Honda
Content
The success of Japanese manufacturers originated
with the growth of their domestic market during the
1950’s. As recently as 1960, only 4 percent of
Japanese motorcycle production was exported. By this
time, however, the Japanese had developed huge
production volumes in small motorcycles in their
domestic market, and volume related cost reductions
had followed. This resulted in a highly competitive
cost position which Japanese used a springboard for
penetration of world markets with small motorcycle in
the early 1960’s.
It is often said that Honda Created the market – in U.S.
and elsewhere – for what we have called secondary
uses of motorcycles, through their extensive
advertising and promotional activities; and it is true
that Honda presented the attractions of motorcycling
as a ‘fun’ activity in a new way, and with a level of
media support not previously attempted by
motorcycle manufacturers. However, the success of
this campaign depended in the last resort on the fact
that light weighted motorcycle that were the
company’s primary product were fun and easy to ride,
did not give the mechanical problems that had
traditionally been associated with motorcycles, and
were cheap to purchase.
Driving through the spin on Honda’s big success
16 November 2004, Financial 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. Bikes were powerful and noisy and the riders’ leather clothes smelt of leaking oil. Honda
entered the US market in 1959 and changed everything.
Five years later the company made one in two bikes sold in the US. Their best selling machine was
the 50cc Super Cub. The company’s advertising slogan was “you meet the nicest people on a Honda”.
The story benefits from deconstruction. One school of explanation derives from the original Harvard
Business School case study. That case is based on a 1975 report by the Boston Consulting Group for
the British government that described these events as the archetype of an orchestrated attack on
western markets by Japanese manufacturers of consumer goods. Having established large economies
of scale in the domestic market, Honda was able to exploit its cost advantage globally.
A quite different history was given by Richard Pascale, who went to Tokyo to interview the elderly
Japanese who had managed Honda’s first steps in the US. These executives explained that Honda
had never imagined that small bikes, popular in Japan, would find a market in the wide open spaces
of the US. They had focused on large machines, planning to compete with US manufacturers. Mr
Honda, they said, was especially confident of success with these products because the shape of the
handlebars looked like the eyebrows of Buddha.
But the eyebrows of Buddha were not appealing in the world of Marlon Brando and James Dean. The
Japanese hawked their wares around the western US, to dealers “who treated us discourteously and
gave the impression of being motorcycle enthusiasts who, secondarily, were in business”. The few
machines they sold, ridden more aggressively than was possible in Japan, leaked even more oil than
their US counterparts.
Dispirited and short of foreign currency, the Honda executives imported some Super Cubs to ease
their own progress around the asphalt jungle of Los Angeles. Passers by expressed interest, and
eventually a Sears buyer approached them. And the “nicest people” slogan? That was invented by a
University of California undergraduate on summer assignment.
Only the naive will believe either account.
Successful business strategy is a mixture of luck and judgment, opportunism and design, and even
with hindsight the relative contributions of each cannot be disentangled. Mr Honda was an irascible
genius who made inspired, intuitive decisions – with assistance from the meticulous market analysis
of his colleagues and the intense discipline of Honda’s production line operations.
It is a mistake to believe the ultimate truth about Honda can be established through diligent research
and debate. The Harvard account, although paranoid, is right to emphasise Honda’s operational
capabilities. Mr Pascale correctly stresses the human factors but his interviewees must have laughed
as he wrote down the story of the eyebrows of Buddha.
Andrew Mair’s survey illustrates how, as Jacques Derrida would have anticipated, every academic
and consultant – including me – interpreted the Honda story in the light of his own preconceptions.
The Boston Consulting Group naturally saw the experience curve at work and later, when peddling a
different panacea, realised it was an example of time-based competition.
Gary Hamel and C.K. Prahalad perceived the development of Honda’s “core competence” in engine
manufacture. Henry Mintzberg seized on Mr Pascale’s account as an instance of emergent strategy.
But there is no true story and no point in debating what it might be.
The lesson of Honda is that a business with a distinctive capability that develops innovative products
to exploit that capability and recognises the appropriate distribution channels for such innovations
can take the world by storm. And that lesson is valid whether Honda’s achievement was the result of
careful 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)
This kind of strategy helps recognizing creativeness, initiation and innovation within an
organisation.
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)
It encourages informal communication networks in an organisation and helps in the flow
of creative thinking and ideas within an organisation.
It acts as an experimentation and a pragmatic problem solving so as to develop a new
strategy.
> 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 multidimensional 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.
with the growth of their domestic market during the
1950’s. As recently as 1960, only 4 percent of
Japanese motorcycle production was exported. By this
time, however, the Japanese had developed huge
production volumes in small motorcycles in their
domestic market, and volume related cost reductions
had followed. This resulted in a highly competitive
cost position which Japanese used a springboard for
penetration of world markets with small motorcycle in
the early 1960’s.
It is often said that Honda Created the market – in U.S.
and elsewhere – for what we have called secondary
uses of motorcycles, through their extensive
advertising and promotional activities; and it is true
that Honda presented the attractions of motorcycling
as a ‘fun’ activity in a new way, and with a level of
media support not previously attempted by
motorcycle manufacturers. However, the success of
this campaign depended in the last resort on the fact
that light weighted motorcycle that were the
company’s primary product were fun and easy to ride,
did not give the mechanical problems that had
traditionally been associated with motorcycles, and
were cheap to purchase.
Driving through the spin on Honda’s big success
16 November 2004, Financial 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. Bikes were powerful and noisy and the riders’ leather clothes smelt of leaking oil. Honda
entered the US market in 1959 and changed everything.
Five years later the company made one in two bikes sold in the US. Their best selling machine was
the 50cc Super Cub. The company’s advertising slogan was “you meet the nicest people on a Honda”.
The story benefits from deconstruction. One school of explanation derives from the original Harvard
Business School case study. That case is based on a 1975 report by the Boston Consulting Group for
the British government that described these events as the archetype of an orchestrated attack on
western markets by Japanese manufacturers of consumer goods. Having established large economies
of scale in the domestic market, Honda was able to exploit its cost advantage globally.
A quite different history was given by Richard Pascale, who went to Tokyo to interview the elderly
Japanese who had managed Honda’s first steps in the US. These executives explained that Honda
had never imagined that small bikes, popular in Japan, would find a market in the wide open spaces
of the US. They had focused on large machines, planning to compete with US manufacturers. Mr
Honda, they said, was especially confident of success with these products because the shape of the
handlebars looked like the eyebrows of Buddha.
But the eyebrows of Buddha were not appealing in the world of Marlon Brando and James Dean. The
Japanese hawked their wares around the western US, to dealers “who treated us discourteously and
gave the impression of being motorcycle enthusiasts who, secondarily, were in business”. The few
machines they sold, ridden more aggressively than was possible in Japan, leaked even more oil than
their US counterparts.
Dispirited and short of foreign currency, the Honda executives imported some Super Cubs to ease
their own progress around the asphalt jungle of Los Angeles. Passers by expressed interest, and
eventually a Sears buyer approached them. And the “nicest people” slogan? That was invented by a
University of California undergraduate on summer assignment.
Only the naive will believe either account.
Successful business strategy is a mixture of luck and judgment, opportunism and design, and even
with hindsight the relative contributions of each cannot be disentangled. Mr Honda was an irascible
genius who made inspired, intuitive decisions – with assistance from the meticulous market analysis
of his colleagues and the intense discipline of Honda’s production line operations.
It is a mistake to believe the ultimate truth about Honda can be established through diligent research
and debate. The Harvard account, although paranoid, is right to emphasise Honda’s operational
capabilities. Mr Pascale correctly stresses the human factors but his interviewees must have laughed
as he wrote down the story of the eyebrows of Buddha.
Andrew Mair’s survey illustrates how, as Jacques Derrida would have anticipated, every academic
and consultant – including me – interpreted the Honda story in the light of his own preconceptions.
The Boston Consulting Group naturally saw the experience curve at work and later, when peddling a
different panacea, realised it was an example of time-based competition.
Gary Hamel and C.K. Prahalad perceived the development of Honda’s “core competence” in engine
manufacture. Henry Mintzberg seized on Mr Pascale’s account as an instance of emergent strategy.
But there is no true story and no point in debating what it might be.
The lesson of Honda is that a business with a distinctive capability that develops innovative products
to exploit that capability and recognises the appropriate distribution channels for such innovations
can take the world by storm. And that lesson is valid whether Honda’s achievement was the result of
careful 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)
This kind of strategy helps recognizing creativeness, initiation and innovation within an
organisation.
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)
It encourages informal communication networks in an organisation and helps in the flow
of creative thinking and ideas within an organisation.
It acts as an experimentation and a pragmatic problem solving so as to develop a new
strategy.
> 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 multidimensional 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.
