Honda UK: Motor Vehicle Strategic Business Unit

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Executive Summary
Honda UK is a subsidiary of a Japanese company Honda. The company has ventured in the
United Kingdom with Motor vehicle Strategic Business being one of its lucrative ventures. In the
external environment, the report deduces that the opportunities in the United Kingdom industry
are; political stability, low level monetary interest policies, desirable trade flows and patterns,
saturated fashion and trends, desirable economic framework , imperative R&D, internet
integration car technology, and high level lifestyle and income distribution. From the external
environment in the United Kingdom industry, deducible threats are; strict rules and regulations,
harsh carbon dioxide emissions and EU tough legislations, complex safety and customer rights
compliance aspects, and high inflation.
Under internal environment, Honda UK has the following strengths in its market; After sales
service that connects the company with its customers, SAP software, engagement of many
suppliers thus leading to discounts, increased innovation, maintenance of suppliers portal
through JIT production philosophy, brand regeneration via total quality control attitude, lean
manufacturing techniques, customer customisation and interactivity and effective batch shipment
mechanisms. Honda UK weakness in the United Kingdom is unmanageable and soaring
remuneration and wage cost.
Honda UK applies differentiation strategy in the United Kingdom Motor vehicle industry which
should also be maintained since the company has not exploited the market fully through this
strategy.

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Table of contents
1.0 Introduction .............................................................................................................................................................1
2.0 External environment analysis ..........................................................................................................................1
2.1 PESTEL model ........................................................................................................................................................1
2.1.1 Political Factors ....................................................................................................................................................1
2.1.2 Economic Factors .................................................................................................. Error! Bookmark not defined.
2.1.3 Social Factors ........................................................................................................ Error! Bookmark not defined.
2.1.4 Technological factors............................................................................................. Error! Bookmark not defined.
2.1.5 Legal factors .......................................................................................................... Error! Bookmark not defined.
2.1.6 Environmental Factors ........................................................................................... Error! Bookmark not defined.
2.2 Porters five forces model .........................................................................................................................................2
2.2.1 New Entrants threat ............................................................................................... Error! Bookmark not defined.
2.2.2 Competitive rivalry ................................................................................................ Error! Bookmark not defined.
2.2.3 Buyers bargaining power ....................................................................................... Error! Bookmark not defined.
2.2.4 Suppliers bargaining power ................................................................................... Error! Bookmark not defined.
2.2.5 Substitute products ...............................................................................................................................................2
3.0 Honda Internal environment analysis (Value chain) ................................................................................................3
3.1 Support activities .....................................................................................................................................................4
3.1.1 Firm infrastructure ................................................................................................. Error! Bookmark not defined.
3.1.2. HRM ..................................................................................................................... Error! Bookmark not defined.
3.1.3 Technology development ....................................................................................... Error! Bookmark not defined.
3.1.4 Procurement ........................................................................................................... Error! Bookmark not defined.
3.2 Primary activities ...................................................................................................... Error! Bookmark not defined.
3.2.1 Inbound logistics.................................................................................................... Error! Bookmark not defined.
3.2.2 Operations.............................................................................................................. Error! Bookmark not defined.
3.2.3 Outbound logistics ................................................................................................. Error! Bookmark not defined.
3.2.4 Marketing and sales ............................................................................................... Error! Bookmark not defined.
3.2.5 Services.................................................................................................................. Error! Bookmark not defined.
4.0 SWOT ....................................................................................................................... Error! Bookmark not defined.
5.0 Current issues that faces Honda UK ......................................................................... Error! Bookmark not defined.
6.0 Bowman’s strategy clock .......................................................................................... Error! Bookmark not defined.
7.0 Conclusion ................................................................................................................ Error! Bookmark not defined.

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1.0 Introduction
Honda is a Japanese company that developed a venture strategy for Europe in 1979. The
company strategized on availing cars to the United Kingdom market. Some of the Honda UK
motor vehicle Strategic Business Unit brands are CRV Honda, Civic sport, Jazz, Accord Saloon
among others (Gifford, 2009).
This report undertakes analysis of Honda motor vehicle strategic Business Unit of the Honda UK
based on its performance in reflection to the competitors’ motor vehicles. It is significant to
study the Motor vehicle SBU for Honda UK for purposes of measuring market trends and also
what is required in the UK motor cycle industry. This report is structured into the following
parts; external analysis, key issues, internal analysis, strategic analysis and conclusion.
2.0 External environment analysis
2.1 PESTEL model
This model is acronym representing political factors, economic, social factors, technological
factors, environmental, and also legal factors. All these factors make a structure for the macro
environment that is important in the strategic management.
2.1.1 Political Factors
Honda UK has complied with UK strict rules and also regulations that govern the manufacture of
motor vehicles. For example, the United Kingdom government insists on automobile firms to
manufacture cars that have fuel efficiency capability and this is shown through standard and
safety issues and vehicle emissions (Jones, 2013). Enforcement of a CO2 emission law and also
the EU legislation change relates to end of life vehicle for the vehicle is a major political
measure which affects the automobile firms negatively. The UK Automobile manufacturing
firms in the country enjoys the country political stability (Frisendal, 2012).
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2.2 Porters five forces model
This model outlines the firm strategic management also industry analysis. The models play a
significant role in identifying the power axis within a certain business situation (Crain, 2010).
Thus, porters’ model focuses on undertaking and exploring business competitive advantage
analysis. However, the limitation associated with this approach is that most strategic consultants
rarely use it in scenarios of undertaking business strategic position qualitative evaluation (Crain,
2010). Also, See appendix 2.

Figure 1: Porters Five forces structure (Source: Kannegiesser, 2008)

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2.2.5 Substitute products
The threat for substitute products in the UK is moderate. This in essence means that the effect of
substitute products in the motor vehicle industry is relatively low. In cities such as London,
motor vehicles have increased in roads leading to congestion and thus need for substitutes such
as Motorcycles. Also, the parking charges for motor vehicles are relatively high in the United
Kingdom prompting people to use other means of transport. Lastly, the high cost involved in the
running cars prompts people to seek for substitutes that are relatively cheap. However, the effect
of substitutes has not been immense due to many advantages that are attributable to Motor
vehicles for instance Cars are usable in all weather especially in UK whereby there is Winter and
Summer, and therefore the threat is moderate.
3.0 Honda Internal environment analysis (Value chain)
The internal environment analysis entails both the support and also the primary activities as
captured in this section in respect to Honda UK car SBU. This analysis tends to make
description of all the activities that are encompassed under business and perfectly connects to
business competitive strength analysis improvement (Gereffi et al., 2005). Honda UK
management concentrates much on the value addition aspect for purposes of ensuring that all its
motor vehicles for instance Honda CRV are widely acceptable in the UK industry based on their
performance.

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Figure 2: value chain model (Source: Trapp, 2014)
3.1 Support activities
This refers to those operations that are not directly to any manufacturing process. In Honda UK,
support activities are used for purposes of ensuring effectiveness and efficiency materialises in
the company improvement (Gereffi et al., 2005).