduced to Mexico in October of this year, and the Japan-made Fit will be introduced to the U. S. and Canada next spring.
Honda will further expand its product lineup in order to respond to increasing customer demands for vehicles with high fuel efficiency. Construction of a new automatic transmission plant in Georgia, Honda Precision Parts Georgia, began in May. Production of high-precision gears in North America will also begin in Honda’s Ohio transmission plant for the first time in North America. Production of engine components, including connecting rods, is being increased and strengthened in Alabama. Honda will invest a total of 30 billion yen to localize and accelerate powertrain production in North America in order to meet growing market demand. South America Since its introduction in 2003, the Fit has become very successful in this region, and the Honda plant in Brazil is producing at its full capacity of 50,000 units annually. Fit and new Civic will be key models in the region. In Brazil, local production of Hornet 600F, a 600cc 4-cylinder motorcycle, will begin for the first time. Honda aims to improve technologies which support powertrain production in this region. * Europe Diesel power is expected to become one of the key efforts to reduce CO2 emissions in Europe. Honda began equipping the Accord with the i-CTDi engine ast year and added it to CR-V and FR-V this year, and will add it to the new Civic next year. With this diesel strategy at the core, Honda will further strengthen its auto business in Europe. * Asia In order to fulfill growing demand for motorcycles in the region, Honda’s third motorcycle plant in Indonesia will become fully operational this fall and a new plant in the Philippines will begin production in April next year. Honda will introduce high value products that further advance ease of operation. A new automobile plant being built in Vietnam with an annual capacity of 10,000 units will become operational in July next year.
The annual production capacity of the automobile plant in Indonesia was expanded from 40,000 to 50,000 units. In India, annual automobile production capacity will be expanded from the current 30,000 units to 50,000 units by the end of this year. This will accommodate the startup of local production of Civic within the next year, in addition to the current production of the popular Accord and City models. Honda plans to double production capacity in India to 100,000 units by 2010. This month, Thailand became the third country, after Japan and the U. S. where Honda introduced the “spin cast” production method that does not require sand casting for the cylinder sleeve. Also, the annual production capacity of Honda’s automobile engine plant in Thailand will be doubled to 300,000 units in spring 2006. While introducing advanced powertrain production technologies in Asia, Honda will pursue high quality worldwide and utilize its flexible, complementary global supply network. * China While expanding overall annual automobile production capacity in China to 530,000 units, Honda has been improving quality and cost competitiveness.
Honda became the first automaker in China to export its locally manufactured products, with shipments to Europe. By exporting to one of the most competitive automobile markets in the world, Honda will further improve the competitiveness of production in China. By spring 2006, Dongfeng Honda in Wuhan will be innovated and expanded into a mass production plant with an annual production capacity of 120,000 units. Local production of the all-new Civic equipped with an advanced engine will begin in China. NSX successor ; We are now focused on the development of a new model to succeed the NSX for a new era.
We would like to debut a new super sports car equipped with a V10 engine in 3 to 4 years. Please look forward to seeing the NSX successor. HondaJet HondaJet will make its first public demonstration flight next week, July 28, at EAA AirVenture 2005, an annual exhibition of experimental aircraft, held in OshKosh, Wisconsin. Since its maiden flight in December 2003, HondaJet has taken numerous test flights. Total flight time to date has reached 150 hours, and HondaJet has so far achieved its maximum altitude of 13,000 meters and maximum speed of 728km/h.
Honda will continue its testing efforts for HondaJet which improves fuel efficiency by 40% compared to existing aircrafts in its class by combining excellent aerodynamic performance with the high fuel efficiency of Honda’s HF118 engine. Conclusion Honda is committed to further advancing powertrain technologies in order to offer new products and technologies that satisfy growing demand from customers around the world for high fuel efficiency and to achieve more environmentally-friendly mobility that more people can enjoy.
Honda will continue to dedicate company resources to the creation of new technologies. Honda will also continue making capital investments proactively to strengthen the flexibility and efficiency of its global production network. Setting customer satisfaction as our number one priority, Honda strives to provide the joy of mobility to even more customers through the introduction of new technologies and new products.
When this is achieved, our sales should reach approximately 16 million units for motorcycles, approximately 4 million units for automobiles, and approximately 6. 5 million units for power products by the end of the 9th Mid-term. In terms of sales revenue, this will exceed 10 trillion yen. Through all of these efforts, Honda’s goal is to be a company that society wants to exist, to pursue the joy of mobility, and to extend this joy to more customers and to future generations.