24
Strategic Management Project NITESH KUMAR GUPTA | MAHTAAB KAJLA | PRACHI CHAWLA RAHUL MITTAL | VINNY ARYA | VISHAD DUBEY

Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Embed Size (px)

Citation preview

Page 1: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management Project

NITESH KUMAR GUPTA | MAHTAAB KAJLA | PRACHI CHAWLA RAHUL MITTAL | VINNY ARYA | VISHAD DUBEY

Page 2: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

Agenda

Market Overview

OUR FOCUS OF STUDY

YAMAHA’S CHANGING STRATEGY

EXTERNAL ENVIRONMENT ANALYSIS

Porter’s 5 Forces

INTERNAL ENVIRONMENT ANALYSIS

RECOMMENDATIONS

Page 3: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

India- Second largest producer of motorbikes after China

Motorbikes market ’The big bull’ of Indian automobile industry - 80% share of motor bikes in two wheeler industry

Presence of giants and their diversified portfolio of products: Hero Honda, Bajaj, TVS, Honda Motors, Yamaha

Three major bike segments

- Entry Segment Bike (till 150cc)

- Premium Segment Bikes (150cc-250cc)

- Sports Bikes (Above 250cc)

Market Overview

Page 4: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

PREMIUM SEGMENT BIKES IN INDIA

Increase in distinctive and customized products in the market

Economy is booming

Huge margins

Targeting 20% market share in this segment by 2010 financial year end

FEATURES OF THIS SEGMENT BIKE

- Engine power of 150cc-250cc

- Price range between Rs.50000-Rs.200000

FACTORS FAVOURING THE SEGMENT

- Increasing income scale of the households

- Attractive looks and comforts

- High engine power

OUR FOCUS OF STUDY

Page 5: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

• Four major decisions (2006-07) - Enter into premium segment bikes (150cc-250cc bikes) - First mover advantage in Sports Bike segment like VMAX - Enter into rural markets in Entry level segment bikes - To increase the exports opportunities • Shifting of focus from lower segment bikes to premium segment

bikes • Yamaha has aimed to become the No.1 in customer satisfaction • To target 18-25 years young because - They are very conscious about style quotient - They look forward to their ride as a personality statement • Eyeing on growing middle and upper middle class segment

YAMAHA’S CHANGING STRATEGY

Page 6: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

• Before 2007-2008, Cost control strategy by focusing on low end 100cc bikes • Market Differentiation Strategy by providing more values to the customers in

terms of: - High technology - Superior design - Ergonomics for long distance travelling etc • Prospector in nature - Availability of bikes for every market segment - Provides a diversified product range - Always focus on the innovations

YAMAHA’S CHANGING STRATEGY

Page 7: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

• POLITICAL ENVIRONMENT – Under the UPA rule most of the business from across all industries try and win over as much

political support • Increases Barriers to Entry

• ECONOMIC ENVIRONMENT

– Tightening of the interest rates by the RBI • Increases Barriers to entry

– High Growth Economy with an expected GDP of 8.5% • Decreases bargaining powers of buyers

– Increasing inflow of foreign capital in the country • Increase the threat of competitors

– Deregulation of petrol • Increases Bargaining power of buyers

• SOCIO-CULTURAL ENVIRONMENT – Two-wheelers no more seen as just for day-to-day commuting – education level in the country increases – Expectations from buyers in this segment are very high

• Increases the bargaining power of buyers

EXTERNAL ENVIRONMENT ANALYSIS

Page 8: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

• TECHNOLOGICAL ENVIRONMENT – Bike styling and power seen as distinguishing factors – Product becomes more and more differentiated

• Decreases Bargaining Power of buyers • Threat of competition increases

• ENVIRONMENTAL FORCES

– Pressure on the two-wheeler industry to come up with greener technologies – Manufacturing plants to reduce greenhouse gas emissions

• Increasing further the R&D and innovation costs; Decreases the threat of new entrants

• INTERNATIONAL ENVIRONMENT

– The two wheeler industry is currently growing at a CAGR of 9.45% – Number of international players like Suzuki Hayabusa, Kawasaki Ninja, Suzuki

Zeus entering into India • Increases the threat of new entrants and industry rivalry

EXTERNAL ENVIRONMENT ANALYSIS

Page 9: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

THR

EAT

OF

SUB

STIT

UTE

S -Kinetic Mahindra Deal – Gearless bikes: M&M, India’s largest tractor and utility vehicle maker has already

bought the business assets of loss making scooter maker Kinetic Motor Company and has 80% of the share

in JV by investing Rs 110 crore to gain an entry into the two-wheeler market.

-- E-Bikes: There are several players in this segment which includes YO bikes, BSA Electric bikes, E-bike 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: TATA’s 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 comparable price.

-The switching costs in NANO’s case would be high

-E-Bikes and Gearless Bikes

- Female drivers and teens, gearless bikes and E-bikes are preferred.

OVERALL: Low/Medium

Rationale: Indian two-wheeler premium bike industry has been able to create a niche for itself which

primarily runs on three factors namely: Mileage/Maintenance Cost, Reliability and Style. Even though E-

Bikes and Nano might be able to draw some customers 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

Industry Attractiveness

Page 10: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

BA

RG

AIN

ING

PO

WER

OF

SUP

PLI

ERS

- Suppliers of auto components are fragmented and extremely critical for this industry.

- Most of the component work is outsourced proper supply chain management 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 capture profits from the market

- The industry being capital intensive the switching costs of suppliers is high

- Supplier’s product differentiation is low

-Supplier’s 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

manufacturers, the parts are not highly differentiated when it comes to additional features

and a huge number of small companies have already come up who manufacture such

components.

Industry Attractiveness

Page 11: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

THR

EAT

OF

NEW

EN

TRA

NTS

-Political influence of incumbents helps them get favors from the government which makes it difficult for new

entrants to flourish

- HIGHER-END BIKES: Higher end bikes such as Kawasaki Ninja (Priced at Rs 2.7 lacs, Ninja is a 250cc 4-stroke

bike), BMW bikes, Ducati etc. have also entered into India. Since they have global presence and strong brand

recognition worldwide, Bikes such as Yamaha R15, R1 can face competition from these players, but the

customer base in high end market is not very significant.

- Presence of strong players like Yamaha, Hero Honda, TVS etc

-After the liberalization policy of ’91 barriers to entry for this segment has reduced and government

regulations and taxes have been relaxed.

- Cost disadvantage would be there for the new players since existing players already benefiting from

economies of scale.

- Initial Capital Requirements 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 doesn’t tie up

with any of existing player. (e.g. Kawasaki has tie up with Bajaj Motor Limited)

OVERALL: LOW

Rationale: Looking at the high barriers to entry due to the initial capital requirements and other

infrastructure like access to distribution channels and also the low growth rate, the industry should not see

many new players entering the arena.

Industry Attractiveness

Page 12: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

BA

RG

AIN

ING

PO

WER

OF

BU

YER

S

-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 number 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 required is very

high and buyers are small and fragmented.

- Importance of the product to buyers is high due to other factors like traffic congestion,

fuel prices

- Product differentiation definitely exists and whole industry is different from other

industries

- The other industries are having products that can act as substitutes but then the switching

costs of buyers is high

OVERALL: HIGH

Industry Attractiveness

Page 13: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

IND

UST

RY

RIV

ALR

Y

- The concentration of competitors is high i.e. Bajaj Auto, Hero Honda, KMC, Royal Enfield, TVS,

LML etc

-The relative size of competitors is large and they have enough operational excellence and

financial muscle

- Industry is earmarked with high profit margins

- Product differentiation acts as less of a long term competitive advantage as any product

being matched in a few months by competitor

- Buyers’ switching costs are low as each company has its own portfolio of products and it can

cater to each and every segment

OVERALL: 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. Due to moderate industry growth rate of 10%,

the struggle to increase sales is being reduced to a constant-sum game where everyone is trying

to outsmart the competitors by innovations and price wars

Industry Attractiveness

Page 14: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

• With the rising levels of per capita income of people, the Indian two wheeler market offers a moderate potential for growth.

• This growth is relevant in the light of the fact that 70 per cent of India’s population is below the age of 35 Years and 150 million people

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 Attractive.

Industry Attractiveness

Page 15: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

VA

LUE

CH

AIN

AN

ALY

SIS

Page 16: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

RESOURCES

Tan

gib

le R

eso

urc

es

Financial Resources - Parent company from Japan provides the required funds to Yamaha India. - Maintains a good working capital as they provide very less credit to their dealers.

Organizational Resources - Floor workers are encouraged to plan their work schedule on their own. - Afterwards schedule and resources are finalized through direct interaction of workers and management. - Minimum level of productivity is desired from workers- per day or per week and any deviation is corrected by management

Physical Resources - Two plants in industrial areas of Faridabad - manufacture the engine, gears and Surajpur - assembling. - Two parallel assembly lines. - Easy access to Raw materials

Technological Resources - Unique technologies like liquid cooled engine, DiAsiL cylinders Patents

Page 17: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

RESOURCES

Inta

ngi

ble

Re

sou

rce

s

Human Resources - (>2000) employees including both the plants - Human capital is high due to experienced workforce. - Decentralization of work clear hierarchy facilitates the smooth flow of working. - Recruitment of casual workers mainly for the purpose of procurement and assembling.

Innovation Resources - Sound R&D development from Japan Innovative products to serve the customer from each segment.

Reputational Resources - Strong brand image - Long term relation with their suppliers.

Page 18: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

CAPABILITIES

FUNCTIONAL AREAS CAPABILITIES

Finance To invest a large outlay for R&D

To provide funds against losses

Human Resources To keep low retention rate

Training opportunities in Japan

Marketing John Abraham- the Brand Ambassador

Out of the box promotional ideas like

organizing rock concerts,

Technology To manufacture diesel engine

To design innovative models

To make 6 speed transmission bikes

To make liquid cooled engine with

DiASil cylinder

Information Systems Control on demand-supply gap through a

software

Facilitates communication with suppliers

and dealers

Links all the workings with parent

company in Japan

Page 19: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

Resources Capabilities

Resource Capability Potential access to wide variety of markets

Value contributed to end product

Difficulty in imitation/substitution

Competitive advantage in short run

Competitive advantage in long run

Finance

(Tangible)

To invest a large

outlay for R&D

Moderate High Low Yes Yes

Human

Resources

(Intangible)

Training

opportunities in

Japan

Low Moderate Moderate No Yes

Marketing

(Intangible)

Out of the box

promotional

ideas like

organizing rock

concerts

High Low Low Yes No

Page 20: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

Resources Capabilities

Resource Capability Potential access to wide variety of markets

Value contributed to end product

Difficulty in imitation/substitution

Competitive advantage in short run

Competitive advantage in long run

Technological

(Tangible)

-To design

innovative models

-To make 6 speed

transmission bikes

-To make liquid

cooled engine with

DiaSil cylinder

High High High Yes Yes

Information

Systems

(Tangible)

Facilitates

communication

with suppliers and

dealers

Moderate Moderate Low Yes No

Page 21: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

CORE COMPETENCIES

Liquid cooling system better engine performance by keeping the temperature down and absorbing the engine noise

DiaSil cylinder facilitates cooling performance because aluminium dissipates heat 3 times faster than steel.

Single-axis balancer in R15 and FZ Reduces engine vibration

All these technologies facilitate a better engine performance, good acceleration capability, a good 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 investment for

the competitors.

Page 22: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

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 material providers

Weakness

• Below industry standard production capacity

• Poor Distribution channel

• No marketing aggressiveness

• Internal HR issues

• Operational ineffectiveness

• Storage problems

• Lack of diversified product portfolio

Opportunities

• Increasing urbanization leads to growing premium segment

• First mover advantage in sports premium bikes (500cc+)

• Double digit growth in two wheeler geared industry

• Exports opportunities

Threats

• High competition in the market

• Rise in raw material products

• Increase in interest rates on finance

• Cars available in the same price range

SWOT

Page 23: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V

Recommendations

FOCUS ON METRO CITIES FIRST - Per capita income of households is high - Roads conditions are suitable INCREASE PRODUCTION CAPACITY - Should also utilize Faridabad plant for assembling - Storage capacity should also increase MORE MODELS IN DIFFERENT VARIANTS - To serve the need of each customer - Provides more choices in the market IMPROVES AFTER SALES SERVICE - Spare parts should be easily available - Professional Engineers for services STRENGTHEN THE DEALERSHIP NETWORK - Provide credit limits and financial support to the dealers - Improve display of bikes at showrooms YOUTH ORIENTED PROMOTION - The Ads should focus on the targeted consumers - Features should be well shown

Page 24: Strategic Management Project Presentation: Yamaha Motors [download to view full presentation]

Strategic Management © Group V