Operational strategy of Honda company
Honda is a one of the global automobile industry. In this essay Hondas Company is taken to know the current operational strategy of the company and measured appropriateness of the strategy. This essay directly started from the strategy of the company. Here strategy of corporate and business considered at very minimal level because to check the relationship and support of the operation is there or not. But some of the major needs of corporate and business taken into consideration because all are interred related. This essay much focused on functional strategy because function is the main core of the company which works in front to support and to make success of the company vision and mission. Better operations of the organisation leads to better perform and to compete better in the all direction of the global market. Afterwards, explained excellence of operation through the Sandcone model to measure the competency of the company.
In automobiles industry, Honda is famous as mobile manufacturing company because of their mobility. It always concentrates on creating new value by innovating new product with quality for the global customer. Honda provides extensive and high quality R&D facilities to its association to do new innovation for the society. Hondas major core strategy is staying “Close to the customer” – “Glocalization” – “Manufacturing region”. Here Glocalization means “To be local company to the glob by integrate plants in market wise. By thinking this Honda established 100 factories in 33 countries. In the all global industries or companies or organization have three level of strategy. If these three level of strategy is integrated and creating values to each other in the organisation means organisation growing. In simple each strategy has to integrate and correlated in between to achieve common goal of the organisation. Those three levels of strategies are – one corporate strategy, secondly business strategy and third one is functional strategy. Corporate strategy’s main intention is to set a long term goal with direction and scope for the entire organisation or industry or the company. It also focuses on the allocation of resources what exactly we important need of this essay. Business strategy always depends on first level strategy. It aims on business unit and competition within the organisation as well need relation between corporate and business as a centre. The third one but most important one is functional level strategy; we can call bottom level strategy. It’s mainly on functions of the organisation like finance, operations, marketing and other functions. The functional strategy includes operations of the company. Let us see important points of Honda operational way with context of strategy, and its internal relationship with other level of strategies of the whole organisation. The integrations between all the three levels taken here to know the future of the company…
Location or Region
Honda having global structure by region vies Because Current market is compatible and need to be very speed and flexible. To meet this Honda has six major regional structures to meet it. In the real sense speed, flexibility and efficiency is the major strength of the Honda. By having manufacturing plant in different location is to reach entire glob very effectively. Honda regional locality plan to reach every customer as well present in the global market. To maintain efficiency, flexibility and to transfer technology and product it located in six regions. These six major locations are China, Japan, North America, South America, Europe/Middle East/Africa and Asia. These locations are Honda as a major production unit. Honda’s belief and philosophy is to produce products to customers what they need very closely. Speciality of Honda in this unit is decentralised to take decision according to the local market needs. It also has centralised decision and communication to create a global innovation, community and network among the Honda family to support and produce product to meet their customers globally. Honda always changes products through innovating and producing updated and new products to satisfy customers by exchanging knowledge and technology within the Honda family. Honda’s all location integrated internally to transfer products as well components. It make easy to produce quality product as well it reduces capital investment and cost of the product. Honda’s major strength and key of success is region.
The Hondas manufacturing facilities which is provided to employees is more flexible and futuristic. If we consider Toyota, after introduction of just in time method also Honda is surviving because of its manufacturing flexibility and quality what it served till now. Honda manufacturing factory are according to concept of “Green Factory”. Manufacturing units are more friendly and efficient. But it is still innovating to make it more efficient, less time and very less cost effective production of their manufacturing plants. As we know customers always needs new product and qualitative one, to reach this needs of customer it’s always do research on it. Honda is the one of the company which cultured and implemented Japanese organisations management techniques. By the manufacturing flexibility and mobility what it has made is to shift one manufacturing unit to other unit, one plant to another plant or in between plant, as well locally and globally. This changes and shifting Honda do according to the market demand and requirement of the plant.
Global sale of Honda
By innovation, quality and marketability Honda increasing their customer base throughout the world. Its innovation is the base and it’s the key element of the Honda. Flexibility what it has in the production is backbone of Honda to achieve greater sales. In the context of marketability Honda providing outstanding quality and services to their customers continuously because of its global network is also the one of the reason. As per the Honda’s 2008 sales record Honda reached 24 million customers globally. This customer base is more than the previous year, means it’s more by 5.7% of the previous year. When comes to the auto sales Honda raised sales by 3.78 million units from 3.76 units and motorbike sales raised by 12% in overall sales but the power products division of the Honda came down (declined) by 5.7% on overall sale of previous year. Honda having wider distribution network, to support these network it has regional wise production plant to reach their demand and service. Honda doing extremely well in supply which assures with the entire element required.
Honda has history in developing new product especially in environmental base. It is one of the major companies which is developing technologies by taking environment into consideration. For example, Honda is the first company to introduce fuel less based car to avoid air pollution. This technology reduces emission by increasing efficiency of the fuel as well it is highly performance car with quality and affordability by the global customer. This innovation is one of the histories for the Honda family. FCV launched in America to do test marketing. There is also another one reason behind launching FCV in America that is to meet Air act standards of the region afterwards it taken certificate from the global government as “Fuel Cell Vehicle”. It also started research on solar energy capitalisation by introducing thin film of solar cells and it is also experimenting on home based energy. Honda has greater vision of the global customer requirement. Currently Honda doing research on production and business operations by considering environment. After JIT of Toyota, Honda is planning its manufacturing operations to make more effective through manufacturing, market the product and recycle it once again at the end.
Honda investing more on research and development facilities, because it believes in safety innovation also. In 2003 Honda opened 78 thousand square foot safety research laboratory to develop new vehicles as well as to measure safety of vehicles in Ohio centre. It has more equipment and highly performance resolution materials and it has world’s number one crash simulators. This facility made Hondas to gain development in safety developments. Honda is renowned for development of testing and research in safety measures. Honda also measured technology to protect pedestrian also.
Innovation, research & development
Honda giving importance on already developed product as well as on future product by doing continues and extensive research. Honda developed Jet on its own. Its key feature is its very advanced with light, what the designed made is to perform well. Quality and comfort is too classy. By late 2011 Honda is delivering to customers. To do jet research Honda planned to take 369 thousand square foot and to do production facility to it. For this Honda made JV with GE com. By GE-Honda aero Inc. is going to produce turbo fan jet engine to the customer. By 8 years innovation Honda family created Advanced Step in Innovative Mobility (ASIMO) to help people by Robots which can walk, run, climb and turn. Honda family doing research on robots to make more flexible and feasible. Honda also generated to help disabled and friendly user machines which cal help to move one place to another and to daily work without taking pain in muscles. Now days these kind of machines and body weight support machines are becoming more demandable by the global market.
Customer & The Society – Creating Values
Having worlds highly performance equipment research and development facilities, global presence and manufacturing unit which made local presence created goodwill in the market. Hondas key success is customer potentiality or base what it has and adding. Hondas main theme is “The Power Of Dream”, it says power to a company is not only come by creating new idea and innovations what they did. It’s by hard work and determination by the Hondas family. It created, acquired, planned, designed and produced new products to full fill the dream of the customers to satisfy them also. Some of the factors which created new value is, firstly Honda started producing its product locally, secondly it focused on local demandable and required products by the market, thirdly Hondas commitment on environmental factors and safety measure advancement. These all factors made Honda to gain good name and recognition in the society.
Is Hondas Appropriate strategy?
As per Norman Gaither of operational strategy
Currently Hondas operational strategies inter linked with the corporate and business strategy. The best operational strategy should be at the same level with the organisational strategy. Hondas operational strategy is interred related and supportive to the business strategy and this strategy is having consistency with the corporate strategy. Ass before said, corporate strategy is nothing but related to vision and mission of the company. By the growth of the company and the market capacity we can say that Honda implemented interchangeable and flexible operational strategy. The Honda having flexibility in their operations. Usually operation of a organisation depends on the other organisation which we call as operational planning. After fixing up a market and their demand on it operation strategy has to create for achieving and fulfilling corporate strategy. Honda has the same. It has flexibility in operations, once they fix with demand and production exactly they start adapting strategy on it. In Honda case they covered globally by locating manufacturing plants in six places. Secondly they have powered, extensive, world number one equipped laboratory to do research and development (Norman Gaither 1987). By this we can understand easily that operational strategy of Honda is supportive to business strategy, this strategy is also lined up with corporate strategy. By supporting each other Honda is achieving successive mile stone.
Excellence and Competitive factors as per The “Sandcone” model of operational excellence
It says operation excellence or performance need in cost, quality, speed, dependability and flexibility. Cost wise company having powerful and world best automated machines to manufacture products. For the Quality Honda having quality measures, testing, R&D, quality equipments with machinery to provide number one quality. Speed and dependability wise it is maintaining delivery schedules according to the market need as well plan. To make availability Honda has manufacturing unit in different places. It has wider spread network to delivery products and services to the customer. Its meeting customers dream and demand, key point of Honda. In flexibility, Honda innovating and manufacturing new product with quality to its consumer. It also has wide range of products and sub brand as well Honda giving better service to the customers. Honda maintaining short span and long span life cycle, the time circle of the product is depends on the kind of product what Honda manufacturing. So all these performance in operations leads to low price and high quality in product. It also leads to fast and timely delivery to the customer. Flexibility competes on frequent and wide range of product and service. It also effecting on changing volume and timing on product and services of the Honda. Theses all points already discussed in strategy inter related factors but here aligned in short to know the relation and completion of the organisation.
Honda Company has flexibility in all the level. As we discussed before about three level of strategy and their advantage through competence it is in positive side. But when compare to the global market Honda has to create new technology for its production unit to compete in the price market as early as possible. Here I mentioned price market means “customers totally depend on price”. How Toyota created machinery (JIT) for their production may be in future some more competitors can come up with other kind of technology which effects, reflects and capture Hondas market. Honda has to create with in the short time. Except this what Honda having like resource allocation, maintenance, innovation, quality, wastage control, supplier relation, raw material policy, product policy, production policy and customer satisfaction and more has at the best compare to other automobile industries.
- Honda company website – General and corporate.
- David Barnes 2008, operations management – an international perspective. Thomson Publication.
- Norman Gaither 1987, production and operations management – A decision making and problem solving approach. International Thomson Publication.