Being the first amongst the Japanese manufacturing companies to expand its operations globally, Honda faced numerous challenges in making its products acceptable by the European and American customers who were used to big, fuel consuming expensive cars. Honda played it beautifully by presenting low cost, high quality less fuel consumption vehicles. Due to fuel price increasing, Honda decides to produce more hybrid car which is highly supported by Chinese government. Introducing
The Japanese giant manufactures like Toyota, Nissan and Honda shocked their western competitors in producing low cost vehicle to enter their segments. Honda was most innovative, challenging and strategically sound amount all its Japanese counterpart and not only successfully captured the western market but also succeeded in opening its manufacturing sites both in the Europe, USA and Asia and achieved economic of scale. Today, a large portion of its sales volume (approximately 77%) is generated from these foreign markets with 46% of its manufacturing facilities present off-shore.
In addition, Hondas Chinese sales were rocket fueled in October, 2013 that had increased by 212% over the same period in 2012 reaching 75,000 units in total. Japanese car sales were heavily affected in September 2012 owing to the Diao Yu Island. Environmental Analysis (PESTLE) Political China is saying that they are going to be investing billions of dollars into Hybrid technology. Honda has been on the forefront of this new technology and for this reason they will be a top choice for this new hybrid technology.
The Chinese government is also aiming to put some millions of hybrid cars into use within in the future. Seeing as how Honda is already producing hybrid cars, they will be able to expand and increase the production of these cars to fill the wishes of the Chinese government. There are also however, restrictions being placed on car ownership is many large Chinese cities. This is to reduce congestion and traffic. This means that because of possible increase in taxes or legal restrictions, there may be a fall in demand for cars which will result in Honda losing ales and perhaps revenue. Economical.
Oil prices have recently been rising and will most probably continue to rise as the worlds oil sources are depleted. This means that there will be a fall in demand for petrol cars and a rise in demand for Hybrid cars. On one hand, Honda produces a lot of hybrid technology and for this reason, they will be able to impose and introduce their new hybrid technologies, which will seem more attractive due to higher oil prices. On the other hand, the rise in oil prices will mean that consumers will be less likely to buy Hondas petrol cars which mean they will see a loss of revenue in this sector.
This means that although Honda has Hybrid technology to offer, the fall demand for their petrol cars may cause them to break see no change in revenue (at least in the short run). In the long run, as Honda adjusts its production to more hybrid or electric technology, they will see more revenue gained. Social Consumers are not yet fully convinced by hybrid and electric technology, which means that there are not many firms producing and developing this technology. This means that there is not very much competition in this market sector.
Since Honda is a company who does produce and develop Hybrid technology, they have a much better opportunity to make money here. Since they will see little competition, they can attract a larger consumer base. In the short run, Honda may see a larger market share in this sector but as more and more firms decide to move to hybrid technology, more competition will arise. Consumers are currently looking for better gas mileage and performance in cars that they buy. Hondas hybrid cars has very good gas mileage, however, they do not have as good performance as petrol cars.
This means that even though Hondas hybrids are appealing due to their gas mileage, consumer may still stick to petrol cars because of the better performance. Honda will need to develop better technology to satisfy consumer wants. Technological The newest and most revolutionary technology currently being developed and sold in the automobile industry is hybrid and electric technology. Hybrid technology is becoming more efficient and recognized and since Honda has devoted a lot of money to developing and producing hybrid technology, they are one of the top producers of it.
This means they will be able to gain a larger consumer base as this technology becomes more recognized. On the other hand, companies such as General Motors and Toyota have been having more success with their hybrids and may have an advantage in this market sector over Honda. General Motors has also invested in a new kind of technology that converts waste product into ethanol, which can be used to run cars. If General Motors eventually produces this technology, they may gain an edge over Honda. Internal Resources Tangible resources Intangible resources Strategy formulation (SWOT).