An Analysis of Honda Motor

  • Category:
    Business
  • Document type:
    Article
  • Level:
    Undergraduate
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    3
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    2097

AN ANALYSIS OF THE HONDA MOTOR COMPANY

Honda is one of the leading and the best known companies in the motor vehicle industry. The Honda Motor Company was started in the year 1948 by its pioneer Soichiro Honda in Japan. Although the company started its operations as a motorcycles manufacturer, the company diversified exponentially to produce four wheel drive vehicles fifteen years later and further went into production of fast cars and later in 1969 began exporting the Sedan model to the United States1. This led to the opening up of the wide market for the Honda Company that has been seen in the United States market as well as the wide growth at an international level. Recent records as of 2013 indicated that the car manufacturing company had managed to build a total 1.3 million cars from their United States plant. The manufacturing company opened up a plant in the United States way back in 1982 with a capacity of building a total 1.71 million light trucks and cars.

Branded as majorly an ecofriendly and luxury vehicle, many correctly argue that the Honda is one of those manufacturers who have always embraced the latest technologies in every new automotive that they have produced. However, there has been rising complaints over the past few years due to the high number of cars that have had to be recalled to the company for corrective measures. This does not go down well with any car buyer. In the market, buying a car only for it to be recalled leaves a bad tastes in their mouths. This has hurt the popularity of the brand with many consumers. In fact, the major reason that Honda recalled the motor vehicles was due to an airbag hitch that could have been corrected at the assembling stage.

The case of Hondas steeply priced vehicles is never in question. Although it has always had a keen eye on the high end market, the company has been losing touch with the fundamental principle of diversifying the price ranges to fit different socioeconomic classes. This has been seen with the Honda Civic, Honda Acura and other top models such as the Honda Accord. This cost structure has been a great hindrance in catapulting the company to the middle income countries market segment where most of the world’s working population lies2. More convincing about the skewed cost structure is the pricing of the non-luxury brands of their vehicles at a price. The company equally sells their on luxury brands at high prices, further locking out a large pool of potential buyers. The company should instead focus on equitable pricing whereby a few models of their non-luxury brands should be sold at relatively lower prices and this fallback should be compensated with increased prices of the luxury brands. The fact that the company has not done anything on their truck line has also been a letdown on the company’s productivity3.

A critical look at the company’s relative position with the community, there has been complaints about Honda selective employment strategies. Although this has hailed mainly in the United States of America, as the company seeks to expand there have been worries that should the same continue then the company may not do as well as it expects. Records indicating that of the approximate 197,000 Honda employees, 90% were from the Unites States while only a remaining ten percent were from other countries4. These figures are worrying primarily because there are a high number of professionals from all over the world residing in the USA who could be deployed in the company. Equally, the same disparities has been observed both at its headquarter branch and the United States branch regarding gender equality in employment. The company has by design maintained a higher number of male employees and very few female employees in their workforce. This has not gone down well with most potential employees especially in the corporate world who have interpreted this discriminatory behavior as being against the convectional labor laws5.

Moreover, persistent complains have been presented to the company’s website and throw the customer care desks with regard to inequality in employment opportunities. Although the company has blamed the economic slowdown for this decline in giving employment opportunities, these reasons are not plausible to any keen observer of the employment trends across the world6. Honda, particularly, has been at the receiving end of complaints from most motor reviews with strong criticism against the company for not adhering to the changing dynamics in employment and human resource7.

This has further been evidenced by the strike of workers in the Indian Manesar Honda factory where 1700 workers took to the streets to protest for the low wages they had been receiving despite protests and a pre agreed salary raise that was never materialized. According to various reports, Honda responded to these negotiations by firing four of its workers who had been linked to a labor union. It further led to the exit of 50 workers whom the management branded as troublemakers in the organization8. This trend has been very worrying as it reflects a serious management issue on the side of the organization whereby it has failed to address critical issues relating to their employees.

There have been ever sharper criticism from the issues of delayed payments especially coming from the china branch. Although this was amicably solved, it did not arguer well with the employees since a large majority quit employment due to the frustration.

In addition to these, serious concerns have also been raised regarding he disposal of the batteries used in the Honda vehicles. While most developed countries have embraced the use of gas, there are still some segments and other counties that still use batteries. The issue of recycle and the proper manner of disposing these companies has still remain unresolved by the sixth largest motor vehicle company9. While this may not pose adverse environmental impacts, they can be ecologically damaging in countries where environmental laws are not so stringent.

However, while there are several issues why the Honda Company seems not to be its best, there are still quite a number of convincing reasons why the company should be considered one of the best performing in the industry. First and foremost, the Honda has maintained a reputation for reliability especially with the Honda civic that has popularly been dubbed interestingly as one of the vehicles that mechanics hate10.

The Honda Company has also been given credit for having cars that are the easiest to diagnose in the event of mechanical problems or breakdown. The engineering structure has made it easy for its clients to easily get help from mechanics in the event of a mechanical hitch11.

The company has been acclaimed for the powerful and the strong brand equity that has made the company able to penetrate trough markets that are rather tough for some brands. The company is also highly popular with a larger number of car enthusiasts mainly due to the strong market presence and the active campaigning techniques. General Motors, Toyota and Ford are the major competitors of the Honda Company and this competitive rivalry has been accelerated by the fixed manufacturing costs as compared to the relatively low switching costs consumers have to incur when shifting from one brand to another12. In this light, one of the key factors that have made the company remain highly attractive and has been the companies consistent endeavor to manufacture fuel efficient and high quality vehicles. Undoubtedly, Honda has been the leading manufacturer of these low emission as well as fuel efficient vehicles.

Hondas tremendous achievements in the technological sector are well known by and large. Honda has been merited competitive for their continued production of low emission and pollution technologies. The CVCC engine technology has greatly contributed to the reduced emission hence lower pollution levels13.

In the analysis of n organization, it is paramount to look at the value of the business. This is primarily done by looking at the interlinked activities that link together and assist in the day to day running of the business. These includes activities such as the purchasing, distribution, manufacturing, and also marketing of the organization’s activities and products. Honda has been very keen in embracing this concept of adding value to their business by making sure that all the cars they produce meet thehighest quality in terms of standards ad adding extras that will ultimately give their cars a cutting edge over their competitors14.

Honda has also been making concerted efforts to make sure that they improve their customer relations service by being more responsive to their customers through the service support and making regular repair and maintenance. The company has also greatly improved transparency to their customers through giving prompt, accurate and reliable responses to their customers whenever need be.

Honda has also been well known for carrying out comprehensive research in the market and their top management have been known for good decision making when assessing the market. The strategic management of the organization has seen the company tread carefully when selecting the market segment that it wishes to penetrate15. This has also been witnessed with the selective nature in which the organization has been producing unique products.

Even with stiff competition from Ford and General Motors, Honda has been able to register increased sales essentially as a result of currency fluctuations. Toyota has been the greatest competitor mainly due to its high number of new vehicles it releases annually. This high competitor has, however, had its greatest downside being that the company has equally gained a bad reputation for recalling cars. Toyota recalled a record 295,000 vehicles, namely the Lexus and a further 1.8 million Prius model Toyota vehicles had also been recalled as a result of a software technicality16.

In conclusion, Honda has high expectations for sales and future growth in the emerging markets especially looking towards China and North America where the company has had remarkable success over the last three years. The company is expected to do better and prospects for future growth are quite high. If the company would address the major downsides on equal opportunity employment and embrace penetration into other market, then the company would undoubtedly be moving in the right direction towards becoming a highly competitive brand.

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Brockhoff, K, “Technology management as part of strategic planning – some empirical results”,R&D Management 28 (2008): 129‐
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Calantone, R.J., Schmidt, J.B. and Song, X.M, “Controllable factors of new product success: crossnational comparison”, Marketing Science 15 (2007): 341‐
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Chesbrough, H, and Spohrer, J “A research manifesto for service science”, Communications of the ACM 49 (2010): 35‐40. 

Cooper, R.G, “Strategic marketing planning for radically new products”, Journal of Marketing 64 (2011): 1‐16. 

Damanpour, F, “Organizational complexity and innovation: developing and testing multiple contingency models”, Management Science 42 (2006): 693‐96. 

Drejer, A, “Organizational learning and competence development”, The Learning Organization 7 (2011): 206‐
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Estabrooks, C, “Research utilization and qualitative research”, in Morse, J.M., Swanson, J.M.and Kunkel, A.J. (Eds), Nature of Qualitative Evidence, Sage 46 (2007): 275‐78. 

Fleming, L, “Recombinant uncertainty in technological research”, Management Science 47 (2008): 131‐32. 

Levinthal, D,and Cohen, W.M. “Innovation and learning: the two faces of R&D”, The Economic Journal 99 (2005): 569‐96. 

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1Acs&Audretsch ,Innovation in large and small firms, 78-79

2Calantone&Schmidt , Controllable factors of new product success 341-43

3Fleming, Recombinant uncertainty in technological research

4Levinthal& Cohen, Innovation and learning, 569-71

5 Fleming, Recombinant uncertainty in technological research, 131-32

6Chesbrough, A research manifesto for service science

7 Cooper, Strategic marketing planning for radically new products, 2-4

8 Lynn and Byrne., Organizational learning: a sociocognitive framework

9Markland&Proge,Sources and outcomes of competitive advantage, 669-70

10Brockhoff, Technology management as part of strategic planning, 131-33

11Damanpour, Organizational complexity and innovation 693-95

12Kastelli&Tsakanikas, Internal capabilities and external knowledge sources, 30

13 Lynn & Byrne, Organizational learning, 841-43

14Drejer, Organizational learning and competence development, 206-08

15Damanpour, Organizational complexity and innovation, 693-95

16AMR Research, Improving innovation and cash flow in automotive, 45