Ansoff matrix proposed strategies
MAN4720 | Strategic Plan of Honda Malaysia
Choose an organization with which you are familiar (Honda Malaysia For This Assignment) , write a strategic plan (for simplicity, you might choose to focus on an undiversified business or a business unit within a larger corporation).
Answer:
Introduction
Strategic management is the implementation and formulation of the major objectives and initiatives controlled and taken by the organisation's top management. The management of the organisation takes the strategic management initiatives based on the consideration of the resources as well as an assessment of the internal and external environment through which the organisation can compete (Barney 2014).
Purpose of the assignment:
Background of Honda Malaysia
Strategic challenges
Figure 1: Numbers of cars recalled by Honda Malaysia
(Source: Thestar.com 2018)
Mission, Vision and objective statements
Mission statement
Vision statement
Objectives of the organisation
| Specific | To expand the business with a determined method to reach a large customer base |
| Measurable | This objective can be measured by calculating the numbers of sales of the cars in Malaysia |
| Achievable | This objective can be achieved by taking the growth strategies |
| Realistic | This objective is realistic as the sales of the cars in Malaysia has not increased considerably |
| Time-bound | This objective can be achieved within 12 months |
Objective 2: To promote the business taking innovation as the cornerstone
Environmental analysis
Micro trend analysis
PESTLE analysis
Legal contract of business in Malaysia is called contract of employment that helps the employees to start the work and there are two laws applicable to the contract; one is Civil Law Act 1956 and other is Contract Acts 1950. The corporate tax standard rate in Malaysia is 24% and for the outsider in Malaysia; the companies have to pay the tax for 9 times in each year (Jomo 2016). 10% of tax relief of the foreign companies can attract the foreign companies to do business in Malaysia.
Environmental factors are associated with the climate changes and efficient solutions can surely eliminate the heated engines that can improve the performances of the cars. Honda produces the eco-friendly cars also and the traditional cars can impact on the global warming. Honda Jazz launched in 2017 and this car is electric vehicle which helps the environment to be sustainable.
Industry competitiveness
In Malaysia, the suppliers of Honda are less and Honda has only three suppliers which distribute the cars at right time. The customers of Malaysia look for specific cars and the suppliers need to deliver the cars on right time (Zulkefli et al. 2017). Honda has control over the suppliers when selling the vehicles. Suppliers switching cost threat is high as Honda has to depend on suppliers in the core. Honda’s suppliers are surrounded worldwide and main auto suppliers are AGC Automotive, Takata, American Mituba, Nippon, Nasco and Automatic Spring Products. These suppliers help Honda to manufacture the cars and these suppliers have high force on Honda.
The threat of substitution: (High)
The automotive industry in Malaysia sees the rapid growth and establishment of car projects like Perodua and Proton can change the scenario of Malaysian automotive industry. The automotive industry in Malaysia has registered the marginal growth of 3.05% in 2017 and the competitive rivalry in Malaysia is high as Malaysian car companies like Proton, Perodua, Bufori, Naza and Inokom are also national players in the market (Ipfs.io 2018). International car manufacturers like Nissan, Toyota and Mazda can provide threat to Honda.
Capability analysis
Value chain analysis
| Primary activities | |
| Inbound logistics | Honda Malaysia takes Just in Time supply chain approach which reduced their operation cost such as less space needed, reduction of aging materials/waste, and healthier cash flow for the organisation. This strategy rewards Honda Malaysia with lower cost along with storage. Material handling and warehousing are good for Honda Malaysia. |
| Operations | Honda Malaysia uses advanced production and engineering along with capabilities. The organisation does the quality management in order to improve the design and product testing issue. However, Honda does not have the R&D unit in Malaysia which they have a special unit in the US. |
| Outbound logistics | Outbound logistics of Honda Malaysia is very strong and it has been working with the principle of robust delivery of network. Honda Malaysia does the order processing and distribution through strong logistics software (Natsuda and Thoburn 2014). |
| Marketing and sales | Marketing and sales team of Honda Malaysia works in two different locations, one is in Alor Gajah and another is in Petaling Jaya and the team provides 24 hours services to the customers in post-order. Communication process and channel management of Honda Malaysia is good so that they can reach the large customers in Malaysia. |
| Services | Honda Malaysia uses the local customer service team. Honda Authorised service centres in Malaysia are equipped with the tools expertise and parts that are tailored for every Honda car. Honda Malaysia keeps track of every customer and service advisors attend for the issues of the customers. |
| Support activities | |
| Firm infrastructure | Honda has worldwide production facilities. The manufacturing of the firm is located in Alor Gajah and the company mainly produces the sedans, sport utility vehicles, hatchbacks and electric cars (Honda.com.my 2018). The infrastructure of the firm is handled by the organisation’s staffs’ functions. Manufacturing plant has the capability of manufacturing more than 18,010 units per month. |
| Human resource management | Honda Malaysia recruits employees who live in Malaysia and the employees operate in experience of cultural diversity. The employees are capable of knowledge capture and they have working practice. The employees are mainly skilled and team relationship is very good. In Malaysia, Honda Malaysia has more than 1,200 employees and basic principles of employees are mainly three; buying, selling and creating. |
| Procurement | The global presence of Honda enables the organisation to have easy sourcing of automotive parts from anywhere. The organisation has the ability to create synergy with two or three business branches in Malaysia (Othman et al. 2016). |
| Technology | Honda Malaysia is mainly focusing on pioneering green technology or the eco-technologies which are good for the environment. Honda is passionate in striving to achieve innovation technology and they have challenging boundaries of mobility. Honda has continuous involvement in the joy of mobility. |
Table 1: Value chain analysis of Honda Malaysia
VRIO framework
KPI Benchmarking
This KPI measures how many vehicles are sold in a given time. This KPI can be calculated by adding the total numbers of cars sold in a year. This metric helps to determine if the companies are keeping up with potential demand. In the last three financial years, Toyota and Honda Malaysia both had gained sufficient demand as the manufacturing units showed the increase in demand. In 2017, Honda Malaysia produced only 109,511 cars and it has been increased to 98907 in 2017; however, the manufacturing units of Toyota have been increased more rapidly than Honda Malaysia. Honda Malaysia has sold almost an average 300 cars per day in the Malaysian market (including all model cars).
Figure 2: KPI based numbers of units sold
Revenue
Customer satisfaction
This metric measures the customer satisfaction level for automotive consumers as the variables in this scenario are depended on safety, features and performance. This KPI is measured by conducting the formal satisfaction survey understating the satisfaction level of vehicle consumers. This KPI provides actionable data to the management how the automotive companies can manufacture the cars and provide satisfaction to the customers. Honda uses the survey through online in order to understand the mind of the customers. Toyota advances in the customer satisfaction percentage as Honda Malaysia has been facing the issue of high recall rates and faulty cars (Timmer et al. 2015).
Figure 4: KPI of customer satisfaction
Safety incidents per employee
(Source: Self-developed)
Proposed strategy
SWOT analysis
Strengths 5. High technology products |
Weaknesses |
Opportunities 1. Government regulation |
2. Rising exchange rate |
TOWS matrix
Ansoff Matrix proposed strategies
Product development:
Diversification:
Honda Malaysia mainly sells the four wheeler cars; however, in global perspective; Honda is a mobility company. Honda Malaysia needs to make new product ranges for Malaysian people. It is risky than the product development strategy as the company does not have experience in new market. Honda Malaysia can make new product ranges in Malaysia apart from four wheeler cars; Honda Malaysia can manufacture Honda Powersports, Honda Jet, Honda Power Equipment and Honda Engines. Honda Malaysia is doing great in Malaysia; however, it could fall into trouble if it is not improve the quality of the cars. Diversification strategy will enable the company not to reliable more on four wheelers. It will increase the brand loyalty of the customers as the customers will find different ranges of products from Honda. Honda Malaysia will diversify into products those will relate to later state which follow the current offering.
Evaluation of proposed strategies
| Suitability | Acceptability | Feasibility |
| The current issue of Honda Malaysia is high recall rates. Market share of Honda has been increased by 19% in 2017 (Paultan.org 2018). Product development strategy will be suitable for Honda Malaysia as it would help the organisation to have a large customer base with proper using of advertising. Environmental suitability comes with market penetration as it will help Honda Malaysia to drive out the competitors. Expectation suitability can be met through product development strategy as they will improve the distribution channel and lower pricing strategy. Product development will enable Honda to research more on quality of cars, assessing the needs of customers and increase brand extension. Diversification will make not to depend more on four-wheeler cars only. | Honda Malaysia will meet the expectation of the customers and other stakeholders of the organisation. Honda Malaysia is expecting the positive response from the different market. Diversification and product development both will be acceptable for Honda Malaysia to reduce the risk of lower revenue. Revenue of the organisation can be increased through diversifying the products to the different customer segment. The profit attribution of the company can be increased by retaining and increasing the product market share. Forward diversification is acceptable for the organisation as it will enable the brand to employ new skills and develop operation. | Honda Malaysia has right set of resources, financial, human and technologies. Financial feasibility of the organisation is large as Honda is a global organisation with the right set of cash-flow, break-even analysis and other financial tests. The current workforce will be insufficient when the organisation is going to develop the market. Resources and competencies of Honda will be helpful to expand the business in different in different product categories of Malaysia. Resources, both tangible and intangible help the organisations to implement the product’s quality development (Savino et al. 2015). Honda Malaysia made revenue of MYR 826,47,000 in 2017 (Paultan.org 2018). The organisation wants to improve the revenue through product innovation. |
Reference List
Andre, D., Kim, S.J., Lamp, P., Lux, S.F., Maglia, F., Paschos, O. and Stiaszny, B., 2015. Future generations of cathode materials: an automotive industry perspective. Journal of Materials Chemistry A, 3(13), pp.6709-6732.
Jomo, K.S., 2016. Growth and structural change in the Malaysian economy. Berlin: Springer.
Lacerda, A.P., Xambre, A.R. and Alvelos, H.M., 2016. Applying Value Stream Mapping to eliminate waste: a case study of an original equipment manufacturer for the automotive industry. International Journal of Production Research, 54(6), pp.1708-1720.
Othman, A.A., Hassan, M.G., Ismail, M.A. and Mohd Sharif, K.I., 2016. Exploring the Moderating Effect of Quality Management Practices towards Supply Chain Performance in Malaysia Automotive Industry. International Journal of Supply Chain Management, 5(4), pp.108-113.
Othman, A.A., Kalyani Sundram, V.P., Mohamed Sayuti, N. and Shamsul Bahrin, A., 2016. The Relationship between Supply Chain Integration, Just-In-Time and Logistics Performance: A Supplier's Perspective on the Automotive Industry in Malaysia. International journal of supply chain management, 5(1), pp.44-51.
Thestar.com. 2018. Honda Malaysia Issues Recalls. Available at: https://www.thestar.com.my/business/business-news/2018/04/05/honda-malaysia-issues-recall-for-28399-units-of-2013-year-models/
Timmer, M.P., Dietzenbacher, E., Los, B., Stehrer, R. and Vries, G.J., 2015. An illustrated user guide to the world input–output database: the case of global automotive production. Review of International Economics, 23(3), pp.575-605.
