Introduction and Defination

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INTRODUCTION AND DEFINATION

Definition Of Strategy Formation:

Strategy formation creates strategy, designing new businesses and organizations tocarry out those businesses. Formation involves exploration, the search for new advantages and

business possibilities. Strategy formation creates a theory of business and its accompanying

hypotheses. Strategy formation, or creation, is an aspect of strategic management. The BAi

strategic management construct labels this aspect create art.

Meaning Of Strategy Formation:

Strategy Formation or Strategy Formulation both mean the same. It involves doing ananalysis of

the current position of where the Organization is now; deciding what are the objectives to be achieved; how to reach these objectives.To know our present situation where we are now, the Organization must study both the

internal (micro) and external (macro) situations. In other words both the strengths andweaknesses (Swot).

The greatest thing in this world is not so much where we are, but in which direction weare moving Oliver Wendell Holmes.

Oliver Wendell Holmes (1809-1894) was an American physician, professor, lecturer, poetand writer. He was considered one of the best writers of the 19th century. Like he saysstrategy formation means the direction in which the company is moving.

Strategy Formation should indicate the right course of action for attaining the companys

objectives, and thereby succeed in attaining the companys or organizational objectives.

The Strategy Formation should take into account the environmental conditions, and lead

to the fulfillment of companys vision and objectives.

Based on the above analysis, the objective or goals are formulated. Both short term andlong term objectives are formulated. In this the Organizations `Vision Statement` (longterm), and `Mission Statement` (short term) should be the yardstick in formulating theobjectives.

The next obvious step is to find the ways and means or the process by which to reachthese objectives. The Organization has form a `strategy` and a `plan`, i.e. strategic plan.

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Paul R Niven, a leading Management Guru and author in Strategy Formation says itshould be simple and easy to understand statements among competing alternatives, to makeinformal decisions and most importantly to align the people in the Organization around acommon set of priorities.

Thus `Strategy Formation ` is formulated. From here the Organization moves to theimplementation stage next.

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BUSINESS VISION AND COMPANY MISSION STATEMENT

While a business must continually adapt to its competitive environment, there arecertain core ideals that remain relatively steady and provide guidance in the process ofstrategic decision-making. These unchanging ideals form the business vision and areexpressed in the company mission statement.

In their 1996 article entitledBuilding Your Company's Vision, James Collins and JerryPorras provided a framework for understanding business vision and articulating it in amission statement.

The mission statement communicates the firm's core ideology and visionary goals,generally consisting of the following three components:

1. Core values to which the firm is committed2. Core purpose of the firm3. Visionary goals the firm will pursue to fulfill its missionThe firm's core values and purpose constitute its core ideology and remain relatively

constant. They are independent of industry structure and theproduct life cycle.

The core ideology is not created in a mission statement; rather, the mission statement issimply an expression of what already exists. The specific phrasing of the ideology maychange with the times, but the underlying ideology remains constant.

The three components of the business vision can be portrayed as follows:

CoreValues

CorePurpose

BusinessVision

Visionary

Goals

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Core Values

The core values are a few values (no more than five or so) that are central to the firm.Core values reflect the deeply held values of the organization and are independent of thecurrent industry environment and management fads.

One way to determine whether a value is a core value to ask whether it wouldcontinue to be supported if circumstances changed and caused it to be seen as a liability. Ifthe answer is that it would be kept, then it is core value. Another way to determine whichvalues are core is to imagine the firm moving into a totally different industry. The values thatwould be carried with it into the new industry are the core values of the firm.

Core values will not change even if the industry in which the company operateschanges. If the industry changes such that the core values are not appreciated, then the firmshould seek new markets where its core values are viewed as an asset.

For example, if innovation is a core value but then 10 years down the road innovationis no longer valued by the current customers, rather than change its values the firm shouldseek new markets where innovation is advantageous.

The following are a few examples of values that some firms has chosen to be in theircore:

excellent customer service pioneering technology creativity integrity social responsibility

Core Purpose

The core purpose is the reason that the firm exists. This core purpose is expressed in acarefully formulated mission statement. Like the core values, the core purpose is relativelyunchanging and for many firms endures for decades or even centuries. This purpose sets thefirm apart from other firms in its industry and sets the direction in which the firm will

proceed.

The core purpose is an idealistic reason for being. While firms exist to earn a profit,the profit motive should not be highlighted in the mission statement since it provides littledirection to the firm's employees. What is more important is how the firm will earn its profitsince the "how" is what defines the firm.

Initial attempts at stating a core purpose often result in too specific of a statement thatfocuses on a product or service. To isolate the core purpose, it is useful to ask "why" inresponse to first-pass, product-oriented mission statements. For example, if a market research

firm initially states that its purpose is to provide market research data to its customers, asking"why" leads to the fact that the data is to help customers better understand their markets.

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Continuing to ask "why" may lead to the revelation that the firm's core purpose is to assist itsclients in reaching their objectives by helping them to better understand their markets.

The core purpose and values of the firm are not selected - they are discovered. Thestated ideology should not be a goal or aspiration but rather, it should portray the firm as it

really is. Any attempt to state a value that is not already held by the firm's employees is likelyto not be taken seriously.

Visionary Goals

The visionary goals are the lofty objectives that the firm's management decides topursue. This vision describes some milestone that the firm will reach in the future and mayrequire a decade or more to achieve. In contrast to the core ideology that the firm discovers,visionary goals are selected.

These visionary goals are longer term and more challenging than strategic or tacticalgoals. There may be only a 50% chance of realizing the vision, but the firm must believe thatit can do so. Collins and Porras describe these lofty objectives as "Big, Hairy, AudaciousGoals." These goals should be challenging enough so that people nearly gasp when they learnof them and realize the effort that will be required to reach them.

Most visionary goals fall into one of the following categories:

Target - quantitative or qualitative goals such as a sales target or Ford's goal to"democratize the automobile."

Common enemy - centered on overtaking a specific firm such as the 1950's goal ofPhilip-Morris to displace RJR.

Role model - to become like another firm in a different industry or market. Forexample, a cycling accessories firm might strive to become "the Nike of the cyclingindustry."

Internal transformation - especially appropriate for very large corporations. Forexample, GE set the goal of becoming number one or number two in every market itserves.

While visionary goals may require significant stretching to achieve, many visionary

companies have succeeded in reaching them. Once such a goal is reached, it needs to bereplaced; otherwise, it is unlikely that the organization will continue to be successful. Forexample, Ford succeeded in placing the automobile within the reach of everyday people, butdid not replace this goal with a better one and General Motors overtook Ford in the 1930's.

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OJECTIVES AND GOALS

Objectives:

Objectives represent a managerial commitment to achieve specified results in aspecified period, of time. They clearly spell out the quantity and quality ofperformance to be achieved, the time period, the process and the person who isresponsible for the achievement of the objective.

Objectives are end results of planned activityObjectives state what is to beaccomplished by when and should be quantified if possible.

Example Objectives Minnesota Mining & Manufacturing (3M)FinancialobjectivesTo achieve 10% growth in earnings per share.To achieve 20% - 25%return on equity.To achieve 27% return on capital employed.

Characteristics Objectives form a hierarchyObjectives form a networkMultiplicityof objectivesLong and short range objectives.

Areas of objectivesMarketsProductivityInnovationProductProfitabilityFinancialresourcesPhysical facilitiesOrganization structure and activitiesManagerperformance and development Employee performance and attitude Customerservice Social responsibility.

Importance of objectivesObjectives help to define the organization in itsenvironmentObjectives help in coordinating decisions and decision-

makerObjectives help in formulating strategiesObjectives provide standards forassessing organizational performance.

Objectives of BSNLNational Plan Target of 500 million subscriber base for thecountry by December 2010.Broadband customers base of 20 million in thecountry by 2010 as per Broadband policy 2004.

Factors affecting ObjectivesForces in the environmentInternal forces The valuesystems of the top executives.

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Goals :

GoalGoal is defined as an intermediate result to be achieved by a certain time aspart of the grand plan . A plan can, there for have many goals.

Goals are short term (one year or less) milestones or bench marks thatorganizations must achieve in order for long term long term objectives to bereached. Goals should be measurable, quantitative, challenging, realistic,consistent and prioritized.

A set of goals is needed for each objective that is established in an organization. Goals have the following featuresThey:Are derived from objectivesOffer a

standard for measuring performanceAre expressed in concrete termsAre timebound and work oriented.

Goals are important inStrategy implementationObjectives are instrategyformulation.

Goals are an expected or desired outcome of a planning process. Goals areusually broad, general expressions of the guiding principles and aspirations of an

organization. Objectivesare precise targets that are necessary to achieve goals.

Objectives are detailed statements of quantitatively or qualitatively measurable

results the plan hopes to accomplish.

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ENVIRONMENTAL SCAN

Organizational environment consists of both external and internal factors. Environment must

be scanned so as to determine development and forecasts of factors that will influence organizational

success. Environmental scanning refers to possession and utilization of information about

occasions, patterns, trends, and relationships within an organizations internal and external

environment. It helps the managers to decide the future path of the organization. Scanning must

identify the threats and opportunities existing in the environment. While strategy formulation, an

organization must take advantage of the opportunities and minimize the threats. A threat for one

organization may be an opportunity for another.

Internal Environment :

Internal analysis of the environment is the first step of environment scanning.Organizations should observe the internal organizational environment. This includesemployee interaction with other employees, employee interaction with management, managerinteraction with other managers, and management interaction with shareholders, access tonatural resources, brand awareness, organizational structure, main staff, operational potential,etc.

Also, discussions, interviews, and surveys can be used to assess the internalenvironment. Analysis of internal environment helps in identifying strengths and weaknessesof an organization.

External Envioroment :

As business becomes more competitive, and there are rapid changes in the externalenvironment, information from external environment adds crucial elements to theeffectiveness of long-term plans. As environment is dynamic, it becomes essential to identifycompetitors moves and actions. Organizations have also to update the core competencies and

internal environment as per external environment. Environmental factors are infinite, hence,organization should be agile and vigile to accept and adjust to the environmental changes. Forinstance - Monitoring might indicate that an original forecast of the prices of the rawmaterials that are involved in the product are no more credible, which could imply therequirement for more focused scanning, forecasting and analysis to create a more trustworthyprediction about the input costs. In a similar manner, there can be changes in factors such ascompetitors activities, technology, market tastes and preferences.

While in external analysis, three correlated environment should be studied andanalyzed

immediate / industry environment national environment broader socio-economic environment / macro-environment

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Examining the industry environment needs an appraisal of the competitive structureof the organizations industry, including the competitive position of a particular organization

and its main rivals. Also, an assessment of the nature, stage, dynamics and history of the

industry is essential. It also implies evaluating the effect of globalization on competitionwithin the industry. Analyzing the national environment needs an appraisal of whether the

national framework helps in achieving competitive advantage in the globalized environment.Analysis ofmacro-environment includes exploring macro-economic, social, government,legal, technological and international factors that may influence the environment. Theanalysis of organizations external environment reveals opportunities and threats foranorganization.

Strategic managers must not only recognize the present state of the environment andtheir industry but also be able to predict its future positions.

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STEPS IN STRATEGY FORMULATION

Strategy formulation refers to the process of choosing the most appropriate course ofaction for the realization of organizational goals and objectives and thereby achieving theorganizational vision. The process of strategy formulation involves ten main steps.

Step OneBe the best.The result of a well-developed and executed strategic plan is to develop a competitive

advantage. Just what is a competitive advantage? Business lingo aside, it is simply the answer to:

What can your company potentially do better than any other company? Understanding your

competitive advantage is critical. It is the reason you are in business. It is what you do best that draws

customers to buy your product/service instead of your competitors. Extremely successful companies

deliberately make choices to be unique and different in activities that they are really, really good at

and they focus all of their energy in these areas. You may decide to incorporate your competitive

advantage into your mission and/or vision statements.

Step TwoState your purpose.A mission statement is a statement of the companys purpose. It is useful for putting the

spotlight on what business a company is presently in and the customer needs it is presently

endeavoring to serve. It also serves as a guide for day-to-day operations and as the foundation for

future decision-making. To write a mission statement, answer the questions: What is our business?

What are we trying to accomplish for our customers? What is our companys reason for existing?

Step ThreeVisualize the future.A strategic vision is the image of a companys future the direction it is headed, the customer

focus it should have, the market position it should try to occupy, the business activities to be pursued,and the capabilities it plans to develop. Forming a strategic vision should delineate what kind of

enterprise the company is trying to become and infuse the organization with a sense of purposeful

action. Think big! To write a vision statement, answer this question: What will our business look like

in 5 to ten years from now?

Step FourTake an inventory.The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis helps you look critically

at your organization. It is a tool to help produce a good fit between a companys strengths and its

opportunities.

Assess your strengths and weaknesses by answering these questions: What do we do best?

What do we not do best? What are our company resourcesassets, intellectual property, and people?

What are our company capabilities (functions)?

Assess your opportunities and threats by answering these questions: What is happening

externally that will affect our company? What are the strengths and weaknesses of each competitor?

What are the driving forces behind sales trends? What are important and potentially important

markets? What is happening in the world that might affect our company?

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Step FiveProfile your customers.If you want to move your company from being successful to wildly profitable, you need to meet

your customers needs and wants better than your competitors do. Develop a customer profile by

answering: What are our customers needs, motivations, and characteristics? How do we uniquely

provide value to our customers? What should we improve to grow our customer base?

Step SixWrite your goals and objectives.Goals and objectives are like stair steps to your mission and vision. Realistic goals and objectives

are developed from the SWOT analysis and customer profile. Objectives set the agenda, are broad,

and global in nature. Write two to five objectives that give action to your mission/vision and will take

a few years to achieve. Then, develop goals to achieve each objective. Goals should be measurable,

quantifiable, and support your objectives. Think about achieving them in a one-year timeframe.

Effective goals must state how much of what kind of performance by when is to be accomplished and

by whom. Make sure both your goals and objectives build on your strengths; shore up your

weaknesses; capitalize on your opportunities; and recognize your threats.

Step SevenAssess your resources.Now that you have completed your goals and objectives, it is time to do a resource assessment.

One of the biggest stumbling blocks to all well laid strategic plans is time and money. As with every

business, budgets are never big enough to do everything you want to do. Prioritize key goals by

asking: Do implementing the goals make financial sense? Do you have the human resources to

achieve your plan?

Step EightTake action.Tactics set specific actions/action plans that lead to implementing your goals and objectives.

Basically write a to-do list for each goal. A quick way to develop your tactics is to answer thisquestion: What roadblocks exist to achieving my goal? Use the answer to develop action items for

each goal. Assign responsibilities and deadlines to ensure implementation. A great method to get buy-

in from your staff is to assign a goal to each employee. Ask him/her to write the action plan and be

responsible for making sure each task is accomplished.

Step NineKeep score.In step six, you wrote goals that were measurable. Put these measurements and targets on a

scorecard (in Excel), which acts as an instrument panel guiding your company towards achieving your

vision. With the scorecard, you can actively track your progress on a monthly basis.

Step TenMake strategy a habit.A leader devoted to the successful implementation of the strategy and plan is key. The plan

needs to be supported with people, money, time, systems, and above all communication.

Communicate the plan to everyone in your organization. Hold a monthly or quarterly strategy meeting

to report on the progress toward achieving the goal. Dont forget to take corrective actions when

needed and adapt as the environment changes.

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DIFFERENCES BETWEEN STRATEGY FORMULATION

AND STRATEGY IMPLEMENTATION-

Strategy Formulation Strategy Implementation

Strategy Formulation includesplanning and decision-makinginvolved in developingorganizations strategic goals

and plans.

In short, Strategy Formulation isplacing the Forces before theaction.

Strategy Formulation is anEntrepreneurial Activity basedon strategic decision-making.

Strategy Formulationemphasizes on effectiveness.

Strategy Formulation is arational process.

Strategy Formulation requiresco-ordination among fewindividuals.

Strategy Formulation requires agreat deal of initiative andlogical skills.

Strategic Formulation precedesStrategy Implementation.

Strategy Implementationinvolves all those means relatedto executing the strategic plans.

In short, StrategyImplementation is managing

forces during the action.

Strategic Implementation ismainly an Administrative Taskbased on strategic andoperational decisions.

Strategy Implementationemphasizes on efficiency.

Strategy Implementation isbasically an operational process.

Strategy Implementationrequires co-ordination amongmany individuals.

Strategy Implementationrequires specific motivationaland leadership traits.

Strategy Implementation followsStrategy Formulation.

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SWOT Analysis

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Bydefinition, Strengths (S) and Weaknesses (W) are considered to be internal factors over which

you have some measure of control. Also, by definition, Opportunities (O) and Threats (T) areconsidered to be external factors over which you have essentially no control.

SWOT Analysis is the most renowned tool for audit and analysis of the overallstrategic position of the business and its environment. Its key purpose is to identify thestrategies that will create a firm specific business model that will best align an organizations

resources and capabilities to the requirements of the environment in which the firm operates.In other words, it is the foundation for evaluating the internal potential and limitations and theprobable/likely opportunities and threats from the external environment. It views all positiveand negative factors inside and outside the firm that affect the success. A consistent study ofthe environment in which the firm operates helps in forecasting/predicting the changing

trends and also helps in including them in the decision-making process of the organization.

An overview of the four factors (Strengths, Weaknesses, Opportunities and Threats) isgiven below-

1. Strengths- Strengths are the qualities that enable us to accomplish theorganizations mission. These are the basis on which continued success can be madeand continued/sustained. Strengths can be either tangible or intangible. These arewhat you are well-versed in or what you have expertise in, the traits and qualities youremployees possess (individually and as a team) and the distinct features that give your

organization its consistency. Strengths are the beneficial aspects of the organization orthe capabilities of an organization, which includes human competencies, processcapabilities, financial resources, products and services, customer goodwill and brandloyalty. Examples of organizational strengths are huge financial resources, broadproduct line, no debt, committed employees, etc.

2. Weaknesses- Weaknesses are the qualities that prevent us from accomplishing ourmission and achieving our full potential. These weaknesses deteriorate influences onthe organizational success and growth. Weaknesses are the factors which do not meet

the standards we feel they should meet. Weaknesses in an organization may bedepreciating machinery, insufficient research and development facilities, narrowproduct range, poor decision-making, etc. Weaknesses are controllable. They must beminimized and eliminated. For instance - to overcome obsolete machinery, newmachinery can be purchased. Other examples of organizational weaknesses are hugedebts, high employee turnover, complex decision making process, narrow productrange, large wastage of raw materials, etc.

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3. Opportunities- Opportunities are presented by the environment within which ourorganization operates. These arise when an organization can take benefit of conditionsin its environment to plan and execute strategies that enable it to become moreprofitable. Organizations can gain competitive advantage by making use ofopportunities. Organization should be careful and recognize the opportunities and

grasp them whenever they arise. Selecting the targets that will best serve the clientswhile getting desired results is a difficult task. Opportunities may arise from market,competition, industry/government and technology. Increasing demand fortelecommunications accompanied by deregulation is a great opportunity for new firmsto enter telecom sector and compete with existing firms for revenue.

4. Threats- Threats arise when conditions in external environment jeopardize thereliability and profitability of the organizations business. They compound the

vulnerability when they relate to the weaknesses. Threats are uncontrollable. When athreat comes, the stability and survival can be at stake. Examples of threats are -unrest among employees; ever changing technology; increasing competition leadingto excess capacity, price wars and reducing industry profits; etc.

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ADVANTAGES OF SWOT ANALYSIS

Advantages of SWOT Analysis

SWOT Analysis is instrumental in strategy formulation and selection. It is a strongtool, but it involves a great subjective element. It is best when used as a guide, and not as aprescription. Successful businesses build on their strengths, correct their weakness andprotect against internal weaknesses and external threats. They also keep a watch on theiroverall business environment and recognize and exploit new opportunities faster than itscompetitors.

SWOT Analysis helps in strategic planning in following manner-

a. It is a source of information for strategic planning.b. Builds organizations strengths.c. Reverse its weaknesses.d. Maximize its response to opportunities.e. Overcome organizations threats.f. It helps in identifying core competencies of the firm.g. It helps in setting of objectives for strategic planning.h. It helps in knowing past, present and future so that by using past and current data,

future plans can be chalked out.

SWOT Analysis provide information that helps in synchronizing the firms resources andcapabilities with the competitive environment in which the firm operates.

SWOT ANALYSIS FRAMEWORK

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Limitations of SWOT Analysis

SWOT Analysis is not free from its limitations. It may cause organizations to viewcircumstances as very simple because of which the organizations might overlook certain keystrategic contact which may occur. Moreover, categorizing aspects as strengths, weaknesses,opportunities and threats might be very subjective as there is great degree of uncertainty inmarket. SWOT Analysis does stress upon the significance of these four aspects, but it doesnot tell how an organization can identify these aspects for itself.

There are certain limitations of SWOT Analysis which are not in control ofmanagement. These include-

a. Price increase;b. Inputs/raw materials;c. Government legislation;d. Economic environment;e. Searching a new market for the product which is not having overseas market due to import

restrictions; etc.

Internal limitations may include-

a. Insufficient research and development facilities;b. Faulty products due to poor quality control;c. Poor industrial relations;d. Lack of skilled and efficient labour; etc

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STRATEGY FORMATION HONDA COMPANY

Type

Public company(TYO: 7267) & (NYSE: HMC)

Industry Automotive. Aviation

Founded 24 September 1948

Founder(s) Soichiro Honda Takeo Fujisawa

Headquarters Minato, Tokyo, Japan

Area served Worldwide

Key people Takanobu Ito (President, CEO, &Representative Director)

Products

Automobiles Motorcycles Scooters Electrical Generators Water pumps

Lawn and GardenEquipments

Tillers Outboard motors Robotics Jets Jet Engines Thin-film solar cells

Revenue 7.948 trillion (2012)

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Operatingincome

231.36 billion (2012)

Net income211.48 billion (2012)

Total assets 11.780 trillion (2012)

Total equity 4.402 trillion (2012)

Employees 179,060 (2012)

Subsidiaries

Acura Li Nian (Everus) Honda Aircraft Company

Website world.honda.com

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From a young age, Honda's founder, Soichiro Honda (,Honda Sichir) (17November 19065 August 1991) had an interest in automobiles. He worked as a mechanicat the Art Shokai garage, where he tuned cars and entered them in races. In 1937, withfinancing from an acquaintance, Kato Shichir, Honda founded TkaiSeiki (Eastern SeaPrecision Machine Company) to make piston rings working out of the Art Shokai

garage.After initial failures, Tkai Seiki won a contract to supply piston rings toToyota, butlost the contract due to the poor quality of their products.After attending engineering school,without graduating, and visiting factories around Japan to better understand Toyota's qualitycontrol processes, Honda was able, by 1941, to mass produce piston rings acceptable toToyota, using an automated process that could employ even unskilled wartime laborers.

Tkai Seiki was placed under control of the Ministry of Commerce and Industry(called the Ministry of Munitions after 1943) at the start of World War II, and SoichiroHonda was demoted from president to senior managing director after Toyota took a 40%stake in the company.Honda also aided the war effort by assisting other companies inautomating the production of military aircraft propellers.The relationships Honda cultivated

with personnel at Toyota, Nakajima Aircraft Company and the Imperial Japanese Navywould be instrumental in the postwar period.A US B-29bomber attack destroyed TkaiSeiki's Yamashita plant in 1944, and the Itawa plant collapsed in the 1945 Mikawaearthquake, and Soichiro Honda sold the salvageable remains of the company to Toyota afterthe war for 450,000, and used the proceeds to found the Honda Technical Research Institutein October 1946.With a staff of 12 men working in a 172-square-foot (16.0 m2) shack, theybuilt and sold improvised motorized bicycles, using a supply of 500 two-stroke 50 cc Tohatsuwar surplus radio generator engines.When the engines ran out, Honda began building theirown copy of the Tohatsu engine, and supplying these to customers to attach theirbicycles.This was the Honda Model A, nicknamed the Bata Bata for the sound the enginemade.The first complete motorcycle, both frame and engine, and made by Honda was the1949 Model D, the first Honda to go by the name Dream.Honda Motor Company grew in ashort time to become the world's largest manufacturer of motorcycles by 1964.

The first production automobile from Honda was the T360 mini pick-up truck, whichwent on sale in August 1963.Powered by a small 356 cc straight-4 gasoline engine, it wasclassified under the cheaper Kei car tax bracket.The first production car from Honda was theS500 sports car, which followed the T360 into production in October 1963. Its chain drivenrear wheels points to Honda's motorcycle origins.

Over the next few decades, Honda worked to expand its product line and expanded

operations and exports to numerous countries around the world. In 1986, Honda introducedthe successful Acura brand to the American market in an attempt to gain ground in the luxuryvehicle market. Honda in 1991 introduced the Honda NSX supercar, the first all-aluminummonocoque vehicle that incorporated a mid-engine V6 with variable-valve timing.Later, 1995gave rise to the Honda Aircraft Company with the goal of producing jet aircraft underHonda's name.

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Corporate profile and divisions

Honda headquarters building in Minato, Tokyo.

Honda is headquartered in Minato, Tokyo, Japan. Their shares trade on the TokyoStock Exchange and the New York Stock Exchange, as well as exchanges in Osaka, Nagoya,Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland.

The company has assembly plants around the globe. These plants are located inChina, the United States, Pakistan, Canada, England, Japan, Belgium, Brazil, Mxico, NewZealand, Malaysia, Indonesia, India, Thailand, Turkey, Taiwan and Per. As of July 2010, 89percent of Honda and Acura vehicles sold in the United States were built in North American

plants, up from 82.2 percent a year earlier. This shields profits from the yens advance to a

15-year high against the dollar.

Honda's Net Sales and Other Operating Revenue by Geographical Regions in2007

Geographic Region Total revenue (in millions of)

Japan 1,681,190

North America 5,980,876

Europe 1,236,757

Asia 1,283,154

Others 905,163

American Honda Motor Company is based in Torrance, California. Honda CanadaInc. is headquartered in Markham, Ontario, their manufacturing division, Honda of CanadaManufacturing, is based in Alliston, Ontario. Honda has also created joint ventures aroundthe world, such as Honda Siel Cars and Hero Honda Motorcycles in India,]Guangzhou Hondaand Dongfeng Honda in China, Boon Siew Honda in Malaysia and Honda Atlas in Pakistan.

Current market position

With low fuel prices and a weak U.S. economy in June 2008, Honda reported a 1%sales increase while its rivals, including the Detroit Big Three and Toyota, have reported

double-digit losses. Honda's sales were up almost 20 percent from the same month last year.The Civic and the Accord were in the top five list of sales.Analysts have attributed this to two

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main factors. First, Honda's product lineup consists of mostly small to mid-size, highly fuel-efficient vehicles. Secondly, over the last ten years, Honda has designed its factories to beflexible, in that they can be easily retooled to produce any Honda model that may be in-demand at the moment.

Nonetheless, Honda, Nissan, and Toyota, were still not immune to the global financialcrisis of 2008, as these companies reduced their profitability forecasts. The economic crisishas been spreading to other important players in the vehicle related industries as well.InNovember 2009 the Nihon Keizai Shinbun reported that Honda Motor exports have fallen64.1%.

At the 2008 Beijing Auto Show, Honda presented the Li Nian ("concept" or "idea") 5-door hatchback and announced that they were looking to develop an entry-level brandexclusively for the Chinese market similar to Toyota's Scion brand in the USA. The brandwould be developed by a 5050 joint-venture established in 2007 with GuangzhouAutomobile Industry Group.

Following the Japanese earthquake and tsunami in March 2011 Honda announcedplans to halve production at its UK plants.The decision was made to put staff at the Swindonplant on a 2 day week until the end of May as the manufacturer struggled to source suppliesfrom Japan. It's thought around 22,500 cars were produced during this period.

Leadership

Name YearsSoichiro Honda 19481973

Kiyoshi Kawashima 19731983

Tadashi Kume 19831990

Nobuhiko Kawamoto 19901998

Hiroyuki Yoshino 19982004

Takeo Fukui 20042009

Takanobu Ito 2009

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Products

Automobiles

For a list of vehicles, see List of Honda vehicles.

2011 Honda Jazz (Indian rampart)

2008 Honda Accord (USA spec)

Eighth Generation Honda Civic (Asian Version)

Honda's global lineup consists of the Fit, Civic, Accord, Insight, CR-V, CR-Z,Legend and two versions of the Odyssey, one for North America, and a smaller vehicle soldinternationally. An early proponent of developing vehicles to cater to different needs andmarkets worldwide, Honda's lineup varies by country and may feature vehicles exclusive tothat region. A few examples are the latest Honda Odyssey minivan and the Ridgeline,Honda's first light-duty uni-body pickup truck. Both were designed and engineered primarilyin North America and are produced there. Other example of exclusive models includes theHonda Civic five-door hatchbacksold in Europe.

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Honda's automotive manufacturing ambitions can be traced back to 1963, with theHonda T360, a kei car truck built for the Japanese market.This was followed by the two-doorroadster, the Honda S500 also introduced in 1963. In 1965, Honda built a two-doorcommercial delivery van, called the Honda L700. Honda's first four-door sedan was not theAccord, but the air-cooled, four-cylinder, gasoline-powered Honda 1300 in 1969. The Civic

was a hatchback that gained wide popularity internationally, but it wasn't the first two-doorhatchback built. That was the Honda N360, another Kei carthat was adapted for internationalsale as the N600. The Civic, which appeared in 1972 and replaced the N600 also had asmaller sibling that replaced the air-cooled N360, called the Honda Life that was water-cooled.

The Honda Life represented Honda's efforts in competing in the kei car segment,offering sedan, delivery van and small pick-up platforms on a shared chassis. The LifeStepVan had a novel approach that, while not initially a commercial success, appears to be aninfluence in vehicles with the front passengers sitting behind the engine, a large cargo areawith a flat roof and a liftgate installed in back, and utilizing a transversely installed engine

with a front-wheel-drive powertrain.

As Honda entered into automobile manufacturing after World War II, where Japanesemanufacturers such as Toyota and Nissan had heritage before the war, it appears that Hondainstilled a sense of doing things a little differently than its Japanese competitors. Its mainstayproducts, like the Accord and Civic, have always employed front-wheel-drive powertrainimplementation, which is currently a long held Honda tradition. Honda also installed newtechnologies into their products, first as optional equipment, then later standard, like anti lockbrakes, speed sensitive power steering, and multi-port fuel injection in the early 1980s. Thisdesire to be the first to try new approaches is evident with the creation of the first Japaneseluxury chain Acura, and was also evident with the all aluminum, mid-engined sports car, theHonda NSX, which also introduced variable valve timing technology, Honda calls VTEC.

The Civic is a line ofcompact cars developed and manufactured by Honda. In NorthAmerica, the Civic is the second-longest continuously running nameplate from a Japanesemanufacturer; only its perennial rival, the Toyota Corolla, introduced in 1968, has been inproduction longer.[31]The Civic, along with the Accord and Prelude, comprised Honda'svehicles sold in North America until the 1990s, when the model lineup was expanded.Having gone through several generational changes, the Civic has become larger and moreupmarket, and it currently slots between the Fit and Accord.

Honda produces Civic hybrid, a hybrid electric vehicle that competes with the ToyotaPrius, and also produces the Insight and CR-Z.

In 2008, Honda increased global production to meet demand for small cars andhybrids in the U.S. and emerging markets. The company shuffled U.S. production to keepfactories busy and boost car output, while building fewer minivans and sport utility vehiclesas light trucksales fell.

Its first entrance into the pickup segment, the light duty Ridgeline, won Truck of theYear fromMotor Trendmagazine in 2006. Also in 2006, the redesigned Civic won Car of theYear from the magazine, giving Honda a rare double win of Motor Trend honors.

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It is reported that Honda plans to increase hybrid sales in Japan to more than 20% ofits total sales in fiscal year 2011, from 14.8% in previous year.

Five ofUnited States Environmental Protection Agency's top ten most fuel-efficientcars from 1984 to 2010 comes from Honda, more than any other automakers. The five

models are: 20002006 Honda Insight (53 mpg-US or 4.4 L/100 km; 64 mpg-imp combined),19861987 Honda Civic Coupe HF (46 mpg-US or 5.1 L/100 km; 55 mpg-imp combined), 19941995 Honda Civic hatchback VX (43 mpg-US or 5.5 L/100 km; 52 mpg-imp combined), 2006Honda Civic Hybrid (42 mpg-US or 5.6 L/100 km; 50 mpg-imp combined), and 2010HondaInsight (41 mpg-US or 5.7 L/100 km; 49 mpg-imp combined).The ACEEE has also rated theCivic GX as the greenest car in America for seven consecutive years.

Motorcycles

For a list of motorcycle products, see List of Honda motorcycles.

Honda is the largest motorcycle manufacturer in Japan and has been since it startedproduction in 1955.At its peak in 1982, Honda manufactured almost 3 million motorcyclesannually. By 2006 this figure had reduced to around 550,000 but was still higher than itsthree domestic competitors.

2004 Honda Super Cub

The second explanation was offered in 1984 by Richard Pascale, who had interviewedthe Honda executives responsible for the firms entry into the U.S. market. As opposed to thetightly focused strategy of low cost and high scale that BCG accredited to Honda, Pascalefound that their entry into the U.S. market was a story of miscalculation, serendipity, and

organizational learning in other words, Hondas success was due to the adaptability andhard work of its staff, rather than any long term strategy. For example, Hondas initial plan

on entering the U.S. was to compete in large motorcycles, around 300 cc. It was only whenthe team found that the scooters they were using to get themselves around their U.S. base ofSan Francisco attracted positive interest from consumers that they came up with the idea ofselling the Super Cub.

The most recent school of thought on Hondas strategy was put forward byGaryHamel and C. K. Prahalad in 1989. Creating the concept ofcore competencies with Honda asan example, they argued that Hondas success was due to its focus on leadership in thetechnology of internal combustion engines.[39]For example, the high power-to-weight ratioengines Honda produced for its racing bikes provided technology and expertise which was

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transferable into mopeds. Honda's entry into the U.S. motorcycle market during the 1960s isused as a case study for teaching introductory strategy at business schools worldwide.[40]

Power equipment

Production started in 1953 with H-type engine (prior to motorcycle).Honda power equipment reached record sales in 2007 with 6,4 million units.By 2010 (Fiscalyear ended 31 March) this figure had decreased to 4,7 million units.[43]Cumulative production ofpower products has exceeded 85 million units (as of September 2008).

Honda power equipment includes:

Engine Tiller Lawn mower Riding mower Trimmer Mower Blower Sprayer Hedge trimmer Snowthrower Generator, welding power supply Pumps Outboard engine Inflatable boat Electric 4-wheel Scooter Compact Household Cogeneration Unit

Engines

This section requires expansion.(April 2009)

Honda Outboard motor on a pontoon boat

Honda engines powered the entire 33-car starting field of the 2010 Indianapolis 500and for the fifth consecutive race, there were no engine-related retirements during the runningof the Memorial Day Classic.

Honda, despite being known as an engine company, has never built a V8 forpassenger vehicles. In the late 1990s, the company resisted considerable pressure from its

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American dealers for a V8 engine (which would have seen use in top-of-the-line HondaSUVs and Acuras), with American Honda reportedly sending one dealer a shipment ofV8beverages to silence them.Honda considered starting V8 production in the mid-2000s forlarger Acura sedans, a new version of the high end NSX sports car (which previously usedDOHC V6 engines with VTEC to achieve its high power output) and possible future ventures

into the American full-size truck and SUV segment for both the Acura and Honda brands, butthis was cancelled in late 2008, with Honda citing environmental and worldwide economicconditions as reasons for the termination of this project.

Robots

ASIMO at Expo 2005

ASIMO is the part of Honda's Research & Development robotics program. It is theeleventh in a line of successive builds starting in 1986 with Honda E0 moving through theensuing Honda E series and the Honda P series. Weighing 54 kilograms and standing 130centimeters tall, ASIMO resembles a small astronaut wearing a backpack, and can walk ontwo feet in a manner resembling human locomotion, at up to 6 km/h (3.7 mph). ASIMO is theworld's only humanoid robot able to ascend and descend stairs independently. However,human motions such as climbing stairs are difficult to mimic with a machine, which ASIMOhas demonstrated by taking two plunges off a staircase.

Honda's robot ASIMO (see below) as an R&D project brings together expertise tocreate a robot that walks, dances and navigates steps. 2010 marks the year Honda has

developed a machine capable of reading a user's brainwaves to move ASIMO. The systemuses a helmet covered with electroencephalography and near-infrared spectroscopy sensorsthat monitor electrical brainwaves and cerebral blood flowsignals that alter slightly duringthe human thought process. The user thinks of one of a limited number of gestures it wantsfrom the robot, which has been fitted with a Brain Machine Interface.

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Aircraft

Honda HA-420 HondaJet

Honda has also pioneered new technology in its HA-420 HondaJet, manufactured by

its subsidiary Honda Aircraft Company, which allows new levels of reduced drag, increasedaerodynamics and fuel efficiency thus reducing operating costs

Solar cells

Honda's solar cell subsidiary company Honda Soltec (Headquarters: Kikuchi-gun,Kumamoto; President and CEO: Akio Kazusa) started sales throughout Japan ofthin-filmsolar cells for public and industrial use on 24 October 2008, after selling solar cells forresidential use since October 2007.

Mountain bikes

Honda RN-01 G-cross

Honda has also built a downhill racing bicycle known as the Honda RN-01. It is notavailable for sale to the public. The key feature of this bike is the gearbox, which replaces thestandard derailleur found on most bikes.

Honda has hired several people to pilot the bike, among them Greg Minnaar. Theteam is known as Team G Cross Honda.

Motorsports

Honda has been active in motorsports, like Motorcycle Grand Prix, Superbike racingand others.

Automobile

Honda Racing F1

Rubens Barrichello driving for Honda

Honda became an official works team in the British Touring Car Championship in 2010.

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PROMOTION STRATEGY

Advertisement

The company tried to communicate the unique message in every advertisement that itsproducts have a good quality to customer. For example, Honda Freed; it can carry manypersons in its body, they will feel like family condition. So this product is appropriate to eachquite big family.

So the company used pull strategy in attracting customers because from the aboveadvertisement the company showed the abilities of its product and also it meaned that howthe company's products was different from others.

Personal Selling

The company had coorperated with its representative seller under its three philosophythey are joy of buying, joy of selling and joy of creativity. This has an objective for makingmany satisfaction of customers as highly as the company can do. and also this is a good

strategy of Honda in increasing its sale to be higher and higher in the future.

Public Relation

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Every advertisement of Honda tried to make its picture in form of more good qualitythan others into customer's mind.

Promotion

The company gives a service after selling to customer. For example, Honda Freed thecompany had provided some gift for customer such as first class insurance, film lamina etc.So this is one means of pull strategy in attracting customer's mind and make them become thecompany's royal customers.

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FINANCIAL AND STRATEGIC ANALYSIS REVIEW

Honda Motor Co., Ltd. (Honda) is a leading global automobiles manufacturer. It is principally

engaged in developing, manufacturing and marketing small and general purpose engines, motorcycle,

and passenger and specialty sports cars, among others. The company also provides financial services

to its customers and dealers. As of March 31, 2009 Honda operated through 396 subsidiary companies

and 105 affiliate companies. The company operates its business in four segments namely, Automobile

Business, Motorcycle Business, Financial Services, and Power Products and Other Businesses.

Honda Motor Co., Ltd. Key Recent Developments

Jul 20, 2010 Honda To Introduce Environmental Technology Vehicles

Apr 14, 2010 Honda Plans To Begin Sales Of EV-neo In December 2010

Apr 14, 2010 Honda EV-neo Sales To Start In December 2010

Apr 13, 2010 Toshiba's SCiB Rechargeable Battery Being Selected For Ev-neo, Honda's NewCommercial-Use Electric Motorcycle

Apr 13, 2010 Honda Plans To Begin Sales Of Commercial Use Electric Scooter, EV-neo, In

December 2010

The profile contains critical company information including

Business description - A detailed description of the companys operations andbusiness divisions.

Corporate strategy - Analysts summarization of the companys business strategy. SWOT Analysis - A detailed analysis of the companys strengths, weakness,

opportunities and threats. Company history - Progression of key events associated with the company. Major products and services - A list of major products, services and brands of the

company. Key competitors - A list of key competitors to the company. Key employees - A list of the key executives of the company. Executive biographies - A brief summary of the executives employment history. Key operational heads - A list of personnel heading key departments/functions. Important locations and subsidiaries - A list and contact details of key locations and

subsidiaries of the company.

Detailed financial ratios for the past five years - The latest financial ratios derivedfrom the annual financial statements published by the company with 5 years history. Interim ratios for the last five interim periods - The latest financial ratios derived from

the quarterly/semi-annual financial statements published by the company for 5interims history.

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HONDA ANNOUNCES FUTURE BUSINESS STRATEGY

Published: 7/20/2010

Honda president and chief executive officer Takanobu Ito has revealed the company's future business

strategy, aimed at sustaining financial growth in the long term.

IHS GlobalInsight

Perspective

Significance Honda president and chief executive officer Takanobu Ito has revealedthe company's future business strategy.

Implications The strategy includes Honda's plans for vehicle production in its keymarkets, including Japan. There is also a focus on emerging markets andthe launch of fuel-efficient and alternatively fuelled models aimed atreducing carbon dioxide emissions.

Outlook This latest business strategy highlights the automaker's ongoingcommitment to ensuring long-term financial growth amid a changingbusiness environment, tightening emission standards, and a shiftingfocus towards alternatively fuelled vehicles.

Honda president and chief executive officer (CEO) Takanobu Ito has announced theautomaker's future business strategy, aimed at ensuring sustained growth in its financialperformance amid the changing business environment. Ito revealed that in order to deliverlow-priced quality products with reduced carbon dioxide (CO2) emissions, the companyneeds to focus on three core areas: advancement of environmental technologies; thestrengthening of manufacturing systems and capabilities; and the strengthening of business

operations in emerging nations. He said that, "What I think is most important, and themessage I conveyed strongly to all Honda associates, was to provide good products to ourcustomers with speed, affordability and low CO2 emissions."

Advancing Environmental Technologies

Honda will accelerate the widespread market introduction of integrated motor assist (IMA)hybrid technology by launching several small-sized models equipped with the IMA system inJapan before the end of 2011. The first of these will be a hybrid version of its Fit subcompactcar, which is scheduled to hit the market by the end of this year.

It will use an advanced, high-output, and compact lithium-ion (Li-ion) battery in its futurehybrid models, starting with the next-generation Civic hybrid, production of which will beginbefore the end of this year.

It will launch a plug-in hybrid vehicle (PHV) and an electric vehicle (EV) by 2012, first in theUnited States and Japan, followed by other key markets over the next 10 years.

It will continue focusing on upgraded technologies to improve the fuel efficiency of gasoline(petrol) engines and will start renewing its engine and transmission line-up from 2012 inorder to achieve improved fuel efficiency in its vehicles.

It is accelerating its efforts to develop a smaller diesel engine, and a model equipped with thisengine will be introduced in Europe in 2012.

It will continue accelerating its efforts to develop hydrogen-powered fuel-cell vehicles(FCVs) and hydrogen refuelling systems.

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Strengthening Manufacturing Systems and Capabilities

Honda's domestic facilities will focus on three key goals: firstly, upgrading productionmethodology in order to accommodate production of small-to-medium-sized low-priced fuel-efficient models; secondly, efficient production of the products to be sold in Japan; and

thirdly, strengthening the support functions for Honda plants outside of Japan. Honda will resume construction of its new factory in Yorii, Saitama Prefecture. It will build

hybrid vehicles and fuel-efficient subcompact models at this facility when it becomesoperational in 2013 (see Japan: 15 July 2010: Honda Abandons Plans to BuildMinivehicle Plant in Japan, to Focus on Hybrid Vehicles InsteadReport).

In response to the global shift towards smaller vehicles, Honda will begin production ofminivehicles at its Suzuka factory in 2012. However, it has decided to stop construction of anew 50-billion (US$576-million) minivehicle factory in Yokkaichi, Mie Prefecture.

Honda will accelerate its efforts to either increase localisation rates or localise production inemerging and strategically important markets. It will strengthen its cross-factory/cross-bordersupply system by increasing the flexibility of its manufacturing system.

Strengthening Business in Emerging Markets

In order to remain competitive in emerging and high-growth markets, Honda will continue itsefforts to localise vehicle production by increasing local sourcing of components.

Honda will launch its "new small car" in India in 2011 as scheduled, priced at under 500,000rupees (US$10,618). It will also launch the same model in Thailand during 2011 as part of itsThai "eco-car" production plans. The Thai-made model will also be exported to theAssociation of Southeast Asian Nations (ASEAN) countries.

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CONCLUSION

My last word of advice is a plan is a living document. It does not have to be perfect or100 percent complete to start using your strategic plan. A business without a plan is like a car

without a steering wheel. A rough draft is better than no plan at all. Put your plan on paper soyou can look back on 2004 and celebrate your well-earned success. Happy Planning!

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BIBLOGRAPHY (Reference)

www.wikipedia.com

www.google.com