THEORETICAL BACKGROUND ON BUILDING BUSINESS STRATEGY
Definition and classification of Business strategy
The term "Strategy" originates from the military, referring to a comprehensive long-term plan that considers the capabilities and limitations of opponents This concept has evolved into "Business strategy," which is traditionally defined as the long-term direction and scale of an organization Effective business strategy aims to provide competitive advantages by optimally allocating resources to meet market demands and satisfy stakeholder expectations.
Alfred Chandler defines strategy as encompassing an organization's fundamental long-term objectives, along with the processes and methods chosen to achieve these goals It also involves the allocation of essential resources necessary for successful implementation.
According to William J' Glueck : "Strategy is a consistent, comprehensive and coordinated plan which is designed to ensure that the basic objectives of the organization will be done."
Fred R David defines strategy as a crucial tool for achieving long-term objectives In the context of business, strategy encompasses various elements such as geographic expansion, diversification of activities, asset management, product innovation, market penetration, cost reduction, liquidation, and forming joint ventures.
According to Michael E Porter : "Strategy is the art of building a solid competitive advantage to defense."
The business strategy management will help the organization:
Find their objectives and direction to choose their own ways to achieve the goals and to know the location of businesses in the process of implementing these goals.
Identify opportunities and threatens from external environment, the internal strengths and weaknesses; then to promote the strengths, minimize weaknesses, catch opportunities and prevent risks from outside.
Make business decisions in line with the business environment in order to improve efficiency and productivity.
Choose the appropriate competitive advantages in the changing business environment, and find out how to survive and grow to enhance the competitive position of the enterprise.
Corporate level strategy defines an organization's long-term direction, guiding it in task completion and growth achievement This foundational strategy enables the organization to formulate its specific strategies for success.
Strategic Business Unit level (SBU)
A Strategic Business Unit (SBU) within a company focuses on specific segments or product categories, guiding their development to enhance contributions toward corporate-level goals To ensure alignment with the overall corporate strategy, it is essential for the company to clearly identify and leverage the unique advantages of each sector in comparison to competitors.
Every organization consists of various functional departments, including marketing, human resources, finance, manufacturing, and research and development To effectively support the overarching corporate and strategic business unit strategies, each department must develop its own specific functional-level strategies.
In summary, the three fundamental levels of strategy are interconnected; the strategic level serves as a foundation for lower-level strategies, which must align with higher-level strategies to ensure the successful and effective implementation of new strategies.
Process of generating and selecting strategies
Fred R David emphasizes that essential strategy-formulation techniques can be incorporated into a three-stage decision-making framework, which is beneficial for organizations of all sizes and types This framework provides tools that assist strategists in identifying, evaluating, and selecting effective strategies.
Stage 1 – The Input Stage: consists of the EFE matrix, IFE matrix, and the
Stage 2 – The matching stage: Stage 2 techniques include the SWOT matrix, BCG matrix, IE matrix, and the Grand strategy matrix.
Stage 3 – The decision stage: involves a single technique, the Quantitative strategic planning matrix (QSPM).
This capstone project report focuses on analyzing Yamaha's business performance using key strategic tools, including the EFE matrix, IFE matrix, SWOT matrix, BCG matrix, IE matrix, and QSPM The following sections will explore the essential concepts and foundational knowledge required to effectively conduct a strategic audit for Yamaha.
External Factor Evaluation Matrix (EFE) Competitive Profile Matrix (CPM)Internal Factor Evaluation Matrix (IFE)
Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT) Boston Consulting Group Matrix (BCG) External – Internal Matrix (IE) Grand Strategy Matrix
Quantitative Strategic Planning Matrix (QSPM)
Source: Fred R David, Strategic Management Concepts and Cases, Figure 6-2, P.222
Figure 1.1: The Strategy-Formulation Alnalytical Framework
1.2.1 The Input Stage 1.2.1.1 External Factor Evaluation Matrix (EFE Matrix)
An EFE matrix enables strategists to effectively summarize and assess various factors, including economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information The development of an EFE matrix involves a systematic five-step process.
Step 1: List 10 to 20 key external factors, including both opportunities and threats.
Step 2: Assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (very important) The sum of all weights must equal1.0.
Step 3: Assign a rating between 1 to 4 to each key external factor to indicate how effectively the firm’s current strategies respond to the factor (4= the response is superior)
Step 4: Multiply each factor’s weight by its rating to determine a weighted score.
Step 5: Sum the weighted scores for each variable to determine the total weighted score for the organization.
In an EFE matrix, an organization can achieve a maximum total weighted score of 4.0 and a minimum score of 1.0, regardless of the number of key opportunities and threats considered.
1.2.1.2 The Internal Factor Evaluation Matrix (IFE Matrix)
The IFE matrix serves to summarize and assess the key strengths and weaknesses across a business's functional areas, establishing a framework for analyzing the interrelationships among these areas Developing an IFE matrix involves five systematic steps to ensure a comprehensive evaluation.
Step 1: List 10 to 20 key internal factors, including both strengths and weakenesses
Step 2: Assign weight that ranges from 0.0 (not important) to 1.0 (all- important) to each factor The sum of all weights must equal 1.0.
Step 3: Assign a 1-to-4 rating to each factor to indicate whether that factor represents a major weakness (rating= 1), a minor weakness (rating= 2), a minor strength (rating= 3), or a major strength (rating= 4)
Step 4: Multiply each factor’s weight by its rating to determine a weighted score for the organization.
Step 5: Sum the weighted scores for each vaiable to determine a weighted score for the organization.
An Internal Factor Evaluation (IFE) matrix can yield total weighted scores between 1.0 and 4.0, with 2.5 representing the average score Scores significantly below 2.5 suggest that an organization has internal weaknesses, while scores exceeding 2.5 indicate a robust internal position.
1.2.2.1 The Strengths – Weaknesses – Opportunities – Threats Matrix (SWOT Matrix)
The SWOT matrix effectively organizes a business's strengths, weaknesses, opportunities, and threats, allowing for a comprehensive analysis of these factors By examining the relationships among these elements, the analysis can identify strategic combinations that lead to optimal solutions for the business.
S-O (Strengths-Opportunities): Use a firm’s internal strengths to take advantage of external opportunities
S-T (Strengths-Threats): Use a firm’s strengths to avoid or reduce the impact of external threats.
W-O (Weaknesses-Opportunities): Aim at improving internal weaknesses by taking advantage of external opportunities.
W-T (Weaknesses-Threats): Aim at reducing the internal weakness to avoid external threats
Listed in the order of importance
Listed in the order of importance
Listed in the order of importance
Use strengths to exploit opportunities
Use strengths to avoid threatens
Listed in the order of importance
Limit weaknesses to exploit opportunities
Minimize risks and avoid threatens
1.2.2.2 The Boston Consulting Group Matrix (BCG Matrix)
The BCG Matrix enables multidivisional organizations to effectively manage their business portfolios by analyzing each division's market share and industry growth rate in comparison to other divisions.
Source: Fred R David, Strategic Management Concepts and Cases, Figure 6-6, P.232
Question Marks: The organization must decide whether to raise market share by improving product, service or invest more to enhance competitiveness
The IFE total weighted scores
The EFE total weighted scores High
Stars: Forward, backward, and horizontal integration; market penetration; market development; and product development are appropriate strategies fir these divisions to consider
Cash Cows: Product development or diversification may be attractive strategies for strong Cash Cows However, as Cash Cows division becomes weak, retrenchment or divestirure can become more appropriate
Dogs: Cost reduction can become the most appropriate strategy.
1.2.2.3 The Internal – External Matrix (IE Matrix)
The IE Matrix visually organizes an organization's divisions within a nine-cell framework, as shown in Figure 1.3 To create the IE Matrix, each division must first develop an Internal Factor Evaluation (IFE) matrix and an External Factor Evaluation (EFE) matrix, which serve as the foundation for the overall IE Matrix.
Source: Fred R David, Strategic Management Concepts and Cases, Figure 6-9, P.234
The Quantitative Stategic Planning Matrix (QSPM) uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies This matrix is developed in 06 steps:
Step 1: Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM
Step 2: Assign weights to each key external and internal factors.
Step 3: Identify alternative strategies that the organization should consider implementing
Step 4: Determine the Attractiveness Scores (AS) defined as numerical values that indicate the relative attractiveness of each strategy in a given set of alternatives (range for AS from 1 to 4)
Step 5: Compute the Total Attractiveness Scores (TAS) TAS are defined as the product of multiplying the weights (Step 2) by the AS (Step 4) in each row
In Step 6 of the QSPM process, calculate the Sum Total Attractiveness Scores (STAS) by aggregating the Total Attractiveness Scores (TAS) for each strategy The resulting STAS will indicate the most appealing strategy among the available alternatives.
BUILDING UP THE BUSINESS STRATEGY FOR YAMAHA
General information about Vietnam motorcycle market
Asia dominates the global motorcycle industry, accounting for over 80% of total registered motorcycles worldwide China leads as the top motorcycle manufacturer in the region, producing nearly 17 million units annually, which represents almost 50% of Asia's total output Other significant contributors include Indonesia and India, each producing over 5 million motorcycles per year.
Southeast Asia, particularly Indonesia, Vietnam, Thailand, the Philippines, and Malaysia, contributes nearly 30% to total motorcycle production in Asia, with a 21% increase in demand in 2010, totaling 13.5 million units Honda leads the market, boasting a 72% share in Thailand and 54% in Vietnam Meanwhile, Yamaha Motor Corporation recognizes the strategic importance of these markets and has enhanced its product lineup and sales efforts, resulting in significant growth, particularly in Indonesia, where Yamaha holds a 46% market share.
Resource: Yamaha Motor Corporation - Annual Report 2010 Figure 2.4: Market share of motorcycle makers in main ASEAN markets
In 2010, Yamaha unit sales in these five major markets grew 26%, to 5,023,000 units, far outpacing the increasing in overall demand (21%)
Resource: Yamaha Motor Corporation - Annual Report 2010
Figure 2.5: Yamaha Motor unit sales by country in main ASEAN markets
YMC aims to boost unit sales in the ASEAN region to approximately 6 million by fiscal 2012 To achieve this, the company has optimized its manufacturing structure, achieving a production capacity of 3.6 million units in Indonesia and 1.0 million in Vietnam Additionally, YMC plans to expand its production capacity in Indonesia to reach 4.0 million units by fiscal 2012 Southeast Asia is expected to continue being a significant area of growth, demonstrating a strong global demand for motorcycles.
2.1.2.1 Current situation of Vietnam motorcycle market
In recent years, Vietnam has seen significant improvements in infrastructure and quality of life, leading to a surge in travel demand As a result, various modes of transportation have been developed and utilized Two decades ago, motorcycles were a rare sight and viewed as luxury items; however, they have now become the predominant mode of transport, representing approximately 61% of all vehicles in the country.
Between 1995 and 1999, foreign direct investment (FDI) in motorcycle manufacturing focused on assembly by importing components from abroad, gradually increasing the localization of production From 2000 to 2003, numerous local enterprises emerged across the country, engaging in the trading and assembly of motorcycles using components sourced from China.
In 2003, Chinese motorcycle products captured 65-70% of the domestic market, primarily due to their affordability and low quality, which appealed to consumers with limited incomes, leading to their rapid dominance in the market.
Since 2005, foreign direct investment (FDI) enterprises have revamped their business strategies by adopting new models and focusing on cost reduction, particularly in the basic moped motorcycle segment, to boost market share Consequently, sales of Chinese motorcycles have significantly declined, giving way to products from reputable joint-venture companies like Honda, YMVN, Suzuki, SYM, and Piaggio.
Source: Statistic data of YMVN Figure 2.6: Demand for motorcycles in Vietnam from 1995-2010
Vietnam has emerged as the fourth largest motorcycle market globally, following China, India, and Indonesia The domestic motorcycle demand has evolved significantly; from 1996 to 2002, the primary focus was on basic mopeds with engine capacities of 50cc to 100cc However, between 2003 and 2008, the market diversified, introducing various scooter models By 2010, scooter demand surged to approximately 30% of the total motorcycle market, up from just 8% in 2006 Despite this growth, the demand for basic moped motorcycles remains a lucrative opportunity for businesses.
Source: Statistic data of YMVN Figure 2.7: Motorcycles demand in Vietnam 2006-2010, with a prediction to 2015
A survey conducted by the Marketing department of YMVN indicates a significant shift in motorcycle demand in Vietnam, with an anticipated increase in scooter usage By 2015, scooters are expected to account for 50% of the total domestic demand, and this figure is projected to rise to 70% by 2020.
2.1.2.1 Master plan for the development of Vietnam’s motorcycle industry by
Vietnamese motorcycle market is expected to continue growing in near future It is estimated that by 2015, total registered motorcycles across the country will be about
As of 2020, Vietnam's motorcycle market is projected to reach approximately 35 million units, reflecting an annual growth of about 2 million units The average increase from 2016 to 2020 is estimated at 1.8 million motorcycles per year In line with Decision No 002/2007/QD-BCT from the Ministry of Industry and Trade, which outlines the "Master Plan for the Development of Vietnam’s Motorcycle Industry" for 2006-2015 with a vision for 2020, Vietnam aims to establish itself as a major hub for motorcycle design, manufacturing, and assembly The plan focuses on enhancing regional competitiveness and achieving full integration into both regional and international markets.
Satisfy 100% of the basic moped motorcycles demand in rural area, and 90% demand in urban area;
Be able to achieve 60% of locoalization ratio for the scooter products and 90% for basic moped motorcycle
Products will comply with a roadmap of implementing international commitments on emission standards;
The company specializes in manufacturing large motorcycles with engine capacities exceeding 125cc, including premium scooters, sport bikes, and three or four-wheeled motorcycles designed for individuals with disabilities Additionally, it produces off-road motorcycles tailored for tourism and agricultural product transportation, catering to both domestic and export markets These models will account for 30% of the company's overall production capacity.
The motorcycle industry's supporting sectors are poised to gain international competitiveness, actively participating in the production and supply chains of global motorcycle manufacturers As a result, the export revenues from motorcycles and their components are projected to reach approximately 400 million US dollars.
Researche and manufacture engines, motorcycles using “clean” fuel to supply for domestic and export markets;
By 2020, revenues from export of motorcycles and components will reach 500 – 800 million US dollars, in which “clean” fuel-use motorcycles account for 15% - 25%;
Supporting industries of motorcycle industry will meet demand on parts and components of other assembly industries, such as electric equipments, electronics, automobile, and consuming industries…
General introduction about Yamaha Motor Vietnam Co., Ltd
2.2.1 The process of establishment and organization structure
Yamaha Motor Vietnam Co., Ltd (YMVN), which was established on Jan 24 th
Established in 1998 under investment certificate No 2029/GP, the company is situated in Trung Gia Commune, Soc Son District, Hanoi It operates as a joint venture, with Yamaha Motor Co., Ltd holding a 46% stake, Vietnam Forest Corporation owning 30%, and Hong Leong Industries Berhad possessing 24%.
YMVN specializes in the research, manufacturing, and sale of Yamaha motorcycles with engine capacities ranging from 100cc to 175cc These motorcycles are fully assembled on advanced production lines, utilizing technology transferred from YMC, ensuring that they meet both global Yamaha standards and Vietnam's safety and quality regulations In addition to providing motorcycles through a comprehensive nationwide dealer network, YMVN also offers after-sales services and spare parts to enhance customer satisfaction.
YMVN has established a strong presence in the Vietnamese motorcycle market, despite being a newer player Their diverse range of products, including stylish mopeds and scooters available in vibrant colors, has gained popularity, particularly among the youth.
Basic moped Taurus, Sirius Under 20 million
Sporty moped Jupiter, Exciter From 30 to 40 million VND
Utility scooters Luvias-125cc From 27-37 million VND
Sporty scooters Nouvo-135cc 36.2 million VND
YMVN operates three factories in Hanoi and has established six branches in major cities, along with a network of over 500 3S dealers across the country As a leading motorcycle company, YMVN has earned significant customer trust through effective and strategic business practices.
YMVN has established a traditional organizational structure defined by high job specialization and functional departments, forming a pyramidal hierarchy At the apex is the General Director, followed by a limited number of Deputy General Directors or Senior Managers, with multiple management layers beneath them Jobs are organized into functional departments, including accounting, sales, and human resources, with Vietnamese leaders at the helm of each department.
The company's organizational structure features strong interconnections among its components, emphasizing specialization and a high level of responsibility This framework ensures that specific rights are established, enabling effective management functions and the successful attainment of overall objectives.
2.2.2 Situation and Business performance from 2006 to 2010
In 2007, YMVN achieved a record motorcycle sales milestone of 500,000 units, signaling the company's continuous growth By 2010, YMVN's market share soared to 29%, and the company is now aiming to surpass 1 million motorcycle sales annually With a clear understanding of its strengths, YMVN is progressively solidifying its strong position in the Vietnamese motorcycle market.
Source: Statistic data of YMVN Figure 2.9: The sales results and market share of YMVN period 2006-2010
Table 2.3: Business performance from 2006 to 2010 (Unit: Thousand USD)
Source: Statistic data of YMVN
Between 2006 and 2010, the business experienced significant growth, with revenue more than doubling from $395.8 million to $826.1 million Additionally, after-tax profit saw a remarkable increase, rising from $35.3 million to over twice that amount.
Market share increasing to 76.138.000 USD) In fact, the total revenue and after-tax profit of year
The global economic crisis that began in the US in December 2007 and spread to Europe, Japan, and Asia led to a decline in 2008 compared to 2007 Despite this challenging environment, YMVN reported impressive business performance, achieving an after-tax profit of $46.967 million While total revenue and after-tax profit saw a slight decrease from 2007, the company's results remained strong.
Building up the business strategy for YMVN by 2015
2.3.1 Analyzing factors affecting the business strategy of YMVN
2.3.1.1 External factor evaluation matrix (EFE)
In the aftermath of the financial crisis and global economic depression, Vietnam's economy has shown significant recovery and rapid growth Following a GDP growth rate of 5.3% in 2009, the country achieved an impressive 6.78% growth in 2010 Additionally, the General Department of Statistics reported that Vietnam's GDP per capita reached 1,168 USD in 2010, marking a twofold increase compared to previous years.
In 2006, the rise in personal income levels led to an increased demand for personal commuting options, enabling YMVN and other motorcycle manufacturers in Vietnam to invest further in production and development.
In recent years, Vietnam has experienced a significant rise in inflation, particularly noticeable since mid-2010, driven by high credit growth from previous years As 2011 began, the upward trend in inflation intensified due to simultaneous increases in the prices of essential raw materials and fuels, such as electricity, coal, and petrol This price surge has led to higher input costs, diminishing production efficiency and competitive strength for businesses, prompting enterprises to adopt more cautious investment strategies.
In 2010, the devaluation of the Vietnamese dong against the US dollar created significant challenges for motorcycle manufacturers in Vietnam The instability of the exchange rate led to substantial losses, as many manufacturers rely on importing components from countries like Japan, Thailand, Indonesia, and China This reliance, coupled with the weaknesses in supporting industries, raises concerns about the risks associated with fluctuating exchange rates, impacting their ability to implement medium and long-term plans effectively.
Vietnam ranks as the third most populous country in Southeast Asia and holds the 13th position globally in terms of population density As reported by the General Department of Statistics, the total population reached around 86 million as of April 1, 2009, with nearly 25.5 million residents (about 30%) living in urban areas This demographic presents a significant market opportunity for the motorcycle manufacturing and trading sector, particularly for YMVN.
In recent years, a significant migration of people to major cities for business and education has occurred, with urban populations reaching 25,436,896, representing 29.6% of the national total, while rural areas account for 60,410,101, or 70.4% Urban areas are experiencing an average population growth rate of 3.4% annually, compared to just 0.4% in rural regions This urbanization trend has led to an increased demand for personal vehicles, particularly motorcycles, which are favored for their affordability and convenience in city commuting.
Age structure: The population structure by age also has changes in a positive direction The proportion of the population under 15 years old decreased from 33.1% in
From 1999 to 2009, Vietnam experienced a significant demographic shift, with the proportion of the population aged 15 to 64, the key labor force, rising from 61.1% to 69.1%, while the percentage of those aged 65 and older decreased from 24.5% This demographic trend indicates that Vietnam is currently enjoying a golden age of population, characterized by a robust young labor force This abundance of young workers presents a unique opportunity for enterprises to streamline recruitment processes and for YMVN to develop innovative models tailored to the young customer segment.
Vietnam enjoys political stability due to a unified commitment to shared objectives and principles, even amidst global and regional uncertainties Key indicators of this stability include a secure and thriving populace, peaceful national conditions, strong relationships with neighboring countries, robust economic growth, and international recognition These factors create a favorable environment for foreign direct investment (FDI) enterprises, encouraging them to establish and sustain long-term operations in Vietnam.
Over the past 20 years of "Doi Moi," Vietnam has made significant advancements in its legal environment, driven by the demands of objective practice and the pressures of joining the WTO The government has implemented reforms aimed at streamlining the administrative apparatus, enhancing officer qualifications, ensuring expenditure transparency, and simplifying the legal system These improvements have fostered a more favorable business climate and reduced bureaucratic obstacles for enterprises.
In the past, Vietnamese families were predominantly family-oriented, with parental influence significantly shaping personal ambitions and decisions Even after moving out, individuals often felt the weight of their parents' opinions However, globalization, the rapid growth of mass media, and increased exposure to the outside world have transformed the personality and lifestyle of the younger generation With higher education and greater economic independence, youth are now more assertive about their personal values and the need for respect, pursuing independent lifestyles and hobbies This shift is evident in their consumption patterns, as they increasingly choose products based on personal preference rather than familial recommendations.
Vietnam is experiencing significant socio-economic changes that are transforming lifestyles, particularly among the youth, who are shifting from traditional to more advanced and diverse preferences This evolution has created opportunities for YMVN to introduce new motorcycles that are fashionable, stylish, and appealing As the demand for high-quality products grows beyond urban centers and into rural areas, YMVN is well-positioned to expand its market reach and achieve higher sales results.
Motorcycles have become an essential mode of transport for Vietnamese people, spanning both urban and rural areas In recent years, Vietnam has emerged as one of the fastest-growing motorcycle markets globally, thanks to their affordability and convenience compared to cars and buses However, the surge in motorcycle usage has led to significant challenges, including traffic congestion and worsening air quality in major cities As motorcycles are a primary source of toxic emissions, their overuse contributes heavily to air pollution, which poses economic and health risks Researchers have highlighted the considerable economic damages resulting from air pollution, underscoring the urgent need for solutions to this pressing issue.
Rivalry among competing in the industry
Exhaust fumes from motorcycles in Ho Chi Minh City and Hanoi contribute to significant economic losses, estimated at over $50 million and $20 million annually, respectively, which represents 0.3% to 0.6% of each city's GDP To address the rising number of motorcycles and their emissions, experts advocate for stricter controls on production technology to meet EURO-3 standards, the adoption of ecological technologies, and the safe disposal of older motorcycles.
Starting January 1, 2014, the Ministry of Transport mandates that all two-wheel motorcycles must comply with the Euro-3 emissions standard, transitioning from the current Euro-2 level In response to these new regulations, YMVN has implemented advanced emission control technologies that meet the Euro-2 standard and plans to upgrade to the Euro-3 standard by 2012.
Vietnam's science and technology qualifications lag significantly behind regional and global standards, with most enterprises relying on outdated technology that is two to three generations behind the latest advancements Only 2% of Vietnamese enterprises utilize advanced technology, in stark contrast to Thailand's 31%, Singapore's 73%, and Malaysia's 51% To meet the criteria for industrialized and modernized nations, this figure should exceed 60% This technological backwardness hinders the growth of the supporting industry, particularly in motorcycle manufacturing.
Source: Fred R David, Strategic Management Concepts and Cases, Figure 3-3, P.118
Figure 2.10: The five-forces model of competition
SOME SOLUTIONS TO IMPLEMENT THE BUSINESS
Some solutions to implement the business strategy of YMVN by 2015
3.1.1 Solutions to implement the Focus and Growth Strategy for Sporty Scooter Market
To ensure the leading position and continue to make up the higher market share in this category, the company needs to consider some solutions as follows:
Increasing the production scale and renovating technology
YAMVN should leverage its existing experience and technology to enhance the production of 3rd generation DiAsil technology, thereby meeting the growing customer demand By capitalizing on government policies that promote investment in supporting industries, the company can significantly improve its capacity to produce high-tech components, positioning itself as a leading supplier in the motorcycle parts market.
The sporty scooter category is rapidly emerging with limited competition, prompting YMVN to leverage DiAsil technology for model diversification By modularizing the DiAsil engine, YMVN can boost productivity and lower production costs for future products Additionally, capitalizing on the favorable tax conditions under AFTA and WTO will enable YMVN to adopt Advanced Fuel Injection Technology, aiming to enhance fuel efficiency by 50% for motorcycles by 2015.
YMVN currently targets male customers, who make up 80% of its audience, but there is a growing demand for products tailored to female customers To address this, YMVN should expand its sporty product line to better cater to women while maintaining its commitment to advanced design and cutting-edge technology Additionally, the brand must prioritize innovative and distinctive designs that resonate with the younger generation.
To enhance efficiency and reduce costs, YMVN must improve its design processes This can be achieved by expanding its internal design division and collaborating with GK Dynamic Tokyo to establish a specialized design division focused on Sporty Scooters.
3.1.2 Some solutions to implement the Cost Leadership strategy to increase the penetration in basic moped market
Sirius and Taurus stand out for their superior quality and style, but their production costs are 7% higher than similar HVN products To sustain their competitive edge, YMVN should focus on upgrading production technology to reduce costs while maintaining their strengths.
Investing in component parts production
YMVN operates a state-of-the-art parts manufacturing factory that supplies components for its own production and exports motor and hydraulic engine parts to Japan and the US This competitive edge highlights the importance of securing government support for the industry to enhance production capabilities By expanding its Component Parts factory, YMVN can diminish supplier bargaining power and lower the costs associated with its basic moped production.
Expanding channel of distribution and the market
YMVN plans to address the urgent need to replace approximately 12 million Chinese motorcycles and over 3 million units from other brands, primarily owned by rural residents To enhance consumer access and purchasing power, the company intends to swiftly expand its distribution channels into these rural areas Specifically, YMVN aims to establish 100 additional 3S dealers and 150 2S agents across the countryside nationwide.
In the basic moped segment, the cost leadership strategy between Japanese manufacturers YMVN and HVN has led to minimal price wars, as both companies implement a "Sandwich" pricing strategy to deter potential competitors While YMVN holds a significant advantage in the sporty moped market, it is crucial to maintain competitive pricing to appeal to young consumers with medium to high incomes who favor a sporty and speedy aesthetic.
For Focus and Growth Strategy in the sporty scooter, the competition
YMVN must enhance its research into technology to reduce costs and sustain its competitive edge in the market However, given its advanced technology and unique functional features, YMVN should consider pricing its products higher than competing models to establish and affirm their premium status.
To enhance its cost leadership strategy in the basic moped segment, YMVN must rapidly expand its sales network, particularly in rural areas where HVN currently holds a competitive advantage Within the next two years, YMVN should aim to establish a presence in every rural location across the country, thereby improving customer access to sales and services and boosting overall competitiveness in the market.
To enhance its focus and growth strategy in the sporty scooter segment, YMVN should leverage its advantageous shop locations, primarily situated at busy street corners that naturally draw customer attention The company needs to seek new partnerships, specifically targeting shops located at crowded crossroads and spacious areas In addition to competing for prime locations and shop size, manufacturers are also vying for superior after-sales service quality Therefore, YMVN must prioritize the enhancement of its training processes and continue to improve its after-sales services, which currently represent a significant strength for the brand.
Continue to sticks its brand-name and promotion activities to Sport Activities in order to strengthen the brand image.
Making careful advertisement plan with clear advertising messages.
Choosing the right advertising channels is crucial for effective outreach Utilizing professional publications, outdoor posters, and community platforms like Facebook and blogs can enhance visibility Among these, online social networks stand out as the most current and cost-effective option, offering the largest and fastest means to connect with customers.
Researching and predicting the market with higher frequency
Currently, YMVN conducts annual market surveys to assess motorcycle shop quantities and brand recognition, along with customer preference surveys on motorcycle colors, graphics, and functions every four to six months However, to stay attuned to evolving consumer tastes and market changes, YMVN should increase the frequency of its market research.
To effectively develop the Basic Moped motorcycle, YMVN should prioritize research and development activities that align with the specific needs and preferences of target customers in rural areas Conducting a comprehensive mass survey with a larger sample size in these regions will provide valuable insights to guide the design and features of the moped, ensuring it meets the expectations of rural consumers.
YMVN should target young customers in major cities for their sporty scooter line In addition to exploring new technical demands, the design and color play a crucial role in attracting this demographic Therefore, it is essential for YMVN to assess young people's reactions to the latest global trends in color and graphics.
Some recommendations to the state
Vietnam has established a robust legal framework for intellectual property rights; however, violations remain prevalent, particularly in the motorcycle industry Despite the peak of these infringements occurring between 2005 and 2008, issues such as industrial design theft, especially concerning external plastic covers, and trademark violations continue to be widespread.
To effectively address the violation of intellectual property rights, it is essential to integrate the efforts of the state, society, and market, with the state playing a pivotal role in coordinating these entities This approach necessitates collaboration among various authorities, including the National Office for Intellectual Property, economic police, market management departments, the Vietnam Register Center, and Provincial People’s Committees.
To effectively combat intellectual property rights violations, it is essential to raise the fines imposed on offenders Under Decree No 97/2010/NĐ-CP, penalties for such violations can reach a maximum of 500 million VND; however, this amount remains relatively low in comparison to the profits generated from sales As a result, the current fines do not serve as a strong deterrent, allowing violators to continue their unlawful activities without significant consequences.
Reducing some motorcycle registration procedures
Authorities should consider exempting the technical safety and environmental protection certification process for imported motorcycles when manufacturers utilize these models solely for research and development purposes, rather than for commercial sale.
Developing supporting industries and industrial human resources
Enhance the attraction of investment in five targeted sectors of the supporting industries, i.e pressure processing (forging, pressing), casting, welding, thermal treatment, and mold and die;
Formulate a master plan to develop supporting industries of the motorcycle industry, which will play a leading role in the development of supporting industries for other assembly industries
Build a supporting industry database in conjunction with business matching service between FDI assemblers and local suppliers to narrow the information and perception gap between enterprises
Improving organization structure and activities of an industry association
Improve and enhance a focal point role of an industry association in gathering all motorcycle assemblers and part suppliers in Vietnam together, improving their product quality and productivity
Organize meetings to facilitate information exchange among manufacturers and develop a strategic plan for either restructuring the current association or creating a new one, with the goal of establishing an industry association that effectively represents and serves the interests of all its members.
Developing a long-term business strategy for the next four to ten years is challenging due to fluctuating external factors such as policies, consumer demand, and competitive conditions Nevertheless, creating a robust strategy is essential for corporate strategists, as it optimizes internal resources and improves the organization's adaptability to external changes.
As motorcycles continue to play a vital role in people's lives leading up to 2020, YMVN has the opportunity to establish itself as a leading supplier in the motorcycle and spare parts manufacturing market By analyzing both external and internal factors impacting business performance, and with the goal of increasing market share and competing with major rival HVN, YMVN proposes strategic initiatives to enhance its market position.
Diversifying products in designing and engine with the two main suggestions: implement the pioneer strategy in Sporty scooter category; and increasingly penetrate into basic moped category
Maintaining and expanding network by three levels: DO, 3S, 2S
Closely fastening brand-name and promotion activities with outdoor activities, especially sport events and social activities.
To ensure long-term success, the company must implement a comprehensive training program aimed at enhancing the skills of its highly qualified workforce This strategic focus on employee development is essential for achieving sustainable growth and maintaining professionalism within the organization.
The strategic management process leads to decisions with profound and enduring impacts, making it crucial for strategists to systematically and promptly review, evaluate, and oversee the implementation of these strategies.
The "Building Up Business Strategy for Yamaha Motor Vietnam by 2015" outlines a comprehensive development strategy for YMVN We extend our gratitude to the professors and classmates at Griggs University for their invaluable contributions of time, energy, ideas, and suggestions that have enhanced this thesis We welcome feedback to further refine and improve strategies for YMVN.
1 Le Van Be (2010), Feasible Studies on Solutions for Traffic Jam in Ho Chi Minh
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