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As far as both internal and external environment of Honda Motor Co., Ltd. has to be
examined from the point of view of a particular country, we have assumed that the best tools
to estimate all the aspects in relation to each other would be SWOT analysis and Porter’s Five
Forces Model. These tools are among the most widely used methods of strategic planning.
In SWOT analysis information can be divided into the following groups: strengths and
weaknesses, which are internal factors; and opportunities and threats, which are external
ones. Thus, this tool will not just help us to analyze both environments of the company, but
will give an opportunity to draw parallels between them and to have a thorough look at the
position of the company on the market of a particular country, taking into consideration the
relevant features of the company in general.
While analyzing the internal environment we will operate with the following groups of
factors:
 mission and philosophy
 organizational planning
 organizational operations
 human resources
 technological resources
 financial resources
The country, which has been selected in order to analyze contemporary strategic
environment is the United States of America. The strategic environment for Honda in the
USA is analyzed with the help of both methods. In SWOT analysis the following factors will
provide the basis for conducting the research of the external environment:
 economic factors
 sociological factors
 technological factors
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 political/professional factors
Strengths
Weaknesses
Honda has got highly motivational mission
The prices for non-luxury automobiles
statement. The organizational purpose of
produced by Honda are higher than those of
the company is to create top-quality
the main competitors.
innovative products that enhance mobility
and benefit society. The company state that There is no truck-line, which could have
their purposes are harmonious work and
widened the opportunities of the company on
high safety of their products.
the world’s market.
The products of the company are known to
Return On Invested Capital and Return on
be reliable.
equity, which decreased for 60% over the
past five years, shows that management and
There are sales networks, research and
business conditions are not that healthy.
development centers and manufacturing
facilities in each region, which is necessary In the period from 2007 to 2011 the net sales
to answer the requirements of all the
decreased from 11.087.140 to 8.936.867
customers.
million yen; the net income decreased from
592.322 million yen to 534.088 million yen.
Strong internal control system, which
include Systems for ensuring that the
The earthquake and tsunami in Japan forced
execution of duties by directors and
Honda to cut its production. The flooding in
employees complies with the law and the
to Thailand, inundated one of Honda’s plants.
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Company's Articles of Incorporation,
The Civic, Honda’s best-selling car globally,
Systems related to retention and
reported December sales in the US that were
management of information on, Provision
more than a quarter lower than a year earlier.
of employees when assistance is requested
Car and Driver magazine described the new
by corporate auditors and independence of
model in a review last spring as “an
such employees from directors, etc.
unadventurous effort” that had not improved
on its predecessor.
The establishement the Global Honda
Quality Standard (G-HQS) in April 2005,
according to which Honda facilities all
over the world have been or are to be
certified, in order to prevent any failures in
quality level of products.
At the present moment, Honda is the
biggest manufacturer of motorcycles, and
one of the biggest manufacturers of
automobiles in the world.
Opportunities
Threats
The best opportunity for Honda is
If the strengthening of yen continues, the
emerging markets.
company can suffer great losses.
Honda can increase its productivity if it
Products, prices and managerial policy of its
continues the policy of fuel efficiency.
competitors are able to become the biggest
challenge for Honda on the world’s market in
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general, and on the US one in particular.
Five Forces Model developed by Michael Porter, a Harvard University Professor,
reveals the whole impact, which different aspects can have on competitiveness of a company.
The core of the model is direct competitors of a company. However, the main point of
the model is that besides them, there are a broader set of competitors, such as bargaining
power of buyers, bargaining power of suppliers, treat of new entrants, and treat of substitute
products or services.
After collecting information about the market an analyst can determine components of
each of the competitive sectors mentioned above.
The bargaining power of buyers is slowly growing, but it does not contribute much to
Honda’s positions, according to, again, high prices. Nevertheless, the situation may alter,
because more and more people prefer fuel-efficient cars, so the price-difference may be
pushed into the background.
Bargaining Power of suppliers is rather high. Honda has a wide group of suppliers,
which turns out to be an affiliated group, in which 20% of Honda’s equity stakes are held.
There is almost no threat of new entrants to the market in the USA, taking into
consideration its present state.
However, the threat of substitute products is enormous. Moreover, as it has been
mentioned, Honda’s prices are often higher.
So we can conclude that competitive rivalry on the US market is high. Nowadays, many
industry analysts declare that Honda has great difficulties relating to its cars’
competitiveness. The result is rather astonishing: the drop of Honda’s sales in the USA by 7
per cent is the biggest one for any carmaker in 2011.
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References
Honda Philosophy: Honda's basic principles and policies, viewed 29 February, 2012,
<http://world.honda.com/profile/philosophy/>
Outlook And Price Targets On Automotive Stocks (Part 2), viewed 29 February,
2012,<http://seekingalpha.com/article/386241-outlook-and-price-targets-on-automotivestocks-part-2>
Reed J & Simon B, 2012, Honda faces challenges in US market, The Financial Times
Limited, viewed 29 February, 2012, <http://www.ft.com/intl/cms/s/0/d9b7c030-37bd-11e1a5e0-00144feabdc0.html#axzz1nvTFlJi5>