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The Group:
A leading group in all respects through effective use of resources, technology and good business
practices, attracting and retaining high quality associates and developing them to their fullest
potential, keeping customers in the highest esteem and giving attractive sustained returns to
shareholders.

The Company Introduction:


Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor CompanyLimited
Japan, and the Atlas Group of Companies, Pakistan.The company was incorporated on November,
1992 and joint venture agreement wassigned on August, 1993. The ground breaking ceremony was
held on April 17, 1993.
The first car rolled off the assembly line on May 26, 1994. Official inauguration was done by
President of Pakistan, Sardar Farooq Ahmad Khan Leghari.Mr. Kawamoto, President of Honda
Motor Company Limited Japan was also present tograce the occasion. The company is listed on
Karachi, Lahore and Islamabad Stock Exchanges.On July 14, 1994, car bookings started at six
dealerships in Karachi, Lahore, and Islamabad. Since then the Dealerships Network has expanded
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and now the companyhas sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and
SpareParts) Pitstops network in all major cities of Pakistan. Since the commencement
of production in 1994, the company has produced and sold more than 150,000 cars till Oct,
2008.All dealerships are constructed in accordance with the standards defined by Honda World
over.
Percentage of local parts conforms to the government's policy. Local vendors are continuously
patronized to develop parts locally. The quality of local parts is thoroughly checked to meet
stringent international standards.We always strive to give outstanding service to our valued
customers. In addition toproviding regular service to customers, the company also regularly
conducts Service Campaigns, to facilitate customer's need for service. This has given our customer
sabsolute confidence in our cars, clearly evident from the ever increasing sale volumes.It is the
constant endeavor of Honda Atlas Cars (Pakistan) Limited to achieve.

HONDA IN PAKISTAN
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited
Japan, and the Atlas Group of Companies, Pakistan. The company was incorporated on November
--, 1992 and joint venture agreement was signed on August ---, 1993. The ground breaking
ceremony was held on April 17, 1993 and within a record time of 11 months, construction and
erection of machinery was completed. The first car rolled off the assembly line on May 26, 1994.
Official inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan Lehar. Mr.
Kawamoto, President of Honda Motor Company Limited Japan was also present to grace the
occasion. The company is listed on Karachi, Lahore and Islamabad Stock Exchanges

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Product line:
Honda Atlas has competitive edge to other automobile Companies in term of product quality. The
products and their prices are following as:

Honda Civic. PKR 23.5 - 30.0 lacs.

Honda City. PKR 15.2 - 18.2 lacs.

Honda Accord. PKR 112.5 - 112.5 lacs.

Honda CR-V. PKR 82.0 - 82.0 lacs.

Honda CR-Z Sports Hybrid. PKR 34.2 - 35.0 lacs.

Honda HR-V. PKR 36.2 - 36.2 lacs.

Core Competencies of Honda:


Largest Capacity Motorcycle manufacturing facility.
Vertically integrated high precision engine parts.
Flexible manufacturing facility.
Only company using ED-Paint Coating System.
Largest nation-wide exclusive Sales and Service network.
Capable of new model development by local R & D.

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Competitive Priorities of Honda


Honda company compete in the marketplace by virtue of one or more of the following
competitive priorities:

Quality

Lead-time

Cost

Flexibility

Competitive forces
Honda faces competition in the international markets from a number of brands such as

Toyota

Mitsubishi

Mercedes

BMW

However, Honda cars in Pakistan that had started its operations in Pakistan 1994 under a joint
venture with Atlas has been is enjoying the key position in 1300 c. c and above. The main
competitors of Atlas Honda in Pakistan are:

Operational Strategy
Honda operates in the worldwide market with 134 production facilities in 28 countries and
31R&D facilities in 15 countries, about 167000 Honda employees and associates serve 23
million customers worldwide annually. Honda s global operations are divided into administrative
Regions responsible. for operating. Hiring and engaging the people and philanthropic initiatives
locally in the communities that Honda operates. Honda is pushing the independence of their local
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management and sales operations, at the same time with integrating and forward-looking plan for
each region. They operate under the conduct guidelines that help member companies and
associates in evaluating and managing risks, complying with laws and regulations, keeping a
high level of transparency in operational level, that s all to maximize the worldwide customer
satisfaction.

Decision Making
In order to reach a decision based on objectivity and priority based analysis, one of the most
frequently used techniques is the QSPM. This technique enables us to measure the attractiveness
of feasible alternative actions. QSPM objectively indicates which alternative strategies are the
best QSPM uses input from stage 1 and matching results from stage 2 analyses to decide among
alternative strategies. Like other strategy formulation analytical tools, QSMP requires good
intuitive judgment .In the stage 3 of Honda Atlas Cars, there were three alternative strategies that
we found very attractive. The data collected from the external and internal audit, and the
matchingdone from the opportunities, threats, weaknesses and strengths brought us toconsensus
of selecting these alternative strategies. We selected three strategies in total;

1. Strategic Decisions
(Planning Products, Processes and Facilities)
Honda cars used strategic decision-making when they plan the company's future. Strategic
management involves defining long-term goals, responding to market forces and carrying out the
firm's mission. Honda company mission is equivalent to its purpose -- its primary reason for
existing. Developing long range production plans. Including process design Selecting and managing
production.

2. Operating Decisions
(Planning Production to Meet Demand)
The demand of Honda cars company's products or services are stable over time or its resources
are unlimited, then aggregate planning is trivial. Demand forecasts are converted to resource
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requirements, the resources necessary to meet demand are acquired and maintained over the time
horizon of the plan, and minor variations in demand are handled with overtime or under time.
Aggregate production planning becomes a challenge when demand fluctuates over the planning
horizon.

3. Control Decisions
(Planning and Controlling Operations)
The Honda companys Operational planning is an estimation of what needs to be done to ensure
operational processes are efficient and effective-that supply always meets demand. Honda
Operational control is to ensure that operations conform with this estimation, and if they do not,
adjustments can be made.
Typical activities Honda companys performs planning and control process include:

setting objectives-so that you know what is to be achieved by your plans and by when

allocating tasks and responsibilities-who is to be involved with the new product and
service and how they are to be involved

scheduling-work patterns, process scheduling, supply and demand scheduling

assessing resource requirements-people and their skills, money (budgets), time, raw
materials, plant and equipment, capacity

Inventory Management:
Inventory is a stock of any things held to meet future demand. Inventory is created when
the rate of receipts exceeds the rate of disbursements. It is depleted when disbursement exceeds
receipts. There are three types of inventory:

Raw material inventory

W.I.P. inventory

Updating records.

Providing management reports.

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Automating the recording process.

Re-computing decision parameters

In HACPL, the inventory basis and audit reports are prepared. Finished goods inventory The
basic objective of firm is to minimize total inventory cost (ordering & carrying).The same is the
case in Honda Atlas Cars (Pakistan) Limited. In HACPL, the whole inventory system is
computerized. Following are the advantages of this computerized system.

Safety Stock
HACPL maintains a safety stock of 2 to 3 months. The reason for maintaining a safety stock is as
follow:

To protect against shortage that occur due to suppliers.

To protect smooth and continuous operations.

In HACPL, the inventory is held in the following forms:

Inventory of imported parts.

Inventory of local parts.

In order to avoid stock out, they have more safety stock of imported parts as compared to that of
local parts.

Economic Order Quantity (EOQ)


Economic Order quantity is used to determine the most efficient order size of Honda company.
Ordering inventory cost a company money in several ways, there is a carrying cost for holding
inventory, and there is a fixed cost per order. By determining the most efficient order size,
Honda cars satisfy demand for their product while minimizing the costs associated with
ordering and carrying inventory.

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Process Management
Process Design:
Honda Atlas Cars (Pakistan Ltd. has a separate production department which is headed by Vice
President (Production). A Japanese person is currently working on this seat. The production
department has a number of sections such as:

Vendor Section

Engine Section

Welding Section

Maintenance Section

Paint

Vehicle quality control

These along with some other sections are arranged in four groups, each one headed by a Gm. For
Example, there is one GM for welding, paint and maintenance.

Capacity Planning In Honda


Honda took a measure in capacity planning and created a special form. This form keeps the coexistence between plan-based product planning which refers to conduct production in advance
with a lot inventory, and order-based product planning which defines the production aligns with
the customer order. This reconciliation enables Honda leverage the demand and supply together
with the level of inventory.

Plant Capacity
Currently the plant has the capacity of 35 vehicles per day which is lower than that of Toyota. As
for as the production level is concerned, it varies from time to time.

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It was15 cars per day when I visited the factory. This shows that the plant is being underutilized.
There may be several reasons for this under-utilization such as:

Weak economic condition of the country.

Problems with cotton crop.

High price of Honda Cars.

Decrease in purchase of cars by large companies.

Presence of Toyota

Decrease in the purchasing power of potential customers.

Project Management
Honda has a reputation for innovative product designs and advanced engine technology. The
reputation has required an effective mix of project management skills and functional skills in
engine R&D. With regard to project management, Honda tends to assign most engineers full time
to specific product teams. In contrast, at other Japanese firms and at most other firms and at most
other auto makers in Europe and United States, component engineers usually take responsibility
for two or three vehicle projects at the same time. Spreading technical expertise across multiple
project is one of the major characteristics of a matrix organization, as opposed to independent
product or project teams, such as Chryslers. When it starts work on a new product, Honda forms
a temporary project team that resembles a task force of engineers from different functional areas.
Honda does have strong managers, which it calls Large Project Leaders

(LPLs).Although top

management has slightly reduced their authority in recent years, the LPLs are still more powerful
than project managers in traditional matrix organizations such as Renault and Mitsubishi.
Therefore, they have been really close to the ideal heavyweight project manager.

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Supply Chain Management in Honda


Honda does build long-term relationship with its suppliers, but not use the form of institutional
mechanism, for example family relationship and supplier association. In the purchasing activities,
Honda intervenes directly in the activities carried out by its component makers. For a number of
components Honda arranges the purchase of the raw materials two or three tiers back along the
supply chain, which enable the suppliers gain advantage of price and quality, on the other hand,
Honda often dispatched experts to support the suppliers and solve the problems relating with
components delivery and quality. This kind of partnership assures continues supply of materials at
a reasonable cost and involves the supplier to materials innovation and improvement which will
facilitate the organization to produce products with variety. A striking point is the reconciliation
with multiple and single resourcing strategy. For example, Honda purchases two different types of
seats for one automobile model from supplier A and supplier B separately. This method enable
Honda to gain the advantages of single supplier, (for example, deliveries can be scheduled easily,
long-time partnership can be established), and multiple supplier,(a flexibility of volume, the risk
of a disrupted supply, better service and price).

Location Decision in Honda


There are over 40 Japanese-owned firms producing automobile components which enable Honda
to carry out Just-in-time logistics to material supplies. On the other hand, the firms are dispersed
to small town locations 10-20 miles apart, which avoids the increase labor cost via separation the
local labor markets.

Logistics Department:
Under vendor improvement Program Company ensure timely supply of raw material; reduce
rejection in parts and ensuring quality under the assistance of quality assurance department.
Improve the sourcing of vendor to make them company strength.

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Purchase department control all purchases other than auto (CAR) like stationary, kitchen items,
office supplies and all type of purchase but not car or parts related... Vendor procurement
department purchase parts and other auto related parts from local, head office, and from import.

Main Functions:

Vendor Procurement (VP)

Local Purchase

Finished Goods Dispatch

Vendor Improvement Program (VIP)

Out Source Processing (OSP)

Transportation Mode:
HACPL has a habit of using only one mode if transportation (i.e. Highway) for the both inputs
and outputs. The logic behind this mode is low cast and flexibility of shipping to almost any
location in
Pakistan.Currently, HACPL has no transportation fleet of its own. Nearly five transportationcom
panies are performing this function on contract basis. NLC is also included in these companies.

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