Strategic Management at Honda

Strategic Management at Honda

1. Firstly what is strategic management? It is the process of

specifying an organization’s objectives, developing policies and plans

to achieve these objectives, and allocating resources so as to

implement the plans. Strategic management is usually performed by the

highest level of managers in the company. A company’s strategy must be

realistic enough for it to achieve it; hence it must make sure it has

the right resources to be able to cope with the strategy. An example

of an overall business strategy may be to put the organization in a

position where it can carry out its mission. Now to see how the

definition of strategic management conforms to what’s been written

about how Honda grew and developed its markets in the US. Firstly in

the BCG account of how Honda grew into the US markets it quotes “the

success of the Japanese manufactures originated with the growth of

their domestic market during the 1950s.” To think strategically there

are three big questions that need to be answered that are, where are

we now? Where do we want to go? How will we get there? I believe the

first question of thinking strategically is now answered, “where are

we now” Honda must of seen that they have been successful in their

own domestic market and are ready to go into other markets so at this

point they must have been thinking where do they want to go next hence

the second strategic question. Another quote from the BCG report,

“….the basic philosophy of the Japanese manufactures is the high

volumes per model provide the potential for high productivity as a

result of using capital intensive and highly automated techniques.”

This now I believe has answered the third question of thinking

strategically, “how will we get there.” Honda knew from the success

of their own domestic market the key to their success was gaining

economies of scale as the cost of producing motorbikes declined with

the level of output. So this would be their way of entering the US

markets as they also knew their competitors would have a scale economy

disadvantage in technology and manufacturing. If we look at the

second account of how Honda grew and developed its markets in the US

we can see other ways of how its conforms with strategic management.

Pascal’s version is based on interviews with the Japanese executives.

They say they had no ...

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...aving a

formalised approach to strategy and implementations there are some

disadvantages. Having a formalised strategy can mean a lot of time

and thought need to be put into forming a good strategy which might

mean a huge drawback in cost savings whereas this time and thought

could be implemented elsewhere in the business. A formalised approach

to strategy development can also mean a slow response when there is a

change in the market. Developing a strategy and implementing as said

before takes a long time and a lot of thought which in business means

money so when there is a change in the market the strategy may not be

relevant to the new situation which could consequently mean further

cost occurring such as forming new strategies and responding to the

new market situation. A situation like this can be learnt from Honda

when they thought their larger bikes would sell as Americans liked

bigger things and also they thought the Buddha like handlebar would

assist in sales of these larger bikes, but when this was not the case

and they learnt it was the smaller bikes (50cc) the consumers wanted

they had to quickly change their main strategy and follow on with a

new one.