hrm 360: honeywell inc. and global r&d

HRM360 HONEYWELL INC. AND GLOBAL R&DHONEYWELL INC. AND GLOBAL R&D Group D


Background:

Honeywell is a major conglomerate company that produces a variety of consumer products, engineering services, and aerospace systems for a wide variety of customers, from private consumers to major corporations and governments.

In mid-1997, Steve Wilson, a Honeywell Technology Center (HTC) manager, thought back to the previous week’s visit from a Chinese delegation interested in Honeywell Inc.(Honeywell) technology and products. These visits were becoming increasingly frequent. Wilson and other HTC managers were certain that there were many international opportunities for Honeywell, not just in China but throughout Asia and Eastern Europe. The dilemma was that HTC, Honeywell’s research and development R&D organization, was centralized in Minneapolis, a long way from the potential new markets. There was a growing consensus that HTC had to become more international to support Honeywell’s growth opportunities. However, before anything could be done, many issues had to be addressed.

Honeywell had a long history of engineering and scientific achievement. In 1885, Albert Butz invented the damper flapper, a device that opened furnace vents automatically. Butz formed the Butz Thermo-Electric Regulator Co. in Minneapolis to market the product. In1927, the firm, now known as the Minneapolis Heat Regulator Company, merged with its main competitor, Honeywell Heating Specialties of Wabash, Indiana. The new public company, named the Minneapolis-Honeywell Regulator Co. and headquartered in Minneapolis, became the leading U.S. firm in home heating controls.

Throughout the 1930s, Minneapolis-Honeywell expanded and diversified. In 1930,the first international subsidiary was opened in Toronto and in 1934, the first European subsidiary was established in the Netherlands. Between 1900 and 1937, the company evolved from manufacturing one thermostat to producing more than 3,000 control devices and its engineers received more than 1,000 patents. During World War II, Minneapolis-Honeywell became involved in mass-production of military instruments and equipment. This work lead to the development and production of an aircraft autopilot, positioning Minneapolis-Honeywell in the aeronautical engineering business. After the war, the firm reorganized its various defense-related businesses into the Military Products Group and by the late 1950s, military business represented one third of the company’s sales. By the 1960s, the firm, now called Honeywell Inc., had become an important supplier for the U.S. space program.

In 1955, Honeywell formed a division called Datamatic to build computers. This division would eventually have a 10% market share. Honeywell’s controls


business also grew rapidly in the post-war period. In 1950, the firm acquired the Micro Switch Corporation, a manufacturer of switches, sensors, and manual controls used in myriad products such as cars, airplanes, appliances, air conditioning systems, and factory equipment. In1953, Honeywell introduced its famous round thermostat, the Honeywell Round. Muchof Honeywell’s growth between 1960 and 1980 was the result of international growth and,in particular, demand from developing nations for home, building, and industrial controls.

The 1980s and early 1990s was a period of restructuring for Honeywell. Total employment dropped from 94,000 in 1985 to 50,000 in 1995. Cutbacks in U.S. defense spending had a dramatic effect on Honeywell’s Space and Aviation Division. During a three-year period from 1991 to 1994, space and aviation revenue declined by $700 million to $1.4billion. Space and aviation employment declined by half to about 11,000 and 3 million square feet of plant space was closed. In 1990, the defense business, which a few years earlier had accounted for almost half of total revenues, was spun off into a new organization. In1986, Sperry Aerospace, a Phoenix-based firm manufacturing flight instrumentation, advanced avionics, and other electronics systems was acquired for $1.03 billion. The acquisition solidified Honeywell’s position as the leader in aircraft navigation systems and flight controls. Also in 1986, after its market share dropped to 2%, the computer business was spun off into a joint venture of Compagnie des Machines Bull of France and NEC Corp. of Japan. In 1991, Honeywell exited the computer business.

Honeywell was organized around three industry sectors: home and building control, industrial control, and space and aviation control.

The home and building control division manufactured controls for heating such as thermostats, ventilation, humidification and air-conditioning equipment, home automation systems, lighting controls, building management systems and services, and home consumer products such as air cleaners and humidifiers.

The industrial control sector produced systems for the automation and control of process operations in industries such as oil refining, oil and gas drilling, pulp and paper manufacturing, food processing, chemical manufacturing, and power generation. For example, Honeywell controls were used in 24 of the world’s 25 largest oil refineries. The industrial control sector also produced switches, sensors, and solenoid valves for use in vehicles, consumer products, data communication, and industrial applications.

The space and aviation sector was a leading supplier of avionics systems for the commercial, military, and space markets. Honeywell systems could be found on virtually every commercial aircraft produced in the Western world


and were aboard every manned spaceflight launched in the United States. Products included automatic flight control systems, electronic cockpit displays, flight management systems, navigation, surveillance, and warning systems, and severe weather avoidance systems. In 1995, the Boeing 777 was launched, marking the successful launch of a new suite of Honeywell integrated avionics controls.

European operations were headquartered in Brussels and the Asia-Pacific region was based in Hong Kong. Non-U.S. sales were $2.8 billion, equal to 39% of 1996 total sales. By the year 2000, non-U.S. sales were expected to increase to 45%. Much of this growth was projected for China and Eastern and Central Europe. With their high levels of air and water pollution and poor record of energy efficiency, these areas were large potential markets for Honeywell home and building and industrial controls.

Honeywell’s home and building and industrial control competitors ranged from diversified global giants like Siemens and Asea Brown Boveri to small, specialized firms such as Andover Controls, a $70 million manufacturer of programmable, network-based building automation systems. In the space and aviation control sector, the set of competitors was much smaller and primarily U.S.-based.

In addition to increasing internationalization, the controls industry had seen a wave of mergers, acquisitions, and alliances In 1996, Electrowatt Group, a Swiss-based holding company, announced the formation of Landis & Staefa, Inc., a worldwide combination of Landis & Gyr and Staefa Control System. Landis & Staefa competed with Honeywell in-home and building controls. Later in 1996, it was announced that Siemens AG was acquiringa 44.9% share in Electrowatt Group. Siemens, a Honeywell competitor in various product markets, was one of the world’s largest organizations.

R&D was a focal point throughout Honeywell with technology seen as the key to marketplace differentiation. About 30% of Honeywell’s current sales were from products introducedin the past five years. Honeywell was involved in two main R&D activities: R&Dthat supported Honeywell’s worldwide product divisions and contract research funded byoutside government agencies and firms. Including R&D done both in the product divisionsand by HTC, Honeywell funded $353 million of R&D in 1996 and contract workgenerated revenue of $341 million. Until the cutbacks in U.S. military spending in theearly 1990s, most of the contract research was for military purposes. Although a significantamount of contract research still involved the Dept. of Defense, other funding agenciesincluded NASA, Department of Commerce, and the Electric Power Research Institute.Increasingly, non-defense firms


were forming alliances to jointly develop new technologiesthrough contract research.

The Honeywell Technology Center (HTC) was Honeywell’s primary research organization and supported the worldwide product divisions. As a corporate service organization, HTC’s mission was to support the product divisions and develop technologies that had the potential to benefit multiple product divisions.

Very little product development or product testing was done at HTC. HTC supported divisional product development by providing new technologies that could be incorporated into products and by developing concepts for new products. The actual development of new products was a divisional responsibility and each of Honeywell’s product divisions had active engineering organizations. It was a divisional responsibility to turn new technology into something that was producible and salable. As such, most of the R&D done at the division level was product development and engineering work using existing technologies.

Occasionally, if HTC was convinced a product should be developed immediately to create a market window and no division had the resources to react quickly, HTC might initiate product development. HTC might also approach a customer directly as the basis for generating divisional interest in a technology. As well, technology that would benefit only one division was normally viewed as R&D that should be funded at the division level rather than at corporate.

Technology transfer occurred in many different forms depending on the technology, the product division involved, project funding, and so on. The following discussion illustrates one example of a successful technology transfer. The project began with an idea from a university student intern working at HTC. The project was initially funded under the Initiatives Program, the internal HTC funding mechanism for advanced, long-range thinking. The project involved fuzzy control theory that was not initially directed at a product.

As the project progressed, the Home and Building Control Systems Group saw some potential applications for the technology in the boiler control area. Some additional internal funding of around $50,000 was provided to do some


modeling and simulation of the concept. Although discussions with the product divisions had not yet occurred, there was a belief that the technology could be useful to one of the European divisions.

Technology transfer to the Honeywell Europe divisions had always been problematic. While the European divisions expected HTC to develop new technology, European managers often complained about the irrelevance of the technology for their markets, the cost of HTC, and their lack of contact with HTC. Although 25% of Honeywell sales were in Europe, a much smaller percentage of R&D was carried out either in Europe or in Minneapolis for European solutions. Until about 1990, there was very little Honeywell R&D being done for Europe even though Europe was supporting central R&D financially, creating some bitterness in the European operation. Central R&D was primarily focused on the U.S. market. New product development in Europe was originating in the European divisional engineering groups. An HTC manager recounted his experience in making a presentation to a group of Honeywell managers in Brussels. After making the presentation and outlining current technology initiatives in HTC, the Europeans indicated that they were unaware that HTC was working on such leading technologies.

In the early 1990s SSDC (the R&D organization that preceded HTC) managers were considering how to strengthen European R&D. With the collapse of the Iron Curtain and expectations of new Honeywell markets developing in Eastern Europe, the viability of an R&D organization somewhere in Eastern Europe was being debated. There was a belief that very strong technical skills could be found in countries like Poland and Russia. In 1992 an HTC scientist and former university professor in Czechoslovakia was attending a conference in Tampa. He met a Czechoslovakian from a research institute in Prague. With the Czech economy in transition and research funding drying up, the Czech scientist was interested in new opportunities. The HTC scientist returned to Minneapolis with reasonable assurance that a partnership with the Czech scientist could work. HTC Prague began with five former Czech university professors hired on a contract basis to do research in two areas: computational fluid dynamics, a technology area important for evaluating control product designs, and advanced boiler control technology. Honeywell’s Eastern Europe office was moved from Vienna to Prague and by 1997, the Honeywell sales organization in Prague had grown to more than 60 employees. Prague was viewed as an excellent entry point for what could be a huge business in controls for district heating.

Within Honeywell, reasons for and against centralized R&D were being actively debated.

Reasons supporting centralized R&D included the following:


1. The complexity of Honeywell products and systems is such that a large team of R&D people is needed in one location to ensure interaction occurs between scientists. It is easy to share information when almost all HTC employees are in the same building and see each other regularly. Decentralization would reduce interaction and personal contacts.

2. One of the main functions of Honeywell’s central R&D is to move ideas around the world. Decentralizing R&D would jeopardize this central dissemination function.

3. When the product is a system comprising various parts, a team can be built using people from different areas. Scattering people geographically would make this difficult.

4. If R&D scientists are too far from the central labs they risk becoming obsolete, migrating from R&D to the product divisions, or losing contact with central R&D. They may even think they are competing with central R&D.

5. If R&D is tied too closely with a division, there is the risk that the division will not have the long term orientation necessary for R&D, which could lead to complacency. Or, after assuming ownership of the R&D, the division may decide that a particular technology is no longer necessary and R&D efforts could decline. A central R&D organization can ensure stability in research efforts and implement controls to keep people motivated.

6. Engineers and scientists interested in R&D prefer to work in a central R&D organization.

7. What the non-U.S. and non-European divisions need now is localization of existing products, not new technology.

8. The HTC culture would be difficult to transfer.

9. Before R&D could be localized, Honeywell had to develop more incentives to transfer technology.


1. Central R&D is too far removed from the customer, particularly customers outside the United States. It is impossible to develop customer solutions if you do not understand customer problems. The current remote sites in Phoenix and Prague benefit from being close to the divisions. Different parts of the world should logically be the focus for problems unique to their area. For example, tropical Asia has unique air conditioning requirements because of the heat and humidity.

2. If the technology does not require interaction with other technologies, like the development of a particular sensor or flat panel displays, it may be better to have it located where the local support structure is strongest. The support could come from the product division or in a geographic area known for a particular technology.

3. Application developments may require close interaction with a customer in the customer’s facility.

4. Putting R&D people in geographic business units would increase the relevance of R&D and increase the information flow from business units to R&D.

5. Future sales will be growing faster outside the United States and, therefore, people from all parts of Honeywell must be in the growing areas of the business.

6. Traveling to Europe, China and other locations outside the United States is expensive and time consuming. It would be better to have people on the ground in these locations.

7. Remote R&D facilities would facilitate technology transfers outside the United States.

8. Remote locations in countries like China provide a foothold that gives Honeywell credibility and makes it look like a committed Chinese business. It could also help in hiring local engineers and scientists.


9. Remote locations show the product divisions that Honeywell is serious about a particular region. Along with the basic question of centralized versus decentralized R&D, there were additional issues associated with R&D:

Would remote locations have to focus on unique technologies? How would those technologies be identified? Are there technologies that are unique to specific locations?

Outside funding was critical to HTC. As part of a U.S. corporation, could a remote location gain access to outside funding? With greater R&D presence, could HTC gainaccess to funding from agencies such as the World Bank and the Asian DevelopmentBank?

What kind of controls must be in place to ensure that a remote location remained part ofcentral R&D rather than becoming an offshoot of a product division?

In Europe and Asia, with its diversity of countries and markets, where should HTC havea stronger presence?

With an increasing shift to software as the key to product differentiation, how wouldthis influence future Honeywell R&D?

Within Honeywell, the allocation of HTC costs were based on divisional revenues. Wasthis allocation system appropriate given that some regions within the firm were growingfaster than others?

How would remote R&D locations be staffed. Would it make sense to move HTC peopleout of Minneapolis to new locations? If not, were skilled scientists available in otherparts of the world?

In view of Honeywell’s international growth opportunities, the issue of international R&Dwas becoming a high priority issue in HTC. For example, China’s economy was growing sorapidly that some sort of HTC presence seemed inevitable. One line of thinking was thatHTC should have employees based in China with a broad learning and exploration agenda.

Another view was that until there was a clear understanding of the opportunities in China, it would not make sense to commit to expensive expatriate employees. A further issue wasthat in China, and Asia in general, there were no engineering staffs to adapt technologiesfor the local market. For the most part, products manufactured and sold in Asia were productstransferred from American or European Honeywell divisions. Without an engineeringstaff in Asia, technology could not be transferred.


Main Issue

What should Honeywell do to effectively decentralize their research & development facility into the Eurasian market?


Theme

The case ‘Honeywell Inc. and Global Research & development’ is about Honeywell’s quest to decentralize their research & development (R&D) facility from their headquarter in Minneapolis and the different issues and complications they face. There was a growing consensus that HTC had to become more international to support Honeywell’s growth opportunities. However, before anything could be done, many issues had to be addressed. How should Honeywell attempt to build effective global R&D capabilities? HTC had developed a unique entrepreneurial, interaction-based culture. Could this culture be replicated outside the United States? How quickly should HTC move? Who would manage new R&D organizations? How would these organizations be funded? Should international R&D sites be centers of excellence for specific technologies, or should they be application centers using technology developed in Minneapolis, or should they be a combination of both?


SWOT Analysis

SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies.

A SWOT analysis starts with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning, including SWOT analysis, has been the subject of much research.

Strengths: attributes of the person or company that is helpful to achieving the objective.

Weaknesses: attributes of the person or company that is harmful to achieving the objective.

Opportunities: external conditions that is helpful to achieving the objective.

Threats: external conditions which could do damage to the business's performance.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.


First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.

The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development.


Strength

Interaction based culture:--

HTC had developed a unique entrepreneurial, interaction-based culture. Throughout the 1930s, Minneapolis-Honeywell expanded and diversified. In 1930, the first international subsidiary was opened in Toronto and in 1934; the first European subsidiary was established in the Netherlands. Between 1900 and 1937, the company evolved from manufacturing one thermostat to producing more than 3,000 control devices and its engineers received more than 1,000 patents.

Long tradition of scientific achievements:--

Honeywell had a long history of engineering and scientific achievement. In 1885, Albert Butz invented the damper flapper, a device that opened furnace vents automatically. Butz formed the Butz Thermo-Electric Regulator Co. in Minneapolis to market the product. In1927, the firm, now known as the Minneapolis Heat Regulator Company, merged with its main competitor, Honeywell Heating Specialties of Wabash, Indiana. The new public company, named the Minneapolis-Honeywell Regulator Co. and headquartered in Minneapolis, became the leading U.S. firm in home heating controls.

Specialization in military products

During World War II, Minneapolis-Honeywell became involved in mass-production of military instruments and equipment. This work lead to the development and production of an aircraft autopilot, positioning Minneapolis-Honeywell in the aeronautical engineering business. After the war, the firm reorganized its various defense-related businesses into the Military Products Group and by the late 1950s, military business represented one third of the company’s sales. By the 1960s, the firm, now called Honeywell Inc., had become an important supplier for the U.S. space program.


Fast growth rate:--

Throughout the years Honeywell grew very fast. Throughout the 1930s, Minneapolis-Honeywell expanded and diversified. In 1930, the first international subsidiary was opened in Toronto and in 1934; the first European subsidiary was established in the Netherlands. Between 1900 and 1937, the company evolved from manufacturing one thermostat to producing more than 3,000 control devices and its engineers received more than 1,000 patents.

Centralized R&D:--

The company had a centralized R&D. this gave the company quite a few advantages. The complexity of Honeywell products and systems is such that a large team of R&D people is needed in one location to ensure interaction occurs between scientists. For example, the control system for a refinery incorporated hundreds of other products. It is easy to share information when almost all HTC employees are in the same building and see each other regularly. Decentralization would reduce interaction and personal contacts. One of the main functions of Honeywell’s central R&D is to move ideas around the world. Decentralizing R&D would jeopardize this central dissemination function.

Stability in research efforts:--

The company’s centralized R&D ensured a good stability in research efforts. If R&D is tied too closely with a division, there is the risk that the division will not have the long term orientation necessary for R&D, which could lead to complacency. Or, after assuming ownership of the R&D, the division may decide that a particular technology is no longer necessary and R&D efforts could decline. A central R&D organization can ensure stability in research efforts and implement controls to keep people motivated.


Cultural heritage at HTC:--

HTC has developed a culture of its own. HTC has developed a unique culture based on openness and interaction across different levels and technologies. The kinds of people they hire and attract are very entrepreneurial down to the youngest engineers. How to duplicate this culture in a place like Prague is a complicated issue. It is already tough enough to do it in Phoenix.

Diversified business arena:--

Honeywell was organized around three industry sectors: home and building control, industrial control, and space and aviation control. The home and building control division manufactured controls for heating, ventilation, humidification and air-conditioning equipment, home automation systems, lighting controls, building management systems and services, and home consumer products. The industrial control sector produced systems for the automation and control of process operations in industries. The space and aviation sector was a leading supplier of avionics systems for the commercial, military, and space markets.

The space and aviation sector:--

The space and aviation sector of Honeywell was a leading supplier of avionics systems for the commercial, military, and space markets. Honeywell systems could be found on virtually every commercial aircraft produced in the Western world and were aboard every manned spaceflight launched in the United States. Products included automatic flight control systems, electronic cockpit displays, flight management systems, navigation, surveillance, and warning systems, and severe weather avoidance systems.


Weaknesses

Declining defense industry:--

US defense industry is on a decline. Cutbacks in U.S. defense spending had a dramatic effect on Honeywell’s Space and Aviation Division. During a three-year period from 1991 to 1994, space and aviation revenue declined by $700 million to $1.4billion. Space and aviation employment declined by half to about 11,000 and 3 million square feet of plant space was closed.

Centralized R&D:--

HTC’ centralized R&D is giving rise to some problems as well. Central R&D is too far removed from the customer, particularly customers outside the

United States. It is impossible to develop customer solutions if you do not understand customer problems. The current remote sites in Phoenix and Prague benefit from being close to the divisions. Different parts of the world should logically be the focus for problems unique to their area. For example, tropical Asia has unique air conditioning requirements because of the heat and humidity.

Location selection:--

If the technology does not require interaction with other technologies, like the development of a particular sensor or flat panel displays, it may be better to have it located where the local support structure is strongest. The support could come from the product division or in a geographic area known for a particular technology. Putting R&D people in geographic business units would increase the relevance of R&D and increase the information flow from business units to R&D.

Cost factor:--


Cost can also be a factor here. Traveling to Europe, China and other locations outside the United States is expensive and time consuming. It would be better to have people on the ground in these locations.

Internal complications regarding technology transfer:--

Honeywell had complications regarding technology transfer to Honeywell Europe. Technology transfer to the Honeywell Europe divisions had always been problematic. While the European divisions expected HTC to develop new technology, European managers often complained about the irrelevance of the technology for their markets, the cost of HTC, and their lack of contact with HTC. Although 25% of Honeywell sales were in Europe, a much smaller percentage of R&D was carried out either in Europe or in Minneapolis for European solutions. Until about 1990, there was very little Honeywell R&D being done for Europe even though Europe was supporting central R&D financially, creating some bitterness in the European operation. Central R&D was primarily focused on the US market. New product development in Europe was originating in the European divisional engineering groups.


Opportunity

Eastern European market:--

The area of district heating was a large potential market for Honeywell. In

Eastern Europe and China, most people had never used a thermostat in their homes. Apartments generally had no heating controls and their temperatures were determined by outputs of a central district heating facility. During the winter it was not unusual to see open windows in apartment buildings as residents tried to cool their apartments. Hot water for domestic radiators was provided by a central boiler in each region. On a designated day of the year, an official turned the heating on for the whole city; on another, it was turned off. Often, there were no valves on the radiators. The plumbing was often arranged so that if one occupier turned down the heating, the entire building would be affected.

Asian market:--

The Asian market also worked as a great opportunity for Honeywell. Although Honeywell’s Asian business accounted for only about 8% of sales, CEO

Michael Bonsignore indicated that “Asia represents the greatest growth opportunity for Honeywell in the next 20 years.” Honeywell’s Asia Pacific business had operations in eighteen Asian countries including Hong Kong. Honeywell generated about $250 million in revenue in China and expected sales of at least $500 million by the end of the decade. In 1997, Honeywell began working with Beijing District Heating Co. to improve heating services for 20% of the capital’s buildings, with the potential for expansion.


Foreign credibility:--

Remote locations in countries like China provide a foothold that gives Honeywell credibility and makes it look like a committed Chinese business. It could also help in hiring local engineers and scientists. Remote locations show the product divisions that Honeywell is serious about a particular region.

Technology transfer

Honeywell also saw an opportunity in the technology transfer arena. Creating a new source of technological expertise will allow them to expand their technological leadership into new territories. Within the divisions, the perception of HTC had shifted in recent years as HTC increasingly stressed the importance of relevance and pushed this message deep within the organization. Relevance meant that HTC’s goal should be to help the divisions serve their customers. As well, Honeywell was committing greater funds to technology transfer. Ten years ago, technology transfer was more ad hoc with fewer specific funding mechanisms available.

HTC Prague:--

A R&D centre in Prague posed Honeywell with great opportunity in the European market. HTC Prague began with five former Czech university professors hired on a contract basis to do research in two areas: computational fluid dynamics, a technology area important for evaluating control product designs, and advanced boiler control technology. Honeywell’s Eastern Europe office was moved from Vienna to Prague and by 1997, the Honeywell sales organization in Prague had grown to more than 60 employees. Prague was viewed as an excellent entry point for what could be a huge business in controls for district heating.


Threat

Reduction in US defense spending:--

The reduction in US defense spending is a substantial threat for Honeywell, since they are heavily dependent on the defense sector. Cutbacks in U.S. defense spending had a dramatic effect on Honeywell’s Space and Aviation Division. During a three-year period from 1991 to 1994, space and aviation revenue declined by $700 million to $1.4billion. Space and aviation employment declined by half to about 11,000 and 3 million square feet of plant space was closed.

Mergers and acquisitions:--

The controls industry had seen a wave of mergers, acquisitions, and alliances In 1996, Electrowatt Group, a Swiss-based holding company, announced the formation of Landis & Staefa, Inc., a worldwide combination of Landis & Gyr and Staefa Control System. Landis & Staefa competed with Honeywell in home and building controls. Later in 1996, it was announced that Siemens AG was acquiring a 44.9% share in Electrowatt Group. Siemens, a Honeywell competitor in various product markets, was one of the world’s largest organizations. Siemens had sales of more than$60 billion, 250 manufacturing sites in 42 countries, and subsidiaries and affiliates in more than 190 countries.


HR Planning Process:

HR planning Process Chart

FORECASTING DEMANDFORECASTING DEMANDFORECASTING DEMANDFORECASTING DEMAND

ConsiderationsConsiderations

Product/service demandProduct/service demand TechnologyTechnology Financial resourcesFinancial resources Absenteeism/turnoverAbsenteeism/turnover Organizational growthOrganizational growth Management philosophyManagement philosophy

ConsiderationsConsiderations

Product/service demandProduct/service demand TechnologyTechnology Financial resourcesFinancial resources Absenteeism/turnoverAbsenteeism/turnover Organizational growthOrganizational growth Management philosophyManagement philosophy

TechniquesTechniques

Trend analysisTrend analysis Managerial estimatesManagerial estimates Delphi techniqueDelphi technique


Trend analysisTrend analysis Managerial estimatesManagerial estimates Delphi techniqueDelphi technique


Staffing tablesStaffing tables Markov analysisMarkov analysis Skills inventoriesSkills inventories Management inventoriesManagement inventories Replacement chartsReplacement charts Succession PlanningSuccession Planning


Staffing tablesStaffing tables Markov analysisMarkov analysis Skills inventoriesSkills inventories Management inventoriesManagement inventories Replacement chartsReplacement charts Succession PlanningSuccession Planning

External ConsiderationsExternal Considerations

Demographic changesDemographic changes Education of the Education of the

workforceworkforce Labor MobilityLabor Mobility Government policiesGovernment policies Unemployment rateUnemployment rate

External ConsiderationsExternal Considerations

Demographic changesDemographic changes Education of the Education of the

workforceworkforce Labor MobilityLabor Mobility Government policiesGovernment policies Unemployment rateUnemployment rate

BALANCING BALANCING

SUPPLY AND DEMANDSUPPLY AND DEMAND

BALANCING BALANCING

SUPPLY AND DEMANDSUPPLY AND DEMAND

(Shortage) (Shortage) RecruitmentRecruitment

Full-timeFull-time Part-timePart-time RecallsRecalls

(Shortage) (Shortage) RecruitmentRecruitment

Full-timeFull-time Part-timePart-time RecallsRecalls

(Surplus) (Surplus) ReductionsReductions

LayoffsLayoffs TerminationsTerminations DemotionsDemotions RetirementsRetirements

(Surplus) (Surplus) ReductionsReductions

LayoffsLayoffs TerminationsTerminations DemotionsDemotions RetirementsRetirements

FORECASTING SUPPLYFORECASTING SUPPLY


Forecasting Demand Considerations:

Product/ Services

Product or service demand is the organization internal consideration based on which it simply design its human resource planning strategy. It refers to the want of particular products that are shaped by one’s society and are described in terms of objects that satisfy needs, when backed by buying power, wants become demand. Therefore it helps measure the potential market for a particular product/service.

Information available

The space and aviation sector was a leading supplier of avionics systems for the commercial, military, and space markets. Honeywell systems could be found on virtually every commercial aircraft produced in the Western world and were aboard every manned spaceflight launched in the United States. Products included automatic flight control systems, electronic cockpit displays, flight management systems, navigation, surveillance, and warning systems, and severe weather avoidance systems. In 1995, the Boeing 777 was launched, marking the successful launch of a new suite of Honeywell integrated avionics controls.

Of the three product sectors, home and building control was the most international because its products had potential applications in every country. The end customer was the homeowner and housing needs differed in every country. Most of the home and building control products sold in Europe were engineered and manufactured in European factories.

For example, German homes were usually heated with hot water whereas in the U.S. forced air was the norm. As a result, various valves and boiler parts were developed in Germany for the German heating market. In other cases, the European products were close adaptations of products sold in the United States. There were also products, such as thermostats sold in the Netherlands, which were imported directly from the United States.

HTC need to make sure that they are technologically updated with the recent trend with their product and services


HTC product and services have to be just right for the consumers as because they are not easy customizable.

Technology

Technology refers to the explosive advances and exciting ways to learn about customers and to create tailored products; it also refers to the development of original products, products improvements, product modifications and new brands through the firm’s own research and development efforts.

Information Available

The underlying philosophy of technology transfer was consistent throughout HTC.

First, technology transfer required funding, which occurred through different mechanisms.

Second, technology transfer was rarely a function of “how incredible the technology is.”

The technology had to be mature and its transfer had to be economically feasible in terms of cost effectiveness and ROI. Some successful technology transfers involved technology that had been developed five to ten years earlier. Third, there had to be an emotional commitment to the technology within a product division. The challenge for all technology transfers was to convince the product divisions that the technology was relevant and could provide customer solutions.

HTC product has to be designed to be produced and sourced worldwide.

HTC invested more in Technology as because the product should meet all the customers demand in a general way and with a minimum cost.


Financial resources

Financial resources are the resources where a company generates its funding from; it is usually the back bone of the company, as because without finance a company cannot progress further. A company needs financial resources to implement their strategic plans and objectives.


Occasionally, if HTC was convinced a product should be developed immediately to create a market window and no division had the resources to react quickly, HTC might initiate product development. HTC might also approach a customer directly as the basis for generating divisional interest in a technology. As well, technology that would benefit only one division was normally viewed as R&D that should be funded at the division level rather than at corporate.

Within HTC, scientists and engineers competed for funding via various funding programs. The Home Run Program supported projects with low technical risk, an established market need, a large funding requirement, and an expectation of a rapid capital return. The Initiatives Program focused on innovative, technology-based funding with high risks and longer term payoffs. Technology Base Funding supported longer range division needs.

Projects provided for matching funds from divisions tied directly to divisional products needs. There were many and varied linkages between HTC and the product divisions. In some cases, HTC engineers were assigned to divisions to support product development.

The assignments could range from several weeks to a year. Nevertheless, it was acknowledged that it was difficult to get people to accept short-term assignments because of family and personal constraints.

Research and Development needed to make sure that they find the right technology to use for their products


Technology was one of the key reasons that will differentiate and take HTC to a new level.

Organizational Growth

Growth is something for which most companies, large or small, strive. Small firms want to get big, big firms want to get bigger. Most firms, of course, desire growth in order to prosper, not just to survive. Organizational growth, however, means different things to different organizations. Indeed, there are many parameters a company can select to measure its growth. The most meaningful yardstick is one that shows progress with respect to an organization's stated goals. The ultimate goal of most companies is profit, so net profit, revenue, and other financial data are often utilized as "bottom-line" indications of growth.


The 1980s and early 1990s was a period of restructuring for Honeywell. Total employment dropped from 94,000 in 1985 to 50,000 in 1995. Cutbacks in U.S. defense spending had a dramatic effect on Honeywell’s Space and Aviation Division. During a three-year period from 1991 to 1994, space and aviation revenue declined by $700 million to $1.4 billion. Space and aviation employment declined by half to about 11,000 and 3 million square feet of plant space was closed. In 1990, the defense business, which a few years earlier had accounted for almost half of total revenues, was spun off into a new organization. In

1986, Sperry Aerospace, a Phoenix-based firm manufacturing flight instrumentation, advanced avionics, and other electronics systems was acquired for $1.03 billion. The acquisition solidified Honeywell’s position as the leader in aircraft navigation systems and flight controls. Also in 1986, after its market share dropped to 2%, the computer business was spun off into a joint venture of Companies des Machines Bull of France and NEC Corp. of Japan. In 1991, Honeywell exited the computer business.

The company wanted to grow further more and wanted to distribute the product not only in China but to the whole International market.

HTC did not want only to dominate the market of china, but there were other opportunities to dominate other international market, and HTC wanted to that as because HTC wanted to be the market leader.


Management Philosophy

The philosophy of business considers the fundamental principle that underlie the formation and operation of a business enterprise, the nature and purpose of a business, for example, is it primarily property or a social institution; its role in the society; and the moral obligations that pertain to it. The subject is important to business and management, and is closely related to business ethics and political economy. It is influenced significantly by philosophy, ethics and economic theory.


HTC had two additional groups of managers called Business Development managers and Divisional Technology Managers (DTMs). The five Business Development managers were responsible for generating outside contracts. Six DTMs provided an interface between the divisions and HTC, working closely with the technology section heads and the product divisions. The DTMs had two main responsibilities:

1) To understand the divisional business strategy; translate that strategy into short- and long-term technology needs; and disseminate that information in HTC as the basis for influencing investments in R&D

2) To establish mechanisms for the transfer of mature technology from HTC to divisions.

According to a DTM, the DTM’s role was “to be a funnel for information transfer and dissemination.”

The new management team was responsible to ensure quality of the product

They new management team was assigned to find out the possible problems and provide a solution to the customers, and find out their satisfaction level.


Absenteeism/turnover

No information is available

Techniques

Managerial Estimates


In mid-1997, Steve Wilson, a Honeywell Technology Center (HTC) manager, thought back to the previous week’s visit from a Chinese delegation interested in Honeywell Inc.

(Honeywell) technology and products. These visits were becoming increasingly frequent.

Wilson and other HTC managers were certain that there were many international opportunities for Honeywell, not just in China but throughout Asia and Eastern Europe. The dilemma was that HTC, Honeywell’s research and development R&D organization,

One of the key technique would be the managerial estimates as because some of the managers of Honewell figured out that if they broaden their products and service range from China to other countries they could earn a lot of revenue and for doing this they need to have Research and Development centers in other potential countries which would give them in brief details about the customers wants and needs, which Honewell could use and customize their product according to that while incorporating new and better technologies for getting the best output and pass beyond the customer satisfaction level.


Forecasting Supply Considerations:

Demographic Changes

Demographic changes are any changes in any group of people and the changes brought about by their consumption and buying habits.


In addition to increasing internationalization, the controls industry had seen a wave of mergers, acquisitions, and alliances In 1996, Electrowatt Group, a Swiss-based holding company, announced the formation of Landis & Staefa, Inc., a worldwide combination of Landis & Gyr and Staefa Control System. Landis & Staefa competed with Honeywell in home and building controls. Later in 1996, it was announced that Siemens AG was acquiring a 44.9% share in Electrowatt Group. Siemens, a Honeywell competitor in various product markets, was one of the world’s largest organizations. Siemens had sales of more than $60 billion, 250 manufacturing sites in 42 countries, and subsidiaries and affiliates in more than 190 countries. In the United States alone, Siemens had more than 46,000 employees in over 400 office locations, 40 research and development facilities, and 80 manufacturing and assembly plants. In 1991 Siebe acquired U.S.-based Foxboro for $656 million. The Siebe group employed over 42,500 people and consisted of more than 150 companies located in 40 countries. In 1992, Emerson Electric bought Fisher Controls for $1.4 billion, forming the Fisher-Rosemount family of companies.

Different countries people have different taste and preference so making the new technological advancement was a big challenge for the development team of HTC.


Education of the Workforce

Education of the workforce refers to the degree of education a person needs to have to complete the job, or in other words for a high tech education of the subject matter has to be matched with the work itself.


For software, technology transfer often involved transferring individuals to teach the software and adapt it to applications. For home and building controls and its more mature technology, technology transfer often meant the transfer of hardware solutions. For space and avionics applications, the cost of the technology might be less important than the contribution of the technology to safety or reliability. For home and building controls, the cost of the technology was always an issue since there was a belief that customers were very reluctant to spend more money for basic controls such as thermostats, even if the technology was significantly better.

HTC needed to have the outmost person for finding new technical advancements for their products.

HTC in their research and development team had to have the new and with all the updates a team of technicians who could actually strive and differentiate countries people and choice and make technologies advancement to the product according to the courtiers people taste and preferences.

Labor Mobility

Unemployment Rate

Government Policies

Information Unavailable


Technique

The only technique in my opinion is very much appropriate for mentioning would be

Skill Inventories

Skill inventories provide management with information on the availability and distribution of skills within the organization, and help employees plan career development. The inventory summarizes the employee's past education and experience, current skills, short- and long-term career goals, and specific plans for growth, both on and off the job. For both the employer and the employee, the skills inventory helps ease the transition from present to future.


The next step was to show some examples of the technology to product divisions. The initiation of the HTC-division interaction could occur in various forms, such as a monthly HTC report on internally developed HTC programs, a DTM presentation to the divisions, or a specific request from a division for a particular technology. The HTC objective in interacting with the divisions was to develop divisional interest for the project. In this example, a division in the Netherlands was interested. This division sold valves and other components for boilers used in homes for heating and hot water. Based on a proposal prepared by HTC engineers, the division agreed to participate in a Joint Project, which meant that the division and HTC would share project funding equally. By getting the division involved, product and market specifications could be developed. At this point, the personnel involved in the project included the Home and Building Control Systems, HTC engineers, a division development engineer, and a DTM. At the division level, the engineer would work with sales and marketing people to justify the funding.

HTC needed people who can handle pressure and along with this pressure come up with innovative ideas.


Balancing out the Demand and Supply

Honeywell need to make sure that their products are up to dated and along with their research team, having a research team in every country would give them a better view of the country itself rather than speculating. So its all better to be there and judge rather then speculating and judge. So HTC needs to have their research team in every country and find out their trends and preferences, make available of the information and try to build or adapt new technologies in their product and services according to the information. By doing this HTC will earn loyal customers and will eventually dominate the market.


Recommendation:

So far we have seen that the company of our concentration in this case: Honeywell have so far analyzed the entire case in every details and found out ach and every problems what the company is facing according to the current, external and competitive environment and then summed up all the main problems of the company in one vital issue. After that, we have concentrated more on the HR side of the case as we feel that the part of the business that can contribute most in this case in human resource. We have specified all the short run and long run issues related to HR in this case in one articulate list where we have presented each of the HR issues with a question. And now it is time to us to look for a solution and recommend it.

To recommend comprehensive solutions we must first sum up all the problems and the issues that we have listed into a more concise with fewer number of issues that summarizes all the issues into specific measurements and than basing on that sum-up, we would offer recommendation.


If we approach this way, we can sum up all the issues and the problems in this five specific points:

1. How is Honeywell going to manage the human resource in the face of the current recession that the Mercosur region is facing?

2. How is Honeywell going to manage the operations of the company in different aspects with the current external, internal and competitive environment and for the long run so that it reaches the target of 14% return on profit?

3. How should HoneywellD’ Aquino manage its sales team to push for a higher sales so that it can meet the desired return on sales of 14% in the current environment full of challenges regarding the internal, external and competitive issues?

4. What strategies should Honeywell imply to manage its brand to maintain and expand its brand value in the market?

5. What should Honeywell do to strategically manage the human resource of the company to make it fit for the long run implication of the business?

Now we are going to offer recommendation for each of the problems separately and the we would formulate a detailed implementation plan to offer proper course of action for Honeywell.


Recommendation Regarding the Current Recession:

Problem:

How is Honeywell going to manage the human resource in the face of the current recession that the world is facing?

Solution:

In the solution of this problem, we are going to recommend following a policy that concentrates on retaining the employees rather than downsizing them.

During recession a very typical trend that many companies show is the massive downsizing that is done. This approach has a lot of disadvantages. It creates a storm among all the parties related to the company the company, law-suits are filed in great number but most importantly the company looses its value to almost all of its stakeholders. However, aside from all those reasons stated, there are two vital reasons why Honeywell should never look to downsize employees:

Firstly it will create a very bad image for the company in the eyes of the labor union and the work force, because Latin America is a place where such things as downsizing are not seen in a very friendly manner.

Secondly and most importantly, Honeywell already has a very highly qualified, strong and effective human resource in the company that has proven to be very highly competitive in the market and an asset for the company. Cutting down on this excellent human recourse is therefore not a very wise decision. If this workforce gets reduced by downsizing, it going to be very hard to rebuild such human resource and we really doubt that the quality and the value of this human resource is ever going to be restored.


Therefore downsizing should not be an option for the company even at the time of the recession and therefore, we recommend a policy that would cut the labor cost and at the same time retain the human resource of the company. In that way the current labor force will be retained which is very important for the company.

We would look to cut labor costs and at the same time keep the employees of the company satisfied and make them truly feel that they belong to this company. For that we are going to use a number of HR tools which we are going to discuss when we would be devising the implementation plan.


Recommendation Regarding the operations:

Problem:

How is Honeywell going to manage the operations of the company in different aspects with the current external, internal and competitive environment and for the long run so that it reaches the target of 14% return on profit?

Solution:

The problem with operations basically relates to the high operating cost that is even more heightened by the high transpiration cost and the complexity arising from the very diversified product lines and services of D’ Aquino. In solution of these problems we are going to recommend the company to look for establishing more production facilities in the other Mercosur countries so that it reduces production costs.

Where to set up the production facility/s depends mainly on two factors:

Propensity to the Central Headquarter: This means how close the production facility/s is to the central headquarter of the business.

Propensity to the Market: This means how close the production facility/s is to the actual market where the product is offered.

The company usually has two options to choose from: to prefer propensity to the central headquarter meaning putting the production facilities close to the central headquarter where the resources are more easily available or the company may prefer propensity to the market meaning setting up the production facilities near the market where it is offered where the finished goods are doesn’t need to be transported and customization can be made depending on the demand of the market. The two options have two


different cost implications. Preferring propensity to the market means more transportation cost of the finished goods and costs coming from other administrative paperwork relating to the transportation of the products. Preferring propensity to the market meaning hiring more labor relating to production giving rise to the a source of cost, the cost of setting up the and running production facilities etc. A company should estimate the costs of both of the two options and picks the one that costs less. There’s off course other issues attached as well.

In case of Honeywell, the company has preferred the propensity to the central head quarters which is proven to be giving the company high cost, so there is probability that preferring propensity to the market can be a better options for some regions. At least this option can be considered incase of Argentina where the operational performance are the lowest. Here we have to conduct a cost analysis of the products if a new production plant is made in any other region (i.e. Argentina). One way to do this analysis is the transportation model which might be implied here. Apart from the cost analysis of the transportation model there are other factors like the human resource to be considered as well. All these analysis and tactics will be given in detail in the implementation of these strategies.


Recommendation Regarding the Operations:

Problem:

How should Honeywell manage its sales team to push for a higher sales so that it can meet the desired return on sales of 14% in the current environment full of challenges regarding the internal, external and competitive issues?

Solution:

Using the different HR tools to motivate sales force like incentive planning, designing bonuses, earnings based on not only fixed payment but also variable to the performance like designing pay on the basis of quantities sold or points earned, group incentives etc and also design marketing strategies within the sales department to boost up sales using different sales techniques and tools like missionary selling etc.

The Tactics that we would considering are:

Creating Group Incentive Plans in Argentina: As we can see from the data given to us, Argentina is the region where generating sales is proven to be the toughest. Therefore, we would be offering group incentive plans in those areas because group incentives is much more effective individual incentives as it motivates the whole group to work together in the positive direction.

Setting Up Higher Targets With Higher Rate of Pay: To push for higher sales we can make the sales quotas higher than it is now. However, to motivate salespeople towards that goal the reward for accomplishing that challenging higher goal should be higher as well.


Let Salespeople Participate in Their Goal Setting: In setting the sales quotas, the salespeople should be given a chance to participate because that would motivate the sales team further.

Train the Salespeople to do Missionary Selling: One of the ways companies in this business boost up their sales is by missionary selling in which the sales people target not the buyers but the people who influence the buying decisions of the buyers like the doctors, health professionals, health teachers in high school etc. The company can train the salespeople to design the way they would do this type of selling, for example, by giving incentives to the doctors etc.


Recommendation Regarding the Brand:

Problem:

What strategies should Honeywell imply to manage its brand to maintain and expand its brand value in the market?

Solution:

Honeywell as a brand has been facing a lot of problems recently. There have been the issues of distributors displaying their brand of products with products that are completely unrelated which is harmful for the brand image of the company. In addition to that, we can have observed that Honeywell is using the same brand name for both its industrial customers and home customers which dilutes the brand image in the minds of the target markets. We need to devise tactics to solve these problems.


Honeywell can do vertical integration to get some control over its distribution channel. They can set up their own showrooms and outlets to sell the products that they think are exclusive to their brand. In this way, at least the brand identity of those exclusive products can be kept in tact.

Apart from the exclusive products, other products in their product lines can also be included in the tactics. For those products, a push strategy can be used where the company would offer higher pay to the owners of the outlets if they display their products in exclusive locations.


Honeywell may extend their brand to newer types of products to increase diversity in their brand portfolio and thus create demand in the more segments in the market, winning more number of customers. This can help the company stay competitive in the market in these hostile situations.

Honeywell can split up their brand for the commercial buyers and the home buyers segment with separate brand identities for each of the co-brands. This will need some strategies made by the human resource as well.


Recommendation Relating to Human Resource:

Problem:

What should Honeywell do to strategically manage the human resource of the company to make it fit for the long run implication of the business?

Solution:

There are problems and issues relating exclusively to the human resource of the company that needs to be solved. These problems relate to the fast changing of business cycle, building the right workforce for customer, managing diversity, operational planning etc.


Workforce Planning: Honeywell must have a solid workforce planning based on the business cycle about how they are going plan their human resource in different phases of the business cycle, if they have a preplan about that, they will at least have something to base upon in the long run.

Planning at Operations Level: Honeywell must also have plans in their operations level to improve the operational performance that are under scrutiny right now to reach the desired target of 14% return on sales.


Planning for Distribution and Customer Service: Honeywell one the main issues is the distribution and consumer services. They must plan their human resource properly to oversee these issues wisely.

Special Managerial Planning: Honeywell must have effective plans to manage the current managers as well to make themselves fit for the future external issues and future geographical expansion potentials.

Having specific recommendations gives a company a solid base for making the right decisions and strategic moves in the external, internal and competitive context. It specifies the main issues that a company has and gives ideas that pave way to bring out positive results out of these issues. It helps in utilize the plus points of an organization to create competitive advantages and overcome the minus points to be a strategically strong player in the market.


Implementation:

Based on this recommendation and tactics, now we are going to plan the implementation that should be thorough and it should focus on the in detailed action plan of the company. The whole organization process would be revised on these strategies and tactics and therefore t has to be as much detailed and solid n terms of effectiveness as possible.

Implementation Solutions to Current Recession:

Problem:

How is Honeywell going to manage the human resource in the face of the current recession that the world is facing?

Solution:

In the solution of this problem, we are going to recommend following a policy that concentrates on retaining the employees rather than downsizing them.

During recession a very typical trend that many companies show is the massive downsizing that is done. This approach has a lot of disadvantages. It creates a storm among all the parties related to the company the company, law-suits are filed in great number but most importantly the company looses its value to almost all of its stakeholders. However, aside from all those reasons stated, there are two vital reasons why Honeywell should never look to downsize employees:


Firstly it will create a very bad image for the company in the eyes of the labor union and the work force, because Latin America is a place where such things as downsizing are not seen in a very friendly manner.

Secondly and most importantly, Honeywell already has a very highly qualified, strong and effective human resource in the company that has proven to be very highly competitive in the market and an asset for the company. Cutting down on this excellent human recourse is therefore not a very wise decision. If this workforce gets reduced by downsizing, it going to be very hard to rebuild such human resource and we really doubt that the quality and the value of this human resource is ever going to be restored.

Therefore downsizing should not be an option for the company even at the time of the recession and therefore, we recommend a policy that would cut the labor cost and at the same time retain the human resource of the company. In that way the current labor force will be retained which is very important for the company. We would look to cut labor costs and at the same time keep the employees of the company satisfied and make them truly feel that they belong to this company. For that we are going to use a number of HR tools which we are going to discuss when we would be devising the implementation plan.


Recommendation Regarding the operations:

Problem:

How is Honeywell going to manage the operations of the company in different aspects with the current external, internal and competitive environment and for the long run so that it reaches the target of 14% return on profit?

Solution:

The problem with operations basically relates to the high operating cost that is even more heightened by the high transpiration cost and the complexity arising from the very diversified product lines and services of Honeywell. In solution of these problems we are going to recommend the company to look for establishing more production facilities in the other countries so that it reduces production costs.

Where to set up the production facility/s depends mainly on two factors:

Propensity to the Central Headquarter: This means how close the production facility/s is to the central headquarter of the business.

Propensity to the Market: This means how close the production facility/s is to the actual market where the product is offered.

The company usually has two options to choose from: to prefer propensity to the central headquarter meaning putting the production facilities close to the central headquarter where the resources are more easily available or the company may prefer propensity to the market meaning setting up the production facilities near the market where it is offered where the finished goods are doesn’t need to be transported and customization can be made depending on the demand of the market. The two options have two different cost implications. Preferring propensity to the market means more


transportation cost of the finished goods and costs coming from other administrative paperwork relating to the transportation of the products. Preferring propensity to the market meaning hiring more labor relating to production giving rise to the a source of cost, the cost of setting up the and running production facilities etc. A company should estimate the costs of both of the two options and picks the one that costs less. There’s off course other issues attached as well.

In case of Honeywell, the company has preferred the propensity to the central head quarters which is proven to be giving the company high cost, so there is probability that preferring propensity to the market can be a better options for some regions. At least this option can be considered incase of Argentina where the operational performance are the lowest. Here we have to conduct a cost analysis of the products if a new production plant is made in any other region (i.e. Argentina). One way to do this analysis is the transportation model which might be implied here. Apart from the cost analysis of the transportation model there are other factors like the human resource to be considered as well. All these analysis and tactics will be given in detail in the implementation of these strategies.


Recommendation Regarding the Operations:

Problem:

How should Honeywell manage its sales team to push for a higher sales so that it can meet the desired return on sales of 14% in the current environment full of challenges regarding the internal, external and competitive issues?

Solution:

Using the different HR tools to motivate sales force like incentive planning, designing bonuses, earnings based on not only fixed payment but also variable to the performance like designing pay on the basis of quantities sold or points earned, group incentives etc and also design marketing strategies within the sales department to boost up sales using different sales techniques and tools like missionary selling etc.


As we can see from the data given to us, Argentina is the region where generating sales is proven to be the toughest. Therefore, we would be offering group incentive plans in those areas because group incentives is much more effective individual incentives as it motivates the whole group to work together in the positive direction.

To push for higher sales we can make the sales quotas higher than it is now. However, to motivate salespeople towards that goal the reward for accomplishing that challenging higher goal should be higher as well.

In setting the sales quotas, the salespeople should be given a chance to participate because that would motivate the sales team further.


One of the ways companies in this business boost up their sales is by missionary selling in which the sales people target not the buyers but the people who influence the buying decisions of the buyers like the doctors, health professionals, health teachers in high school etc. The company can train the salespeople to design the way they would do this type of selling, for example, by giving incentives to the doctors etc.


Recommendation Regarding the Brand:

Problem:

What strategies should Honeywell imply to manage its brand to maintain and expand its brand value in the market?

Solution:

Honeywell as a brand has been facing a lot of problems recently. There have been the issues of distributors displaying their brand of products with products that are completely unrelated which is harmful for the brand image of the company. In addition to that, we can have observed that Honeywell is using the same brand name for both its industrial customers and home customers which dilutes the brand image in the minds of the target markets. We need to devise tactics to solve these problems.


Honeywell can do vertical integration to get some control over its distribution channel. They can set up their own showrooms and outlets to sell the products that they think are exclusive to their brand. In this way, at least the brand identity of those exclusive products can be kept in tact.

Apart from the exclusive products, other products in their product lines can also be included in the tactics. For those products, a push strategy can be used where the company would offer higher pay to the owners of the outlets if they display their products in exclusive locations.


Honeywell may extend their brand to newer types of products to increase diversity in their brand portfolio and thus create demand in the more segments in the market, winning more number of customers. This can help the company stay competitive in the market in these hostile situations.

Honeywell can split up their brand for the commercial buyers and the home buyers segment with separate brand identities for each of the co-brands. This will need some strategies made by the human resource as well.


Recommendation Relating to Human Resource:

Problem:

What should Honeywell do to strategically manage the human resource of the company to make it fit for the long run implication of the business?

Solution:

There are problems and issues relating exclusively to the human resource of the company that needs to be solved. These problems relate to the fast changing of business cycle, building the right workforce for customer, managing diversity, operational planning etc.


Honeywell must have a solid workforce planning based on the business cycle about how they are going plan their human resource in different phases of the business cycle, if they have a preplan about that, they will at least have something to base upon in the long run.

Honeywell must also have plans in their operations level to improve the operational performance that are under scrutiny right now to reach the desired target of 14% return on sales.

Honeywell one the main issues is the distribution and consumer services. They must plan their human resource properly to oversee these issues wisely.

Honeywell must have a succession planning that has specific plans on cultivating managers for the future geographical expansion opportunities of the organization.


Honeywell must have effective plans to manage the current managers as well to make themselves fit for the future external issues and future geographical expansion potentials.

Having specific recommendations gives a company a solid base for making the right decisions and strategic moves in the external, internal and competitive context. It specifies the main issues that a company has and gives ideas that pave way to bring out positive results out of these issues. It helps in utilize the plus points of an organization to create competitive advantages and overcome the minus points to be a strategically strong player in the market.

hrm 360: honeywell inc. and global r&d

Documents

hrm360 honeywell

honeywell round

honeywells controls

honeywells space

aviation control

control division

home heating controls

home automation systems