Use of PEST and SWOT techniques on Honda Essay

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1 Introduction

Honda is the most successful company bing in the market now yearss with the latest engineering in the car industry with luxury autos to athleticss to household auto they have a huge scope of autos and minibikes. Honda, ( 2010 ) In October 1946, Soichiro Honda established the Honda Technical Research Institute in Hamamatsu, Japan, to develop and bring forth little 2-cycle motorbike engines. Two old ages subsequently, Honda Motor Company, Ltd. was born, and in 1959 Honda opened its first shopfront in Los Angeles with six hardworking employees. Honda opened there first U.S. works in 1979 and have evolved into a company that straight using more than 25,000 Americans. More than 100,000 workers are employed at authorised Honda car, bike and power-equipment franchises in the United States. Tens of 1000s of extra Americans are employed by more than about 600 U.S. providers from which Honda purchases parts and stuffs.

Honda, ( 2010 ) In the recent old ages the car crisis of 2008-2010 was the portion of fiscal downswing, which affected car shapers and providers around the universe. The industry was weakened by the significant addition in the monetary values of fuel linked to energy crisis of 2003-08 which discouraged purchases of cars with low fuel economic system. In the twelvemonth 2008 there were fewer fuel efficient theoretical accounts to offer to the consumers, the bigger cars including General Motors, Toyota, Ford, Chrysler, Nissan and Honda Motors experienced skiding gross revenues.

Honda, ( 2010 ) Honda Motors in 2008 announced it would be down sizing due to 2008 economic crisis and predicted that there may be decreases in staff at all degrees of the direction effectual January 2009

2 Strategic Analyses, ( 2010 ) . “ The procedure of strategic analysis the procedure of carry oning research on the concern environment within which an organisation operates and on the organisation itself, in order to explicate scheme ” . “ A figure of tools are used in the procedure of strategic analysis, including PEST, SWOT analysis, and Michael Porter ‘s five forces theoretical account ” .

Pest Analysis, ( 2010 ) “ Pest analysis is for Political, Economic, Social, and Technological analysis and helps to put a model of macro-environmental factors used in the environmental scanning constituent of strategic direction ” .

Pest Analysis, ( 2010 ) Political factors are the degree to what the authorities interferes in the economic system. Specifically, political factors countries such as revenue enhancement policy, labour jurisprudence, environmental jurisprudence, trade limitations, duties, and political stableness. Political factors include goods and service which the authorities wants to supply or be provided Government plays an of import function in the economic system every bit good as in revenue enhancements to be charged to the company ” . These factors besides play an of import function in the employment jurisprudence, competition ordinances as the company can non do specific monetary values as they have to follow the competition ordinances.

“ Economic factors have economic growing, involvement rates, exchange rates and the rising prices rate ” . Pest Analysis, ( 2010 ) these factors have major impacts on how concern plants and determination devising, illustration, involvement rates affect a house ‘s cost of capital and therefore it affects the concern and how will turn and spread out. Exchange rates affect the costs of exporting goods and the supply and monetary value of imported goods. Economic factors affect the buying power of possible clients as the power to purchase the merchandise.

Social factors include the demographic and cultural facets of the external microenvironment. Pest Analysis, ( 2010 ) these factors affect client demands and the size of markets. Social factors affect the demand for a company ‘s merchandises and how that company works. Companies may alter assorted direction schemes to accommodate to these societal tendencies ( such as enrolling older workers ) . Social factors affect the demands and wants of the client and the manner they buy a peculiar merchandise, as the demand may worsen with the new merchandise which offered to the incorrect age sector.

Pest Analysis, ( 2010 ) Technological factors can cut down the barriers to come in and cut down minimal efficient production degrees, and play a large function outsourcing determinations. Technological factors include technological facets, mechanization, engineering inducements and the rate of technological alteration. They can assist to find barriers to entry, minimal efficient production degree and influence outsourcing determinations. Technological factors help to technological displacements that can impact costs, quality, and lead to invention.

SWOT analysis, ( 2010 ) SWOT analysis is a strategic planning method used to measure the Strengths, Weaknesses, Opportunities, and Threats involved in a undertaking or in a concern.

It helps in stipulating the aim of the concern venture or undertaking and placing the internal and external factors that are favourable and unfavourable to that aim. SWOT analysis is a concern tool by which, a house will be able to implement a strategic analysis, analyzes and recognizes its corporate Strengths and Weaknesses every bit good as the existed or extroverted Opportunities and Menaces from its external environment. Completing a SWOT analysis will assist in identifying and the ways to minimise the affect of failings in your concern while maximising your strengths merely when these four critical information elements are good detailed and known, the endeavor is able to explicate and implement the scheme taking to its concern purposes. SWOT analysis methodological analysis is implemented in two stages as follows.

SWOT analysis compiles of, SWOT analysis, ( 2010 )

Strengths: “ properties of the individual or company that is helpful to accomplishing the aim ”

Failings: “ properties of the individual or company that is harmful to accomplishing the aim ”

Opportunities: “ external conditions that is helpful to accomplishing the aim ”

Menaces: “ external conditions which could make damage to the aim ”

Honda Motors is one of the most successful cars company in the universe and with the aid of PEST analysis and SWOT analysis they have come so far as they are able to understand what are the political factors, economic, societal and technological factors they have to understand when they are bring forthing the cars every bit good have to understand the demands and wants of the client every bit good as the economic system of the topographic point as the authorities plays an of import function. They have to understand the engineering they have to supply in at that place cars because the latest engineering will be able to pull the people better and they would be able to make the market better and the relevancy of SWOT analysis in running the concern is really of import as Honda has to understand what are at that place strengths, failing, chance, menaces in order to be successful in the market as they need PEST and SWOT analysis together to be able to last in the market for long tally these two analysis helps Honda to be a better company and be able to understand its clients and their demands.

2.1 Honda: Accommodating dualities ( Product related nucleus competences versus procedure related nucleus capablenesss. Constructing dualities is the best avenue for new thoughts in the field of cars industry.

Productivity, ( 2010 ) Product related nucleus competences are measuring of the effectual usage of the resources, expressed as the ratio of end product and input. Productivity as the ratio

of end product and input. Productivity us really of import to concern because they can derive market portion and do great net incomes. For illustration, when productiveness additions, merchandise costs decline and merchandise monetary value can be reduced.

Productivity relates to competitiveness in the manner that if two houses have the same degree of end product but one requires less input because of higher productiveness, that one will be able to bear down a lower monetary value and accordingly increase its portions of the market.

Process related nucleus capablenesss typically depicting the act of taking something through an constitution and normally set of processs to change over it from one signifier to another, as a fabrication or administrative process. The procedure nucleus capablenesss at Honda is playing an of import function as it is assisting in holding new and developing advanced thoughts for the company and playing an of import function in merchandise related nucleus competences.

Procedure Capabilities, ( 2010 ) The construct of procedure capableness has been used by the fabrication industry to quantify the relation between merchandise specifications and the mensural procedure public presentation. Assorted ratios and indices have been developed to depict this relation.

2.2 International trade is exchange of capital, goods, and services across international boundary lines or districts. International Trade, ( 2010 ) the chief advantages of international trade are International trade has flourished over the old ages due to the many benefits it has offered to different states across the Earth. International trade is the exchange of services, goods, and capital among assorted states and parts, without much hinderance. The international trade histories for a good portion of a state ‘s gross domestic merchandise. It is besides one of of import beginnings of gross for a underdeveloped state. With the aid of modern production techniques, extremely advanced transit systems, multinational corporations, outsourcing of fabrication and services, and rapid industrialisation, the international trade system is turning and distributing really fast.

International trade, ( 2010 ) Great assortment of goods available for ingestion and international trade brings in different sorts of goods from different finishs. This gives consumers a assortment of pick to take from and which will non merely better their quality but besides the whole state. Better allotment and better use of resources, since states tend to bring forth goods and points which they are good at and hold a comparative advantage towards its rivals.

Efficient in production will assist states and they will follow better methods of bring forthing goods and this will maintain the cost down in order to stay competitory. States that can bring forth a merchandise at the lower monetary value possible can derive the larger market portion in the market. Therefore an inducement to bring forth expeditiously arises. This will assist criterions of the merchandise to increase and consumers will hold a good quality merchandise to devour.

Car industry, ( 2010 ) Restricting trade in the context of planetary car industry, the planetary automotive industry, progressively characterized by planetary amalgamations and resettlement of production centres to emerging developing economic systems, is in the clasps of a planetary price-war. The industry is capable to imperfect competition which has resulted in excessively much of everything excessively much capacity, excessively many rivals and excessively much redundancy and convergence. The industry is concerned with consumer demands for styling, safety, and comfort ; and with labour dealingss and fabrication efficiency. The industry have to truly work hard to run into the demands of the consumers and what are the new wants as what types of autos they want in the car industry. Specialization in car ( Honda ) sector is progressively going section specific as each of these states is happening its niche. China is specialising in constituents, India in two Wheelers and little vehicles, Thailand in pick-up trucks and rider autos and Indonesia in public-service corporation vehicles. As Honda is minimizing its market in these countries and other countries of the universe as they are supplying harmonizing to their clients wants as they have limitation in supplying different sorts of cars which is non required in the peculiar state.

Car industry is a symbol of proficient wonder by human sort. Bing one of the fastest turning sectors in the universe its dynamic growing stages are explained by nature of competition, merchandise life rhythm and consumer demand. Today, the planetary car industry is concerned with consumer demands for styling, safety, and comfort ; and with labour dealingss and fabrication efficiency.

3 Whittington ‘s Evolutional and Systemic schools of ideas. Using the two schools of idea in developing scheme to Honda motors. Evolutionary procedure in which the Evolutional is manner in which the evolutionary position: sell or dice. Strategy, ( 2010 )

Marketing communications determinations are for short-run endurance

In the long-run we might be dead!

Intense focal point on short-term gross revenues, non long-run brand-building

Whittington ‘s four schools of idea

The development scheme of Honda Motors have used the Whittington evolutional and Systemic school of idea in there procedure and the manner to understand the market better and its competition. Not merely maximising the net income but besides professional pride and civilization as described under in the figure

Evolutionary and Systemic schools of idea




Opportunities to do determination and competition

Unexpected swings in future

Competition does non connote efficiency: markets can be manipulated ; society has other standards s for corporations than merely net income maximization

Finding possible causes of action and aim

Trial and mistake forced picks

Local approved

Choosing class of action and developing scheme

Bettering operations direction

Strategic objectives depends

on the specific societal system in

which the scheme is created


Strategy = twenty-four hours to twenty-four hours direction for lasting and competitory nature

Other than net income maximizing is professional pride, influence, faith and civilization

The two schools of idea which are being used by Honda Motors in order to develop their schemes are Evolutional and Systemic and Honda are utilizing these tools in a proper mode likewise in

Evolutional school of idea used by Honda in

Marketing communications determinations are for short-run endurance

Communication determinations are for short term in the development procedure

Intense focal point on short-term gross revenues, non long-run brand-building.

They have to see intense focal point on the market

The school of idea who is better is Systemic school of idea because of tonss of ground Systemic school of idea have

Systemic School of idea used by Honda

Consumer attitudes and behaviour are confined to societal systems with given norms, values, functions, civilization, and moralss. Honda understands all these behaviour and attitude of the client in order to develop a better scheme in future.

Restrictions to what selling communications can make in footings of market portion – the consumer civilization regulations, Honda have to hold a good cognition about the selling communicating and cognize its bounds

Other “ rational ” grounds for marketing communications than pure net income maximization, such as faith, civilization and professional pride.

This school of idea is better and more suitable towards Honda as it keeps an oculus on the consumer demand demands and wants every bit good understand its client behaviour. They have good cognition of the selling procedure. Honda believes in professional pride, civilization and faith apprehension of the people and how people react to these norms as Honda is the taking Automobile industry as it suites towards the Systemic school of idea in order towards the strategic development.

Proper account of Systemic in figure below

4 Processual schools of idea is about understanding the trade name and act uponing the trade name with some hazard taking in determination devising and Processual attack helps tauten to keep its end of a simple scheme based on four cringle. The cringles can impact but should non alter the strategic direction of the house and it is about

Consumer attitudes and behaviours can be influenced

Continuous betterment of trade name, Creative ways of making client

Ad direction

Certain grade of risk-taking in decision-making allows for advanced and

The Processual School of Thought is about doing the Honda follow the scheme and develop a trade name by understanding its clients and their demand and wants. At the same clip understand its values. The deductions of strategic direction on the four cringles.

The rational cringle helps in doing certain that strategic direction would be based on rational ideas and thoughts. Processual school of idea aids in concentrating on the usage of rational determination devising when doing determinations and commanding the usage of schemes. It helps and makes certain that all the deductions of any determinations or schemes would be carefully analyzed under Processual School of Thought. Therefore Processual School of Thought is doing the strategic direction of the rational cringle more though full and full of new thoughts.

The open political relations loop with the aid of Processual School of Thought helps to make a more unfastened influence on strategic direction. Politicss are used by some to add their thoughts to strategic direction without being discreet about it. Overt political relations focuses on the usage of influence and connexions to asseverate strategic thoughts with the aid of Processual School of Thought and that is best thing for the company

The Culture and knowledge cringle plays an of import function when evaluated by the Processual School of Thought as it makes usage of civilization and tradition to act upon strategic direction determination and to do the schemes based on the civilization of the topographic point and state. Honda Motors uses civilization and knowledge as of import factor in strategic development. The civilization and knowledge cringle makes usage of thoughts to alter strategic direction determination so that the house will move harmonizing to the demands and wants of the environment. In this loop Processual School of Thought would function an of import portion in doing determinations that will impact the house and Processual attack helps the house maintain its end of a simple scheme based on the four cringles.

The covert political relations loop with the aid of Processual attack helps to make a more close agencies to act upon strategic direction ; this involves a member of the Honda Motors secretively act uponing strategic direction determinations in his favour. Covert political relations cringle is a more close manner to act upon determinations and schemes and this normally creates determinations that may be good to the company.

5 Decisions

Honda Motors is one of the taking cars industries and in twosome of old ages they have been confronting jobs as the industry was weakened by the rapid addition in the fuel monetary values every bit good as to energy crisis of 2003-08, which made people to purchase less of cars with low fuel economic system. In the twelvemonth 2008 there were some theoretical accounts released by Honda with fuel efficient theoretical accounts to offer to the consumers, the bigger cars including General Motors, Toyota, Ford, Chrysler, Nissan and Honda Motors experienced skiding gross revenues.

Honda has used PEST and SWOT analysis to work harder to accomplish the end to do their gross revenues go high, and have worked on the failing in the market every bit good. Honda has studied there PEST analysis and the factors that are impacting their company. Honda being the taking car industry has to cognize its strengths and failing, when covering with their client. They need to cognize their demands wants and demands.

Whittington ‘s Evolutional and Systemic schools of ideas are being applied by Honda Motors to the better development of their scheme and which helps them to cognize where they are standing in the market and with the aid of the four cringles Honda can cognize its company better manner as they will be able to understand its civilization, faith and this will assist to do better strategic determinations for the company.

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