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Dr. Guanjan Malhotra
Tushar Sharma Sauravh Jha Gourav Kumar
The history of the Honda Motor Company began with the vision of one man – Soichiro Honda. His dream was personal mobility for everyone. Soichiro Honda founded the Honda Motor Company in 1948. In the same year, he designed and engineered the first product of this company - a 50 cc motorized bike on a bicycle frame - in his small shed at Hamamatsu. Today, Honda is a global company with a global viewpoint that is reflected in a solid commitment to local markets and economies.
Honda Siel India Ltd. (HSCI) was incorporated in December 1995 as a joint venture between Honda Motor Co. Ltd., Japan and Siel Limited, a Siddhartha Shriram Group company, with a commitment to providing Honda's latest passenger car models and technologies, to the Indian customers. The total investment made by the company in India till date is over Rs. 800 crores. HSCI’s first state-of-the-art manufacturing unit was set up at Greater Noida, U.P in 1997. The green-field project is spread across 150 acres of land (over 6,00,000 sq. m.). The annual capacity of this facility is 100,000 units. The company’s second manufacturing facility is in Tapukara, Rajasthan. This facility is spread over 600 acres and will have an initial production capacity of 60,000 units per annum, with an investment of about Rs 1,000 crore. The first phase of this facility was inaugurated in September 2008. The company’s product range includes Honda Jazz, Honda City, Honda Civic and Honda Accord which are produced at the Greater Noida facility with an indigenization level of 77%, 76%, 74% and 28% respectively. The CR-V is imported from Japan as Completely Built Units. Honda’s models are strongly associated with advanced design and technology, apart from its established qualities of durability, reliability and fuelefficiency. Honda Jazz is the company’s first offering in the premium compact car segment. The Jazz is a segment-defining car that has won accolades and adoration all over the world. Widely acclaimed for its dynamic styling, spacious interiors, versatile utility and remarkable performance, the Honda Jazz brings added fun and excitement to the driving experience.
GROWTH RATE OF HONDA SIEL:
Honda Siel Cars India Ltd. Has reported a sales increase of 38 per cent during June 2010. The company sold 3,826 units during the month as against 2,772 units sold during the same month of the previous financial year. The cumulative sales for the calendar year 2010 (January-June), increased to 21,604 units against 16,738 units during January-June 2009 a 29 per cent growth, compared with cumulative sales during the corresponding period in the previous calendar year. During the calendar year 2010, (January-June) Honda City recording a growth rate of 31 per cent, Honda Accord at 6 per cent and Honda CR-V 49 per cent.
CONTRIBUTION IN GDP:
Rising GDP and per capita Income indicates growth of economy and hence rises in demand. Younger generation has more disposable income with increasing salaries & they are also perceived to be more technology savvy & ecologically conscious. 58% of Indian population is youth population. This will be the target market for the next few coming years. Honda Siel Cars India (HSCI), the Indian subsidiary of the Japanese giant Honda Motor Co, today said that its sales will register double digit growth in the current financial year. The company expects its total sales to be around 60,000-65,000 units during the current year, up from 55,250 cars sold in 2008-09. Tatsuya Natsume, director-marketing, HSCI said the growth in India sales will happen mainly due to the introduction of its new global car, Honda Jazz. The company has already received bookings for more than 1,000 cars of Jazz in the last few days. "The Indian economy is showing signs of recovery and we expect automobile industry will bounce back shortly. For Honda, the market is looking up due to our portfolio enhancements and we will register double digit growth this year," he said. The company, he said, will most probably resume its investment programme at Tapukara plant in Rajasthan, in the next financial year to expand its production
capacity. The company, which currently has a capacity to produce 1,00,000 cars per annum at Greater Noida, is planning to add an additional 60,000 units at Tapukara. "We intend to launch our new small car in India in the next two years and by then also increase our installed capacity. Actually, our capacity expansion is not linked to new car launch. It depends on the capacity utilisation at Greater Noida plant. Once we utilise that capacity fully, we will go for expansion of capacity in our second plant in Rajasthan," Natsume told reporters after launching its new global car, Honda Jazz, here today. HSCI has already invested Rs 600 crore at its Rajasthan plant and the remaining Rs 400 crore will be invested to add another 60,000 units per annum. Natsume said, Honda has commenced work at its India R&D centre earlier this month at Noida with three engineers deputed from Japan. It plans to recruit 10 R&D engineers to begin with in India and increase the headcount over the years. He, however, did not divulge the amount spent on R&D in India. Globally, Honda spends around $50 billion, which is 5 per cent of its annual sales turnover, on research and development. Already, Honda has R&D centers in Japan, US, UK, Brazil, Germany and Thailand. The Indian R&D Centre will work towards increasing local contents in its cars produced in India.
COMPETITON OF HONDA SIEL:
Last Price Market
Cap. Sales Turnover
Crompton Greave ABB Havells India Techno Electric HBL Power Bharat Bijlee
338.90 805.90 384.15 347.10 26.00 988.15
21,740.15 17,077.70 4,622.74 1,981.64 657.80 558.46
5,283.99 6,291.44 2,487.27 668.04 1,109.51 656.01
617.34 354.64 227.10 113.81 100.42 41.22
1,791.50 2,423.75 1,251.00 536.80 938.31 252.30
Emco Numeric Power Birla Power Solution
62.00 306.20 1.30
383.95 309.44 277.58
978.55 409.24 238.12
133.80 33.46 1.35
847.24 206.96 379.88
CORE COMPETENCIES OF HONDA SIEL
Honda has a core competency in building small petrol engines with efficient profiles. Apart from it the other core competencies are: The cars performance in terms of fuel efficiency Delivery/guarantee of quality and reliability Research and Development into the Hybrid Technology
The initially installed capacity of the plant was 49,000 cars per annum, which was recently increased to 10,000 cars. The capacity expansion was possible because of the excellent performance of all the Honda models in India. The expansion process involved an investment of Rs.90 crores, with the covered area increasing from 55,000 sq. m. to 1,07,000 sq. m. The covered area now constitutes 24 % of the total land area of the plant. The company plans to further raise its capacity to 20,000 units per annum by 2012.
The Spillover Effect of Japanese Foreign Direct Investment in Human Resource Management A Case Study of Honda Siel
While evaluating the degree of transferability based on this case study, it is found that Japanese management practices have undergone further adaptation in the country of transplant to suit local needs. While adaptation itself is not bad as has been shown by Honda Japan’s experience, what is disconcerting is that despite the accolades won by the human resource management practices, there does exist a certain amount of resistance to the later in India because of local biases and rigidities. The net result has been only a partial reaping of benefits by the country where Japanese management practices have been adopted. The impression acquired during the field visit is that part of the blame for this goes to the Japanese entrepreneurs themselves. For instance, The Japanese expatriates in Honda Seil unanimously believed that allowing unionism would be detrimental. The incident in another Honda venture in Gurgaon has only strengthened this belief. Further, the Japanese feel more committed to the transfer of technology rather than management practice especially the human resource practices because it requires universal will and a platform where more dialogues can be initiated between the workers, the Indian mangers and the Japanese expatriates. At the same time, the local management is also to blame since they have adopted Japanese management practices in a piece-meal fashion, on account of structural or cultural rigidities endemic to India. Thus while softer aspect of management practices like Quality Circle and Suggestion system has found ready acceptance, career growth pattern and compensation has been tuned to the industry practices prevalent in India.
The Indian Mid-Segment Passenger Car Industry
Nitin Gupta Institute of Chartered Financial Analysts of India (ICFAI) Vaibhav Shekhar The ICFAI Institute for Management Teachers
The IUP Journal of Business Strategy, Vol. VII, No. 3, pp. 60-72, September 2010
The Indian automobile industry is one of the fastest growing automobile industries in the world. The low penetration level of cars in India coupled with rise in the disposable income of its working population has made it an attractive destination for global automobile manufacturers. This case deals with the mid-size car segment of the passenger car industry in India. In 2009-10, this segment accounted for approximately 12.7% of the total passenger cars manufactured in India and its Year-on-year (YoY) growth rate was approximately 15%. The major players in this segment include Tata Motors, Maruti Suzuki, Hyundai Motors India, Ford India, General Motors India, Honda Siel India, Mahindra-Renault and Hindustan Motors. In addition to the existing players, various new players like Volkswagen, Nissan, Fiat, etc., have either already entered in this segment or are about to enter. The case highlights various issues being faced by current as well as new entrants in this segment. The case provides exhaustive contemporary data on the mid-size car segment of the passenger car industry in India. Analysis of the case can be done using Porter’s five forces model.
Influence of Government Policies on Industry Development The Case of India's Automotive Industry
Mahipat Ranawat affiliation not provided to SSRN Rajnish Tiwari Hamburg University of Technology (TUHH)
Technology and Innovation Management (University of Hamburg) Working Paper No. 57
The automotive industry in India has come a long way from its nascent state at the time of India’s independence in 1947 to its present day dynamic form. As compared to the production of mere 4,000 vehicles in 1950, the production of the industry crossed the historic landmark of 10 million vehicles in 2006. Today, the industry produces a wide range of automobiles and auto-components catering to both the domestic as well as foreign markets. The development of the industry has been shaped by the demand on the one hand and the government interventions on the other; the influence of the latter being considerable. The evolution of India’s automotive industry is identified to have occurred in four phases. In the first (1947-1965) and second phase (1966-1979), the important policies identified were related to protection, indigenisation and regulation of the industry. On the one hand, these policies helped India to build an indigenous automotive industry, while on the other it led to unsatisfactory industry performance. In the third phase (1980-1990), the single most important policy identified was the one with regard to relaxation in the means of technology acquisition. The foreign competition inducted into the industry transformed its dynamics. Lastly, in the fourth phase (1991 onwards) the liberalization with regard to foreign investment had a significant influence on the Indian automotive industry as we see it today . This work traces the evolution of the automotive industry from its inception to present day and identifies the important policies made by the Indian government. The work also studies the influence of important policies on the development of the industry.
1. Tendency to be inflexible and not accept that vehicle production defects may be due to errors committed in the particular shop that the shop head heads. 2. Insufficient understanding of automobiles, their subsystems and functions of important parts such as suspension, exhaust, fuel system, coolant circuit, etc. 3. Tendency to be narrow minded and resist changes required in the particular shop, say, to accommodate a new vehicle version. 4. Inadequate ability to liaison with various production lines and departments. 5. Inadequate knowledge across all facets of the company’s business – for example, the shop head of the transmission shop of Product A typically does not have knowledge of the engine manufacturing processes being used in Product B. 6. Inadequate interpersonal skills, leading to inadequate ability to resolve conflicts that may arise between workmen – this causes disruption in smooth production and leads to loss of time, increased cost and inadequate quality. 7. Inadequate understanding of end-to-end processes – supervisors generally tend to know the details only of the production line they are handling.
DEMAND OF HONDA IN INDIA
SALES & SERVICE NETWORK:
Honda Siel Cars India (HSCI) Ltd., leading manufacturer of premium cars in India, sold 55,884 units during the period April '09 - February '10 as against 45,052 units during the same period last year recording an increase of 24%.
GLOBAL DEMAND OF HONDA SIEL CARS: Private vehicles account for 30% of the total transport demand in urban areas of India. An average of 963 new private vehicles are registered every day in Delhi alone. The number of Honda Cars produced in India rose from 80000 in 2007-08 to 90000 in 200910. However, India still has a very low rate of car ownership. When comparing Honda car ownership between BRIC developing countries, it is on a par with China and exceeded by Brazil and Russia, Compact cars especially hatchbacks predominate due to affordability, fuel efficiency, congestion, and lack of parking space in most cities. Honda are the most popular brand in the order of their market share. The subcompact Fit fivedoor has been on sale in the United States since April 20, and in the first 45 days of availability some 9,900 units have been sold. That rate exceeds the automaker’s 38,000to 42,000-unit annual target. At the same time, the Accord Hybrid, which went on sale in late 2004, never has achieved its annual sales target of 20,000 units. U.S. sales through May, at 2,849 units, have plunged 58.5% versus year-ago, according to Ward’s data. A Honda spokesman says output of the vehicle has been reduced by 50% in the first five months of 2006 vs. the same period year-ago at Honda’s Sayama, Japan, plant. Acceptance of the V6 powered Accord Hybrid, which for the ’06 model year begins at $30,990, has been hampered by its high sticker price and performance-oriented nature, says Dan Bonawitz, vice president-auto operations, for American Honda Motor Co. Inc. “The Accord (Hybrid) is tuned to be ‘plus performance,’ and with the current gas prices and price differential, it’s just not doing that well,” he says at a media preview for the Acura RDX cross/utility vehicle. Bonawitz won’t say whether the automaker will scrap the model when the next-generation Accord debuts next year, or if it is looking at a 4cyl. hybrid version akin to Toyota Motor Corp.’s new Camry Hybrid. Honda does say it is monitoring sales of the Camry Hybrid closely. At the same time, demand for the Fit subcompact is outstripping supply. “It looks like (the Fit) is going to do very well,” Bonawitz says. However, he says Honda is not upping the Fit’s U.S. sales target, which it dropped earlier this year from an initial goal of 50,000-60,000 units due to lack of capacity and a desire to better understand who the early buyers are. “We probably have a little bit of flexibility there. But as you know, it’s a very popular vehicle globally – there’s not a lot of extra room,” Bonawitz says of production capacity for the Fit, which is being built for North America at Honda’s Suzuka, Japan, plant. Speculation is Honda could produce the Fit at a new plant it plans to build somewhere in the U.S. Midwest.
As we know that Honda has only one manufacturing unit in India. So, we assume if Honda has three manufacturing unit than the TRANSPORTATION METHOD would hab been, If HONDA has three plants in cities A, B and C and two major distribution centres in D and E. The capacities of the three plants during the next quarter are 1000, 1500 and 1200 cars. The quarterly demands of the two distribution centres are 2300 and 1400 cars. The transportation costs (which depend on the mileage, transport company etc) between the plants and the distribution centres is as follows:
Cost Table Dist Centre D Dist Centre E
Which plant should supply how many cars to which outlet so that the total cost is minimum? The problem can be formulated as a LP model: Let xij be the amount of cars to be shipped from source i to destination j. Then our objective is to minimize the total cost which is 80x11 + 215x12 + 100x21 + 108x22 + 102x31 + 68x32. The constraints are the ones imposed by the amount of cars to be transported from each plant and the amount each center can absorb.
The whole model is:
Minimize z = 80x11 + 215x12 + 100x21 + 108x22 + 102x31 + 68x32 subject to, x11 + x12 = 1000; x21 + x22 = 1500; x31 + x32 = 1200; x11 + x21 + x31 = 2300; x12 + x22 + x32 = 1400; and integer, i = 1,2,3, j = 1,2. The problem can now be solved using the simplex method.
POLICY IMPLICATION IN HONDA:
Affirmative Action Policy Statement
Honda acts affirmatively to assure that it will: (A) Recruit, hire and promote for all job classifications without regard to race, creed, color, national origin, age, religion, sex, pregnancy, ancestry, citizenship, marital status, physical or mental disability, medical condition, sexual orientation, special disabled or Vietnam Era veteran status, or other protected group status. (B) Base decisions on employment solely upon an individual's qualifications and interest in the position being filled. (C) Make promotion decisions only on the individual's qualifications as related to the requirements of the position for which the associate is being considered without regard to race, creed, color, national origin, age, religion, sex, disability, special disabled or Vietnam Era veteran status, or other protected group status. (D Ensure that all other personnel actions such as compensation, benefits, transfers, staff reductions, company-sponsored training, education, tuition assistance, social and recreation programs will be administered without regard to race, creed, color, national origin, age, religion, sex, pregnancy, ancestry, citizenship, marital status, physical or mental disability, medical condition, sexual orientation, special disabled or Vietnam Era veteran status, or other protected group status.
Equal Employment Opportunity Statement
Honda is committed to the policy of Equal Employment Opportunity for all persons and does not discriminate against associates or applicants because of race, color, religious creed, sex, pregnancy, national origin, ancestry, citizenship, age, marital status, physical or mental disability, a legally protected medical condition, sexual orientation or any other characteristic protected by local, state or federal law. Employment decisions shall comply with all applicable laws prohibiting discrimination in employment.
Non-discrimination Policy Statement
Honda is committed to providing a work environment that is free from unlawful discrimination, including harassment that is based on any legally protected status. Honda will not tolerate any form of harassment that violates this policy. This policy forbids any unwelcome conduct that is based on an individual's age, race, color, religion, sex, national origin, ancestry, marital status, sexual-orientation, veteran status, physical or mental disability, legally protected medical condition or association with anyone who has, or is perceived to have, any protected characteristic, or any other basis protected by state ,federal or local law.
1. 46% of the respondents own Honda City cars This shows that most the people own Honda City brand cars in Delhi. 2. 34% of the respondents replied that it was Status that influenced them, 21% replied that it was necessity. This shows that most respondents feel that owning branded cars is a status symbol and hence they are influenced by this factor. 3. 93% of the respondents replied that they searched the information before buying the car and 7% did not search the information. 4. 54% respondents were influenced by the family decision, 33% by own decision, 13% friends decision to make decision about which brand car to buy.
1. As today’s customer are more aware about the different brands available in the market so before purchasing they go for a search so it is necessary that sales executives are trained well about the brands so that it is easy for them to convince the customers. 2. Customers believe well branded cars are better in quality and service so the dealers should keep in touch with the customers regularly and update them about the service and offers, so that they become loyal customers and brand loyal. 3. Honda and its dealers have to consider not only the market performance of its cars but also of its competitor’s cars and at the same time keep the track of the changing attitude of customer in changed situations. A good strategy differentiates company brand to other competitor’s brands.
It is surely undoubted that HONDA is a giant by all means of Automobile and Machinery sector of the word. It has experienced success in all aspects of its operations. People, especially the customers of HONDA, whether they be business or individual customers, like Honda and trust the name. The credibility that Honda worldwide has been able to acquire, during the short time period that the company has being in Japan and all around the world and here in Pakistan, is immense by all definitions. Firstly and probably most importantly the changing dynamics of the customers and consumers. Honda has managed to satisfy its customers, of all sorts, throughout its life here, however it must continue to do so.
1. 2. 3. 4. 5. 6. 7.
www.google.com www.Scholar.google.com www.hondasiel.com www.honda.com www.wikepedia.com www.scribd.com
BOOKS 1. Operation Research, J.K.Sharma, page:- 259-312
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