Individual Decision Making Framework versus Group Decision Making Framework - Honda Company - Case Study Example

RUNNING HEAD: The Honda effect Case Study Case Study Report ‘Individual Decision Making Framework versus Group Decision Making Framework’ NAME SUBJECT LECTURERS NAME DATE Contents Contents 2 Executive Summary 3 1. INTRODUCTION 4 2. THE DECISION –MAKING FRAMEWORK 5 2a. A sociological perspective 6 2b. The occurrence of conformity 7 2c. Individual Decision Making as opposed to Group Decision Making 7 CONCLUSION 8 RECOMMENDATIONS 9 REFERENCE LIST 10 Executive Summary This report seeks to analyze the sociological perspective of individual decision making framework for the Honda Company that saw it become the leading motorcycle company in the American market. Generally the main reasons attributed to the expansion and success of Honda was based on the market share loss, profitability declines as well as scale economy disadvantage in technology, distribution and manufacturing (Pascale, 1996) with Honda coming up with effective strategy to maximize their profits... The Honda Strategy was to be a low cost producer of motorcycles, and exploit the economies of scale in utilizing its market position in Japan to force entry into the US market with a description of it being a ‘leisure’ class. In highlighting the sociological perspective in terms of how the Honda Company makes decisions one would say that it was a two people affair, rising to a group of executives from its formative years. One would say this was to improve the way it managed its affairs in different markets and opening up better business opportunity. The opening of a new company in the United States was crucial and a need to have new executives with vision to manage the company. The recommendations for the continued success of the Honda Company can only be said to involve having and adopting a broad system of business and management strategy. The role of other employees needs to be taken into account by the entire company because more ideas would be gathered as well dealing with the possibility of having and experiencing the Abilene Paradox. A consensus approach in the decision making process with a focus on the descriptive action-research model would be the best to be adopted by the company. 1. INTRODUCTION The main aim and purpose of this report is to analyze the decision making framework of the Honda Company which in 1982 had at least six Japanese executives responsible for their ultimate position of dominance in the U.S market. The instrumental support that was provided by the executives was based on them being inventive and geniuses in the motorcycle business. The embracing of competitive markets as well as good marketing strategy was amongst the key objectives that have led to the success of Honda Japanese Company, in the United States of America. The decision making framework since 1959 to 1982 seemed to be the same with a group of top executives to implement the company decisions as well as adopt them. The report will analyze the two significant issues of the company both at the individual and group levels of the company. By the year 1982, the Company had already had about six executives, bringing in different expertise to the company as well as decisions for implementation for the company. The consensus passed by all of them in terms of key areas of the business was crucial in determining its success within the United States market. The Honda decision making strategy basically revolved around their inability to focus on the perceptions of the American people on motorcycles. Prior to them establishing the American Honda Motor Company in 1959, there was already a limited market for motorcycles in the whole of America. They perceived them to be for rowdy people, groups and for troublesome teenagers The strategies that one can attribute to the group decision making within the Honda Company would be that of having a group structure with the two leaders Sochiro Honda and Takeo Fujisawa being heterogeneous, competent, and able in facilitating the creative (Johnson & Johnson, 2009) process to see the company achieve its objectives. The roles of every individual and contribution to the group can be well linked to their own independent and specialist expertise, subject it to the entire group in order to get the desired outcome (Fitzgerald & Ayson, 2011). 2. THE DECISION –MAKING FRAMEWORK The decision making framework that any company wishes to choose can have either an optimistic or an adverse impact on how any company works. The Honda Company’s main decision making body during its formative years was based on entirely two people that is Takeo Fujisawa and Sochiro Honda all bringing different capabilities, opinions as well as creativity in terms of running the company. The fact that both of them hold different beliefs of what the main focus of the company should entail, they however succeeded in keeping the company together and manage to beat the major European Suppliers. One would say at the onset that they are the most dominant decision makers in the company (Teale et al, 2003). At the apex of the decision making process within the Honda Company are the two founders who play a key role in the determination of what is best for the company. Their decisions are informed with their individual drive for the desired success of the company based on their different views. Moreover when the Company sought to make a decision in adopting the campaign for the Honda Motor Cycle “You Meet the Nicest People on a Honda” (Pascale, 1996) developed by a student, there was an adequate meeting of the mind by the executives with everyone addressing their various opinions on what would be the best marketing strategy. The expansion of the business saw the need of increasing the number of executives capable of handling various aspects of the business. One unique thing about the Honda Company is that one cannot seek to identify the effect of Garbage Can mode of decision making where every person comes up with their own problems and predetermined solutions. In trying to understand the Honda decision making structure, one would say that it surpassed the “Black Swan” theory (Taleb, 2008) in respect to the events that occurred prior to the setting up of the company in the America. The market had been riddled with bad perceptions of the motorcycle and one would have said that it would have had a negative impact on the Honda Company. The company however was able to emerge at the top despite the difficulty in the market based on their strategy and marketing (Beauchamp et al, 2008). 2a. A sociological perspective When one considers the sociological perspective, in the Honda Decision making process, is that despite their different views of how the business ought to be carried out, they managed to stay at the top. The johari window model (Luft in Teale, 2003:274) would be considered the best description for the success of the Honda Company based on their ability to communicate their various views. Contrasting an individual decision making perspective, it would have been a great detriment to the outcome of the company if either of the two proponents would have sought to focus on their own interest without communicating it to the company. The operations of the Honda Company demonstrate that a group can be successful if they adapt and play different roles as well as adhere to different company organizations. Guth and MacMillan (as cited in Amason, 1996) state that it is crucial that all the members of any given group need to be committed to effectively implement all the decisions of the organization. 2b. The occurrence of conformity Conformity essentially refers to the ability of all those persons working within a given setup to exert the desired pressure on the individuals to act and behave that portray a common understanding (Gerrig et al, 2012). Sochiro Honda himself only saw that a motorcycle was important and crucial for racing while Takeo was more open to the possibilities of expanding and conquering the motorcycle company in the United States. Bowing to any kinds of pressures that were experienced by the two executives did not deter the way they run the company. At one particular time they both realized that despite their different opinions, their objective gave a new lease of life to the entire company progress as well sanctions. 2c. Individual Decision Making as opposed to Group Decision Making In the Honda Case study one would attribute the success of the company to the fact that the crucial decisions were made in consultation with all the key executives of the company. This confirms that the performance of the company is enhanced when every person is involved in the decision making processes (Johnson & Johnson, 2009:268). The attribute of group decision making from the Honda Company seeks to highlight that in a group there is little or no room for errors, recalling information better and producing a high quality product (Johnson & Johnson, 1989). The fact that Honda through creative and proper incentives became the best in the American market was due to their dedication and their ability to communicate within the entire company to implement all their decisions. For instance Sochiro Honda was able to design a motorcycle with the aid of financial support from Fujisawa seeing them grow their motorcycle business despite the odds. Their interactions within the company sought to show that an individual cannot do the work of running a company alone without interaction. The correction of errors in their models can be attributed to their interaction with an increase in how they gather information. CONCLUSION The report has sought to analyze the decision making processes in the Honda Company upon its establishment in the United States in 1959 and its growth and dominance in the business. The decision making process within the company is said to be one of the best based on their ability to cohesively and amicably conform to their business needs. Their views on the market having been driven by the Japanese strategy and the microeconomic strategy model one would say that their perception towards business and organization led to their success. Despite the fact that a more open and single minded business strategy would have seen them through a greater level of success, a person cannot single out their view towards adopting a portfolio theory and the experience curves. A sociological perspective is highlighted based on the fact that the involvement of all the company major players in the decision making process, and the implementation stages was ideal in pushing the company to greater success. The fact that every individual within the company are equipped with different skills such as marketing strengths, ingenious, temperament and different kinds of ideas only shows that thinking as a group is the most ideal in seeking to find the best solution to company problems and needs. RECOMMENDATIONS The success of the Honda company can however be linked to a few anomalies in terms of how the company as an entity of its own has come up with the bestselling motorcycles in the world. One way is that the Honda Company should seek to adapt a better and open strategy model as opposed to the one they adopted of microeconomic strategy model. A more broad and enriched perspective to capture the taste and preference of other companies. The company should have gone to a greater length to link the preference of new markets as opposed to imposing their own preference. Secondly a crucial aspect that needs to be adopted would be choosing to adopt the decision making process that is descriptive in approach for instance the Cumming and Worley’s action research model (Akdere & Altman, 2009). This would be important because it would be crucial for all the members to gather their different opinions that would isolate the possibility of having an Abilene paradox where people would fear to table their opinions on what they see would be crucial for the Company’s success. The role of the other employees has not been effectively attributed to Honda Success. A last change to the operations of the company would be to collect the data and information from all the Honda employees. This would be important in ascertaining the growth of the company. REFERENCE LIST Amason , A. C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: resolving a paradox for top management teams. Academy Of Management Journal, 39(1), 123-148. Beauchamp, T., Bowie, N. & Arnold, D. (2008). Ethical Theory and Business Practice. In M. Fitzgerald & S.Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 295-338). Frenchs Forest, Sydney, Australia: Pearson. Fitzgerald, M. & Ayson, S. (Eds.) (2011). Managing under uncertainty: a qualitative approach to decision making. Frenchs Forest, Sydney, Australia: Pearson. Gerring, R., Zimbardo, P., Campbell, A., Cumming S. & Wilkes, F. (2012). Social Psychology. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 449-496). Frenchs Forest, Sydney, NSW: Pearson. Janis, I.L. (1982). Group Think: Psychological Studies of Policy Decisions and Fiascos. In M. Fitzgerald & S.Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 295-338). Frenchs Forest, Sydney, Australia: Pearson. Johnson, D & Johnson, F. (2009). Decision Making. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 498-551). Frenchs Forest, Sydney, NSW: Pearson. Luft, J. (1970). Group Processess: An Introduction to Group Dynamics. In M. Fitzgerald & S.Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 295-338). Frenchs Forest, Sydney, Australia: Pearson. Pascale, R.T. (1996). The Honda Effect. Carlifornia Management Review 38 (4),80. Taleb, N. (2008). Prologue. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making(pp. 163-175). Frenchs Forest, Sydney, NSW: Pearson. Teale, M., Dispenza, V., Flynn, J. & Currie, D. (2003). Management decision-making in context. In M. Fitzgerald & S. Ayson, (Eds), Managing under uncertainity: a qualitative approach to decision making (pp. 7-25). French Forest, Sydney, NSW: Pearson. Read More