Honda is a multi-national company that manufactures a range of products including automobiles, motorcycles and lawn mowers. Established in 1948 and becoming one of the leading manufacturers in the world, it has 119 production facilities in 33 countries that supply Honda products to nearly every country in the world.
How has it internationalized operation?
An answer to this question will be given by showing Honda’s strategies in the process of internationalization on the example USA.
Honda’s internationalization began in 1959, when it founded the subsidiary “Honda Motor Co. Inc.” in the United States. Cars were exported into the United States then. Therefore, Honda Motor Co. Inc. was acting as an intermediary for Honda of Japan. At the begining, it had low commitment to avoid risk.
Then, it founded “Honda of America Manufacturing” via FDI tool in 1981 with assembling of the Honda Accord. However, the parts for the cars were still manufactured in Japan and only assembled in the United States. In this time, Honda pursued a global strategy with the same cars being sold around the world to take advantage of economies of scale.
Iin the mid 1980s, it changed its strategy to adapt to local markets, from a global approach to a multinational approach. It operated in five different strategic regions: North America, Europe / Middle East / Africa, South America, Asia / Oceania and Japan. To overcome the loss of economies of scale, it adapted new strategy with the basics developed by a common development-centre and then these basics transfered to all strategic regions for modifications to satisfy different customers. To cope with increased cost, it also adapted new manufacturing approach: LEAN MANUFACTURING SYSTEM.
Nowadays, it operates in 6 strategic regions, persuing "Green Technology" concept to serve the whole world's customers.