Business Management

This document provides an overview of business management, focusing on Honda as a case study. It discusses Honda's business model, management style, and success factors. It also includes a PEST analysis of the company and highlights key elements for organizational success. The document is suitable for students studying business management or anyone interested in learning about Honda's strategies.

Running Head: BUSINESS MANAGEMENT
Business Management

BUSINESS MANAGEMENT
Table of Contents
Introduction...........................................................................................................................................2
About Honda.........................................................................................................................................3
Business Model.....................................................................................................................................5
PEST Analysis.......................................................................................................................................7
Key elements for the success of any organization.................................................................................9
Recommendations for the company.....................................................................................................11
Conclusion...........................................................................................................................................12
References...........................................................................................................................................13
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Introduction
Honda is a Japanese Multinational Conglomerate which is mainly recognized for
automobile production. The company has also aided other companies in programming the
manufacture of military aircraft. Honda has also remained dynamic in motorsports such as
Superbike racing, Grand Prix and others. The report will familiarize the business model,
marketing structure principles and some of the current practices carried out by Honda to
operate successfully in the current business environments. Honda upholds an outstanding
management style in their organization; the report will elucidate the management styles
upheld in Honda. The report will highlight Honda’s way of operating its business in the
current environment by highlighting its business model. Some of the prime steps taken by
Honda in order to achieve success in the global marketplace are deliberated in the report. An
organization has to understand the external factors affecting its business practices; the report
also uses PEST analysis in order to comprehend the impact of Political, Environmental,
Social and Technological factors on Honda. The report also deliberates the importance of key
elements such as market trend, rivalries, demand and supply for the success of any
organization. Furthermore, a strategic recommendation for the continuous growth of Honda
has been elaborated in the report.
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About Honda
Honda Motor Company is a Japanese Public International Corporation headquartered
in Tokyo which is mostly recognized as a manufacturer of automobiles, motorbikes, power
equipment & airplanes. The company initiated to manufacture motorbikes from the year
1949, and in 1953 the company first announced the Honda C-100 which was a small-engine
motorbike. By 1959, the C-100 was the largest selling motorbike in the world. Apart from the
motorbike and automobile business, the company also produces marine engines, power
generators, garden equipment, personal watercraft and many other products (History, 2019).
A precise management style has been always upheld by Honda; most of their
management style is determined by the numbers, such as Respect for Individuals (3
Fundamental beliefs), 3 Joys and 5 Management policies (Honda Motor Co., 2019).
Three fundamental beliefs
The fundamental belief of Honda is ‘respect for individual’, and the belief is categorized into
three parts, which are mentioned as follows.
o Initiative: One should be creative and act on his own enterprise and decision, rather than
being limited by predetermined ideas.
o Trust: People who are connected with Honda should share mutual trust among themselves.
o Equality: Honda creates equal prospect for each individual irrespective of caste, creed,
educational, economic or color differences (Honda Motor Co., 2019).
Honda’s Management Policies
o Struggle persistently for a pleasant work-flow.
o Always progress with determination & youthfulness.
o Enjoy the work and efforts
o To be aware and attentive to the importance of research
o Cultivate new concepts and uphold an understanding that time is a precision element of life
(Honda Motor Co., 2019).
The Three Joys
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o The joy of selling: The joy of selling ensues when people who are involved in retailing &
retuning Honda products cultivate an association with the customers built on a shared trust.
o The joy of Buying: The joy of buying occurs when the products provided to the customer
exceed their expectations.
o The joy of creating: The joy of creating happens when all the associates involved in the
design, development, manufacturing, and engineering department work in accordance with
the customer needs (Honda Motor Co., 2019)
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Business Model
A business model can be demarcated as a conceptual structure which supports the
feasibility of the manufactured goods or a company & explicates in what ways the company
maneuvers, its ways to make money & in what ways company intends to accomplish all its
business goals (Martins, et. al., 2015). A seamless business model would have three parts:
- All the imperative details regarding the manufacturing and product design
- Details related to product selling and finding appropriate customer base to distribute the
product.
- All the information regarding the ways through which the company will make money and
how customers would remunerate (Clinton and Whisnant, 2019).
Honda is an esteemed company that has not let its customers down in terms of
product quality and design. The works in Honda is guided by a hands-on engineering
principle through which the company has achieved a respectable position in the marketplace.
The company thrives to develop new products with perfection so that all of its customer bases
could get satisfied and they could fulfill their perspectives of joy as well.
One of the imperative factors that led Honda to be successful in the global market is
Honda always looks forward to being successful outward from their home shores. The
company maintained an international perspective by distinguishing most of the countries in
the world as their potential customer. The fact can be astoundingly remarked that Honda
began trading their motorbikes in the US since 1959, and in 1974 Honda amazed the industry
by introducing Civic with a label ‘first car that abides by the US Clean Air Act emission
standards’.
Honda’s globalization strategy endorsed them to succeed in different parts of the
world, including the U.S. It was first Japanese company to manufacture cars in China, and its
remarkable earning record in India & Southeast Asia including other distant regions has
developed a strong competitive environment.
Following are some of the prime steps taken by Honda that have been some of the prime
reasons for the success in the global marketplace.
1. Don’t Globalize, Localize
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This is one of the prime factors that led to Honda’s success. Dissimilar to the other
companies, in spite of controlling through the headquarters, Honda allows each of its
subsidiaries to operate independently and allow its subsidiaries to manufacture & design
automobiles in accordance with local needs and demands (The Washington Post, 2019).
2. Honda does not rely on Robots (Automated machines)
Through automation, companies could reduce costs and elevate the level of efficiency
as well, but Honda’s factories are decisively labor concentrated in the industry. The company
has employed robots only in a dangerous area where humans can be harmed, other than that
all the other areas are fully operated by humans. Honda’s reason behind this strategy is, by
automating the plant employees will be disengaged and innovation will also be lost
(Rothfeder, 2014).
3. Employees are fortified to question the Status Quo
Honda is a well-esteemed organization that encourages the employees to continuously
dig holes in the status quo. Daily meetings are held in Honda in order to re-evaluate the
strategic decisions whether it is large or small, through this step Honda always make a better
choice (White, 2014).
4. Honda believes to pay attention to the engineers
Honda’s strengths lie in innovation and product which is cultivated by R&D through
which company could conceive fresh ideas and techniques to build and innovate new vehicles
faster & better (White, 2014).
5. Honda focuses on the factory flexibility
Unlike other companies, Honda does not have to retool their factory to assemble a
new vehicle, they effortlessly manufacture numerous vehicles in a single assembly line &
after some time they would switch to anew designed vehicle if they want. Each of the
production facilities of Honda upholds in-house engineering practice which allows an
autonomous operation to design vehicle in accordance with the local needs (Rothfeder, 2014).
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PEST Analysis
The company’s business situation could be effectively analyzed with the help of
PEST analysis. With the help of PEST analysis impact of external factors (Political,
Economic, Social, and Technological factors) on the company could effectively analyze.
Below is the PEST analysis for Honda for current market situations.
Political: Proposals have been coming forward from the governments around the globe to
limit the number of automobiles used by people to reduce the effect of lethal gases on the
environment. This would influence a huge impact on company sales, as the company would
be enforced to minimize the manufacturer in accordance with the government legislature
(Kumar, et. al., 2016).
Governments of many countries are proposing and encouraging the manufacture and
use of gas-mileage or hybrid cars; Honda may have to make new pacts due to which they
would have to bear a heavy loss. The government in many countries foresees to launch
vehicles that ingest very less or no diesel, so Honda would have to capitalize more in R&D
for the development purposes (Duque, et.al., 2016).
According to Doval (2018), Honda has invested over $1.2 billion in India for the
development and manufacture of hybrid and electric vehicles. The company specified that
electrified range of vehicles has been developed under the Clarity brand which would
comprise plug-in hybrid, full-electric cars & fuel cell option. The Clarity range of Honda is
now available in Japan & U.S., sooner it will be launched in India as well (Doval, 2018).
Rendering to the article given by The Japan Times (2015), Honda had intended to
capitalize $340 million to build fuel-efficient gasoline engines in Ohio, as the development of
electric cars would impulse for more automobiles with low emissions of toxic gases (The
Japan Times, 2015).
Economic: Rising fuel costs are affecting the automobile industry severely. The change in
fuel prices impacts on consumer spending habits, due to which revenues and profits of
automakers are affected.
The fact is tacit that Honda will also run through a rough business in petrol and diesel
cars, but the company can shine through the hybrid and electric segment, as they have been
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investing a good sum in the sector. For instance, Honda has a good chance to flourish in the
Chinese market, as the government is promoting the use of hybrid and electric cars, and
China has world’s highest population (Electrive, 2018).
Social: According to The Japan Times (2015), Honda Motor Co. is certain that they would
change its official language to English for worldwide communications within the
organization within 2020. This statement was publicized by Honda in its sustainability report
(The Japan Times, 201). This is one of the main steps to socialize the company.
Honda uses Lifecycle Assessment (LCA) in order to evaluate the influence of the
product and operation over the environment. Through this, the company can find fresh
techniques to decrease the influence on the environment from each & every side of the
business. Apart from these, Honda works to design their product in a way that they can be
recycled after their useful lives (Honda, 2019).
Technological: As technology is being advanced day-to-day and people look for the best
technology available in the marketplace. For instance, people rely too much on GPS
technology in the contemporary world; they rely on GPS wherever they want to go. These
days, companies are manufacturing cars with inbuilt GPS facilities, therefore Honda has
included the Satellite Navigation System in their cars.
The Internet has influenced the automobile industry up to a large extent; before
purchasing the cars people go through the internet and decide what they want to purchase by
conducting comparisons. So, Honda would have to increase its influence on the internet in
order to attract more traffic from the buyers (Honda, 2019).
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Key elements for the success of any organization
Key elements that have to be focused on the success of the organization are deliberated
below:
Demand: The organization can evaluate the risk involved in the business and significant
pronouncements could be made with the help of demand forecasting. With the help of
demand forecasting, an organization could achieve perceptions for the capital investments &
choices for developments (Economics Discussion, 2019)
The significance of demand forecasting is as follows:
o Demand forecasting backs every business to accomplish its pre-decided objectives.
o The budget could be made efficaciously, as the company could comprehend the demand and
they would attain an insight to act accordingly.
o Demand forecasting would help an organization to stabilize manufacturing & employment.
o Performance of the organization could be evaluated and corrective actions could be
implemented with the help of demand forecast.
o Management could also make effective decisions such as, plant’s capacity to produce in
accordance with the needs or increase the plant’s capacity (Economics Discussion, 2019).
Supply: Supply chain management is a set of activities that are necessary to strategize,
govern & implement the products’ development from purchasing supplies, manufacture &
circulation of the product to the final customer.
o Through supply chain management, customer service would be enhanced through which
customers will expect a good product and after sale support.
o Through an effective supply chain management, purchasing cost and production cost would
be decreased up to a great extent.
o The flow of the product will be increased, thus increasing the cash flow.
o If the supply chain of the organization is controlled effectively, the company would have
improved profit leverage (Hugos, 2018).
Market Rival: Knowing and understanding the competitors in the marketplace would help
the organization to make the products or services enhanced. The organization can take
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advantage of their competitors by using the knowledge to create marketing strategies that can
take benefit. Following are some of the imperative benefits of knowing the competitors.
o Communications plan could be efficiently planned to get the most of the advantages.
o The organization could understand who their competitors are.
o Considerate on the market investment could be achieved, which would help to elevate the
sales yield.
o The more the customer opts to select an organization over the other company, the more the
trust is built.
o With rivalries in the marketplace, organizations would get to understand more about the
market (Kim, et. al., 2015).
Trend: Organizations should have a trend awareness and be able to make amendments in
accordance with the market trends. Following are some of the significant reasons for an
organization to understand the market trends.
o If an organization understands and follow the market trends successfully, they would be able
to achieve and predict what will happen now & tomorrow.
o Understanding market trends will help to cultivate better business planning.
o Forecasting is one of the prime activities that are carried out by any organization to predict
future changes in the business, understanding market trends would help to make better
forecasting.
o Organizations will be informed about early cautions (Cleverism, 2019).
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Recommendations for the company
o Honda should focus more on manufacturing and launch hybrid and eco-friendly cars,
countries like the UK prefer hybrid and eco-friendly cars due to the ingestion of toxic gases
into the environment.
o The company should thrive to improve the fuel economy with the enhancement of overall
performance, as there are different countries which require the automakers to improve their
fuel economy of the products.
o As climate change is a critical issue for the world, Honda should aim to manufacture all of its
products with eco-friendly methods.
o Honda should focus on the rising fuel costs and climate changes caused due to the toxic
emissions to the environment. They should understand the fact that rising fuel cost will
influence customer’s spending habits, so the company should invest in R&D to manufacture
in accordance with the changes.
o The company should make sure that all of its subsidiaries are adhering to the eco-friendly
methods and are contributing some part to the social movements
o Technological trends should be carefully perceived and the company should try innovating
their products in order to achieve competitive advantage.
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Conclusion
Through the report, the fact can be comprehended that Honda is a prestigious
organization that has expanded its business globally through its perspective to see the whole
world as its potential buyer. The company upholds virtuous management policies which is
one of the prime factors that lead to a prosperous work environment in each and every
subsidiary. Honda upholds unique policies such as hands-on engineering policies which aid
in manufacturing automobiles way faster and efficient than the other companies in the
industry. Through the report, the fact can be comprehended that the strategies upheld by
Honda have enabled them to be one of the best automobile manufacturers in the world. The
company has flourished in the global marketplace and has also invested a good sum in new
interests as well, such as Motorsports and aircraft. Honda thrives to manufacture and deliver
the products to the customers with exceptional quality. Through PEST analysis, the fact has
been comprehended that Honda’s way of operating in the current environment is efficient.
Some of the key elements that are required for the successful business operation have been
deliberated in the report. At last, strategic recommendations for the successful operation of
Honda’s business has been deliberated in the report.
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References
Cleverism. (2019). Business Trend Awareness. Retrieved from:
https://www.cleverism.com/skills-and-tools/business-trend-awareness/
Clinton, L., & Whisnant, R. (2019). Business Model Innovations for Sustainability.
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4bf7a285fc65
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Honda. (2019). Honda Corporate Social Responsibility. Retrieved from:
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Hugos, M. H. (2018). Essentials of supply chain management. UK: John Wiley & Sons.
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