Free Custom «Honda's Strategic Management.» Essay Paper

Introduction

All successful companies are guided by well thought out strategies. Strategizing contributes immensely to the success of companies in their area of operation. A strategy is solely a matter of organization (Plenert, 2002, pg 76). Strategy first seeks to understand the organization. An understanding of what the organization is occurs. It also helps understand what the organization needs to achieve. It also gives the reason for the need to achieve the goal (Young, 2009, pg 43). Finally, it explains how the goal will be achieved. Managers of an organization look at the position of the company at present. They look at the opportunities available and envisage the future. They look at the resources at their disposal and plan on how to utilize them to realize their goal. The management strives to implement the strategy to achieve their goal.

 Several forces exist in the implementation of strategies. Above all, strategies are put forward in order to help the company have advantage over others. This advantage is usually competitive. Businesses run in environments. The prevailing environment dictates the strategy the company will employ (Plenert, 2002, pg 76). In the process of implementation, challenges occur. These challenges usually call for change in the strategy initially developed. To avoid such changes, a clear analysis of the business environment need be carried out. A proper SWOT analysis is carried out to avoid this (Young, 2009, pg 43).

 

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 Intended and emergent strategy

Honda was once known for producing super cub motorcycles (Berger, 2011, pg 4). These were mainly used in the congested Japanese cities. Through strategizing, Honda has grown to be one of the best selling motorcycle companies. Only a few companies have managed to enjoy the same success as Honda. Honda was enjoying a lot of success with its super cub in its native Japan (Berger, 2011, pg 4). Its management carried out an analysis and saw the opportunity of producing larger motorcycles for use in the US. They relied on their cheap labor to spur their success by producing relatively cheaper motorcycles.

 However, their inexperience in the large motorcycle industry led to several malfunctions in their motorcycles (Berger, 2011, pg 4). This almost led the company into bankruptcy. The intended strategy had backfired. However out of frustration, one of the workers led to the discovery of another opportunity. The super cub found market in the US for sports (Young, 2009, pg 43). The management first dismissed it since it was not the envisaged strategy. In the end, Honda’s management reluctantly agreed to the new business opportunity. This led to huge sales volume and led to great success in the American market. This was because of an emergent strategy.

The advantage of this emergent strategy has helped Honda grow to one of the best motor companies. This success helped them diversify and grow their business all over the world (Chandrasekar, 2007, pg 502). Honda maintains a competitive advantage over its rivals. This is because of its strategic planning. Buoyed by the supercub success, Honda came up with another strategy and diversified its production (Berger, 2011, pg 4). It started producing cars and since it had built a name for its products, its cars were also a success. Due to mass production, Honda is able to produce at a cheaper cost. This was boosted by availability of cheap labor. The company also has advanced technological ability. This helps in mass production of high quality motor vehicles. This usually occurs at a cheaper price and thus maintaining its competitive advantage over a majority of the players (Chandrasekar, 2007, pg 502). Hondas’ strategy stresses on production of goods, which are cheap and durable. The company owes much of its success to this strategy.

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Prior to its emergence as a force in the motor industry, Honda had restricted its operations mainly in Japan. However, due to its cheap labor Honda saw an opportunity in the American market where motor cycles were popular in highways (Berger, 2011, pg 4). It designed a bigger cycle for the American market. However, Honda ran into a series of setbacks in implementing this strategy. A majority of the market was not willing to buy untested products and thus the sales envisaged were not realized.

 Secondly, Honda was inexperienced in the production of highway motor cycles. This led to various problems with their cycles and thus led to lesser sales. The startup cost was also high. This meant the number of Honda personnel in America was small. This led to constraints in meeting the desired quality of products. The Japanese government and put up foreign exchange restrictions (Berger, 2011, pg 4). This greatly hindered Hondas’ operations in the American market. These challenges almost drove Honda to near bankruptcy. This was until the management realized an opportunity for a market for its small cycles. This was an emergent strategy and not the intended one.

 Hondas mission is to be the leading player in the motor industry. Its goal is to capture the market with products of high quality (Chandrasekar, 2007, pg 502). These products are intended to be cheap. This strategy has been developed through experience. When Honda ventured into the American market, the challenges met almost led to the collapse of the company. It had targeted the big market in the big motorcycle industry (Berger, 2011, pg 4). This was supposed to add on to its stronghold in the small cycles in Japan. However, the strategy backfired. The emergent strategy led to an increase in the market of its small cycles in America. From that experience, Hondas’ management has learned analyze the markets when strategizing. Their main market is the fast growing class of middle-income earners. They achieve their success by producing quality and at an affordable price. This helps them capture the huge market in the middle-income earners (Chandrasekar, 2007, pg 502). This helps them maintain a competitive advantage over the other players.

 Just like any other firm, Honda has its strengths and weaknesses (Neubert, 2008, pg 272). It also has unexploited opportunities. Threats also exist in its area of operations. All these factors combined define the next strategy of the company. Clear and well-performed SWOT Analysis propels businesses to greater things (Neubert, 2008, pg 272). In order to understand Hondas business standpoint, an understanding of its SWOT is paramount. Honda has various strengths. These are the key in maintaining a competitive advantage over other players in the industry.

  Diversification in its production is one of its strengths (Chandrasekar, 2007, pg 502). The company was initially known for production of small cycles. However, following its success in the motor cycle industry, the company has grown into a fully-fledged motor vehicle producer (Neubert, 2008, pg 272). It produces almost all types of motor vehicles. This has been possible due to its strategy of producing quality and at a cheaper price. In addition, due to its early success in the cycle industry, the company occupies a leading position in the market (Neubert, 2008, pg 272). It has an advantage of a strong brand name. This is because of the strategy laid out by the management. Due to its emphasis on quality, Honda has developed a strong engineering technology. This has helped maintain a competitive edge due to quality products. This technology has also helped in mass production thus reducing the cost of the products. Honda has a strong distribution network. This ensures its products serve almost every part of the market.

 Honda has its weaknesses as well. These lead to challenges in its quest to maintain its competitive advantage. Its production costs are on the rise. This is because of increasing benefits paid to retired employees (Neubert, 2008, pg 272). These are affecting its strategy. It is becoming increasingly difficult to produce cheaply as a result. In addition, other weaknesses exist in the employee’s productivity. Some of the employees are not fully productive thus undermining the company’s strategic plan (Chandrasekar, 2007, pg 502).

 Honda is presented with plenty of opportunities to further its growth. Demand of hybrid cars is on the rise. The company can exploit this and continue with its dominance in the industry. There also exists a huge untapped market. This is in the emerging Asian market. The company can also venture into the aviation industry. Its potential is underutilized and presents a nice opportunity.

 Despite these, threats to Honda’s dominance exist. The economy is slowing down. This is affecting incomes and thus slowing Honda’s growth. There is also increased competition in the industry (Chandrasekar, 2007, pg 502). This leads to more demands in maintaining the competitive advantage. The Japanese Yen has been gaining ground over the dollar. This results in less income from exports. This affects Honda’s dominance as an industry player. Tightening emission standards have led to companies rethinking their strategies (Neubert, 2008, pg 272). Honda has not escaped the consequences as well.

Hondas’ strategic planning embraces porter’s five forces (Neubert, 2008, pg 272). This has helped a lot in ensuring its success. This has helped it have that competitive advantage even during harsh times. Its strong brand name built upon its quality cheap products is the first force. It has helped fight off competition from its rivals (Chandrasekar, 2007, pg 502). This has ensured continued dominance in the business. Secondly, Honda has fought off the threat of substitutes through diversification (Berger, 2011, pg 4). This means it produces almost all the products that can be used in place of others. This has helped it have tight grip in the industry. Another reason for Hondas’ dominance is its ability to produce cheap products (Berger, 2011, pg 4). This meets the third force of Honda. Its products prices are within the customers bargaining power. In addition, the cheap price has led to the company meeting the bargaining power of suppliers. This has ensured a well connected supply chain for its products (Neubert, 2008, pg 272). Finally, Honda fights off competition effectively. This is through cheap products. It also occurs through supply of high quality products. Diversification also helps the company beat competition.

 Honda operates in dynamic environment. It calls for careful strategy to overcome the rigors of this environment (Berger, 2011, pg 4). The political environment in the world keeps on changing. This affects markets from time to time. Exchange rates keep on fluctuating. This leads to uncertainties in the exports sector. To cope with this, Honda has diversified its operations (Chandrasekar, 2007, pg 502). It also has started producing for the Asian market.

 The economic environment is rapidly changing.  Slow down in economies has been experienced lately. This affects strategies greatly. To counter this effect, Honda produces at a cheaper price (Chandrasekar, 2007, pg 502). This helps it maintain its market despite the challenges. This has helped it maintain its competitive advantage over other industry players.

 Honda has developed a strong network of the supply chain (Chandrasekar, 2007, pg 502). This is mainly because of the cheap price. The high quality of the products has also contributed to this. This makes the company standout. It also helps further the brands name.

Advances in technology have made competition very stiff. To cope with this changing business environment, Honda has embraced technology (Neubert, 2008, pg 272). This has helped in mass production. It has also helped in development of new techniques. This has helped fight off competition.

 The environment is changing rapidly. More measures are being implemented to curb these changes. To cope with this, Honda is venturing into hybrid cars, which are less polluting. This has helped it to cope with the restrictions and maintain its advantage.

Honda has a visionary leadership. It is characteristic of many Japanese motor industries. It puts strategy at the forefront. This is the principle reason for the success enjoyed by the company (Verburg, 2005, pg 217). The company sets out goals and works to ensure they are achieved.

 Honda has many capabilities. This serves best in maintaining its competitive advantage in the market. First, it is blessed with cheap labor. This has helped it produce cheap products. It also has diversified its production (Neubert, 2008, pg 272). This helps it serve a wide range of the market. Its advanced technology also ensures quality products. It also ensures mass production and thus cheap product. The opportunity available in hybrid cars is also a great potential for the company. All these help the company maintain a competitive advantage over its rivals (Sharma, 2009, pg 33).

Conclusion

Hondas’ business principle operates on porters five forces. Its strategy is based on these forces. This has helped the company in production of quality motor vehicles. This has been enabled by cheap labor combined with technological advancement. This has led to production of cheaper products. This has captured the huge middle-income market. This has enhanced the company’s brand name (Neubert, 2008, pg 272). Because of this, the company has maintained a competitive advantage over its rivals.