CASE ANALYSIS ON INDIA YAMAHA MOTORS

CASE ANALYSIS ON INDIA YAMAHA MOTORSPresented By:Dechen Chongmu BarfungpaRina Gupta

CASE ANALYSIS ON INDIA YAMAHA MOTORS

The case tries to look at issues that ailed the Company and the measures the company initiated for a turnaround.

ABSTRACT

India Yamaha Motors entered the Indian market in 1980s with its 100 cc motor bikes.The Indian Companies then started to enter into joint ventures and technical collaborations with other companies.Motorcycles started replacing scooters.Financial banks and institutions largely suported these companies in financing them.Promotions were done through famous celebrities acting as brand ambassadors. Motorcycles were then projected as freedom, exuberance, and convenience.

INTRODUCTION

Some Of The Collaborations

6Yamaha entered in a technical collaboration with Escorts Motors in 1985.The company went down a spiral.The ownership and control of Escorts-Yamaha was later on taken over by Yamaha Motors and it came to be known as Yamaha Motors Escorts Ltd (YMEL).They started restructuring its sales promotions and launched new products to bring the company back in the game.

CHANGING FACE OF YAMAHA

Though Yamaha had an early success in India with its power packed RX100 model in the late 1980s. The Company was unable to keep pace with the vehicles launched by Bajaj, TVS and Hero Honda. The market share of the company, which had been sliding year after year, touched an all time low of 4% in the 7.5 million Indian two wheeler market. During this phase of sliding market share the company burrowed huge amounts to stay afloat. Declining sales revenue and continuous losses made it difficult to repay the loans.

NEED FOR RESTRUCTURINGFrom being an almost cult product, the RX-100 lost its die-hard patrons when it failed to catch up with two- stroke transition forced by the govt. in early 1990s. Yamaha tried many times to launch new products and rebuild its reputation, but it always failed (Ramanathan 2010).9Yamaha dissolved the old units and merged them into a new entity Yamaha Motors India (YMI) from April 2008.The company offered Mitsui corporation a stake in YMI.Restructuring of Yamaha required financial resources which was provided by Mitsui Investment.4 billion was infused making the capital go up to 5.6 billion rupees out of which 1.68 was provided by Mitsui.

RESTRUCTURING PLAN-2006The additional financial resources was basically proposed to be used for two things. Used for launching new products in the domestic market using contemporary technology.The Indian operations had accumulated a loss of Rs. 10 billion.Another element was that the restructuring was a two-fold strategy that focussed on changes in the production facilities of the Co.

RESTRUCTURINGThe plan of action proposed was to replace the 40 yr old facility at Surajpur in UP with a brand new facility and a simultaneous upgradation of the factory in Faridabad that produced engines and carried out machining and casting of components. 11The Company proposed to manufacture 50% of the components in-house and procure the balance through vendors, and on the marketing front the Company proposed to increase the number of dealers.The Company committed much of the financial resources also for developing new products mostly focusing on developing fuel efficient motor cycles to improve competitiveness of its products.PROSCONSRevives a Company from slumpThe restructuring may work out or not.Increases sales through introduction of new product categoriesIt involves lot of challenges like resistance from employees and from their attitudesIncreases growth rateIt involves a lot of finance which is usually not easy to acquire.Extensive research brings out the strength areas of the companies as in the case of yamaha.PROS AND CONS OF A RESTRUCTING STRATEGYIt was expected that the restructuring program would speed up product development, improve quality, and cost reduction.The Company was keen on reorienting the sales channel to infuse consumer-oriented policies. Post restructuring YMI planned to manufacture 4 lakh bikes annually at the Surajpur plant, the Co introduced new models such as FZ 15 and R15 which helped the Company attain 16% growth in sales.POST RESTRUCTURING OUTCOMESInspite of 6 tough loss ridden years Yamaha refuses to exit India. It continues to concentrate on the niche maket in the 200 to 250 cc category and hitting the market with high-end performance bikes. The Company still feels it can turn things around and can realign its India strategy just like it did in Thailand where it tried to sell the lifestyle and not the product.CONCLUSION