Table of Contents

Introduction 2

Business Strategy of Yamaha 3

Stakeholders Analysis 5

Yamaha Indonesia Organisational Audit 8

Yamaha Indonesia Environmental Audit 10

Strategic Positioning Techniques 12

Yamaha’s Current Strategies and Programs 14

Plans for Yamaha’s competitiveness in the Future 16

Conclusion 18

Appendix 19

Bibliography and Interviewed Sources 20

Introduction

This report is about Yamaha Indonesia and the objectives of the company and strategies

to fulfill the objectives. This report is going to focus on Yamaha Mio, the newest product

of Yamaha Indonesia and the competition of the particular product with products of

Honda, which is the biggest competitor of Yamaha.

The content of the report is written based on interviews, books, and related articles in the

Internet.

2

Business Strategy of Yamaha

A company’s strategy is its plans or policies to achieve its objectives (Oxford Mini

School Dictionary, 2002: 630). PT Yamaha Motor Kencana Indonesia has some main

corporate objectives such as to gain more market share and to become the market leader

in the Indonesian motorcycle industry. One of Yamaha’s strategies to achieve the goals is

to launch a new product called Yamaha Mio, which is an automatic scooter.

Yamaha Mio is not the first automatic scooter launched in Indonesia. In 1999, Kymco

already launched automatic scooter in Indonesia, but the sales was not satisfactory. In an

interview, Indjun, the CEO of Bajaj Motorcycle Indonesia, claimed that Kymco

automatic scooters are not really successful because of its big body, and because the tire

ring’s size has too small diameters. The ring diameter, which was 12-inch, is not suitable

for the road condition of Indonesia, where there are many holes and mounts. The tire can

easily stuck into potholes, so the Indonesian market do not prefer to buy Kymco scooters.

Before Yamaha Mio, Yamaha Motors had launched Yamaha Nouvo in 2002, also an

automatic scooter, but the sales of the product was not very satisfactory because of the

big size of the body. Indonesian consumers do not like motorcycle with big body because

it will block them to move easily in crowded traffic.

To fill the gap in the automatic scooter market, Yamaha released Yamaha Mio. Yamaha

Mio is targeted to woman and the scooter has small body with 14-inch diameters of tire

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ring, so the motorcycle can move easily in crowded traffic and will not be easily stuck

into holes. So, the main features of Yamaha Mio attract the Indonesian market, and the

sales starts to increase since the first time it is launched and conquers 70.6% market share

in automatic scooter market by March 2007 (LampungPost.com, 2007, Internet).

Yamaha Mio has successfully increased Yamaha Motor’s sales from the second to the

first place on March 2007. Honda, which always been on top, sold 151.127 units of

motorcycle, while Yamaha could sell 160.235 units of motorcycle (BisnisIndonesia.com,

2007, Internet).

In an interview with Jon Fieris, an ex General Manager in KTM, he said that in

Indonesian market, Yamaha Mio is most successful in Bali. It is successful there because

most of the citizens, including the men, are wearing sarong in daily life. Riding on a

motorcycle would be hard because sarong is tight, so most Balinese cannot spread their

legs freely in order to sit properly on a motorcycle. With a scooter model, consumer can

sit properly on the motorcycle without having to spread their legs.

Yamaha holds 43.7% market share in March 2007 (Wibisono, 2007, Internet). By

launching Yamaha Mio, Yamaha Motor Kencana Indonesia has fulfill its objectives,

which are to gain more market share and become market leader in motorcycle industry in

Indonesia.

4

Stakeholders Analysis

Stakeholder analysis is needed for the company to identify its most important stakeholder

and understand about parties around the organization (HNC/HND Business Strategy,

2004: 17). It will also tell the company which party has the greatest impact to the

company.

Yamaha Motor Kencana Indonesia has main internal stakeholders such as employees,

dealers, and customers. The main external stakeholders of Yamaha Indonesia are the

government, competitors, banks, and suppliers.

Some stakeholders such as workers, suppliers, dealers, and consumers are very important

for the company. Workers and suppliers are very important for the product development

and the making of the products, while dealers have big role on the distribution of the

product.

According to Indjun, here are around 6000 staff and technicians working at Yamaha

motorcycle factory in Indonesia, and most of them are working under contract agreement.

Yamaha factory decided not to take the factory workers as fixed workers, so when the

sales of motorcycle is decreasing, the company does not need to manufacture too many

motorcycles and spend extra cost to pay the workers. Yamaha can easily reduce the

number of workers and save the costs by finishing the contract agreement.

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Factory workers and technicians are very important for Yamaha because without them,

the motorcycles will not be manufactured. For example, Yamaha factory workers have

been striking for two weeks since 19 April 2007 because they do not agree with the

contract agreement system and want Yamaha to take them as permanent workers

(MetroNews.com, 2007, Internet). The manufacturing activities were stopped for two

weeks and as the result, Yamaha missed manufacturing target and the products were

distributed lately to dealers.

Yamaha products are sold through dealers all over Indonesia. According to Yoke

Setiawan, a General Manager of Yamaha dealer in South Jakarta, the manufactured

motorcycles are sent directly from the factory to the dealers, so the price of Yamaha

motorcycles can be lowered. Every year, the CEO of Yamaha make sales target, and

every month, the area manager of each dealer is given monthly sales target.

Dealers’ role in the run of the company is important, as they are the ‘bridge’ between the

company and the consumers. Without the dealers, it will be hard for consumers to reach

the products and sales will not increase easily. Yoke said, Yamaha also realizes that

dealers should be motivated to sell as many motorcycles as possible, so Yamaha gives

reward to dealers that reaches sales target or sell more than the sales target, such as tour

to Yamaha factory in Japan.

A Yamaha motorcycle is built of approximately 3300 components. Some of the

components such as engines are made in Yamaha Japan, the velgs are made in Indonesia,

while lamps and plastic components are imported from China. Yamaha and the suppliers

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are having long-term relationship, and Yamaha cannot change the suppliers for the

components easily because it might create uncertain quality of Yamaha products.

Customers are the focus of the company whenever it decides to produce new products.

Yamaha has successfully created attractive products at the reasonable prices such as

Yamaha Mio, and as the result, the sales of the product increases and the company has

gained more market share. Without potential customers, there is no point of

manufacturing and distributing the products.

The Government is an external shareholder, but the Government only affects the

company’s activities by national regulations such as tax and product safety regulations.

To protect the safety of the consumer, the government gives minimum requirements on

the thickness of materials that are used to produce the products. Government was also

concerned about the increasing pollution rate in Jakarta, so the Government banned 2-

stroke motorcycles from the market to reduce the pollution rate.

Bank is considered as an important external shareholder because, Jon Fieris claimed that,

nowadays 95% motorcycles in Indonesia are bought in credit. The sales of motorcycle are

highly affected by the credit program and the bank will also get profits from interests by

giving credit to motorcycle owners. So, both Yamaha Indonesia and bank are positively

affected by each other.

7

Yamaha Indonesia Organisational Audit

Tangible and Intangible Assets

Yamaha Indonesia’s tangible assets are stock of motorcycle, materials, machineries, cash

at bank, shareholders, employees, factories, office buildings, et cetera. The intangible

assets of Yamaha are the goodwill, brands, innovation ideas and patents.

Internal Organisation

Since the first time Yamaha entered Indonesia, it was managed as a family business. But,

since the 1998 monetary crisis starts, the management of Yamaha Indonesia is fully taken

over by Yamaha Japan.

Toyota Japan bought most shares of Yamaha Japan 3 years ago, and since then, Toyota

contributes a lot in technical and development area of Yamaha products. Under Toyota,

Yamaha released Jupiter MX, Nouvo, and Mio.

Products, Brands, and Market

Yamaha Indonesia had gain the second biggest market for 30 years (20%), with Honda at

the first place (55% market share), but since Yamaha released Mio, it becomes the market

leader in motorcycle industry in Indonesia with 43.7% market share by March 2007. It

means, Yamaha Indonesia has fulfilled its goals to gain market share and to be the market

leader in Indonesian motorcycle industry.

8

Limiting Factors

Some limiting factors of Yamaha Indonesia are the amount of dealers and the reselling

price of the product. In these two factors, Yamaha is still behind Honda, which is its

biggest competitor.

Yamaha has total 1.100 dealers all over Indonesia (Hidayat, 2007, Internet), while Honda

has approximately 2.300 dealers all over Indonesia. Yamaha has fewer amounts of

dealers than Honda, and this might influence the sales of Yamaha products. Consumer in

Indonesia also consider the location of the dealer when they want to buy a car or

motorcycle because they do not want to spend too much money for the delivery of the

product.

The reselling price of Yamaha motorcycle is also less than Honda motorcycle, because

according to Yoke Setiawan, since the first time Honda entered Indonesia, it always

became the market leader, until Yamaha beat Honda recently. So, in consumer’s mind,

Honda’s image is better than Yamaha, and that affects the reselling price.

Competence and CFS

Yamaha has been in Indonesia for 35 years in 2007, so the mechanics at Yamaha service

centres must be very experienced in fixing broken manual motorcycles. Since Yamaha

had launched automatic scooters such as Nouvo or Mio, it also has to be ready to fix any

problem that may occur. Yamaha trained its mechanics to fix problems on automatic

scooters so the consumers will be satisfied with the after-sale service of Yamaha.

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Yamaha Indonesia Environmental Audit

A company’s external environment elements, physical and social environment, have five

factors, such as Political, Economic, Socio-cultural, Technological, Ecological, and Legal

factors. These factors are also called PESTEL factors (HNC/HND Business Strategy,

2004: 24). There is also another element of external environment such as competitive

environment.

Political-legal Environment

The organization’s activity is in the framework of the regulations in the area it operates.

Years ago, two-stroke motorcycles are banned in Jakarta because of the high rate of

pollution. At that time, Yamaha was specialized in two-stroke motorcycles. Because of

the new regulation, Yamaha had to pull all two-stroke motorcycles from the Jakarta

market and launch four-stroke motorcycles.

Economic Environment

The slow economic growth in Indonesia and the increasing number of people keep cheap

workers available to work in the factories. The disposable income of the consumer mostly

remains the same, so motorcycle credit is the best choice for lower class people.

Socio-cultural Environment

Socio-cultural environment is influenced by demographic factor such as the concentration

of population in some geographical areas (HNC/HND Business Strategy, 2004: 28). For

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example, because so many people from all over Indonesia load Jakarta, the motorcycles

would be stored mostly in Jakarta, to fulfill the needs of the consumers.

Technological Environment

Jon Fieris said that, in manufacturing the motorcycles, there five steps such as welding,

painting, furnishing, assembling, and machining. The manufacturing processes of the

motorcycles are done 50:50 by workers and machineries.

Competitive Environment

Yamaha’s biggest competitor is Honda, which has been launching two products, Honda

Vario and Honda Revo, to beat Yamaha Mio. Yamaha does not have to bother new

entrants in the industry because Yamaha and Honda already conquered more than 80% of

the motorcycle market, so Yamaha only has to concentrate in competing with Honda.

The substitute products of traveling with motorcycle are the shuttle buses from residential

areas to TransJakarta bus stops, and the TransJakarta buses. As there are more

TransJakarta bus stops and the buses are rarely trapped in a traffic jam, some motorcycle

riders are switching to the buses.

Customers demand good quality products at a lower price, which in this case, Yamaha

wins over Honda. Yoke Setiawan said that almost all components of Honda motorcycles

are imported from China, which will not last long.

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Strategic Positioning Techniques

SWOT Analysis of Yamaha Indonesia

STRENGHTS   WEAKNESSES         *currently the market leader * lack of experience in fixing automatic    Motorcycles* produces long-last products           * well established and trusted                  OPPORTUNITIES   THREATS           * the products are cheaper than Honda * fewer amount of dealers and service    centres than Honda* growing demand in the new market        * the products have lower reselling* banks are willing to give motorcycle value than Honda products credits, it increases sales        * Honda launched competing products* innovative products        * the market share difference with    Honda is very thin           

Yamaha has currently reached the market leader position in the motorcycle industry in

Indonesia and that means the interest of Indonesian customers in Yamaha products is

increasing. Yamaha Mio is considered as a new type of product in Indonesian motorcycle

industry and with the high quality parts of the products, Yamaha is selling long lasting

and interesting product. Those points are surely going to help Yamaha to increase the

market share even more and attract new customers.

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Upon the strength points of Yamaha, Jon Fieris said that Yamaha service centre

mechanics are still not very experienced in fixing automatic motorcycles. The mechanics

are still not very experienced because the product is still new, so there are still

unexpected problems that will occur in the future. To overcome the weakness, Yamaha

needs to train its staff and do more observations on possible problems by having

consumer panels.

Some opportunities that Yamaha has to compete with Honda are that the products are

sold cheaper than Honda products. Also nowadays, banks are willing to give motorcycle

credits easily to lower class people, who are mostly the target market of motorcycle

brands in Indonesia, so it helps the demand of motorcycles to increase lately.

Even though Yamaha is currently the market leader, the market share difference between

the two brands is thin. Honda as its biggest competitor is still strong in some points such

as higher reselling price of the products than Yamaha, launching new Honda products to

compete with Yamaha products, and in the number of dealers and service centres. So, to

avoid consumers to choose Honda products because of the distance to the nearest

Yamaha dealers or service centres, Yamaha has opened up 140 new dealers and service

centres in 2006 (Hidayat, 2007, Internet).

13

Yamaha’s Current Strategies and Programs

Yamaha’s strategy to increase the image of the brand worldwide is to get Valentino Rossi

joins Yamaha Team for MotoGP Championships since 2004 (RossiFiles.com, 2006,

Internet). The continuous winnings of Valentino Rossi in Yamaha Team increase the

image and sales of Yamaha products worldwide.

Yamaha Indonesia allows consumers to buy the products on credit. Yamaha checks the

credit application fast, and in maximum two days, it can give the reply whether the credit

application is accepted or not. Consumers only have to pay IDR 500.000,00 down

payment and they can already bring the motorcycle home and finish the installment

within the agreed period. It attracts consumers because they can get the product fast with

low amount of down payment.

Yamaha is giving three-years/36.000Km machine warranty on all the products, two years

warranty on electrical matters, six-months/6.000Km warranty on general matters.

Yamaha also gives five times free maintenance and three times free lubrication oil

control. The warranty services might help to increase the sales because the consumers do

not have to worry about the after-sale services.

Indjun said that Yamaha gives free gifts on every purchase such as Yamaha helmet,

jacket, and free lubrication oil. Other than to attract consumers with the gifts, the worn

helmet and jacket with the brand Yamaha written on them will also be a way of

promoting the products.

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Yamaha is also doing ‘Yamaha Safety Riding Science’ campaign to promote discipline

on the road due to the increasing number of motorcycle accidents. Yamaha might be

considered as a caring company that prioritizes safety to its customers, and certainly

produces safe products.

The strategies and programs are mostly strategic to increase the image of the brand

through Valentino Rossi’s winnings and the safety riding campaign, and also the sales of

the products by giving credit, warranty, and gifts.

15

Plans for Mio’s Competitiveness in the Future

The mission of Yamaha Mio is surely to be the market leader in automatic scooter

market, even though Honda or other competitors introduce similar type of automatic

scooters to beat Yamaha Mio.

There are some ways to keep the competitiveness of Yamaha Mio such as innovation on

the machine, model, colours of the body, lamp shape, and sticker. Yamaha Mio also can

use European standard emission to make the product more ‘environment friendly’ and

produces less pollution into Indonesian air.

According to Jon Fieris, since the first time Yamaha enters Indonesia, the image of

Yamaha is as a ‘speedy but wasteful in petrol usage’ motorcycle, while the image of

Honda is as a motorcycle with economical petrol usage. Yamaha Mio will be more

competitive if it can be speedy and economical at the same time.

Yamaha might also train its mechanics to fix automatic scooters, so the after-sale service

of Yamaha Mio will be better than Honda Vario because of the informative and helpful

staff. If the after-sale service is satisfactory, consumers’ trust to the company will

automatically increase.

Yamaha is using parts that are mostly manufactured in Indonesia, Japan, but also uses

some parts that are manufactured in China. Yamaha also tries to maintain the quality of

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the products by not using too many parts that are manufactured in China, since most of

Chinese products are very cheap but not long lasting. So, even though Yamaha could get

more profit if it uses parts manufactured in China, it still prefers to use parts from Japan

and Indonesia that are more long lasting.

Yamaha might also do more promotions and keep on producing high quality products to

maintain the market share, then hopefully the difference in market share of Yamaha and

Honda can be thicker.

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Conclusion

Launching Yamaha Mio is a perfect strategy to gain market share and be the market

leader over Honda in Indonesian market. Yamaha has to come up with new strategies to

keep and gain more market share. Overall, the performance of Yamaha Indonesia is

impressive.

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APPENDIX

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Bibliography

Bisnisindonesia.com, 2007, ‘Penjualan Yamaha Menyalip Honda’www.bisnis.com/servlet/page?_pageid…topik=A60&cdate=23-APR-2007&inw_id=521389 (accessed 25/4/07)

Hidayat, T., 2007, ‘Yamaha Tancap Gas’http://taufiek.wordpress.com/2007/04/04/yamaha-tancap-gas/ (accessed 6/5/07)

HNC/HND Business Strategy Mandatory Unit 7, 2004, BPP Professional Education: London

LampungPost.com, 10 March 2007, ‘Yamaha Mio Yakin Kuasai Pasar Matic’http://www.lampungpost.com/cetak/berita.php?id=2007031001093085 (accessed /5/07)

MetroNews.com, 2007, ‘Karyawan PT Yamaha Motor Berunjuk Rasa’http://www.metrotvnews.com/berita.asp?id=37253 (accessed 6/5/07)

Oxford Mini School Dictionary, (2002), Oxford University Press: Oxford, UK

RossiFiles.com, 2006, ‘Statistics’http://www.rossifiles.com/valentino-rossi/career/statistics/ (accessed 9/5/07)

Wibisono, A., 2007, ‘Tebas Honda, Yamaha No. 1’http://www.detikfinance.com/index.php/kanal.read/tahun/2007/bulan/04/tgl/04/time/110624/idnews/762803/idkanal/4 (accessed 3/5/07)

Wikipedia.com, 2007, ‘Stakeholder (corporate)’http://en.wikipedia.org/wiki/Stakeholder_(corporate) (accessed 2/05/07)

Interviewed Sources

Yoke SetiawanGeneral Manager of a Yamaha Authorized DealerAdeline MotorJl. Kyai Maja 77, Kebayoran Baru, Mayestik, 12120South JakartaPhone: (021)7394874Fax: (021)7259001

F. IndjunThe CEO of Bajaj Motorcycle Indonesia

Jon FierisEx General Manager of KTM Motorcycle

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