Strategic Capabilities Of Honda Company: SWOT Analysis And Stakeholder Engagement

Introduction to Strategic Capabilities of Honda Company

The role of strategic capability within the business is huge as it is referred to an ability of the business to effectively utilize competitive strategies that permit it to handle and amplify its value over time (Jüttner, Christopher and Godsell, 2010). The development of strategic capability indicates the renewal of the organizational capabilities which are medium of competitive advantage. The main motto of this paper is to elaborate on the strategic capabilities of Honda Company that operate its business internationally. The mission statement of the company is to maintain a global point of view, the company is keen to supplying products of the uppermost quality and main focus of the company is on customer satisfaction (Honda, 2018). At last, the balance between intended and emergent approaches to the strategy formation process will be discussed in the context of Honda Company.

Frameworks and concepts for analyzing the strategic capability of Honda

The Swot analysis is the major framework for analyzing the strategic capability of Honda. It is an effective approach that is able to recognize the strength and weakness of the company and with the help of this framework company can take appropriate action in reducing the impact of weakness over its competitive advantages.  There are some concepts of strategic capability that affect the entire business in an adequate manner (Barney and Hesterly, 2010).

Sustainability

In the context of sustainability of Honda, it has been found that company is focused towards safety, quality, society and environment. Honda is trying to decrease the footprint of environmental from the point of view of both products as well as corporate activities. The company has issues sustainability report that involves the outcomes and potential plans of effective efforts along with data regarding the global environmental performance of the company (Andersen and Nielsen, 2009).

Organizational knowledge

The company is focused towards the training and development program of employees so that they can understand the entire concept of how to perform within the company. It is essential for the employees of the company to have the proper knowledge about the organization and it can be done with the help of training program (McElwee and Smith, 2012). 

Cost efficiency

The company provides the cars to the customer by keeping consideration of cost-efficient in which the company highlights the concern of fuel economy. There isa number of cars provided by the company which is full of cost-efficient. Accord gets 23 mpg/city and 34 mpg/hwy in the govt site of fuel and economy which indicates that it is an eco-friendly car.

SWOT Analysis for Strategic Capabilities of Honda Company

Development

However, there are many competitors of the company but due to a high level of awareness with the latest technology in the automobileindustry; the company is able to stay in the competitive environment significantly (Biermann, Pattberg, Asselt and Zelli, 2009)

Excellent R&D

Honda is able to attain the heights because the company is more active towards R&D and its manpower employed in R&D. Therefore, the company is coming up with effective and elegant designs which compete with different modes of a different company.

High Technology Products

The technology of Honda Company is high that is why they are making advanced products to the customers, the entry barriers are high and that is why the brand has not beaten in the last many years. The company’s latest technology can be identified by combining the entire product portfolio of Honda.

Market Share

The company has most of the market share in most of the markets as it has well-reputed image in the automobile industry due to strong capability in manufacturing. The trust of the customers over the company is strong that facilitates the company to attain competitive advantages.

Product Portfolio

The product portfolio of Honda Company is enormous; the company has more than 100 cars and other automobiles. The company provides the high-quality engine to the customer to make them satisfied with the products.

High costs and prices

Naturally, the investment of the company in R&D and adoption of latest technology is bringing the high cost for the high costs of the products. This is the major weakness of the company and it cannot be decreased because it would be the adjustment with quality.

Needs products for the masses

The need of every person is different and it has been found that the Honda company is manufacturing the products only for the upper level class which bring the issues for lower middle class people, it is essential for the company to keep the focus on lower middle class as other brands such as Hyundai, Maruti do.

Dependency

The company is dependent on North America to develop most of the revenue which can be considered as the weakness for the company.

Porter’s fiver forces

it is an effective framework to analyze the competitive environment and the microenvironment facing an organization. The five elements of Porter’s five forces are defined below:

Bargaining power of suppliers (low)

Honda has globally supply chain and distribution network and it has several suppliers around the world to get raw materials for making the products. The bargaining power of suppliers is low because they are spread worldwide and do not hold enough financial strength.

Bargaining power of customers (high)

A customer of the 21st century has become more advanced and they have enough information to take decisions regarding buying any products that are why the bargaining power of customers is high. Honda invests in making better cars with the safety of people which makes the customer value for the company.

The threat from substitute products (moderate)

The threat of substitutes in the case of Honda Company is moderate as there are much public transports available which can work as the threat of substitute products for the company. The reason behind moderating the products of Honda is a brand image, large product range and marketing capabilities.

The threat from new entrants (LOW)

Due to high entry and exit barriers, the threat of new entrants in the automobile industry is low. It is required for the new company to have a huge investment in entering automobile industry. Honda Company has no impact due to new entrants because it is not possible for them to grow overnight.

Competitive rivalry

The level of competitive rivalry is very high among the existing brands as there are many factors that may influence the competitive strength of the company. Honda Company is provided a number of innovative products to the customers all over the world; still, the position of the company is in a tough situation due to tough layers such as Volkswagen, Toyota, Hyundai,and Ford.

Electronic and alternative fuel vehicles

The company has a huge opportunity in targeting towards the future of automobile market where inthe audience will be more attracting practice of clean energy due to fuel like petrol and diesel along with CNG has its limitations.

Automobiles rising

The range of automobiles is growing all over the world and one of the biggest causes of its is the increasing rate of buying the power of individuals. There is another reason for it is that it is a social norm now to have a car or motorcycle. Hence, consumption is at an all-time high.

Development in developing countries

Due to rise rate of purhcasing behavior and easy loan available from banks increase the opportunities for Honda Company to expand its business in developing countries.

Product expansion

The company has huge opportunity to add more products to their product portfolio and making more variants to amplify the more product line.

Competition

Competition is increased day by day as many competitors of automobile industry from local and national involve with a different range of products which can be afforded by people.

Cost Efficiency and Market Competition

Fuel Prices

The fuel prices are amplified which is the major cause of losing the interest of people in buying carbecause of the increased rate of fuel imbalance the daily life activities.

Rising transportation and other costs

Transportation, manufacturing and transportation costs are some aspects that affect the automobile industry and this can become the major reason for Honda Company to not get succeeded.

The role of stakeholders in automobile industry is huge as they are liable for the growth of the company that is why it is required for the company to deal with stakeholders in the moreefficient way (Freeman, 2010). Honda Company hosts the annual normal general meeting of shareholders to optimize communication with all stakeholders. It has been identified that the major stakeholders of Honda are employees, suppliers, government, communities, investors and customers (Samavi, Yu and Topaloglou, 2009). There isnumber of ways to address the interest of stakeholders in which the company continuously works to promote and maximum understanding in regarding with shareholders.  Along with that the company provides a service called the C-Card which acts as a point based reward card for favoured members to help offer an optimal level of service to customers. The major stakeholders of Honda are mentioned below:

Employee

The company operates its business in 17 countries in which company has more than 180,000 employees worldwide. They are the major stakeholders for the company as without participation of the employee in the organization, it would not be possible for the company to get growth in more significant manner (Olander and Landin, 2008).

Suppliers

The company selectsvendors y evaluating various factors such as technical capability, information security initiatives and financial position. The suppliers of the company are American Mitsuba, windshield wiper assemblies; Nippon Seiki: instrument panels, Nasco: suspension parts; ThyssenKrupp: brake calipers; Automatic Spring Products: seat components; and Mylox Polymers: bumper material

Customers

The company is provided high quality in products that is why the range of loyal customers of the company is high. It has been found that more than 1 million users use the products of Honda Company. The company maintains the relationship with the customers in more efficient manner (Lawrence and Weber, 2014).

Investors

It has been found that as of 2012, there were around 217,967 shareholders globally.

Communities or media

The role of communities or media in promoting the products of the company is huge as they are contributing to show Honda’s initiative to better the environment.

Stakeholder Engagement Strategies of Honda Company

Government

The company is more obliged in following the legal terms that is why it works with local government to make sure that they are meeting the legal requirements or not.

It is essential for the company to provide proper guidance to the stakeholders as the growth of the company is entirelydependent on the stakeholders of the company.The major issues can be lack of customer satisfaction, improper training and development program, ineffective maintenance station and lack of feedback process that affect the stakeholders. These issues can impact the image of the company in an adverse manner. To carry out the responsibility in the form of global mobility-related manufacturer, Honda is engaged in dialogs with economic, government and industry bodies by actions that involve involvement in the Ministry of Land Infrastructure and Transport Study Group for Promotion of ASV (Advanced Safety Vehicle) along with serving as chairman and committee members within theJapan Automobile Manufacturers Association. The company should provide proper training and development program to the employee so that the range of customer satisfaction can be increased in more efficient manner (Yam, Lo, Tang and Lau, 2011). Along with that by taking consideration of above issues, the company should cooperate with the external organization for cooperating with initiatives regarding sustainability by membership in the World Business Council for Sustainable Development.

Three major issues related to ethics and CSR

The three major issues of companyare related to ethics and corporate social responsibilities are mentioned below:

Labour issues in 2016: it has been found that the company had to face union troubles at Honda Motorcycles plant in Tapukara. There are more than 50 workers got injured in which company was not able to take quick action against them or to protect their employees.It has been admitted by the company that it has suffered production losses because of an “illegal strike within the second plant premises of Honda Company (Sampath, 2016).

Treating employees with contempt in 2016: It has been found that Honda warned over workers’ treatment at Swindon Plant. The union said that Honda must catch up with the rest of the industry. There are also severe concerns over health and safety issues at Honda, Unite encompassing recently been in touch with the Health and Safety Executive (HSE) over a “bad near miss” (Unite The Union, 2016).

Honda Fined for Violations of Safety Law in 2015: the top auto safety agency of nation has fined Honda Motor a record $70 million for grossly underreporting fatal injuries and accidents to the government and regulators. The company is not concerned regarding the safety of the employees (Ivory, 2015).

The company has responded to those issues by increasing the safety value of the employees within the company so that they could not get harm at the time of performing the task. The company is started to keep consideration of safety law so that again they could not face the same situation with same issues. The labor issues were resolved by the company to increase the safety of the labor and the management arranged approx 2000 workers to be brought in from Orissa and other states.

The company has taken various steps in the context of improving its corporate social responsibility in a significant manner. It has been found that on the basis of awareness of its responsibilities to decrease the effects in all zone of corporate activity along with from the use of its products, the company is actively engaged in environmental conservation.The company has moved ahead in reducing CO2 emissions and popularizing renewable energy. The company has initiated in installation of solar panels at the stadium. The company has become the leader in recycling the oriented environmental conservation and initiative in improving the recycling rates (Bayou and De Korvin, 2008). It has taken various steps to become friendly withAsian country. On April 2, 2009, the largest Honda Safety Driving Centre in the ASEAN region released in Thailand. Honda has been energetically entailed in supporting traffic safety and safe driving in Thailand since 1989, including by opening a Honda Safety Riding Centre for motorcycles in the suburbs of Bangkok in 1994. Today, a total of 10.9 million people, or one in six Thai residents, have inwarded traffic safety education from Honda in Thailand (Hasegawa and Kimm, 2008).

The balance between intended and emergent approaches to the strategy

There is a major difference between intended strategy and emergent strategy as an intended strategy are described in detail within an organization’s strategic plan. On the other hand, the Emergent approach can be considered as a realized strategy which is entirely differing from intended strategy (Mirabeau and Maguire, 2014). It is an unplanned strategy that arises in answer to unexpected opportunities and challenges.The company is maintained the strategy formation process. As can be noticed that Honda has planned the strategy to Accura in which they have been setting new standards in automotive design and engineering for three decades by bold innovations. In the case of emergent approach, it has been found that the company has been making changes in the technology by planning with employees. it has been analyzed that the intended strategy is the plan at the beginning and the beginning of Accura Car, company has evaluated the market in a significant manner and realized strategy is how it worked out at the end that is why the company is constantly improving the system of technology in making satisfy the customers. The company is maintaining the balance between the emergent and intended strategy for transforming the business into the world technology (Bayou and De Korvin, 2008).

Advantages and disadvantages of intended approach in Honda

The major advantaged of  intended approaches is to use formalized the strategic planning in that it helps the inclusion of the strategy in the corporate agenda and a guide outcomes of the strategic planning process amplifies the staff awareness and increased the participation in the strategic plan. Intended strategy is controllable for future occurrence and it helps in making current planners included. It helps in making decisions rational and pushes for coordination. On the other hand it has some disadvantages as well such as it is not essential for the company to have the accurate planning for the future. The failure in planning may lead the company into the adverse situation (Honda, 2018).

The main advantages of emergent approaches in Honda Company are that to understand the team dynamics and help monitor progress. This strategy can be miscommunicated due to lack of structure and the major disadvantages of this strategy in Honda company is the inability of some companies to plan effectively for it and the damageit can do to the organizational structure.There is another advantage of emergent strategies that are the outcomes of the latest innovations or ideas accepted by an employee of the company which could encourage the morale of them and improve the work culture and make them feel more empowered. The main disadvantage of an emergent strategy is that it is not expected, and therefore cannot be planned (Sobo, Bowman and Gifford, 2008).

It is essential for the company to amend the balance between both approaches for overcoming the major disadvantages. The intended approach disadvantages can be changed with the help of effective skills of leadership within the organization. The company should provide the on-job training to the employee for evaluating the technologies in the Automobile industry.Along with that, the company should focus on towards the various theories to maintain the balance between both approaches such as uncertainty based theory, innovation and learning based theory and human resource-based theory.

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