Japanese Motorcycle Market

This case discussed about the competition (rivalry) between Honda and Yamaha to be the leader in the Japanese motorcycle market. The case study begins with a brief introduction on the Japanese motorcycle market during the early 1950's. At that time, there were 50 competitors fighting for position in the market, with Tohatsu (22% market share) as the number one competitor, followed by Honda (20% market share).

Both company practiced different approach to try to emerge as the leader of the motorcycle market. Tohatsu took a more conservative approach by growing at a slow and controlled rate. On the other hand, Honda's approach was more aggressive ("winner's competitive cycle") and has increased revenues at the same time decreasing its costs. Tohatsu's market share dropped to less than 4% while Honda increased to 44%.

In February 1964, Tohatsu was filed for bankruptcy. The original 50 competitors hand shrunk to four (Honda, Yamaha, Suzuki, and Kawasaki) in 1965. Over the next 10 years, Japanese became more interested in purchasing luxury goods over durable goods, which slowed the motorcycle industry. Honda took the initiative to diversify into manufacturing automobiles. Towards the end on the 60's, Honda's share in the Japanese motorcycle industry reached 65%. By 1975, Honda was obtaining more revenues from autos than from motorcycles.

With Honda focusing on its automobiles, Yamaha saw the opportunity to attack and conquer the motorcycle market. They began quietly increasing their motorcycle production capacity in Japan. Honda's market share declined to 40% by 1981. By the end of 1981, Yamaha and Honda had nearly equal shares in the motorcycle market. However, Honda continued to be preoccupied with its autos (began investing in large-scale automobile production in U.S.). President Hisao Koike challenged and publicly launched Yamaha on a heady campaign to surpass Honda. President Koike stated that the difference