Challenges Faced by Honda

Challenges Faced by Honda1 IntroductionHonda is the most successful companionship existing in the securities industry now days with the latest technology in the motorcar industry with luxury railcars to sports to family car they abide a vast range of cars and motorbikes. Honda, (2010) In October 1946, Soichiro Honda established the Honda Technical Research Institute in Hamamatsu, Japan, to surface and produce small 2-cycle motorbike engines. Two years later, Honda Motor Company, Ltd. was born, and in 1959 Honda opened its origin storefront in Los Angeles with six industrious employees. Honda opened on that point first U.S. plant in 1979 and have evolved into a company that directly employing much than 25,000 Americans. More than 100,000 cut backers be employed at authorized Honda automobile, cycle and power-equipment dealerships in the United States. Tens of thousands of additional Americans argon employed by more than nearly 600 U.S. suppliers from which Honda purchases parts and materials.Honda, (2010) In the recent years the automobile crisis of 2008-2010 was the part of financial downturn, which proceeded automobile makers and suppliers around the world. The industry was emasculated by the substantial increase in the calls of dis step forward linked to energy crisis of 2003-08 which discouraged purchases of automobiles with low fuel economy. In the year 2008 there were fewer fuel expeditious models to offer to the consumers, the king-sizeger automobiles including General Motors, Toyota, Ford, Chrysler, Nissan and Honda Motors experience sliding sales.Honda, (2010) Honda Motors in 2008 announced it would be down sizing out-of-pocket to 2008 economic crisis and predicted that there may be reductions in staff at all levels of the management impelling January 20092 Strategic Analyses, (2010). The fulfill of strategical analysis the moreovert against of conducting research on the business environment within which an organization operat es and on the organization itself, in order to formulate strategy. A number of in any casels ar used in the operation of strategic analysis, including PEST, SWOT analysis, and Michael Porters five forces model.Pest Analysis, (2010) Pest analysis is for Political, Economic, Social, and expert analysis and admirers to set a framework of macro-environmental factors used in the environmental scanning component of strategic management.Williams and Curtis (2007) that political factors include organisation regulations and legal issues and define both formal and informal rules under which the squiffy must operate. Specifically, political factors argonas much(prenominal) as tax policy, labor law, advertising law, environmental law, guile restrictions, tariffs, and political stability Government plays an principal(prenominal) role in the economy as swell as in taxes to be charged to the company. These factors to a fault play an burning(prenominal) role in the employment law, compe tition regulations as the company can non make particularised prices as they have to follow the competition regulations.Economic factors have economic change by reversalth, lodge in rates, exchange rates and the inflation rate. Pest Analysis, (2010) the factors have major impacts on how business works and conclusion reservation, example, interest rates affect a firms cost of capital and therefore it affects the business and how testament grow and expand. Exchange rates affect the costs of exporting goods and the supply and price of imported goods. Economic factors affect the purchasing power of potential customers as the power to debase the ingathering.Social factors include the demographic and heathen aspects of the away microenvironment. Pest Analysis, (2010) affectionate factors affect customer needs and the size of market as well on the demand for a companys point of intersections and how that company will perform. Companies change various management strategies to adapt to these social trends (such as recruiting older workers). Social factors affect the needs and indigences of the customer and the way they buy a special(a) product, as the demand may decline with the new product which offered to the wrong age sector.Pest Analysis, (2010) proficient factors can reduce the barriers to enter and reduce minimum efficient turnout levels, and play a big role outsourcing decisions. They can stand by to determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Technological factors assist to technological shifts that can affect costs, quality, and lead to innovation.SWOT analysis, (2010) SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business.SWOT analysis is a business tool by which, a firm will be competent to implement a strategic analysis, analyzes and recognizes its corporate Strengths and Weaknesses as well as the existed or forthcoming Opportunities and Threats from its external environment. Completing a SWOT analysis will help in identifying and the shipway to minimize the affect of weaknesses in your business while maximise your strengths only when these iv critical reading elements are well elaborated and known.SWOT analysis compiles of, SWOT analysis, (2010)Strengths attributes of the person or company that is stabilising to achieving the intentWeaknesses attributes of the person or company that is harmful to achieving the objectiveOpportunities external conditions that is helpful to achieving the objectiveThreats external conditions which could do damage to the objectiveHonda Motors is one of the most successful automobiles company in the world and with the help of PEST analysis and SWOT analysis they have come so far as they are qualified to understand what are the political factors, economic, social and technological factors they have to understand when they ar e producing the automobiles as well have to understand the needs and wants of the customer as well as the economy of the place as the government plays an important role. They have to understand the technology they have to provide in there automobiles because the latest technology will be able to attract the people break out and they would be able to reach the market better and the relevance of SWOT analysis in running the business is truly important as Honda has to understand what are there strengths, weakness, opportunity, threats in order to be successful in the market as they need PEST and SWOT analysis together to be able to live in the market for long run these two analysis helps Honda to be a better company and be able to understand its customers and their needs.2.1 Honda Reconciling dichotomies (Product related core competencies versus process related core capabilities. Constructing dichotomies is the outstrip avenue for new ideas in the field of automobiles industry.prod uctiveness, (2010) Product related core competencies are measurement of the effective use of the resources, expressed as the ratio of output and input. Productivity as the ratioof output and input. Productivity us very important to business because they can gain market share and make cracking profits. For example, when productivity increases, product costs decline and product price can be reduced.Productivity relates to scrap in the way that if two firms have the same level of output but one requires less(prenominal) input because of higher productivity, that one will be able to charge a lower price and consequently increase its shares of the market. cognitive operation related core capabilities typically describing the act of taking something through an mental home and usually set of procedures to convert it from one form to another, as a manufacturing or administrative procedure. The process core capabilities at Honda is playing an important role as it is helping in having new and development progressive ideas for the company and playing an important role in product related core competencies.Process Capabilities, (2010) The concept of process capability has been used by the manufacturing industry to quantify the relation between product specifications and the measured process performance. Various ratios and indices have been developed to describe this relation.2.2 International trade is exchange of capital, goods, and work across international borders or territories. International Trade, (2010) international trade area has flourished over the years due to the many benefits, as it has offered services to many countries across the world. International trade is the exchange of goods and services for an issue forth of capital. It is also one of important sources of money making for developing country, with the help of modern manufacturing techniques, advanced transportation, multinational corporations, outsourcing of manufacturing and services, and fast industrialization, the international trade system is spreading and growing fast.International trade, (2010) Great variety of goods ready(prenominal) for consumption and international trade brings in different kinds of goods from different destinations. This gives consumers a variety of choice to call for from and which will not only improve their quality but also the whole country. Better assignation and better utilization of resources, since countries tend to produce goods and items which they are good at and have a relative advantage towards its competitors.Efficient production will help countries and they will be able to adopt better methods of producing goods and this will keep the cost down in order to remain competitive. Countries that can produce a product at the lower price will be able to capture a bigger market share in the market. Therefore an incentive to produce efficiently arises. This will help standards of the product to increase and consumers will have a good q uality product to consume. car industry, (2010) Restricting trade in the context of global automobile industry, the global automotive industry, rapidly changing with global mergers and relocating its production centers towards emerging and developing economies. The industry is subject to imperfect competition which has resulted in too much of capacity, too many competitors and too much redundancy and overlap.The industry is worried about the demands and wants of consumers about product styling, safety, alleviate and manufacturing efficiency. The industry have to really work hard to meet the demands of the consumers and what are the new wants as what types of cars they want in the automobile industry. Specialization in automobile (Honda) sector is increasingly becoming segment specific as each of these countries is finding its niche. China is specializing in components, India in two wheelers and small vehicles, Thailand in pick-up trucks and passenger cars and Indonesia in utility vehicles. As Honda is understating its market in these areas and other areas of the world as they are providing tally to their customers wants as they have restriction in providing different kinds of automobiles which is not required in the particular country.Automobile industry is a symbol of technical marvel by human kind. Being one of the meteoric growing sectors in the world with its dynamic growth phases are explained by nature of competition, product liveliness cycle and consumer demand.3 Whittingtons Evolutional and general schools of thoughts. Applying the two schools of thought in developing strategy to Honda motors. Evolutionary process in which the Evolutional is way in which the evolutionary perspective sell or die. outline, (2010)Marketing communications decisions are for short-term survivalIn the long-term we might be dead needlelike focus on short-run sales, not long-term punctuate-buildingWhittingtons four schools of thoughtThe development strategy of Honda Mot ors have used the Whittington evolutional and systemic school of thought in there process and the way to understand the market better and its competition. not only maximizing the profit but also professional pride and culture as describe under in the figureEvolutionary and Systemic schools of thoughtWhittingtonEvolutionSystemicOpportunities to make decision and competitionUnexpected swings in futureCompetition does not imply efficiency markets can be manipulated society has other criteria s for corporations than just profit maximizationFinding possible causes of action and objectiveTrial and error forced choicesLocal approvedSelecting course of action and developing strategy up(a) operations managementStrategic objectives dependson the specific social system inwhich the strategy is createdStrategyStrategy = day to day management for surviving and competitive natureOther than profit maximizing is professional pride, influence, religion and cultureThe two schools of thought which are being used by Honda Motors in order to develop their strategies are Evolutional and Systemic and Honda are using these tools in a proper port likewise inEvolutional school of thought used by Honda inMarketing communications decisions are for short-term survivalCommunication decisions are for short term in the evolution processIntense focus on short-run sales, not long-term brand-building.They have to consider intense focus on the marketThe school of thought who is better is Systemic school of thought because of lots of reason Systemic school of thought haveSystemic groom of thought used by HondaConsumer attitudes and behavior are confined to social systems with given norms, values, roles, culture, and ethics. Honda understands all these behavior and attitude of the customer in order to develop a better strategy in future.Limitations to what merchandise communications can do in terms of market share the consumer culture rules, Honda have to have a good knowledge about the mercha ndise communication and know its limitsOther rational reasons for marketing communications than pure profit maximization, such as religion, culture and professional pride.This school of thought is better and more suited towards Honda as it keeps an eye on the consumer demand needs and wants as well understand its customer behavior. They have good knowledge of the marketing process. Honda believes in professional pride, culture and religion understanding of the people and how people react to these norms as Honda is the spark advance Automobile industry as it suites towards the Systemic school of thought in order towards the strategic development. suitable explanation of Systemic in figure below4 Processual schools of thought is about understanding the brand and influencing the brand with some risk taking in decision making and Processual approach helps firm to support its determination of a simple strategy base on four circle. The loops can affect but should not change the strat egic management of the firm and it is aboutConsumer attitudes and behaviors can be influencedContinuous advantage of brand, Creative ways of reaching customerAdvertising managementCertain degree of risk-taking in decision-making allows for innovative andThe Processual School of eyeshot is about making the Honda adopt the strategy and develop a brand by understanding its customers and their need and wants. At the same time understand its values. The implications of strategic management on the four loops.The rational loop helps in making sure that strategic management would be based on rational thoughts and ideas. Processual school of thought helps in focusing on the use of rational decision making when making decisions and controlling the use of strategies. It helps and makes sure that all the implications of any decisions or strategies would be carefully analyze under Processual School of Thought. Therefore Processual School of Thought is making the strategic management of the rat ional loop more though full and full of new ideas.The overt politics loop with the help of Processual School of Thought helps to create a more open influence on strategic management. Politics are used by some to add their ideas to strategic management without being discreet about it. conspicuous politics focuses on the use of influence and connections to assert strategic ideas with the help of Processual School of Thought and that is beat out thing for the companyThe Culture and cognition loop plays an important role when evaluated by the Processual School of Thought as it makes use of culture and tradition to influence strategic management decision and to make the strategies based on the culture of the place and country. Honda Motors uses culture and cognition as important factor in strategic development. The culture and cognition loop makes use of ideas to change strategic management decision so that the firm will act according to the needs and wants of the environment. In this loop Processual School of Thought would serve an important part in making decisions that will affect the firm and Processual approach helps the firm maintain its goal of a simple strategy based on the four loops.The covert politics loop with the help of Processual approach helps to create a more secretive means to influence strategic management this involves a member of the Honda Motors secretively influencing strategic management decisions in his favor. Covert politics loop is a more secretive way to influence decisions and strategies and this usually creates decisions that may be beneficial to the company.5 ConclusionsHonda Motors is one of the prima(p) automobiles industries and in couple of years they have been facing problems as the industry was weakened by the rapid increase in the fuel prices as well as to energy crisis of 2003-08, which made people to buy less of automobiles with low fuel economy. In the year 2008 there were some models released by Honda with fuel efficient models to offer to the consumers, the bigger automobiles including General Motors, Toyota, Ford, Chrysler, Nissan and Honda Motors experienced sliding sales.Honda has used PEST and SWOT analysis to work harder to achieve the goal to make their sales go high, and have worked on the weakness in the market as well. Honda has studied there PEST analysis and the factors that are affecting their company. Honda being the leading automobile industry has to know its strengths and weakness, when dealing with their customer. They need to know their needs wants and demands.Whittingtons Evolutional and Systemic schools of thoughts are being apply by Honda Motors to the better development of their strategy and which helps them to know where they are standing in the market and with the help of the four loops Honda can know its company better way as they will be able to understand its culture, religion and this will help to make better strategic decisions for the company.