The Honda - Yamaha War

CHAPTER 1

INTRODUCTION AND BACKGROUND OF STUDY

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This chapter discuss briefly on the objectives and case summary on the case study.

1.1 Objective

This report attempts to assess and analyze the case study "The Honda-Yamaha War (A)" by understanding and identifying the problem faced between both Honda and Yamaha in the Japanese motorcycle market, and then choosing the best strategy to solve Yamaha's issue. In order to solve the case study, a few alternative strategies are proposed. Each of the strategies suggested is then evaluated. Based on the results from the evaluation, the most viable strategy (based on total weight) would be selected, and then proposed for implementation.

1.2 Case summary

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,