Honda and the US motorcycle market in the 1960s
Question:
1. Which of the following three strategic approaches was adopted by Honda in its
entry to the US market:
(a) Considered and planned in response to market analysis and research?
(b) Building on Hondas experience in its domestic market?
(c) Applying creative and innovative ideas in response to new market opportunities?
2. Are the different accounts of Hondas market entry mutually exclusive?
3. Do you think Honda would have been more or less successful if they had adopted a
more formalised strategic planning approach to their launch?
In 1984, Richard Pascale published a paper that described the extraordinary success Honda
and experienced with the launch of their motorcycles in the US market in the early 1960s.
It was an article that has generated discussion about strategy development processes ever
since.
The US market had been served by Harley Davidson of the USA, BSA, Triumph and
Norton of the UK and Moto-Guzzi of Italy. In 1959 Harley was the market leader with
total sales of $16.6 million. But the total British share of the US industry was 49 per cent
at that time. By 1973, however, the British share had dropped to only 9 per cent. This was
largely the result of the incursions of Honda in the 1960s, following the setting up in 1959
of the American Honda Motor Company. Honda sales rose from $500,000 in 1960 to $77
million in 1965.
In his paper, Richard Pascale provided not one, but two accounts of how this extraordinary
market success had occurred. What follows are extracts from his paper.
The Boston Consulting Groups and Harvard Business Schools accounts of the success
Following the dramatic decline in the British share of the US motorcycle industry from
1959 to 1973, in 1975 the Boston Consulting Group (BCG) issued a report to the British
Government summarising their findings of their study into Hondas strategy in the
motorcycle industry.
The success of the Japanese manufacturers originated with the growth of their domestic
market during the 1950s. This resulted in a highly competitive cost position which the
Japanese used as a springboard for penetration of the world markets with small
motorcycles in the early 1960s. (BCG, 1975: xiv)
Other studies, for example by the Harvard Business School, explained Hondas success in
the USA.
After the Second World War, motorcycles in the USA attracted a very limited group of
people other than police and army personnel who used motorcycles on the job. While most
