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Published by: ady_2021 on Nov 23, 2009
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Lecture Notes Vol. 1 for Management Strategy, 2006
1. What Is Management Strategy?
0. Significance of Management Strategy\u2015Why Is \u201cStrategy\u201d Necessary?
\u25c7\u201cManagement strategy\u201d is a key concept for a corporation to survive/grow by responding to
environmental changes.

\u25c7Without\u2015or with poor\u2015strategy, a corporation\u2019s profit yield does not measure up to its merits.
\u25a0Corporate performance in full: \u201cstrategic concept + operational capability\u201d
\u30fbWith a poor strategy, corporations capable of high-level operation result in a low performance.
\u30fbJapanese automobile industry and consumer electronics industry
\u25c7Historical importance of the strategy
\u30fbSignificant influence on growth and expansion of corporations
\u30fbReversal of ranks for Ford and GM
\u30fbExpansion of Epson

1. Origin of Management Strategy

\u30fbTraditionally a military term, originated in \u201cstrategos\u201d
\u30fbIn these years, the verbiage of so-and-so strategies has become popular.
\u25a0\u201cStrategy\u201d and \u201cTactics\u201d:
\u30fb\u201cTactics\u201d: the use of troops and maneuvers in an individual combat; short term
\u30fb\u201cStrategy\u201d: the broad concept referring to an overall scheme of operations; long term

\u25c7Application of \u201cstrategy\u201d to corporate management:
\u30fbDevelopment in the U.S.: Demand from managerial sites\u2192Academic pursuits (the 1960s on)
-In the1950s, there was no use of the \u201cstrategy\u201d concept.
\u30fb\u201cBusiness policy\u201d
-Used in 1960s, as many industries matured in 1950s.
\u2192Advancement in business diversification
\u30fb\u201cStrategies for Diversification\u201d, \u201cProgramming Strategic Planning\u201d (H. I. Ansoff)
-In the 1970s, the major concern was over managing diversified businesses.
-In the 1980s, faced with their deteriorating competitiveness, U.S. industries were interested in
recovering the competitive edge of their individual business.
\u30fb\u201cCompetitive Strategy\u201d (M. E. Porter)
2. What Is Management Strategy?
2.1 Definition of Management Strategy
Lecture Notes Vol. 1 for Management Strategy, 2006
\u25c7Difficulty in defining the terms
\u30fbWhat is mind? (Psychology)
\u25c7What does one think of to hear the term \u201cmanagement strategy\u201d?
\u30fb\u201dWhat is the management strategy of so-and-so company?\u201d
\u25c7Broad range of capturing (defining) \u201cstrategy\u201d
\u2192To begin by looking into the two cases

\u25a0Two Cases
\u30fbCase 1: Yamato Transport\u2019s entry into a home-delivery business
\u30fbCase 2: Honda Motor\u2019s foray into a motorcycle business for U.S. market

2.2\u3010Case 1\u3011Yamato Transport Co. To Embark on Home-Delivery Business in 1976
\u25bcOgura, Masao (1998), My Experiential Management Theory, Nikkei Business, Oct. 5,
\u25bcOgura, Masao (1999), Masao Ogura: Business Administration, Nikkei Business Publications
2.2.1 Background of the Case
\u25a0Yamato Transport C.:
\u30fb1919: Started transport business with 4 trucks in Kyobashi, Tokyo (delivery service for
department stores by contract)
\u30fbAround 1970: Carrier business for commercial freight, the core undertaking, came to a
\u2192Study on entering into door-to-door parcel delivery services
\u30fbPrevalent viewpoint regarding the home-delivery market: \u201cUnprofitable business\u201d

-Contingent, atypical\u2192Unpredictable demand projection
-All in one-piece lot\u2192Inefficient
(Versus commercial freight: Formulaic, repetitive demand)

2.2.2 Business Model/Basic Concept for Emergence (President Masao Ogura)
\u25c7Profitable scheme: Treat a home-delivery project as a \u201cnetwork business\u201d, the same as
(1) \u201cDemand creation\u201d by building the network
\u2192Revenue increase
(Telephone used on business in daytime\u2192Personal use in evenings with one in every home)
(2) \u201cHigh-density delivery\u201d by building a network\u2192 Efficiency up, cost down
\u30fbAs the network broadens, the volume of packages increases.\u2192Distribution trucks increase.
\u2192Territory per truck becomes narrower.\u2192Efficiency increases.
2.2.3 Specific Strategies
\u25c7Target on securing the \u201cforerunner predominance\u201d
(1) Specialize in the home-delivery business
Lecture Notes Vol. 1 for Management Strategy, 2006
\u30fbPullout from the commercial freight business
\u30fbBan on receiving orders of corporate packages (up until Oct. 1985)
(2) Installation of consolidating agents
\u30fbAppoint liquor stores and rice shops as consolidating stations
\u2192Efficient assembly of packages (in terms of agency fee/freight discount)
\u30fbConvenience stores as well in recent years
As of March 1999: 297,000 outlets (vs. the number of post boxes at 160,000)
(3) Building the network for collection and delivery
\u30fbBCD network
\u30fbStruggle against regulations: No business operation permitted without a license for the route
truck transport business
\u3008Service Areas\u3009
-1981: Area ratio at 31%, population ratio at 78%
-1985: Instituted an administrative litigation against Transport Minister (\u2190Unclarity in criteria

for a business license)
-1987: 98%
-1997: 100%

(4) Others: Flat fee by area, overnight delivery, \u201csales driver\u201d
2.2.4. Results
\u25c7Fiscal year 1980, 5th year since the business commencement:
- Ratio of ordinary profit to net sales at 5.6% (above break-even point)
- Home delivery is a \u201cprofitable business.\u201d
\u25c7Share of the home-delivery market in 1997:

-Yamato at 38%, Pelican 19%, Postal Mail 17%
-(2004: Yamato 35.6%, Sagawa 30.8%, Pelican 11.4%, Fukuyama 9.7%, Postal Mail 7.0%)
-New services: Golf, ski, time-designated services

<< Comment by Mr. Masao Ogura regarding \u201cTop Executive\u2019s Job\u201d>>
\u201c\u2026In the first place, everything has both merits and demerits. People look at either of them
and say that this has merits, or only demerits, and so on. But there is nothing which only
presents merits or demerits. Inevitably one has both sides. The job of a top executive is to
think how to bring demerits under control, and you could say that there are business chances
where demerits exist\u2026\u201d

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