MGT 470- STRATEGIC MANAGEMENT

Perspectives on Strategy: The Real Story Behind Honda's Success

Summary

By: Maha Rehman

BBA 2k16 B

2/17/20
 Overview

The article starts off with different definitions of the word “Strategy” by different authors. But on

a vast term this word merely means giving a direction to the managers and helping their thought

process. In theory, strategy formulation is:

1. Driven by the top tier management

2. Has been extensively driven by empirical models and;

3. Often produces more paperwork than actual insight.

American vs. Japanese

The article then articulates the difference between the Japanese and American meaning of the

word strategy.

The Japanese believe the word strategy to be a multi-dimensional word and believe that it

shouldn’t be susceptible to change, rather should be able to cope with any changes in the

technology, environment, customer base etc. They believe that having one view of this word is

the biggest weakness. They derive this word from Sumo Wrestling or Kabuki where having a

“Peripheral Vision” is very important to defeat the opponent. Whereas, Americans tend to be

inflexible and “Formula Driven” when it comes to strategy.

The article then compares different USA and Japanese based products such as YKK v. Talon,

Yamaha v. Baldwin and Honda v. Harley-Davidson.

Honda: Strategy Model

The article then explains Honda’s reason behind success in the motor industry and why the

British failed to fully exploit the merits of this industry. It used studies from Harvard and the
BCG model to show that Honda’s market share kept increasing. The main advantage Honda had

was that it was a low-cost producer and exploited the benefits of economies of scale. And using

its low-cost strategy it then wanted to expand into a new niche i.e. the leisure class.

Organizational Process Perspective

This article then tells how Honda gained success during the war and post war period where Japan

was in dire need of transport, Honda teamed up with Fujisawa to give Honda a new brand

strategy. Hondas main weapon were his inventive abilities and his self-confidence, and using

these he came up with a breakthrough model which was innovative in design and was demanded

highly causing Honda’s market share to beam up to 15%. With increased innovation, Honda

expanded to the racing industry and now was ready to the untapped US market. Upon entering

this market, they completely refined it and started their Nicest People Campaign which boosted

Honda’s sales. They changed their logistical model to cash on delivery and shifted the power

relationship from dealer to the manufacturer (which would be the model for this industry for

years to come)

The Honda Effect

The western world believes in oversimplification and having a linear view of the world, whereas

Honda did not. They always acknowledged the “human factor” and accounted for any change,

mistake and contingency in the internal and external environment. Being ready for something

that is “outside their field of vision is crucial for the success of any organization”

Perspective Three: the Case for Multiple Perspectives

This perspective starts off with two basic points, firstly, traditional corporate strategy

formulation favors a more microeconomic view and secondly, strategy alone is not fit to combat
the innovation and rapid change in the 80s. This perspective then differentiated Japanese and

American view into 6 further perspectives.

1. Strategy: the Japanese have a broader view of strategy as discussed above.

2. Organizational structure: To succeed, structure requires reinforcement from the other

managerial factors.

3. Systems: the Japanese culture pays attention to informal systems

4. Style: the Japanese use the Mintzberg point of view. The main three mechanism to

convey attention and time are as follows:

a. In-basket

b. Telephone

c. Calendar

The effective employment of this managerial lever results from nothing less or more than

the self-discipline to allocate our time and attention to do what we say our priorities are.

5. Staff: the socialization process is the key

6. Shared values: the Japanese believe in the saying that thousands of "little people" doing

"little" things, all with the same basic purpose, can move mountains.