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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 YAMAHAS 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
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India Yamaha Motors Limited


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 Yamahas 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.
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Chapter: EXECUTIVE SUMMARY

India Yamaha Motors Limited


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. Yamahas 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

India Yamaha Motors Limited


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.
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Chapter:

India Yamaha Motors Limited


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

India Yamaha Motors Limited


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

India Yamaha Motors Limited


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

India Yamaha Motors Limited


INDUSTRY ANALYSIS - Two Wheeler Geared Bikes
Kinetic Mahindra Deal Gearless bikes: M&M, Indias 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

India Yamaha Motors Limited


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

India Yamaha Motors Limited


- 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

India Yamaha Motors Limited


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

India Yamaha Motors Limited


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 dealers 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 Inhouse 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

India Yamaha Motors Limited


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

India Yamaha Motors Limited


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 T
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

India Yamaha Motors Limited


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 dont 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

India Yamaha Motors Limited


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/200-300cc-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-awinwin-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-atrs-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-WHEELERP-P-T
2
Chapter: REFERENCES

India Yamaha Motors Limited


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

India Yamaha Motors Limited


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

India Yamaha Motors Limited

Annexure B Achievements of Premium Segment Bikes of Yamaha


Bike of the the Year 2010 (SZ-X) by ET Zigwheels. 150cc Commuter Motorcycle
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