Besides, Honda set their price for his market share target. They may lower the price to achieve the target if they need to do so. Secondly, Honda has a comprehensive sales plan.
Honda chooses the middle-class as his target customers, and chooses to sell beginning from the West Coast and moving eastward. Different from American and European companies in the US, Honda provides a kind Of lightweight motorcycles with three-speed transmission, an automatic clutch, five horsepower, an electric starter, and a step-through frame.Compare with other motorcycles, his del is lighter, faster, easier to drive, especially for women. Besides, it is less than $250 in retail, which is much cheaper than others (Christiansen & Upscale, 201 1). Some people don’t believe the lightweight market has a big potential of profit, but Honda believes that motorcycles could be sports vehicles rather than transportation vehicles.
It grabs the special needs of customers, and provides the products they want. Thirdly, Honda improves products quickly. At the beginning, Honda focuses on technology. The Honda Technical Research Institute was established in 1946.In order to compete tit 4-stroke engine, which introduced by competitors, Honda promotes a superior 4-stroke design that doubled horsepower without additional weight. It has a strategy that takes leadership in product innovation.
Fourthly, a good selling and distribution system is another reason for Hand’s success. Honda consistently spent more than its competitors in advertising, and established the largest dealership network in the US. In order to build up an adequate selling and distribution network, Honda even could accept short-term loss. It also claims, “You meet the nicest people on a Honda.This strategy was successful, because its American sales rose from $500,000 to $77 million in five years (Christiansen & Upscale, 201 1). The comprehensiveness, features, price, and the selling and distribution system of the company will attract more good dealers, which will improve retail sales. Fifthly, Honda has high productivity and low cost.
After having the superior 4-stroke design, Honda acquired a plant. It became a comprehensive producer of engines, frames, chains, sprockets, and other ancillary parts crucial to motorcycle performance in two years.Some people have argued that Honda saves a lot of money due because the lower labor cost in Japan; however, the labor costs are higher than western companies.
The relative high growth and scale make the total costs lower than its competitors. Besides, the price in the US is much higher than in Japan, because of the duty, freight, and packing in shipping from Japan to the US. That means Honda could set a lower price in the future by reducing this kind of cost. In conclusion, this case explains Hand’s success for its clear long-term strategies.
Honda emphasis on market share, and this remarry objective brings high production volume, improved productivity, Ion costs, and also the higher profitability than competitors in the future. Case E analyzes Hand’s success from the perspective of the company history. The development of Honda at the beginning was not good, because competitors had the more powerful 4-stroke engines than Honda, and the lack of finance management and technical basis. After the participation of Fuchsias, who brought financial expertise and marketing strengths, Fuchsias forced Honda to innovate engine, and build a full-scale manufacturer.Although Honda dated at the second line due to the late entrance, they became successful IR Japan because they find the special needs of small motorcycles. Therefore, they provide the motorcycle has doubled horsepower and halved weight, which was not expensive and easier to control, especially for women. This makes Honda success in the Japanese motorcycle industry.
The success in the US seems unexpected with luck. It has no Strategy when it entered the IS market, and became successful by solving a lot of problems including Firstly Honda has no strategy for entering the US market.The idea of leadership is o see what they could do in America. The corporate culture that “success against all odds” encourages Honda to challenge itself (Christiansen & Upscale, 201 1). They do not discuss the profit or deadlines for breakable. They are brave and just try to do something in America.
Secondly, although the market is vast, untapped, and affluent, there are many problems in the American market, which are distribution, service quality and the potential of motorcycles. There are only 3,000 motorcycle dealers in the US, and two thirds of them are open on nights and weekends (Christiansen & Upscale, 01 1).Besides, the inventory and the service are poor. Moreover, it is hard estimate the motorcycles sales in the US because everyone drives an automobile. Honda chooses to sell four models of motorcycles at the beginning, although they know the products are not superior enough. They choose to start from Los Angels, because it has a large Japanese communion a suitable climate, and a growing population.
Thirdly, they face the engine problems, which are leaking oil and encountering clutch failure. They solve the problem by redesigning the head gasket and clutch spring within one onto.Fourthly, there are some things beyond their plan.
Depends on experience, Honda runs advertisement for dealer, but gets a few responded. They think American customer would prefer bigger and more luxurious product; but actually, some people are interested in ICC, which is the small model. Although they still hesitate to push them into the market, they have to do so at that time. Instead of motorcycle dealers they want, some sporting goods stores want to sell them. Besides, the customers are different from their plan, which are normal everyday Americans, but not traditional customers.Finally, Honda almost lost the advertisement “you meet the nicest people on a Honda”, because some executives are interested in another advertisement. In conclusion, Honda is lucky to be successful in this case. It does not have a clear step-by-step strategy, but change its plan when face different problems.
Fortunately, it works and brings a lot of profit for Honda. 2. Was Hand’s strategy deliberate or emergent or both? In Case A, Honda has a deliberate strategy, which is involves the management team specifying the actions that the company should be taking to achieve pacific goals (Vicki, 2014).Honda set market share as its primary goal. To achieve that, Honda focuses on high production volume by developing a full- scale manufacturing process. It also improved product whether there is a threat from competitors by innovation. Besides, Honda has low costs, which makes it save more money than competitors.
It also establishes a good selling and distribution system due to advertising and dealership network. Those make the higher profitability of Honda than competitors in the future. However, the strategy in Case B is emergent.Emergent strategy is the view hat strategy emerges over time as intentions collide with and accommodate a changing reality (Moore, 201 1). Honda has no strategy, even no clear profit goal at the beginning they just want to try and see what will happen, and gradually develop by solving problems. They set every strategy aimed to solve different problems, such as the engine quality problem.
Some of actions are forced to do, for example, they have to push the small motorcycles to market when they still in hesitation. Fortunately, it saves Honda. Some successful experience in Japan doesn’t work in America.
For example, the advertisement cannot attract motorcycle dealers, so they have to change this strategy. 3. Based on the key lessons you learned, what advise can you give organizations with regard to organizing for successful strategy formation and management Compare with the two cases of Honda, I have four advices for organizations. Firstly, deliberate strategy is very important for a company. A long-term goal is a direction for the development of a company. For example, in the Honda B, Honda has his central ambitions in his life, which is to build and to race a gig-performance special-purpose motorcycle and win.It is better for a company to do research first and have a deliberate strategy, because it will help company to achieve the ultimate goal step-by-step. Strategy is also a position, which means of locating an organization between the internal and the external context (Integers, 1987).
This will help company to find the position of the product, the target customers, the direction of innovation and the direction of product design. Secondly, the leadership should be brave to act the strategy, although it seems very difficult.For example, it is doubtful hat motorcycles could make a profit in the US, Honda still want to challenge and try. Thirdly, the emergent strategy is also important, because there will be a lot of changes and the deliberate strategy may be failure due to some accident or unexpected element. For instance, Honda is failing to attract motorcycles by advertising, but they decide to accept sports goods stores quickly, which brings success to Honda in the US.
The effective communication between top leadership and employees will help company to combine deliberate strategy and emergent strategy.Lastly, the basic knowledge and skill in this industry is very important. For example, in this case, manufacture and selling system is the competence of motorcycle industry, which Include the product innovation, the low-cost productivity, the advertisement, and selling and distribution system.
These methods help Honda to be successful in the US. In conclusion, both deliberate and emergent strategy is important for a company. The effective communication could help to combine these two strategies together.
Besides, the leadership should be brave enough to act a strategy and have the ability to solve the emergent problem.