THE HONDA EFFECT

Case Study on The Honda Effect



Case Study on The Honda Effect

Strategy

A strategy can be considered as plan that involves actions and steps to accomplish the set objectives and aims of a business. It is concerned to gain a state of benefits as compare to business rivals and use the available resources in a best way to explore and attain the potential opportunities. Since, the chances or risks and uncertainty to any business plan or goal is always present in the business environment, therefore, forming strategies is more feasible to a constant plan as it allows management setting various options to achieve a certain goal, which is known as strategic options. With respect to management perspective it can be considered as determination of long term goals and aims of an organization, planning and designing actions and necessary steps, allocating resources to carry out the set objectives. In addition, with respect to marketing, making strategy involves utilizing available resources to take advantage of maximum opportunities in order to surge up sales and gain competitive advantage over competitors in market (John. R. & Gillies. L. G., 1996, p. 176).

Strategy and Culture

There are three distinct factors that play a vital role in differentiating an organization from other market players. These include, domestic capital market, domestic labor market, and strategic planning. Every country has unique official operating settings, and impact of these settings form institutional structures. National dissimilarities particularly affect capital and labor market. There are two basic organizational models used in this regard in various parts of the world and these are Anglo American and Continental European Model. Anglo American model focuses on equity financing, multinational ownership practices, effective corporate control, and flexibility in labor markets. On the other hand, Continental European Model focuses on debt financing, less dispersed ownership, ineffective corporate control and stringent labor markets. Organizational practices may also be affected by its national political influences that affect its flexibility and assortment (Scott, W. R., 2001, n.d.).

Cultural values of any organization are reflected by its corporate governance style that represents the social control of an organization. Culture represents the forms of thoughts, emotions and reactions that reflect traditional values and philosophies, which distinguishes one nation from another. Cultural aspects affect all the operations, practices, structure, tasks and hierarchies of an organization. Such dissimilarities in countries may take place as a result of geographical, economical and genetic factors (Scott, W. R., 2001, n.d.).

According to Hofstede model (Hofstede, G., 1980, n.d.), culture can be described in five scopes, which are explained below:

Uncertainty avoidance

It is greater in nations and groups, where people favor rules and likely conditions. USA has lower uncertainty avoidance therefore, it tends to take risk and do not follow much rules and regulations. Therefore it can be said that organizations operating in USA may have informal organizational structure that is reflected in their planning processes as well. Comparatively Japan has high uncertainty avoidance. They do not completely trust just one strategy. They tend to prepare them selves for uncertainty ...