STRATEGIC MANAGEMENT

Strategic Management

HONDA MOTORS - RECONCILING MANAGERIAL DICHOTOMIES

The automobile industry crisis of 2008-2010

The automotive industry of the world is the first major victim of the financial crisis. The speed at which the industry suffers the consequences of the economic slowdown has something amazing. Sales drop on both sides of the Atlantic. Announcements of plant closings are multiplying. No manufacturer can escape to a drastic revision of its earnings outlook. The suddenness and rapidity of the disaster is due to several reasons.

First, the automotive industry is extremely sensitive to changes in consumption. What could be easier for households or businesses to postpone for six months or more, buying a vehicle, while the post is heavy on the budget? Then, the auto industry is facing the full brunt of the credit crisis. In developed countries, three quarters of cars are bought on credit. When access to it is more difficult, the impact on sales is immediate. The lean organization of the sector is third reason which just a drop of dating showroom dealers so that the plants are forced to reduce rates or partially close. The storage of vehicles produced but not sold proves to be more expensive than lying off part of some employees.

Once installed this context, the situation of the automotive industry in the World has not much to see. United States, these economic problems are indeed grafted on a heavy structural crisis.

Finally for years, companies suffer from inadequate cost structure. Forced to assume pension and health costs of their employees, manufacturers assume an average additional cost per car of 1400 dollars compared to their main competitors.

Energy crisis of 2003-08

In the autumn 2007 price breaks $ 80 mark and continued to grow until the end of the first decade of July next, in 2008, reaching unheard of before July 11 the value of $ 147 per barrel mark Light Sweet. All this time the major oil consumers, primarily in the United States continued to increase in gasoline prices, products and services, which catalyzed the development of non-payment crisis on bank loans. In 2008 payments crisis escalated into a massive recession, during which the bankrupt's largest financial companies in the country, and accumulated over the past forty years, enormous challenges in the U.S. economy related to its debt nature, moved up to date, resulting in burst current global economic crisis, which led to a sharp drop in oil demand and the relative stabilization of the price per barrel in 2009, in the range of 35-75 dollars. 2008 Since the second half of 2008 as a result of landslide lower price crisis spread to oil-exporting countries, which on several occasions resorted to a reduction in production quotas. The situation, therefore, has become a vicious circle. Some analysts suggest that the reduction in quotas was due not so much a desire to support the price of a barrel as a simple consequence of a physical shortage of black gold, which is who provides the price, and there was the ...