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Case Study: Reconciling Managerial Dichotomies @ Honda Motors

The global commercial strategy report talks about several aspects of global strategies employed by Honda and similar automobile companies in their management. As can be realized the report based on the case study of reconciling dichotomies at Honda is the primary product of the statement. The first part talks about business level strategy and commercial level strategy to understand their basic essentials in achieving the overall objectives. It is considered that Honda has made a new method of traditional ideas of management style used in the european nations known as the trade off strategy. Honda's product core competency is probed at length in the literature combined with the process related key competency.

Mergers and acquisitions are talked about within the next area of the statement and the circumstances of varied companies in the auto industry are taken up and the chance factors, product synergies and new market probable are discussed. Corporate and business social responsibility dialogue centres on the financial and non financial benefits to be achieved through the implementation of corporate social responsibility initiatives. The Honda style of management as well as the traditional western style of management is talked about in the final period where it is decided that few companies can achieve the merits of both sides of the dichotomy and at least sometimes certain tradeoffs are necessary in general management.

Business level strategy and corporate and business level strategy.

Strategy is a term used to specify the look of aligning the actions with resources and capabilities for successes (Cousins, Lamming, Lawson and Squire 2008; Johnson, Scholes and Whittington, 2005). Hence strategy is the master level plan which spans the whole company including its assets, resource allocations, product / service offerings, operational aspects, geographies etc (Hitt, Ireland and Hoskisson, 2009). Strategies can be found is different levels; and in the case of truly global companies with the own identities wherein which they want to promote their activities in different areas have to have a high level plan which considers the entire scope of the organisation (Johnson, Scholes and Whittington, 2005). Individual models of the company in each geography or product / service category need to have its own plans at its level which should be aligned with the top level strategy (Johnson, Scholes and Whittington, 2005). The pan organisational level strategy is referred to as corporate and business level strategy and the many individual sections whether at physical level or product / service level is the business enterprise level strategy. Regarding Honda which has business interests in several geographies and across various product offerings from cars, engines, power products, aircraft and even financial services has to develop its organisation level strategy upon which it will be divided into different parts to formulate the business level strategies at each geography and each product / service area.

Typical corporate level strategies include physical coverage, variety of products total learning resource allocation between geographies and items, acquisitions, mergers etc (Johnson, Scholes and Whittington, 2005). Hence the organisations level and range is defined in the organization level strategy (Cousins, Lamming, Lawson and Squire 2008). Taking an example Honda with highly successful automobile associated business diversified in to plane processing with a subsidiary called Honda Jet (http://hondajet. honda. com/) on the trunk of a ground-breaking innovative design which is a corporate level decision and strategy. The business level strategy will involve this area whether geographical or product / service wise. It takes into account the local situations of the marketplaces, assessment of the inner and external factors, competitor examination, customer needs etc (Cousins, Lamming, Lawson and Squire 2008; Johnson, Scholes and Whittington, 2005). The business enterprise level strategy needs to meet with the overall commercial level strategy of attaining the overall objectives. The pricing composition, discounts, will buy or make decisions etc at the unit level will be business level strategy (Floyd, 1997).

Reconciling dichotomies

Reconciling dichotomies is the key theme of the research study being analysed here. It has been argued in the case review that Honda has been able to defy traditional principles of management style applied in the traditional western nations of either or strategy or more well known the trade off strategy. While Honda's product core competency is evident from the literature and is greatly respected the procedure related key competency is not convincing from the case study. As per Hitt et. al. (2009), Honda has used its capabilities in bringing technicians, designers and even the frontline sales and marketing clubs together to build up innovative product answers to the auto market with it's less polluting CVCC engine motor and the energy efficient VTEC machines. Regarding to Keillor (2007), Honda's success is the competence originates from the interest to be world's best designers and manufacturers of inside combustion motors. Barnes (2001) rates Hamel and Prahalad to state that Honda effectively entered the business segments of yard movers, outboard motors from its traditional auto segments due to its key competency in motors and power trains. Hence it is unquestionable that Honda has had the opportunity to exert its main competence in developing new products in to the markets. But one has to identify the real issues of key competency here. Simply developing new systems might not be the effective way to be always a world leader in virtually any segment. You'll find so many examples of ground breaking products failing due to lack of open public demand, being ahead of its times or simply because innovativeness has not been marketed fully to the prospective market.

Barnes (2001) identities that it is not only the product related central competency but also process related in the realms of vehicle dealer management using training and aiding the network with specific functional techniques for merchandising, planning and service management which helped it enter into home based business areas. The key fact of this process related capabilities was that Honda was able to replicate their work in the home based business segments it got into. Barnes (2001) claim that the merchandise design pattern as effectively argued in the case study by De Wit and Meyer (2004) is in itself a process competency as other smart you won't be able to design and develop new and innovative solutions before its competition. The fact that the new progressive products were sent to the market much prior to the competition suggests that the process used in their development also has to play a major role. Again core competency as described by Prahalad and Hammel (1990) is the mixture of individual technologies and creation skills that underlie a company's myriad products. Hence it is clear that product and process center competencies go together.

Mergers and Acquisitions in the global car industry:

Mergers, acquisitions and joint projects are considered among the routes where organisations can expand their occurrence into new marketplaces across geographies or product sections. Essentially these varieties of expansion are external in nature in that they all come with an element of foreign presence mounted on them (Campbell, Stonehouse and Houston, 2002). These procedures of growth of business hold the advantages of minimizing risks as there is a new local knowledge or skills which is included into the organisation. You can find prospect of the acquired company to generate new knowledge and synergies to the total organisation which may be valuable in functioning in the new market conditions. But combined with the benefits to the organisation there are also associated negatives also of slipping into debt due to the leveraged dynamics of the acquisition and higher risk of bankruptcy of the company. These factors are analysed below.

Debt and Threat of Bankruptcy

The risk of bankruptcy arrives from the leveraged transaction during the acquisitions and mergers of the companies. During such process the acquiring company must pay off the existing shareholders and usually they vacation resort to debt taking at rates of interest which might not exactly be ecological if the perceived values or earnings were not received following the acquisitions. In such cases the entire organisation might go bankrupt because of the debt it offers accrued. The newest exemplory case of such case in the auto industry is the case of Standard Motors wherein which it continued a acquisition spree in the heady years of 2000 till the downturn struck in 2008 (Hitt, Ireland and Hoskisson, 2009)). GM bought stakes or majorities in many Western european and Asian companies to enter in new markets or to simply garner up the market share of these companies. It used the debt model to fund these purchases and it should be said that these investments gave the dividends in the initial years with GM garnering excellent market share and becoming the world's greatest automaker (Hitt, Ireland and Hoskisson, 2009). But through the recession it became unsustainable and GM could no longer obtain the financial earnings to service its debt. It had to market off some of the assets and US financial aid was required to make it out of bankruptcy (Hitt, Ireland and Hoskisson, 2009). Taking other samples it may be seen that Honda ditched Rover just in time to all the declining company's sickness spreading to it and taking it also down (Hitt, Ireland and Hoskisson, 2009). While it was BMW which endured due to the acquisition of Rover after Honda unwounded its romance. Relating to Grubb and Lamb (2001) BMW's German efficiency process cannot change the regular poor quality and inefficiencies within rover plus they didn't synergise and BMW was required to suffer financially credited to write from 3 billion us dollars.

Potential for Product Synergies

As per Hunt (2009) synergies should turn out in any type of merger and acquisition other sensible the investment will be wastage. "It really is leveraging the mixed durability of two functions to a transfer in a way that adding the average person capabilities of both companies their amount is higher than their parts" (Hunt, 2009, pp216). The synergies can be capitalised in many various ways and forms and they are available across the diverse structures in an organisation. The synergies can be of functional, financial, enhanced research and development, product / service etc. Relating to Frensch (2007) the merchandise synergy potential is on loan consolidation of overheads, restructuring of outsourcing, marketing and sales activities in the new market segments etc. As per Spedding and Rose (200) true synergy is achieved only when the acquiring company realises the amount of the main skills of the company and also both companies are clear with the goals on the integration and optimised combination of the resources whether it's intellectual, physical or informational.

The recent exemplory case of acquiring of product synergies is the acquisition of Jaguar and Land Rover by Tata Motors of India. Tata motors through its acquisition of the firms were looking to enter the UK market as well concerning acquire the huge complex and research and development skills offered by both companies.

Access to New Technologies and Emerging Markets

Accessing new technologies and entering growing markets is also one of the seeks of acquisitions or mergers. As given in the above example of Tata Motors acquiring Jaguar and Land Rover new systems are now designed for the Tata motors from the prior fifty or so years research and development activities of both the companies (Hitt et. al. , 2009; View, 2008). Tata motors through its acquisition of the firms were aiming to enter the united kingdom market as well as to find the huge specialized and research and development skills available at both the companies (Bhabatosh, 2009). Honda came into the appearing market of India in 1984 through joint venture with Hero Group. Honda has recently got into into a joint contract with SIEL Limited to manufacture vehicles in India (Bajpai, 2009). Through these joint ventures Honda was able to enter the growing market of India and has shown enormous improvement in its sales of its motorcycles in the last two decades. Likewise Suzuki, Kawasaki etc likewise have made joint endeavors with Asian companies and got into the emerging markets in Asia and Africa and has garnered huge sales earnings (Bhabatosh, 2009; Bajpai, 2009). Just lately Honda received the stake of hero group and it offers a solid platform no in India. The strategy of Honda and other automobile companies in the Asian continent was to create joint ventures with local companies who possessed the knowledge of the market to drive the sales and marketing activities (Bhabatosh, 2009; Bajpai, 2009). This is also because of the then government laws in India and other Asian countries that any international company to enter in their market they need to offer an Indian spouse with majority partnership. Recently the government authorities have laid back these polices and many companies were able to find the stakes with their partners and combine the management, technology input etc into these companies to earn more income (Hitt et. al. , 2009; Bhabatosh, 2009; Bajpai, 2009).

Corporate Community Responsibility

As per Kotler and Lee (2005), "Corporate interpersonal responsibility is a commitment to improve community well-being through discretionary business techniques and efforts of corporate resources". Free market overall economy is spreading about the world being pushed by capitalist countries and multinational organizations for his or her own benefits. It is a recognized world view that capitalist type of free market economics is effective to the up lifting of most classes of individuals. This has been cemented after the rival communist and Marxist form of economies in many countries collapsed while others in stagnant or in change methods. The initiatives of multinational companies, major companies to get into new marketplaces and make earnings are growing and increasing pressure is being born upon producing and third world countries to relax their restrictions. Nonetheless it is also true that lots of of the activities of major corporations are in the realms of exploitation of people, natural resources, and bribery basic intentions to make profits using any techniques (Bacchus and Crowther, 2004).

The situations on Enron and World. com collapses, the exploitation of low paid labour by Nike in Indonesia, the various situations of bribery in arms dealings of BE aerospace etc are some of them. These activities have tarnished the views of many people in major organizations and organisations as well as the economics they represent and are trying to find different ways. This attitude of people led to a standard distrust of several major corporations and soothe these thoughts, at least a few of the companies are taking on social causes with their profit building activities as well. The pet name for such activities carried out by major companies is corporate communal responsibility.

As per Hopkins (2007), "corporate communal responsibility is a systematic way taking into accounts both inside and external stakeholders, while some identify it as solely voluntary". The organisations can enhance their bottom level lines and enhance their relationship with its stakeholders such as employees, shareholders, suppliers etc. The execution of CSR activities the organisation's reputations is increased by the release of trust, trustworthiness, quality, consistency, credibility, connections and transparency. It fosters staff morale, innovation, imagination, better risk management etc (Hopkins, 2007). Economically the performance of the company can be improved as there is better understanding of the company by its stake holders specifically the employees and the shareholders. The financial basic of companies improve scheduled to better credit facilitates which are a by product of CSR functions. With all the advanced financial performance within the balance sheet the companies are able to implement their job better than their opponents who've not implemented the CSR initiatives.

Japanese and European strategic control models

The case study gives a comparison of the american style of management and the some what different mother nature of the management system performed within the Honda company. It is argued in the event review that in traditional american systems of management a certain tradeoffs are necessary to perform. The tradeoffs discussed thoroughly are between taking on one of both opposing positions that have merits and demerits in its operations. Taking an example the management structure in a business can be individualistic or collectivist. Both of the machine has its advantages and it is depending upon certain requirements and the specific characteristics that all company prefers one form of management to some other. Hence as an organisation occupies one design of management framework it totally rejects the other extreme and in its wake looses after the merits that would have been bestowed if it had used the other pole.

Traditionally in the western world it is thought that firm decisions are required to be made and these decisions need to be seen from outside the house as company. Hence when a company decides to have a management structure with a collectivist mentality in decision so that it is actually shuns the individual's functions and the responsibility is shared collectively. This has benefits such as executing in groups, a feeling of comradeship etc. But certain demerits of collectivist procedure are that the distributed responsibility makes the management complacent and there are specific things which cannot be done collectively which is often performed by people who are specialist in their areas.

The research study argues that in Honda both the approaches were techniques hand and hand and not just in one circumstance but also in many instances such as product development, design etc. This has given climb to the word reconciling dichotomies in the case study. The term and the research study suggest that Honda has tried to accept both the good characteristics of the opposite ends of the poles in general management and has tried out to assimilate them in their framework. The good example is its development of new progressive less polluting engine motor was the original dichotomy of increasing the level of one pollutant over another is reconciled. The traditional view or somewhat the western procedure would have gone to decide after one end of the pole and go forward or quite simply make a decision which pollutant they would reduce at the expense of increasing the other. But Honda technicians worked for this developed engines that emits less pollutants therefore reconciling the dichotomies. A similar is the case with individualism and collectivism wherein they proven a panel room way at their top management decision making process but helped individualistic solutions within its product development and design areas to improve decision making and efficiency.

It may be argued that Honda's approach is preferable to the traditional method of tradeoffs but it may not be possible to have both the ends of the pole at the same time in many circumstances. My view is that lots of companies make an effort to take the good qualities in various opposing systems but their success rates are different. In Honda it appeared to have worked well and there could be many companies in the western as well who'll be utilizing such strategies. The new matrix type of management is an exemplory case of taking both the good factors from different system and fusing it along but experience has proven that this may not work very well for all types of companies.

Conclusion

The above report delves into the global strategies utilized by Honda and such car companies in their management areas. In the first part of the report discusses the business level strategy and corporate level strategy and it is understood that the business level strategy needs to meet with the overall corporate and business level strategy of attaining the overall aims. Reconciling dichotomies is the center material of the research study which is discussed at length. It has been argued in the event study that Honda has had the opportunity to defy traditional principles of management style utilized in the traditional western nations of either or strategy or even more widely known the trade off strategy. While Honda's product key competency is apparent from the literature and is generally respected the process related primary competency is not convincing enough and it's been established that both must exist together to accomplish primary competence in the company.

Mergers and acquisitions are reviewed as one of the routes where organisations can broaden their occurrence into new marketplaces across geographies or product segments. The mergers and acquisitions of varied companies in the auto industry are taken up and the risk factors product synergies and new market potential is discussed. It has been seen that there are risks in these activities but there are also better product synergies to be performed and the getting into of new markets opens up wider range for the companies.

In the final part corporate public responsibility is reviewed wherein it sometimes appears that there is certain financial and non financial benefits to be achieved through the execution of csr initiatives. The Honda design of management as well as the western style of management is discussed in the final phase where it is set that few companies will be able to achieve the merits of both edges of the dichotomy and at least in some cases certain tradeoffs are essential in management.

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