External Environment Factors That Impact the Honda Company

2652 (6 pages)
Download for Free
Important: This sample is for inspiration and reference only

Table of contents

Executive Summary

The paper includes PESTEL analysis of Honda company and recommendations on how Honda can exploit the resources and opportunities given in order to achieve its organizational goals and objectives. In addition to this, it describes base on the external environment of Singapore that will impact on Honda and its operations. Furthermore, it highlights the examination of how to operate and stretch the resources and capabilities to understand the sustainable of competitive advantage firms by using VIRO framework. Finally, it includes the common step of decision making process which will impact for better decision making.


Established in 1948, Honda has come a long way to become one of the world’s largest conglomerate automobile corporations. Since the establishment, Honda has manufactured aircrafts, power engines, power equipments, many other automobiles parts and combustion power engines in tremendously large numbers of quantity every year. The headquarter of Honda is located in Tokyo, Japan and Honda assembly plants around the world and become multinational corporation. Honda has committed to creating customer-oriented business model with the intention to providing a mean to an end of customers’ needs and satisfaction. Being a multinational corporation, Honda aims to have sustainable growth globally, by dedicating to manufacturing the high-quality products within reasonable price range for global market.

Analysis of external environmental factors


In Singapore, the government don’t allow the increase number of motorcars on roads as it explore to decrease the traffic jam on its crowed and main streets. In other words, Singapore government set up the proposal for the limited number of cars sale. Additionally, the price of the vehicle are huge price mark-ups because of various taxes and import duties. This law impact on the sales of Honda, and sale of the Honda will be decrease compare to the previous. The government policy have an influence on Honda profit. Singapore have the ability to do business well by having stability political environment. Being political stability, it will be positive effect on Honda’s revenues and profits.


Being Honda is Japan base organization, the exchange rate of Singapore and Japan are changing and that will impact the sale price of the Honda’s products. The economic growth of Singapore shows a potential opportunity for Honda. When the economy is good, people can afford more self-fulfilment needs and psychological needs. Singapore’s stable economy and its growing GDP growth over the year’s state that Honda has less to worry about economical threats in Singapore. Better economy equates higher purchasing power of consumers and hence there are more opportunities to exploit in meet sales and profits objectives. Honda should continue to innovate and introduce new models, designs annually to keep track on modern technology trend and maintain the interests of its consumers.


Social factor comprises of cultural and demographic aspects of macro environment in the automobile industry. People are tending to buy their cars from the manufacturers instead of opting from imported ones. Nowadays, social influences have changed or at least impacted on consumer buying behavior and their conscious of being green. Thus, electrical automobiles and environmentally friendly cars that consumes less fuel or emits less greenhouse gases are getting higher in demand. The increase in sales of these models every year is an indicator that these cars are getting more popular. Honda never fails to pick up the opportunity and has launched eco-friendlier cars.

There are still gaps in market in which Honda can fill by innovating green technology for the likes of consumers who are consciously green. For example, exhaust filters to lessen emissions or less fuel consuming engines for those who do not prefer electric car, can be very attractive in the market. Honda’s main target consumers are middle-class since Honda brand is not a fancy premium car, yet not cheap junk of machine. Increasing gap between poverty and riches can come across as a threat, since it equates to a declining number of middle class or it can also be considered an opportunity that middle class gets to higher class and stay loyal to Honda.


In advanced modern world, most of the organization have started to utilize advanced information technology to improve their businesses in every aspect of business. The internet plays an important part in improving connectivity and communication in Singapore. Honda is now producing the vehicles with the advance mobile technology and innovating technology because the better producing advance technology the higher its sale. And then customers will buy the vehicles with advance technology and that will give safety and convenience for them. Moreover, Honda can make mobile apps to enhance customer engagement and loyalty that will lead to increase in sales of spare parts.


Due to higher concerns in green and limited space for parks, many people have chosen public transportation as their main method of transportation. But the trains are getting more crowded than ever in office hours. Because of pollution caused by gas emissions from cars have become part of a problem in Singapore. Singapore used to be one of the countries which have highest level of industrial greenhouse gases emission and Singaporeans are more concerned to have sustainable environment. Singapore government have started and supported green initiatives or companies that are show integrity in corporate social responsibility in terms of environment. Honda is producing eco-friendly cars like Honda Hybrid to protect global warming. So, the environmental factor impact on Honda by raising its contribution in environmental protection.


From work laws to quality related laws and different laws that may shift from country to country and market to showcase, there are a few territories where lawful issues can bring about misfortunes for Honda. Honda needs to center around its valuing strategies, must propose the decrease on vehicles, which faces the adversaries, and permits creating more deals. According to employment legislation of Singapore, the office hours are 8 hours in a day or 44 hours in seven days, and the compensation is high every hour of overtime. In this way, Honda will be influenced because of the high wages of representatives. Singapore government set up the working environment wellbeing law that Honda need to make like detailing mishaps, preparing, and the security gear to guarantee that its representatives are secure. In this way, government laws widely affect the Honda Company. Political elements incorporate enrolment law, exchange and local exchange organization and the tax assessment will have effect on Honda. Examination how Honda can better manipulate and stretch the resources and capabilities: The capability of a corporation is its capacity to oversee and manage its assets which officially talked before, for example, similar to individual of the corporation (employees), capability to pick up leverage over competition. Abilities are the activities what the association do well, for example, talents of employees, administrative and specialized aptitudes. Assets are the things (protests) or attest that we have in an association however it is hardly. They are time, unpolished materials, capital land and individuals (human resources). Be that as it may, the things of the assets are not profitable all alone.

No time to compare samples?
Hire a Writer

✓Full confidentiality ✓No hidden charges ✓No plagiarism

Capability of a corporation lead organizations as they give them the high ground in the profoundly focused market. Just through improvement and maintainability of both old and new abilities, these organizations will have the capacity to keep an edge over different rivals and competition. These capabilities include well-updated knowledge, creative products as well as innovative designs. These abilities incorporate very much refreshed information, imaginative items and inventive plans. By having the correct amount and nature of data and knowing how to utilize them, organizations would then be able to end up noticeably more productive and powerful. Barney and Hesterly (2006), depicts the VRIO system as a decent apparatus to look at the inner condition of a firm. The fundamental of the VRIO examination implies for making the uniqueness of business all through the assessment of an organization's different resources and competences. As indicated by VRIO, the resources and competences of a company must be valuable, rare, expensive to emulate or implement and organize.


If the organization has an opportunity to adventure or disallow the threats in the related environment, it can be said a valuable resource or capability. Furthermore, most of the valuable resources help firms to rise the perceived customer value by developing differentiation and reducing the price of the products. Honda Motor have invested capital heavily in research and development which is not common in the auto industry. In the forefront of technology, it can support Honda to develop more innovative, new technologies and creative products for the organization and customers across the world. In other words, Honda support to improve the actions technical skills as a capability. In terms of value, Honda come through at using its design to build reliable cars that simply work. This capability is rather valuable for the Honda and its industry.


A resource is considered uncommon or rare essentially in the event that it isn't broadly controlled by different contenders. A firm that has significant assets that are not uncommon isn't in a place of preferred standpoint with respect to contenders. Be that as it may, when a firm keeps up ownership of significant resources that are rare in the business they are in a place of upper hand over firms that don't have the resources. Honda has the improve technical skills and knowledge for production, sales and services, manufacturing process, systems and equipment used to make all Honda products. By having well-update knowledge and technologies, it will affect for building vehicles of best quality with reasonable low cost (Dyer, et. al., 2004). Furthermore, Honda keep the relative low cost products in both long term and short term quality grades compare to others in motor industry (Dyer & Hatch, 2004).


The idea of impersonation or intimating incorporates any type of getting the lacking resource or substituting a comparable resource that gives proportional advantages. Intangible (also called tacit) resources or capabilities, like corporate culture or reputation, are very hard to imitate and therefore inimitable (Falcon, 2009).” Honda exceeds expectations in building capacities as the autos have awesome specialized designing aptitudes prompting proficient efficiency of prevalent and inventive items. Solid operation in production and designing abilities have fortified the brand value of Honda. Items incorporate new advancements making it troublesome for the contenders to achieve the stamp where Honda is standing. Due to this, the clients esteem the brand and it empowers Honda to emerge in the market making it troublesome for the contenders to duplicate. As indicated by Harris Poll Equitrend consider, Honda is positioned as a brand with most astounding brand value the exceptional nature of its items that prompt client inclination with intention to make a purchase. Honda isn't only a brand yet a dependable name in the automobile industry. Therefore, Honda's engineering and innovative design and brand equity are inimitable.


A good corporate must have protocols or standardized procedures in terms of administration and management when it comes to management systems and policies for every different aspect of the business. The corporate culture must bear all its values and rarity and difficulty in mimicking, resources and capabilities. The organization structure of Honda support to invent an impressive list of innovative products and a way to use information about the innovations flowed to the right people in a timely fashion. By investing for technical skills, that will support the current changes and the challenges of tomorrow. And then people and process of Honda that anticipate to the company’s competence need to be internal with the same department so it is more likely to achieve the coordinated goal which will ensure a high-achieving competency.

Decision Making Process for Better Decisions

Decision making is a process of choosing the action among from the alternatives courses, thus basic leadership process, the likes of decision making is a vital piece of expanding viability in corporations. The decision-making procedure of any organizations can be separated into five particular steps.

  • Step 1: Identify and define the problem

Some of the decision-making process are start with some kind of problems. The first step of the decision-making process is to search and identify the problem that needs to be solved. And then it need to determine the objective or goal of the decision and clarifying the question is an important first step in making a good decision. At the first step, Honda want to increase the sale of the organization in 2018 and it require to make decision which is attainable amount to increase the sales. Moreover, it need to understand the objective that trying to accomplish and the desired end results and this should provide to define the next step of evaluation options.

  • Step 2: Gather Information for Weighing Your Options

In making the good decisions, it need to gather the essential information that is related to the problem. Furthermore, making a list of every possible alternatives will support for decision making process with a variety of solutions such as pros and cons when considering options for final decisions. This step will help to understand what needs to be done in solving the problem, and will also help to generate ideas for a possible solution. Honda need to search information about the products or services that can get customer needs and wants and update trend that will support for the development the innovative and creative products which will lead to increase sale. Honda can gather information from Search Engines which is an instant and easy way to find out and past experiences of Honda assist in identify the goals.

  • Step 3: Consider the Consequences

This step can be just an essential step because it will help to determine how the final decision will impact on organization. The organization need to oversee the advantages and disadvantages of different options that was listed in earlier stages. It need to feel comfortable when choosing the right option as they come naturally for the most likeliness to success at lowest possible cost. Honda can consider from the strategy of promotion, advertising, membership programs which will support for increase sale.

  • Step 4: Make your Decision

After identified the goal, gathered all of the related information, choose the consequences, now it’s time to decide for the final decision. After the previous step, Honda decide what they will choose for the strategy and how they will do to increase sale. For example, Honda will make decision to implement the promotion strategy by increasing the advertising budget like advertising on online platforms like YouTube, and use other social networks to integrate its corporate integrated marketing communication with consistency. It can speak interest of the offering. Moreover, the decision support for Honda that will be a good result for now and in the future that will be increase sale.

  • Step 5: Evaluate the result

After implement the final decision, it need to evaluation the decisions and take perseverance on the part. This step is probably important step and it will monitor the results and help the organization to further improvements in the process of making business decision in critical conditions. Evaluating the result may take time, however, it is worth the wait to see the effectiveness of the implementation. In these days, there has a lot of dynamic changes around the world, so Honda always should be on the lookout for potential opportunities and adapt and make changes accordingly to the challenge.


The PESTEL strategy help Honda to examine the external environment factor that will impact on organization and how to attack challenges affecting on Honda. Honda need to use various methods of both internal and external analysis of the organization to realize the potentially useful resources that are valuable, rare and unique. Honda also needs to know its competencies to understand the sustainability of the company. VIRO framework for assessing resources and competencies are considered a primitive tool to measure the values of the company’s capabilities. Most of the organization do and as it should, make decisions to adapt to every changing challenges and business environment fundamentally on daily basic, which can finally take Honda towards its missions and vision in a long-term. So, the recommendation can help Honda to make better decisions.

You can receive your plagiarism free paper on any topic in 3 hours!

*minimum deadline

Cite this Essay

To export a reference to this article please select a referencing style below

Copy to Clipboard
External Environment Factors That Impact the Honda Company. (2020, December 28). WritingBros. Retrieved May 29, 2024, from https://writingbros.com/essay-examples/external-environment-factors-that-impact-the-honda-company/
“External Environment Factors That Impact the Honda Company.” WritingBros, 28 Dec. 2020, writingbros.com/essay-examples/external-environment-factors-that-impact-the-honda-company/
External Environment Factors That Impact the Honda Company. [online]. Available at: <https://writingbros.com/essay-examples/external-environment-factors-that-impact-the-honda-company/> [Accessed 29 May 2024].
External Environment Factors That Impact the Honda Company [Internet]. WritingBros. 2020 Dec 28 [cited 2024 May 29]. Available from: https://writingbros.com/essay-examples/external-environment-factors-that-impact-the-honda-company/
Copy to Clipboard

Need writing help?

You can always rely on us no matter what type of paper you need

Order My Paper

*No hidden charges