Running Head: HONDA EUROPE CASE STUDY

HONDA EUROPE CASE STUDY

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Honda Europe Case Study

Company Overview

The Honda Motor Company Ltd. is a Japanese manufacturer of locomotives such as

automobiles, bicycles, and motorcycles. Apart from that it also manufactures power

equipment and is headquartered in Minato in the capital city of Tokyo, Japan. The firm has

been accredited with being one of the largest manufacturers of motorcycles since 1959 and

was designated as the second-largest manufacturer of automobiles in 2015. Honda is a global

brand today and has established its operations in prime cities of the world. Therefore, this

paper will be mainly focusing on the European segment of Honda.

The European head office of Honda is located in Bracknell, UK, and serves as a part

of the business services sector. With an estimation of around 7,486 employees, it generates a

whopping $6.80 bn in sales each year. It mainly operates as a retailer and offers new as well

as used cars, motorcycles, utility vans, and various other power accessories to the consumers

in the European market. The company has been progressing rapidly and therefore the

following SWOT and PESTLE analysis determines how and what factors actively contribute

towards its growth and the factors that are potentially harming its growth.

SWOT Analysis

Strengths

Honda is one of the famed brands in terms of automobile manufacturing and selling,

therefore; it carries the weight of its name. Honda has been a symbol of strength and safety

through the years and has established trust and goodwill among its loyal customers.

Secondly, Honda boasts of a huge global presence and the sales in Europe are driven up due

to the name that it holds in the international market. Furthermore, the skilled workforce of
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Honda is a major asset to the company as they are the ones behind designing and producing

worthy locomotives. Honda as a leading innovator invests heavily in its R&D forum and that

has resulted in it producing durability-engineered products.

Weaknesses

The European citizens feel that despite Honda having a strong brand name and reach,

there is a significant lack in certain areas. Statements have come in saying that there is not

much variation and development between different vehicular models. Several automobiles

had to be called back due to faulty products. Such accounts have served as a major drawback

and have put a significant dent in the brand name of Honda. The brand has seen a significant

dip in sales due to the pandemic. Their sales dipped down by 25 percent due to the pandemic

hit economy.

Opportunities

Honda has always advocated for a cleaner environment for the future generation to

live in. Therefore, they can design their vehicles to produce zero-emission and consume less

energy. Their concept of Zero-emission vehicles has been in talks for some time now and is

on the right path. The success of this plan of Honda could be a huge success for the brand and

an opportunity to expand its product base. Its patent acquisition could also be an additional

feather on the innovation giant. Similarly, they have always invested heavily in R&D

concerning AI and robotics, therefore the company could make a difference in many lives by

using the same technology to make their vehicles disability-friendly. This could be a great

boost to the firm’s ethical side and could be an inauguration of an entire line of products.

Threats

The multi-billion dollar company is prone to cyber attacks as its cyber system was

hacked in the year 2019. Although the company addressed this threat as soon as it was
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possible, attacks as such could prove to have a devastating impact on the firm and its

investors. The firm also faces intense competition from premium automobile companies such

as BMW, Ford, Hyundai, and Volkswagen as their target customer demographic and markets

are the same. Furthermore, the depletion of natural resources and the hunt for alternatives

have added to their burden as it calls for increased investments in R&D.

Strengths Weaknesses
Strong brand name Lack of vehicular development
Loyal customers Pandemic hit sales
Global presence Faulty called back products
Skilled workforce
Well invested R&D

Opportunities Threats
Zero-emission vehicles Rising fuel prices
Use of AI and Robotics for a new product Intense market competition
line for the disabled population Prone to cyber attacks

PESTLE Analysis

A firm’s internal analysis allows us to know the basic weaknesses and strengths that

are to be worked on. However, by undertaking the PESTLE analysis we can adequately

understand how various external features comprising of political, economical, social,

technological, and environmental factors affect a firm. Further, analysis as such enables the

thorough comprehension of the company dynamics and evaluates the areas that need to be

worked on for continuous progress.

Political factors

The European government has been in discussion of passing regulations that are to

require automobiles sot consume fewer resources and therefore, this factor has greatly
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affected Honda as a bulky investment is to be made in the R&D sector. Furthermore, various

governments have passed regulations that state the maximum number of vehicles that can be

owned by a single household. Such steps are being taken by the various governments to lower

air pollution but have been a major drawback for manufacturers like Honda. Similarly,

several governments have increased the rates of fuel in their nations that has reflected

negatively in terms of sales for Honda.

Economical factors

The pandemic has hit every nation hard and the European nations to are suffering

from the same. Therefore, due to this, individuals have been left with minimum disposable

income, therefore, the sale of locomotives has dropped down. However, the rising prices of

fuel could be combated by the production of hybrid cars. Therefore, the production of hybrid

cars such as Honda Jazz and Honda Civic Hybrid is targeted towards covering up the losses.

Furthermore, the firm is susceptible to fluctuations in international currency rates.

Social factors

Honda understands the demographics of its customers well and has introduced eco-

friendly cars to ensure their place in the evolving social scenario. Honda has been

emphasizing heavily in the European market and has also adopted its needs in their products

to attract consumers. They are heavily targeting the 22-50 demographic as they believe them

to be the future of their company.

Technological factors

Honda has always been an innovator in terms of technological aspects, therefore the

newest models of Honda come equipped with Satellite Navigation System rather than the

conventional Global Positioning System. Furthermore, to ensure their technological

advancement with the environmental concern, they have developed iv-tech as a step up from
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their v-tech engine. Such novel technologies have allowed Honda to achieve more sales and

gain a prime position in the European market.

Legal factors

Honda is a popular brand and is spread over several nations across the globe.

Therefore, they need to follow the guidelines laid down by the government while maintaining

their standard operating protocol (SOP). However, global warming is an issue that has

become quite the Achilles heels for locomotive consumers, and therefore Honda too has been

engaged in legal battles with several nations to curb the fuel run locomotive. Such battles

through the European continent have taken a heavy toll on the company in both image costs

and financial costs. In several European nations, Honda has been alleged by the workers in

terms of not being paid minimum wage and therefore, this matter too is being looked after on

legal grounds.

Environmental factors

Environmental concern is the current hype all over the globe. Several nations have

started to formulate rules and regulations with environmental safety in mind. Therefore,

Honda has also accompanied them on the journey towards providing a safer and cleaner

environment. Its line of hybrid cars is currently the talk as they focus on less pollution and

less energy consumption. The European market is smitten with hybrid vehicles and has led to

significantly greater sales in their area. Honda follows Reduce, Recycle and Reuse principles

and has also been trying to use less water in the production process to conserve water.

Furthermore, the firm is continuing with its research process to deliver products that do not

hamper the environment in any manner.

In summation, even with a prestigious name, Honda has been facing several issues as

a firm and therefore several factors are to be taken care of by the company to ensure its
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growth in the coming years. Comprehension of the factors that affect its market position

enables it to apply suitable measures to combat them and adequately contribute towards its

progression.