Honda, Principles of Management and Organizational Structure

1. The Power of Dreams
Principles of Management
Section 410

2. Introduction to Honda
Honda is a Japanese multinational corporation primarily known as a
manufacturer of automobiles and motorcycles.
Honda was founded on 24th September 1948 by Soichiro Honda and
Takeo Fujisawa.

3. Management of Honda
Management involves coordinating & overseeing the work activities of
others so that organizational goals can be accomplished efficiently and
effectively.
•Planning
Honda’s management has established the following goal for its organization.
“Maintaining a global viewpoint, we are dedicated to supplying products of the
highest quality, yet at a reasonable price for worldwide customer satisfaction.”
Honda develops flexible plans, where they anticipate possible problems and solutions
to those problems. Honda involves it’s staff in different types of planning.
1. Product Planning
2. Business Planning
Honda develops many plans and then carries out extensive
brainstorming sessions where they first set objectives and
discuss ways to achieve those objectives.

4. Management of Honda
•Organizing
Organizing is a crucial function to facilitate completion of any plans. Honda placed a
team of specialists for various centers across the world, who were assigned specific
tasks to accomplish goals.
•Leading
Initially Soichiro Honda & Takeo Fujisawa
used forceful personal leadership but later
Mr. Takeo introduced “team leadership”
where the boardroom system was used.
•Controlling
Honda uses the “soft” approach where workers are put
in complete control of machines. Human control is
necessary where humans monitor what machines do.

5. Strategic Management
Step 1: Identifying Honda’s current mission, goals and strategies
Honda’s mission statement
“Maintaining a global viewpoint, we are dedicated to supplying products of the
highest quality, yet at a reasonable price for worldwide customer satisfaction.”
Honda’s current goals
•“Accelerate our effort to strengthen the core characteristics that make Honda
unique to accomplish further growth “ part of speech by Honda’s president.
•Another goal is to reduce total hydrocarbon emissions by developing “green” vehicles
Honda’s strategy
Honda’s current global strategy is to put cost-effective
plants in areas that best meet the needs of local customers.

6. Strategic Management
Step 2: Doing an external and internal analysis of Honda (SWOT)
Strengths
Weakness
•Innovation
•Market share leadership
•Strong brand equity
•Unique products
•High cost structure
•They depend on profits
coming in internationally
rather than domestic profits
Opportunities
Threats
•Emerging markets
•Expansion abroad
•Demand for “green” cars
•Economic slowdown
•External changes
(government, politics, taxes)
•Lower imports

7. Strategic Management
Step 3: Formulate, implement strategies and evaluate results
Honda creates it’s plan, for instance Honda recently revealed the “2010 Hybrid
Insight Honda” and it plans to sell ½ million hybrid vehicles by 2012.
Honda is now implementing this plan by advertising & marketing all over the globe
to increase sales of the new car.
In 2012 Honda will evaluate it’s results by comparing
the desired state with the current situation.

8. Strategic Management
Step 3: Formulate, implement strategies and evaluate results
Honda’s Annual
performance cycle helps
them to formulate
implement strategies and
evaluate results.

9. Human resource Management
HRM means employing people, developing their resources, utilizing, maintaining
and compensating their services in tune with the job and organizational
requirement.
Honda company employs 181876 workers. Soichiro Honda had the
clear aim and created a trustworthy atmosphere in the company.
His employees soon came to understand that poor
performance would not be tolerated. Due to his anger the
employees called him Mr. Thunder, but they loved him.
The Human Resource Managing Department at Honda
is given specific instructions on how to employ the best
possible workers.

10. Human resource Management
The objective of managers is to build relationships in which workers would see
themselves working with the manager, rather than working for a manager.
Human resource management assume that if employees
are happier at work the production would increase. The
owners treat others as equal and often work in a
workshop with employees.

11. Employees – an asset of the organization

12. Motivating Employees
Motivation can be defined as the process of arousing, directing, and maintaining
behavior toward a goal.
Soichiro Honda placed human initiative and attention
to all workers on the first place. He tried to create a
better environment for his employees, attract
specialists and motivate them to do their work in the
best possible way.
Motivating the employees was one of the main
objective of the human resource management at
Honda.

13. Motivating Employees
Mr. Honda paid much attention to experimental work and did not accept attempts to
control him or his corporation via the traditional caste system.
Mr. Honda understood that encouraging his
worker’s personal development, their wish for
self-actualization will bring him success in
business. He instilled in his employees the drive to
learn without fear of failure, having built the road
to success.

14. Managing Operations
“Taking an innovative approach to develop new efficiencies in managing our
operations through their services” said Mike Wallace, manager of Honda’s MRO
purchasing.
Assembly Lines
An example of the way Honda manages operations is
when they use tracking software to monitor when
motors and other machinery go into service. This has
brought significant cost savings to Honda, making
Honda very efficient.

15. Managing change & innovation
“In today’s competitive market, you must keep up with the latest technology, but
more importantly you must take care of your customers." stated Honda’s managing
director
Honda is keeping up with technology like creating “green”
cars, and wants to maintain profits but however it’s main
focus is to provide excellent customer service.

16. Honda’s current situation
•According to this article, Honda ranked #1 on ACEEE’s
“greenest vehicles of 2010”
•ACEEE is the American council for an Energy Efficient
Economy.
•Honda Civic GX natural gas car earns the top spot for
the seventh year straight.
•This shows that Honda is doing it’s best to keep up
with the current social trends, one of which is being
“environmentally friendly”
•Honda is going “green” inorder to satisfy the needs of
those customers who are trying to reduce their carbon
footprint on this earth.
•By producing such cars Honda is able to prove that it is a
thoughtful organization.

17. Honda’s current situation
•The American Honda Motor Co., Inc reports that the
sales of the American Honda was up by 15.6 %
•This is a decline of 19.5% compared to 2008 results.
•The top three best-selling cars were Accord, Civic and
CRV
•As John Mendel, the executive vice president of
American Honda says “the good news is that the
market appears to be stabilizing and we have more
reasons for optimism in 2010.”
•Honda’s current sales have declined but not as
drastically as other car companies, who were badly
affected by the economic recession.
•Honda hopes & predicts that it’s sales will increase in 2010.

18. Honda’s current situation
•We are all aware of the catastrophic earthquake
in Haiti
•Honda has recently donated $300,000 to Haiti
•Honda is working with the Red Cross inorder
to supply water pumps and generators to Haiti
•The major advantage for Honda in this
situation is that they are getting good
advertisement and can reestablish Honda
company’s name as a thoughtful organization.
•Honda is also offering special gifts for their
customers and any cash earned on those gifts
will go to the Haiti relief fund

19. Recommendations
• In order to increase motivation among employees they should
provide incentives such as badges for employee of the month.
•To reduce employee turnover Honda should have a strong
organizational culture. They can enforce this by holding annual
seminars for employees.
• In order to maintain a strong customer relationship and get
constructive feedback they should create online questionnaires
and chat rooms.
The rules that had been set by Mr. Honda and Mr. Fujisawa need to be modified
according to the changing times as Honda is becoming more globalized.
• They should be able to adapt to
different styles of management as each
country has its own management styles.

20. References
Following are the resources which helped us in analyzing and obtaining information:
•Google search engine helped to surf for information about Honda
•The Principles of Management textbook enabled us to
understand various management terms and concepts.
•The Honda Book of Management provided information about
the company’s management structure
•Articles from Bangkok Post enabled us to analyze
the current situation of Honda
•The Honda company’s website contributed information
about company’s background and recent activities