Impact of Natural Disasters on Honda
Discuss about the Thermal Comfort and Productivity in Electricity.
Asian region is one of the most vulnerable regions in terms of the natural disasters such as earthquake. This is due to the reason that major countries in the Asian region such as Indonesia and Japan are located in the seismic belt. Thus, in the recent past there are number of incidences where huge casualties and lose of infrastructure is being caused due to natural disasters (Cavallo et al. 2013). This is also having adverse impact on the business organizations due to the reason that emergence of natural disasters also cause loss of man power and infrastructure and assets for the organizations.
Honda motors are having their production facilities both in Japan and Indonesia. Thus, they are one of the major business organizations that are affected from the natural disasters in the recent time. This is also enhancing the importance to identify the major challenges and impacts of the natural disasters by the global management of Honda in order to initiate necessary steps accordingly (Cameron and Shah 2015). This report will discuss about the recent natural disaster occurred in Japan and Indonesia and how Honda is being affected. In addition, the actions taken by Honda in overcoming the challenges will also be discussed in this report along with discussing some proposed steps.
In the recent time, Indonesia witnessed one of the major natural disasters in the form of Tsunami in 2004. Following that there are number of earthquakes and threats of Tsunami are being faced by them but the one in 2004 caused huge casualties and loss for the national economy (Todo, Nakajima and Matous 2015). On the other hand, in 2011 Japan witnessed one of the largest earthquakes killing more than 29000 people. Thus, both these incidents not only caused loss for the countries but also caused huge loss for Honda due to the fact that production facilities of Honda got hampered due to these. In addition, the impact on the business of Honda is more due to the reason that Indonesia and Japan are the two major production facilities for Honda and they also use these facilities as their export hub. Hence, due to the natural disasters in Japan and Indonesia, the global business for Honda also get affected and hampered.
- One of the major impacts of the above discussed natural disasters on the business of Honda is shortage of spare parts. This is due to the reason that Honda is mostly depended on the external sources for the spare parts and components of their automobiles (Arto, Andreoni and Rueda Cantuche 2015). However, due to the disaster, transportation got affected due to blockage on roads and railways. This caused Honda to stall their production and lost a big chunk of revenue by not able to export their products.
- Another major impact faced by them is submerging the facilities and premises due to the disasters. There are instances where Honda has to stop their production process due to the flooding of their production areas. This also caused them loss in terms of production and also in terms of the loss of equipments. In addition, due to the flooding in the production facilities, employees were also not being able to work and thus Honda had also lost man power from the emergence of earthquake.
- Another major impact on the business of Honda is power shortage. This is mostly faced by them in the production facility of Japan. This is due to the reason that the magnitude of the earthquake in Japan in 2011 was such huge and that it cramped the entire country and thus, the power was also cut off (Tanabe et al. 2013). This caused stoppage of the production facilities by Honda. This impact was more long term for them due to the reason that issue of power shortage took time to get addressed.
- Due to the emergence of the natural disaster in both Japan and Indonesia, Honda also faced the issue of transporting their finished products. This is due to the reason that natural disasters affected the transportation process and this caused barrier in the outbound process of Honda. Thus, on one hand, Honda was not able to continue their production process and on the other hand they had also not able to transport their already finished products.
- It is also reported that due to the earthquake in Japan, Honda also suffered in terms of their human resources. This is due to the reason that more than 30 employees of Honda Japan got injured during the earthquake with one casualty (Hondanews.com 2018). Thus, Honda also lost their human resources from the emergence of the natural disasters.
There are number of actions and steps being initiated by Honda soon after the initial hangover of the earthquake in both the country. The following sections will discuss about these steps already initiated by Honda.
- Honda has shifted their major production facilities in the western countries. This is due to the reason that western countries such as Canada is having lower probability or risk of natural disasters compared to Japan and Indonesia. Thus shifting of the facilities caused Honda to have less risk associated with their probable natural disasters in Japan and Indonesia (Schmidt and Simchi-Levi 2013). In addition, in the future, emergence of any mishaps will not be able to affect the production process of Honda.
- Honda is initiating in having their own power plant for their facilities and reducing the dependence on the external sources. This is being initiated due to the reason that having own power plant will enable Honda to overcome the power shortage in case of any emergency. This will also help them to overcome the challenge of transportation of electricity from outside during the time of natural disasters.
- Honda is also having hospital facilities for their employees in case of any emergencies. In addition, the hospitals are being located strategically in order to ensure the free space and quick response in the time of the disasters. Now Honda will not have to transport their injured employees to the nearby hospitals during the emergencies.
- They are having quick response team in their facilities. These teams are being brought up in order to take the necessary steps in case of the emergencies. These teams are being trained accordingly and they are equipped to manage the emergency situations (Cook 2015). Thus, it is beneficial for Honda to effectively manage the initial disturbances during the natural disasters and it will also ensure the loss in term of man power will be less for them.
- Honda has also initiated the training program for their employees also in order to aware them regarding the natural disasters. Thus, the employees of Honda are now more trained and aware about what to do in case of any emergencies. This is helping Honda to reduce the risk of casualty in time of the disasters and also the loss of infrastructure is also low due to having more trained staffs in place.
- It is recommended that apart from the steps being initiated by Honda, they should also consider in having production facilities that will be more immune against natural disasters such as earthquake. This is due to the reason that earthquake is the most common form of natural disasters in both Japan and Indonesia. Honda should ensure that earthquake proof materials and standards are being followed in their facilities. This will ensure that physical damage and loss will be less for Honda.
- It is also recommended that Honda should increase their storage facilities for their spare parts and components. This will help them in having seamless supply of the materials for few days even during the emergencies. Thus, the chance or probability of facing the shortage of supply during the emergencies will get lowered. This will further ensure that the continuous flow of the production process will get continued even in the time of disasters.
- Honda can also have some their components and parts indigenously built rather depending on the external suppliers. This is due to the reason that emergence of the natural disasters will stall the transportation process of the supply chain for Honda. However, on the other hand, having the facilities of producing parts and components by own will help them to reduce the transportation barriers in the time of emergencies. This will also ensure that Honda will able to continue their production process even if the inbound supply chain process gets hampered.
Conclusion
Thus, it can be concluded that Honda is having higher risk of natural disasters for their production facilities in Japan and Indonesia. This is due to the reason that both these countries are vulnerable against natural disasters such as earthquakes and volcanoes and are facing higher risks in the recent time. This report discussed the impact of the natural disasters on the business of Honda in both these countries. In addition, the steps already being initiated by Honda are also being discussed in this report. A few recommended steps are also being discussed that will help Honda to effectively overcome the risk of natural disasters.
Reference
Arto, I., Andreoni, V. and Rueda Cantuche, J.M., 2015. Global impacts of the automotive supply chain disruption following the Japanese earthquake of 2011. Economic Systems Research, 27(3), pp.306-323.
Cameron, L. and Shah, M., 2015. Risk-taking behavior in the wake of natural disasters. Journal of Human Resources, 50(2), pp.484-515.
Cavallo, E., Galiani, S., Noy, I. and Pantano, J., 2013. Catastrophic natural disasters and economic growth. Review of Economics and Statistics, 95(5), pp.1549-1561.
Cook, J., 2015. A six-stage business continuity and disaster recovery planning cycle. SAM Advanced Management Journal, 80(3), p.23.
Hondanews.com (2018). Earthquake Impact on Honda Operations. [online] Hondanews.com. Available at: https://hondanews.com/releases/2df35fcc-d5c1-49b3-9f8a-ec2ae0bc9472?l=en-US&mode=print [Accessed 7 Jun. 2018].
Schmidt, W. and Simchi-Levi, D., 2013. Nissan Motor Company Ltd.: Building Operational Resiliency. MIT Sloan management Review.
Tanabe, S.I., Iwahashi, Y., Tsushima, S. and Nishihara, N., 2013. Thermal comfort and productivity in offices under mandatory electricity savings after the Great East Japan earthquake. Architectural Science Review, 56(1), pp.4-13.
Todo, Y., Nakajima, K. and Matous, P., 2015. How do supply chain networks affect the resilience of firms to natural disasters? Evidence from the Great East Japan Earthquake. Journal of Regional Science, 55(2), pp.209-229.
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