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One car can't suit everyone, Honda chairman says

STANFORD -- Honda Motor Co. can no longer build the same cars to sell in all segments of its worldwide automobile market, Nobuhiko Kawamoto, head of the Japanese automaking giant, told a Stanford Business School audience Monday, Nov. 4.

Industry has become global but major markets - including Europe, North America, and Japan - "not only are different from one another, each market also is increasingly segmented,: he said. "As a result, a world car concept will be more difficult to apply in most segments of the auto industry."

Honda has manufactured cars in the United States since 1982. Next year, Kawamoto said, it will export the models made in the United States to 18 nations, including Japan and Europe. To succeed, he said, Honda must satisfy not only the tastes of customers, but also find a fit within different societies.

"Our operations have both an economic and social impact wherever they are located," he said. "As a result, the need to address political, social, and trade issues that affect our operations is increasing."

New corporate structure

Kawamoto, who last year became president and CEO of Honda Motor Co., said that Honda has reorganized its corporate structure to become more flexible and better able to meet market needs. At the corporate level, it has created a planning board - representing product development, sales, production, quality and cost functions - to develop a strategic worldwide plan. Each member of the board then becomes responsible for implementing the plan in response to the needs in the specific market in which he works.

For instance, in Marysville, Ohio, where 10,000 Honda employees produce cars, production operations already are independent of strict corporate control.

"In the '90s, we plan to achieve self-reliance for our development operations as well," Kawamoto said. "Because of our ability to develop products [in Ohio], we are now working with North American suppliers in a very early design stage of the next generation of Accord."

Cars made in Ohio of higher quality

In response to a student question, Kawamoto said the quality of cars produced in Ohio is superior to those made in Japan. The North American operation, he said, has about 300 Japanese employees and depends heavily on non-Japanese managers.

He also described the agreement in the United Kingdom between Honda and Rover, where a new plant is being built to manufacture 100,000 cars per year.

"At the moment, the British market is not good, but we are optimistic," Kawamoto said.

"We've spent 10 years working with the British. At the beginning it wasn't very productive because we'd learned English based on the Americans," he joked.

During his day at the Stanford Business School, Kawamoto also spent several hours with students enrolled in the MBA course titled "Investment Management," which discusses factors influencing the value of companies. Course work includes a paper describing the decision by Kawamoto and his management team to reorganize Honda to compete more successfully.

The course is taught by Jack McDonald, Industrial Bank of Japan Professor in the Graduate School of Business. He and Norihiko Shirouzu, a fellow at Stanford's Asia-Pacific Research Center (Northeast Asia-U.S. Forum on International Policy, have studied Honda for more than a decade and written papers that have been used by students in McDonald's class each year.

Monday, students were able to ask the Honda leader himself about recent corporate decisions.



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