Strategic Management (Case Study Sample)

Strategy: The Case of Honda
Student’s Name
Institutional Affiliation
Table of Contents TOC \o "1-3" \h \z \u Introduction PAGEREF _Toc416248258 \h 3Strategic Management PAGEREF _Toc416248259 \h 3Strategically Planned and Emergent Strategy PAGEREF _Toc416248260 \h 4Honda’s Background PAGEREF _Toc416248261 \h 5Japanese Executives Talk about Honda’s Success PAGEREF _Toc416248262 \h 6Honda’s Success According to the BCG Report PAGEREF _Toc416248263 \h 9Advantages and Disadvantages of Approach Described by Honda Executives PAGEREF _Toc416248264 \h 11Advantages PAGEREF _Toc416248265 \h 11Disadvantages PAGEREF _Toc416248266 \h 13Conclusion PAGEREF _Toc416248267 \h 13Bibliography PAGEREF _Toc416248268 \h 15
Introduction
A strategy was not an important factor in the business world up to around 1940s. In fact, it was mainly used in military planning, especially during war. Henderson, Cheney, & Weaver, (2015) explain that the history of the military is dominated by several cases of how a strategy was used to achieve goals and objectives. Jeffs (2008) shows how old it is by explaining that it was adopted in the English dictionary back in the year 1688. Some of the most common strategies that were known in the military field were offensive and non-offensive war strategies. The military defined strategy as anything done out of the imagination of the enemy. As the corporate world developed, and as competitiveness increased, the need for utilizing "strategy" in business was appreciated. Apple is one of the companies that adopted "strategy" as soon as they started operation. Although many other enterprises took a long time to take up this idea, it has now become an integral part of today’s businesses. This paper seeks to interpret and put a mark between two forms of strategy, "planned strategy" and "emergent strategy." It will consider giving a comprehensive definition, of the term "strategy" as used today, before going forward to analyse both emergent and planned approaches. Honda being one of the companies that have shown tremendous success in the years of operation will be studied. In this case, the paper will analyse two accounts of how the company entered the US market, the Boston Consulting Groups (BCG) report, and the Pascale’s report.
Strategic Management
Strategic management is simply an administrative method for effectively controlling all factors that affect the internal and external environment of a business. The primary aim of strategic management is to achieve organisational goals and objectives of the business. Siegel (2009) describes it as the process of meeting the obligations of a firm through effective planning and utilization of organizational resources. This means that activities like setting objectives, planning, strategy formulation and evaluation and control are at the core of strategic planning. Henderson, Cheney, & Weaver (2015) expose that it as the blueprint for the business’ path to success. While defining strategic management, it is important to remember that good resource utilization and achievement of sustainability also form the core of it. In this case, strategic management does not focus too much on the short-term goals but on the future state of the firm.
Strategically Planned and Emergent Strategy
Theorists have divided "strategy" into "strategically planned corporate strategy" and "emergent strategy." A strategically planned approach can also be referred to as deliberate strategy. According to Chia (2013) a deliberate policy is that which occurs in line with the goals and objectives of a firm. In most cases, it follows short term plans, but it ultimately seeks to accomplish the long-term goals of a firm. According to Aoki & Lennerfors (2013) both strategically planned and emergent strategies can both be used to identify the direction that a company is taking, by merely observing its actions. While many businesses try to plan for their future, it has been proved in the past that any business can easily fall in any of these two categories depending on the circumstances that surround it. While setting up deliberate strategies, stakeholders try to outline explicit directions of the path that the business will follow. As Jeffs (2008) explains, this type of plan attempts to eliminate entirely or reduce the influence of any external factors that could affect the operations of the business. Siegel (2009) reveals that companies that use deliberate strategies are likely to push their employees to think and behave in a particular way. Employees are all taken through the vision of the organization and are expected to work towards it. This approach is also dependent on long bureaucratic decisions making processes.
Emergent strategy, on the other hand, is directly created out of unintended patterns that a business follows in an attempt to align itself with the prevailing market situation. Aoki & Lennerfors (2013) say that this pattern develops randomly, without focusing on the set goals and objectives of the firm. Brian (1989) calls it realized strategy because it is after a company has achieved certain results that it discovers the force that was propelling its operations. In this case, although a business may have its set goals, the environment usually offers many challenging realities that force the managers to revise their policies continually. As the company keeps reviewing its objectives, a regular pattern slowly emerges and provides a clear sense of direction to a business. In this phase, the firm can pick a particular path that it will use to reach its goals, according to a pattern that it has been following in the past. This is a realized or an emergent strategy.
Honda’s Background
Honda is a Japanese multinational that was established in the year 1948. Soichiro Honda was supported by his business partner, Takeo Fujisawa in setting up the company and running it. They started their business by producing low-performance, small motorcycles in Japan. They later ventured into the production of marine engines, small family generators and garden equipment like lawn mowers. Mintzberg, Pascale, Gool, & Rumett (1996) say that the company’s initial stages were faced with very little resistance. This is attributed to the fact that Honda had very few competitors and that the motorcycle market was still developing. As demand for motorbikes increased in Japan, Honda was able to gain control of a huge market, which enabled it to become one of the leading companies in the Japan. The company decided to move to the US ten years later. This new market was very different from the one in Japan. It took them time to learn the behaviour of the American consumer and keep refining their strategy until they found a way to succeed. Later the company expanded to various parts of the world and has recently ventured into the production of low cost, but high-performance vehicles. It is currently on record with leading automotive manufacturing companies in the world, with an average stock price of about $33 in the New York Stock Exchange (Eliza, 2014).
Japanese Executives Talk about Honda’s Success
According to the Japanese officials, the success of Honda was not based on any strategy, but on the techniques that the company used to handle their daily challenges. Greimel (2015) explains that the Japanese do not believe in policy like the Westerners. Japanese executives confirmed this by saying that relying on a single strategy can be misleading since one can easily misapply it. Champniss, Wilson, & Macdonald (2015), who are in support of the Japanese executives, say that many American firms have performed poorly in business, despite having come up with very clear and sharp strategies. Pascale’s report shows that Japanese believe that the market will not always respond to your approach. While a business manager may have predicted that consumer demand will be drawn towards a particular product, it may not happen at all. A manager who is deeply embedded in such a way of thinking may end up underperforming due to reduced sensitivity to the market. Instead, administrators should focus on setting short-term goals and responding to events fast and appropriately (HBR, 1996).
While many business analysts believed that this company had good strategies in place, Japanese executives disagree. Honda, the founder of the Honda Company, said that their approach was purely on trial and error. He explained that when they entered the US market, they were not sure of what to expect, and how to react to new customer behaviours. As Eliza (2014) explains, Honda was very flexible as they entered the US market; they kept changing their business model within the first years of operation. Japanese executives say that Honda’s main idea was to try out this new market and see if it could respond well to their products (Aoki & Lennerfors, 2013).
Pascale’s report revealed that Honda experienced very few sales during his first year in the American market. As much as they tried to pull new consumers with low prices, it was still difficult to meet the target sales. On analysing the reasons for failure, it was established that the company’s timing and business structure affected their marketability. Americans were fond of very fast and luxurious motorcycles, unlike Japanese consumers who were comfortable with smaller bikes. They liked to ride bikes over long distances. Harley-Davidson was already a market leader, and had won trust from the major customers, who included government bodies. Honda had to consider producing motorcycles for regular citizens who had never used them before. This was a new move considering that motorbikes were for the military and government bodies. Though their sales, increased, there was still a major prob...