Strategic Analysis of Honda: Contemporary Management Issues Report

This report examines the contemporary management issues faced by Honda, a major player in the automotive industry. The analysis begins with an introduction to effective management practices and their impact on business performance, followed by a case study focusing on Honda. The report identifies key dynamic forces affecting Honda, including internal factors analyzed through SWOT analysis and external factors examined using PESTLE analysis. It then explores Honda's strategic responses to these forces, particularly climate change and technological advancements. Furthermore, the report applies Porter's Five Forces model to assess Honda's competitive position. The conclusion summarizes the key findings and offers recommendations for Honda to navigate the challenges and opportunities in the contemporary business environment. The report emphasizes the importance of strategic decision-making in adapting to changing drivers and ensuring long-term success.

Contemporary
Management Issues

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Honda Case Study ......................................................................................................................3
Key dynamic forces impacting on business and society. ..........................................................4
How the organisation responded to these changing drivers........................................................6
Recommendations.....................................................................................................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Every business need a effective management practices which are helpful to balance entire
business operational activities. Management makes a critical task very easier by ignoring
wastage of resources and aid in improve the profit rate that is good for business and society.
Through effective opportunities of employment help to get more output at a low cost.
Contemporary management includes planing, leading, conducting, controlling all the business
operations to accomplish business goals. Managers of the organisation are responsible to for
utilising useful resources effectively. Sometimes, Companies are facing lots of issues related to
the management sue sue to various forces that impact on business performance. All the forces
can affect the business directly through internal and external forces that mainly affect the
strategic decision making of the business. For this report, Honda company chosen that is a public
sector company founded in 1946 and the headquarter of this company in Minato, Japan. This is
considered as world's biggest motorcycle manufacturing company that operating their business
all around the world. In this time, company experiences many external issues that give adverse
impact on the environment and also affect the government policies. The main purpose of this
report is to determine the strategic issues that Honda company are facing when it adopting any
changes. This report analyse the two major changing drivers that affect the company decision
making and also identifying the key dynamic forces that influence the business and society.
Lastly, this report analyse that how company respond to these changing drivers.
TASK
Honda Case Study
Honda is a Japanese multinational corporation that is a largest manufacturer of auto
mobiles, cars, motorcycles and other power equipments. Honda considered the 1st Japanese auto-
mobile company that release a luxury brand “Acura” in the year 1986. This company founded by
Soichiro Honda & Takeo Fujisawa and the total number of employees in company are 215, 638.
Honda are experiencing many problems related to the external environment that has not even
completed in the last years that mainly affect on greenhouse gases (Çora, 2020). It main motive
to decrease these affect so that energy sources will not be suffer. This case study depicts the
requirement to determine the external factors of business environment factors through PESTLE
analysis and Porters model. Honda company has used two key drivers including Climate

protection change and changes in technologies. These changes are consider the most prominent
function that Honda has undertake as per to spread changes in company. Moreover, it necessary
to recognise the strength and weakness of the Honda so that it make easily to evaluate and
analyse where change is needed. SWOT analysis can be use to analyse the strength and
weaknesses of the company (Cranford, et. al., 2016).
Key dynamic forces impacting on business and society.
Forces of Internal Factors
SWOT Analysis
It is the strategic tool that analyse the strength, weaknesses, opportunities and threat for
an organisation so that they can develop the awareness of all the factors that will be effecting the
functionality and decision-making of an organisation. The factors which may effect the
operations of Honda are as follows:
Strengths Weaknesses
 Honda is world's largest engine
manufacturer who has produced 27
million units of engine. It is the core
product for the company.
 Honda has the strong positioning in
Asia's motorcycle market (Esteki and
et. Al., 2017).
 Honda is investing low funds in their
research and development that is
leading to weak innovation in their
products.
 Company is majorly dependent on
North America that gives high revenue
and profit.
Opportunities Threats
 Honda can capture the large market by
operating their business in to new
market.
 Company can introduce the low fuel
vehicles that will increase the product
demand.
 Honda is facing high competition with
their rivals such as Toyota, ford,
General Motors.
 Increasing price of Yen exchange will
leads face problem in exchanging
foreign money Opportunities Honda is
world's largest engine manufacturer
who has produced 27 million units of
engine. It is the core product for the

company.
 Honda has the strong positioning in
Asia's motorcycle market (Lakatos and
Arsenopoulos, 2019).
Honda can invest more in research and development so that new technique can be
introduce in their business innovation and this will invite the innovation in the business. It also
expand their market and decrease their dependency on North America.
Forces of External Factors
PESTLE Analysis
It is the frame work of analysing the macro factors ( Political, Economical, Social,
Technological, Legal and Environmental) of an organisation that affect from the outside . It give
the proper insight of external factors so that business can formulate and implement their business
strategies accordingly. There are various factors which is effecting the operations of Honda and
these are as follows. Political factors - These are the factors which include government policy, political
stability, foreign trade policy, tax policy, labour law, environmental law and trade
restriction. The government of UK is changing the taxation policy and that will help the
Honda to manufacture their products with low tax rates. Changing tariffs of imports and
export in various countries is impacting the Honda negatively Lazaridou and et. al.,
2019).There is stable government in the country which is influencing the company to
operate their business smoothly and can sustain in the market for a longer period of time. Economical factors - These are the factors which incudes interest rate, employment or
unemployment rate, raw material cost, foreign exchange rate and impact the economy
and their growth. Disposable income of consumer is another factor that affect the
business. Situation like Brexit leads to create tension and affects the currency exchange
rate. Honda have to consider the economic condition of the country while launching new
product. There is high income level of consumer in UK, Company can launch premium
car to generate higher revenue that will increase the profitability . (Li Meng and Li,
2016).

 Social factors - These are the factors which impact the socio-culture of an individual or
the society. It includes education level, cultural trends, changes in lifestyle and changing
family demographics. Company must understand the cultural influence of an particular
region of their business and then manufacture the product accordingly. Honda is getting
new opportunities by doing market research and fulfil the need of the potential customers.
The company have the opportunities of introducing electric scooters with the help of
using renewable sources in their operation. This seems risky but company like Honda
can easily convince the consumer to invest more for the welfare of the society. Honda is
also manufacturing ca for UK that do not believe in imported cars. Technological factors - These are the factors which includes innovation and
development in their products and services with the help of new technologies like
digitalization, automation and research. When the world is moving towards digitalization,
Honda is putting their efforts in meeting the variable trends (Mulaba-Bafubiandi and et.
al., 2019). The company has introduce the new technology GPS in their new model and
also update the engines with v-tech engines. With the use of v-tech engines, there will b
reduction in the use of carbon in the environment. Honda believes in unique product and
manufacture accordingly to full fill the need of the consumer. Legal factors - These are the factors which include employment laws, health and safety,
consumer law, trade rules and restrictions. This have to complied with the political
factors in order to run the business in a lawful manner. When Honda is working on global
basis that includes various law to be followed by the organisation. A change in any law
will leads to modify the major process of production and affect the profitability of the
business. Company needs to work in an appropriate manner to save from the major lose.
In many countries, the government have not define the rule for hybrid and electric
vehicles and that is a threat for the company (Polat, Alkan and Sürmeneli, 2017).
 Environmental factors - These are the factors which includes climate, carbon footprints,
waste management, sustainability and recycling procedures, which influence the
surrounding environment and ecological aspect. Company is more likely to establish
various polices in order to save the environment. Honda is aim to cut CO2 to half by
2050 and they are impact fully promoting their electric vehicles and wish to convert its
two-third of their product in to electric vehicles. They also promoting the 3R's model

reduce, recycle and reuse in their operation so that company can use the raw material in
an effective manner.
From the above discussion, It is analysed that there are various factors which is affecting
the functionality of the business. Honda must consider the social factor as consumer are the one
who will contribute in increasing the profitability of the business (.Reißmann, Thrän and
Bezama, 2018).
Porter's Five Force Model
Honda is most popular company that lead the car manufacturing in present time.
Company mainly focus on the quality and cost of the products that suitable for the people.
Through good reputation, Honda continuously leading the whole auto-mobile market. With the
help of Porters Five force model, Honda can analyse their present market position and also
determine that how to take more competitive advantage (Flaker, et. al., 2016). All these five
forces are playing essential role to competitive forces that influence the profitability of the
company. Through this model, company can understand how to develop a working strategy to
enhance profitability and competitive advantages for long term period. The explanation of this
model are given below -
Illustration 1: PORTER'S FIVE FORCE
MODEL, 2018
 Threats of New Entrants- The threats of new entries forces for Honda company is low
because its very critical to enter in to the auto-mobile industry. Honda is concerned about
the other manufacturer auto-mobile products rather than new companies. Other
manufacturer companies brings some innovative products with new features and put
more pressure on Honda company. With the help of low pricing strategies, provide value

of proposition, Honda can maintain all these challenges and take competitive advantages.
Honda also consider some other strategies like building a specific economic of scale,
conduct more research and development to analyse the market situations can helpful to
tackle the market challenges. Bargaining Power of Suppliers – The force of suppliers power is high in case of Honda
because company is selling those products that customers seek. All the customers want
specific and innovative products and Honda have something that customers really want
and people can not find it another places that's why the bargaining power of suppliers is
high. Suppliers consider the dominant position can decline the profit margin of the
Honda. The higher supplier power lead the lower the profitability of the company.
Honda can prepare effective supply chain, conduct experiment in project design and
develop honest and dedicated suppliers to cope up with this situation (Johnson, et. al.,
2019). Bargaining power of Buyers – The bargaining power of customers force is moderate
level for Honda. Buyers want to purchase those products which easily available in best
offers and deals that put pressure on the company to provide various types of discounts,
offers , coupons in purchasing the products because high bargaining power of customers
can lead high ability to increasing offer and discount rates. Honda can create a large and
strong base of customers and innovate new products to tackle this situation. Threats of Substitutes – The threat of substitute products and services for Honda is low
because there is very limited level of transportation. In Auto-mobile industry, there is not
more company exist so threat of substitute products is less. Honda is a service oriented
company that understand the requirement of customers. Company can improve the
switching cost so that customers can easily consider the products of Honda.
 Rivalry among Existing Competitors – The force of competitors are high in case of
Honda because there is not many car companies in market that's why the demand of cars
are very high so the level of competition is more in this industry. To take more
competitive advantages, Honda can create sustainable differentiation, build an
appropriate scale that help in compete better and company can collaborate with their
competitors so that company market size increase (Magistro, et. al., 2016).

How the organisation responded to these changing drivers
According to the Honda company case, there are two changing drivers determined that
are technological changes and climate protection changes. As per the Honda case, it can be
analysed that it is not simple for Honda to tackle with these forthcoming changes because these
changing drivers give impact on management of the company. It is very critical for the company
to manage these changes because the transformation of petrol usage vehicles into specific
electronic vehicles. It is very challenging situation for the company to consider the appropriate
strategic decision so that company can save themselves from the damage and loss. Chine , UK
and EU are consider those countries which can create a massive level of competition for Honda
so that company need should think about the environment and also do some extra efforts to make
environment clean through preparing electric vehicle which can help to overcome the
competition level from China and other countries (Masanja, 2019). Company need to think
about it very carefully because China has the power to dominate the whole market very
effectively. Honda are experiencing very tough condition because company surrounded by
various forces that can affect the company internally and externally that's why Honda need to
show more concern about the key dynamic forces so that company can take effective steps to
achieve the business goal.
Company should evaluate their strengths and weakness and also work hard to get new
opportunities and convert their weaknesses into strength. Company should also explore many
external opportunities so that company can easily manage the external forces like environmental
and technological factors. Company consider these business environment factors because
company conation two key changes which are related to the climate and technologies.
Through effective internal factors, company can easily adopt the change if company have
a strong group members (Miller and Hadlock, 2020). Honda considered some specific steps
which are helpful to generate more working strategies for decision making so that company can
manage all the operations systematically. Company selected useful strategies that can help to
respond these changes that are given below- Consider the change & incorporate with company objectives - To define the change
and also integrate with the company goal is essential for the Honda. There is a need to
understand that where change is required and then analyse the change situations like pick
electric vehicles instead of petrol. Company operations need to be change only for

electronic vehicle. Honda need to think about their employees so that their productivity
can increase and company can get more profit advantages. Analyse the effect of change – After the consider and incorporate all the changes its
necessary to analyse the impact of change in context of management operations of the
Honda. The impact of changes are mainly bear by the high authority and managers of
Honda so that they should aware about the effect of change in each and every department
of the company. Company can give more attention to those department which are more
affected by the change of technology and climate (Porfiriev, 2016). Create appropriate strategy for communication – After Honda analysed that which
department are most affected by the change then company must create a effective
strategy for communication so that Honda company managers can easily communicate
with other employees. Appropriate and effective communication strategies are useful to
understand that what the main reason behind the change and why it is necessary to adopt.
Feedback and reviews are the most effective elements of the communication strategy.
Through feedback , company can satisfy all the employees questions and comments. Conduct advanced training & development programs – In this step, company need to
provide the appropriate advanced training and development sessions to their employees
so that employees can enhance their skills and knowledge which can help to adopt
technological and climate protection change effectively(Randi, Bertozzi and Putti,
2019). Honda employees should improve their skills and abilities which can help to
achieve the company objective. With the help of training, Honda can maintain share
updates about the new market trends and modification of technologies which will help
employees to perform their job in a best manner and prepare themselves form upcoming
changes.
 Evaluate the Change Process – Change process helps to manage the change
circumstances that occur due to change in company operations and management. It is
mandatory to measure and evaluate the process of change so that Honda can recognise
the differences that mainly occur due to changes in the company performance. Company
need to take care of all the strategic plan which help in decision making strategies which
ca help to get the expected outcomes (Sharma, Chaudhary and Singh, 2019).

It is essential for the company to consider more appropriate strategies related to the
strategic decision making so that Honda can contain the changing drivers. To consider the
change and apply some effective decision making tools, Honda can use Inshikawa diagram. The
explanation about this diagram are given below-
Importance of Ishikawa Diagram
This diagram given by the Kaoru Ishikawa in 1960 and also known as “Fish bone
Diagram”. This diagram depicts the causes of an elements that mostly useful in manufacturing
and development of products and also analyse the issues related to the quality control and also
determine that which resources needed at a particular time. Through this diagram company can
take decision appropriately. Honda is about to change the entire process of operations and
productions so there is a need to take specific decision which can help the company to adopt
change successfully (Shet, 2020).
This diagram consider the most useful toll for taking the strategic decision for the Honda
so that company can manage all the specific contemporary management issues. This tool identify
every elements that is the cause of the product failure. Honda adopt this diagram because
company are looking for change in their production electronic vehicle.

Illustration 2: Ishikawa Diagram, 2020
In manufacturing process of the electronic vehicles, some defects create many issues. It is
compulsory for the Honda to take decision in order to make successful manufacturing process of
electric products. This cause and effects diagram is essential because it identify the reason of
defect. Through analysis of this diagram, Honda can take decision which will help to obtain the
company goals.
Honda can use specific theories which is related to the change and also implement some
applications which can help to cope up with the contemporary management issues . Honda
generalised Lewin' s change model and the description of this model are given below-
Lewin's change Management model
This model is prominent because it formulate the understanding and balancing the change
in organisation. This model presented by the Kurt Lewin's in 1947. With the help of this model,
company can easily manage all the management issues and changes (Taniguchi, et. al., 2020).
There are three steps involved in this model such as unfreezing, changing and refreezing.
Through this model, company can ensure that every employees can easily understand the entire
process of change. This change management model explain every steps very specifically so that
all the employees of the Honda company can easily understand. This model help to generate the

specific perception so that all the employees can influenced toward the change and change
process of the company. This model help to adopt the specific behaviour that can useful to make
and consider all the changes which Honda company wanted through steps of the models. The
description of this these three steps are given below-
Illustration 3: Understanding Lewin’s Change Management Model, 2021
 Unfreezing – This is the first step of this model, that determine that company can create a
good team so that they can ready for the unexpected and upcoming change. This is the
initial step that's why it apply before the implementing the change. It mandatory for the
company to spread the awareness about the change and also consider the specific reason
behind the change. Honda company managers ensure that all the employees are ready to
adopt the change. Honda can give appropriate information for the change to their
employees so that it make easily for the employees to work on strategy which can help to
analyse the change process. Changing - This step also contain as Transition stage. After the employees unfreezing
and ready for change then transition is required for the change. This time is very difficult
for the employees because there is lots of uncertainty about the futures so company
require time to adjust the process of change. There are four elements are essential for the
changing and transitions (Teczke, ed., 2016). First is communicate consistently, dismiss
hearsay, encourage action and connect employees. These four elements are beneficial for

the employees to handle the changing situation. In this stage all the employees of the
Honda need to develop their skills and also behaviour so that they can well prepared to
adopt the change. In this stage, Honda consider two significant things which are
necessary for the change these things are flow of information and good leadership. Both
are playing prominent role to motivate and appreciate the employees.
 Refreezing - In this last stage, reinforcing & institutionalizing the expected changes is
considered and company ensure that employees are widely accept the change through
useful time and effective organisational culture activities. There are four principles
involved in this step such as embed change, plan for sustain change, give support and
celebrate the success. Honda try to make whole functions and process in easily form so
that employees become habitual for the process of change and all the employees are feel
capable to face all the condition which are occur due to change.
From this management model it can be analysed that it is necessary to implement all the changes
steps which can help Honda to perform effectively even in an uncertainty situation.
Recommendations
According to the case of Honda it can be analysed that all the changing aspects are
essential for the growth of the company. There are some useful recommendations that need to
consider by the company so that company can easily enhance their operational , production ,
manufacturing and management process and procedure. There are few recommendations that
need to adopt are given below-
 Company should conduct survey and also analyse the business environment and
determine the reaction of their employees that they are ready for change or not. Company
should take the permission from their employees about the change because change can
affect their working condition and environment (Thai, 2017).
 Company should ask for advice , suggestions form the shareholders and also inform them
about the change so that all the shareholders can easily cooperate with the company.
 Company manager should clear about the necessity of change and also prepare useful
strategies which help in strategic decision making.
 Company should aware about the specific plans and techniques so that those employees
feel difficulty they can follow plan to make the easily change process.

 It is mandatory for the company to interpret the requirement of change so that company
can adopt effective communication strategies (Thompson and Henke, 2018).
 Company should provide proper guidelines about the change so that it can help the
employees to follow specific structure, it is easily for them to follow change process
properly and they can also provide their opinion to the management about the change.
CONCLUSION
As per this report it is analysis that company experience many management issues that
become a big challenge for the company employees. So to tackle this situation company need to
opt some change which can increase the productivity of the company but sometimes employees
are not prepared for change and they found difficult to deal with the change process. This report
discussed about the change that company adopt for the better working condition and company
operations and management work properly. This report determined SWOT analysis which helped
to identified the strength and weaknesses of the company so that company can take competitive
advantage to get opportunity. This report used PESTLE and Porter's Five Force model so that
company prepare their employees to face the external environment situation and ready to take
more profit and competitive advantages.
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