For a lot of the past decade until 2007, the global car industry experienced a boom. There was an unprecedented demand for cars as consumers acquired more disposable income and an desire for foods for vehicles. However, the good times didn't last permanently. In 2008, the industry was jolted by its worst ever problems in memory. This is mainly activated by the global financial downturn, but other factors played out a role as well. As a result, many car producers suffered with declining sales and large deficits. What went wrong and how performed the auto industry bounce back? These are a number of the issues that'll be reviewed by this report. Also, the report targets the successes of Honda in conquering the problems.
2. 0 LIMITATIONS WITH THE REPORT
There are two main resources of data for just about any research. They are really principal data and supplementary data. Main data is obtained by the researcher through questionnaires, interviews etc. Extra data is the reliance of preexisting data for research. Due to the lack of time and limited scope of this study, the researcher relied entirely on secondary data. The situation with using supplementary data is the fact it might not be exactly fitted to the needs of the study. This is the major restriction of the record.
3. 0 Opportunity OF THE REPORT
This survey examines a few critical areas that happen to be:
3. 1 Critically evaluating the global auto industry in the three most recent years
3. 2 Analyzing and contrasting the strategies utilized by key players
3. 3 Critically critiquing the leadership varieties of key players
3. 4 Examining the amount of CSR in the car industry
4. 0 Simple OVERVIEW OF THE GLOBAL Vehicle INDUSTRY
The global auto industry is very competitive and fragmented. The consumer is virtually spoilt for choice as there are automobiles to cater for each and every preference and budget. However, this is not very good news for car makers as they need to position themselves in creative ways. By March 2010, the top three global car creators are Toyota, Standard Motors and Volkswagon. Even though Toyota's image is relatively tarnished by the recent car recall scandal, it still commands a strong business lead over the rest. Since the problems of 2008 to 2009, we see signs of improvement as car sales are increasing. Yet, there is a lot turbulence in advance and the industry may still experience some shocks in future.
5. 0 Program OF THE STRATEGIES
5. 1 Business Level Strategy versus Corporate Level Strategy
Business level strategy is defined as an organizational strategy that seeks to determine how a business should be competitive in each of its businesses (Robbin and Coulter, 2005). On the other hand, corporate and business level strategy can be an organizational strategy that looks for to determine what business a company should be or would like to be.
At the heart and soul of business level strategy is the role of competitive edge. This is what sets a firm aside from its competitors and provides it a definite edge. Sustaining competitive edge will be based on the interplay of the five forces within an industry. According to Porter (1990), these five causes are the threat of new entrants, the risk of substitutes, the bargaining electric power of potential buyers, the bargaining electric power of suppliers and rivalry among firms. By doing an professional and internal research, a firm may then identify its competitive advantages so that it can go after the right strategy.
There are a few major business level strategies. The first is cost leadership in which the company becomes the lowest cost producer in the industry. This requires a good cost framework and incentives systems predicated on meeting rigorous quantitative targets (Griffin and Putsay, 2007). A differentiation strategy is where a organization offers unique products that are prized by customers. This involves good R&D and the recruitment of highly skilled and gifted employees. The third business level strategy is the concentrate strategy. Here, the firm pursues a cost or differentiation benefit in a thin segment of an industry. Finally, some firms have no proper benefit. Termed "stuck in the centre" by Porter (1990), they are really firms which don't succeed at producing competitive benefits as an expense head or through differentiation. Such businesses find it hard to achieve long term success.
A company has three major commercial level strategies. They can be growth, stableness and renewal (Dess et al, 2008). The development strategy is utilized to raise the company's business by extending the amount of products that exist or the markets they serve. This strategy is employed so the company can increase its sales, market show or the amount of employees. Companies develop in a number of ways, for case through awareness, horizontal integration, vertical integration or diversification.
A stability strategy is a technique at corporate and business level that is characterized by an lack of major changes. This implies the business may provide the same customers, maintain its market show and profits on return (David, 2009). While this may seem very unusual and contrary to a business's goals, it ought to be appreciated that some companies are extended to the limit and any further expansion will take its toll on limited resources. Similarly, some business are in a stage of low or no expansion so seeking to grow can be an exercise in futility.
A renewal strategy is a corporate level strategy that was created to dwelling address organizational weaknesses that are leading to declining performance (Lynch, 2006). Generally, there are two renewal strategies. The foremost is retrenchment strategies, that happen to be brief run renewal strategies found in situations when performance problems are minor. On the other hand, a turnaround strategy is utilized when the business encounters serious performance problems and it requires to be completely overhauled.
5. 2 The Controlling Dichotomies by Honda Motors
Honda is exclusive in the sense it is unconventional in its proper management (or at least regarding to Western ideas of proper management). Corresponding to Western tactical management theories, the assumption is that there surely is a trade off when one of two mutually exclusive options is chosen rather than another based on the competing forces in existence. This can be known as reconciling dichotomies. Honda has repeatedly shattered this idea as is seen in one of its dichotomies, which is the product related key competencies versus process related primary competencies.
A central competency is defined as an internal functionality that is essential to a company's strategy (Porter, 1990). Honda is well-known for its main competencies, especially its engine. Called the substance vortex handled combustion (CVCC) engine motor, it was a breakthrough in engineering. The issue with engines up to then was that contaminants would be shaped from interior combustion engines. Efforts to remove one pollutant invariably resulted in the proliferation of another and it was assumed that nothing at all could be achieved about any of it. Honda refused to simply accept the position quo and developed a nifty little and at that time unorthodox solution. It came up with an interior catalytic converter in the engine unit that removed all pollutants after combustion, an idea that is currently used in most engines. In this admiration, Honda revealed its capacity to reconcile the concept of design and function. This capability endows the company with a competitive advantage.
Similarly, Honda is able to achieve process related competency in terms of the time it requires in new product development. Generally, European auto manufacturers require at least five years to design and produce a new car model. Other Japanese companies require at least three years to take action but Honda can do it 2 yrs. How this is done is based on the company's right the very first time concept. Consequently, activities or operations must be mistake free so that point on subsequent tasks is not squandered rectifying blunders in earlier techniques. Furthermore, this presents a chance cost and an operating cost for the company. When costs are lower, profit margins become higher and the business has the luxury of cutting down its prices in order that they are charged more cheaply than rival products. The proper the very first time approach results in better inventory control and additional cost benefits.
Honda approaches new product development by using SED groups who work on a project from learn to finish. Honda also has a particular model replacement system in which all parts of each model are systematically eliminated and replaced in four years. As a result, the company is able to shift from one product to some other seamlessly and with few glitches.
6. 0 THE RULES OF MERGERS AND ACQUISITIONS
6. 1 Brief Explanation
In recent years, buying existing businesses in their entirety has become a very popular way of committing. In practice, this type of investment is normally effected by one organization (the bidder) buying sufficient typical stocks in the other organization (the mark) to be able to exercise control or even to have complete possession. Yet, there may be some confusion about the terms 'mergers' and 'acquisitions'. Where two firms are of similar size and there can be an agreement between your two pieces of management as to the desirability of the outcome, then it tends to be referred to as a merger (Lynch, 2006). Otherwise, the word acquisition tends to be used.
6. 2 Analysis
Theoretically, a company can be a bidder when it views an opportunity to make an investment with a confident incremental world wide web present value. It is likely to perceive such an opportunity in either one of the next situations. One, where it considers that the incremental cash flow from the investment when low priced at a level consistent with the amount of risk from the cash flow are positive or two, where in fact the reduction in the level of risk from the bidder's existing cash flows causes the appropriate rate for discounting those cash moves to fall season, thus increasing the web present value of the prevailing cash moves of the bidder (Ross et al, 2007).
6. 2. 1 AN EXCESSIVE AMOUNT OF Debt and the chance of Bankruptcy
A risk when acquiring another firm is in conditions of financing. In case a company has surplus surplus cash then this might not be a problem. However, some companies fund their acquisitions through the problem of arrears. Debentures have their part to experiment with but have serious cons from both viewpoints. They create binding contractual commitments on the bidder both as regards to interest and capital repayment (McLaney, 2001). For the equity holder of the prospective, they represent a definite change of investment, a change to a risk/ go back profile which they may find unacceptable. Switching back again to equities would require them inconvenience and cost. Hence, a business could find itself with too much debt and this would increase the risk of personal bankruptcy, especially when the merger is failing and drains the business's cash.
6. 2. 2 Prospect of Product Synergies
There are multiple reasons why a firm may want to buy over another. One of these is synergy. In theory, mergers can bring real benefits to shareholders scheduled to genuine rises in positive cash moves or risk lowering. These benefits tend to be known as arising from synergy, a 'two plus two equals five' symptoms with the complete being greater than the sum of the parts (McLaney, 2001).
Another reason for mergers and acquisitions is risk dispersing and reduction through diversification. Merging two businesses with different activities will reduce risk since the returns from the different activities are improbable to be correctly favorably correlated with each other. Though this fact is frequently submit as the justification for such mergers, in the context of maximization of shareholder riches, it is invalid alone. It is because such diversification could be performed by individual shareholders at little or no cost. Their prosperity will not be increased insurance agencies this done on their behalf, because the security market prices seem to expect that such diversification will curently have taken place (Ross et al, 2007). This may create conflicts between shareholders and management.
6. 2. 3 Access to New Technologies and Emerging Markets
A third reason for mergers and acquisitions are access to new technology and emerging market segments. Furthermore, they bring about the economies of scale that a bigger business could yield. Such economies may maintain a wide variety of areas. For example, a larger buying power may lead to lower prices being payed for raw materials, much larger production runs could become possible leading to personal savings in the setup costs and other overheads (Rugman and Hodgetts, 1995). Combining administration and accounting activities can lead to savings in the associated costs. The effects of the would tend to lower total cash outflows. Furthermore, the organization would also stand to get access to new technologies and emerging markets through diversification.
7. 0 THE GUIDELINES OF CSR
7. 1 Short Introduction
Corporate responsibility refers to the set of obligations the business undertakes to safeguard and improve the society where it functions (Griffin and Pustay, 2007). There are three broad areas of corporate responsibility that happen to be organizational stakeholders, the natural environment and general cultural welfare. Commercial responsibility is aimed towards organizational stakeholders because these are people and organizations that are straight influenced by the procedures of an organization and that have a stake in its performance. Most companies that strive to be responsible to their stakeholders give attention to three main teams which are employees, customers and traders. Other stakeholders will then be selected predicated on their relevance or importance to the organization and the company tries to handle their needs and objectives too.
7. 2 Analysis
The stakeholder theory considers the impact of prospects of the different stakeholder groups to determine corporate responsibility. That is portrayed by Drucker in his views on business ethics for the reason that management is ultimately in charge to itself and population most importantly. These sentiments were re-echoed later by Freeman (1984, cited in Enquist et al, 2006) who said it had not been just a subject of interpersonal responsibility or business ethics, but finally the very success of the company depends on it. Stakeholders are 'groups from whom the business has voluntarily accepted benefits, also to whom the organization has therefore incurred commitments of fairness' (Galbreath, 2009). A firm's traditional stakeholders are its shareholders, employees, collectors, customers and the federal government. However, the opportunity has been extended in recent years to add non-governmental organizations and the city as a whole.
Over the previous three decades, we have witnessed a simple switch from the classical view of corporate responsibility to the socioeconomic view. This is the view that management's commercial responsibility transcends merely making profits but also encompasses protecting and increasing the welfare of modern culture. This position is based on the conviction that companies are not independent entities responsible and then shareholders. There is also a responsibility to the modern culture at large which allows their creation through various regulations and facilitates them by purchasing their products and services. Furthermore, supporters of the view think that business organizations are not merely merely economic companies. Society expects and even encourages businesses to be involved in social, political and legalities.
Corporate responsibility is employed as a management tool for controlling the information needs of the various powerful stakeholder groupings and managers use commercial responsibility to manage or affect the most powerful stakeholders to be able to get their support which is vital for success (Freeman et al, 2001, cited in Gyves and O'Higgins, 2008). The main element issue here is identifying the concerns of the various stakeholder groups which are generally different, and the way to fulfill them (Harrison and Freeman, 1999). Hence, the corporation is driven to act in a more ethical manner to avoid antagonizing powerful stakeholders. Scholars have cited five major tactical replies to institutional pressure for commercial responsibility, which range from the timid to the hostile. The first strategy is to acquiesce, which is to accept corporate responsibility beliefs, norms and guidelines for the organization. The second approach is to compromise by partially conforming to commercial responsibility requirements while changing it to suit organizational needs. The 3rd strategy is to avoid or resist all corporate responsibility initiatives as the fourth method is a far more effective form of level of resistance to commercial responsibility initiatives through outright defiance. The ultimate approach is by manipulation, which is by wanting to change global corporate responsibility expectations. As can be expected, the last methodology can only be employed by the major and most powerful businesses.
Proponents of corporate and business responsibility dispute that it brings numerous benefits. The most commonly cited benefits are increased earnings; usage of capital from socially liable investment; reduced operating costs/increased functional efficiency from product/process offsets (Tench et al, 2007); enhanced brand image and reputation; increased sales and customer devotion; increased production; increased potential to draw in and sustain employees; potential reduced regulatory oversight; lowering and controlling risk; differentiation vis- -vis opponents (Gyves and O'Higgins, 2008).
7. 3 The continuing future of CSR
Once seen as unnecessary window dressing, CSR has become a respectable component of many auto businesses' activities. Companies such as Honda, Toyota and Chrysler all show strong commitment towards CSR activities and other companies are spurred on to follow suit. It is evident that CSR is a way to achieving competitive benefits and as the general public becomes more socially aware and environmentally conscious, CSR among auto companies can only rise.
8. 0 LEADERSHIP
8. 1 Short Description
Leadership is the process of influencing a group towards the achievements of goals. Control is complex and intangible in dynamics. Good leaders are essential to the success of any business but it is difficult to identify the traits that make a good leader. Strategic command models refer to the authority styles that contribute to organizational greatness. There are two broad types of strategic management models - the Traditional western model and japan model.
8. 2 Analysis
There are some similarities between the Traditional western and Japanese tactical management models. For example, both use job oriented and relationship oriented models and there are dazzling differences in the way many individual professionals run their companies. Yet, because the Western world (for illustration America) and Japan have different histories, cultures and worth, it comes as no real surprise that we now have differences in strategic management.
The attitude towards work functions change in both techniques. Western factory personnel are little more than human robots who must conform to the strictest operating strategies. On the other hand, Japanese factory personnel are given better independence and trust to execute the task the best way they can as employees are considered to really have the best knowledge about how precisely to do their work, not management.
Both American and Japanese organizations have vertical constructions, though Japanese organizations have a flatter framework (Robbins and Coulter, 2005). Western business leaders typically have no concern about their subordinates, while Japanese leaders try to cultivate good relationships with their employees. Japanese leaders tend to be friendly and caring, nor like to shame employees in public. Employees are cared for with admiration and trust, which is at melody with Eastern philosophies of preserving public tranquility. In American companies, each staff member is in charge of a narrow range of tasks. On the other hand, Japanese employees work in teams and there is collective decision making.
As an outcome, labour relations vary under both models. Western factories are highly unionized and there is often a bitter romantic relationship between line workers and top management. Employees deal with for better working conditions while employers make an effort to keep labour costs low by trimming incentives. On the other hand, Japanese companies are seen as a providing 'a grain dish for life' which can be an appealing concept in an time where job uncertainty is widespread. In doing this, Japanese firms actually cause their employees to work harder in order not to betray the trust and trust the workplace has in them.
Industry organizations are also different. European firms are distinct from one another. Inter solid relations are distant. In contrast, in Japan there's a prevalence of Keiretsu family members. Kiretsus are significant, vertically integrated firms in Japan (Rugman and Hodgetts, 1995). You can find three main types of kieretsus: banks, making companies and commercial companies. Toyota is an exemplory case of a processing keiretsu. Kieretsus are so powerful that they often times provide all of their own funding and working needs from interior sources. Keiretsus have close inter-firm relations.
The Future
Strategic leadership is smooth and ever before changing. What is acceptable and works in a single context might not be feasible in another. In my opinion, though, japan model is way better. This method is better in motivating employees to work harder and do their best. Consequently, employees tend to be committed and have better job satisfaction. That is ultimately good for the organization because employees are its main property. A harmonious and happy work place is more conducive to achieve greater results than an environment where workers are constantly pressured and stressed out. Therefore, I feel that I'd adopt japan approach if I were to run a company in future.
9. 0 CONCLUSION
Honda Motors is a fantastic company with a shiny future. Owing to a mixture of factors such as effective authority, good corporate and business culture and a dedicated workforce, the company can build and support competitive advantage that will serve it well for years to come. The recent car industry crisis has been a test for the industry players and Honda has transferred with flying colorings.
