Team: The Trailblazers

Ankith Passi(1501069)
Aroop Sanyal (1501074)
Harmeet Singh (1501080)
Krishna Murari (1501019

Case: Honda Today

The Honda today case is a classic example of Concept testing, with regards to
product development. It discusses a tough situation for Honda in the micromini car
segment which is going through a lot of regulatory changes just after Honda released
a new engine design for its car, the Honda Today.
The case takes us to December 10, 1988 and revolves around Masami Kamimura,
the Large Project Leader (LPL) at Honda Motor Co.s Today team. Due to expected tax
changes, the Japan Automobile Manufacturers Association (JAMA) began to lobby for
tax exemptions and recommendations for changes in micromini specifications. The
Ministry of Transportation was expected to finalize its decision based on the
suggestions made by the JAMA.
The main concern fot Masami Kamimura was that, the team had only recently, as
early as Jan 1988 come up with a new engine design for the Today after spending a
lot of capital on RnD. Coming up with a new design would mean incurring a lot of
additional costs or sacrificing the high quality standards set by Honda over the years.

Question: How would you characterize Hondas approach to product

development?
Honda, since its inception in 1948 has been a company known for its focus on
innovation and high quality standards. It is for these reasons that Honda has become
one of the largest engine manufacturers and the largest motorcycle producer. In
terms of automobile production, Honda is ranked 10.
From the very initial stages of Hondas journey, this award winning corporate has
been a constant patron of creativity & excellence. Honda fostered an environment
without constraints to help their engineers unleash their creativity and flourish
during testing times. People working in Honda are allowed to think, to participate, to
experience and to improve their performance daily. The Honda Way promotes their
egalitarian culture of open arrangements, similar uniforms and increase their
performance daily.
Hondas development teams were independent and focused organizational units;
that is, a team of engineers was dedicated to the development of a new car model.
While other competitors believed that a simultaneous design of a new engine and a
new car was too risky, they generally came up with either an old design or an old
engine. Hondas technical experts believe that every new car must have a new
engine. They also believe that to actualize the real character of a new car the
coherent match between the body, the chassis and the engine must be unleashed.
Although Honda does not believe in traditional market research, it depends on its
engineers to understand customer preferences through understanding emerging
trends. They did this through their Large Project Leaders (LPLs) who played a critical
role in major development process.

Question: What should Kamimura do? What specific option or approach

would you recommend? What must he do to execute the approach in the
time available?

Team: The Trailblazers

Ankith Passi(1501069)
Aroop Sanyal (1501074)
Harmeet Singh (1501080)
Krishna Murari (1501019
Kamimura being an experienced person in the industry had already pre-empted what
sort of proposal JAMA was going to put forward to the MOT. It mainly involved
increasing the engine size and the overall size of the vehicle to comply with the new
tax laws.
The options available to Kamimura in this regard are:
1. Increasing the cylinder stroke length: Involves changing the height of the
cylinder block along with few minor engine parts. Approximate investment
would be 1.5 billion yen.
2. Increasing the cylinder bore: Involves expanding the cylinder bore. Considered
as the easiest & the cheapest option. Approximate investment would be 500
million.
3. Increasing both stroke & bore: Approximate cost would be the combined cost
of the two options mentioned above. Involves challenge in designing such
new thing.
4. Redesign the engine entirely: Involves higher risk, time and money amounting
greater than 5 billion yen.
There are several important considerations that Kamimura must make while thinking
of his decision, not the least of which is cost. Honda just spent 5 billion yen
revamping the Today for its January 1988 introduction and may not be prepared to
spend another 1.5 to 5 billion yen to redo all of that work. In spite of having a 22%
market share, spending so much money on designing would greatly impact the
bottom line for Honda, which would definitely be a deterrent for proposing an engine
change.
There is also the consideration of engineering talent. Since the "Honda Way"
prevents engineers from working on multiple projects, the Today would have to keep
its very talented engine design engineers on the project for at least another year if
the engine is to be redesigned.
Last but not least is the deadline that the Today must meet. If the Honda Today is not
released with the specified 660 cc engine close to the date the new tax laws and
vehicle specifications go into effect, Honda could lose some of the ever-increasing
micromini market share and perhaps tarnish its image for future models. By choosing
an inexpensive and simple method of increasing the engine displacement, Kamimura
would all but guarantee that the new Today would be ready on time for the change in
tax laws.
Given these factors, we believe it would be more pertinent for Kamimura to go ahead
with increasing the bore length of the existing engine. This would ensure low
overhead costs, while keeping their engineers busy with the new project. Also this is
one of the few alternatives which would ensure that the Today can hit the roads
without any delay. Given the high amount of competition in the micromini segment,
having the car released with the competitors is critical, else they might lose out of a
comparative market share.

Question: What do you think Hondas competitor will do? Why?

Answer: According to the case, Japans micromini vehicle market had been passing
through a terrific competition during the years of late 80s. Automobile
manufacturers had been trying hard enough to increase their market share by

Team: The Trailblazers

Ankith Passi(1501069)
Aroop Sanyal (1501074)
Harmeet Singh (1501080)
Krishna Murari (1501019
introducing newer and newer car models with better specification in every new
release. And we see that, this proposed tax policy change has dictated companies to
rethink and reposition themselves again. As a result the JAMA committee had been
formed to lobby for an exemption from the tax and recommend new specification
that would be acceptable to all the manufacturers.
After a month long discussion, JAMA recommended an increase in displacement in
the range of 650-690cc and an overall increase in car lengths of 50-100mm. And of
course as a participant of JAMAs task force, competitors of Honda had tried to
establish the specification that suits them best.
However, upon receiving the final decision of JAMA, Hondas competitors will
certainly go for releasing their car models with fewer modifications, as they know
very well that companies achieving a timely response to the proposed specification
would enjoy a substantial advantage in the market and would be granted
considerable prestige for the feat. Here, one important fact is to be noted that, as
Hondas competitor does not believe in designing absolutely a new engine for every
new model, it wouldnt be a tough job for them to bring the required modifications as
it is in the case of Honda.