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Unformatted text preview: BUSI 698 BUSI 698 Strategic Management
Honda Strategy Implementation Announcements
Announcements Second inclass test next Wednesday (Nov. 12)
Will include: Corporate Strategy, Strategy Implementation and Corporate Social Responsibility
Presentations will be on Nov. 17 and 19
Please email me TODAY if you have any conflicts Course Overview
Industry Structure Business Strategy:
Resources & Capabilities Corporate Strategy
Strategy Implementation IndustryLevel Sources Firm
FirmLevel Sources ( Π) Strategy Formulation and Strategy Formulation and Implementation Strategy Formulation: Planning for above average profitability Industry analysis, competitive positioning, resources and capabilities, corporate strategy Strategy Implementation: The actions and tools required for making and executing the plans Where do strategies come from? Planning and adaptation
Formal and informal organization
Corporate governance Honda (A)
Honda (A) Is the motorcycle industry a good industry?
What is Honda’s positioning strategy?
Does Honda possess any resources and capabilities that
confer sustainable competitive advantages?
confer Honda’s Activities
Procurement Emphasis on share and sales volume, not short-run profitability
Relatively high labor costs
Honda Technical Research Institute
Product innovation leadership
Many product updates Fully integrated producer of engines, frames, chains, sprockets, etc. Inbound
Activities Design for production
Cold storage of designs Operations Highly automated
& sales Service Extensive
Low price ($250)
prices on new
models The Experience Curve (I)
The Experience Curve Shows the percentage decline in the cost of production when the cumulative output is doubled. Year 1
Produced Year 2
Year 5 Adapted from J. Furman q 2q Year 6 Cumulative Output The Experience Curve (II)
The Experience Curve (II) Experience Curve & Economies of Scale economies of scale = average costs decrease as a function
of the amount produced at one time
experience curve = average costs decrease as a function of
the cumulative # of units produced
cumulative Experience Curve & Market Share
Market if experience curve affects all firms in industry equally…
then ‘buying’ market share may be a viable way to achieve a
low-cost leadership position
data shows that high market share high profits (in many
industries) experience curve can be a source of First-Mover Advantage
of course, having low costs may lead to high market share
market Adapted from J. Furman Is the customer always right?
Is the customer always right? Suppose you were an American or European
motorcycle manufacturer in the early 1960s…
motorcycle would you ever believe that Honda could erode
your market share and ‘eat your lunch’?
would you ever have invested in making smaller,
lightweight motorcycles like the Supercub?
lightweight By listening too closely to what your customer
wants today, you may miss on the technology
(or industry) development that will drive the
industry performance new technology old
technology see Clay Christensen, The Innovator’s Dilemma
The time Honda (B) Questions
Honda (B) Questions How does this story differ from the earlier one?
Which story do you believe the most?
In which ways was Honda lucky?
In which ways were there opportunistic?
Why did we see “foresight” and “planning” where there was none? Is case (A) useless? What can we learn from thinking about What can we learn from thinking about the case from both viewpoints?
Case A Honda planned wisely
and had the foresight to
take advantage of the
economics of the
and design capabilities,
create new products &
sales channels, etc.
planning & foresight!
planning Adapted from J. Furman Case B Honda benefited from new
product development &
campaigns, benefit from
experience curve (even if
Strategy requires that firm
strategy be adapted as
circumstances luck & pluck are
important Some generalizable lessons
Some generalizable lessons Did it all occur randomly? What were the forces behind Honda’s emergent strategy? Background, values, and representations of the management team
Adjustment to feedback from the outside world
“Selective flexibility” When does experimentation make more sense than forethought? When the cost of each trial is low,
When feedback from trials is rapid,
When adjustment after the trial is inexpensive,
When live trials give far better information that any effort at prediction would yield Intended vs. Realized Strategy
nde d St
Strategy Realized Strategy Unrealized
Strategy Emergent Strategy
Henry Mintzberg: (1987) “Crafting Strategy”, Harvard Business Review, Mintzberg – Another view on Strategy
Mintzberg – Another view on Strategy
“Strategies grow like weeds in a garden.” Emergent strategies emerge without – or in spite of –
clear intentions: Actions converge into patterns.
Strategies can form as well as be formulated.
The role of the strategist is to allow these patterns to
emerge and recognize them.
Strategy formulation and strategy implementation are
Deliberate and emergent strategies coexist. So, What Is Strategy?
So, What Deliberate Strategic Planning (e.g. Porter)
Analyze forces in an industry and position within
industry Evolving Identify and design distinct activities to position firm
Accumulation of resources and capabilities over time
“Routines” form and get selected through trial and error
within organizations Emergent Strategy as Process or Pattern (e.g. Mintzberg)
Strategy is a result of day-to-day decisions and actions An interesting book
An Examines the viewpoints and
actions of the US and USSR
from multiple perspectives
Allison was Asst. Secretary of
Defense for Kennedy & founding
Dean of Kennedy School at
Three perspectives rational actor mechanism
political manipulation view
bureaucratic decision process Viewing from different lenses
yields alternate understandings
of crisis and choices
Adapted from J. Furman Takeaways from the Honda Case
Takeaways from the Honda Case Strategy formulation and implementation are
Firms use trial-and-error as much as formal planning
There is typically an element of “luck” and “taking
chances” in every success story…
However, “fortune favors the prepared mind”.
Your business education should… Help you recognize opportunities
Give you knowledge of your objectives
Provide you with tools to analyze and take advantage of
opportunities in a timely manner
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- Fall '10