Yamaha: BCG Matrix
It is important to note that the BCG matrix can provide an invaluable insight into the state of a product or service. The quadrant position can reveal whether it needs to be eliminated, developed, or utilized. In the case of Yamaha, the company has three central business units, which possess different market shares and growth rates. Therefore, each of these units includes a different quadrant positioning in the BCG matrix, based on which it will be possible to derive specific strategies.
Each business unit of an enterprise or its product falls into one of the quadrants of the matrix by the growth rate of the industry in which the enterprise operates and the relative market share. In this method, it is important to clearly define the industry in which the firm operates. If the industry is defined too narrowly, then the firm can become a leader, and when the industry is broadly defined, the firm will appear weak.
The growth and market share matrix has a lot to do with a product’s life cycle curve. However, its advantage or difference from a simple model of the life cycle of a product or an industry lies in the careful consideration of a certain set of products that may be at different stages of the life cycle and in the development of recommendations for the redistribution of financial flows between products.
One of the most well-known products of Yamaha is its motorcycles, which can be considered a signature product of the company. It has the number two position in motorcycles, which means that the specified product has a relatively high market share value. However, in regard to the growth rate, the coronavirus pandemic resulted in a steady decline in the sheer sales volume of all land mobility products, such as motorcycles and e-bikes (Yamaha, 2019). In addition, motorcycles and e-bikes comprised more than 60% of all sales conducted by Yamaha, which means that they are the main revenue generators (Yamaha, 2020). In other words, the company is heavily reliant on the performance of these products in order to remain resilient in the market.
It is critical to point out that Yamaha motorcycles were declining in sales for a certain period of time. It is stated that such a decline began prior to the pandemic because from 2018 to 2019, sales of the product dropped by 1.5%, and the emergence of the coronavirus worsened the problem since the sales from 2019 to 2020 declined by 15.5% (Yamaha, 2021). Therefore, Yamaha motorcycles have a high market share but a negative growth rate, which means that they can be considered Cash Cows, as shown in Table 1.
In other words, Yamaha motorcycles can continue generating cash flow until the product becomes irrelevant or experiences a drastic change in the growth rate of sales. The company needs to use its Cash Cow to fund projects or products with more prospective future potential or generate profits for investors.
When the market growth slows down, star products become cash cows. These are products, or business units, that hold leading positions in the market with low growth rates. Their appeal is due to the fact that they do not require large investments and provide significant positive cash flows based on the curve. Such business units not only pay for themselves but also provide funds for investment in new projects on which the future growth of the enterprise depends. In order for the cash cow phenomenon to be fully utilized in the investment policy of an enterprise, competent product management is necessary. Competition in trainee industries is very fierce, so constant efforts are needed to maintain market share and find new market niches.
The second product is the Yamaha e-bike, which is a part of the land mobility products of the company. Although it was stated that Yamaha land mobility products experienced a major decline in sales, e-bikes resulted in sales and income increases due to the European and Japanese markets (Yamaha, 2019). In other words, there is location-based interest in the product line, which drives its sales volume by a significant margin.
However, e-bikes still remain a small fraction of total land mobility products, which is why their sales increase did not seriously affect the total land mobility sales. Therefore, e-bikes have a positive growth rate in the market despite the effects of the pandemic, with their market share being significant (Yamaha, 2020). The market share significance can also be derived from the fact that it has a sixth position in the e-bike systems, which does not put it among industry leaders, but it also does not exclude it as a new entrant. The presence of a promising growth rate with substantial market share put e-bikes in the Stars quadrant of the BCG matrix, as shown in Table 1.
Star products are market leaders who are typically at the peak of their product cycle. They themselves bring in enough funds to maintain a high share of a dynamically developing market. However, despite the strategically attractive position of this product, its net cash income is rather low, as it requires significant investments to ensure high growth rates in order to take advantage of the curve. Managers are tempted to reduce investments in order to increase current profits, but this is fraught with consequences since, in the long run, this product can turn into a commodity-cash cow. In this sense, it is not the current income that matters but the future income of the star product.
The third product is industrial robots, or robotics in general, which are also a critical part of Yamaha’s business. It is important to point out that the given business unit has a number 12 position in the market, which means its market share is insignificant. From the annual report of Yamaha, it is evident that robotics is a small fraction of total sales conducted by the company, and it has a low market share in general (Yamaha, 2020).
However, the growth rate of the given business unit is steadily growing despite the pandemic’s economic disruptions, which shows that the robotics segment of Yamaha is highly promising and has potential. The growth rate of industrial robots from 2018 to 2019 was 1%, and from 2019 to 2020 was 9.7%, which is interesting since the year pandemic resulted in higher growth than in previous years (Yamaha, 2021). Therefore, a high growth rate and lack of significant market share put industrial robots in the Question Marks quadrant of the BCG matrix, as shown in Table 1.
However, if the robotics unit will experience the slightest decline in growth rate, it will become a dog product. Dog products are products that have a low market share and have no room for growth because they are in unattractive industries. These business units have either zero or negative net cash flows. Unless there are special circumstances, these business units should be disposed of. However, corporations sometimes retain such products in their nomenclature if they belong to “mature” industries. The capacious markets of “mature” industries are to a certain extent protected from sharp fluctuations in demand and major innovations that radically change consumer preferences, which allows maintaining the competitiveness of products even in conditions of a small market share.
Table 1. BCG Matrix.
In conclusion, it is evident that there are major differences in performance among various Yamaha’s business units. The company’s main revenue generator, Yamaha motorcycles, is experiencing a steady decline in sales volume, but they occupy a large portion of the market share, which means that the given business unit is a Cash Cow. Yamaha’s e-bikes have a positive growth rate and substantial market share, which puts the business unit in the Stars category. Industrial robots are also experiencing a positive growth rate, but they lack market share, which means that the business unit is in the Question Marks category.
Yamaha: Ansoff Matrix
One should be aware that the Ansoff matrix can be a powerful tool for determining the strategic trajectory for Yamaha. The given instrument can provide a valuable understanding of a company’s potential move for the upcoming years since it considers both internal and external factors. Internal factors are manifested in the notion of existing or new products, which are reliant on the company itself. The external factors are based on market states, which can be existing or new ones. The variety of combinations between these metrics determines the strategic trajectory for a company, which can be highly useful in Yamaha’s case.
The first quadrant of the Ansoff matrix is market penetration, which primarily focuses on the development of existing products in existing markets. It is important to note that motorcycles and land mobility products still comprise the largest section of Yamaha’s sales volume, which means that its products, such as e-bikes and regular sports motorcycles, need to be developed further (Yamaha, 2020).
For example, Yamaha’s e-bikes are experiencing a steady growth rate amidst pandemics, and it has a significant market share, which means that the company can focus on expanding the market share of this business unit in the existing market as shown in Table 2. Such an approach is called market penetration, where the goal is to improve sales of the current products in the market (Gamble, Peteraf, and Thompson, 2020). In addition, the pandemic is most likely to subside due to mass-scale vaccination, which will result in an economic recession rebound, and the demand for Yamaha’s sports motorcycles will inevitably grow once again. In other words, both e-bikes and sports motorcycles did not reach their maximum potential of market penetration, and thus, the latter strategy is plausible for the company.
The second quadrant is product development, where new products are introduced to existing markets. One of the most prominent marketing campaigns conducted by the company is “Call of the Blue,” which strives to popularize Yamaha among the population (Yamaha Racing, 2018). Historically, Yamaha was well-known for its sports motorcycles, which are not suitable for the majority of the population. Therefore, new product developments can focus on building motorcycles, which are not necessarily sporty. Yamaha can introduce off-road, scooter, and retro motorbikes in order to increase its range for a wider range of consumers, as shown in Table 2.
For example, scooter motorbikes possess a higher degree of utility and usefulness, especially in densely populated regions across Asia. It is estimated more and more people are switching to scooter motorbikes as means of transportation since they are usually more affordable and cheaper to maintain (Salaudeen, 2020). In other words, Yamaha can greatly increase its product and brand presence by developing outstanding scooter bikes. Similarly, off-road and retro motorbikes are demanded in smaller market segments, where the former product is mostly needed to traveling lands without any infrastructure and challenging terrains, and the latter is needed for long-distance on-road traveling.
The third quadrant is market development, which focuses on introducing existing products to new markets. It is important to note that Yamaha has already reached and established its customer base across the globe for its motorbikes. However, the company’s e-bikes are most popular in regions with higher carbon emission taxation, such as Europe.
The given product can also be used to target environment-aware and environment-friendly consumers, who avoid gasoline usage and would prefer electric motorbikes. One can argue that Yamaha did not complete or fully capture this market segment, and consumers seek to reduce their carbon footprint. For example, Tesla experienced major success and significant growth in both popularity and sales because the product is appealing, outstanding, and environment friendly. Similarly, Yamaha can capture the equivalent individuals who prefer motorbikes instead of gasoline alternatives.
The last quadrant is diversification, which focuses on the development of new products in order to introduce them to new markets. Yamaha’s small portion of revenue comes from its business unit of industrial robots, which, as was stated previously, is experiencing steady growth. In other words, it can be considered as a new product, which is being introduced to a new market of robotics.
The modern age of manufacturing requires a high level of automation, and Yamaha can enter this new market by developing manufacturing based products for other companies. The reasoning behind such a strategy is rooted in the fact that Yamaha has already developed industrial robots, which is why this diversification is plausible.
Table 2. Ansoff Matrix.
In conclusion, the Ansoff matrix is a highly effective tool for determining the strategic trajectory of a company. In the case of Yamaha, there are prospects in all four sections of the framework, where market penetration is manifested in focusing on market share expansion for e-bikes and sports motorcycles. Product development can be achieved by building motorbikes, besides sports versions, such as the off-road, scooter, and retro alternatives. Market development can take place by introducing e-bikes for consumers who care about their carbon footprint and environment. The diversification strategy can be obtained by developing industrial robots for a new market of manufacturing robotics technology.
Reference List
Gamble, J., Peteraf, M., and Thompson, A. (2020) Essentials of strategic management: the quest for competitive advantage. New York: McGraw-Hill Education.
Salaudeen, A. (2020). More women on motorcycles and scooters are hitting the roads in Egypt. Web.
Yamaha Racing. (2018). Call of the blue. Web.
Yamaha. (2019). Yamaha motor reveals rise in consolidated sales – strong growth in marine and financial services segments. Web.
Yamaha. (2020). Annual report 2020. Web.
Yamaha. (2021). Sales by industry. Web.