The success of Japanese manufacturers originated

with the growth of their domestic market during the

1950s. 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 1960s.
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
companys 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 Hondas big success

16 November 2004, Financial Times

Hondas 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 companys 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 Hondas 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 Hondas 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 Hondas 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 Mairs 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 Hondas core competence in engine
manufacture. Henry Mintzberg seized on Mr Pascales 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 Hondas achievement was the result of
careful planning or serendipity.

Emergentstrategy:
Anemergentstrategyisakindofpatternthatisunintendedandcomesacrossasaseriesof
decisionsinanorganisationandiswasnotincludedintheplanningphaseorforthelongterm
purpose.Thiskindofstrategyhappensintheorganisationbychanceorwithoutanyplanning
madeandisasetofcertainactionsthatareunintended.Weneverknowitmaybeasuccessor
afailure.

Emergentstrategiesarecharacterizedbypatternsofactionswithinabusinessthat
occur without a clear relationship to, or even in spite of, the stated goals or
missionofthebusiness.(Dontigney.E,2013)

1.What are the benefits and drawbacks of taking an "emergent" approach to strategy
making?
>Thebenefitsoftakinganemergentapproachtostrategymakingare:

Itcanbeusedtocapitalizeunexpectedmarketingbenefits.Theemergentstrategyleadsa
businesstoprovidewhatthemarketactuallywants,ratherthanwhattheownerorexecutive
thinksorbelievesthemarketwants.(Dontigney.E,2013)

Thiskindofstrategyhelpsrecognizingcreativeness,initiationandinnovationwithinan
organisation.

One of the advantages of latching on to an emergent strategy is that it could be

somethingthatyourcompanyhasdiscoveredbeforethecompetitiondoes.(Anderson.A,2013)

Itencouragesinformalcommunicationnetworksinanorganisationandhelpsintheflow
ofcreativethinkingandideaswithinanorganisation.

Itactsasanexperimentationandapragmaticproblemsolvingsoastodevelopanew
strategy.
>Thedrawbacksofemergentstrategyapproachare:
Itcanalwaysberiskybecausethiskindofstrategyisnotaplannedoneandcomes
acrossasasetofactionsanddecisionsforaproblemsolving.Thestrategyappliedcarriesan
equalchanceofbeingsuccessorafailure.

Emergentstrategydoesnotofferagenuinealternativetomoretraditionaldeliberate
strategy,especiallyforanewbusinessesoperatingonnarrowmargins.(Dontigney.E,2013)
Itcanbetoocostly.
It only happens by chance and is kind of an evolutionary approach leading to
uncertainty.

HONDACASESTUDY:
2.DidHondasentrystrategydemonstratethecharacteristicsof"logicalincrementalism"?
(slide12willbehelpful)
>Logicalincrementalismisamanagementphilosophywhichstatesthatstrategiesdonotcome
intoexcistencebasedonaonetimedecisionbutrather,itexiststhroughmakingsmalldecisions
thatisevaluatedperiodically.(businessdictionary.com,2013).Logicalincrementalismallows
strategytobesynthesisedandcoordinatedintoasinglecoherentdirectionbyusingasmany
known multidimensional inputs as possible in the conceptualization process to shape the
overarchinggoals(Kippenberger,1998).
Yes,IbelieveHonda'sentrystrategydemonstratethecharacteristicsoflogicalincrementalism
becausetheycertainlyanalysedtheUSenvironment,madeupthemarketingstrategies and
followedapolicyofdevelopingtheUSmarketregionbyregion.Hondaexperimentedwiththe
USmarketandbasicallydidnotworkoutforacertainspecificgoal,ratheritmadegeneral
goalsstepbystepandtriedtoachieveitslowly.USalreadyhadabunchofgoodmotorcycle
brandsservinginthemarket,howeverHondabeingafirsttimerintheinternationalmarket
workedwithcertainstrategiesandwereabletobeatother'smarketshareinashortspanoftime
byprovidinglowcostandlightweightbikestothecustomers.Theytookriskandfacedthe
challengesinagoodwayandwereabletoinfluencethepeoplewhooncealreadyhadbad
imageaboutmotorcycles.Their marketingskills workedsuperblyinattractingthousands of
people.Theyevenfacedseveralfailuressuchasoilleakages,clutchfailurebuttheytestedthe
bikesandredesigneditinJapanandwereabletosatisfythecustomers.Addingup,theycame
upwith50ccSupercubswhichIwouldconsideraemergentstrategybecauseHondabythen
knewtheAmericanenvironmentandexperimented.
Questions
1.WasHonda'sentrystrategyintheUSmoredeliberateoremergent?
> I think Honda's entry strategy in the US was more of a deliberate one because as per
perspectiveone,becausetheyanalysedthemarketshareofit'scompetitorsbeforehandand
basically differentiated themselves from the others. Japanese manufacturer had a basic
philosophythathighvolumespermodelprovidethepotentialforhighproductivityasaresultof
usingcapitalintensiveandhighlyautomatedtechniqueswhichmakesitadeliberatestrategy
practicer.Aftertheworldwartwo,motorbikesattractedverylimitedgroupotherthanpolice
andarmypersonnelwhousedmotorcycleonthejob.MotorcyclewascalledasHell'sangels,
Satan's slaves and eventually had a bad image. Honda however, expanded the market by
redefiningaleisureclass('Nicestpeople')segmentandexploitingitscomparativeadvantagevia
aggressivepricingandadvertisingandwereabletoattractmanylocalpeopleaswell.Hondais
dedicatedtobeingthelowpriceproducer,utilizingitsdominantmarketpositioninJapanto
entryintotheUSmarket.Likely,Honda'smarketingstrategyasdescribedinthe1963annual

reportstarteditspushintheUSmarketwiththesmallest,lightweightmotorcycleswithmany
functions.
Asperthesecondperspective,weseethecompanyfacedseveralproblemssuchasoilleakages
andclutchfailureintheirbikeseventuallydamagingHonda'simagebuttheywentupwith
severalstrategiesrightawayandwereabletoovercome.Honda'smainentryintheUSmarket
waswhentheysawamarketwhilevisitingUSandwantedtotestifHondamotorbikeswillbe
accepted there. They did certain experiments with strategies i.e. they practiced emergent
strategy.Theydidnothadanyfuturevisionorgoaltheyjustmovedalongandadaptedwiththe
environmentEventually,in1963,astudentdidaHondaadvertisementassignmentandfrom
thenthebrandhasbeeninseparable.
2.Whichoftheaccountsseemmoreaccurateandwhy?Whydoyouthinkthetwoaccounts
differsomuch?
>Accordingtome,Thesecondaccountseemsmoreaccuratebecauseitisbasedoninterviews
byPascalewithHondaExecutives.Inthesecondaccount,theyhaveclearlymentionedallthe
thingsfromtherootsoftheirestablishmentinUS.Theyexplainsstartingfromtheirvisitto
America and then ending up opening a market there. They expresses their experiences
emotionallyandinadetailedwaywhichseemsconvincing.Theyclearlyexplainedthelanguage
problem they had at that time, the hurdle to obtain a currency allocation from ministry of
Finance,theirdaysofsleepingonthefloore.t.c.whichmakesitprettyrealistic.Enteringinto
Us market was a challenging task full of risk with a new frontier for Honda. The second
perspectiveclearlyshowsHonda'sentryintheUSasanemergentstrategybecausetheydidnot
haveanyspecificplannedoutgoalhoweverworkedstepbystepadaptingtotheenvironment
andmakingsuitablechanges.
Thetwoaccountsdiffersomuchbecausethewayofexplanationdiffersdrastically.Thefirst
perspectivemakesHondaseemslikehadaplannedvisionofenteringtheUSmarketwithcertain
philosophiesimplemented.Whereas,thesecondperspectiveisfarmoredifferentandexplains
thatHondahappenedtohaveenteredtheUSmarketcoincidentally.
4.DoyouthinkHondawouldhavebeenmoreorlesssuccessfuliftheyhadadoptedamore
formalizedstrategicplanningapproachtothelaunch?
>IdonotthinkHondawouldhavebeensuccessfulifithadadoptedamoreformalizedstrategic
planningapproach.Wheneverythingisplannedout,ithappensthatwhencertainfailurearises
thereisahighchanceoffallingdowndrasticallyandHondawouldpossiblybeoutofthemarket
whentheyhadtheleakageandclutchfailureproblem.Aformalizedplaningstrategywouldn't
helpHondatocopeupandworkaccordinglywiththecircumstancesandtheenvironment.