Class 2: Creating and Claiming Value

Question 1

What were the inputs that lead to Honda’s success in North America?

Answer 1

• superior/new product
• process/productivity-> economies of scale
• changed sales and distribution to match channel need
• promotions + ads
• top leadership

Question 2

What does success look like for Honda?

Answer 2

• brand longevity
• revenue/market share
• profitability

Question 3

Topic summary of Honda case

Answer 3

Honda used a mass production, mass market, low-cost approach for early success with motorcycles in the US

Question 4

What is the virtuous cycle of activities that lead to success for Honda?

Answer 4

tech->market demand->volume->factory utilization->costs->prices->tech

Question 5

Who is Henry Mintzberg?

Answer 5

• professor at mcgill, montreal for 40+ yrs
• iconoclast; “consistently contrarian canadian”
• -“strategic planning” is an oxymoron
• -management is a practice
• -managers are often distracted “jumping from topic to topic
• -managers are trained incorrectly (wrote managers, not MBAs)
• Strategy often “emerges” from discovery, not tops-down analysis

Question 6

What is the key takeaway from Mintzberg?

Answer 6

effective strategies often emerge from opportunistic, skillful and disciplined response to opportunities, not planning alone

Question 7

What role did management play in honda’s success entering the NA market for motorcycles according to case A?

Answer 7

• understanding business environment/landscape
• finding an underserved segment
• productivity gains (learning curve, business model)

Question 8

What role did management play in honda’s success entering the NA market for motorcycles according to case B?

Answer 8

seeing (new) opportunities)
being able to adapt
willingness to take risks

Question 9

why did british firms not copy honda’s strategy?

Answer 9

basically, they literally couldn’t

Question 10

What are two ways to increase profitability?

Answer 10

raise prices or lower costs

Question 11

How did honda create more value?

Answer 11

targeted previously underserved segment, at low cost to honda so low price to consumers

Question 12

What are learning curve effects?

Answer 12

• increased labor productivity with increased production
• driven by cumulative output within existing technology over time
• think of it as simply, learning by doing (labor only)
• “the more you do something, the better you get at it”

Question 13

What are experience curve effects?

Answer 13

-a drop in per-unit direct costs from process innovation
-first coined by brucie, founder of BCG
-allows a firm to “jump” to a new learning curve and lower per-unit cost at the same production level
-includes all direct costs (labor, capital, distribution)
economies of scale