Yamaha Corporation (13035676)

8/17/2019 Yamaha Corporation (13035676)

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Y A M A H A C O R P O R A T I O N

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UNIVERSITY OF THE WEST OF ENGLAND YAMAHA CORPORATION

International Management UMSCQX-15-M

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Int&rn't(on') M'n'*&+&nt

Yamaha Corporation

I. Introduction:

Yamaha Corporation is a Japanese multinational corporation with a wide range of products as

well as services. In 1887, Yamaha’s usiness was egan ! "ora#usu Yamaha, the founder

when repaired a ro#en reed organ in Japan. "en !ears later, 18$7, %ippon &a##i Co., 'td.

was estalished with the capital which was 1(( million Japanese !en. Yamaha Corporation

was the official name from 1$87 to mar# the 1((th anniversar! of its foundation. "oda!, with

7) susidiar! companies and nearl! *(,((( emplo!ees around the world, Yamaha ecomes a

worldwide #nown rand name.

"his essa! will mention and discuss the portfolio strategies of Yamaha since *(((. In detail,

portfolio mi+ and longterm potential of the compan! will e anal!-ed ! using portfolio

tools. oreover, the strategies of the competitors are also anal!-ed to suggest the suitale

decisions.

II. apping Yamaha’s /usiness 0ortfolio:

Yamaha operate in multiindustr! and multinational, therefore, multidivisional forms

form2 was mapped for Yamaha’s usiness portfolio Carrell et al 1$$72 3igure 12. 3or

development of the corporation, anal!sis, portfolio pla!s an important role which could

understand competitive position and the rate of return which received from usiness units

4enr! *(1(2. Corporation could ma+imi-e the return on investment ! allocating suitale

level of resources etween usiness units. "herefore, the general electric c5Inse! matri+

nine o+ matri+2 will e applied. "his method could assess the performance of usiness

units. 4owever, these usiness units were controlled ! corporate parent. "he fight, which

can create or destro! corporation’s value, etween the corporate parent characteristics and

opportunities in the usiness is an important element. In finding the usinesses which

corporate parent should ta#e into the portfolio, the parenting fit matrix will e used. 3inall!,

the corporation could decide to hold the units in the portfolio ! using the Market- Activated

Corporate Strategy Framework .

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3igure 1. Yamaha’s form

/ase in Chandler 1$662 and Yamaha nnual eport *(1)

III. Corporate 9trateg!:

In 1$$(s, Yamaha was one of the largest corporation of musical instrument in the world,

accounting for nearl! a half of new musical euipment sales. ;ith a wide range of production

than an! other competitors, Yamaha was pursued a corporation strateg! of diversification.

Yamaha operate in man! usinesses and diversif! the organi-ation following oth


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share technolog! and managerial model, reduce the costs, to e popular through rand name

usage, and enefit from cooperation &hoshal et al 1$$A2.

Yamaha has also operated in education, networ# devices, golf products, etc., Yamaha was into

unrelated new usiness that value chains are different which no potential e+ists to transfer

technolog! or management #nowhow from one usiness to another, to transfer competencies

to reduce costs, to achieve enefits, or comine similar activities "hompson and 9tric#land

*((?: *$)2.

;ith the appearance of Yamaha around the world, gloal diversification was applied.

ccording to 5im 1$8$2, the main reason for gloal diversification include the accession of

the new foreign mar#ets to discover the uniue assets of that mar#et, ualit! resources,

accession of lowercost, e+pand the economic scale and other efficiencies, and preoccup!

competitors.

4owever, there are man! ris#s and pitfalls of diversification. "he corporation has to divide

the time and energ! for the portfolio. "here is argument that parents ma! destro! some value

! increase overhead cost, slowl! decisions, some unsuitale interventions, and cannot add

enough value to compensate &oold and Campell *((*: *1$2. oreover, unsuccessful

susidiaries ma! use the resources from the success /erger and Bfe# 1$$)2. n important

issue of diversification is unsuitale interference of a corporate parent.It can affect adl! on

the susidiar! managers.

5e! competences:

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3igure * Yamaha nnual eport *(1)2.

ccording to "ampoe 1$$A2, core competencies are the comination of technologies and

production s#ills which underlain a compan!’s production line. 3rom figure *, there is a seen

that Yamaha’s #e! competenc! is fields of sound and music. ;ith the histor! is more than

1*) !ears, Yamaha has much #nowledge and s#ills in their maor. "hrough identif!ing core

competencies, Yamaha #nows the core products which are an incarnation of one or more core

competencies ."his was proved through their revenue as well as a mar#et segment of sound

and music productions 3igure ?2.

"here is an argument that the successes of the corporation depend on the core competencies

which underlie their end products 0rahalad and 4amel 1$$(2. 3rom identif!ing the core

competencies, the corporation #nows what the main products which need to e innovated and

developed. It helps companies focus on the mar#et, find the effective wa!s to use the

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resources and e+ploit the new usinesses. "hus, core competencies could give the potential to

access the variet! of mar#ets. oreover, it could ma#e the products ecome uniue which

most of customers reuired.

3igure ? Yamaha nnual eport *(1)2.

It can e seen that core competencies were uilt through a process of improvement and

enhancement. It will e the competitive advantage. corporation who missed to contriute

core competences, will e difficult to enter as well as maintain in the mar#et.

ID. 0ortfolio atri+:

'5 P'r&nt(n* 6t +'tr(:

ccording to Campell, &oold and le+ander 1$$)2, parenting mi+ matri+ was used to

evaluate how good the parent’s characteristics fit opportunities and the records of e+tending

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of misfit these characteristics and critical success factors. "here is a tool to figure out the

opportunities to increase as well as the issues of destro!ing the value of Yamaha.

"o e defined as should e wellsuited to e+ploit and wellunderstood ! corporation,

heartland usiness should e the main of corporate strateg! and acuisition activit!. /!

contriuting 6).*> in segment sales proportion and nearl! 8A> in revenue, musical

instrument 2 is heartland usiness of Yamaha Corporation. ;ith the histor! and e+perience

more than 1*) !ears old, Yamaha was famous and e+pert on musical instruments.

Enderstanding the important as well as the role of this ranch of the corporation, Yamaha

process to estalish and e+pand optimal sales networ#s for each of musical instrument.

4owever, there was a downtrend in the side of music and Fnglishlanguage school F2 in

recent five !ears although the corporation has some activities to improve Yamaha annual

report *(11, *(1*, *(1?, *(1A, and *(1)2. It ma! fit with Yamaha’s approach ! long time

estalished 1$)A2. 4owever, the adding value is uite low so that Yamaha should e+amine to

divest this usiness if the price was suffered over the e+pected value of future cash flow.

"herefore, music and Fnglishlanguage should e in ballast categor!.

"urn to the side of audio euipment 2, there is a good usiness for Yamaha. lthough audio

euipment is not maor of Yamaha, it was developed uic#l!. "he reason could e that there

is some similar characteristics etween this usiness and musical instrument which depends

on an e+isting professional ac#ground of #nowledge aout sound and music. 3or the future,

Yamaha intends to develop this usiness ecome one of their maor usiness through

e+panding the mar#et into developed and emerging countries. "herefore, it can e seen as

edge heart business.

"here is a value trap business for Yamaha in semiconductors 92. It can e fitted with

parenting opportunities through their e+perience and #nowhow in sound, e+pertise in

developing digital musical instruments, signal technologies and soft wave technologies

Yamaha annual report *(1)2. 4owever, Yamaha ma! lac# of critical success factors. 3or

instance, there is a hard sector due to man! strong suppliers such as: Intel, 9amsung,

Gualcomm etc.

"he other usinesses of Yamaha which include: golf products, automoile interior wood

components, factor! automation and resort facilities B2, can e categori-ed as alien-territory

usiness. lthough these usinesses ma! not fit with Yamaha’s approach due to different,

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there is a creation of potential value. "he! contriuted in the revenue as well as the rand

name of Yamaha.

9ource: dapted from . &oold, . Campell and . le+ander, Corporate 'evel 9trateg!,

;ile!, 1$$A.

3igure A. Yamaha’s parenting fit matri+.

75 N(n& 7o +'tr(:

%ine o+ matri+ was developed to set up the capital and resources for the usiness units.

"here are two dimensions: the attractiveness of the industr! and the units’ ailit! in the

industr!. It helps compan! #now what usinesses should e developed, maintained and

divested.

Musical instrument:

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Yamaha has wellposition in the gloal musical instrument industr!. ;ith the e+periences as

well as #nowledge in this sector, Yamaha possesses high competitive strength. "he music

instrument industr! seems to e high attractiveness. "he gloal mar#et for musical

instruments industr! was forecasted to grow up. lthough there are threats from China

producers and 5awai which is a strong rand name in musical instrument, Yamaha still gains

the mar#et share and maintains the dominant position.

Audio euipment:

"here is medium competitive strength in audio euipment. lthough Yamaha e+pertise in the

musical field, electronic is not their strength. "he audio euipment mar#et is potential.

4owever, the attractiveness of audio euipment is medium. In particular, there are some

strong competitors in this field such as 9on!, 4itachi, etc.

!ducation:

Yamaha maintains the high competitive strength in this field. ;ith the e+perience and the

future plans that concentrate on e+panding music schools and conducting local music lessons

in China and other emerging countries, the position of Yamaha is reall! stale. China and

other emerging countries are reall! attractive. 4owever, there is a medium attractiveness

mar#et that so man! competitors are developing and e+panding such as 5awai etc.

Semiconductors:

"here is a low competitive strength for Yamaha. "he achievement from semiconductors

reuired large investments as well as huge #nowledge. 4owever, in the rapid development of

semiconductors, Yamaha is !oung compared to others. 3urthermore, with large investment in

technolog!, Yamaha could lose the positions in the other fields. "he attractiveness for

semiconductors is medium. lthough the mar#et is e+pected to grow radicall! in the future,

there are so man! strong companies in this field such as: Intel, 9amsung, %Didia etc.

"thers:

"he competitive position of this area is medium. lthough these usinesses are not Yamaha’s

maor, Yamaha has e+perience. "he attractiveness is low ecause there are so man! strong

rand names while there are niche mar#ets.

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4igh edium 'ow

Dalue Creation 0otential in /usiness Enit

9ource: &luc# et al *(((2

3igure 6: Yamaha’s C9 framewor#

#$ Strategy Moves and %esponse:

5awai usical Instruments anufacturing 5awai2 is a Japan compan! which maor in

manufacturing and selling musical instruments. It was estalished in 1$*7. %owada!s, 5awai

and Yamaha Corporation is dominating the piano gloal mar#et. "herefore, there is a

competition etween 5awai and Yamaha.

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Japan was used to the potential mar#et for piano when piano sales, in 1$7$, was ?((,(((

units. 4owever, it decreased and fallen to aout 17,((( units. "herefore, finding a new

potential mar#et to survive is an important mission.

5awai reali-ed the potential of the 9outheast sia mar#et, which middle class as well as

wealth! people are increasing and the demand for piano is growing. "he investment was

made for see#ing new mar#et and more resources. t the end of ugust *(1?, 5awai opened

the first compan! music school in Indonesia.

3orecasting the change of industr! as well as strategic moves from competitor, Yamaha

e+panded their influences on the piano mar#et of 9outheast sia. 9o man! ranches of

Yamaha were opened in 9outheast sia countries such as "hailand, Dietnam, and ala!sia

etc.

DI. F3FF%CF9:

thon! F. 4enr! *(1(2. &nderstanding Strategic Management$

/erger, 0hilip &., and Fli Bfe#. H@iversifications effect on firm value.H 'ournal of financial

economics ?7.1 1$$)2: ?$6).

Carrell, . ., Jennings, @. 3., 4eavrin, C. 1$$72. Fundamentals of organi(ational

behaviour . 0rentice 4all.

Chanler, @ 1$662 0roceedings of the merican 0hilosophical 9ociet! KonlineL. vailale

from: http:MMwww.amphilsoc.orgMsitesMdefaultMfilesM1)?(*1*.pdf Kccessed *) @ecemer

*(1)L.

Chan 5im, ;., 0eter 4wang, and ;illiam 0. /urgers. H&loal diversification strateg! and

corporate profit performance.H Strategic management )ournal 1(.1 1$8$2: A))7.

Campell, ndrew, ichael &oold, and arcus le+ander. HCorporate strateg!: "he uest

for parenting advantage.H *arvard business review 7?.* 1$$)2.

@avis, 0eter 9., et al. H/usiness unit relatedness and performance: loo# at the pulp and

paper industr!.H Strategic Management 'ournal 1?.) 1$$*2: ?A$?61.

&oold, ichael, and ndrew Campell. H0arenting in comple+ structures.H +ong %ange

,lanning ?).? *((*2: *1$*A?.

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&hoshal, 9umantra, and Christopher . /artlett. HCreation, adoption, and diffusion of

innovations ! susidiaries of multinational corporations.H 'ournal of nternational .usiness

Studies 1$882: ?6)?88.

&oold, ichael, ndrew Campell, and arcus le+ander. Corporate-level strategy:

Creating value in the multibusiness company. %ew Yor#: J. ;ile!, 1$$A.

&luc#, 3.;., 5aufman, 9.0., ;allec#, .9., c'eod, 5. 9tuc#e!, J. *(((2 /hinking

Strategically , Mc0insey1Company$

4amel, &ar!, and Coimatore 5. 0rahalad. H"he core competence of the corporation.H

*arvard business review 68.? 1$$(2: 7$$1.

ellahi, 5...F.'., 3r!nas, J.&.F.B..&.F. and 3inla!, 0..E.'. *(()2 2obal Strategic

Management . B+ford Eniversit! 0ress Inc, %ew Yor#.

"hompson, . Jr., and 9tric#land, J. . *((?2. 9trategic anagement: Concepts and Caes,

1?thedn. %ew Yor#: c&raw4ill2.

"ampoe, ahen. HF+ploiting the core competences of !our organi-ation.H +ong range

planning *7.A 1$$A2: 6677.

Yamaha Corporation *(1)2 Annual %eport 3456 KonlineL. vailale from:

http:MMwww.!amaha.comMaoutN!amahaMirMpulicationsMpdfdataM*(1)MannMan*(1)e.pdf

Kccessed *) @ecemer *(1)L.

!2
http://www.yamaha.com/about_yamaha/ir/publications/pdf-data/2015/ann/an-2015e.pdfhttp://www.yamaha.com/about_yamaha/ir/publications/pdf-data/2015/ann/an-2015e.pdf

Yamaha Corporation (13035676)

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