Environmental Analysis – Honda Company

Legal/Regulatory Analysis

Although, Honda is a Japanese based automobile company, it has numerous

subsidiaries in Asia, Europe and North America. Besides, the manufacture of

motorcycles, the company also produces sports equipments, marine engines, power

generators, and luxury cars called the Acura (Scott, 2012). Since the country operates

in different countries, there are external business challenges to be addressed.

In terms of legal factors, the company is expected to adhere to the laws and

regulation of the country where it operates. For example, in most countries in North

America and Europe, the working hours are standardized, and employees are only

expected to work for 8 hours. What is more, employee wages are calculated per hours,

hence making it difficult for the company to sustain wages and salary. In the United

Kingdom, employment laws require companies such as Honda to pay £ 6.93 per hour

as minimum wage. Consequently, this highly affects the sustainability of the company

operation and profits (McBeth, 2009).

Another legal factor that influences the operations of Honda in its subsidiaries

is the proposed policies by foreign countries. For example, in the U.S, North America

and Europe, multinational companies such as Honda are required to provide insurance

cover for employees and offer training for skill development. Besides, companies are

required by law to install safety equipments to protect employees. Therefore, if Honda

Company fails to adhere to the set laws and regulations, it could be de-registered of

face a number of lawsuits.

Technological Analysis of Honda Company

Due to the advancements in technology, Honda will be required to make use

of the latest technological trends to stay competitive. For example, in the development
of its new SUV cars and the luxury cars called the Acura, the company should include

satellite navigation systems for the purpose of tracking and security. Furthermore, the

cars and motorcycles can be installed with Global Positioning Systems to make it easy

to provide the location of their cars. Most importantly, the company is passionate

about using technology to produce innovative products and challenge the boundaries

of mobility advancements.

The impact of technology affects the market because people are shifting

towards the purchase of environmentally friendly cars. In response to this customer

need, the company has started the production of cars fitted with vi-Tec engines, which

are friendly to the environment because they produce fewer emissions to the

biosphere (Shook, 2008). Furthermore, the rising cost of petrol globally, the company

has been forced to use eco-friendly technology in order to ensure that their vehicles

have a sustainable future.

Socio-Cultural Analysis of Honda Company

Socio-cultural factors affect the customer needs and potential markets because

of the demography and cultural aspects. For example, in the American and UK

market, consumers have a higher preference for the local brand of vehicles such as

Mercedes or Jaguar model of vehicles. Therefore, Honda Company had to change the

belief of consumers by introducing the Honda Civic Hybrid, which is an eco-friendly

vehicle (Nonaka & Takeuchi, 2005).

Another socio-cultural aspect affecting the operations of Honda is the

language barrier. Especially when venturing into English speaking countries.

Therefore, the company is forced to employ English speakers to help in the marketing

of its products. Furthermore, many consumers perceive the Honda cars are too

expensive; hence they are less preferred to Bentley, Benz and BMW. In this regard,
Honda has to grapple with the task of changing the social and cultural aspects of

consumers on their products (Mitchel, 2005).

Although, the culture of Honda Company is innovation and creativity through

the use of technology, customers still perceive its products as overly expensive and

overrated. Therefore, the company should redouble its efforts in producing affordable

products and marketing them as eco-friendly.

The Customer Environment of Honda Company

The Honda Company operates in a complex and challenging industry, and the

company needs to take into considerations the changing needs, tastes and preferences

of customers for the successful implementation of its strategies. Since its inception,

the Honda Company has always focused its attention on marketing its products in

developed countries such as Asian and American countries. In spite of the immense

profits it has generated, the company should be aware of the several opportunities

available; such as, new investment opportunities in the Mediterranean, Africa and

other developing countries. Therefore, the company should expand its target market to

ensure that the current and potential customers accept the products.

The overall brand position for Honda is manufacturing of efficient luxury cars.

To deal with competition from its key rivals; Mercedes, BMW and Ford, Honda has

adopted the “Joy III campaign” as its main strategy in addressing the concerns of its

current and potential customers. The Honda philosophy is “joy of buying, selling and

producing” which appeals to a larger market segment such as women, the youth and

the family. Besides, the cars are now marketed with new product attributes such as

reliability, pleasure, fuel efficiency and new car models (Alexander, 2009).

For a long time, the Honda Company has been focusing on producing cars that

are more suitable for the working, middle and high class people in society. Although,
Honda has succeeded in producing different models of cars for its consumers, the

target market has always been limited to a specific segment. As a result, young people

and unemployed have not been able to afford Honda cars, which have been perceived

as too expensive and costly. However, to develop a formidable marketing strategy,

Rothfeder (2014) argues that the company should shift its focus and target the urban

youth market, which is extremely marketable in the automobile industry. This can be

achieved by introducing new models aimed at attracting customers from this segment

of the market. However, the company should be ready to venture into the market

segment with branding difficulties due to the market share held by its competitors.

The company needs to intensify its marketing campaign because its cars and

motorcycles are perceived as extremely expensive in comparison to other companies.

Currently, Honda cars focus mostly on the rich and affluent in society since the cars

are exorbitantly expensive compared to models like Toyota. However, the prevailing

needs of current and potential customers include fuel efficiency, affordability,

reliability and durability (Rothfeder, 2014).

Honda has been exceptionally successful in the adoption of the 5W model. In

terms of “who,” the company strives to reflect positively in the society. In terms of

“what” Honda vehicles have been regarded as highly efficient in terms of

performance. In terms of “where” the company has strategically positioned their

vehicles as the “ultimate driving machine” owing to the design and modification of

their automobiles. In terms of “why,” the company produces uniquely designed cars

for comfort, class, style and elegance to satisfy the needs of customers. Finally, in

terms of “when,” the company has positively used technology to produce automatic

cars, which can be tracked and operated using technology (Honda.com, n.d).

Therefore, Honda has been highly successful owing to its unique brand, and
differentiation of its vehicles, thus gaining competitive advantage in the market. The

company continues to produce fuel-efficient cars that are affordable and stylish.

In conclusion, Honda Company should target the market depending on the

needs and quality needed by their customers in different countries. Although the

number of the new models of cars developed by Honda has increased, product

positioning needs to be complemented through diversification of the product range,

targeted marketing and commitment to quality and lean manufacturing strategy.

Alexander, J. (2009). Japan’s motorcycle wars. Washington: UBC Press.

Honda.com: Official Site of American Honda Motor Co., Inc. (n.d.). Honda.com:

Official Site of American Honda Motor Co., Inc. Retrieved June 19, 2014,

from http://www.honda.com/

McBeth, F. (2009, October 4). Honda Commemorates 30 Years of Manufacturing in

America. Transportation Business Journal, 2, 458.

Mitchel, D. (2005). Honda Motorcycles: Everything you need to know about Honda.

Seoul: Krause Publications.

Nonaka, I., & Takeuchi, H. (2005). The knowledge-creating company: how Japanese

companies create the dynamics of innovation. New York: Oxford University

Press.

Rothfeder, J. (2014). Driving Honda: Inside the world’s most innovative car

company. Michigan: Penguin Books.

Scott, A. (2012, April 23). Honda Introduces 'Green Dealer' Program for Honda and

Acura Dealers in the U.S. Entertainment Close-up, 1, 655.

Shook, R. L. (2008). Honda: an American success story. New York: Prentice Hall.