chapter  1
17 Pages

Controversies in local economic development

A story is frequently repeated in management text books of how Honda built its business in the USA. It draws on an account by Mintzberg (1987) who describes how Honda executives arriving in Los Angeles from Japan in 1959 to establish their North American subsidiary had intended to sell 250cc and 350cc motorcycles. In Japan a 50cc machine known as the ‘supercub’ was their marquee brand. Infl uenced by the marketing perception that the USA would demand big, high performance machines the company set out to sell their bigger models and did not include the supercub in their original plans. Sales of their big bikes proved less than anticipated and were not helped by high rates of mechanical failure. The company that in 2006 was the third largest manufacturer of passenger cars in the USA looked at one stage as though it would fail to stay in business. Honda, so the story goes, succeeded because of the unanticipated and unplanned for popularity of its supercub machine. As frequently presented to students of management, this shows how chance events rather than deliberate strategy can determine business success (Kay 2004). The supercub, we are told, captured buyer attention after being seen in use by Honda staff for travel around their sites in Los Angeles. A representative of Sears Roebuck was among those spotting the supercub who contacted Honda asking about their availability. The buyer gave Honda the idea of selling the bike through general retailers rather than specialist motorcycle dealers. Mintzberg (1987) says that they had been reluctant to sell the supercub for fear such a ‘toy’ machine would damage their broader appeal to serious bikers (although it should be noted that Pascale (1984) states that the initial stock taken to the USA included the 50cc bike). With fl agging sales, the supercub was added to the marketing mix and by 1964 nearly one in two motorcycles sold in the USA was a Honda.