Business strategy Essay Example | Topics and Well Written Essays - 1000 words

Business strategy - Essay Example The country has high political stability. However, the government has imposed certain trade regulations. For example, there is a strict restriction on the import and export of raw materials used for automobile manufacturing. Economical Factors: - The economic factors play an important role in the success of an industry. The economy of Japan is said to be highly stable and the country is currently witnessing an economic boom. The current GDP of the country is $5.984 trillion and the per capita income is $36,200 (CIA, 2013). The figures clearly reflect the robust nature of the economy of the country. The strong economy of the country is a positive indication of further growth of Honda in Japan. Social Factors: - The total population of the country as of 2012 is 127,368,088 (CIA, 2013). The major religion of the country is Shintoism which nearly accounts for 83.9 %, while Buddhism and Christianity accounts 7.14% and 2 % respectively. The major language is Japanese. The literacy rate is 99 %. In addition studies suggest that people of Japan are extremely passionate about cars. Hence the societal factors of Japan are extremely favourable for Honda’s business. Technological Factors: - Technology is a crucial factor for every business. The importance is more when it comes to the automotive industry. Honda depends heavily on technology to manufacture its products and market its products. In addition, technology is playing a critical role in the research and development function of the company. However, the favourable factor is that Japan is a technologically developed country and offers a strong technical infrastructure for the companies doing business in Japan. Environmental Factors: - With increasing awareness of environmental sustainability, car manufacturers are forced to come up with products which are eco friendly. Moreover, due to global warming, the Japanese government has imposed several restrictions on the use of petroleum products. This is why Honda h as come up with eco friendly cars such as Honda Hybrid. Japan has a different weather pattern and climate, which can negatively affect the engines. Hence, the weather of Japan can be a possible threat to the company. Legal Factors: - There are strict regulations imposed by the Japanese government on the automobile industry. Most of them are related to the safety of passengers, and welfare of the employees. In addition, there are some restrictions with import and export products to USA. Porter’s 5 Force Analysis Porter’s 5 forces model is another strategic management tool used to analyze the attractiveness of an industry. In this context of the study, Honda belongs to the automobile industry of Japan; hence the automobile industry of Japan will be evaluated. The analysis is presented below: - Force Density Properties Bargaining Power of Buyers High The principal reason behind this is the availability of a large number of car manufacturer and marketer in Japan Bargaining Power of Suppliers Low Suppliers of raw materials of the automobile industry are in large numbers. However, there are certain accessories which can be imported from some other parts of the world but due to stringent trade regulations; companies are bound to dependent on local suppliers. Threat of New Entrants Low The initial investment required to set up an automobile business is very