The Hondas Internationalization Process Business Essay

Honda Motor Company, Ltd is the most prominent automobile company of japan. It stepped into the Japanese market in the 1949. It has the greatest market share in the global market. It is the major manufacturer of motorcycles. The company’s major branch is headquartered in Tokyo .In the beginning, the company was just a manufacturer of motor bikes but started to sell the automobiles and lawn mowers after all the competitors. The success of the company is because of their strategies; the company makes the product for the markets where they are demanded. The founder of Honda, Mr. Soichiro Honda implemented his mechanical and commercial ideas to the company and this is his struggle that made Honda, a big success. A Honda motors is serving the market of 33 countries at present with its long-lasting manufacturing facilities.( Honda, 2013)

Honda’s Mission Statement

The mission statement of Honda is to maintain a standard of quality and deliver highest quality products at a rational price to satisfy the customers. ( Honda, 2013)

Honda’s Vision Statement

The vision of Honda is to create an organizational culture to achieve the goals and strengthen as the unbeatable brand and the best manufacturers of motors.

Organizational Leadership Style

The first leader of Honda was the person who founded the company, Mr. Soichiro Honda. The research has shown that Mr. Honda was an innovative leader and he always encourages the employees to increase their production efficiency. He was a transformational leader. He always promoted a culture of communication between the managers and employees in order to accomplish the objectives of the organization. All the employees at the company are enthusiastic and make up a successful team.( Hunt, 2007) The company follows the concept of transformational leadership.

Honda’s Internationalization Process

The internationalization means to expand the business on global level. Honda proved itself as the most successful producers of cars on the global level. In 1959, Honda started its process of internationalization by having a subsidiary in United States, the Honda motor co. ltd. Honda in japan manufactured the cars and they were exported to its subsidiary. Honda was late in introducing its automobile industry and this made the company to face many problems in the market of Japan. ( See Appendix 1). The import from japan was restricted afterwards and then the Honda Company initiated “Honda of America Manufacturing” in 1981, although the parts of cars were manufactured in japan and the assembling was in US. Honda started to export the cars to other countries as well and introduced its products in the international market. In the 1980s, Honda recognized that it has strongly captured the market of United States and then the company took ahead its concept of globalization to the idea of internationalization. The objective was to have more market share and to cater different needs of different customers in a better way. The management of Honda decided to divide its market in five regions. These regions include North America, Europe, Middle East Africa, South America, Asia Oceania and Japan.

Honda Regions And Subsidies

Year

Honda Regions and Subsidies

Year

Japan

1949

Middle east Africa

1970

North America

1965

South America

1959

Europe

1962

Asia Oceania

1974

The Situation in the Host Companies

The Honda products have come up with success in most of its host countries. When we talk about US, there are two types of views that are expressed about the Honda Company in the market. Some people think that it had a bad impact on the domestic automobile market of US and some people consider it as a good deal. According to Richard Pascale, Honda had intended to protect an uncertain share of the traditional US motor-cycle market (1995).Contrary to this, the Honda products were failed to be accepted by the Europeans because the local companies were providing a higher quality at a cheaper price. The sales of Honda in Europe were 11% of the global turnover in the early 1990s as compared to Japan (33%) and the North America (43%). Honda is willing to spend about $40 million and wants to appoint 300 employees to increase production in Greensburg, Ind., as its North American operations have a big role in the global strategy of the company. ( Global automakers, 2012)

Internationalization Strategy of Honda

The company made the subsidies more independent from the parent company. All the subsidies were responsible for their own profits, manufacturing and R&D. this was because of a difficulty to determine the taste of all the customers while sitting a single country. The company designed a strategy to make independent R&D in all the regions i.e. Honda Research of America” in 1984 to produce the cars that will satisfy the needs of the customers. It was very expensive to make products according to each strategic state, so Honda developed a strategy of platform for the automobiles. According to the strategy it established a common development center where the product was modified in accordance with the taste of the market of that region and to satisfy the customers. To control the increasing cost, Honda changed its manufacturing approach from the classical Ford Manufacturing System to the Lean Manufacturing System to compete with its internationalization strategies. At present, the Honda Company is promoting the concept of “Green Technology” to cater and satisfy the customers around the world. Honda Company has an effective international strategy according to which all the regions will have independent relationships to enhance the trust factor. (Mair, 1998) The corporations should contribute a part in the transfer of the technology. Honda’s overseas strategy consists of the four localizations:

Localization of products

Localization of profits

Localization of production

Localization of management

The localization of products which means the products should be produced and marketed on the basis of the needs of the customers of that particular region and the R&D of the company should conduct research to increase the level of efficiency in the production. The localization of profits means to reinvest the profits in the company as much as possible. The localization of production refers to the concept that the company should not depend on the products that are exported; it should also conduct the production activities in the region to contribute in the development of the company. The last localization is the localization of management that refers to the practice of promoting the collaboration and communication between the management and the employees in order to achieve the international targeted common goals in an effective way.

New Mission after Internationalization:

The mission after the internationalization is to maintain an international market and supply highest quality products at a rational price to satisfy the customers all over the world.

New Vision of Honda

The vision of the Honda Company is to prove itself as the best and most efficient manufacturers of automobiles and motors in the world.

COMPETITIVE STRATEGIES AND COMPANY ASPECTS

It would be beneficial for the corporation to form strategic alliances with the other local corporations of the host country in order to be successful. It will pave the way for its progress and development. Moreover, the increased emphasis on delivering the high quality automobiles to the customers would assist the corporation in capturing the more market share. Furthermore, it would be advantageous for the corporation to enter the Asian markets due to the increase in the population there. It will help them in earning the optimal proceeds.