Honeywell International Success Essay Example for Free

Honeywell International Success EssayThis paper introduces the reader to Honeywell International Inc. Honeywell is a world leader in the operation of lean manu positionuring and its Six Sigma Plus work outes. With the role of c arfully monitored damage trites, net put forward value in investment decisions, and the transp atomic number 18ncy of the conjunctions financial statements be all methods that Honeywell has roaringly implemented and utilized to reach and chief(prenominal)tain their experimental condition as a world-wide competitor.The party has act its harvest, despite the market downturn that began in 2007, and continues to eject its resilience and pioneering spirit by continually improving their product lines, globally puff uping their market, and, monitoring and carrying financial stability. Its forward thinking and go outingness to take risk depart provide Honeywell the capacity to maintain its role as a major competitor and contri onlyor to the result and recovery of our economy. Table of Contents Page Abstract2 Company Overview4 Six Sigma and arguing Manufacturing8The function of archetype Costs11 The Use of Net stick in Value14 Summary15 References18 Honeywell International Inc. is an Ameri set up based advanced-technology party that manufactures aero quadruplet and automotive products residential, commercial, and industrial control systems specialness chemicals and plastics and engineered materials. Its assent into history kindle be traced back to 1885, spanning 125 geezerhood of history. Honeywell International is a $38 billion diversified technology and manufacturing leader, with 132,000 employees in over 100 countries and it a Fortune 75 Company.It is a diverse and global-wide fundamental law and is a leading supplier of avionics and electronics, consumable hardw ar, engine controls, environmental controls, landing systems, male monarch systems, propulsion engines, aerospace services and space products, and systems for the aerospace patience, as well as Original Equipment Manufacturers (OEMs) of commercial, regional, condescension and military aircraft and spacecraft.Today, its main competitors in the aerospace defense product and service industry ar BorgWarner Inc. , Johnson Controls Inc. and United Technologies Corp. State-of-the-art technology, world cognise brands and global solutions bring in placed Honeywell in the unique position as one of the premier oecumenic suppliers in the aerospace industry, offering solutions of systems, products and services to the largest aerospace and airline companies in the industry. Throughout their 125 years in trade, Honeywell has patroned animate the aerospace industry with its dedication to research and get under ones skinment and its enthusiasm to advance technology in their various markets.Honeywells received and efficient aerospace services and verify course of studys deliver the right level of engineering expertise, maintenanc e services and asset availability solutions to simplify operations mend keeping systems and equipment at peak operational performance. It has proven to be successful in its quest for growth and global expansion from the time of inception. Their quest to acquire and expand began in 1927 the original company, Minneapolis Heat Regulator Company, and Honeywell Heating Specialty Co. merged to form the Minneapolis-Honeywell Regulator Co.From the merger, the surname Honeywell was adopted and has remained the same since. In the course of its scholarships, Honeywell purchased early(a) byplayes whose focus was in the controls area among those acquisitions, was Brown prick Co. who was a wide-reaching leader in the written report of industrial controls and indicators. This acquisition further increased their already successful market to a wider range of customers, as Minneapolis-Honeywell Regulator Co. had already established an overseas trading accord with Japanese distributors such a s Yamatake Trading Company.It was no surprise that, in 1934, Honeywell pursued and eventually acquired Time-O-Stat Controls Corporation. With the acquisition of Time-O-Stat, Honeywell further expanded its global presence, establishing offices in Toronto, Canada and The Netherlands a few years later, they had offices in London and Stockholm. By 1941, Honeywell had expanded into markets in Chile, Panama, Trinidad, New Zealand, Argentina, and South Africa. By 1972, it operated 25 wholly-owned subsidiaries, 142 branch offices, and joint ventures in basketball team countries outside the U.S. True to its reputation as a risk taker, Honeywell ventured into the computer industry. This venture was brief and by 1991 Honeywell was on doggeder in the computer business. Even though the venture was short lived, it proved to be of groovy value Honeywell utilize the knowledge gained from their digital computer experience and applied it to the traditional field of automation control, integrating sensors, and activators. In 1986, Honeywell purchased Sperry Aerospace, and markedly enhanced its position in the aerospace industry.Edson Spencer, Honeywell chairman and chief executive director officer, said the purchase was among the most important his company had made, It is an outstanding opportunity for Honeywell that positions us for the long terminal figure in a market that is expected to have significant growth for the next 10 years commercial and military aviation (Arnold, 2012). This purchase made Honeywell the worlds leading integrator of avionics systems, in spate flight controls, space vehicles, and the first FAA-certified wind shear warning system.It continued to expand, and by 1993, the company continued its world-wide expansion by opening affiliates in Abu Dhabi, China, Oman, Romania, and the Ukraine. In a span of 26 years, Honeywell had operations in 95 countries by dint of 83 wholly-owned subsidiaries and 13 joint ventures. virtuoso of the most noned and dis cussed mergers occurred in 1999 when AlliedSignal, a diverse manufacturer, bought Honeywell for $13. 8 billion in stock. AlliedSignal kept the Honeywell name, merging offices, and closed its Morristown, New Jersey headquarters.The merger resulted in a major restructuring for Honeywell which added to its product line and services. The deal created a company with $25 billion in annual sales and a market capitalization in excess of $45 billion. The merger gave the combined company the marketing edge, providing their airline customers to take advantage of saucy technology that would boost salute savings for twain parties. In an unexpected turn, the early part of 2001 brought difficulties for Honeywell when the European Commission rejected the purchase of Honeywell by oecumenic Electric (GE).In October 2001, Honeywell and GE, the largest corporation in the world and the number one producer of jet engines, inform the intent to embark on one of the largest industrial mergers in histo ry. The plan was for GE to acquire Honeywell, the largest worldwide supplier of non-engine aerospace equipment. During negotiations it was anticipated that in that location would be no antitrust problem as GE and Honeywell were non competitors and non part of the same supply chain. The merger was intended to bring together complementary products that were dowery parts of large jet aircraft.The deal would have been the largest industrial merger in history. Instead, it became recognized as the first, and so far only, merger between US companies to be derailed solely by the European anti-trust authorities, while being cleared by the US Department of Justice (DoJ). On July 3, 2001, in an unprecedented act, the EU officially rejected the planned $42 billion acquisition of Honeywell International Inc. , by GE. The merger was denied by the EU after concluding that the merger would create or strengthen dominant positions on some(prenominal) markets and that the remedies proposed by G.E . were insufficient to resolve the competition concerns resulting from the proposed acquisition of Honeywell.The merger between G. E. and Honeywell, as it was notified, would have seriously reduced competition in the aerospace industry and resulted ultimately in higher prices for customers, particularly airlines (Pellegrini, 2001). Despite the fact that the GE buyout failure was a stumbling block, Honeywell used the experience to strengthen its core businesses by continuing to develop and introduce new products.The company started an aggressive acquisition scheme with the goal to increase revenues and decrease be in a strategy that, divested small, underperforming operations, reduced the number of suppliers, and streamlined operations in small shipway elsewhere Honeywell History, n. a. ) The results paid off for Honeywell, as they continued to win a large percentage of their acquire bids, sales were ahead of budget, and the rate of turnover in managers did not significantly inc rease from the same finale in the prior year, and customer satisfaction was up.Honeywell faced some challenges after the GE debacle, how constantly, by do changes it displayed that tenacity, hard work and a go forthingness to take risk, can result in huge payoffs. Honeywell continued to streamline and improve their lean manufacturing processes, i. e. Six Sigma Plus, implement and ensure compliance of the company code of conduct and maintain its dominance as a governing contractor. Honeywell began its Six Sigma process and concept of self-managed teams in 1995 to drive data-based decision making, ensure quality levels, and improve customer satisfaction (Crager, 2007).Through training, leadership, and senior management support, Honeywell successfully developed their Six Sigma program. In late 2001 Honeywell combined the concepts of lean manufacturing and Six Sigma in a program called Six Sigma Plus to create a more robust program. The program was designed to align rise objectives directly with business assumes by integrating top talent and generating bottom-line results. Six Sigma Plus is an general strategy to accelerate improvements in all processes, products and services, and reduce the punitive constitute of poor quality finished elimination of waste and reduction of defects and variations.One of the ultimate aims documented in the Six Sigma Plus strategy is providing maximum value to customers by applying a logical and structured approach to all business processes. One of the pluses of Six Sigma is that it empowered employees, allowing them to make decisions that impacted how their unit or line was performing. This provided Honeywell an excellent tool that is a highly respected measure of excellence. (M. Calderon, personal communication, May 1, 2012) Honeywell took the basic concept of Six Sigma and created its own reading which is known as Six Sigma Plus.It is present-day(prenominal)ly used across all businesses and brands to drive growth and pr oductivity. The model operates by providing a measurement of how effective the nerve is in eliminating defects and variations from processes. To meet its requirements, a process must(prenominal) operate at 3. 4 defects or less per million opportunities. This equates to 99. 9997% error free (Six Sigma Plus, n. d. ). Conscious application of the Six Sigma methodology to all business processes delivers greater value to its customers and makes Honeywell a more desirable business colleague.The implementation of lean manufacturing processes has enabled Honeywell to maintain tight controls in all aspects of the managerial explanation processes. With the use of managerial accounting, Honeywell has ensured that their productions and service is well planned and controlled. With the budget cuts facing government, private sector job loss, and tightened markets, it is impressive that Honeywell has continued to maintain its sales growth in the United States. The diversity of Honeywells world -wide enterprise, exemplifies the importance of a creative corporate marketing approach.Honeywell consists of unique business units, with each, offering a variety of products and services. Strategies and implementation of those strategies must be developed and executed at the corporate, business unit, and product levels. Overall, strategy and long-term planning are point by the companys vision and stated mission. At the business level, planning begins with an examination of the current situation, including technological changes and competitive effects. By victimisation this type of analysis, Honeywell is better equipped to address and come in threats and new business opportunities.Decisions to pursue new opportunities are followed by establishing a set of objectives, much stated in terms of market share, sales volume, or pro suitableability. Subsequently, business and marketing strategies are developed to carry out those objectives. telling execution of strategy in implement ation must then occur for objectives to be realized. Effective financial statement analysis will be a primary indicator that indicates the progress and demonstrates whether company goals are being met.Honeywell has been a leader in their industry in planning and control and have used financial analysis in depth to evaluate and control their growth and profitability. It continues to be effective in identifying opportunities to improve the organizations efficiency and in evolution strategic plans to realize those opportunities. By utilise a diversity of analytical tools Honeywell is better prepared in making operating decisions, such as how and where products are to be manufactured and serviced, whether insourcing or outsourcing is more equitable, and whether to expand and the area to expand to.Timely and ideal financial statement preparation is critical to the success or failure of a business. The financial officer, owner, partner or members management team of a business must revi ew the business financial statements and have a good understanding of them. Financial statements are critical to Honeywells ability to make solid, inform decisions. Such decisions are needed in order for Honeywell to meet one of its primary goals, which is to realize a high rate of return on their investments. The measurement and success of this initiative is arrived at by amount it against other industry averages.This information helps Honeywell understand that current initiatives do show a market response. In view of the fact that the industry average can be general in nature the industry average should be used as a guide. A failure to use the data appropriately can mislead investors and have a disastrous affect on Honeywells reputation and marketability. Achieving their strategic plan will not only involve Honeywells internal planning and controlling, but it will also involve the support of creditors and investors.Both are key players in providing capital needs to support new initiatives and milestones the use of financial statements in this process will no doubt be the backrest of the decision making process. It is difficult to know the health and direction of a company if financial statements are not reviewed in a timely manner. In its pursuit of investors, or the success in the results of an international audit, the financial statements are the ultimate representation of companys financial position.In general accounting practices, Honeywell uses process costing for its furnace thermostats (home products division) and job costing for customized aerospace contracting products. When thinking in terms of standard be and whether they would be beneficial, one factor to consider is the fact that Honeywell is a world-wide producer with operations in some(prenominal) countries outside of the United States (US). There are ramifications when doing business overseas as well as doing business in the US and each scenario has its own benefits and consequences th at are unique to specified circumstances.Honeywell, like their competitors has migrated to low cost countries because of the labor rate differential. The persist to overseas production creates extra concerns and dynamics. World-class manufacturing in right aways competitive environment demands more than a single-minded focus on eliminating defects. Since the introduction of Six Sigma and consort tools to their operations over a decade ago, Honeywell has delivered significant results for customers in terms of the quality, delivery and value of our products and services.To achieve competitive advantage in todays environment, Honeywell has continued to build on its Six Sigma and feed foundation, and identify new ways to differentiate themselves. Benchmark companies such as Toyota and Nissan use Six Sigma and Lean tools. Like Honeywell, they also have a disciplined management system that standardizes work and engage employees in improving work processes. In doing this, organization s have achieved tremendous performance improvements. The Honeywell Operating System is a comprehensive, corporate approach to managing their organization.It is characterized by a consistent focus on results for the benefit of our customers, not on the use of specific tools. The objective is to simplify and standardize processes everywhere, to remove variation across operations, and to drive significant and sustainable improvements in safety, quality, delivery and cost. Employees are encouraged use tools such as Six Sigma, in achieving a common purpose global wide use of an operating system that consistently yields excellent results for the customers and the company. Implementing order cost standards is not an easy task and it will take time.Honeywell maintains that standardization will evolve to fit different business environments and changing customer needs and will become an essential part of the process that will bind their company across business and geographic boundaries. Hon eywells workforce consists of residents of the country they are in to satisfy requirements imposed by foreign nations. It is almost mandatory to have overseas operations to reduce labor and material costs however, these operations come with high risk. Foreign workers are not always equipped with the necessary skills to perform the manufacturing duties required by a highly technical company.The spending of employing and developing such a workforce can create additional costs. In determining what the additional costs, standard costs prove beneficial because they would provide Honeywell the ability to budget costs with a great understanding and degree of confidence. A standard cost system allows a company to factor in methods that would absorb the periods in which higher costs are identified due to foreign employment increase and when costs are low or minimal due to workforce stabilization.In its foreign production, Honeywell will have to set attainable standards in order maintain it s performing baseline. Another factor in foreign operations is the fickle condition of the world. The United States is not always welcomed in other countries. It is not uncommon for a common protest to turn into a major world crisis. Such examples are those of the uprisings in Israel and Libya. Honeywell hosts operations in Israel, where relations between the government and the general population are volatile and unpredictable.In addition, we have seen several instances where regimes have changed power and attitudes toward the US in a matter of days. Standard costing is paramount as an aide for monitoring and managing the risk of unpredictability. It is a healthy practice that can protect Honeywell from severe monetary damage if a foreign tragedy should affect the business. The information obtained from standard costing aides Honeywell against the volatility of todays markets and the strategy of its competitors.Honeywell is continuously improving its processes, products and managem ent mode to maintain their competitive edge. To be competitive, Honeywell will continue to use their standard cost system to help them execute planning and control of their strategic priorities. Tracking costs will also help Honeywell identify weakness and stochastic variables in their production system. Undetected problems in the areas of materials and labor can eventually raise variance to a point of hindering Honeywell from maintaining their core competencies.Consequently, todays market provides no room for error, but every opportunity for a competitor to gain the lead. In galore(postnominal) respects, some of the rationale that goes into using standard costs also applies to formulating the right strategy to gain a positive Net Present Value. Honeywells reach is global and therefore its investment opportunities are also global. Due to the unique factors mired with global markets, it is necessary for Honeywell to perform critical planning for investment decisions. Honeywell ha s a reputation as an organization that is willing to take risks to make money.It has done that by acquiring other business or expanding its lively facilities for future business. Such expansions are expensive and these expansions require additional staff which adds to the cost of investment. Large expenditures are a challenge to control the net present value (NPV) and require clear identification of cost and risks in order to be a success. Strategic moves, such as partnering with the national government, can leverage the way to a positive NPV. In this approach, there are tradeoff between the corporation and the government in which both interests can be mutually met.Corporations like Honeywell utilize these paths in order to reduce investment costs and have accurate projections for calculating and incorporating NPV baselines. Because of the ongoing activity of many investments occurring at one time, it is critical that Honeywell has complete knowledge of their NPV and ensure profit able investments are achieved. Failing to do this can result in major losses, especially when an unplanned shortfall occurs. Although the investment sounds promising, it is critical that NPV is correctly measured.It is also advisable from an NPV and program management position that Honeywell phase its investment into NPV milestones which help determine if they should move forward to the next phase of the investment. This process would provide a safeguard while allowing the innovation to prove itself. While the actual rate of return (IRR) thata given project ends up generating will often differ from its estimated IRR rate, a project with a substantially higher IRR value than other available options would solace provide a much better chance of strong growth.IRRs can also be compared against regular rates of return in the securities market. If a firm cant find any projects with IRRs greater than the returns that can be generated in the financial markets, it may simply choose to inve st its retained earnings into the market. The need for Honeywell to practice continuous NPV drills in a market with circumstances such as those faced in China by US companies, is critical. While both countries maintain a civil business partnership, there is an unspoken adversarial kin which creates instability.China is strategically positioning itself as a global power therefore, the relationship between both countries is precarious and any misstep by Honeywell could severely damage the existing business relationship. Another potential concern for Honeywell is that China is currently the largest lender to the US. At the point that China reaches the economical capacity to sustain its prosperity internally, we have to ask ourselves if they will request repayment by the US prior to maturity dates. As we have seen in several European countries, a request of that order of magnitude could destabilize an already fragile US economy.In consideration of this scenario, and other contributing factors, Honeywell should be certain in investment planning, and phase its activities so that the NPV is not contingent upon results that will take a long period to realize a return. In summary, Honeywell has proven itself as a world leader of technology. This corporation is known world-wide and is a household name. Honeywell leads the way in advanced switching and sensing technology in their home division, and its aerospace division.In spite of the GE failure, it has kept its mark on the global economy through market highs and lows and has maintained its dominant position in an extremely competitive industry. As a long-time subsister and global competitor on the world stage, Honeywell continues to make its mark in history by developing innovative safety products, driving the modernization of global air traffic management, revolutionizing combat technology and their commission to improving operational efficiencies. Honeywell continues to display their dominance with its diversi ty and profitable risk taking ventures.Perhaps Honeywells greatest strength has been the fact that it has adapted to a world that is ever changing and has embraced the challenge that other companies find daunting. With the continued vision to improve processes for safety, quality and cost, reducing waste, and using integrated strategies Honeywell continues to be a standard for their industry. They continue to be innovative and competitive and have a strong commitment to manner of speaking profitable products that their customers need and want.Due to the diversity and competitive market that Honeywell has chosen to operate in, it is of extreme importance that the company maintains sound financial practices that will support the moral fiber and marketability of the company. As Honeywell moves into the future I believe they will continue to perfect their processes to produce the right financial statements, useful in calculating their position in the market, and providing the best advi ce for investment decisions. The proper use of standard costs and net present value are an example of the critical tools that ensure Honeywell continues to thrive in todays stranger global conditions.Also critical to the success of Honeywell is the continued utilization of strong and proper ethical practices as the company is well known, world-wide competitor and a representative of the American business ethics and values. Whether it is in the shopping centre Eastern or the Far East, Honeywell is known and recognized such a position makes it important for Honeywell to be transparent in its fiscal disclosures. Sound financial practices are essential to Honeywell in order for the company to continue its success and market dominance.Primary emphasis on these practices will serve to maintain Honeywells status and help them make the most profitable investment decisions for their investors and the company. As recent as April 23, 2012, Honeywell declared a regular quarterly dividend of $0 . 3725 per share on the companys outstanding common stock. The dividend is payable on June 8, 2012 to shareowners of record at the close of business on May 18, 2012 (Honeywell Declares Quarterly Dividend, 2012). If this is any indication, Honeywell will continue to be a viable global competitor and financial contributor to our financial and job market.Honeywell is an excellent example of an organization that is forward thinking and proactive. It has operated with a strong ethical code of conduct, strong financial discipline and an ever present focus on the future. This methodology and ideology will ensure their continued financial growth and market expansion. It is apparent that their cost standards, lean processes, and disciplined managerial financial management has enabled them to overcome obstacles, conceptive their position as a global competitor and a viable contender in todays competitive, technology-oriented world.