Honda Motor Company Recommendations for Leadership

Honda Motor Company Recommendations for Leadership

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Honda Motor Company Recommendations for Leadership

Honda Motor Company has a proper working organizational structure, made evident by strong and successful varying multiple sectors, functioning almost autonomously. Hondas’ subsidiaries are functioning on their own accord, and although separate from the parent company’s main direct objectives, they are still able to provide much needed profit, and success for its main branch. The company’s diversified portfolio, ranging from automobiles and motorcycles, to generators and engines, as well as successful research program and brand name has proven time and time again that Honda is well organized and its structures working within the field. Therefore any recommendation to change the company’s organizational structure is unnecessary, as one should not change what has always worked in the first place. However, in light of the recent events that has plague Honda, a recommendation of change of leadership may be necessary to redirect the company to a proper path.

It should be known that Honda Motor Company is well ahead of any recommendation for change in leadership. In fact, just recently this year on February of 2015, Honda without any previous hints, surprised many with the news that it was changing up its leadership ranks. The company’s chief executive, Takanobu Ito, although shall remain on the board, has decided to step down to become an adviser to the company instead. A Honda insider and a much younger Takahiro Hachigo will take his place at the top as the new CEO. Furthermore, as previously mentioned, many of the upper administrative staffs have chosen to retire and be replaced with a younger group. “In a release statement by soon to be former CEO of Honda, Ito Takanobou, ‘Honda is ready to make a new leap forward. To do this, Honda needs to be led by a new, younger team’” (McGregor, 2015). This approach is indeed a great example of strategic planning, a change that would lead to “major targets or end results that relate to the long-term survival, value, and growth of the organization” (Bateman & Snell, 2013).

First of all, why a change of leadership? Honda Motor Corp’s internal and external weaknesses made evident by the SWOT analysis, has really hurt the company’s image. The shift and change of leadership is definitely crucial, especially since Honda is faltering in many fronts. It has failed to take advantage of Toyota Motor Corp’s stumbles five years ago, which allowed one of its competitors, Nissan Motor, to challenge for its top five positions in the U.S., narrowing the shares gap between the company by a critical 8.4%. Furthermore, Honda has been hurt by stumbles in the U.S., and Asia; Japan and China primarily. In fact, its recent and popular Civic sedan, redesigned in 2013 has received poor reviews in the U.S. for using cheap materials and a lack improved fuel economy. In Japan, its sales of the newly launch Honda Fit subcompact vehicle were hurt due to delays. In China, Honda completely missed its sales forecast, gaining a meager sale increase of 4.1% in a market that expanded by 7%. As a company that relied heavily on safety, Honda was most affected by the recall of millions of older vehicles equipped with the airbags from Takata Corp., that have been linked to six deaths around the world. Having account for more than half of the 25 million vehicles recalled for suspect airbags, it has been the most expensive issue that Honda has had. With the recent bout of costly recalls due to faulty airbags, a line up of boring and under powered vehicles, rising raw material prices, and economic downfall, Honda Motor Company requires a change of direction in order to survive against its competitions.

Honda is definitely in need of a change in direction it is going. Ito who was once a feisty former supercar engineer, shook up Honda’s decades-old, tightly knit supply chain, often seeking to trim cost and find more cutting technology. This approach made him an ideal target and a scapegoat for the faulty airbags, and overpriced tech-out boring vehicles. The 55 year old Hachigo, described as a broadly experience executive has jumped several levels in executive rank to his position. In a sense, Hachigo does not really fit the pattern of a typical Honda leader, and yet it’s the very same reason why he was chosen over other ideal contenders to become president. With a diverse experience in the major markets, the U.S., China and Europe, as well as a background in developing some of Honda’s most popular products, “Hachigo’s low profile could make the impression of a new direction, a fresh start and a new leap forward” for Honda Motor Company (McGregor, 2015). However, only time will tell, if he could steer the company to its former glory.

Recommendations for Product

The 4P’s are the product itself, the place it is being sold into, the price and its promotion. Marketing is the ability to make the population aware of the product via promotion. It is also accompanied, with the “ability to create product value, thereby causing the need, or the desire for the product, often determined, by the quality of the product itself, the price, as well as its location and target population” (Bateman & Snell, 2013). Honda Motor Company vehicle promotion is perfect as aforementioned above, and with manufacturing plants and markets in various continents, placement is also within the ideal objective. Therefore, would a price and product change be recommended?

Honda vehicles prices has always been higher than any of the competition and yet it has always worked and had benefited the company ever since. In fact, a change in price is definitely not recommended. It has always been part of their motto to create vehicles of slightly higher price, but in turn, at a higher quality and value. It’s even engraved well into their promotion and Honda has accepted and embraced this weakness and turned it into strength. Therefore, the issue lies not on the price, but the product itself.

A product change or revamping is definitely recommended, especially since Honda’s recent product line up as of late, does not match the price point they are asking for. People would often shell out more money, for a higher quality product, that they will find exciting and be proud to use. However, the issues with Honda are that most of their current products are underpowered, of cheap interior quality, bland in design, and are not worth the expensive price tag. Courtesy of Honda’s successful research and development division, each vehicle that Honda sells are equip with the latest advance vehicular technology often found in luxury lines from other companies. This may very well be the reason why the prices are so high. Just like you cannot add pepper to make a failed recipe taste any better, addition of advance technology into a boring cheap looking vehicle will not justify the increase in price. What I recommend for Honda to do, would be to change their vehicle line up to make it more exciting by listening to what their customers needs and wants. This will create further value to their vehicle line up. Designing sexier cars, and sportier aggressive look, will recreate their image. As it stands, the creation of the Acura NSX, which is aggressive, beautifully design, and overpowered is a great start for Honda this year.

Furthermore, having multiple class of the same vehicle will target customers at multiple economic level. Multiple trims of varying degrees of technology placement will make the vehicles more affordable since, the customers has more options to choose what accessories they would like to have in their vehicle, thereby managing the direction of where they want their money to go directly into, rather than being force to purchase a tech out car. Honda’s product needs to change to accommodate its customer’s wants, and return to its root and motto about selling vehicles, for an individual, not for the profit of the company.

Conclusions

Honda Motor Company has always be an organization dedicated to the advancement of mobility, targeting leading-edge technologies in various sectors. From racing spirit, to their dedication in environmental leadership, the company’s mission has always been to develop forward thinking technologies that anticipate and satisfy the needs of a future society. Honda Motor is not solely an automotive company as everyone may perceive it to be. Its many manufacturing and technological fields make Honda amongst the few versatile companies globally. Since self limitation will lead to inhibition of growth, Honda has avoided that by procuring various sectors in different fields. Market stability and continuation of technological advancement is its main purpose as a company. Although success and profit is definitely required to continue this goal and objective, set forth by its original founder, Soichiro Honda, it is still quite evident based on the charts and graphs that Honda does not aim for the number one spot in the global auto industry, but rather stability and consistency. Base on their practices, Honda have maintained stability by aiming for stable consumers and avoiding drastic financial risk by avoidance of venturing into new territories. However, the change of economic times will always dictate the direction the company is going, and in business, there is no such thing as 100 percent safety net. With the recent situations that’s been plaguing Honda such as the recall, the company’s lost of self, and their lost of the hold in the motorcycle industry, the company may very well venture out of their comfort zone.

The troubled times that Honda is in right now is reflective of their deviation to their original perspective and motto, and not necessarily due the failures of their current CEO. Ito, was appointed CEO during global recession, and as such, he started at a financial disadvantage already. In fact, if one were to look at his track record as a CEO Honda, he actually doubled the net profit of Honda, and had a steady growth under his watch. Furthermore, the company continued to lead development projects toward commercialization, including business jet aircraft Honda jet and Honda fuel cell vehicles. Nevertheless, there were strains that appeared in Honda’s rapid globalization and development structure reforms, which caused a lot of issues for Ito as aforementioned above. However, with the upcoming new CEO and refreshed administration, Honda is venturing back to its root, to what made it once was. It will be interesting to see how Honda’s new CEO will change the company’s direction. Will he remove some threats? Take some opportunities? Turn weaknesses into strengths or vice versa? So far, only time will tell.

Appendix

	Valuable in Achieving Objectives	Detrimental to achieving Objectives
Internal Factors	Strengths Diversified Product Portfolio Strong Brand Images Largest Vehicle Manufacturer Successful Motorsport Program Powerful Research & Development Popular Company Refined Production System Innovation Highly Experience Well Known Reputation Engines with high durability HighCredibility 13. High Customer Satisfaction	Weakness High End cost structure Boring and Bland Style Economic Down Fall Underpowered Vehicle Lack of strong truck line 6. Recent Bout of Recalls
External Factors	Opportunities Increasing Fuel Prices Positive Outlook for Global Motorcycle Industry Growing Demand for environmental firnedly vehicles Growth through acquisitions 5. Offering of low emission vehicles	Threats Economic Slow Down Intense Competition Rising raw material prices Natural disaster Appreciation of Yen vs Depreciation of US Dollar 6. Decrease of fuel prices

Figure 1: U.S. Market Share The Big Five

 

http://online.wsj.com/mdc/public/page/2_3022-autosales.html#autosalesE

Figure 2: Auto Sale vs Gas Prices

http://online.wsj.com/mdc/public/page/2_3022-autosales.html#autosalesE

Figure 3: Motorcycle sales 2014 Domestic

http://bikeadvice.in/nov-2014-sales-report-2-wheelers-analysis/

Figure 4: Auto Manufacturer Market Share in America as of march 2015

Chart Of The Day: Auto Brand Market Share In America In March 2015

Honda Motor Company Recommendations for Leadership

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