Strategic Management at Honda Essay -- Business Management Studies

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 â€Å"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, â€Å"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, â€Å"†¦.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, â€Å"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 ... ...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.