1. What are the benefits and drawbacks of taking an “emergent” approach to strategy making?
Emergent
approach/strategies are majorly results from some cases whereby discrete
decisions made by various mid-level employees un-intentionally move the whole
organization in a new direction. This approach occurs inside an organization that
are described by pattern of actions without any clear relation with the mission
or stated goals of the business.
Source: Mintzberg, Quinn & Goshal, 1998
Benefits:
In an organization, emergent approaches/strategies
arises mostly from persons in organization reacting directly to market forces.
The shifts in practices of consumer businesses, order sizes and consumer tastes
are reflected by their decisions. Effective emergent
strategy does require that the organization maintain the flexibility,
particularly at the executive or owner level, to embrace the new strategy. The
main advantage of emergent approach in strategy making is that, rather than
focusing on what the executives or the owner believes or thinks the market
wants, it leads a business to provide what the market actually wants.
Drawbacks:
Emergent
approach in strategy making arises as a part of ongoing organizational
activities by nature. Although a business could sacrifice
a deliberate strategy and depend on an emergent strategy to develop, the chances
of such order establishing from unstructured, and pure business activities
remains lean. Therefore, emergent strategy does not offer an honest substitute
to more traditional deliberate strategy, specifically for new businesses
operating on slim margins. At best, it assists/aids to serve and complement as
a curative/remedial measure for deliberative strategy
Considerations:
The
driving forces like rapid cycling of technical innovation and consumer interests
which results in increasing change in the business landscape, tells us that the
businesses should or may have to inherent the tolerance for emergent approach
for strategy making. About reading emergent strategy into the patterns of behavior,
the business executives and owners do need to remain cautious. The uninformed
and poor decision-making at that level (executive and owner level) could result
in shifts in the strategic positions of the business due to middle-level
decisions.
2. Did Honda’s entry strategy demonstrate the characteristics of “logical incrementalism”?
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Yes,
I think that Honda has demonstrated all the characteristics of logical
incrementalism in its entry strategy in US two-wheeler market. Here are the
reasons to justify it:-
Ü As
of 1960, Export of Honda Motorcycles was only four percent.
Ü After
the Second World War, Motorcycles were used by very few people in the US other
than Army personnel and Police. The attraction for motorcycles was diminishing.
Most of the riders were decent people but the image of motorcycling was damaged
by some group of rowdies who went around on motorcycles calling themselves by
such names as “Satan’s Slaves” and “Hell’s Angels”. During this phase too,
Honda established an American subsidiary – American Honda Motor Company in 1959
(also stated in their annual report 0f 1963).
Ü It
was in 196, with a regional advertising budget of $1, 50,000 and help of 125
distributors, Honda tried to promote their machines and also correct the bad
image of motorcycling in US and focused on the young families in their
advertising theme as “You meet the nicest people on a Honda”. It was a very
good attempt made by Honda to promote their machines and create a good vibe for
motorcycling.
Ü Emergent
strategy was followed by Honda in a case where it responded to the demand of
its customers for light-weight motorcycles and supplied accordingly. Honda was
able to create a phenomenal demand for lightweight motorcycles. This helped American
Honda’s sales to rise from $500,000 in 1960 to $77 Million in 1965.
Ü Market
Share of Motorcycles in US (1966):-
Motorbike (Brand)
|
% Shares
|
1.
Honda
|
63%
|
2.
Suzuki
|
11%
|
3.
Yamaha
|
11%
|
4.
Harley Davidson
|
4%
|
5.
BSA/ Triumph and others
|
11%
|
Ü Constant
scanning of the US motorcycle market was done by the representatives of Honda
from Japan. However during their research, Honda came to find that the US
motorcycle risers were attracted towards more bigger and luxurious machines, that’s
why they were very confident with their 250cc and 305cc machines. But, they did
a side-bet of using the light-weight motorcycles for themselves to travel
around the errands of Los Angeles. This helped it to garner a lot of attention
and which resulted in a phenomenal demand for its lightweight motorcycles in
the US market, this helped American Honda’s sales to rise from $500,000 in 1960
to $77 Million in 1965.
Ü The
first year was very poor for Honda motorbike in US. The US motorcycle business
occurs during April-to-August season and they were there during the closing of
1959 season. They hard-learned the practices and techniques of business in
United States and started to directly approach the retailers which helped them
improve their sales. They also started giving advertisements for the wholesalers
in different motorcycle magazines. The 305cc and 250cc motorcycles were selling
steadily but a disaster occurred when reports of encountering clutch failure
and oil leaks came in the first week of April 1960. This was because the
motorcycles were driven much faster and farther in US than in Japan. Honda air
freighted the motorcycles to Japan and started doing tests and research in
their testing lab. Within a month and working for 24/7 a redesigned clutch
spring and head gasket solved the problem.
This showed how Honda was able to
adapt to rise above environmental uncertainties and coordinating emergent
strategies.
In
my opinion, they followed strategies for each and every elements of “Logical Incrementalism”
from experimentation, environmental uncertainty, coordinating emergent
strategies to general goals.
Reference:
About Emergent Strategy, Advantages
and Disadvantages of Emergent Strategy, [Online] Accessed from http://yourbusiness.azcentral.com/advantage-disadvantage-emergent-strategy-15781.html accessed on 20th April, 2013
About Emergent Strategy, [Online] accessed from http://www.rapid-business-intelligence-success.com/emergent-strategy.html accessed on 20th April, 2013
About Emergent Strategy, Advantages and Disadvantages of Emergent
Strategy, accessed from http://smallbusiness.chron.com/advantage-disadvantage-emergent-strategy-10070.html accessed on 21th April, 2013
Mintzberg, Ahlstrand and Lampel (2009) „Strategy Safari‟
Edition 2, FT Prentice Hall, Chapter 8
Lynch, R (2011) Strategic Management, 6th Edition, Pearson
Education, Chapter 1
Johnson, Whittington and Scholes (2011) Exploring Strategy,
9th Edition, Pearson Education, Chapter 12
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