Week 21

Week 21 (12/11/2013)

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

Emergent strategy is a set of actions, or behavior, consistent over time, "a realized pattern [that] was not expressly intended" in the original planning of strategy. When a deliberate strategy is realized, the result matches the intended course of action. An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions. "Deliberate strategies provide the organization with a sense of purposeful direction." Emergent strategy implies that an organization is learning what works in practice. Mixing the deliberate and the emergent strategies in some way will help the organization to control its course while encouraging the learning process. "Organizations ...[may] pursue ... umbrella strategies: the broad outlines are deliberate while the details are allowed to emerge within them" (Mintzberg, 1994, p. 23-25; Hax & Majluf, 1996, p. 17).

Benefits of Emergent Strategy:

Emergent strategy is comprised of innovative and creative ideas. Each individuals of the organization can give their ideas and opinions so informal communication exists so the organization have chance to access more beneficial ideas and suggestions. It helps the individuals of the organization to share their visions and values without which they will not be able to cooperate with each other.It leads the business to facilitate market by providing their wants rather than facilitating the market with what the owner thinks the market wants. It use approaches that are more practical in nature in order to solve the problems so new strategies could be formed.

Drawbacks of Emergent Strategy:

Emergent strategy cannot be planned for long term as once it fails immediately other strategy needs to be developed. The amount of risk involved is high in this strategy because business requires different strategies in different stages and no one can be sure whether the implemented strategy will be a successful one or failure. New businesses with narrow margins cannot be cannot conduct this strategy because there is a chance of failure and it will be difficult for new businesses to recover the loss. Emergent strategies are not pre planned instead it is known through mistakes and experiences which might or might not occur in future.(www. csrc.lse.ac.uk)

2. Did Honda Entry strategy demonstrate the characteristics of ‘logical incrementalism’?

Without any doubt Honda Entry strategy proves the characteristics of “Logical incrementalism”. Some points to support my answer are given below:

Ø   Only four percent of Japanese motorcycle production used to be exported in 1960. However, the small Japanese motorcycles were produced in large volumes in their domestic market and helped them in cost reduction in mass production of the motorcycles.

Ø  Honda established an American subsidiary in 1959 as “American Honda Motor Company”. This was the time when group of people like “Hell Angels”, and “Satan’s Slaves” were only to use the motorcycle and gave it a bad image. Honda’s marketing strategy targeted the general public who had never before given a second thought to a motorcycle.

Ø   With its best features like, three-speed transmission, an automatic clutch and five horsepower, Honda started its push in the American market with the smallest, lightweight motorcycle. At this time Honda was probably superior to other competitors in productivity.

Ø   Honda also developed the policy of spreading itself in American market region by region. They started on the West Coast and moved eastward over a period of four-five years. In 1961, with the support of 125 distributors and with the expense of $150,000, Honda advertised their product with a theme named “You Meet the Nicest People on a Honda”. This was an attempt to shift the rowdy motorcyclist to decent family riders.

Ø  With their experiments and exposure over a period of time, American Honda’s sales went from $500,000 in 1960 to $77 million in 1965. Starting from virtually nothing in 1960, Honda had gain a leading success in selling lightweight motorcycles by 1966.

    

Fig: Honda       

In my opinion I do not think that Honda would have been successful if they had adopted a more formalized strategic planning approach to the launch. If they had adopted formalized strategic plan then they would have to suffer a lot because if everything was supposed to happen according to the plan then while their image was hampered due to leakage and failure then they would have given up and moved out of the US market. If they had planned the strategy then they would have made plan for some certain years and would carry out that plan until the end of the period despite of all the high cost factors. Even in case of sales if they had planned to sell certain numbers of bike then they would have to suffer the loss since there were problems in their designs and functioning and people would not purchase it but they would have already manufactured their products in large amount. They would have destroyed their brand image due to their technical failures and could not even introduce other products under their brand name. They took risk and adapted according to the market situation and customer expectations which made them successful not the formalized strategic planning approach.( www.honda.com)

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References:

n.d.). Retrieved from csrc.lse.ac.uk: http://csrc.lse.ac.uk/asp/aspecis/20040158.pdf

(n.d.). Retrieved from www.honda.com: http://www.honda.com/

sbaweb.wayne.edu. (n.d.). Retrieved from http://sbaweb.wayne.edu/~absel/bkl/vol23/23ak.pdf