Strategic Management Project Report Yamaha Motors

2011
Strategic Management Project Report

Submitted to: Rajesh S Upadhyayula
Submitted By: PGP/14/260 NITESH KUMAR GUPTA PGP/14/280 MAHTAAB KAJLA

PGP/14/287 PRACHI CHAWLA PGP/14/290 RAHUL MITTAL PGP/14/313 VINNY ARYA
PGP/14/315 VISHAD DU BEY
India Yamaha Motors Limited
Table of Contents
EXECUTIVE SUMMARY ..............................................................
............................................................ 2 INTRODUCTION ....
................................................................................
.................................................... 3 OUR FOCUS ...............
................................................................................
................................................. 3 YAMAHA INDIA- A BACKGROUND A
ND NEED FOR CHANGE IN STRATEGY ....................... 3 YAMAHA S CHANGING STRATEG
Y ..............................................................................
....................... 4 EXTERNAL ENVIRONMENTAL ANALYSIS ......................
................................................................... 5 INDUSTRY A
NALYSIS - Two Wheeler Geared Bikes .............................................
................................. 8 INDUSTRY ATTRACTIVENESS.....................
................................................................................
.... 10 COMPETITIORS ANALYSIS ...................................................
.............................................................. 11 INTERNAL ENVIR
ONMENT ANALYSIS ................................................................
.............................. 11 VALUE CHAIN ANALYSIS..........................
................................................................................
........... 11 YAMAHA INDIAS RESOURCES ..........................................
................................................................. 13 TANGIBLE RE
SOURCES ........................................................................
............................................ 13 INTANGIBLE RESOURCES ...........
................................................................................
..................... 13 YAMAHA INDIAS CAPABILITIES .............................
...................................................................... 14 RESOUR
CES CAPABILITIES................................................................
......................................... 14 YAMAHAS CORE COMPETENCIES ..........
................................................................................
.......... 16 SWOT ANALYSIS ....................................................
................................................................................
17 RECOMMENDATIONS ............................................................
................................................................ 18 REFERENCES .
................................................................................
.......................................................... 19 ANNEXURE-A Detaile
d competitor Analysis...........................................................
................................ 20 YAMAHA IN PREMIUM SEGMENT ..................
................................................................................
20 HERO HONDA MOTORS LTD. .....................................................
...................................................... 20 HONDA MOTORCYCLES & SC
OOTERS INDIA PRIVATE LIMITED .......................................... 21 BAJAJ
AUTO Ltd. .....................................................................
............................................................. 22 TVS MOTORS ....
................................................................................
.................................................... 22 Annexure B Achievements
of Premium Segment Bikes of Yamaha .............................................
.......... 23 Chapter: EXECUTIVE SUMMARY
1
EXECUTIVE SUMMARY
Yamaha enjoyed a great start in India with its models RX100 and RX135. But, the
government ban on two stroke bikes was the biggest breakthrough in Yamaha s succes s.
They ran in losses for almost for a decade. Parent company Yamaha Motor Corpo ration
(Japan) has decided to utilize its deep R&D for the Indian markets. Premi um segment
industry is unattractive for the new entrants due to need of huge ini tial capital investment.
The industry is also affecting by other factors like av ailability of cars in the same price
range, stiff competition. But, rise in per capita income of households, westernization etc.
provides an opportunity for the existing players to capture the market. Through this
research, we are analyzing one of the new strategies by India Yamaha Motors Private
Limited to enter into the premium segment bikes in India. Our research will be focusing to
analyze the industry, to study internal and external forces affecting the decision of the c
ompany. In this research we have used various strategic tools and frameworks to support
our analysis, took the help from various web and literary resources whic h is given in
references section. Yamahas main problems were identified as a late entry in the market,
operational inefficiencies and not following aggressive se lling. As compared to their
competitors, their capabilities are not per standard in the current scenario. However, parent
companys financial and technological su pport facilitates company to show their core
competencies to the customers. To i mprove, Yamaha should focus to increase its
production capacities. They should u tilize their premium technology by giving focus to
introduce new range of produc ts to satisfy the consumer needs. They should also give
importance to market the product well.
2
Chapter: EXECUTIVE SUMMARY
INTRODUCTION
India is the second largest manufacturer of motorbikes in the world after China. The
motorbikes market is considered as a big bull of Indian automobiles industr y. In India, the
share of motor bikes in the twowheeler industry has risen to 80 % from 30% in the last
decade and a half [Refer. Figure 3 Annexure A], during wh ich annual period sales of
motorbikes in the country have grown by a multiple of 13. With strong players like Hero
Honda, Bajaj Auto, TVS, Yamaha India etc aim to provide efficiency and comfort ability
without compromising on the fun and th rill of riding. These companies provide various
variants of motorbikes to satisf y all the types of consumers in the country. In India, four
different variants o f motorbikes are available in the market with the power engines of
100cc, 125cc, 150-250cc and above 250cc bike.
OUR FOCUS
The premium bikes segment has emerged as the biggest growth segment in India bec
ause economy is booming and people moving up the salary bracket. There has also been
an increase in distinctive and customized products. Besides growing demand, huge
margins in the segment have also led major players in the industry to focu s on premium
bikes. Premium bikes segment consists of the motorbikes with an eng ine power of 150-
250cc. These bikes come under price range between Rs. 50,000 to Rs. 2, 00,000. 40-
45% of the motor bikes demand drives from urban India. The fa ctors for premium
segment bikes in India can be the increasing income scales of the households, attractive
looks and comforts offered etc. In India, only 31 out of every 1000 persons own motor
bikes in India. Still, there is a big scope for this industry to explore. The basic target of
every Motor Cycles company is the youth and middle-income households (RS. 300000-
Rs. 500000).
YAMAHA INDIA- A BACKGROUND AND NEED FOR CHANGE IN STRATEGY
Yamaha Motors, a Japanese company entered in India in 1980s through the acquisit ion of
Escorts Motors Private Limited in 1999. It is the second largest manufact urer of motorbikes
in the world after Honda. It forayed into the market with Yam aha RX100 and RX135 in the
mid-nineties. Everything was going well until a gover nment regulation came into force
banning 2-stroke bikes and compelled Yamaha to pull out its bikes from the market. Later it
introduced many new models but thei r success rate was poor despite the fact that the
engines of theses bikes were a mong the best in the business. Several reasons why these
models were not that su ccessful were probably because of the choice of marketing,
inefficient operation s strategy, shortage of imported raw materials from Japan etc. In 2007-
08, Yamah a India suffered an operating loss of Rs. 336 crores. They adopted a turnaround
strategy of involving structural, financial and marketing fronts. The company on its part
planned to cash in on the market sentiment of increasing tilt towards premium bikes, sales
of which were growing y-o-y at 5% even as the total motorcy cle sales in 2007-08 plunged
by 12 per cent in the first ten months of the FY in 2007-08. Premium bike sales have in the
meanwhile leaped up to over 15 per cent of total sales during 07-08. Yamaha s niche in
Japan is in racing bikes (high-pre mium segment) due to its high engine capacity which is
its core competency. Afte r sufficient market research, it realized the Indian market is viable
for premiu m segment bikes and has shifted its focus from the lower end segments to the
hig h-premium
3
Chapter: INTRODUCTION
segment. Its aim is to provide customers the full range of its engineering marve l. With
the rising disposable income in India, it has seen an opportunity and at tempted to
leverage on it. After launching models in premium segment like FZ1, S Z and Fazer,
Yamaha India is able to develop a brand image in front of their con sumers.
YAMAHAS CHANGING STRATEGY

1) Yamaha has shifted its focus from the lower end segments to the premium segme nt of
bikes. It aims to provide its customers the full range of its engineering marvels that make
Yamaha the company that it is. 2) Yamaha has a very strong foc us on the technical
department, the result of which can be seen with Yamaha comf ortably leading the
constructors championship in the Superbikes racing with Valen tino Rossi and Colin
Edwards as their riders. 3) Yamaha has aimed to become the No.1 in customer satisfaction
and is looking forward to providing the customer w
ith an experience with its products. 4) The target market of India Yamaha Motors i s the
young and enthusiastic 18-25 yr. Olds who are willing to try taking the no
t so much treaded path of buying the sports bike rather than a utility two wheeler . These
young guns are very conscious of the style quotient and look forward to th
eir ride being a personality statement. 5) With the increasing dispensable incom e in India
and growing middle and upper middle class segment Yamaha is sure to f ind many
prospective customers.
From Cost Control to Market Differentiation
For a long time till 2007-08, Yamaha has been following the cost control strateg y by
focusing on the low end 100cc bikes like Crux and Alba. This kept it market share to below
5%. In lieu of the growing Indian economy and the need for differ entiator products, Yamaha
revamped its strategy and shifted its focus to premium bikes. The 100cc bikes are supplied
only if there is a pull, but the company ha s clearly indicated that it sees its future in the mid-
market and premium segmen ts. The company is not just willing to limit itself to just prestige
pricing. It will provide more value to the customer in terms of attributes like great techn
ology, superior design, ergonomics for long distance travelling etc. For example the
company will be launching its new superbike in the 1000cc segment. Apart fr om this, it is
also optimistic about the FZ-16 series it has launched in the mid -market segment (150 cc)
bikes. So hence, we can see that the aim is to provide niche products for the diverse
customer segments. This is its market differentia tion strategy.
4
Chapter:
Yamaha can be described as a prospector (especially after the year 2007) as it h as been
constantly trying to explore new markets and opportunities. It provides bikes for almost
every market segment ranging from the 100cc Crux to the 1000cc FZ1. It aims at
providing a diversified product range to satisfy a wide variety of customer preferences. It
has come up with several innovations like improving fuel efficiency of the bikes,
introducing environment friendly engines, reducing the size of the engines and
introducing light weight and compact metals for its bikes.
Yamahas Breadth Strategy
Yamaha has globally forayed into an extensive range of products like motorcycles ,
scooters, boats, sail boats, watercrafts, outboard motors, music instruments, racing karts
etc
EXTERNAL ENVIRONMENTAL
ANALYSIS Political Environment
Under the UPA rule most of the business from across all industries try and win o ver as
much political support. The core competitors viz. Yamaha and Honda have be en coming
up with new higher models while the Bajaj industry has been upgrading its bikes model by
only varying the cc engine. It is believed that Mr. Bajaj has used his political influence to
raise the prices of the competitors models, ther eby minimizing his loss of market share.
Such political influences helps the inc umbents to gain favorable bargains from the
government making it difficult for n ew entrants to flourish thereby making Barriers to Entry
high. Chapter: EXTERNAL ENVIRONMENTAL ANALYSIS
Economic Environment
Tightening of the interest rates by the RBI Makes it difficult for companies to arrange for
funds for expansion but it effects the new entrants even more, thus increasing barriers to
entry. High Growth Economy with an expected GDP of 8.5% H igh per capita income results
in higher disposable income with the buyers thereb y making them less price sensitive. This
will decrease the bargaining power of b uyers.
5
Increasing inflow of foreign capital in the country Permission of FDI in the cou ntry has
attracted many foreign big giants like Harley Davidson to enter into th e Indian market. As
these companies are already very competent with high technol ogies and financial
resources, the entry barrier will not be any issue and thus will increase the threat of
competitors in the industry. Combined Goods and Serv ices Tax is expected by 2011 which
is expected to remove the cascading effect ca used due to multiplicity of taxes.
Deregulation of petrol has led to increase in prices and increase in commission to petrol
pump owners and will continue the s piral This shall increase the cost of ownership of the
vehicle thereby making th em demand for more fuel efficient vehicles. Since the choice of
the vehicle can save the buyer the running expenses, this shall make the Bargaining power
of buy ers high
Socio Cultural Environment
As education level in the country increases, every customer keeps a basic knowle dge
about the standard technology required. Also with increasing globalization, India is getting
westernized more and more by the day. The public mentality that a two-wheeler is just for
day-to-day commuting is changing and people are more and more moving towards
premium bikes. The expectations from buyers in this segm ent are very high since they
look as their bikes as a style statement and a refl ection of their attitude towards life. This
increases the bargaining power of bu yers as people start looking for that exclusive brand
image and differentiation. To target common commuters, Yamaha Motor India launched 3
new bikes namely YBR 125,Yamaha SZ ,Yamaha SZ-Exit also launched sporty bikes like
Yamaha Fazer 250 t o cater young Indian population
Technological Environment
Chapter: EXTERNAL ENVIRONMENTAL ANALYSIS Bikes with higher engine capacities
hav e done commendably well on the Indian roads. Bike styling and fuel efficiency ha s also
seen major developments. The new technologies including the mono shockers , back and
front disc brakes, the magnum wheels, DiASil Cylinder etc. are some t hings that many
companies are looking forward to. This decreases the bargaining power of buyers as the
product becomes more differentiated and companies woo new customers with innovative
products. It also increases the competition in the in dustry thereby increasing the industry
rivalry. Yamaha has been able to involve many of these technology trends in its latest bikes
i.e. FZ & FZS. Yamaha also d eveloped CF Aluminum Die Casting Technology for mass
production of Aluminum. Thi s helped in reducing the weight of the parts.
Legal Environment
Due to the steep fuel prices in India, the sector is driven by demands for fuel efficient
automobile systems. Hence, the regulations on fuel efficiency are less
. As discusses before, it increases the bargaining power of buyers. The vehicula r emission
regulations are taken care by Society of Indian Automobile Manufactur ers (SIAM)
6
Delhi High Court came out with a ruling that a comprehensive insurance policy fo r
vehicles which also covered the pillion rider on a two-wheeler should be offer ed by all the
insurance firms. This was accepted by all insurance firms after mu ch deliberation.
Environmental Forces
Demand for two wheelers is increasing and thereby overcrowding the roads. Anothe r
problem is the adherence to emission norms because of the lack of infrastructu re for
inspection. Because of Euro II, there will be a lot of pressure on the tw o-wheeler industry
to come up with greener technologies. This shall compel the c ompanies to invest in
innovation and R&D thereby reducing their profits and maki ng the industry unattractive
for the new entrants thus decreasing the threat of new entrants. In light of this Yamaha
educates its employees about hazardous mat erials in products and has implemented
LCA methodologies. Yamaha improved its pr oduction and air conditioning equipment to
reduce greenhouse gas emissions.
International Environment
The two wheeler industry is currently growing at a CAGR of 9.45% from, and has t
hereby drawn the interest of a number of international players. Suzuki Hayabusa,
Kawasaki Ninja, Suzuki Zeus, is some of the bikes which are already launched in India.
These players cater to a very specific customer segment but due to the h igh margins
make a profitable venture for players like Harley Davidson, BMW etc. However, for long
term sustainability in India every player will have to enter in the market in the premium
segment range. Increases the threat of new entrants and industry rivalry since more and
more companies would soon be vying for the same customer segment which currently is
not that large in size.
7
Chapter: EXTERNAL ENVIRONMENTAL ANALYSIS
INDUSTRY ANALYSIS - Two Wheeler Geared Bikes
Kinetic Mahindra Deal Gearless bikes: M&M, India s largest tractor and utility veh icle
maker has already bought the business assets of loss making scooter maker K inetic Motor
Company and has 80% of the share in JV by investing Rs 110 crore to gain an entry into the
two-wheeler market. This means that though this deal Kin etic will get the support of financial
muscle of Mahindra Finance whereas, for K
MC its a win-win situation as Mahindra has global sourcing expertise and experien ce in
building differentiated products. - E-Bikes: There are several players in this segment which
includes YO bikes, BSA Electric bikes, Ebike India, with the increasing global prices of
crude oil and gas the demand for such types of bikes is increasing slowly but in consistent
fashion. - The NANO Effect: TATAs launch of 1 Lac car has obviously raised concerns for
two wheeler automobile industry, as consumer might want to buy a 4-wheeler which is
available to them almost at c omparable price. Although the speculation was there that after
the launch of TAT A NANO there might be a drop of 20% in growth of two wheelers, the
decline is de finitely there but not at such high extent. - The switching costs in NANOs case
w ould be high but they would be getting a benefit of 4-wheeler but in case of E-B ikes and
Gearless Bikes such as Kinetic Honda switching costs are not much high so in a country
like India for female drivers and teens, gearless bikes and E-bi kes are preferred. - The
relative price of substitutes like E-bikes and Kinetic would be lower as compared to NANO
but relative quality such as engine, features bikes like FZ, Karizma, R15 would have an
edge. OVERALL: Low/Medium Rationale: Indian two-wheeler premium bike industry has
been able to create a niche for its elf which primarily runs on three factors namely:
Mileage/Maintenance Cost, Reli ability and Style. Even though E-Bikes and Nano might be
able to draw some custo mers away from geared bikes but they are still not capable enough
to become the ride of the youth of the country who are more looking at it as a style
statement
. - Suppliers of auto components are fragmented and extremely critical for this industry. -
Most of the component work is outsourced proper supply chain managem ent is costly yet
needed. - Suppliers can influence the industry by deciding on the price at which the raw
materials can be sold. This is done in order to captu re profits from the market - The industry
being capital intensive the switching costs of suppliers is high - Suppliers product
differentiation is low - Suppliers threat of forward integration is low as the capital investment
required is very high and suppliers are small and fragmented. OVERALL: Low Rationale:
Even though the availability of high quality components is very critical for the auto manuf
acturers, the parts are not highly differentiated when it comes to additional fe atures and a
huge number of small companies have already come up who manufacture such
components.
BARGAINING POWER OF SUPPLIERS
THREAT OF SUBSTITUTES
8
Chapter: Industry Analysis - Two Wheeler Geared Bikes
9
Chapter: THREAT OF NEW ENTRANTS
- The political influence of incumbents helps them get favors from the governmen t which
makes it difficult for new entrants to flourish - HIGHER-END BIKES: High er end bikes
such as Kawasaki Ninja (Priced at Rs 2.7 lacs, Ninja is a 250cc 4-s troke bike), BMW
bikes (Priced at Rs 18 lacs upwards and models like R 1200 GS, S 1000 RR and bigger
K series bikes with 4-cylinder engines), Ducati (Priced up to Rs 10-45 lacs, with 15
different models including, Hyper Motard, Monster, Str eet Fighter, Desmosedici RR, SBK
and Sport Classic, which are powered by 696- 1, 198cc engines) have also entered into
India. Since they have global presence and strong brand recognition worldwide, Bikes
such as Yamaha R15, R1 can face compe tition from these players, but the customer
base in high end market is not very significant. - The barriers to entry is very high due to
presence of strong play ers like Yamaha, Hero Honda, TVS - Industry growth rate(CAGR)
in past decade is almost 10% which is definitely not so much lucrative after liberalization
and In
dias GDP has grown up to 8% - After the liberalization policy of 91 barriers to en try for this
segment has reduced and government regulations and taxes have been relaxed. - Cost
disadvantage would be there for the new players since existing p layers already benefiting
from economies of scale. - Initial Capital Requirement for setting up production plant,
marketing costs, supply chain management would
be high - Access to Distrubution channels would be tough and capital intensive if the new
competitor doesnt tie up with any of existing player. (e.g. Kawasaki h as tie up with Bajaj
Motor Limited) OVERALL: LOW Rationale: Looking at the high barriers to entry due to the
initial capital requirements and other infrastructu re like access to distribution channels and
also the low growth rate, the indust ry should not see many new players entering the arena.
- High per capita income makes buyers less price sensitive thereby decreasing the
bargaining power - High expectations from buyers in terms of Styling and power - Due to
increase in num ber of models in all the categories, the buyers are empowered to a large
extent. - Dealers threat of backward integration is low as the capital investment requi red is
very high and buyers are small and fragmented. - Importance of the produc t to buyers is
high due to other factors like traffic congestion, fuel prices - Product differentiation definitely
exists and whole industry is different from o ther industries - The other industries are having
products that can act as subst itutes but then the switching costs of buyers is high
OVERALL: HIGH
BARGENING POWER OF BUYERS
THREAT OF NEW ENTRANTS
- The concentration of competitors is high i.e. Bajaj Auto, Hero Honda, KMC, Roy al Enfield,
TVS, LML etc - The relative size of competitors is large and they ha ve enough operational
excellence and financial muscle. - Product differentiation is low as any product being
matched in a few months by competitor. - Industry g rowth rate(CAGR) in past decade is
almost 10% which is definitely not so much lu crative after liberalization and Indias GDP
has grown up to 8% - Industry is earm arked with high profit margins - Buyers switching
costs are low as each company h as its own portfolio of products and it can cater to each
and every segment OVER ALL: HIGH/VERY HIGH Rationale: The industry is earmarked
with large and powerful competitors like Bajaj and Hero Honda, who already have a huge
market share. Du e to moderate industry growth rate of 10%, the struggle to increase sales
is bei ng reduced to a constant-sum game where everyone is trying to outsmart the compe
titors by innovations and price wars.
INDUSTRY ATTRACTIVENESS
From the analysis done, we can see that its really very difficult for a new entra nt to see
the industry as economically viable to enter. The reasons for unattrac
tiveness of industry for a new entrant are: High bargaining power of buyers Requ ires huge
investment in R&D Difficult to set a sales and distribution model acro
ss the country
But for an incumbent the equation changes and with the rising levels of per capi ta income
of people, the Indian two wheeler market offers a decent potential for growth. This growth is
relevant in the light of the fact that 70 per cent of In dias population is below the age of 35
Years and 150 million people [Refer Figure 1Annexure A]. The threat of new entrants, the
threat of substitutes as well as bargaining power of suppliers are favorable forces. Even
though the industry is bound to see a lot of competition, looking at the high profit margins
along with some moderate growth opportunities, we would say that the Industry is Attractiv
e.
INDUSTRY RIVALRY
10
Chapter: INDUSTRY RIVALRY
COMPETITIORS ANALYSIS
PRODUCTION CAPACITY (in units) 3900000 1000000 3690000 2420000 600000 IN
PROFITS ? No. of models in 150cc+ bikes 5 2 4 4 3 Variants
HERO HONDA HONDA MOTORS BAJAJ AUTO TVS MOTORS YAMAHA
Yes No Yes Yes No
150cc-225cc 150cc-250cc 180cc-220cc 150cc-220cc 150cc only
Big players such as Hero Honda and Bajaj (as shown in the figure above) have exe rcised a
huge Bargaining power over suppliers as well as buyers. As such, Yamaha receives heavy
competitive pressures especially on grounds of the cost as well as distribution leadership
assumed by these players. Currently Yamaha is providi ng bikes only in 150cc whereas
their counterparts are have already launched thei r bikes in 150-250c bikes. Also,
Yamahas annual capacity is very less as compared to other competitors. [refer Annexure
A for detailed competitor analysis]
INTERNAL ENVIRONMENT ANALYSIS VALUE CHAIN ANALYSIS
PRIMARY ACTIVITIES
YAMAHA will replace or repair at its Authorized Dealership free of charge, those parts
which may be found on examination to have manufacturing defect, within 2 years from
the date of sale of Motorcycle or first 30,000 kilometers of its oper ation, whichever
occurs first, to the purchaser. YAMAHA warrants the products to be free from
manufacturing defects for a period of two (2) years from the date of sale of the
Motorcycle or first 30,000 kilometers of its operation, whichever occurs first. If during this
period of warranty the Motorcycle proves to be def ective due to material or
workmanship, YAMAHA through its Authorized Dealers wil l repair the Motorcycle without
charging the labor or parts value as per the ter ms and conditions
11
Chapter: COMPETITIORS ANALYSIS
Customer Satisfaction has always been the top priority of Yamaha and the company is
planning to enhance Yamaha Bike Station numbers to 180 from current 100. The Yamaha
Best Service Stations are planned to increase to 250. To provide good se rvices, Yamaha
ensures the availability of all major parts with their dealers. I t also provides engineers to
dealers to provide the service to their customers. Service
Marketing & Sales Outbound Logistics Operations Inbound Logistics
John Abraham is the Brand Ambassador of Yamaha in India. They usually run their theme
with the Campaign Yes Yamaha. They also promote their products through Road Shows,
Rock concerts in the country. Yamaha has introduced the unique concept of Yamaha Bike
Station (YBS), an authorized Yamaha Dealership with the Best 3S fac ility - Best Showroom,
Best Service Facility and Genuine Parts. Yamaha procures the heavy components from its
vendors in Japan and Thailand. However, a motorcyc le comprises of over 2000 components
which are locally sourced. The two wheeler industry largely sources its parts and
components from common vendors in North I ndia (Faridabad being the hub). As such, the
supply side is marked by a lot of p olitics between the vendors and bigger players who have
a large appetite to plac
e orders beyond capacity thus creating an artificial scarcity in the market. Yam aha has a
policy of ordering for the parts at least three months in advance. The y coordinate with their
all vendors through software. After deciding the number of bikes to be produced, software
automatically sends the order to their all ven dors with all the requirements. Also, it is the
responsibility of the vendor to provide raw materials at the company gate. Yamaha has two
plants i.e. in Faridab ad and Surajpur (Noida). Manufacturing of engines and gears are
done in Faridaba d plant while production runs in Surajpur. Currently, the company has
increased its production capacity from 400000 bikes per year to 600000 bikes per year. The
y have two conveyor lines where bikes can manufacture in parallel in two shifts. Also, they
have separate departments for activities like painting, welding etc. The lead time of the
bikes is very high as compared to their competitors. Yamah a has a smaller range of
models in comparison with its counterparts in India lik e Hero Honda and Bajaj. As such, it
exercises a relatively lesser influence on i ts distributors in terms of stocking and display.
They have tie-ups with Transpo rtation companies to deliver the motorbikes at dealer s
place. Yamaha India also s erves to foreign markets such as Argentina, Mexico, Philippines,
and Bangladesh etc. Yamaha does not offer any credit terms to its dealers except in
discretiona l cases. This is an aberration to the industry trend of an average of 2 month cr
edit period.
SUPPORT ACTIVITIES
Firm Infrastructure Chapter: VALUE CHAIN ANALYSIS Manufacturing facilities compr
ises of 2 state-of-the-art Plants at - Faridabad (Haryana) and Surajpur (Uttar P radesh).
The infrastructure at both the plants supports production of motorcycle s and its parts for
the domestic as well as oversees market. At the core are the 5-S and TPM activities that
fuel our agile Manufacturing Processes. We have In-house facility for Machining, Welding
processes as well as finishing processes o f Electroplating and Painting till the assembly
line. Human Resources Management They have more than 2000 employees including
staff and managers. All activities in the company are headed by Japanese except HR
Department. The Labour Union po ssesses a very strong bargaining power especially
post the 72 day strike in 2000 which led to institution of a binding increment in allowances
at the operationa l-supervisory level every three years.
12
Technological Development Yamahas technology in India is fully supported by its p arent

company from Japan. Particularly for 150cc+ bikes, they introduced a very high technology
which differentiates Yamaha from its competitors in this segment
. For instance, YZF-R15 Yamaha first designed a cowling shape around the radiato r that
would make maximum use of the running airflow. They have introduced bike in radical
tires for the first time on the Indian roads. Procurement The procure ment system in
Yamaha is totally online. The role of Purchase Management is to n egotiate with the
vendors on the terms of price and delivery. As company plans t he production for the next
3 months and enters into their software, the order fo r the raw materials automatically
reaches to each and every vendor. Purchase Dep artment checks the quality and quantity
of raw material and transfer to stores d epartment. They have also an appropriate
capacity to store their raw materials. They store the products in the lot of production
which is going to follow.
YAMAHA INDIAS RESOURCES
Tangible Resources
Financial Resources Yamaha Motors Corporation, the parent company from Japan pro
vides the required funds to Yamaha India. It also maintains a good working capit al
because they provide very less credit to their dealers. Organizational Resour ces Rather
than communicating the instructions downward, floor workers are encou raged to plan
their work schedule on their own. Then the schedule and resources are finalized through
direct interaction of workers and management. Workers are also expected to state a
minimum level of productivity- per day or per week and any deviation from this standard
is analyzed and corrected by the workers and th e management. Physical Resources
Company has two plants in Faridabad and Surajpu r. Both plants are located in the
industrial area of their respective cities. Fa ridabad plant manufacture the engine, gears
and other parts while Surajpur plant is for assembling. Company also has two assembly
lines which can run in paralle l. As Faridabad is called the hub for raw material for the
automotive industry, company has very easy access to the raw materials, Technological
Resources The u nique technologies like liquid cooled engine, DiAsiL cylinders, and
design appro ach differentiate Yamaha over the other competitors. They have also filed a
pate nt application for various technological solutions related to the diesel engine.
Intangible Resources
Human Resources Yamaha has around 2000 employees including both the plants. They
have a pool of experience holders who are there in the organization over a long time.
Decentralization of work clear hierarchy facilitates the
13
Chapter: YAMAHA INDIAS RESOURCES
smooth flow of working. They also recruit casual workers mainly for the purpose of
procurement and assembling. Innovation Resources The strong R&D development f rom
Japan has a capacity to provide innovative products to serve the customer fr om each
segment. Their idea sense is totally based on customer needs. For exampl e, they have
launched their bike with Radical tires for the smooth riding. They also have launched
many models with innovative design like Enticer. Reputational Resources Yamaha has
the brand image for their products. They believed in keepi ng a long term relation with
their suppliers. With the image of bikes like RX100 , Indian customers always perceive
Yamaha as a sport bike.
YAMAHA INDIAS CAPABILITIES
FUNCTIONAL AREAS Finance Human Resources Marketing CAPABILITIES e outlay for R&D To
provide funds against losses To keep low retention rate Trai
ning opportunities in Japan John Abraham- the Brand Ambassador Out of the box pr
omotional ideas like organizing rock concerts, To manufacture diesel engine To d esign
innovative models To make 6 speed transmission bikes To make liquid cooled engine with
DiASil cylinder Control on demand-supply gap through a software Fac ilitates
communication with suppliers and dealers Links all the workings with pa rent company in
Japan
Technology
Information Systems
14
Chapter: YAMAHA INDIAS RESOURCES
Resources Capabilities
Resource Tangible/ Intangible Capabilities Potential access to wide variety of m arkets
Value contributed to end product High Difficulty in imitation/substitut i on Low Competitive
advantage in short run Yes Competitive advantage in long run Yes
Finance
Tangible
To invest a large Moderate outlay for R&D Training Low opportunities in Japan Ou t of the
box High promotional ideas like organizing rock concerts -To design inn ovative High
models -To make 6 speed transmission bikes -To make liquid cooled e ngine with DiaSil
cylinder Facilitates Moderate communication with suppliers and dealers
Human Resources Marketing

Intangible
Moderate
Moderate
No
Yes
Intangible
Low
Low
Yes
No
Technological
Tangible
High
High
Yes
Yes
Information Systems
Tangible
Moderate
Low
Yes
No
YAMAHAS CORE COMPETENCIES
Yamaha Indias R&D is considered to be the core competency for Yamaha because they
produce very powerful engines. The YZF R15 is the first India made motorbike to mount a
liquid cooling system for a better engine performance. Liquid cooling h as the ability to keep
down the temperature in a highperformance engine that wou ld otherwise reach very high
temperatures. That s why it is used on race machine s. Also, the liquid coolant in a liquid-
cooling system absorbs engine noise. Tha
t s why the engine is quieter and the ride has a quality feeling. DiaSil cylinde r facilitates
cooling performance because aluminium dissipates heat 3 times fast
er than steel. The YZF-R15 and FZ16 engines have a single-axis balancer. This re duces
engine vibration, which in turn reduces vibration felt by the riders at th e front and rear of
the seat, the handlebars and the footrest. All these technol ogies facilitate a better engine
performance, good acceleration capability, a go od balance which will provide a good
riding performance. A good R&D is always a valuable for any company. The above
technologies which Yamaha develops are very rare. It is also very costly to imitate
because setting new R&D requires huge in vestment for the competitors.
SWOT ANALYSIS
STRENGTHS Back-up support from the parent company Highly experienced
management Good R&D set up Premium technology Established Brand Prime location
near raw mat erial providers OPPORTUNITIES Increasing urbanization leads to growing
premium s egment First mover advantage in sports premium bikes (500cc+) Double digit
growt h in two wheeler geared industry Exports opportunities WEAKNESSES Below
industry standard production capacity Poor Distribution channel No marketing
aggressiven ess Internal HR issues Operational ineffectiveness Storage problems Lack
of dive rsified product portfolio THREATS High competition in the market Rise in raw mat
erial products Increase in interest rates on finance Cars available in the same price range
RECOMMENDATIONS
Focus on metro cities Yamaha should target metro cities first for their premium bikes. The
reason is that the earning capacity of youth is higher as compared to 2 tier cities. The
poor roads conditions of other cities is also the one reason not to focus on 2 tier cities.
Yamaha should increase their production capacity As Yamaha India has plans to capture
four different markets in India i.e. Sport s Bikes, Rural area with entry segment bikes and
scooters, Yamaha should plan to increase the annual production capacity which is very
as compared to its compet itors. They should also use their Faridabad plant to assemble
the bikes after ta king the license. More models in 150cc+ segment (only bikes at 150cc
bikes) As o ther competitors like Hero Honda, Bajaj provides motorbikes upto 250cc,
Yamaha s hould go beyond 150cc+ bikes. Currently, Yamaha have only 3 bikes in 150cc
in di fferent variants. Should improve the after sale services Yamaha is not satisfyin g
their customers in after sales services, parts of the bike are not easily avai lable in the
market. This is the major drawback in capturing the market share so Yamaha should take
some better steps to satisfy and retain their customers. Mea sures should be taken to
improve its dealership Yamaha which is trying to build a brand new image of a high tech
and stylish brand of bikes should take appropri ate steps to show it in their showrooms.
Also, Yamaha should provide credit peri
ods to their dealers so that they give more orders. Yamaha don t provides any cred it
period to its vendors. Youth oriented promotion Yamaha claims that they targe t the
customers of age group 18-25 but their ad never represents this so they sh ould make such
kind of AD where youth should take in as center of attraction. Th ey should do this earliest
to capture the market because vast majority of people depending on ads and friends as
their chief sources of information about the pr oducts.
1
Chapter: RECOMMENDATIONS
REFERENCES http://www.motorbeam.com/bikes/yamaha-bikes/yamaha-applies-for-
turbodiesel-engin e-patent/ http://www.yamaha-motor-india.com/about/profile/process.html
http://ww w.mouthshut.com/review/Yamaha-FZ16-qprrtqrrqm
http://www.xbhp.com/talkies/news/1 6984-yamaha-unveils-new-ad-campaign-around-icc-
cricket-worldcup-2011-a.html http ://www.yamaha-motor-india.com/whatsnew/win20.html
http://www.scribd.com/doc/2165 100/Yamaha http://www.yamaha-motor-
india.com/whatsnew/win20.html http://www.siam india.com/Member/memberhead.aspx
http://www.yamaha-motor-india.com/16secrets/eng ine/index.html http://www.yamaha-motor-
india.com/service/warranty.html http://ww
w.businessworld.in/index.php/Automobiles/Yamahas-New-Spark-Plug.html http://www.
scribd.com/doc/28710601/Yamaha-Sales-promotion-and-Customer-satisfaction http://
www.financialexpress.com/news/premium-bike-segment-pulls-it-for-the-sector/27581 7/3
http://automotivehorizon.sulekha.com/yamaha-india-bolster-sales-by-23-2perce
nt_12_2010_postedby_jayashankar-menon http://articles.economictimes.indiatimes.c
om/2010-04-19/news/27604874_1_yamaha-plans-pankajdubey-india-yamaha-motor http:/
/articles.economictimes.indiatimes.com/2010-04-19/news/27604874_1_yamaha-plans-p
ankajdubey-india-yamaha-motor http://www.overdrive.in/story-news-bikes/yamahas_t
urnaround_strategy-561-0.html http://www.dancewithshadows.com/autoindia/200-300-cc-
bikes-premium-segment-motorcycles-in-india/ http://goaonwheels.com/2010/04/06 /yamaha-
eyes-deluxe-premium-bike-segments/ http://www.surfindia.com/automobile/c ompare-150cc-
500cc-bikes.html http://bikes.whereincity.com/ http://economictimes
.indiatimes.com/news/news-by-industry/auto/automobiles/mahindra-kinetic-is-awin-win-
deal/articleshow/3311955.cms http://ezinearticles.com/?Future-of-Electric-Bi kes-in-
India&id=5316144 http://www.financialexpress.com/news/the-nano-effect/434 592/
http://news.oneindia.in/2009/10/08/bajaj-launches-sports-bike-kawasaki-ninj a.html
http://www.business-standard.com/india/news/bmw-bikes-in-india-by-dec-at-rs-18-
lakhonwards/113917/on http://www.topnews.in/ducati-india-plans-sell-150-hi gh-end-
bikes-year-2010-2245934 http://www.scribd.com/doc/28370752/Comparison-Stu dy-of-
Honda-Hero-Honda-amp-Bajaj http://www.scribd.com/doc/32459289/TWO-WHEELER-P-
P-T
2
Chapter: REFERENCES
ANNEXURE-A Detailed competitor Analysis

YAMAHA IN PREMIUM SEGMENT
MODEL ENGINE CAPACITY 150cc 153cc 153cc WEIGHT (in kg) 124 141 PRICE
RANGE (In R s.) 70000-80000 49000-52000 72000-75000 FUEL TANK 12 litres 13 litres
MAXIMUM PO WER 12.1PS@ 7500 rpm 14PS@7500 rpm
YAMAHA FZ1 YAMAHA SZ YAMAHA FAZER
HERO HONDA MOTORS LTD.
Hero Honda Motors Ltd. is a result of the joint venture between India s Hero Gro up and
Japanese Honda Motors Company in the year 1983. This joint venture has no t only
created the world s single largest two wheeler company but also one of th
e most successful joint ventures worldwide. Hero Honda is globally known of bein g the
most fuel-efficient and the largest CBZ selling Indian Motorcycle Company. HERO
HONDA BIKES IN PREMIUM BIKES
MODEL ENGINE CAPACITY 149.2cc 149.2cc 223cc 225cc WEIGHT (In Kg.) 141 150
150 15 9 PRICE RANGE (Rs.) 54000 79000 79000 91000 FUEL TANK 12 litres 15 litres
15 lit res 15.3 litres MAXIMUM POWER 10.6KM@8500 rpm 16.8bhp@7000 rpm
16.8bhp@7000 rpm 17.6bhp@7000 rpm
CBZ X-TREME HUNK KARIZMA KARIZMA ZFR1
Honda Motorcycles & Scooters India Private Limited
Established in 1999, the Honda Motorcycle & Scooter India Pvt. Ltd. (HMSI) is a wholly
owned subsidiary of Honda Motor Company Ltd., Japan and is located at Man esar,
Haryana. The company s most well-known brand is the Honda Activa that revo lutionized
the Indian scooter market in terms of design and features. The compan y exports
scooters to the European Union.The annual capacity is 1000000 units. T heir main
models in this segment are
3
Chapter: ANNEXURE-A Detailed competitor Analysis
HONDA MOTORS PREMIUM SEGMENT BIKES
MODEL ENGINE CAPACITY 149.1cc 250cc WEIGHT (In Kg.) 139 161 PRICE RANGE
(Rs.) 51 209 150000 FUEL TANK 13 litres 12.4 litres MAXIMUM POWER 13.3bhp@8000
rpm 5.4KW@ 7500 rpm
UNICORN VTR
BAJAJ AUTO Ltd.
Established in 1945 Bajaj Auto Ltd was incorporated as a trading company. Bajaj Auto
Ltd. is one among India s top ten companies in terms of market capitalizati on and among
the top five in terms of annual turnover. Today, the company has be come a market
leader. These days, Bajaj Auto Ltd. has started offering products in all segments (mopeds
& scooterettes, scooters, motorcycles, three wheelers). BAJAJ PREMIUM SEGMENT
BIKES
MODEL ENGINE CAPACITY 180cc 220cc 198.8cc 220cc WEIGHT (In Kg.) 154 150 145
150 PRICE RANGE (Rs.) 63000 85000 7000075000 80000 FUEL TANK 14 litres 15 litres
15 litres 15 litres MAXIMUM POWER 16.5bhp@8000rpm 15KW@8000rpm
15KW@8500rpm 15KW@85 00rpm MODEL
AVENGER DTSi AVENGER 220 PULSAR DTSi PULSAR DTS FI 220
AVENGER DTSi AVENGER 220 PULSAR DTSi PULSAR DTS FI 220
TVS MOTORS
TVS Motor is a leading and trusted two wheeler company began with the vision of TVS
Scooty the founder of the Sundaram Clayton Group, the late T.S. Srinivasan - to design,
develop and produce an affordable moped for the Indian family. The
company has been known for its ruggedness and reliability. The company is the th ird
largest two-wheeler manufacturer in India and ranks among the top ten global ly. They
have an installed capacity of around 2420000 units per annum. Their mai n models in this
segment are TVS PREMIUM SEGMENT BIKES
MODEL ENGINE CAPACITY 159.7cc 220cc 150cc 160cc WEIGHT (In Kg.) 136 137 130
140 PRICE RANGE (Rs.) 62000 95000 80000 80000 FUEL TANK 16 litres 16 litres 16
litre s 15 litres MAXIMUM POWER
4
Chapter:
APACHE RTR 160 APACHE RTR 220 180 RTR MENACE VELOCITY 160
13.1bhp@6500rpm 15.2bhp@8500rpm
Annexure B Achievements of Premium Segment Bikes of Yamaha
Bike of the the Year 2010 (SZ-X) by ET Zigwheels. 150cc Commuter Motorcycl he
Year 2010 (SZ-X) by ET Zigwheels. Best Executive 125cc Commuter Motorcycle of
the Year 2010 (YBR-125) by ET Zigwheels. Viewers Choice Bike of the Year Award ( SZ-
X) by ET Zigwheels. Viewers Choice Award (SZ-X) by CNBC Overdrive Awards 2011.
Viewers Choice Award (SZ-X) by NDTV CAR & BIKE AWARDS 2011. Motorcycle of the Ye
ar Above 150cc (SZ-R) by Bike India Awards. Most Sporty, Best Styling & Success in
Motorsports by Auto India.
FIGURE 1: Rise in Indias Young Working Population
FIGUERE 3: Break-up of the Two-Wheeler Industry
FIGURE 2: The Production of automobiles (2008-09)
5
Chapter: Annexure B Achievements of Premium Segment Bikes of Yamaha

Strategic Management Project Report Yamaha Motors

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Strategic Management Project Report Yamaha Motors

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2011

Strategic Management Project Report

Submitted By: PGP/14/260 NITESH KUMAR GUPTA PGP/14/280 MAHTAAB KAJLA

YAMAHAS CHANGING STRATEGY

Technological Development Yamahas technology in India is fully supported by its p arent

Human Resources Marketing

ANNEXURE-A Detailed competitor Analysis

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