EXECUTIVE SUMMARY 执行摘要
The purpose of the report is to assess the recent strategies employed by global automobile organisations between 2007 and 2010 based on secondary data and published press. Organisations thereafter refer to global automobile organisations. This report explores the process of reconciling dichotomies at Honda Motors Corporations (HMC) in terms of its strategies and core competences. Several theoretical frameworks were derived from related literature as a guide to analyse and integrate relevant elements from business level and corporate level strategies application.
The roles on mergers and acquisitions (M&A) applied in the global automobile industry are then discussed. This section is structured as follows: part 1 reveals M&A in relation to too much debts and risk of bankruptcy; part 2 describes M&A as a strategy to explore potential for product synergy and part 3 illustrates M&A as means to access to new technologies and emerging markets.
This report examines the corporate social responsibility (CSR) practices initiated by the organisations and its impact on the financial and non-financial performance. The report ends at discussion the Western and Japanese leadership used by the global automobile organisations and their suitability.
INTRODUCTION - OVERVIEW OF GLOBAL AUTOMOBILE INDUSTRY 简介-全球汽车工业概览
The automobile industry can be divided into three categories: auto parts vendors, automobile manufacturers and dealers. The global automobile market has been long dominated by Western manufacturers such as General Motors, Chrysler and Volkswagen in 1955 followed by eastern automobiles manufacturers Toyota, Honda and Nissan since 2005. In 2009, Toyota was the world's leading car manufacturer with approximately 15.3 percent market share, Volkswagen 13.1 percent and Ford approximately 6.9 percent market share (Datamonitor 2009).
Recently automobile manufacturers in developing countries such as Hyundai, Tata and Geely have increasingly become vital players in the automobile market, Hyundai is now one of the significant players in the United States market (Fetscherin and Toncar 2010) whereby Tata and Geely have begun to take aim at developed country automobile markets and intend to compete in the global automobile market (Fetscherin and Toncar 2010).
The 2008 global financial downturn had negatively impacted the automobile industry into crisis thus many organisations were encountered losses and bankruptcy. Nevertheless, there were four outstanding organisations recorded remarkable profit during this turbulent period: Volkswagen, Honda, Hyundai and BMW (Appendix 1). Forecasts predict that the global car industry will be worth $1,611 billion by 2014 with the volume of 66.2 million units (Datamonitor, 2009).
HONDA STRATEGY AND MANAGERIAL DICHOTOMIES
HMC established in 1948. Honda develops, manufactures and markets small general purpose engines and scooters to specialty sports cars, had earn an outstanding reputation from customers worldwide. Honda has grown to become the world's largest motorcycle manufacturer and one of the leading automobile manufacturers. There are seven business units in HMC (Figure 1).
Honda business level strategy versus corporate level strategy in global context
Business level strategy refers to the way HMC competes in an industry which it is located. Porter generic strategies framework had been employed to examine each Honda strategic business units (SBU) (Figure 2).
Figure 2 Porter generic.jpg
Honda sets out cost leadership strategy to produce an urban car with fuel efficient feature, Honda City, a successful model had reflected Honda's innovative and quick response to market demand on inexpensive and fuel efficient (Nonaka 2007). Honda enjoys the cost advantage to produce and market its Hero Honda motorcycle in India by preference to access to raw materials and efficiency of production capability (Ramarao 2009). Honda continuous seeks for cost reductions to competitive position.
Differentiation involves offering a unique product with special characteristic however the selling price may not be low (Fitzroy and Hulbert 2005) Honda created Acura series to isolated its common automobile ranges. Acura is a higher range to compete with luxury category, i.e. Toyota Lexus. Honda Acura differentiates itself from product features and engine performance. Honda produces a series of scooter range from 50cc to 125cc to meets different demands for different markets (HMC 2009). Honda launched specialty engines GX160, GX200 and GX390 for better handling and durability suitable for long tail boats which are common water transportation in Asia (HMC 2009). Honda Insight, a hybrid vehicle that incorporated a compact and lightweight hybrid system to offer fuel economy while maintain the pleasure of driving (HMC 2009).
Besides differentiation strategies, Honda performs well in its private jets, ATVs, watercrafts, outboard motors and jets. Honda differentiates focus on dual clutch transmission and water cooled engines in its FourTrax Rancher ATVs (HMC 2009). Honda started Hondajet since 2006, the private jet featured by HF120 compact turbofan engine for low emission where the first delivery is expected in 2011 (HMC 2009).
Corporate strategy is the future organisation's directions against resources possessed by the organisation (Lynch 2000). Corporate strategy links organisation's internal resources and the social economic environment that it operates (Lynch 2000). HMC's sense of purpose is to striving to be a company society wants to exist (HMC 2009). In view of intense competition (threats) and strong demand (opportunities) from HMC operating environment (Figure 3), HMC had implemented some value added corporate strategies.
Product diversification concerns an expansion of product range that Honda supplies. Honda extended its product range from light truck to compact sedan cars. In North America, HMC introduces Pilot, Acura TSX and Acura TL to meet the different market requirements (HMC 2009). HMC broaden its range to launched Honda City in Asia outside Japan as the trend towards driving smaller cars accelerated along with the increase in fuel prices (HMC 2009).
Vertical integration is an expansion of range of business related activities that HMC encompasses (Fitzroy and Hulbert 2005). Honda opens up financial services division to lease their automobiles and services centres for pre and after sales services to strengthen its branding position as one stop vehicle provider.
Geographical diversification is an expansion to wider geographical areas mainly to create additional market share or obtaining competitive advantages. HMC has a global network of 396 subsidiaries and 105 affiliates in more than five regions and 160 countries recorded 3.5 million units automobiles sales in 2009 (HMC 2009). HMC established its manufacturing plants in various countries to support domestic demand rather than manufacture in Japan and export, this will help in shorten the delivery lead time and incentive in domestic assembly.
Successful organisations must outgrow their initial scope of products and geographical areas (Fitzroy and Hulbert 2005). Horizontal integration refers a diversification into different industries. Besides automobile, HMC broadens its business into different industries i.e. aviation business, solar cell business and household cogeneration units (HMC 2009).
Honda product-related core competencies versus process-related core capabilities
In practice, HMC's capability is as the main drivers for its shareholder values. Honda started with motorcycle business had move on to engine business and the most successful automobiles consists of 77 percent of its revenue. HMC's success underlying its core competence in engines design allows HMC to develop more products i.e. lawn mowers, motorcycles, automobiles and private jets (McGee and Thomas 2007).
Substantial increase in fuel price, new customer preferences and spending patterns are a significant momentum to the pricing model and value proposition changes whereby consumers' emphasize on good price for reasonable quality (Giesen et. al. 2010). As part of corporate strategy, Honda enhances its Research and Development (R&D) particularly in safety technologies to help reduction on the risk of injuries to passengers and pedestrians from car accidents and fuel efficient cars, i.e. Honda Freed and Honda City.