International motorcycle market in the 1960’s, studied by
International Strategic Management
Case Study Assignment No. 1
Strategy is usually related and sometimes confused by people with planning. But as time course shows in the study of companies, there are different approaches of how a company can develop its strategy. Johnson, and Shcoles, in their book “Exploring Corporate Strategy” had studied the different ways that companies develop their strategy. The authors had formulated and structured three general ways how companies build it, there are: the design, experience and ideas lenses. “Exploring Corporate Strategy” literature explains that these are the main streams how people perceive that strategies are developed, but these streams are not exclusive but inclusive and can be combined to develop each company’s unique strategy.
A good example of the former it’s the incursion of Honda to the US motorcycle market in the 1960’s, studied by different approaches as so as external and internal point of view. For Boston Consulting Group and Harvard Business School, it was a more design lens approach of how Honda incursion in the US market. They state that Honda’s strategy was directed towards high volumes per model, providing high productivity, and low costs. Their main overview highlights that Honda succeeded in US by introducing a new product (small motorcycles) that expanded the motorcycle market in the US through price generic competitive strategy. They underline that in 1959, Honda was already the largest motorcycle producer in the world. That suggests that Honda was prepared with capacity, capital and technical capability to enter the US market.
However through the US Honda launchers point of view their incursion was not a matter of those issues, neither a designer strategy approach. They stated “In truth, we had no strategy other than the idea of seeing if we could sell anything in the US”, so from their lens, the strategy was to explore a different environment and find a niche to position the company. By the other hand at the beginning they appoint that they try to adopt an experienced strategy, by going directly to the retailers, but the situations with the large machines lead to a changing environment that pushed them to an emergent strategy.
Mr. Honda was more an ideas lens strategy leader; by encouraging he’s executives to generate ideas to “success against all odds”. He didn’t established a rigid strategy by ordering to focus in certain product, he foster the emergent patterns, and acted as a coach.
Every company uses or finds different ways to develop their corporate strategy. While Honda preferred to manage with the emergent opportunities in order to construct their expansion strategy, Ericsson in the counterpart designed their corporate strategy based in analysis and planning, “The Company made a bold strategic change, forming an entirely new business area, Ericsson Information Systems”. Their strategy included the acquisition of new technologies, resources, etc. Ericsson’s designed strategy failed, “but the market growth predictions faltered immensely and so did profit expectations”. As result of the segregation of ERA, their strategy was different; it was continuously built by the emerging opportunities, and generating new ideas.
For these companies strategic leadership was always there, Mr. Honda acting as a coach, and Ericsson’s CEO as a tight planning controller, and Lundqvist as an entrepreneur. All these reflected in the success of the outcomes. Politics were highly used in the development of the new Ericsson’s business. Since the beginning the internal politicking was presented in the different areas of Ericsson, mainly between the SRA CEO and bureaucrats of the corporation. Politicking was also involved with the outside negotiations to gain a concentrated business sector, “after much pressure and debate corporate management finally gave SRA the business and responsibility for the system as a whole”. Hondas case was different because there was not conflict or struggle between the CEO and the executive’s vision, so not much politicking was involved.
Logical incrementalism, was presented in different ways for them. For Honda’s external point of view it was built up on experienced success, while for the insiders it was a search for opportunities and taking advantage of them in order to exploit the niche. Ericsson, is a complete different story, while the corporate tried to drive the company to certain vision (Information Systems), and failed at the same time that the smallest branch struggle to achieve its own vision. Suddenly the whole business transformed towards the successful vision, “By the turn of the century Eriksson was completely dominated by the mobile telephony business”.
Thought the change in the markets and the development of new technologies, as result of natural evolution as Darwin appointed, every organism has to evolve as the same pace as the environment in order to survive. Companies have to change from time to time, because, what was a need yesterday, it might not be today. So companies had to seek new horizons and search more opportunities, change their strategies as new ideas emerge, in a structured and operational planned change, helped by experience and an entrepreneurial attitude towards to the unknown future to redesign their selves.
Johnson, G. and Scholes, K. (2002) Exploring Corporate Strategy. 6th ed. Essex: Prentice Hall.