04-05- 2011

Assignment
Strategic Management
Topic: Yamaha Motor Bikes Analysis

Report Submitted To: Col (R) Imtiaz A. Mohar

Compiled By: Jawad Arshad Kahoot

Enrollment No: 01-120092-020

MBA-IV-Y (HRM)
 Chapter No.1

Yamaha History:

1. How it was started:

It was from these words spoken by Genichi Kawakami (Yamaha Motor's first
president) in 1953, that today's Yamaha Motor Company was born. He quickly
rose to positions of manager of the company's Tenryu Factory Company (musical
instruments) and then Senior General Manager, before assuming the position of
fourth-generation President in 1950 at the young age of 38.

In 1953, Genichi was looking for a way to make use of idle machining equipment
that had previously been used to make aircraft propellers. Looking back on the
founding of Yamaha Motor Company, Genichi had this to say. "While the
company was performing well and had some financial leeway, I felt the need to
look for our next area of business. So, I did some research." He explored
producing many products, including sewing machines, auto parts, scooters, three-
wheeled utility vehicles, and motorcycles. Market and competitive factors led him
to focus on the motorcycle market. Genichi actually visited the United States
many times during this period.

2. When it was started:

The Yamaha Motor Corporation, Ltd., begun on July 1, 1955, is a major part of the
entire Yamaha group, but is a separately managed business entity from the
Yamaha Corporation. The Yamaha Motor Corporation is the second largest
manufacturer of motorcycles in the world. Yamaha Motor Corporation owns its
wholly-owned subsidiary in the U.S. called Yamaha Motor Corporation, USA, that
is handling not only motorcycles, but also snow mobiles, golf carts, outboard
engines, and water vehicles, under the brand name of Yamaha as well.

In 1954 production of the first motorcycles began, a simple 125cc single-cylinder

two-stroke. It was a copy of the German DKW design, which the British BSA
Company had also copied in the post-war era and manufactured as the Bantam.
 The first Yamaha, the YAI, known to Japanese enthusiasts as Akatombo, the "Red
Dragonfly", established a reputation as a well-built and reliable machine. Racing
successes helped boost its popularity and a second machine, the 175cc YCI was
soon in production.

The first Yamaha-designed motorcycle was the twin-cylinder YDI produced in

1957. The racing version, producing 20bhp, won the Mount Asama race that year.
Production was still modest at 15,811 motorcycles, far less than Honda or Suzuki.

The company grew rapidly over the next three years and in 1959 introduced the
first sports model to be offered by a Japanese factory, the twin-cylinder YDSI with
five-speed gearbox. Owners who wanted to compete in road racing or motocross
could buy kits to convert the machine for both road and motocross racing.

The first overseas factory was opened in Siam in 1966 to supply Southeast Asia. In
1967 Yamaha production surpassed that of Suzuki by 4,000 at 406,000 units.
Yamaha established a lead with the introduction of the first true trail bike "the
250cc single-cylinder DTI". The company also developed a two-liter, six-cylinder,
double overhead-camshaft sports car unit for Toyota Motor. Which proved
helpful when Yamaha produced their own high-performance four-stroke
motorcycles.

3. Pioneer:

Yamaha's history goes back over a hundred years to 1887 when Torakusu Yamaha
founded the company, which began producing reed organs.
Driving Factors: Govt policies

Changing
consumer Economical
perception

Driving Factors

Increasing
Growing
market
population

Chapter No 2

Strategic Management review:

Major decision and their impact:

1. Increase cost of raw material:

Assemblers had raised prices in January 2011 due to rising production cost in view
of hike in utility charges and surging rates of plastic, tires, aluminum, steel, etc.
Motorcycle assemblers however said that higher incomes due to good crops of
wheat, cotton, rice, etc., had encouraged growers to buy new bikes.

The maker of Suzuki bikes also witnessed 24.5 per cent rise to 15,148 units as
compared to 12,160 units while sale of Yamaha bikes fell by eight per cent to
84,823 units from 92,622 units.

Even demand for other bikes also improved. Like:

1. Ravi bike sales rose by 15.4 per cent to 19,820 units from 17,164 units
2. Sale of Habib bikes increased by 2.5 per cent to 15,130 units from 14,761
units.
 3. Sale of Hero and Qingqi bikes swelled to 29,408 and 2,004 units from
25,947 and 1,432 units.

Chinese Bikes:

The Chinese bike assemblers, who are enjoying good sales in urban areas, were
perturbed over higher valuation advice issued by Director General Valuation on
March 26, 2011 for 51 Chinese-origin 70cc motorcycle parts.

How is Natural Disaster Affecting Japanese Motorcycle

Manufacturing?
“Japan's corporate culture is famous for 100 year business plans and forward-
thinking innovations, so it's no wonder that the country's recent earthquake and
tsunami have cast a pall of uncertainty over the nation's motorcycle
manufacturing business.”

How has natural disaster affected Japan's big four-- Honda, Kawasaki, Suzuki,
and Yamaha?

As it stands, Honda's automotive factory suffered the most serious damage, and
the Tochigi factory facilities will be shut down until March 20th, along with
several other factories, including the Kumamoto facility where the CBR600,
VFR1200F, DN-01 and Super Cub are built. Kawasaki Heavy Industry's Akashi
factory is located 400 miles southwest of the primary disaster area, and "didn't
experience any direct effects from the earthquake," according to a company
statement. Suzuki has stopped production at six plants until at least March 17,
and Yamaha has avoided major damage but won't resume production until
around March 23.

While car manufacturers like Toyota have seen tens of thousands of vehicles
worth of lost production, most automotive companies run at an average of 61
days of inventory supply. According to Kelley Blue Book, "in the short run, it
appears as though there are enough vehicles on dealer lots in the United States to
withstand a short-term production cutback," as cited in a Media Post article.

The motorcycle industry, however, is more fragile at the moment due to

precipitous sales drops in recent years, making it particularly vulnerable due to its
non-essential (i.e, discretionary) nature. With warm weather signaling greater
demand, a reduction in inventory could become more noticeable than in the four-
wheeled business. And on a separate note, the MotoGP race at Twin Ring Motegi
has been postponed, and Tokyo Motorcycle Show has been canceled.

Honda has donated 1,000 generators to aid with rolling blackouts and offered 300
million yen (around $3.8 million) towards relief and recovery. If you're a
motorcyclist looking to support Japan, I recommend checking out Moto for Japan,
an organization which says that, "Whether you're a rider, a racer, an industry
employee, or a fan of any of the Big Four, this is your opportunity to give back to
one of the most important nation-contributors of all things riding and racing."

2. Diversification:

From the 1960s, Yamaha Motor Corporation started diversifying into other
businesses to reduce the company's dependence on its motorcycle business.
The company's management was confident that the diversification strategies
being followed would be beneficial to the company in the long run. Several
analysts were also of the opinion that the company was correct in diversifying
into other businesses. But others were sceptical about Yamaha's diversification
strategies and opined that the company should have stuck to its core business
of manufacturing motorcycles.

Pedagogical Objectives:
To understand the evolution of Yamaha over the years and analyze the
rationale behind the company's diversification into businesses other than
motorcycles
To discuss whether Yamaha was right in diversifying into other businesses.

3. Yamaha Merger:

Yamaha Announces a Change in the Date of the Merger of Two Domestic Audio
Engineering Subsidiaries.
Yamaha Corporation has announced the merger of two subsidiaries engaged in
providing engineering services related to professional audio equipment with the
objective of strengthening its position in this business in Japan. However, the
merger of these two companies––Yamaha Sound Technologies Inc. (Head Office:
Chuo-ku, Tokyo; President: Shuji Fukushima; hereinafter, Yamaha Sound
 Technologies) and FUJI SOUND CO., LTD. (Head Office: Chiyoda-ku, Tokyo;
President: Makoto Takanose; hereinafter, Fuji Sound), has now been postponed
from the originally scheduled date of January 1, 2009, to April 1, 2009, because
the time required for relocation to a new office and completion of other
preparations will be longer than originally anticipated.
Please note that Makoto Takanose, currently president of Fuji Sound, is scheduled
to assume the office of president of the newly merged company, Yamaha Sound
Systems Inc., which is outlined as follows.

Outline of the New Company to Be Formed through the Merger:

Company name Yamaha Sound Systems Inc. (YSS)

Address Nihonbashi Daini Building, 41-12, Nihonbashi Hakozaki-cho, Chuo-ku, Tokyo

Business locations Tokyo, Osaka, Nagoya, Fukuoka, and Sendai

Representative Makoto Takanose, President and Representative Director

(Mr. Takanose is scheduled to assume the office of president and is

Currently president and representative director of Fuji Sound.)

New scheduled date of the April 1, 2009

merger

Lines of business Planning, system design, installation, adjustment, maintenance, etc.,

related to professional audio systems as well as development and manufacturing of

professional audio equipment

Paid-in capital ¥49.6 million (100% invested by Yamaha)

Number of employee 140

Sales target ¥6.0 billion in the third year following the merger
 4. Yamaha Global Operation:

Japanese automobile major Yamaha is planning to make India the hub to

manufacture premium motorbikes for global markets. In the past year, the
company registered a three-fold increase in two-wheeler exports from India,
driven largely by the growing international demand for high-end bikes.

"We will fully utilize the infrastructural facilities that we have set up here in India
to push our exports further.

The Indian unit supplied 66,904 bikes in fiscal 2010 to Yamaha's global operation,
compared with 38,639 units in 2008-2009. These two-wheelers were sold in
countries such as Colombia, Sri Lanka, Indonesia, Kenya, Bangladesh and the
Philippines. Yamaha exports bikes such as Gladiator Type SS, FZ16, YZF-R15, Crux,
Enticer, Alba and G5 out of India. "We are seeing a huge demand for exports,
which grew at 73% in the past year," said Mr Dubey. In contrast, demand for
Yamaha bikes in India grew at 25% in the same period.

The focus on selling high-end bikes in the 150cc category and above has worked
well for Yamaha. This year, the company has gained a 12% share of the $8-million
two-wheeler market, up from a share of 5% in 2006. Now, the company targets to
increase its share in the premium and deluxe segment to 20% by 2010-end. In the
previous year, Yamaha sold 223,307 motorbikes in the Indian domestic market,
compared with 162,370 units in 2008-2009.

Yamaha will also expand its product portfolio in India by launching a scooter that
will tap into another growth segment. As per the data by the Society of Indian
Automobile Manufacturers (SIAM), in the financial year 2009-2010, the two-
wheeler industry clocked growth of 26% in the domestic sales and 13.54% in
export.

5. Yamaha Innovation:

Yamaha Vixion is the leading product from Yamaha Motor Japan on the sport bike
category along with Yamaha New Scorpio and Yamaha Byson. The latest New
Vixion 2011 doesn’t have any changing from their Yamaha Vixion 2010 last year.
New Vixion 2011 using full injection and new head lamp (face-lift) and not used
the circle head lamp. New Vixion 2011 also keeps the color stripping the same and
the basic color also the same.

With engine capacity 150CC new Vixion 2011 consumes less fuel rather than
similar motor bike on the same class.
Jakarta – Most motorbike manufacture recently have launch their new product on
the sport category which has big engine capacity 250CC. Namely Honda motor
with their new CBR 250, Kawasaki with their Ninja 250 and others.
Yamaha looks don’t want to miss this opportunity they plan to launch the product
as well. Yamaha Motor with their new innovation will creating new product on
250CC class soon and make this product as their Flagship model in Indonesia.

This innovation is one of the Yamaha product cycles and they plan to use their
factory in India to manufacture the new Yamaha 250. The information from
Yamaha the factory in India can produce 600k units per year and can be increase
in line with the demand and market.
Actually Yamaha already have several model on the market which already on the
same capacity i.e. YBR in South America, FX, Fazer, Crux and other else. Please
wait the new Yamaha 250 lauch in Jakarta soon.

6. Major setbacks / failures:

Yamaha needed a way to manage its distribution channels and partners more
effectively, and it recognized that Document Sign was a strategic business tool that
could improve the company’s existing processes. With such a vast network of
authorized dealers; Yamaha sales representatives needed a better way to manage
signing contracts with their accounts. Because of a change in its Internet sales policy,
Yamaha had to work with its entire dealer network, essentially at once, to update its
master dealer agreements. Yamaha explored options for easing its contract-signing
process that would benefit the internal sales team as well as dealers. But the
company felt that there was more to simply getting contracts signed; it wanted to
strengthen its relationships with its dealers and position Yamaha as a progressive
company that adopts new technologies to become more efficient. In addition, it
wanted to find a way to incorporate contract signing into its existing CRM system
from Sales force.com. By tracking all of the interactions that the sales team had with
customers, including contracts, Yamaha management could get a global, 360-degree
view of its customers. And, most importantly, Yamaha wanted to make sure that its
dealers would have a positive experience working with the company.

1. Could not innovate their products early

2. Less feature as compare to Honda
3. Low marketing struggle
4. Less campaign

Chapter No.3

Environmental influences and the response by the company:

A company’s external environment elements, physical and social environment

have five factors such as

1. Political
2. Economic
3. Socio-cultural
4. Technological ecological
5. Legal factors.

These factors are also called PESTEL factors. There is also another element of
external environment such as competitive environment.

1. Political:

The company’s activity is in the framework of the regulation in the area it

operates. Years ago two stroke motor bikes are banned in Japan because of
the high rate of pollution. At that time Yamaha was specialized in two stoke
motor cycles. Because of the new regulation Yamaha had to pull all two
strokes motor cycles from Japan market and launch four stoke motor cycles.
 2. Economic Environment:

The increasing number of keep cheap workers available to work in the

factories. The disposable income of the consumer mostly remains the same so
motorcycle credit is the best choice for lower class people.

3. Socio-cultural environment:

Socio- Cultural environment is influenced by demographic factor such as the

concentration of population in same geographical area.

e.g.: So many people from all over the Japan load Tokyo the motor cycle would
be the stored mostly In Tokyo to fulfill the need of consumers.

4. Technological environment:

Jon fieris said that manufacturing the motorcycles, there five steps such as

Welding
Painting
Furnishing
Assembling
Machining

The manufacturing processes of the motorcycle are done 50:50 by workers

and the machines.

5. Competitive Environment:

Yamaha biggest competitor is Honda, which has been launching two products
Honda Vario, and Honda Revo to beat Yamaha Motorbikes.
Yamaha does not bother new entrants in the industry, because Yamaha and
Honda already conquered 80% of the motorcycle market, so Yamaha only has to
concentrate in competing with Honda.

Customers demand good quality product at a lower price which in this case
Yamaha wins over Honda. Yoke Setiawan said that almost all components of
Honda are imported from china, which will not last long.

Chapter No 4

Strategic Intent with Strategies:

Evaluation of existing strategies:

Global Vision:

Yamaha desire is to lead the world in technology and make a significant

contribution to the creation of a better society as a result most of the products
that Yamaha developed started out of making a difference.

Yamaha's turnaround strategy:

Reeling under operating loss of Rs 336 crore in 2010, Yamaha is adopting a

turnaround strategy involving structural, financial and marketing fronts.
Reeling under operating loss of Rs 336 crore in 2010, Yamaha is adopting a
turnaround strategy involving structural, financial and marketing fronts. For
starters, Japanese trading company, Mitsui will take up a 3 per cent stake in
Yamaha and contribute 30 per cent of the Rs 696 crore capital investments
Yamaha India is going to make to shore up its finances. Parent company Yamaha
Motor Corp (YMC) Japan is fully supportive of the revitalization plan of its arm and
will be pumping in funds to the tune of Rs 800 crore in the coming 3 years to wipe
out accumulated losses of the subsidiary, since 2001.

Suggested Strategies and program:

Yamaha can increase the image of the brand worldwide through:

5. Yamaha allows the customer to buy the motorbikes on credit

Yamaha checks the credit application fast and maximum two days, it
can give the reply whether the credit application is accepted or not.
6. Yamaha can offer three years warranty on all of its motorbikes
7. Yamaha can give free gift on each purchase
8. The worm hamlet and jackets with the Yamaha brand written on it
9. Yamaha can start a campaign to promote discipline like Yamaha
Safety Riding Science on the road due to increasing number of
motorcycle accidents.

The strategies and programs are mostly strategic to increase the image of the
brand and also sale of the products by giving credit, warranty, gifts, campaign etc.

Chapter 5

Objectives:

Long Term:

Be the Exclusive & Trusted Brand renowned for marketing and manufacturing of
YAMAHA products, focusing on serving our customer where we can build long
term relationships by raising their lifestyle through performance excellence,
proactive design & innovative technology. Our innovative solutions will always
exceed the changing needs of our customers and provide value added vehicles.

Build the Winning Team with capabilities for success, thriving in a climate for
action and delivering results. Our employees are the most valuable assets and we
intend to develop them to achieve international level of professionalism with
progressive career development. As a good corporate citizen, we will conduct our
business ethically and socially in a responsible manner with concerns for the
environment.

Grow through continuously innovating our business processes for creating value
and knowledge across our customers thereby earning the loyalty of our partners
& increasing our stakeholder value.
Short Term:

To capture the market with offering quality motorbikes and by demanding lowest
price.

Chapter 6

Main issues internal/ external:

1. Internal Issues:

Yamaha struggles with personnel issues, competition:

Sales growth hit by delayed plans even as turnover at key levels an issue.

Yamaha Motor Company, the world's second biggest motorcycle maker, is having
a tough time like:

1. Retaining people in its Indian subsidiary, even as plans of expansion and

launch of new models amid intense competition becomes imperative.
2. The company has had three Japanese executives for the post of managing
director over three years.
3. In addition, its senior and mid-level marketing team has seen immense
churn, as employees actively scouted for further opportunities.
4. Yamaha's talent migration comes at a time when the company had finally
got its footing right in the Indian market with the success of models such as
the FZ series and the R15. Prior to 2008, the Japanese company was largely
neglected by consumers for lack of excitement in its product range.
5. Intense competition in the performance biking segment (150cc and above)
resulted in the company not being able to meet its set target of sales and
market share last year.

2. External Issues:

There are number of different issues Yamaha facing nowadays like:

 High prices of raw material
High labor cost
Different new entrants
Competitors
High taxes
Chinese models

Chapter No 7

1. Manufacturing process:

Yamaha manufacturing facilities comprises of 2 state-of-the-art Plants. Currently

10 models roll out of the two Yamaha Plants.

The infrastructure at both the plants supports production of motorcycles and it's
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. They have In-house
facility for Machining, Welding processes as well as finishing processes of
Electroplating and Painting till the assembly line.

The stringent Quality Assurance norms ensure that our motorcycles meet the
reputed International standards of excellence in every sphere.

As an Environmentally sensitive organization we have the concept of

"Environment-friendly technology" ingrained in our Corporate Philosophy. The
Company boasts of effluent Treatment plant, Rain water - Harvesting mechanism,
a motivated forestation drive. The IS0-14001 certification is on the anvil - early
next year. All their endeavors give them reason to believe that sustainable
development for Yamaha will not remain merely an idea in pipeline.

They believe in taking care of not only Your Motoring Needs but also the needs of
Future Generations to come.
2. Control mechanism:

Traction control is a widely used control system to increase stability and safety of
four wheel vehicles. Automatic stability control is used in the Yamaha motorcycle
and in MotoGP competition, but not in other motorcycles. This presents an
algorithm and a low-cost real-time hardware implementation for motorcycles. A
prototype has been developed, applied on a commercial motorcycle, and tested
in a real track. The control system that can be tuned by the driver during the race
has been appreciated by the test driver.

3. Evaluation techniques:

The main evaluation methods of Yamaha two-stroke engine oil were standardized
as the JASO (JASO: Japanese Automobile Standard Organization) method in 1993.
After the establishment of the JASO specification, the person executed an
evaluation of various oils. As a result, it has been determined that an examination
method that also evaluates the differences in demands on oil caused by regional
characteristics and use conditions of the engine is necessary. Thus, the three
following methods were developed.

1. The first is a method of low-temperature detergency examination.

2. The second is a method of low-temperature start-ability examination.
3. The third is an exhaust port carbon blocking examination.

Chapter No 8

Swot Analysis:

1. Strength:

Currently good market position

Produce long last products
Well established and trusted
Continuously does product improvement in accordance with
demanding customers.
The distribution network of Yamaha Motors is very wide and
spread across the country.
Probably the best in terms of R&D facility.
Has a great brand name
 2. Weaknesses:

Lack of experience in fixing automatic motorcycles

Narrow product line
Series of flap motorbikes like:RX100 and RD350.

3. Opportunities:
The products are cheaper then Honda
Growing demand in new market
Banks are willing to give motorcycles credit in increase sales
Innovative products
Consumers have become technology conscious and Yamaha
Motors have best R&D facilities.
So they can tap new costumers with innovative technology in
motorcycle design and manufacturing.
There lies lot of potential in 150cc and above segment and
Yamaha has not made enough inroads in this segment.

4. Threats:

Fewer amount of dealer as compare to Honda

The products have lower reselling values than Honda products
Honda launched competing products
The market share difference with Honda is very thin.
Constant demand to reduce the prices.

Conclusion:

Launching Yamaha new product is perfect strategy to gain market share

and be the market leader over Honda in Japan market. Yamaha has to come
up with new strategies to keep and gain more market share. Over all the
performance of Yamaha is impressive.