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1 Introduction

1.1 Purpose
The aim of this report is to investigate how incorporating elements of the organising and leading management functions can deal with challenges that increased financial uncertainty in the external environment of Honda Motor Co., Ltd.

1.2 Background
Honda Motor Co., Ltd is a multinational automotive corporation which has grown to become the largest motorcycle manufacturers and one of the worlds leading automakers. With a global network of 396 subsidiaries, Honda develops, manufactures and markets a wide variety of products, ranging from small general purpose engines and scooters to specialty sports cars. Company statistics as per 2009, indicate that 76.7% of Hondas net sales were generated from automobile (cars) business.

1.3 Scope
The scope of this report is derived from the managerial functions of organising and leading that aid Honda with challenges to deal with external financial uncertainty.

1.4 Methodology
To inspect the issue concerned, a review on Hondas operations was conducted by reading through its Annual Report for the year 2009. In addition to that, relevant academic resources were used to support the theory behind this investigation.

1.5 Assumptions
For the purpose of this report, it has been assumed that the plan of developing new hybrid cars is in line with Hondas plan to deal with the challenges pertaining to the augmenting financial uncertainty in the external environment.

1.6 Limitations
Although there are four management functions could be utilised to achieve the goals of Honda, this report will focus only on the organising and leading functions. Furthermore, only the relevant key elements of these two functions have been discussed.

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1.7 Plan
This report will begin by highlighting the impact of external environment which affects the operations of Honda. It will then identify and discuss the elements of organising and leading which can be applied by Honda to overcome the impact of the external financial uncertainty. Finally, this report will conclude the overall discussion with a summary of recommendations as to how the organisation can put into practice some of these concepts in an attempt to deal with external financial uncertainty.

2 Discussions

2.1 Impact of External Environment


External environment of an organisation refers to the factors outside the organisation that affect its performance (Robbins, Bergman, Stagg, & Coulter, 2008). External environment of an organisation can be divided into two groups which are the specific environment and general environment. Specific environment such as stakeholder relationships has direct affect on managers decisions whilst general environment is broad; include factors such as economic condition and political condition that may affect the organisation (Robbins et al., 2008). Honda Co., Ltd. faced a sharp decrease in net income which was a fall from 463.0 billion in 2008 to 137.0 billion in 2009 (Honda Motor Company Ltd, 2009). The two reasons which caused this extensive decline were the global financial crisis and the rise in fuel price. Financial crisis in economies of the United States and Europe created a downward spiral leading to further deterioration in the overall economy (Chari, Christiano, & Kehoe, 2008). Rise in oil price reduced the demand for cars where many customers of Honda switched their preference more towards compact and fuel efficient cars. To overcome this problem, Honda plans to develop new hybrid cars to gain its customers demand.

2.2 Organising
Organising is one of the functions of management. Robbins et al. (2008) defines, organising as, arranging and structuring work to accomplish the organizations goals (p. 342). The process of organising is very important and serves many principles. The purposes of organising are to set formal line of authority, direct and coordinate multiple organisational tasks and creates relationships between employees and management et cetera (Robbins et al., 2008). Organisational structure is the, formal arrangement of jobs within an [2]

organisation and organisational design is a, process of developing and changing an organisations structure (Robbins et al., 2008, p.342). Mechanistic design and organic design are the two models of organisational designs. Organisational structures are divided into two categories which are the traditional structure and contemporary structure.

2.2.1 Matrix Structure


Matrix structure is a popular contemporary organisational structure which possesses an organic design. Robbins et al. (2008) defines the matrix structure as an arrangement of jobs that pulls and assigns specialists from different functional departments to work on one or more projects. The matrix structure of an organisation is made up of several organisational functions such as; administration, manufacturing, accounting, designing and so forth. Each project is directed by a manager who is responsible to oversee his product team with people from different functional department (Kuprenas, 2003). The unique feature about matrix organisation is that it creates a dual chain of command (Robbins et al., 2008, p.358) where employees in the matrix structure have two managers: their functional managers and their project manager. In order to perform effectively, both managers have to communicate, coordinate and resolve conflicts together.

2.2.2 Matrix Structure in the Development of Hybrid Cars


Honda plans to implement a matrix structure team for the development of new hybrid cars. It pulls specialists from different functional departments for instance design engineering, Research and Development (R&D), manufacturing, Human Resource Department, and administration. Specialists from each department have their roles to develop the hybrid cars. For example, specialists from design engineering department are responsible for all aspects of designing the cars whilst those from R&D are responsible to do some market research regarding consumers demand for fuel-efficient cars. North and Coors (2010) states that a well-implemented matrix structure can help allocate scarce resources across an organisation and focus on diverse talents that demand teamwork.

2.2.3 Human Resource Management (HRM): Selection and Training


The selection process involves screening potential employees in an attempt to ensure that only the most suitable job applicants are hired (Robbins et al., 2008). Aghazadeh (2003) cited Messmer (2002) as stating that, since there is a bigger pool to select from, it is important to have structures and processes which can assess vigilantly each job applicants skills and [3]

talents to ensure that the right applicant is selected from among the many qualified people. Robbins et al., (2008) suggest that, HRM can use certain selection devices such as application forms, written and performance-simulation tests, interviews and in some cases physical examinations. These selection devices may vary according to the departments. For instance, interviews are needed when selecting candidates for administration and physical examinations are very important when choosing applicants for production department. Employee training is an important HRM activity. Employees are needed to be trained adequately to keep them productive at all times especially when the organisation undergoes a rapid reformation (Aghazadeh 2003). There are several types of training which include, interpersonal skills training, technical training and performance management training (Robbins et al., 2008). Employee training can be delivered in two methods which are the traditional ways and technology based method (Robbins et al., 2008). Traditional ways include on-the-job method and job rotation method, whilst technology based method involves E-learning, teleconferencing and so forth. Essential and adequate amount of training will enhance the productivity of employees. HRM in Hondas hybrid car project play a necessary role in selecting and training the employees. As discussed earlier, HRM is included as a part of the project. HRM professionals in this project will analyse the capability of existing employees in the company whether to include them in the current project. If existing employees meet the criteria, then they will be employed in the project. This method is used to reduce the cost of recruiting and selecting employees outside Honda. Once the employees are selected, the HRM professionals will provide and guide them with necessary trainings to enhance their productivity.

2.3 Leading (Motivation)


Motivating and rewarding employees is one of the most important and challenging activities that managers perform. Motivation is defined as the process that pushes an individuals efforts toward acting, performing actions and achieving a goal (Robbins et al., 2008). There are two types of theories of motivation namely the content theories and process theories. Content theories focus on what motivates an individual where it includes of Maslows Hierarchy of Needs, McgGregors Theory X and Theory Y, Herbergs Motivation-Hygiene Theory and McClellands Three-Needs Theory. Process theories on the other hand discuss peoples behaviour and the reasons they react as they do which include Goal Setting Theory, Reinforcement Theory, Equity Theory, Job Design Theory and Expectancy Theory (Robbins et

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al., 2008). Motivating employees will ensure that they are engaged with their work in line with the organisations goals and objectives.

2.3.1 Goal Setting Theory


Goal setting theory is one of the process theories which propose specific goals increase performance and that difficult goals, when accepted, result in higher performance than do easy goals (Robbins et al., 2008, p.606). Lycette and Herniman (2008) mention, setting successful goals can be a complicated and debatable affair, and it usually requires the combined energies of art, science, diplomacy and political knowledge. Commitment to a goal may be increased by reward or by participating in setting up the goals (Katzell & Thompson, 1990). Goal setting theory deals with people in general and applies to those who have high need of achievement (nAch) where they accept and commit to the goals (Robbins et al., 2008). People with nAch will perform better when they get feedback on how well they have performed towards their goals. Law of Effect conceptualizes positive feedback as positive support that encourages hardwork while negative feedback as a punishment in which discourages the same behaviour (Thorndike, 1913, as cited in Cianci, Schaubroeck & McGill 2010).

2.3.2 Expectancy Theory


The expectancy theory was introduced in 1964 by Victor Vroom to organize and integrate existing knowledge in the field of vocational psychology and motivation (Lee, 2007). Expectancy theory explains an individuals behaviour based on his or her expectations that the act will be followed by a given outcome and on the attractiveness of the outcome to the individual (Robbins et al., 2008). Lee (2007) mentions, that expectancy, instrumentality and valence are the three components of expectancy theory. Employees usually do their jobs by considering some factors. Firstly, the types of outcomes; whether the outcomes are positive or negative. Secondly, level of attractiveness of the rewards to them. Finally, types of behaviour they should exhibit in order to achieve the rewards. Generally, Vroom's expectancy theory also places emphasis on the importance of motivation in the explanation of why people choose a particular action or behavior (Lee, 2007).

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2.3.3 Goal Setting Theory and Expectancy Theory in Hondas Hybrid Car Project To motivate employees, Honda should implement Goal Setting Theory in this project. It should make a task more challenging to improve the workers performance. For example, job such as designing a latest engine for hybrid cars will be a challenge for them because it involves a lot of hardwork where it eventually improves the employees overall performance. In addition to that, fixing short period goals such as timeliness for the project will ensure the teams are on the right track. Besides motivating, rewarding them is also very important. For instance, offering company shares; Employee Share Ownership Plan (ESOP) and providing a fully paid incentive trip to the best project team will trigger their behaviour to work more in their best interest level.

3 Conclusions
In summary, management functions of organising and leading (motivation) play a vital role dealing with the challenges that increased financial uncertainty in the external environment of an organisation. Specifically, designing an appropriate organisation structure (matrix structure), selecting suitable job candidates and providing essential trainings for the employees will enhance the development of the new hybrid cars. Besides that, adequate motivation and rewards will ensure that the employees are engaged with their work in line with the organisations goals and objectives. Conclusively, the project of Hondas new hybrid cars is capable of to meet the challenges of external financial uncertainty upon the implementation of these two management functions.

4 Recommendations
It is recommended that the following actions can be put into practice by Honda Co., Ltd.: Assign tasks to well train specialised employees so that mistakes to develop the hybrid cars can be reduced. Select employees who would be successful and later proved to be successful. Provide necessary trainings to the employees with appropriate training methods. Motivate employees to make them engaged with their work. Award employees with attractive rewards to appreciate their labour efforts.

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5 Reference List

Aghazadeh, S.M. (2003). The Future of Human Resource Management. Work Study, 52(4), 201 207. Chari, V.V., Christiano, L. & Kehoe, P.J. (2008). Facts and Myths about the Financial Crisis of 2008 (Working Paper 666). United States of America: Federal Reserve Bank of Minneapolis Research Department. Cianci, A.M., Schaubroeck, J.M. & McGill, G.A. (2010). Achievement Goals, Feedback, and Task Performance. Human Performance, 23(2), 131 154. Honda Company Ltd. (2009). The Power of Dreams: 2009 annual report. Retrieved from http://world.honda.com/investors/annualreport/2009/pdf/honda09ar-all-e.pdf Katzell, R.A. & Thompson, D.E. (1990). Work Motivation: Theory and Practice. American Psychological Association, 45(2), 144 153. Kuprenas, J.A. (2003). Implementation and Performance of a Matrix Organization Structure. International Journal of Project Management, 20 (1), 51 62. Lee, S. (2007). Vrooms Expectancy Theory and The Public Library Customer Motivation Model. Library Review, 56(9), 788 796. Lycette, B. & Herniman, J. (2008, September/October). New Goal Setting Theory. Industrial Management, 25 30. North, M. & Coors, C. (2010). Avoiding Death by Dotted Line. Healthcare Financial Management, 64 (1), 120 121. Robbins, S., Bergman, R., Stagg, I. & Coulter, M. (2008). Management (5th ed.). Frenchs Forest: Pearson Education Australia.

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