Please answer the following questions based on illustration 13.4:

1. What different insights can the two accounts (deliberate and emergent strategy development ) provide? How can they be useful?

Do you think Honda would have been more or less successful if it had adopted a more formalised strategic planning approach to the launch?

Illustration 13.4:

A classic case: Honda entering the US motorcycle market

There are different explanations of successful strategy development.

In 1984, Richard Pascale published a paper that described the success Honda had experienced with the launch of its motorcycles in the US market in the 1960s. it is a paper that has generated discussions about strategy development processes ever since. First he gave explanations provided by the Boston Consulting Group (BCG):

'The success of the Japanese manufacturers originated with the growth of their domestic market during the 1950s. This resulted in a highly competitive cost position, which the Japanese used as a springboard for the penetration of world markets with small motorcycles in the early 1960s......The basic philosophy of the Japanese manufacturers is that high volumes per model provide the potential for high productivity as a result of using capital intensive and highly automated techniques. Their market strategies are therefore directed towards developing these high model volumes, hence the careful attention that we have observed them given to growth and market share.'

Thus the BCG's account is a rational one based upon the deliberate intention of building up a cost advantage based on volume.

Pascale's second version of events was based on interviews with the Japanese executives who launched the motorcycles in the USA and demonstrates how the serendipitous nature of Honda's strategy shows the importance of learning and culture:

'In truth we had no strategy other than the idea of seeing if we could sell something in the United States. It was a new frontier, a new challenge, and it fitted the "success against all odds" culture that Mr Honda had cultivated. We did not discuss profits or deadlines for breakeven....... We knew our products.... were good but not far superior. Mr Honda was especially confident of the 250cc and 305cc machines. The shape of the handlebar on these larger machines look like the eyebrow of Buddha, which he felt was a strong selling point...... We configured our start-up inventory with 25 per cent of each of our four products - the 50cc Supercub and the 125cc, 250cc and 305cc machines. In dollar value terms, of course, the inventory was heavily weighted towards the larger bikes.... We were entirely in the dark the first year. Following Mr Honda's and our own instincts, we had not attempted to move the 50cc Supercubs... They seemed wholly unsuitable for the US market where everything was bigger and more luxurious.... We used the Honda 50s ourselves to ride around Los Angeles on errands. They attracted a lot of attention. But we still hesitated to push the 50cc bikes out of fear that they might harm our image in a heavily macho market. But when the larger bikes started breaking, we had no choice. And surprisingly, the retailers who wanted to sell them weren't motorcycle dealers, they were sporting goods stores.'