SAFe Criteria And Business Analysis Of Yamaha

Overview of Yamaha

Discuss about the SAFe Criteria Of Acronym for Suitability.

This assignment will discuss about the SAFe criteria. SAFe is the acronym for Suitability, Acceptability and Feasibility. Under suitability SWOT, PEST and Porter’s five forces theory will be conducted to understand the key external and internal factor that affects the organisation. Yamaha has been selected as the organisation to understand its key external and internal factors, Strengths and weaknesses that the organisation is having and the opportunities and threats that the organisation may face or is facing recently. Ansoff matrix has also been discussed in this report to provide some strategy how it can help Yamaha in expanding the business.  The Ansoff model will discuss about product development, market penetration, market development and product diversification.  Yamaha is a reputed company with a huge market share and is loved by all for its excellent quality and service they provide. Yamaha has a number of products starting from musical instrument to electronics but the most profitable sector of Yamaha is the motorcycle division. They have a huge brand goodwill in the market and a good customer base but in recent years, they have suffered reduced sales and many other issues, which are discussed in this assignment. This report will discuss about the problems and will provide some recommendation how the problems can be minimised (Yamaha.com, 2018).

SAFe is the acronym for Suitability, Acceptability and Feasibility. Jerry Johnson developed this model to analyse the business strategy and the organisation. Under suitability SWOT analysis, PEST analysis, Porter’s five forces theory and the value chain analysis are conducted to understand the internal and the external factors that affect the working of the organisation. The acceptability factor examines whether the strategy meets the stakeholders expectations, the risk level, which the organisation is taking, is acceptable, the return on investment is suitable for the organisation or not. Feasibility helps to understand whether the organisation will work in the environment, how the organisation can be financed, availability of skilled labours or how the skilled labour can be achieved and how the resources can be obtained for the organisation. In the assignment, we will use PESTEL, Porter’s 5 forces theory, value chain analysis and the SWOT analysis for examining the suitability of the organisation (Johnson 2016). Ansoff model will examine the acceptability of the current strategy by the stakeholders. In the assignment, Yamaha is chosen to understand to examine their business strategy (Team 2013).

SWOT Analysis of Yamaha

Yamaha is a Japanese conglomerate and multinational company, which deals with a various range of products starting from musical instrument to electronics (Khan, Jain and Sharma 2013). Yamaha is also a largest producer of consumer vehicles like superbikes but the motorcycle division got separated from the main company in 1955 and formed Yamaha Motors. Torakusu Yamaha founded Yamaha Corporation in October 12, 1887. The headquarters of Yamaha is located in Shizuoka, Japan. The organisation earned revenue of 408.2 billion JPY in the year 2017. The operation income of the company is accounted 44.3 billion JPY at the end of 2017. Yamaha had a net income of 46.7 billion JPY in 2017. The organisation employs 28,112 employees worldwide, which includes temporary employees (Yamaha.com, 2018). Yamaha is the largest manufacturing brand of piano in the world.

Yamaha has a wide range of products and some of its key products are listed below:

• Musical instruments such as piano, guitars
• Audio equipment’s such as speakers, music systems
• Electronics product

Under its subsidiary company, Yamaha Motor Co. Ltd produces the following products:

• Motorcycles
• All-terrain vehicles
• Marine engines
• Wheelchairs
• Personal Watercraft

SWOT analysis will help us to understand the strength, weakness, opportunities and threats that the organisation is facing or might face in the future. SWOT analysis examines the internal and the external factors (Wang and Ge 2013).

Strengths:

• Yamaha Corporation has excellent brand value. The advertising of the Yamaha products is one of the key factors, which led them to huge popularity and brand awareness among the customer (Iglesias, Ind and Alfaro 2013). The distribution channel of Yamaha is better than many of his rivals, which has let them to expand their business worldwide and maintain a good customer base.
• The organisation has employed over 25000 employees who are trained and skilled in their field. Most of the products of Yamaha Motors are made in Japan and India where skilled labours are available in huge numbers.
• Yamaha is the largest manufacturer of pianos (Immawan and Kurniawan 2016). Yamaha is also a major brand in the motorsport like World superbike, MotoGP etc. Yamaha Motors Co. Ltd. has a huge market share and the most profitable among all other Yamaha motors product.
• Yamaha’s industrial infrastructure is huge and equipped with high-end technology, which helps them errorless manufacturing and help them to manufacture in a huge quantity in a less amount of time.
• Yamaha has a huge product range, which starts from musical instruments to Motor division. Product diversification helped Yamaha in increasing the brand awareness among the people. Wide product range helped in reaching to different types of customers (Hutzschenreuter and Horstkotte 2013).
• Yamaha products are well known for its rigid built and excellent quality. Yamaha is a reputed company and they are highly focused on making products of higher quality (Ebaid, Ammoura and Al-khishali 2016).

Weaknesses:

• Yamaha has an excellent advertising strategy but still it has some weaknesses in their advertising and marketing. Yamaha is at the top of the BCG matrix; therefore, it needs a huge expenditure in the Advertising (Mooradian, Matzler and Ring, 2013). Compared to its rivals like Hero motors or Hyundai, Yamaha used the television marketing ineffectively. However, newspaper advertisement and magazine advertisement can be seen regularly but a brand like Yamaha should use the television more effectively.
• Yamaha has a huge weakness, which comes in the form of poor after sales service. Yamaha’s service counters are very less and it is very inconvenient for the customer to service their vehicle (Parts, 2015).
• As per reports, the sales of Yamaha products are decreasing specially the motor divisions sales have decreased in recent years (Fyhri and Fearnley 2015).

Opportunities:

• With the advancement of technology and increasing price of the fuel, consumers are switching from fuel consuming vehicles to electric bikes. Electric bikes are relatively cheaper and are eco-friendly consumer will prefer electric bikes to regular bikes (Bai et al., 2013)
• Yamaha’s most of the products are high-tier segment motorcycles, which are of premium quality and are expensive. Yamaha should look on the low-tier and mid-tier products also, which will help them in boosting their sales.
• Yamaha should expand their business in the developing nations as well. The developing nations can provide them huge revenue. This expansion of products is not limited to the motor division it can also be applied to other products of Yamaha as well (Beamish, 2013).

Threats:

• Yamaha is facing a tough competition in the market from the Indian brands as well as from many international brands. Indian brand Bajaj has taken a huge customer base from Yamaha with the help of brilliant brand positioning in the market (Pochet et al., 2017).
• Rising fuel prices and changes in government policy is responsible for the decrease in sales of the motorbikes.
• Yamaha is also facing indirect competition. It has been observed that consumers are preferring scooters over motorcycles nowadays. Many consumers do not prefer bikes and they have purchased cars instead of bikes or scooters.

PEST analysis will help us to understand the Political, Economic, Social and Technological factors that affect Yamaha.

Political factors:

• Political factors include the political influence over the motorcycle industry. Change in political leaders brings many changes in policies of the government. For example, present India government has raised the prices of fuel, which resulted in the decrease in sales of Yamaha.
• Tax policies of different countries influence the buying habit of the consumer.
• Trade regulations are one of the important factors that the organisation look into while exporting their vehicles.

Economic factors:

• Economic growth of the company influences the growth of the organisation in a particular country. A developed country will also give more revenue than the underdeveloped country. A country with lower economic growth will results in lower sales of their product.
• Inflation in a country will hamper the sales of the motorcycle in a particular country. Inflation rate highly influence the sales of the product.
• Availability of low cost labour and raw materials also attracts the motor industries.

Social factors:

• One of the most aspects is popularity of the transportation mode. In many countries, people prefer bikes and in many countries, people like to travel by car. This buying habit according to their preference of the mode of transportation influences the sales.
• People in the developed economy prefers safety as a result, they choose cars over bikes as cars are safer than the bikes. This affects the sales of the motorbikes.

Technological factors:

• Technological factors such as fuel efficiency highly influence the buying habit of the consumer. With rise in fuel prices customers are becoming more budget concerned. They are preferring bikes with high fuel efficiency.
• Advancement in technology has brought electronic scooters in the market, which is economical and cuts down the prices. Yamaha should bring out their own electric vehicle, as the consumers prefer electric vehicles to the fuel consuming vehicles.

Porter’s five forces theory helps to understand the eternal factor that affects an organisation.

Bargaining power of suppliers (Low)

The bargaining power of supplier for Yamaha has reduced over the years. The reason for their reduced bargaining power is high number, the want for quality and geographical presence. The important factors for determining the power of the supplier is brand name and quality. Nowadays brand wants their suppliers to have a great brand image, good quality and they should follow the right regulations. The suppliers for the motorcycle industry is spread all over the world. Yamaha has its suppliers spread out all over the world, this are the reasons why the bargaining power of the supplier is low.

Bargaining power of the buyers (Moderately high)

Bargaining power of the buyers is dependent on many factors, which includes marketing, prices, market size and so on. The most important factors is size of the competition. The size of competition in the motorcycle industry is very high and which has led to price competitiveness between the rival brands. This has led to the rise in the bargaining power of the buyers. Customers have a lots of option from which they can choose and this has increased the rise in the bargaining power of the buyers.

PEST Analysis of Yamaha

Threat of substitute (Low)

The two factors that have increased the threat of substitute product is competition and brands making small cars. In recent years, the threat for substitutes have grown for the motorcycle sectors. However,motorcycle sector have a wide customer segments and Yamaha has a good brand loyalty for its excellent efficiency and technology. However, the threat of substitute product may increase with the rise in fuel prices. Customers are looking for fuel-efficient bikes and Yamaha has realised this and launched many new bikes recently, which are fuel-efficient, and this has decreased the risk of being substituted.

Threat of new entrants (Low)

New entrants or new organisation does not pose much threat to the existing brands. The important factors that influence this threats are marketing, high level of investment and expenses by HR. New entrants need a high level of monetary investment to establish a new brand in the competitive market. Marketing of products and skilled HR have led to increase in the costs of the motorcycle industry. Any new competitor who wants to enter into the market have to face many barriers. One of the barrier is laws. Law is the most vital barrier, which can decrease the pace of the growth and can became a roadblock for the growth of the brand.

Threats for competition (High)

The threat for competition between the brands is high in the 21^st century. This has happened due to the increased number of brands in the market and each of the brand are focused on quality, customer convenience, technology and pricing. These factors are necessary for increasing the customer loyalty. Yamaha is facing a huge competition from different competitors in the every price range. Yamaha is facing competition from Ducati to Honda and many more. To a quite extent, Yamaha has been successful to overcome this threat because of its brand image, customer service and excellent technology. However, the availability of brands with excellent technology quality and efficiency has overall made the competition high.

Porter has adopted generic strategy that consists of four different aspects. These four generic strategies are cost leadership, cost focus, differentiation focus, differentiation leadership. This strategy helps to take a competitive advantage.

Cost leadership:

• High production: Yamaha can expand their market as well as they can expand their production rate, which will help them to sell more products and eventually they can decrease the prices of their products.
• Use of the bargaining power: As discussed earlier Yamaha has the advantage of low bargaining power of the supplier. Yamaha can negotiate with their supplier and can obtain the production input at a lower cost, which will reduce the cost of production and they will be able to cut down the prices of their products.

Cost focus:

Cost focus means charging a price, which is lower than its competitor’s price range. Cost focus will help Yamaha in creating market in the developing economy. Yamaha has the best technology among all its competitors and if they can lower the prices to a certain extent then they can get a new customer’s base.

Porter’s Five Forces Analysis of Yamaha

Differentiation focus:

Differentiation focus strategy means to differentiate the products for a particular customer base. This helps in growth of the organisation. Many small business organisations become successful by developing different products for a particular customer base. Yamaha can focus on the young generation who loves racing and come out with more sport bikes at a lower cost. Sport bike manufacturer Bajaj, Honda have launched bikes that are too costly for the young generations to afford, Yamaha can take this advantage and reduce their prices.

Differentiation Leadership:

Differentiation leadership targets larger markets and tries to achieve competitive advantage by using differentiation in the whole industry.

• Superior product quality: Yamaha is known for its superior product quality. Yamaha has a rigid build and the technology that is used in Yamaha have always attracted customer.
• Branding: Yamaha has a strong customer recognition and brand loyalty that has helped them in gathering attention during any product launch.

Ansoff model:

H.IgorAnsoff developed a model to examine the potential risks of the company. The Ansoff model consists of four parts- Market development, product diversification, market penetration, product development.

Market development

Market development means expanding business in a different territory (Armstrong et al., 2015). Yamaha is spread worldwide and they have good distribution channel. However, with increasing competition by local and international brands it is becoming tough to earn a stable revenue. Reports have also proved that the sales of the Yamaha motorbikes have substantially decreased in last few months. Yamaha should expand its business to the underdeveloped or developing economy. India being a developing economy has provided a huge revenue to Yamaha and it is expected that by 2019 India will be the second largest two-wheeler market for Yamaha. Yamaha should target Bangladesh, Sri Lanka, and Pakistan to expand their business. 

Product development

Product development means creating a product with different or new characteristics, which gives additional and new benefits to the customer. With the increase in prices of the fuel consumer are preferring fuel-efficient bikes and scooters. Yamaha has observed this and started bringing bikes, which are fuel-efficient. Customers nowadays preferring scooters to bikes and Yamaha should give attention in manufacturing scooters as that may increase the sales of their product.

Market penetration

Market penetration is another strategy in the Ansoff model. Market penetration means penetration means focusing on selling the old or existing products into the market to gain a better and higher share of market (Schmidt, Spann and Zeithammer, 2014). Yamaha should improve their marketing strategy like advertisement of their products, which will give help them to reach more customers. They should use the television advertisement more effectively like Honda or Bajaj. They can also bring the strategy of price cut for their existing products however, that should be done carefully or the organisation may suffer a huge loss.

Ansoff Model for Yamaha’s Business Expansion

Diversification

Diversification is a marketing strategy used for entering a new product market or industry. As discussed earlier customers are becoming more budget-oriented and they are looking for cheap but efficient alternative. With the introduction of electronic bikes, customers have reduced using or purchasing the fuel consumed bikes. The electronics bikes are more economical and eco-friendly. Yamaha should diversify and should start manufacturing the electronic bikes, which will help them in keeping the customers (Huang, 2017).

Yamaha’s business activities are operated through different interested parties. They consider those parties to be the key stakeholders of the organisation. They categorise those stakeholders into different groups such as, shareholders and investors, customers, employees, people in the local community and the business partners.

Yamaha encompasses “Sound and Transparent management”, “Quality-Conscious and Customer-oriented Management”, “Harmony with society” and “Valuing people” as promises made by Yamaha to its stakeholders (Castellanelli, 2016).

Key stakeholders of Yamaha

The key stakeholders of Yamaha are:

• Shareholders and investors
• Employees
• Customers
• Local communities
• Business partners
• Global environment
• Government
• Suppliers

Break-even analysis:

Yamaha’s products are priced at a relatively higher price. There are many brands who are providing same specification at a lower price. This is one of the reasons behind the decreased sale of Yamaha products. To reach the breakeven point Yamaha needs to cut down the prices to a certain a point like its competitor. 

For the motorbike industry, the supplier is spread all over the world. The resources are available in abundance and for Yamaha it is very easy to get the resources as they have a huge goodwill and the supplier wants to supply them to increase their goodwill as well. Yamaha needs a huge amount of skilled labour, which is available in huge quantity in India as well as Japan. Yamaha’s most of the engines are made in India. In India, the resources are available and are cheaper.

The resources for Yamaha bikes like aluminium, rubber for the tyres, steel for the alloy wheels and other resources are supplied from India. The Indian based manufacturing plants get the resources at a lower cost, which helps Yamaha to keep the prices lower. However in Japan, and other countries where Yamaha has their own manufacturing plant gets supply from India as well as from the local vendors.

Yamaha is facing some problem regarding increased sales in recent years, this is due to the increased competition, rising fuel prices, more efficient substitutes. This plan will discuss how the sales can be increased despite of having huge competition in the market.

Mission statement:

The main mission is how the sales can be increased. It is evident from the reports that the sales of Yamaha has decreased substantially in recent years. Yamaha Motor Co. Ltd. is the most important part of Yamaha Corporation as it has the maximum number of market shares. Most of the revenue of Yamaha Corporation comes from the Yamaha Motor Co. Ltd. If the Yamaha motor division suffers loss then the whole Yamaha Corporation will suffer loss.

Strengths of Yamaha Motors Co Ltd

• Wide product range
• Good brand reputation
• Excellent quality and rigid build

Weaknesses of Yamaha Motors Co. Ltd.

• Weak marketing and advertising
• Inconvenient after sales service
• Sales is dropping

Opportunities for Yamaha Motors Co. Ltd.

• Electric bikes
• Manufacturing low tier bikes
• Distribution can be improved

Threats for Yamaha Motors Co. Ltd.

• Competition
• Indirect competition
• Rising fuel prices

Yamaha has done a number of things right, which helped them in making a brand image that they are having today. Yamaha has the largest market shares, which happened due to the service they provide. Yamaha has the best engines among all its competitors. Yamaha have always focused on quality and continuously works on improving the quality of their products. Customer nowadays prefers quality products and Yamaha never disappointed their customer base by compromising with their quality. This has led to popularity of Yamaha in the MotoGP racing (Overend, 2017). Yamaha’s low range motorbike R15 become customer’s favourite in just few months after its release. Apart from this Yamaha has a wide range of products, which have increased brand recognition among the customers.

Yamaha is one of the most recognised brand in the world. Starting from musical instrument to electronics Yamaha has a wide range of products. The most important part of Yamaha Corporation is the Yamaha Motor Co. Ltd., which has the maximum market share. However, Yamaha has a good reputation and excellent brand awareness it has suffered reduced sales. This has happened due to the increased competition and rising fuel prices mainly. Yamaha should bring more fuel-efficient bikes. They should also bring low tier segment bikes that can be affordable by the customers. They should also diversify their product and bring electric bikes, which are economical and more efficient (Su and Tsang, 2015).

They can expand their business in the underdeveloped country by introducing low tie segment bikes for them. With the rising fuel prices customer will be shifting in to the eectric bikes that are less expensive and more economical for daily commute (Cheilari et al., 2013).

Conclusion:

Yamaha is a Japanese multinational company with a wide product range starting from musical instruments to electronics. Yamaha has the biggest market share on the motorcycle division and most of the revenue is earned from the motorbike segment. Yamaha has a good brand awareness and reputation for the service and quality they provide. By conducting SWOT analysis it gave a clear idea about the strength and weaknesses of Yamaha for example it has good reputation, it has a wide range of products, and weaknesses like it has ineffective marketing strategy, poor after sales service and etc. It also gave idea about the opportunities lying ahead of Yamaha and the threats the organisation might face. PEST analysis helped to understand the environmental factors that affects the organisation. Porter’s five forces theory helped to understand about the five crucial forces. Ansoff model explaine how it can penetrate the market, develop products, diversify its product range and how it can expand its business. Strategic plan has also been made to understand and solve the problems that Yamaha is facing. To conclude, Yamaha should focus on fuel-efficient bikes and bring scooters in the market that will help reduce the problem of dropped sales.

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