Week 21

What are the benefits and drawbacks of taking an “emergent” approach to strategy making?

By formulating and executing a business strategy we tend to identify unexpected results, these results become useful for the integration for the future references into the future corporate plans. This whole process finding and integrating unexpected outcomes is known as emergent approach.

It generally occurs when things are not pre-planned and well managed. Also, it happens repeatedly due to the daily decisions that are made for the firm to run smoothly at the routine as well as the tactical level of the same firm. In order to know what works best for the firm, someone should be inspecting. Like in nature, problems/things occur just like that even if it is not planned before, this approach also encounters certain problem when business adapts to the evolving environment and circumstances.

Emergent approach has some benefits which are listed below.

• This approach encourages people to think out of the box and have innovative perception.
• Due to this approach, people tend to exchange better ideas, suggestions and information among themselves.
• New realistic ideas come into existence in order to troubleshoot problems.
• It develops special bond amongst people within an organization so that they share their feelings, visions and values.
• It helps a firm to fight with its problems and as a consequence they stand out in very distinguished manner.

Although the approach has its own advantages, it definitely has some drawbacks which are listed below.

This approach is very much nature-oriented which is why we cannot predict what happens next and is well planned for the future.

This approach is basically for such business processes that keeps changing which is why there is a high probability of failure. Hence, this process is very risky.

Chances of making mistakes is way high because of the fact that these approaches is merely a learn and go process and nothing is pre-planned.

Financial problem is another disadvantage in this type of approach because many things don’t work out perfectly as it is not planned well and this might cost a lot of money.

Case Study- HONDA

Was Honda’s entry strategy in the US more deliberate or emergent?

Looking at Honda’s entry strategy, it was deliberate as well as emergent strategy.

Talking about the deliberate strategy, Honda focused on the main shift of the US motorcycle contenders as well as the entire bikes in US which were sold before the year 1960. People’s perspective towards bike was real bad after the world war when motorcycles were called Satan’s slaves or Hell’s angels. However, Honda had well managed plan and policy for their bike sales that targeted all the members of general public rather than just the motorcyclists. In addition, Honda bikes were easy to use and not very heavy-weighted.

The only reason that made them emerge in the market shares is that they began with a deliberate plan; Plan that relied on the crucial idea that “high volumes per model provides the potential for high productivity as a result of capital intensive and highly automated techniques”. Besides, they had their bike produced in a very affordable price and made great use of their leading market position in Japan. Honda then gradually entered the US market with a deliberate plan that redefined the leisure class segment as well as utilized its competitive benefits by the means of aggressive pricing and advertising strategy.

Now talking about the emergent strategy, it is not unknown that the company had to face great difficulties regarding the leakages and also reputation issues. As a matter of fact, the company suffered a lot where the executives slept on floors managing the stock but their entry seemed to be emergent. They tried and tested many strategies in order to set a good image of theirs in the US market so that they would build interest on Honda motorbikes and accept it. The Honda Company’s strategy worked out only in 1963 when one student had done an assignment on Honda advertisement. Ever since, the brand has been inseparable. This kind of strategy was very risk-taking as well as a trial and error process which makes it to be an emergent strategy.

Which of the accounts seems more accurate and why? Why do you think the two accounts differ so much?

In my personal opinion, I would prefer the second account to be more accurate. The reason behind my perception is completely based on the interviews by Pascale with the Honda Executives where they have explained all the little details of their experience of their processes. It shows the emotional attachment and primary information collected first hand.

The approach tends to be more emergent as they struck upon opportunities during their visit to United States where they learnt about the facts and figures on the particular industry they were from. Also, they decided to take a risk on launching the company motorbikes in the US markets because of the fact that US citizens were more relied on automobiles. In addition to this, there were some concerns made by the Finance Minister. In order to introduce larger bikes, they had to encounter many problems like oil leakage and clutch failure. However, they emerged out of such problems without following any plans regardless of cash reserve restrictions. Adapting themselves to the changes, they were finally able to figure out ways to make a different impression of motorbikes in the American market.

Deliberate approach made the Honda Company to actually visit US while the emergent approach made them realize that the US market was completely different from what they had thought. Hence, both accounts differ from one another according to the logical explanations of the events occurred in US.

Deliberate approach used an intentional plan of high volumes and high productivity and was completely based on hard facts. On the other hand, emergent approach was everything that just happened without any plans and was based on emotional factor of the company. Hence, both accounts differ.

Did the Honda’s entry strategy demonstrate the characteristics of “logical incrementalism”?

Personally, I believe Honda has demonstrated the characteristics of logical incrementalism. It exhibited the managerial ideas on the achievement of goals by adapting with regards to the changes in small times during its initial stage. As they were not aware of the market type,they had taken many logical yet smaller decisions that were evaluated just through their learning as well as experiences in their process of growing themselves. Every time they tried something new, there was no guarantee that they would succeed. They risked it every time and with failures they took remedies through which they stepped a little further. Due to their advertising campaign they were able to change people’s perception towards motorbike. They encountered many problems like oil leakage and clutch failure and yet they emerged out of such problems without following any plans regardless of cash reserve restrictions.

Gradually they understood the market’s demands and took small logical decisions and that why they were able to introduce supercubs that helped to make a huge difference for the company.

Do you think Honda would have been more or less successful if they had adopted a more formalized strategic planning approach to the launch?

Had Honda adopted a more formalized strategic planning approach, they would not have been as successful as they are at the present. In fact, they would have faced even more problems and would have given up on the US market when their reputation got destroyed due to leakages and failures if everything was planned.

If they were to apply a planned strategy, it would be of a minimum 2 year plan and according to which they are forced to work on the project till the end no matter what. Besides, if they had planned strategy of selling a certain number of larger bikes, they would have encountered a huge loss as there would be production of limited number of bikes.

So, when they logically decided to redesign and repair Honda, it was the only possible chance of it to survive. Either way, the company could have destroyed itself because of the technical issues that it had to face and wouldn’t have launched the 50cc supercubs into the market if it was more deliberate looking at the people’s lifestyle in the US as well as keep wondering about the facts and figures. In fact, Honda was all set to do what it takes no matter it failed or succeeded. Well, in my personal view, the only reason that made Honda a legend in the international market is that it adapted quite well with the ever-changing situations with all its risks and courage.

References:

http://www.businessdictionary.com/definition/emergent-strategy.html#ixzz2oJXcrZ5y, Accessed on, December, 2013 

E Dontigney, http://yourbusiness.azcentral.com/advantage-disadvantage-emergent-strategy-15781.html, Accessed on December, 2013

http://www.rapid-business-intelligence-success.com/emergent-strategy.html, Accessed on December 2013

http://www.businessdictionary.com/definition/logical-incrementalism.html, Accessed on, December, 2013