Division of Labor is when the production process is split into a number of parts and every worker has to perform a special task. After Adam Smith and other important researchers concluded that division of labor is the main engine which is responsible for the wealth of the societies. This strategy was adopted by a number of companies among which Honda was one of the prominent names.
Honda is using division of labor in car assembly on a very high scale, in order to produce a wide range of automobiles such as smart cars, family vehicles and heavy construction machinery etc. Due to division of labor Honda is able to produce high quality vehicles with great efficiency which enables it to cut their costs and yield high profits.
However, Honda has to face demerits due to division of labor. Honda has expanded its operations to a massive scale, which led it to face dis-economies of scale specially managerial and financial. It became a tough job to design a system which could run company at such level with maximum efficiency.
Information Source:
http://www.omegauto.org/estudios%5Cter045.pdf
http://www.chinalaborwatch.org/news/new-305.html
High School text book. ( GCE A Levels Business Studies )
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