In the earlier blog on Business Strategy, we had seen how Honda made successful attempt at leading the Motorcycle market in US. While this is the success side of the story; strategy gets effectively communicated when we also see why companies haven’t been successful in their pursuit.
We take the case of another automobile company - Yugo to illustrate this point. Yugo entered the US automobile market in the mid 1980s. It had decided to position itself as the leader by under pricing all of its competition. It believed it could dominate the low-price automobile segment with this approach. One point that Yugo overlooked in its approach was that the US consumer's valued their safety even while seeking to purchase an inexpensive automobiles. Although Yugo's price was lower than any other new car in the US maker, its performance and safety were widely perceived to be unacceptable; when its cars actually hit the market, the price really didn’t cost less than many used cars in the US market - those having higher level of safety and performance. There needs to second guess that Yugo no longer sells its cars in the US.
The two caselets mentioned here - that of Honda and Yugo; illustrate the fact that it’s not that your initial plan of approach that matters but the agility with which the company adapts to the different environment.
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