In 1950s in Japanese motorcycle market have 50 competitors. Tohatsu Company was the number one motorcycle manufacturer with a 22 percent market share; Honda was the number two competitors with a 20 percent market share. From 1995-1960, Honda did significantly increase market share at 42 percent per year. Hence Honda established a “winner’s competitive cycle”. To support “winner’s competitive cycle” Honda borrowed heavily as well. Until 1964s, Tohatsu filed for bankruptcy and Honda become the leader in Japanese motorcycle market. In 1970s, when Honda began focusing on the automobile market, Yamaha saw an opportunity to attack and take territory in the motorcycle market. 1981 year-end Yamaha almost nearly market share with Honda, during this time Yamaha want to beat Honda become number one motorcycle manufacturer in Japan market. Even so Honda still committed them to automobiles industry, not seem to redeploying troops in order to protect its motorcycle market. Throughout 1970s to 1980s, Yamaha increased its product line as compared to Honda. Despite the attack, Honda continues to exhibit a preoccupation with autos and began investing in large scales automobile production in the United States. In August 1981, Yamaha announced its plan to construct a new motorcycle factory with an annual capacity of 1 million units and would be increased to 4 million units, as compared to Honda's capacity by 200,000 units. Yamaha and its affiliated companies had a debt to equity ratio of almost 3:1, while Honda group's ratio was less than 1:1. Although Yamaha thought its overt and public challenge had gone unnoticed by Honda, they were mistaken. In later times, Honda turned its attention to motorcycle market, throughout cut down the price and promotion in order to increase market share. The war between Honda-Yamaha result in worldwide inventories. The US market worried about that inventories would influence their market.
2.1 Main problem: The war between Honda-Yamaha impact on domestic and international markets From this case, After Tohatsu Company filed for bankruptcy, Honda leading motorcycle market in Japan, but after a period of time Honda concentrates on automobiles industry. Thus gave Yamaha a change to surpass Honda to become number one motorcycle manufacturer. But when Yamaha’s market share practically can contend against with Honda’s, but Honda still want to keep the number one position so Honda transformation attention to motorcycle, take advantage of cut price to increase market share. After violent compete, Honda and Yamaha made a great scale inventories whatever in domestic and international motorcycle market. 2.2 The not-so comprehensive of Yamaha’s strategy on the business During 1970s Yamaha catch the opportunity to increase the market share in Japan motorcycle market. Yamaha took advantage of Honda attention on automobile market, and increase share to 35 percent. By the end of 1981, Yamaha and Honda had share 37 percent with 38 percent. Therefore, Honda utilized all kinds of method to retake motorcycle market shares. Honda spent more investment in R&D than Yamaha. The sneak attack of Yamaha is quietly increasing its production capacity in Japan though was successful, but Yamaha had no other business and it had invested at a rate far higher than its internal cash generation could support compared to Honda. When Honda regain its business on motorcycles, Yamaha’s production share decreased from 35percent to 27percent and sales of motorcycles as well as plummeted by more than 50 percent. 2.3 Honda’s negligence on its motorcycle business causes overtake of Yamaha For after some time Honda had substituted Tohatsu’s position, Honda diversified into automobiles. Honda deployed its strongest forces into automobile venture which means all available cash and technical capabilities, along with the best troops. Thus, Honda had put all attention into automobile industry and given the lacuna to...
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