Week 21

1. What are the benefits and drawbacks of taking an 'emergent' approach strategy making?

Emergent strategies can be seen as responses to unexpected opportunities and problems and are usually developed from the locations at which business-level strategies are usually implemented, i.e. within business units and not at corporate headquarters. The pure definition of emergence requires the absence of intentions. (Mcgee, Thomas and Wilson 2005 p 11)

It is basically  a strategy by discovery which possibly happens through  daily decisions depending on the situation. The strategy is an action of a firm to the environmental force which is unintended and unplanned. Emergent strategies are unstructured and has fifty-fifty chance for success and failure. However, adopting an emergent strategy helps a firm to become more flexible to the market changes. 

Benefits of Emergent Strategy:

·         The emergent strategies are more likely to make an organization flexible and responsive to the market changes.

·         It helps in innovation,  creating new ideas and entrepreneurship.

·         It makes the ideas flow within the organization and increases informal communication and coordination. This brings a feeling of belongingness among the employees.

·         The strategy focuses more on the market needs and demands. This might result in product development.

·         The company attempts to employ emergent strategy to capture product development that could help it become a technological leader in its industry. (Anderson.A, 2013) 

·         A company can be a pioneer of something by adapting emergent strategy. For example creation of "Buffalo wings" in Buffalo USA.

Drawbacks of Emergent Strategy:

·         Emergent strategies are unstructured and possibly is not a genuine option over a deliberate strategy.

·         It can be a risky one as the decisions are taken unexpectedly and immediately unlike the planned strategy.

·         It creates uncertainty and can be too costly with no guarantee of success.

Emergent strategy is something that a company should keep an eye on, but the original strategic plan is what should be used as a blueprint for success.  If a company continually focuses on emergent strategy to try to capture that one idea that could create success, elements of the strategic plan can go off course and create an entirely new set of problems that the company did not count on. Therefore, emergent strategy should be analyzed and carefully assimilated into strategic planning. (Anderson.A, 2013)

Case Study: Honda

2. Did Honda's Entry strategy demonstrate the characteristics of 'logical incrementalism'?

According to Quinn, “Logical incrementalism is the development of strategy by experimentation and learning from partial commitments rather than through global formulation of total strategies”. Dynamic changes are required to respond to the unexpected changes in the environment rather than planning the strategic direction well ahead (Johnson et al., 2005).

In my view, yes, Honda's Entry strategy demonstrate the characteristics of logical Incrementalism. The reasons below explains why:

·         In 1960, Honda had only 4% of its motorcycles exported. However, it had a huge production volumes in small motorcycles in its home country Japan which benefited them from economies of scale.

·         Honda had a very hard time to increase its market in the US after second world war. The US considered having a bike as a bad image and named them as 'Satan's Slaves" or "Hell's Angels". However, Honda made a step by step strategy and planned to achieve the market patiently.

·          In 1961 they lined up 125 distributors and spent $150,000 on regional advertising. Their advertising was directed to the young families, with the theme  "You Meet the Nicest People on a Honda."

·          Honda's success in creating demand for lightweight motorcycles was phenomenal. It adapted the emergent strategy and developed its product according to the customer demand on light weight motorbikes. They created lighter bikes with 250Cc and 305 Cc which attracted most of the bike users and their sales began to increase rapidly.

·         They also came up with the idea of Supercubs because they knew what their market wants.

·         These logical strategies led  American Honda's sales to increase from $500,000 in 1960 to $77 million in 1965.

·         In 1966, US market share of motorcycle was:

Motorbike (Brand)	% Shares
Harley Davidson	4%
Yamaha	11%
Suzuki	11%
BSA/ Triumph and others	11%
Honda	63%

                               

In conclusion, it was not easy for Honda to emerge in the American market. They had difficulties in understanding the American culture and business. However, they were able to make logically strategy and eventually ended up with huge success. Thus, they included experiments, general goals and tackling with the uncertainty so as to coordinate their emergent strategy and this clearly shows that Honda followed "Logical Incrementalism" 

References:

Alexander Ehn & Yang Zheng, Strategies, Deliberate and Emergent [Online] Available at: http://www.diva-portal.org/smash/get/diva2:21644/FULLTEXT01.pdf (Accessed on December, 2013)

Anderson, A., 2011. Advantages and disadvantages of emergent strategy. [Online] Available at: http://smallbusiness.chron.com/advantage-disadvantage-emergent-strategy-10070.html  (Accessed on December, 2013) 

Business Dictionary, Emergent Strategy [Online] Available at: http://www.businessdictionary.com/definition/emergent-strategy.html (Accessed on December, 2013)