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Managing Strategy The Honda Effect Business Essay

The BCG Survey says that Honda proven an American subsidiary in 1959. The strategy of Honda was explained in an annual article in 1963. The policy of the company was selling, not just for the motorcyclist but instead to the general public. The American Honda motor unit company had made a strategy to get started on making motorcycles open to everyone. The idea was to first expose the smaller light and portable motorcycles to the US.

Honda had done advertising to younger individuals, Honda made a style of 'meet the Nicest People on the Honda', they were able to be successful in setting up a demand for the light and portable motorcycle and they increased the sales from 1960-1965 by $76 500 000. The BCG statement confirmed that success of japan manufacturers started with the growth of their own home markets. The high production for local demand resulted in Honda experiencing economies of scale as the price tag on producing motorbikes declined with the amount of outcome. This provided Honda to achieve a highly competitive cost position and clearly helped them create their business lead. (Minzburg, H & Quinn, J. B. (1991), The strategy Process. (Prentice hall) In the event review of Richard Pascal, he disagreed with the BCG statement. He seems that not everything was as soft as the actual BCG report areas.

In the truth of Honda they actually joined the marketplace at the incorrect time. Honda also possessed lack of money from the ministry of financing. (Minzburg, H & Quinn, J. B. (1991), the strategy Process. Prentice hall) With research study b) Pascal seems that the first case is much less accurate and shows that through incidental events actually resulted in the success of Honda attaining a strong your hands on the united states untapped market. When looking at the BCG record it claims that Honda pushed the compact motorcycles, when in truth Pascal argues that's not true. In fact Honda wished to promote the larger motorcycles but this failed scheduled to mechanised faults which almost demolished the image of Honda.

Compare and comparison both of these accounts of Honda's entrance into the US?

The BCG statement informs us about the simple success of the Honda's light street motorcycle and the impact it manufactured in the industry where as an Insider of the Honda team, Richard Pascale, informs us about the actual problems that Honda experienced in the motor bike industry. The key differences these two accounts have are the following:

The BCG Report case implies that they did an environmental research and that is why they achieved the success whereas in the event B it shoes that they didn't do an environmental evaluation in to the market because if indeed they did they might have learned that there was not a demand for the bigger motorcycles and in case B if indeed they experienced done more research they would have prevented the situation of almost harming the image of the business.

Case A implies that there is an entry strategy that was to ensure reselling and promoting the motorcycles not and then the motorcyclists but to the general public. The Pascale Statement confirmed that Honda did not exactly have strategy planned but they did have the idea of selling something in the United States which is not really having a defined technique to have for a company and therefore could have been another reason they did not succeed as easily as they didn't know very well what they wished to achieve.

The BCG Article made it appear as though the Honda Company didn't run into any problems and this everything went according to that they planned. Inside the Pascale survey on the other side, it demonstrated that not everything went as planned and not everything gone that smoothly, for example the financing was only limited and they were required to keep a few of the money in the inventory. Another example is the fact that in the event B they didn't initially stimulate the smaller motorcycle and demonstrates through incidental occasions they uncovered the untapped market looking smaller compact motorcycles instead of the originally designed much larger ones.

(Clayton M. Christensen and Tara Donovan, 2010)

The Boston Consulting categories (BCG) report evidently shows a deliberate method of Hondas strategy in penetrating the US bike market whereas in the event B demonstrates the procedure was more of an emergent procedure. Case A had a Research and Development effort and an insurance plan of developing the US market region by region. IN THE EVENT B it does not really express much research and development ideas they had the idea of selling the larger motorcycles which by the end of the day did not workout on their behalf but if indeed they had done the proper research they might well have prevented wasting of the time and efforts. (Clayton M. Christensen and Tara Donovan, 2010)

The BCG article shows that they had an obvious strategy and goal to sell lightweight motorbikes and ensure that it is not associated with the typical biker image. The Pascale Report on the other palm indicates that the Honda team put commitment and the majority of their money in to the much larger motorbikes. This take action of following through with the larger motorcycles was almost the finish of Hondas image. The BCG Survey clearly claims that these were prepared and have the required research to make sure that the lighter motorcycles would be the top seller.

The BCG Article shows that relative costs with their motorcycles are determined by two key factors that they posses which is their technology and monetary of level. It demonstrates the Honda machine was sold for under $250 and they were more advanced than their opponents in efficiency, and with intensive advertising they created a market for smaller motorcycles and provided it in a way of having fun activities with the bike It also shows that that they had enough capital to carry out a study and development effort to staff designers.

The Pascales Record states that the inventory was poor and that the manufactures sold the motorcycles to traders in batches and it mentioned that the after-sales service was poor. The Pascale accounts shows that they also have advertising in trade mags but that there was just a few reactions. The Inventory, in line with the Pascale Record, consisted mainly of greater bicycles parts than for small bikes.

The Pascale Report only really talks about the initial accessibility of Honda and claims the difficulties that they had faced. The report implies that it got time before they emerged to dominate the marketplace and have an established low-cost high-quality product. It also clearly state governments that Honda performed not just enter the U. S market with an obvious strategy and they had very little knowledge of the U. S market. The BCG Article on the other hand discusses the entire history of the procedures that Honda experienced and how they truly became successful with proper planning.

The BCG Report implies that they put in place a deliberate advertising campaign and they developed a theme and planned it accordingly to ensure they were not from the average stereotype. The Pascale Survey on the other had indicates otherwise, it implies that Honda had remained with their LA agency for some time until they were approached by Gray Advertising with the thought of the Theme of get together the nicest people on the Honda. Last but not least Pascales Statement argues that the smaller motorbike was inexpensive since it had a distinctive light weight but high vitality engine design. The BCG Statement on the other side said it was inexpensive due to its rate of production. (Richard P. Rumelt, July 10, 1995)

To what amount was Honda's evident strategy deliberate and/or emergent?

Honda's strategy according to the BCG Report came into being as been a deliberate Strategy whereas in Pascales Survey the strategy felt more of an emergent strategy. BCG saw Honda, as a firm, who have deliberate planning by looking at the market and doing an environmental evaluation, setting goals, designed a strategy to handle the environment and competition stresses from Harley Davison and Triump.

A deliberate strategy is more of any desired strategy that is deliberately formulated or prepared by the professionals, it is associated with the use of tools, techniques and frameworks for strategic analysis and analysis. (G. Johnson, K. Scholes, R. Whittington, page 401) Deliberate strategy entails a 6 step process specifically: 1 Environmental Research, 2 GOAL SETTING TECHNIQUES, 3 Strategy Formulation, 4 Strategy Execution, 5 Evaluation/Control, 6 Reviews. (G. Johnson, K. Scholes, R. Whittington)

An Emergent strategy on the other palm comes about through everyday exercises, activities and operations in organisations leading to decisions that become a long-term direction of an organisation. (G. Johnson, K. Scholes, R. Whittington, site 408) An emergent strategy is a structure of action that advances over time within an company in the lack of a specific mission and goals, or despite a mission and goals. (D. J. Ability, Alexander P. and Daniel J)

The BCG Report presented their final report to the British federal and the street motorcycle industry which indicated their competitors in america and revealed what the marketplace underwent. The BCG Survey reveals that Honda possessed the knowledge of the stereotyping of motorcyclist as been the troublemakers, nevertheless they knew that by firmly taking on a new strategy and insurance policy they could overcome the stereotype and sell an inferior motorcycle to the united states market and not merely to motorcyclist but to the general public. This was the strategy and plan that the BCG Article discusses and demonstrates Honda began to push small bikes in to the market first.

The BCG Record shows us that Honda got a deliberate strategy by indicating that that they had done research and development attempts by staffing technicians and designers. Honda's plan according to the BCG Article was to develop the marketplace region by region. With a established plan and strategy in place it implies that Honda does their research on the US Market to discover that there was a market for small bicycles and then building a strategy around the fact that they can grow their sales region by region.

According to the BCG Survey, Honda possessed a deliberate procedure on how to achieve to their market. Firstly Honda came up with a marketing campaign that allowed people to see them as more of a family oriented motorcycle distributor/producer. Honda used a advertising campaign that reveals that you meet the nicest people over a Honda, they deliberately wanted to ensure that the rowdy image was withdrawn of their business and their motorcycles. This strategy was successful and increased Honda's sales and market talk about in Japan and US markets.

The simple fact that the BCG Article demonstrates Honda investigated the market and that Honda had place goals for the business which was to market their smaller motorcycles and be productively competitive reveals it as a deliberate strategy been executed. The Pascale Article is the emergent strategy. An Emergent strategy itself means learning what works and then taking one at a time and look for a possible structure or solution to find reliability again. (Clayton M. Christensen and Tara Donovan)

At First with the Pascale Survey, Richard clearly shows that Honda put all their efforts in to the larger motorcycles but when devastation struck with the larger motorbikes leaking essential oil and having clutch problems Honda's reputation was almost destroyed therefore Honda got no choice but to thrust the 50cc cycle and also to their delight the retailers wanting to sell their bikes were not motorcycle retailers. Therefore making quick decisions from the bad situation they were in show they used an emergent strategy without using proper planning process.

The BCG Record is different relating to Mr Pascale who stated the Honda genuine hesitated to motivate the 50cc bikes because they feared that the smaller motorcycle might damage the image of the heavily motorcycles, this shows that Hondas intention had not been to sell the smaller 50cc bikes but instead to go with the rest of the industry by selling the bigger bicycles including the 250cc and 350cc. This again demonstrates the Pascale Survey was more of an emergent strategy.

The report documented by Richard demonstrates Honda had a hard and challenging time within the market. The inventory that they had been poor and they had many hurdles to defeat, one of them was to obtain financing, at one point Honda had to even place the project on carry. Based on the Pascale Survey Honda did not even have a technique which is another indication that there is no deliberate planning done. This implies they have no research or environmental research in the US market.

The Pascale Report informs us that there was no debate on income or deadlines for breakeven this indicates that planning had not been done and they had not established any goals for themselves or for the business. Honda's focus, relating to Richard's Statement, was to contend with the Western exports and thrust the 250cc and 350cc machines. The Survey brings that Honda was at night the first year. Therefore with their hard learnt experience Honda went to the store direct which was their first rung on the ladder to a far more deliberate strategy. They do this for the reason why to save lots of more costs as money for the Honda team was small and they had a need to minimize out extra costs.

The Pascale report explained that Mr. Honda and the team adopted their instincts alternatively than doing deliberate likely to plan certain final results. The actual fact that these were so hesitant on pushing the 50cc, even although success rate in Japan is so high, shows that they didn't do proper research on the US market as they assumed that the entire US market desires the larger luxurious items. It had been through generating the 50cc themselves that they realised these were getting attention with the smaller motorcycle. Honda was even approached by Sears yet the company still hesitated. Honda eventually went ahead with pressing the 50cc as that they had no other choice kept because of the fact that the larger motorcycles were having more problems, therefore causeing this to be an emergent strategy.

Lastly the advertising based on the BCG Record was a deliberate strategy; they implemented the marketing campaign of reaching the nicest people on the Honda for the reason to break away from the stereotyped image of other motorcyclist. The Pascale Report on the other hand was more of and emergent strategy as regarding to Richard, Honda was still using the LA advertising organization, the campaign to all customers and didn't annoyed one market searching for another. It was only later that Honda experienced and emergent strategy, the director of sales chose that the theme of getting together with the nicest people on the Honda was the right strategy to implement.

What key Lessons may be learned from any contrast of the two quite different accounts of the same strategic decision?

The Lessons discovered from the two accounts will be discussed under clarity below. It involves taking a look at the opportunities they came across, costs advantages, to analyze the marketplace, to be well prepared, not to be surprised and take some risks, lastly to understand the needs of the market.

Honda experienced some really challenging happenings that put their businesses on carry at one point in time, but by learning through their flaws and taking opportunities when they found it they managed to beat some problems and be successful with something they didn't think would be and considered it risky to promote. The 50 cc was a smaller street bike and little do the company know that that street bike is the answer to finding an untapped market through having problems with their larger motorcycles.

The BCG Statement shows that Honda does some strategic planning with cost advantages and easy functions in Japan, this is observed in the statement explaining the competitive positions that Honda acquired so when they emphasized on the profits been made. By doing the necessary research and analysing the markets Honda could be successful and this lesson learned will ensure that they continue the good work of research and development to stay competitive.

Apart from Honda's success in Case A due to their environmental research and pre-thinking they can have in reality done a lttle bit more research into the market that they came into. The actual fact that they were advised never to enter the united states market due to relatively scheduled to small bargaining electricity of the new entrants, and the fact that some stores were sealed on weekends was also an indicator of obstacles that Honda could face. Another lesson that Honda was required to learn was how to break from the typical biker image. Honda at the end of the day does have a closer look at the competition n circumstance A at that is that they found a untapped market that wanted smaller motorcycles.

Surprise and learning exposing oneself to the opportunity of being surprised incremental version and learning, in the case of Richard Pascale he outlined the actual fact that in the event A not everything was entirely true. He states that Honda possessed made miscalculations when it came to which street bike they would be marketing i. e. they were putting more focus on the larger motorcycles, therefore in the event B no clear strategic planning was implemented and they did not even have a particular strategy. Within the Pascale record Honda admitted to have no strategy and they only had the idea of seeing if if their motorcycles would sell in the United States.

Pascale recognizes the 50cc success of Honda as a no other option that had to be implemented to the problems that had happened to the bigger motorcycles. The lesson learned here was that Honda account out that the larger street motorcycle demand was unsatisfactory. But with the aid of the campaign of the plan "You meet up with the nicest people over a Honda" this contributed to them to truly have a sense of path on how they wished to be identified, which made it a successful storyline. When you are smart in detecting the untapped market and reacting fast to it also helped Honda to ensure success. If Honda was not aware of the fact that the bigger motorcycles were not doing so great who knows where they might be now.


The BCG survey seemed more planned and appeared more in control of their marketing activities and calling their market. It evidently showed that there is Research and development done in order to be competitively strong. Honda Operations in the event A, regarding to BCG, looked smoother that that which was stated in Pascales Statement, as in that case it exhibited that Honda experienced faces many problems and got to come across them as they came up. Pascales Statement in fact by the end highlights and important factor which is learning and taking opportunities from the dangers. Pascales disagreement to the BCG was that the BCG article made it seem that Honda's experience was smppth. If Honda possessed done proper planning and research and used the risk on the 50cc they would have had a smoother experience.

Honda's success with the 50cc street bike was explained very in another way by the two accounts analyzed. The BCG Article demonstrated that Honda acquired done deliberate planning and possessed enough resources and enough capital to handle the study and development. In addition, it demonstrates the Honda team knew what they wished and carried out a well-planned campaign to execute their strategy. The advertising campaign, according to the BCG Statement helped enhance the success of Honda as it found the marketplace that these were targeting, and found a means on ways to get these to consider possessing a bike that is associated with more of a family theme.

The Pascale Record acquired more of an emergent strategy; not having a specific strategy set up and pushing the larger motorcycle almost got Honda to lose their delicate reputation. Through emergent strategies, Honda finished up leaving the larger motorcycles to press the 50cc as they had no other choice. Therefore doing this Honda found an untapped market in the US in support of then found the right marketing campaign that best suited the business. Honda acquired a learning experience in both conditions the similarities between the two accounts was to ensure that they both had an eye on the US Market and that the Honda required the probabilities on the 50cc street bike and achieved great results competitively together with the marketing campaign/theme created.

Harvard Referencing:

G. Johnson, K. Scholes, R. Whittington, 8th Edition Exploring Corporate Strategy, page 30, 401, 408

Paul Lester, The Entrepreneurial Process, retrieved 27th Feb 2010 http://www. anderson. ucla. edu/faculty/dick. rumelt/Docs/Papers/HONDA. pdf

Minzburg, H. & Quinn, J. B. , The strategy Process. Prentice hall ( 1991)

Clayton M. Christensen and Tara Donovan

D. J. Vitality, Alexander P. and Daniel J. , Planning Skills. COMsm, Tuesday, March 16, 2010

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