HONDA - THE BIG ISSUES: Founded in Japan, but having its over 80% manufacturing facilities throughout the

world, Honda were facing complex strategic management dichotomies between Japanese (collectivism) and Western (individualism) model: in terms of manufacturing, marketing, product positioning and competitive strategy. As the management structure changed periodically, Hondas strategy switched from one pole of dichotomy to another, made it difficult to reconcile such series of paradox approaches. The issues are how Honda going to transform and efficiently innovating its strategic competitive advantages by reconciling the best of both worlds approaches. Excellent product design and production processes were successful examples of such reconciliation; however, the competitive map evolves over time and Honda needs to continuously innovate reconciliation benefits to stay ahead of the competition. On top of that, Honda needs to contemplate potential risks such as leadership development, industry challenge, foreign currency exposure and direction of its products and production. CRITICAL SUCCESS FACTORS: -Economies of scale: vital in this capital-intensive industry (high operation costs). -Distribution channel need to be strong and diversified to cover global market at the most efficient costs, and at the soonest possible timeframe. -Research and development is essential to develop core competencies by continuously introducing innovations: in form of product technology, processes or sales and marketing. -Branding differentiates every player according to its reputation. Competition in automobile industry is based on product differentiation strategy. -Other CSFs: Human Resources & Talent, Capital Requirements, Pricing, Quality (Product and Customer Service), Promotion, Advertising, Design, Cost of Production and Logistics. RECOMMENDATIONS: Define a clear organization structure and cultures: Organizational structure needs to be simple and inevitably vertical, which balances both philosophies. Clear responsibilities, authorization and information flows should be drawn and communicated within the organization. Culture reconciliation should be up-to-date and incorporate the globalization element, focusing in collectivism approach that emphasizes dynamic teamwork and collaboration. Companys cultural values need to be easily understood. Modify / introduce a consistent global brand: Honda images are differs globally; hence, the company should modify or introduce a consistent brand throughout its markets. The future brand should portray its competitive advantage that is innovative, technology, reliable, affordable and

environmentally efficient. To convey such messages, marketing and advertising activities are crucial as well as engineering, when introducing the new product lines. Enhance dichotomies reconciliation for innovation: Having both dichotomies in the company is an advantage to foster an innovation by reconciling the best of both worlds. Reconciling innovation may be in form of the processes, product technology or marketing, and should not accepting any trade-offs . It can be gained by dynamically organizing training, discussions, knowledge transfer activities, and staff exchange program. R&D investment: leadership in Green and alternative fuel technology: Honda should invest in R&D with more emphasis in innovating green and alternative fuel vehicles (AFV) technologies, as its stakeholders favour the environmental products. Additionally, the company has an extensive expertise in environmental competency and developing such innovations will just enable Honda to lead the branding differentiation strategy. Nurture and attract exceptional talents: Talented employees (especially engineers) are essential for continuous innovation and strategic execution. To attract or nurture exceptional talented candidates, attractive scheme should be established like graduate management trainee scheme, providing scholarship or research grant, internships, and managing continuous training and development programme. Collaboration with complement companies: JV / Alliance / Partnership / Acquisition: Collaboration with other companies is the formula to excel in globalisation business setting. It can be made with complement industries such as research partnership with educational institutes, collaboration with financial institution for customer financing, or involvement in sports events like Formula1, MotoGP, Rally Racing or sports-club sponsorship. This way, aside from less capital investment required, it also provides greater branding exposure. Collaboration may in any form of JV, alliance, partnership or acquisition. Form a network within the industry / government: At times, industry challenges and regulations could impact Honda unfavourably. As such, forming a network with industry players and government bodies may be the best approach to soften the impacts. Honda may actively express opinions to protect its interests through network such as Automobile Association, Road Transport Tribunal etc. Foreign currency hedging / forward contract: Fluctuation of supplies price and foreign currency might risk Hondas financial performance. To ensure actual financial performance does not significantly deviate from forecasted figures, Honda may involve in currency hedging and forward contract with suppliers. Resilient financial performance benefits the company for its future strategic planning.