The report of Honda automobile

The report of Honda automobile
 

Executive summary
Strategic management can .The report studies on the following several aspects and draws the related conclusions through the Honda automobile.
 Outline the PEST and SWOT technical, evaluate the process of ‘reconciling dichotomies’ at Honda Motors, and describe the main advantages of international trade http://www.ukthesis.org/Thesis_Writing/ and the arguments for restricting international trade in the context of the global automobile industry.
 The understanding of Whittington’s ‘Evolutional’ and ‘Systemic’ Schools of Thought in the context of strategy development at Honda Motors, and the application of the two Schools of Thought to Honda Motors
 Evaluate the implication for strategic management of each of the four loops
 
Contents Page
Executive summary 1
Introduction 3
Discussion and Analysis 3
Question One 3
 The outline of PEST and SWOT techniques 3
 Evaluate the process of ‘reconciling dichotomies’ at Honda Motors 7
◆ The main advantages of international trade and the arguments for restricting international trade in the context of the global automobile industr… 9
Question Two 10
◆ The understanding of Whittington’s ‘Evolutional’ and ‘Systemic’ Schools of Thought in the context of strategy development at Honda Motors 10
 Strategic Plan 11
Question Three 13
◆ Evaluate the implication for strategic management of each of the four loops 13
Conclusion 14
Recommendations 14
References 16

 
Introduction
The strategic management (Mintzberg, 1998) is based on strategic plan and control, analyze and supervise the strategic implement of enterprises, especially distribute the resources of enterprise and restrain the direction of enterprise, finally improve the enterprise to achieve the goals of enterprises. In early opinion, Ansoff (Ansoff, 1976)—at first proposed “the enterprise strategy management” which published in the book of “from Strategic Plans to Strategic Management” in 1976. He considered that the strategic management was a series of management businesses which unifies with the enterprise’s day-to-day business decision-making and long-term plan decision-making. Steiner considered in his book of “Business Policy and Strategy--1982”: the strategic management is dynamical process which determined the enterprise’s mission, according to the external and internal environment determined the goals of enterprise, and ensured the true operation of goal and achieved the enterprise’s mission

#p#分页标题#e#
Discussion and Analysis
Question One:
 The outline of PEST and SWOT techniques
(1) The Outline of PEST techniques
PEST (Johnson, 2005) is the basic tools of analyzing the external environment of strategy. It grasps the macroscopic environment as a whole from politics, economic, society and technology views or the elements of four aspects, and evaluates the influences of the enterprise’s strategic goals and strategic formulation.

P is Politics, and refers to the politic power which impacts on organizational business activity and the elements, such as laws and regulations. When the attribute of government for the business is changed, and the government published the laws for enterprise, the strategies of enterprise will be adjusted. E is Economic, …

The analysis of Honda automobile using PEST:
 P: the government supports the development of automobile industry, and promotes a series of laws and regulations to ensure the sustained development of enterprise, such as prohibited unfair competition.
 E: although the development of Japan’s economy is influenced by the financial crisis and exists a certain drop, for the developed country the development of automobile industry is very important to the improvement for economy.
 S: …………………………………………………………………………………………………………………….
 T: in the technology, the Honda automobile promotes the new product, improves the craft of automobile and applies the new material.

(2) The Outline of SWOT techniques
SWOT is one analysis method, and used to determine the enterprise’s competitive strength, competitive weakness, opportunity and threat, thus it combine the enterprise’s strategy with the internal and external environment of enterprise. Therefore, knowing the strength and weakness of resources, and understanding the opportunity and challenge of enterprise facing, these will has important significance of formulating the future developing strategy of enterprise. Table 1 is the SWOT matrix (Lynch, 2006).

 Strength S Weakness W
Opportunity O SO strategy (Growth Strategy) WO strategy (Reserve Strategy)
Threat T ST strategy (Diversified Management Strategies) WT strategy (Defense Strategy)
Table 1 The SWOT matrix
The competitive strength (S) refers to the ability of enterprise superior to its competitors, or refers to the elements which can improve the competitive power of enterprise. For example, when two enterprises are in the same market or they might provide the products and services for the same customers, if one of the two owns the higher rate of profit or the profit potential, then we can consider the enterprise has more competitive strength than the other enterprise. The competitive weakness (W) refers to #p#分页标题#e#http://www.ukthesis.org/Thesis_Writing/ the elements which are lack of the enterprise, or refers to some conditions which make the enterprise in inferiority. The enterprise facing potential opportunity (O): (T): in the external environment of company, it also has some elements, such as endangering the enterprise’s profit ability and market status. The managers should determine the treat of endangering enterprise’s future profits in time, and evaluate and take action to offset or reduce the influence.

The analysis of Honda automobile using SWOT:
 S: the market percentage of product is high and Honda automobile has a certain production working capacity.
 W: ………………………………
 O: has the very high client, the product has a certain influence in the locality, and its techniques renews unceasingly.
 T: ……………………………………………………..
(3) Emphasis Analysis
 External Factor Evaluation Martrix
Key External Factors Weight Rating Weighted Score
Opportunities
The rapid development of world 0.100 2 0.2
Join in WTO 0.100 2 0.2
The large demand of automobile 0.075 1 0.075
The increasing productive rate 0.050 3 0.15
The investment of infrastructure 0.075 2 0.15
The stable political environment 0.150 4 0.6
The average income 0.050 2 0.1
Throats
The increasing appreciation of Yen 0.050 3 0.15
The increasing price of petrol 0.100 3 0.3
The revolution of air pollution 0.100 3 0.3
The crowd traffic 0.075 1 0.075
The investment of competitive company 0.075 2 0.15
Total 1.00 / 2.55
Table 2 External Factor Evaluation Martrix
 Honda Toyota General Populace
Critical Success Factors weight rating score rating score rating score rating score
Market share 0.100 1 0.1 2 0.2 4 0.4 3 0.3
Cost 0.200 2 0.4 2 0.4 2 0.4 2 0.4
Quality 0.100 4 0.4 3 0.3 3 0.3 3 0.3
Advertisement investment 0.075 1 0.075 2 0.15 3 0.225 3 0.225
Price competitive 0.150 3 0.45 3 0.45 2 0.3 2 0.3
management 0.100 4 0.4 4 0.4 2 0.2 3 0.3
Financial situation 0.075 4 0.3 3 0.225 2 0.15 3 0.225#p#分页标题#e#
Locality 0.100 2 0.2 2 0.2 4 0.4 4 0.4
Relationship with government 0.100 4 0.4 3 0.3 3 0.3 4 0.4
Total 1.000  2.725  2.625  2.675  2.85
Table 3 Competitive Profile Matrix (CPM)
……………………………………………………………………………………………………………………………………………………………………………………………………………..

 Competitive Profile Matrix (CPM)
……………………………………………………………………………………………………………………………………………………………………………………………………………..
 Internal Factor Evaluation (IFE) Matrix (Strengths & Weakness)
Key Internal Factors Weight Rating Weighted score
Strengths
Good relationship with government 0.150 4 0.6
Development model with market 0.100 3 0.3
Low cost 0.075 3 0.225
Good financial situation 0.050 4 0.2
Good quality 0.100 4 0.4
Sufficient cash 0.100 3 0.3
Successful experiment 0.100 3 0.3
Weakness
Small production scale 0.075 2 0.15
Single sale channel 0.050 1 0.05
Small advertisement investment 0.025 1 0.025
Small locality 0.025 2 0.05
Small variety 0.075 2 0.15
Total 1.000  2.825
Table 4 Internal Factor Evaluation (IFE) Matrix (Strengths & Weakness)

 Evaluate the process of ‘reconciling dichotomies’ at Honda Motors
Because the financial crisis and the reduction of European and American market sales and the fluctuate exchange rate, the profit of Honda automobile drops now. In Japan, the sale of Honda automobile presented 22% drop in December, 2008. In order to break the situation, Honda automobile applied the suitable strategic management of enterprise.#p#分页标题#e#

In aspect of product-related core competencies, Honda automobile applied the cost leading strategy to improve the competitive power of enterprise. The cost leading strategy lies in with aid of the economic scale, technological innovation, the increasing operation efficiency, and low cost to gain the new material, and gain the low cost and low price. Moreover while it obtains the big market share, it earns the higher profit than competitors, or establishes barriers to resist the competitors outside the market. The president of Honda automobile explained that on the beginning of small scale business of relevant low investment, with the increasing of local needs the new relationship of cooperation is established and is expanded gradually. In Japan the cost of worker is relatively stable and has the competitive power. ………………………………………………………………….

In the aspect of process-related core capabilities, Honda automobile used the reborn of physical distribution and management. In order to enlarge the purchase scale and reduce the cost of spare part, Honda established the export base so that the price of spare part can decrease. In addition, the physical distribution enterprises of Japan pay attention to reduce the cost of work and improve the labor efficiency. The physical distribution enterprise of Japan is requested on the basis of first-class management and cooperation of Japan’s physical distribution to operate. ………………………………

In addition, Honda lean manufacture. Under the premise of guarantee quality, according to different scale of production, Honda starts from the minimum cost and max profit to determine the production efficiency, mechanization and auto degree of craft equipment in production line. The present and future type of Honda can be produced in the same production line. Moreover, from the idea of lean production, Honda plays role in people, and in the various stages of production development, various crafts have experienced the obvious change, such as ramming.

◆ The main advantages of international trade and the arguments for restricting international trade in the context of the global automobile industry
In the context of the global automobile industry, the international trade makes the automobile industry have the great change:

First, the international trade changed the competitive pattern of automobile industry. On the one hand, has produced the limited quantity multinational corporations which can establish the globalization industry. On the other hand, some enterprises, which were once very power in their country and gained the successful automobile industry in the overseas, already have not acted operations according to own situation.

Second

Third, the international trade has resulted in the global characteristic of automobile production. The global purchase of automobile industry’s spare part and the international of spare part industry blurred the “national characteristic” of automobile production and made it become the typical international production (Renard, 2011). ………………………………

Question Two:
◆ The understanding of Whittington’s ‘Evolutional’ and ‘Systemic’ Schools of Thought in the context of strategy development at Honda Motors
The evolutional school of thought (Whittington, 2000) not only stressed the market which is very strong for the process of expensive strategic formulation and is difficult to predict and judge, but also they considered that because the market owned the high efficiency, so they could not allow the establishment of sustained strength. In the competitive environment, the formulating strategy can only bring the temporary profit. And the competitors will duplicate quickly and corrode the early profit (Tran, 2006).

Obviously the evolutional school of thought is more pessimistic than the understanding of strategy. Certainly, in some competitive environment, the variation is the reasonable principle, but it is still a problem whether the kind of variation can be consciously or permanently kept (Stacey, 1996). Thus, the shape of long-term strategy may be no useful. If the managers can carefully determine what they do and improve the efficiency as far as possible. The results may be better.

The systemic school of thought (Thompson, 2000) believed ability of the carrying on plan before time and taking the effective action. They stressed that the potential rationality in the strategy had the special characteristic in the social cultural environment. The systemic school of thought paid attention to the social system which was reflected by the strategic goal and flow. The difference of market, class, government and culture results the enterprise’s strategy have the large difference. …

Strategic Plan
The report studies from three aspects, such as Tows, Space, and Grand Strategy.
 Tows Matirx

Tows Matrix Strengths:
1.Good relationship with government
2.Development model with market
3.Low cost
4.Good financial situation
5.Good quality
6.Sufficient cash
7.Successful experiment Weakness:
1.Small production scale
2.Single sale channel
3.Small advertisement 4.investment
5.Small locality
6.Small variety
Opportunities:
1.The rapid development of world
2.Join in WTO
3.The large demand of automobile
4.The increasing productive rate
5.The investment of infrastructure
6.The stable political environment#p#分页标题#e#
7.The average income SO STRATEGIES:
1.increasing investment
(s1, s2, o1, o3, o5, o6) WO STRATEGIES:
1.increasing production scale of current style (w1, w4, o3, o7)
2.increasing sale channel (w2, w4, o3, o7)
3. increasing advertisement investment (w3, o3, o7)
Throats:
1.The increasing appreciation of Yen
2.The increasing price of petrol
3.The revolution of air pollution
4.The crowd traffic
5.The investment of competitive company ST STRATEGIES:
1. increasing the production scale (s1, s4, s6, t5) WT STRATEGIES:
1. increasing the style of automobile (w1, w6, t3, t4)
Table 5 Tows Matirx
 
 Space Matrix
FINANCIAL STRENGTH RATINGS
1.The net profit is 362,707 million Yen, and increases by 56.17%
2.The sale is 7,362,438 million Yen, and increases by 13.90%
3.The net profit rate is 4.93%, and increases by 37.1% than 3.59%
INDUSTY STRENGTH 2.0
2.0
3.0
1.Good relationship with government
2.Development model with market
3.Low cost
4.Good financial situation
5.Good quality
6.Sufficient cash
7.Successful experiment
8.Small production scale
9.Single sale channel
10.Small advertisement
11.investment
12.Small locality
13.Small variety
ENVIRONMENTAL STRABLEITY 5.0
4.0
3.0
4.0
4.0
3.0
3.0
2.0
1.0
1.0
1.0
2.0
2.0
1.The rapid development of world
2.Join in WTO
3.The large demand of automobile
4.The increasing productive rate
5.The investment of infrastructure
6.The stable political environment
7.The average income
8.The increasing appreciation of Yen
9.The increasing price of petrol
10.The revolution of air pollution
11.The crowd traffic
12.The investment of competitive company
COMPETITIVE ADVANTAGE -2.0
-1.0
-1.0
-2.0
-1.0
-1.0
-1.0
-3.0
-4.0
-3.0
-5.0
-4.0
1.Market share
2.Cost
3.Quality
4.Advertisement investment
5.Price competitive
6.management
7.Financial situation
8.Locality
9.Relationship with government -5.0
-1.0
-1.0
-6.0
-2.0
-2.0
-1.0
-1.0
-1.0
Table 6 Space Matrix

Conclusion
ES AVERAGE IS -28.0/12=-2.33 IS AVERAGE IS 35.0/13=2.69
CA AVERAGE IS -20.0/9=-2.22 FS AVERAGE IS 7.0/3=2.33
DIRECTIONAL VECTOR COORDINATES: X-AXIS IS 0.36
                                     Y-AXIS IS 0.11#p#分页标题#e#

HONDA SHOULD PURSUE AGGRESSIVE STRATEGIES
Table 7 Conclusion of Space Matrix
 THE GRAND STRTEGY MATRIX
 

Figure 1 THE GRAND STRTEGY MATRIX

Question Three:
◆ Evaluate the implication for strategic management of each of the four loops
Like the evolutional school of thought, the processual school of thought (De Wit, 2004) usually has the suspicions to the rational strategic formulation. For the speaking of prcessual school of thought, the organization and market will usually be the thorny and mixed phenomenon, and strategy will be appeared with one manner of small step. The best suggestions of processual school of thought doesn’t attempt to continue diligent, but accepts the reality and cooperates with the real world after when people adopts a serial of national actions and is unable to realize the ideal.

The practice of enterprise’s strategic management indicates that the formulation of strategy is no doubt important but the implement of strategy is similarly important. A good strategy is only the premise of strategy success, and an effective enterprise’s strategic implement is the guarantee of realization of enterprise’s strategic goals smoothly. ……………………………………………………..

Conclusion
Therefore, from the report we can see the implement of Honda strategies. In the aspect of long-term goal, first, Honda should achieve the rapid development of production scale, so it should produce 0.45 million per year. The assemble line need to be increased to 20 and it should absorb new 2000 employees and establish the workshop. Second, it should establish the strong sale network. The service store should be developed to 1000. it should increase 5,000 special sales service shops. Third, it should increase the styles of automobile, about ten types.

Recommendations
The report is based on Honda automobile to study the enterprise strategy. Through the studying we can learn that Honda takes “how lets the customer be satisfied” as the objective. It not only establishes the wide sale service network, but also establishes one whole system of production and researching new production. So through using the strategic management, the enterprise can be gained the better development. So the strategic management is very important for the enterprise.

References
De Wit, B. and Meyer, R. (2004), Strategy Process, Content, and Context: An International Perspective, 3rd Edition, Thomson Learning.

Johnson, G., Scholes, K. and Whittington, R. (2005), Exploring Corporate Strategy: Text and Cases, 7th Edition, Financial Times, Prentice Hall.

Lynch, R. (2006), Corporate Strategy, Fourth Edition, Financial Times, Prentice Hall.

Mintzberg, H., Ahlstrand, B. and Lampel, J. (1998), Strategy Safari, Financial Times, Prentice Hall.#p#分页标题#e#

Stacey, R. D. (1996), http://www.ukthesis.org/Thesis_Writing/ Strategic Management and Organisational Dynamics, Second Edition, Pitman, London.

Whittington, R. (2000), What is Strategy and does it matter? Thompson Learning.

Ansoff, H. I. (1976), From Strategic Planning to Strategic Management, New York and London.

Biggart, N. W. (1989), Charismatic capitalism: direct selling organization in America, University of Chicago Press.

Thompson, A. A. and Strickland, A. J. (2000), Strategic management: concepts & cases.

Renard, N. Sitz, L. (2011), Maximising sponsorship opportunities: a brand model approach, JOURNAL OF PRODUCT AND BRAND MANAGEMENT, VOL 20(2), pp: 121-129.

Tran, S. (2006), The strategic implications of electronic marketplaces: from commercial transactions to interorganisational supply chain activities, INTERNATIONAL JOURNAL OF BUSINESS PERFORMANCE MANAGEMENT, VOL 8(1), pp: 47-61.

Roberts, R. (2005), Issues in Modelling Innovation Intense Environments: The Importance of the Historical and Cultural Context, TECHNOLOGY ANALYSIS AND STRATEGIC MANAGEMENT, VOL 17(4), pp: 477-496.