MENESES, AIRA GENE P.

MGT 303/2:30-4:00
BLOCK C PROF. DANTE NARCISO

1. Why did Honda build a plant in the United States (what were the objectives)?
How is the plant in the United States affecting the company in Japan? What
problems or advantages might the U.S. operation give Honda in the future?

Japanese automaker Honda was hiring American workers for its first plant
on US soil. Honda was a household name. We recognized it for its quality and
reasonable price that has left the future of Japan's auto industry on American soil
looking uncertain. When Honda arrived in the United States, the "made in Japan"
label was tarnished by bad memories of World War II and associated with poor
quality workmanship due to low levels of economic development in Japan in the
post-war years. As Americans started seeking smaller, more fuel-efficient
vehicles, Japanese car makers had an advantage over gas-guzzling US brands.
That's what sold a lot of the US public to the Japanese brands to this day.
Everyone saw Honda as an advantage, not a threat because they knew that job
creation in a very rural state in Ohio would have an immense impact on the
economy. In the beginning, we talked about the Japanese culture and we also
had an American way of doing things. But what we found is that we created
what we called the 'Honda way’. It became the best of the American and
Japanese ways.

2. Why was Honda able to build economy cars in the United States when American
car manufacturers could not? What advantage does Honda have over American
companies?

The new corporation, Honda of America Manufacturing (HAM), was

established in February 1978 for the purpose of producing motorcycles. The
operational setup was based on the idea that the profits American customers
provide Honda should be reinvested in America, rather than taken back to Japan.
This would allow the company to expand its activities internationally, while
becoming more thoroughly engrained in the American cultural fabric. Therefore,
80 percent of the initial capital was financed by American Honda, while the
remaining 20 percent was financed by Honda Motor of Japan. As of the late
1990s, American Honda’s investment in HAM had reached about 97.6 percent.
The manufacture of motorcycles in the U.S. was to require nearly twice the
 funding and labor force used in Japan. Accordingly, discussions turned toward
the question of what should be done to manage profitable U.S. operations,
considering the limited profit margin inherent in motorcycle production. The
conclusion drawn by Nakagawa and his colleagues was that Honda’s top priority
in corporate activity was to provide high-quality products that would ensure the
satisfaction of Honda customers.

3. How much of Honda's success is due to its policies? How much is due to non-
managerial factors?

Honda's aggressive early globalization strategy in the U.S. was followed by

similar successful forays in other parts of the world: It was the first Japanese
company to produce cars in China and its earnings record in India and Southeast
Asia and other far-flung regions is the envy of the auto industry. Due to its global
outlook, Honda has achieved a great deal during its lifespan. Honda is the leading
engine maker in the world with an output of more than 20 million internal
combustion motors annually; it has never posted a loss in its history, and its
automobile operating profit ratios of about five percent consistently top the industry.
Honda's stock price has nearly doubled since September 2008, when the global
economy collapsed; and its vehicles are the most durable and long-lasting of any
automaker, with 75 percent of its cars and trucks sold in the last 25 years still on
the road. The Honda Way influences every significant decision made throughout the
entire organization. As both internal and external changes occur, these principles
and beliefs provide associates with a common and consistent sense of direction The
Honda Way has far more to do with the company's success than any technological
or economic resources.