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Closing Case Honda in North America Website — http://www.honda.com Case Discussion Questions
Internet Exploration Question This case focuses on Honda's decision to build three North American auto assembly plants. One of the most dramatic trends during the 1980s and early 1990s was the surge of Japanese direct investment in the United States. A leader in this trend was Honda. By the early 1990s, Honda had invested $1.3 billion in three North American auto assembly plants - two in Ohio and one in Ontario, Canada. Many of Honda's Japanese subcontracts followed, and also made major investments in the U.S. By 1989, at least 29 of Honda's Japanese suppliers had setup business operations in the U.S. Initially, many American were skeptical of Honda's motives in coming to the U.S., thinking that Honda's primary interest was to circumvent the threat of protectionist trade legislation, which seemed likely following the surge of Japanese car exports into the U.S. The sharp rise in the yen against the U.S. dollar also made it attractive for a Japanese auto company to assembly cars in the U.S. Honda's reasons may have gone deeper, however. Honda's early initiatives in the U.S. may have been a strategic effort on the part of the company to obtain a first mover advantage against Toyota and Nissan in the U.S. market. In addition, throughout its corporate history Honda had acknowledged the need for the "local adaptation" of its products in foreign countries. This case illustrates the evolution of one Japanese company in terms of its foreign direct investment (FDI) in the U.S. It also illustrates the skepticism that often surrounds foreign direct investment. Although most countries covet FDI for economic reasons, there is often a certain degree of skepticism that surrounds the rationale provided by a company from one country wanting to build a major facility in another. An organization that is often involved in U.S. Japanese trade and foreign direct investment initiatives is the Japan External Trade Organization (JETRO). Established in 1958, JETRO is a Japanese government-supported organization dedicated to promoting trade between Japan and other countries. Visit JETRO's website at {http://www.jetro.org/jetro.html} and answer the following questions. First, what is the mission of JETRO? Second, what types of services does JETRO provide to facilitate trade between Japan and other nations? Third, follow the link to JETRO's Chicago office and navigate the additional links that are provided (i.e. Midwest Update, Success Stories, Helpful Links). Briefly summarize any current news on Japanese auto companies operating in the U.S. |
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