The success of of Japanese manufacturers manufacturers originated originated with the growth of their domestic market during the 1950’s. As recently as 1960 only ! percent of Japanese motorcycle motorcycle production production was e"ported. e"ported. #y this this time howe$er the Japanese had de$eloped huge production $olumes in small motorcycles in their domestic market and $olume related cost reductions had followed. This resulted in a highly competiti$e cost position which Japanese used a spring%oard for penetration of world markets with small motorcycle in the early 1960’s. &t is often said that 'onda (reated the market ) in *.+. and elsewhere ) for what we ha$e called secondary uses of motorcycles through their e"tensi$e ad$ertising and promotional promotional acti$ities, and it is true that 'onda presented the attractions of motorcycling motorcycling as a -fun’ acti$ity in a new way and with a le$el of media support not pre$iously attempted %y motorcycle manufacturers. 'owe$er the success of this campaign depended in the last resort on the fact that light weighted motorcycle motorcycle that were the company’s primary product were fun and easy to ride did not gi$e the mechanical pro%lems that had traditionally %een associated with motorcycles motorcycles and were cheap to purchase.
ri$ing through the spin on 'onda’s %ig success 16 /o$em%er 00! inancial Times
Honda’s triumphant entry into the US motorcycle market is one of the most famous and widely debated cases in business strategy. But, as John illustrates this week, most academics and consultants tend to get lost in personal preconceptions in the search for an ultimate truth. Honda and the Supercub is probably the best-known and most debated case in business strategy. In the 1950s, motor cycles were sold through specialist outlets welcoming only testosterone-loaded young men. ikes were power!ul and noisy and the riders" leather clothes smelt o! leaking oil. Honda entered the #S market in 1959 and changed e$erything. %i$e years later the company made one in two bikes sold in the #S. &heir best selling machine was the 50cc Super 'ub. &he company"s ad$ertising slogan was (you meet the nicest people on a Honda). &he story bene!its !rom deconstruction. *ne school o! e+planation deri$es !rom the original Har$ard usiness School case study. &hat case is based on a 195 report by the oston 'onsulting roup !or the ritish go$ernment that described these e$ents as the archetype o! an orchestrated attack on western markets by apanese manu!acturers o! consumer goods. Ha$ing established large economies o! scale in the domestic market, Honda was able to e+ploit its cost ad$antage globally. / uite di!!erent history was gi$en by ichard 2ascale, who went to &okyo to inter$iew the elderly apanese who had managed Honda"s !irst steps in the #S. &hese e+ecuti$es e+plained that Honda had ne$er imagined that small bikes, popular in apan, would !ind a market in the wide open spaces o! the #S. &hey had !ocused on large machines, planning to compete with #S manu!acturers. 3r Honda, they said, was especially con!ident o! success with these products because the shape o! the handlebars looked like the eyebrows o! uddha. ut the eyebrows o! uddha were not appealing in the world o! 3arlon rando and ames 4ean. &he apanese hawked their wares around the western #S, to dealers (who treated us discourteously and ga$e the impression o! being motorcycle enthusiasts who, secondarily, were in business). &he !ew machines they sold, ridden more aggressi$ely than was possible in apan, l eaked e$en more oil than their #S counterparts. 4ispirited and short o! !oreign currency, the Honda e+ecuti$es imported some Super 'ubs to ease their own progress around the asphalt ungle o! 6os /ngeles. 2assers by e+pressed interest, and e$entually a Sears buyer approached them. /nd the (nicest people) slogan7 &hat was in$ented by a #ni$ersity o! 'ali!ornia undergraduate on summer assignment. *nly the nai$e will belie$e either account.
Success!ul business strategy is a mi+ture o! luck and udgment, opportunism and design, and e$en with hindsight the relati$e contributions o! each cannot be disentangled. 3r Honda was an irascible genius who made inspired, intuiti$e decisions 8 with assistance !rom the meticulous market analysis o! his colleagues and the intense discipline o! Honda"s production line operations. It is a mistake to belie$e the ultimate truth about Honda can be established through diligent research and debate. &he Har$ard account, although paranoid, is right to emphasise Honda"s operational capabilities. 3r 2ascale correctly stresses the human !actors but his inter$iewees must ha$e laughed as he wrote down the story o! the eyebrows o! uddha. /ndrew 3air"s sur$ey illustrates how, as acues 4errida would ha$e anticipated, e$ery academic and consultant 8 including me 8 interpreted the Honda story in the light o! his own preconceptions. &he oston 'onsulting roup naturally saw the e+perience cur$e at work and later, when peddling a di!!erent panacea, realised it was an e+ample o! time-based competition. ary Hamel and '.. 2rahalad percei$ed the de$elopment o! Honda"s (core competence) in engine manu!acture. Henry 3int:berg sei:ed on 3r 2ascale"s account as an instance o! emergent strategy. ut there is no true story and no point in debating what it might be. &he lesson o! Honda is that a business with a distincti$e capability that de$elops inno$ati$e products to e+ploit that capability and recognises the appropriate distribution channels !or such inno$ations can take the world by storm. /nd that lesson is $alid whether Honda"s achie$ement was the result o! care!ul planning or serendipity.
Emergent strategy: An emergent strategy is a kind of pattern that is unintended and comes across as a series of decisions in an organisation and is was not included in the planning phase or for the long term purpose. This kind of strategy happens in the organisation by chance or without any planning made and is a set of certain actions that are unintended. We never know it may be a success or a failure.
Emergent strategies are characterized by patterns of actions within a business that occur without a clear relationship to, or even in spite of, the stated goals or mission of the business.( Dontigney.E, 2013)
1.What are the benefits and drawbacks of taking an "emergent" approach to strategy making? > The benefits of taking an emergent approach to strategy making are: •
It can be used to capitalize unexpected marketing benefits. The emergent strategy leads a business to provide what the market actually wants, rather than what the owner or executive thinks or believes the market wants.( Dontigney.E, 2013)
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This kind of strategy helps recognizing creativeness, initiation and innovation within an organisation.
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One of the advantages of latching on to an emergent strategy is that it could be something that your company has discovered before the competition does. ( Anderson.A,2013)
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It encourages informal communication networks in an organisation and helps in the flow of creative thinking and ideas within an organisation.
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It acts as an experimentation and a pragmatic problem solving so as to develop a new strategy.
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•
• •
> The drawbacks of emergent strategy approach are: It can always be risky because this kind of strategy is not a planned one and comes across as a set of actions and decisions for a problem solving. The strategy applied carries an equal chance of being success or a failure. Emergent strategy does not offer a genuine alternative to more traditional deliberate strategy, especially for a new businesses operating on narrow margins.( Dontigney.E, 2013) It can be too costly. It only happens by chance and is kind of an evolutionary approach leading to uncertainty.
HONDA CASE STUDY :
2.Did Honda s entry strategy demonstrate the characteristics of "logical incrementalism"? (slide 12 will be helpful) > Logical incrementalism is a management philosophy which states that strategies do not come into excistence based on a one time decision but rather, it exists through making small decisions that is evaluated periodically. ( businessdictionary.com,2013). Logical incrementalism allows strategy to be synthesised and coordinated into a single coherent direction by using as many known multi-dimensional inputs as possible in the conceptualization process to shape the overarching goals (Kippenberger,1998). ‟
Yes, I believe Honda's entry strategy demonstrate the characteristics of logical incrementalism because they certainly analysed the US environment, made up the marketing strategies and followed a policy of developing the US market region by region. Honda experimented with the US market and basically did not work out for a certain specific goal, rather it made general goals step by step and tried to achieve it slowly. US already had a bunch of good motorcycle brands serving in the market, however Honda being a first timer in the international market worked with certain strategies and were able to beat other's market share in a short span of time by providing low cost and light weight bikes to the customers. They took risk and faced the challenges in a good way and were able to influence the people who once already had bad image about motorcycles. Their marketing skills worked superbly in attracting thousands of people. They even faced several failures such as oil leakages, clutch failure but they tested the bikes and redesigned it in Japan and were able to satisfy the customers. Adding up, they came up with 50cc Supercubs which I would consider a emergent strategy because Honda by then knew the American environment and experimented. Questions 1. Was Honda's entry strategy in the US more deliberate or emergent? > I think Honda's entry strategy in the US was more of a deliberate one because as per perspective one, because they analysed the market share of it's competitors beforehand and basically differentiated themselves from the others. Japanese manufacturer had a basic philosophy that high volumes per model provide the potential for high productivity as a result of using capital intensive and highly automated techniques which makes it a deliberate strategy practice r. After the world war two, motorbikes attracted very limited group other than police and army personnel who used motorcycle on the job. Motorcycle was called as Hell's angels, Satan's slaves and eventually had a bad image. Honda however, expanded the market by redefining a leisure class ('Nicest people') segment and exploiting its comparative advantage via aggressive pricing and advertising and were able to attract many local people as well. Honda is dedicated to being the low price producer, utilizing its dominant market position in Japan to entry into the US market. Likely,Honda's marketing strategy as described in the 1963 annual
report started its push in the US market with the smallest, lightweight motorcycles with many functions. As per the second perspective, we see the company faced several problems such as oil leakages and clutch failure in their bikes eventually damaging Honda's image but they went up with several strategies right away and were able to overcome. Honda's main entry in the US market was when they saw a market while visiting US and wanted to test if Honda motorbikes will be accepted there. They did certain experiments with strategies i.e. they practiced emergent strategy. They did not had any future vision or goal they just moved along and adapted with the environment Eventually, in 1963, a student did a Honda advertisement assignment and from then the brand has been inseparable. 2. Which of the accounts seem more accurate and why? Why do you think the two accounts differ so much? > According to me, The second account seems more accurate because it is based on interviews by Pascale with Honda Executives. In the second account, they have clearly mentioned all the things from the roots of their establishment in US. They explains starting from their visit to America and then ending up opening a market there. They expresses their experiences emotionally and in a detailed way which seems convincing. They clearly explained the language problem they had at that time, the hurdle to obtain a currency allocation from ministry of Finance, their days of sleeping on the floor e.t.c. which makes it pretty realistic. Entering into Us market was a challenging task full of risk with a new frontier for Honda. The second perspective clearly shows Honda's entry in the US as an emergent strategy because they did not have any specific planned out goal however worked step by step adapting to the environment and making suitable changes. The two accounts differ so much because the way of explanation differs drastically. The first perspective makes Honda seems like had a planned vision of entering the US market with certain philosophies implemented. Whereas, the second perspective is far more different and explains that Honda happened to have entered the US market coincidentally. 4. Do you think Honda would have been more or less successful if they had adopted a more formalized strategic planning approach to the launch? > I do not think Honda would have been successful if it had adopted a more formalized strategic planning approach. When everything is planned out, it happens that when certain failure arises there is a high chance of falling down drastically and Honda would possibly be out of the market when they had the leakage and clutch failure problem. A formalized planing strategy wouldn't help Honda to cope up and work accordingly with the circumstances and the environment.
