The Honda Motor Company first arrived the European market in the early 1960s through their sales of motorcycles. The motor vehicles of the company were presented into Europe after a lot of time in the continent. However, it is also reported that, Honda’s sales of motor vehicle in Europe have been comparatively poor, particularly in the preceding five years. Despite its enormous achievement in the North American market, Honda is struggling to gain an important position in the market of European. It is significant for businesses in order to gauge their external and internal business environments in order to maintain an effective competitive advantage. Gauging the business environment aids on suitable growth in the schemes of a company and helps in safeguarding market benefit. The organization was established in the year of 1948 and the headquarter of the company was located in Tokyo, Japan.
The business of the company can be divided into different segments of businesses like automobile, financial services, power product and various businesses. In case of the automobile segments of the company includes light trucks, passenger cars and mini vehicles. In case of the financial services, the organization also provides different financial services such as leasing services, retail lending and the wholesale financing to the dealers. As a part of the power products and the other business purposes, the organization sells different stuffs such as portable battery inverter, lawn mowers, outboard marine engines, snow blowers, general purpose engines and various other products. Although, the organization had the head quarter in Japan, the company organization had their businesses in the countries like United States, China, Brazil, Brazil, New Zealand, India, Belgium, Turkey, Peru, Argentina, Malaysia, Indonesia, Philippine, Thailand, Vietnam, Mexico, Pakistan, England and Canada.
The organization had the rank of 29th in the list of Forbes Fortune Global 500 list in the year of 2019. The company has 430 group businesses in total, 357 of which are combined companies, and 73 are associates. They produce motorcycles for commuting purposes or even for sports purposes. When it comes to cars, the corporation makes a greater range of cars like their best-sellers which are HR-V or the Vezel global and the Civic models. The primary competitors of this automobile company are Nissan, Toyota, Ford and all other automotive makers. It is reported that the Honda makes a profit of almost 211 billion dollars a year. The company has almost 170,000 employees and it is the only company from Japan that operates in the field of luxury cars.
SWOT Analysis of Honda
Strengths- As a part of the strengths of the company, the employee strength can be mentioned. The number of staffs of Honda as of December 31, 2020, augmented by 10,683, to 36,062 from March 31, 2020, due mostly to the incorporation of Honda and the automobile product growth division without the design function of Honda R&D Co., Ltd. and the fusion with Honda Engineering Co., Ltd. by Honda in the Automobile business. Another strength of the company in Europe is associated with the fact that the organization has the largest engine manufacturing plant and it was reported that the Honda’s NSX engine was chosen Best Newcomer at the International Engine of the Year Awards in the year of 2017. The presence of the powerful research and development team of the company can be mentioned as another strength of the company. Power Unit & Energy centre will entirely validate the strong point of Honda as a business corporation that has a extensive range of technologies and attempt to upsurge the value of its merchandise for the upcoming time with addition of research and development purposes for power unit and energy technologies for power products, motorcycles, automobiles, and business jets.
While discussing about the weakness of the company, it can be reported that the decline in the sales is a major weakness of the company. In recent time, the organization had faced a great decline in their sales which hampered the overall business of the company in almost every country of the European region. Another crucial weak point of the company is associated with the quality issues of the organization. In this context, it can be reported that the Takata crisis has been the most conspicuous of Honda’s problems, resulting in the recall of loads of cars from the marketplace. Apart from that the poor exchange rates of the cars of Honda are another major weakness of the company as well. While doing comparison with Toyota, the vehicles of Honda have a higher maintenance cost and the accessibility of the replacement parts is also fewer.
As a part of the opportunities for this company, it can be reported that the demand for small cars and the manufacturing of the small cars by Honda can be a major opportunity for the company. Income in the Small Cars market section is probable to reach US$107,673m in 2021. Revenue is reported to show a yearly growth rate of 8.21 per cent, causing a predictable market capacity of US$147,622m by 2025. Small Car’s marketplace section unit sales are probable to reach 9,293.0K vehicles in 2025. This chance can be used by Honda for its lucrative development. The field of automobile industry is going through a drastic changes and electrical vehicles are the ultimate future of the car industry as well. Therefore, entering into the business of electrical car industry can be a great opportunity for the company.
The market players of Honda in the automobile industry are Ford, Volkswagen, BMW, Toyota, and Hyundai. Honda’s automobile market share is high in Japan and U.S. but weak in Asia. With advanced competitive burden, the company’s functioning spending has also become higher. Therefore, in the European market the presence of the renowned car companies and the sustain business policy can be a major threat for Honda. Apart from that, the different carbon emission policies of different countries of Europe also cause a huge restriction on the business of Honda as they are engaged in the production of carbon emitting vehicles.
PESTLE Analysis of Honda
Political Factors- As a part of the political factors of the Honda in Europe, it can be stated that being a multinational company, the organization must have to operate in multiple countries of Europe and as a part of this they organization must consider the policies and regulations of the different countries of the Europe. In case of the countries going towards a sustainable setting, and lessening of pollution numerous governments across the Europe have taken up curbing the use of individual vehicles by various policies. Apart from that there are a few countries that promote the use of the electrical vehicles and this type of policy can hamper the sales of Honda in the countries of Europe.
The numerous automobile types formed by the company are professed contrarily in diverse areas of the world. With scooters being perceived as a luxury item in global marketplaces e.g. In Europe, they are very common in Asian markets. Honda should study the economic circumstances prevailing in the nation when introducing a fresh vehicle and also regulate the prices of the current vehicles. In a phase of a low growth in revenue, luxury goods like a car in India are facing a slowdown. The sales are anticipated to increase once the economy steadies. Likewise, with circumstances like Brexit generate tension and disturb the money exchange rate. In such conditions, the organization loses out on productivity although the sale is persistent. To maintain with the altering tendency, Honda has decided to work on the eco-friendly and budget-friendly vehicles internationally.
The customers of the numerous automobiles formed by the company seek out diverse things. The variety offered by the company in terms of satisfaction level of its clients is inspiring. This status given to the customer has been showed by the organization over the years of its presence. Numerous social taboos have been eliminated permitting innovative chances for the business organization. Honda has a decent chance to enlarge its marketplace by using renewable energy to continue its automobiles. The company is thoughtful regarding venturing into electronic scooters. However, it may appear risky firstly, but for a corporation like Honda it will be easier to influence the clients to invest a little more for the improvement of the civilisation. The corporation has been working on engineering cars indigenously for areas that do not trust much in bringing in cars, e.g. The UK. Honda utilizes English majorly to eliminate the linguistic barricades internationally.
As a part of the technological factors, the organization had installed GPS technologies in all of their new models and also upgraded their engines to the v-tech engines. This will help the business corporation to make a contribution towards lowering the quantity of carbon in the air.
The different legal rules and regulations in different countries of Europe can cause serious hindrances towards the business expansion of the country. Moreover, policies related to the working hours of the employees must be addressed by the company as well.
As a part of the environmental factors, the issue of climate change and carbon emission reduction can be mentioned.