External Scan: Honda

EXTERNAL SCAN: HONDA1

External Scan: Honda

A lot of companies deem that deliveringservices and products to consumers is the only purpose of the company and generally it is. Sorry to say, for some companies there are externalcomponents that may obscure the efficiency of a company. On the flip side, some external component elements will assist the businesses to succeed. According to Honda (2013), Honda’sa corporationcreated on dreams and these dreams inspire them to buildtop-quality products that enrich human flexibility and profitcivilization. Honda views "The Power of Dreams" as a philosophy that directs and motivates them to progressahead. The power of their corporationemanates from this philosophy” (Honda, 2013).

In today’s market it is vital that a global company such as Hondaberesponsive to the issues and trends that come from technological, political and economictrends. Technology expansions are significant for Honda due to the ever changing developments of today’s information technology. For example, Honda’s Micro-sized Combined Heat and Power (MCHP) demonstrate Honda’s promise to be both ecologicallyresponsive and usestate-of-the-artoperations to aid people in gettingtheir goalsachieved.

Since the economic recession dated 2007 to 2009, consumers were exceptionally penny-wise with how and on what they spent their money. According to Modern Global Automobile Industry (2004), there are multiple trends that are recognized in studying the internationalautomobile market, categorized by the factors below:

  • Global Market Dynamics - The globe’sbiggestcar makers continue to capitalize inmanufacturingresources in developingmarkets in order to decreasetheir manufacturing costs.
  • Creation of Global Alliances - U.S. automobile manufacturers, "The Big Three" (General Motors, Chrysler and Ford) united with and launched strategic alliances with Japanese and European automobile manufacturers. For example, the Chrysler Daimler-Mercedes Benz mergerwas originated by Mercedes-Benz to boosttheir market in the U.S. In general, the trend of the world’sautomobile manufacturerswas to expand in foreignmarkets.
  • Industry Alliance - Rising global rivalry among worldwideproducersinoverseas markets placed the world's automobile manufacturers into three stages, the first stage is Honda, Ford, GM, Volkswagen and Toyota and the two remaining manufacturers arecombined with other car manufacturers to compete with first stage businesses (Modern Global Automobile Industry, 2004).

Consumers who buyHonda do so for two main reasons: The first is because Honda customers like the longevity of Honda products. The second reason is due to Honda’s fuel economy savings.

The automobile industry is fall under government regulations. The global automobile industry also falls under laws and government regulations to include laws that area associated to environmental matters and vehicle safety such as pollution, emission levels, fuel economy and noise. Honda’s political factors include government regulations that a company’s strategy must include and obey. The political factors include matters such as environmental law, advertising law, tariffs, trade barriers, taxes and exchange controls

Honda being one of the most prosperous automobile companies in the world with the help of SWOT analysis has come to understand what the political, technological, economic, and social factors are. SWOT analysis provides the company internal and external factors that if without focus, can negatively affect their business strategies. Honda’s use of SWOT analysis is crucial as they need to be aware of their strengths, weaknesses, opportunities, and threats in order to be successful in their business strategies.

The Supply Management Strategy (SMS) is used by Hondato direct its supply management activities. Through SMS, Honda’s suppliers are able to manage company contact information, business information and site location (Honda Supply Team, 2013). The SMS provides a supply management guideline that allowsinvestors to successfully meet the continuingobjectives of the HondaCorporation.

In regards to Honda motorcycles, Honda motorcycles have comparablequalitieswith their competitors however one of the main differences is cost. A company who desires to operate in a specific industry understands that they need to challenge their opponents and differentiate themselves to attract consumers.

Devoted customer relationships: Companies strive to make a connection between the company and the customer. Fostering a relationship can lead to repeat customers. The relative price for performance of substitutes: Because of Honda’s price points, their rivals strive to provide similar products, undercut Honda to gain more market share, and use similar marketing agendas. The aggressivecompetitiveness between Honda, Kawasaki, and Suzuki and is a more about quality and product status. They all have similar approaches but what set’s Honda apart is innovation and price points for a quality brand loyalty product.

Analysis is a succinctsummary of a company that delineates the company’s strengths, weaknesses, opportunities and threats. Per Yousigma, (2011),

Honda’s strengths are:

  • Global operations
  • Front runner market standing
  • Brand power
  • Engineering ability
  • Staunch distribution market

Weaknesses:

  • Expenditures distributed for post-retirement benefits of employees
  • Employeeefficiency

Opportunities:

  • Rising demand for hybrid electric vehicles
  • Opportunities in the Asian market

Threats:

  • Economic recession
  • Rivalry in the global automobile market
  • Rising Japanese Yen versus the U.S. dollar
  • Tightening emission standard and End-of-Life Vehicle (ELV) directive (Yousigma, 2011).

The Threat of New Entrants in Porter’s five forces of the U.S.car manufacturing industry include: allegiance to major brands, incentives for buying a particular buyer, increased fixed costs, shortage of resources, lofty costs of changing, and government regulation’s barriers to entry. Success of foreign car manufacturers like Honda challenged the belief that the Big Three U.S.car makers were indomitable. The factors that slowed the threat of overseas automakersare the loyalty to U.S. manufactured vehicles and the after-sale services offered.
The five forces analysis of Honda is:

  • Threat of New Entrants
  • Barriers to entry
  • Product differentiation
  • Capital Requirements
  • Substituting cost to buyers
  • Entrance to distribution channels
  • Government Policy
  • Occupantsresistance of market share
  • Industry growth rate
  • Determinants of Supplier Power
  • Supplier Concentration
  • Availability of substitute inputs
  • Importance of suppliers input to buyer
  • Supplier’s product differentiation
  • Importance of industry to suppliers
  • Buyers switching cost to other input
  • Suppliers threat of forward integration
  • Buyers threat of backward integration
  • Rivalry among existing firms
  • Number of competitors (concentration)
  • Relative size of competitors (balance)
  • Industry growth rate
  • Fixed costs vs. variable costs
  • Product differentiation
  • Capacity augmented in large increments
  • Buyers switching costs
  • Diversity of competitors
  • Exit Barriers
  • Determinants of buyer power
  • Amount of buyers compared to amount of sellers
  • Product differentiation
  • Substituting costs to use another product
  • Consumers profit margins
  • Consumers use of various sources
  • Consumers threat of regressiveincorporation
  • Dealers threat of forward incorporation
  • Value of product to the consumer
  • Consumer volume
  • Threat of substitute products
  • Comparativecost of substitute
  • Comparative quality of substitute
  • Substituting costs to consumers

Honda is a “Power of Dreams” company that continually proves that their external trends thrive in their products’industries and maximizes strength’s and opportunities while minimizing weaknesses and threats. Areas of improvement that Honda can incorporate are making ownership more economical by improving fuel economy, lowering CO2emissions, and lengthening the motorcycle service life (Honda, 2013). With the continuing needs and ever changing technology wants of the consumer, Honda willcontinuously look for ways of advancement. Going forward, Honda will go all-out to improve customer gratification by providing superior products and peace of mind and dependability to customers all over the world.

References

Official Honda website, (2013). HondaSupplyTeam Portal Application Overview. Retrieved

from:

Official Honda website, (2013). Retrieved from:

Official Honda website, (2013). Implementing Customer Satisfaction. Retrieved from:

Yousigma, (2013). Yousigma website. Retrieved from: