.. s not instantaneous. Pascale also criticizes the assumption that Honda was superior to other competitors in productivity. He says that Honda was successful in Japan with productivity but evidence suggests that the company was not superior. This was due to the lack of funding from the ministry of finance and a tight budget caused by the plowing back of profits into inventory.
The BCG report shows that Honda had a smooth policy of developing region by region, moving from the west to the east. Pascales response is that this is partly true but reminds that Hondas advertising was still in Los Angeles in 1963, four years after setting up their subsidiary. The report to the British government showed that Honda had a deliberate strategy of disassociating themselves from the “hells angels” type of people by following the “nicest people” advertisement policy. Pascale shows that this was not an intentional move. Instead, it was the result of the director of sales persuading management, against their better judgment, that this was the best course.
The BCG report found that Honda pushed into the U.S market with small lightweight motorbikes. However, Pascale says this is again not true. He argues the intended strategy was one of promoting the larger 250cc and 350cc because Honda felt that due to Americans preferring large items, they would be more likely to purchase a large bike. The bikes were unreliable which led to the promotion of the Super Cubs. These bikes salvaged the reputation of the company; therefore, the idea which brought them to pass was not one of inspiration but one of desperation.
Overall, Pascale gives the impression that it was through an incidental sequence of events that led to Honda gaining a strong hold in the U.S market. This was mainly through the unexpected discovery of a large untapped segment of the market while at the same time trying to retain the interest of the current market. The criticisms made by Pascale can be further analyzed by looking at the strengths of the Honda company. The strengths of Honda start with the roles which the founders played. Mr. Honda was an inventive genius with a large ego and a volatile temperament.
His main concerns were not about the profitability of the company or its products, but rather to show his innovative ability by producing better engines. Fujisawa, on the other hand, thought about the financial section of the company and how to market the ideas. He often challenged Honda to come up with better engines. By specializing in their own abilities, the two men were able to pool together resources and function effectively as a team. Another strength of the company was the way they utilized their market position. Strengths in design advantages and production methods meant they were able to increase sales in Japan even though there was no organization within the company.
Once there was a large enough demand for its products, mainly the Super Cub, Honda, both in Japan and in America, moved from a sale on consignment basis to one that required cash on delivery. At the time, this seemed to be a very risky decision. However, within three years they had changed the pattern within the motorcycle industry by shifting the power relationship from the dealer to the manufacturer. Mr. Honda had cultivated a success against all odds culture into the company.
This was tested when he sent two executives to the U.S with no strategy other than to see if they could sell something. The weaknesses within an organization can become irrelevant if the strategy is strong and there is good leadership. An element of luck also helped Honda follow an emerging strategy. Restrictions placed on funds by the government for the U.S venture forced Honda to take an alternate route. If they had all the funds necessary, they may well have gone through the normal distribution channels. Honda entered the U.S.
market right at the end of the motorcycle trade season. When leaking oil and clutch problems occurred on their bikes it did not affect Honda as hard as it would have had they entered in the beginning of the season. Also, people noticing the Super Cubs led the company to produce a bike which was not at first supported by senior management. The success of Honda was not the result of senior management coming up with all the answers. In fact senior executives in most Japanese manufacturing companies do not take their strategic positions too seriously.
Salesman, cleaners and those working on the manufacturing floor all contribute to how the company is run and thereby influence its strategic position. It is this ability of an organization, to move ideas from the top to the bottom and back again, that the company values the greatest. In conclusion, it is necessary to consider the theoretical side of Hondas strategy and see whether the company was in fact following a model. The first model is the Andrew’s model. Andrew came up with the idea that there were two stages to corporate strategy, formulation and implementation. Formulation involved looking at the market, competitors and resources and formulating a corporate strategy which would be implemented throughout each process of the organizational structure.
This model was also supported by Porter. This is how the BCG saw Honda, as a corporation, who had looked at the market, formulated a strategy to cope with the environment and competition pressures and implemented it. Thus making all Hondas plans and activities deliberate. The second model, known as the emergent strategy, portrays a different image than the Andrews model and shows how Pascale viewed Honda. The model shows a realized strategy made up from an intended strategy, together with an emergent strategy, which is not planned but emerges in relation to activities within the environment.
Pascale seemed to think that in Hondas case a substantial proportion or the companies corporate strategy was emergent and less was actually an intended strategy. In my opinion, Honda did not just follow one of these strategies by itself. Instead, actual strategy followed by Honda is likely to be a combination of both strategies together. Bibliography WORKS CITED Minzburg, H., and J.B. Quinn.
The Strategy Process. New York: Prentice Hall, 1991. Murphy, Patrick E. Marketing. Glenview: Scott Foreman, 1985.
Sakiya, Tetsuo. Honda Motor: The Men, The Management, The Machine. New York: Harper & Row, 1982. Internet address: www.hondamotorcycle.com/heritage/mrhonda/index.htm l.