Yamaha Porter Five Forces Analysis

Published in Companies category by MBA Skool Team, Last Updated: February 27, 2022

Here is the Porter’s Five Forces analysis of Yamaha that covers threat of new entrants & substitutes, bargaining power of buyers & suppliers and competitive rivalry.

Threat of New Entrants:

The threat of new entrants in the Yamaha Porter Five Forces Analysis can be explained as follows:

Yamaha is a Japanese multinational corporation focusing majorly on the manufacture of motorcycles. The industry in which Yamaha operates is one where there are a lot of established players. The companies are known for their all-around efficiency and their quality of products. A new entrant will face a lot of difficulties if it is planning to enter the market. There is a high level of financial capital investment required to set up a manufacturing unit and start the operation.

Since the products are those which involve a lot of money from the customer's side, the customers usually will have to make a conscious decision in buying the product. Though the marketing and advertising campaigns can influence that, people will generally prefer to stick to established brands to buy their products. Even the marketing efforts of bigger players will be difficult to be matched by the new players. Thus, the threat of new entrants is a weak force affecting the operations of Yamaha.

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Threat of Substitutes:

Below are the threats of substitute products of Porter’s Five Forces analysis of Yamaha:

There has been a constant increase in the number of two-wheeler manufacturers in recent decades. The price ranges have also undergone tremendous changes along with this.

There has been a steady increase in fuel prices that have caused an increase in the production of a lot of fuel-efficient vehicles, especially in developing nations. These vehicles have posed a serious threat to Yamaha. Besides, there has also been an increase in the number of small cars, which is economical for price-sensitive people. This has put tremendous pressure on the demand for two-wheelers and hence on the business of the company. But there are loyal customers who realize the brand equity of the brand and will always prefer to be associated with it. This reduces the threat of substitutes for Yamaha. The technology and efficiency of the company are rarely matched by substitute motorcycles making the threat of substitute a moderate force.

Bargaining Power of Customers:

In the Yamaha Porter Five Forces Analysis the bargaining power of the customers can be explained as:

The market in which Yamaha operates is known for the price competition among rival brands. Thus, there is a tendency to choose the most economical product available in the market since all of the players are established ones known for the quality of their products. The motorcycle segment is a highly standardized segment, and most of the brands provide similar products at similar price ranges. This increases the bargaining power of customers since customers will find it difficult to differentiate its product from its competitors. There has been an increasing knowledge base among the customers, which will work in favor of Yamaha as with increasing knowledge, people will be able to appreciate the technological efficiency of the company. Besides, Yamaha has been keen on its customer relations and keeping its customers close. This has helped them in improving their brand loyalty and hence reducing the bargaining power of customers.

Overall, the bargaining power of customers is a moderate force affecting the operations of Yamaha.

Bargaining Power of Suppliers:

Following is the bargaining power of suppliers in the Porter’s Five Forces analysis of Yamaha:

There are a lot of suppliers present in the market than the number of producers. Most of the suppliers are such that they cater only to a small geographical spread than the entire space where the brands are operating. Thus, they have only a lesser reach compared to that of the companies. Besides, there is also a sense of goodwill associated with each of the big players that the suppliers want to be associated with. This reduces their bargaining power further down. The companies have specific quality requirements which the suppliers cannot negotiate on. The negotiation power vests with the makers, and this puts the suppliers at the receiving end. But there are also suppliers who are already established by themselves and cater to multiple manufacturers. They will then have the upper hand in the negotiations as their processes will also be standardized. Thus, the bargaining power of suppliers is a weak force when it comes to the operations of Yamaha.

Competitive Rivalry:

The impact of key competitors in the Yamaha Porter Five Forces Analysis is as follows:

Yamaha have their business in commuter vehicles and scooters, marine engines, cycling components and musical instruments. It has an annual revenue of $13 billion USD Yamaha operates in a marketplace replete with a lot of big players like Harley Davidson, Honda, KTM, Bajaj, Suzuki, Hero etc. Most of these competitors are well established and provide products in segments where even Yamaha is not in operation. Besides, since the products are costlier, the customers will always prefer to stick to those products with which they have a good experience. Thus, there will be loyalty in customers, which will be very difficult to be changed. This increases the competitive rivalry further. Brand image matters a lot, and the companies will have to work on it. Any new innovations will be easily replicated and revamped. All of these companies cater to the same market, which is exhibiting moderate growth. Thus, the companies have to go outside the box with their marketing campaigns to make a mark.

Thus, competitive rivalry is a strong force affecting the operations of Yamaha.

To conclude, the above Yamaha Porter Five Forces Analysis highlights the various elements which impact its competitive environment. This understanding helps to evaluate the various external business factors for any company.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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