2019

Strategic Management by
Pearce and Robinson

HONDA MOTOR CO., LTD. CASE STUDY

SALSA ALDILA [43116010248]
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 TABLE OF CONTENT
TABLE OF CONTENT........................................................................................................1
INTRODUCTION................................................................................................................2
1.1 Background...........................................................................................................2
1.2 Purposes................................................................................................................2
DISCUSSION........................................................................................................................3
2.1 Company mission and social responsibility..........................................................3
2.2 Internal analysis....................................................................................................3
2.3 External environment............................................................................................3
2.4 Strategic analysis and choice................................................................................4
2.5 Long-term objectives............................................................................................5
2.6 Generic and grand Strategies................................................................................5
2.7 Short-term objectives............................................................................................5
2.8 Functional tactic....................................................................................................6
2.9 Policies that empower action................................................................................7
2.10 Restructuring, reengineering, and refocusing the organization..........................7
2.11 Strategic control and continuous improvement..................................................8
CONCLUSION.....................................................................................................................9
REFERENCES......................................................................................................................10

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 INTRODUCTION
1.1 Background
“The strategic management is defined as the set of decisions and actions that result in the
formulation and implementation of plans designed to achieve a company’s objectives. A
strategic management process is the flow information through interrelated staged of
analysis toward the achievement of an aim.” – Pearce-Robinson (2004)
From the definition above, we can see that strategic management is a formulation to be
implemented by the organization to achieve an organization’s objectives with the flow
information that help to give feedback to each stage.
The key component of Strategic Management according to Pearce and Robinson (2004)
include. (1) Defining the company mission and considering the social responsibility (2)
Analysis of internal and external environment (3) Identifying strategies that are most effective
at building sustainable competitive advantage based on key value chain activities and
capabilities (4) Arriving at list of long-term objectives and identification of Generic and Grand
Strategies (5) Creating short-term objectives, functional tactics and refining policies that
empower actions (6) Restructuring, reengineering, and refocusing the organization (7)
Tracking a strategy as it is being implemented, detecting problems or changes in its underlying
premises, and making necessary adjustment.
To identify the Strategic Management of Honda Motor Co., Ltd, analyze and find each of
key component of Strategic Management is needed. The result will be the unity of formulation,
implementation, and control process of Honda in their operation to balancing the internal
capabilities and external forces of their business.
1.2 Purposes
This paper is made with the purpose of being able to explain out each material in Strategic
Management as the final exam of the subject. This paper consists of the theoretical terms of
the materials and also the understanding of the arranger in the implementation of case study
from Honda company.

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 DISCUSSIONS
2.1 Company mission and social responsibility
According to Kotler, a mission statement is a statement of the organization’s reason for
being, its purpose – what it wants to accomplish in the larger environment. A mission statement
should screen out the company purposed of their existences. An effective mission statement clearly
defines who the customer is and what services and products the business intends to provide. It also
serves as a guide for the operations and as the foundation for future decision-making. Nowadays,
beside defines the mission, an organization also should consider the social responsibility towards
the society. It intends the contribution of the organization to the societies that sustain the
organization.
Case Study: Mission statement from Honda “serve people worldwide with the joy of expanding
their life’s potential – lead the advancement of mobility and enable people everywhere in the
world to improve their daily lives”.
From the mission statement, we can conclude that is Honda wants to be a sustain
organization by positioning their self as the need of people. Beside that, they want to help people
or their customers in improving their daily life activities by providing the advancement of mobility.
2.2 Internal analysis
Internal analysis is the analysis of the internal strengths and weaknesses of the
organization. It gives the organization an insight into its competencies and desirable movements,
that can be use to improve the organization’s operations and attain customer satisfaction and
increase profit. The results of the analysis can be use as the comparisons of the past achievement
and the potential risk with the recent capabilities to identifying the future capabilities. It tells where
organization has a scope of improvement and which are the areas where the organization is doing
good. It is primarily a way of understanding the pros and cons through self-evaluation.
Case Study: “Concerning the strengths of Honda, there are two existing strengths. The first
one is our strength in manufacturing a broad range of products including motorcycles,
automobiles and power products. The second strength is the number of markets and 38
million customers we connect with each year through our products.”
By knowing their strengths, Honda can make the improvement that will complete their
capability in serving their products to the customers. With two existing strengths, Honda add new
strength which is ability to create solutions, which includes both Mono-zukuri - the art of making
things, and Koto-zukuri - which is creating new experiences through brand storytelling around the
art of making things. The additional strength will help Honda in strengthen their value proposition
to expand people’s dream and potential by making a product that not only needed but also valuable
and meet people’s dream.
2.3 External environment
External environment analysis is a primary study and analysis of macro-environmental
forces, industry analysis and competitor analysis in purview of an organization’s growth. Macro-

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environmental forces are dimensions in the broader society which influence the organization
within it (politic, economic, socio-cultural, technology, environment, legal, demographic, and
global). Industry environment includes set of contingencies which have a direct influence on the
organization’s action and response. It is including of threat from the new entrant, power of
suppliers, power of buyers, product substitute, and rivalry. Then, competitor analysis focuses on
predicting or anticipating the competitor’s dynamism in action and response.
Case Study: Prices for motorcycles, automobiles and power products in certain markets may
experience sharp changes over short periods of time. This volatility may be caused by various
factors, including fierce competition, short-term fluctuations in demand caused by instability
in underlying economic conditions, changes in tariffs, import regulations and other taxes,
shortages of certain materials and parts, a steep rise in material prices and sales incentives.
There is no guarantee that such price volatility will not continue for an extended period of
time or that price volatility will not occur in markets that to date have not experienced such
volatility.
Overcapacity within the industry has increased and will likely continue to increase if the
economic downturn continues in Honda’s major markets, leading, potentially, to further
increased price volatility. Price volatility in any of Honda’s markets could adversely affect
Honda’s results.
The example from Honda show us that in determining price of their product, there are
external environment that have a big involvement in their pricing. The example shows how the
volatility of industry affect Honda’s results. The volatility in economic conditions, changes in
tariffs, import regulation and other taxes that will face by Honda from their external environment.
Then,
2.4 Strategic analysis and choice
Strategic analysis and choice are stage that is the organization identify strategies that are
most effective at building sustainable competitive advantage based on key value chain activities
and capabilities. The results of screening process of the company mission, internal analysis, and
external analysis be the selection options from which strategic choice is made. The process is
meant to provide the combination of long-term objectives and strategies that optimally position
the firm in its external environment to achieve the organization’s mission.
Case Study: The collaboration for open innovation with third parties. We will clarify what
we should do on our own, and we will focus on that. At the same time, we will be proactive
in engaging in open innovation with external partners.
Honda’s strengths have been advantages in technologies and products centering around the
powertrain and packaging, which includes internal combustion engines as well as more recent
electrified vehicles. However, in the area of the art of making things, they are collaborating with
General Motors, Hitachi Automotive Systems and Yamaha Motor. And in the area of creating new
experiences about the art of making things, they are already collaborating with Japan Post and
Grab Inc. in the area of motorcycles and with Waymo in the U.S. in the area of automated driving.

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Those collaboration from external parties will strengthen their product. They are trying to complete
their production ability by collaboration with other parties that already expert with things that they
are not expert in.
2.5 Long-term objectives
Long-term objective is goal of the organization that intent to be achieve over a multiyear
period. It consists of the planned improvements of organization’s competitive position,
profitability, technology leadership, investment gain, productivity, employee relations, and
corporate image.
Case Study: To embody our 2030 Mission Statement, we set the direction of our concrete
initiatives. From three perspectives - “Creating the Joys,” “Expanding the Joys” and
“Ensuring the Joys for the Next Generation” - we defined three areas of our initiatives.
To achieve their set mission, Honda make three initiative from three perspective. Those
three initiatives are things that will support the organization forward to their mission. When we
saw the initiatives, it somehow doesn’t explain clearly the goals. However, they are like philosophy
of work that will explain more in their short-term objectives.
2.6 Generic and grand Strategies
Generic strategy is that type of strategy which helps to create strong competitive position
in terms of cost or differentiation. Its objective is to create strong competitive position, attract
existing, new and competitor’s customer and to increase profitability. While grand strategy is that
type of strategy which helps to achieve organizational objective. Its objective is to show direction
to the organization to achieve organization’s objective.
Case Study: First, we will further enhance our inter-regional coordination and collaboration
and increase the efficiency of our operations from a global perspective. Second is the
collaboration for open innovation with third parties. We will clarify what we should do on
our own, and we will focus on that. The third area of focus is to strengthen our business
foundation and ensure sustainable operations, especially with our automobile business, in
order to solidify existing businesses.
In order to achieve their mission statement, Honda use innovation as the strategy to realize
the mission. They are using collaboration with third parties to make a new value to their products,
so that it can expand people’s dream of their product.
2.7 Short-term objectives
Short-term objectives are the translation of generic and grand strategies to be an action on
moving forward to the long-term objective. Organization typically have many short-term
objectives to provide guidance for their functional and operational activities. The actions are like
identifying specific functional tactic to be done in short-term, and create an accountability of the
operation within a limited time frame. The objectives should be written in clear, plain and precise
language.

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Case Study: From the first perspective of “Creating the Joys,” we will work on “creating
value for mobility and people’s daily lives.” We will focus on three areas, namely mobility,
robotics—with a focus on AI—and energy solutions in order to provide people with the joy
and freedom of mobility and the joy of making their lives better.
From the second perspective of “Expanding the Joys,” we will focus on “accommodating the
different characteristics of people and society.” In this area, we will strive to further expand
the joy of people by offering products and services that are optimized based on Honda’s
desire to “utilize technology to help people, while putting people at the core.”
From the third perspective of “Ensuring the Joys for the Next Generation,” we will make
progress “toward a clean and safe/secure society.” Striving to become No. 1 in the areas of
the environment and safety, we will invest more resources in these areas. And we will strive
to become a company that leads the efforts to realize a carbon-free and collision-free society.
Honda has three initiatives for their long-term objectives. From that three initiatives, Honda
translate the goals to be some action as explained above. The short-term objectives are like things
that they should achieve in order to complete the long-term objectives. It explains clearly the way
or action that every department should involve in the operation of the organization. Honda also
targeted a focus to each initiative, so that, every department can clearly know their role.
2.8 Functional tactic
According to Pearce and Robinson (2011), functional tactics are the key, routine activities
that must be undertaken in each functional area – marketing, finance, operations, R&D and human
resources management – to provide business’s products and services.
Case Study:
Finance: For the mid-term, we are expecting to incur up-front expenses related to the
introduction of electrified powertrains and automated driving technologies, however, we will
establish a corporate structure which will enable both sustainable growth and shareholder
returns even in a tough competitive environment. To be more concrete, we will further
improve the fundamentals of our existing businesses by pursuing various measures,
including the realization of highly efficient operations through greater inter-regional
coordination and collaboration as well as cost reduction through increased commonality of
parts and platforms. In addition, we will continue to pursue open innovation and the
formation of alliances.
Human Resources: At Honda, for the purpose of enabling our engineers to carry out free
and open-minded R&D activities and create unique and competitive products with advanced
technologies, key research and development operations maintain their independence as
subsidiaries.
R&D: Furthermore, in February 2017, Honda R&D Co., Ltd., the R&D subsidiary of
Honda, announced plans to establish R&D Center X to strengthen our R&D in “new value”

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areas that include robotics technology, mobility systems and energy management, etc. The
R&D Center X began operations in April 2017.
Beside formulated strategy for the operational of the organization, Honda also runs tactics
for its functional side. There are some tactics from finance, human resources and R&D department.
For finance, Honda use to incur up-front expenses that related to the introduction of their new
technologies that will reduce the cost. To maximize the work performance, Honda use advanced
technologies to create unique and competitive product. They also always improve and add new
value to their products towards some area include robotics technology, mobility systems and
energy management.
2.9 Policies that empower action
Policies are directives designed to guide thinking, decisions, and actions of managers and
employees in implementing strategy. It helps organization in standardized many routine decisions
and clarifying discretion managers and employees can exercise in implementing functional tactics.
The policies should be derived from functional tactics with key purpose of aiding strategy
execution.
Case Study: As of March 2017, Honda’s existing global vehicle assembly and product
assembly plants had acquired ISO 14001, an international certification for environmental
management systems. Honda is in the process of obtaining certification for newly built
plants.
For the fulfillment of our 2030 Vision, we will set the corporate attitude to “pursue growth
through the pursuit of quality.” We will increase the quality of Honda products and services,
and at the same time, we will increase the quality of our corporate activities, which we will
carry out based on the strong principle that we want to please our customers.
Honda had acquired ISO 14001 for their assembly plants. It shows that Honda’s operation
already below the procedure of International standard. The standard will guide every assembly
process in the production department. Then, every employee should follow the standard in making
decision for assembly process. Honda also set corporate attitude that will show company’s attitude
to the stakeholder. It shows the operational things of the organization that is balancing the growth
with the quality itself.
2.10 Restructuring, reengineering, and refocusing the organization
Restructuring, and reengineering are terms that reflect the critical stage in strategy
implementation wherein managers attempt to recast their organization. The structure, leadership,
culture, and reward systems of the organization should be assessed and if need be changed to
ensure cost effectiveness and quality.
Case Study: The special merit of Honda’s automobile development is our “SED* development
system,” where development teams, production teams and sales teams work as one and form
a project team to pursue product development. We will further advance this development
system and introduce a new development process for Honda’s art of making automobiles,

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which will enable us to more efficiently create both products and new experiences that appeal
to people’s emotions. Through those new initiatives, we will aim to create attractive
automobiles and achieve comprehensive cost reduction by making both the development and
production of new automobiles more efficient.
To ensure cost effectiveness and quality, Honda applied new development system that
consist of many teams from different function in the organization to be a team to pursue product
development. The system that involved operation and sales function in the organization can make
a product that will exceed customers need. Feedback from the sales function can help development
team to find a solution that will meet customers demand. The solution must be executed by
production team clearly. Then, the result of the product can fulfill expectation of every team in the
project team even their customers.
2.11 Strategic control and continuous improvement
Strategic control is concerned with tracking a strategy as it is being implemented, detecting
problems or changes in its underlying premises, and making necessary adjustments. It is a process
to monitor performance and take corrective action. Strategic control seeks to guide action on behalf
of the generic and grand strategies as they are taking place and when the end results are still several
years away.
Continuous improvement is a form of strategic control that allows the organization to
respond more proactively and timely to rapid developments in several areas that influence the
organization’s success. The improvement itself comes from the analysis of post-implementation
results that can be used to enhance future decision making.
Case Study: The Company is adopting a “company with an Audit and Supervisory
Committee” system with the aim of reinforcing the supervisory function of the Board of
Directors and ensuring the prompt decision-making. Under the system, the Company
operates the Audit and Supervisory Committee, which consists of directors, to delegate the
authority to directors from the Board of Directors and accelerate the separation of the
supervisory function and business execution function.
With the adoption of the function of audit and supervisory committee, Honda can maximize
their control by that system. The way they focusing supervisory function in the organization make
the operation more controlled. The controlled operation helps them to find out a process of system
that not efficient in producing. The result of the committee works can make a new method or
improved process to help the organization more effective and efficient.

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 CONCLUSION
At an organization, strategic management model must be considered as an important
process. Strategic management model helps the organization in mapping their path towards their
goal. As the case study of Honda Motor Co., Ltd. We can see the process from the formulation,
implementation, and controlling process of their way to achieved their purpose in future.
Begin from the mission statement that determined what the organization want to be in the
future. Their existence and image that they want to build towards their stakeholders which is
customers, government, community, investors, employee, etc. After make the proper one, an
organization should have analysis result from internal and external forces to know their capabilities
in the fluctuates market. The results will help them to choose what kind of strategy that will be
more effective and efficient to achieve their mission. In this case, Honda choose to use innovation
by collaboration with other parties to have cost reduction and quality improvement of their product.
By setting the long-term objective in a path will help the organization to precise the things
that they should focus on. It somehow not really precise about the job arrangement and it will
transform into detail information in short term objective. The courage action from the short-term
objective that explain clearly about things that each department must do in realizing the long-term
objective. It also supports by functional tactics from finance, marketing, operation, human
resources, etc. department as the person in charge of the functional side of the organization. Honda
itself likes to elaborate the organization’s function with R&D and production department in
purpose to exceed customers expectation of a products.
Honda sets some international standard of their assembly process as the guidance of their
employee in decision making process that will help them in implementing strategy. They also have
corporate governance that showing a flow of their work culture, so that, the employee can follow
the flow of the culture itself.
As a consideration to make the implementation of the strategy more effective and efficient,
an organization usually doing the restructuring, reengineering, and refocusing of their operation.
To accelerate the result of their product, Honda make a project team that consist of production
team, development team, and sales team to be as a team to make the production more efficient.
Then, for the controlling of the implementation of the strategy, Honda adopting “Company with
an audit and supervisory committee” to accelerate the separation of the supervisory function and
business execution function.
From each key component, Honda formulate, implement, and control their organization
process in order to achieve their mission that already set in the beginning.

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 REFERENCES
Pearce II, John A Robinson Richard B. Jr. (2003). Strategic Management Formulation,
Implementation and Control. Mc Graw hill, Boston.
Robbins, Stephen P & Mary Coulter. 2013. Global Edition: Management. England: Pearson
Education.
YouSigma. (2008) “A Review of Strategic Management Process”

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