PESTEL/PESTLE ANALYSIS OF YAMAHA MOTORS
Yamaha is a global brand of motorcycles and other technological products including industrial robots and unmanned vehicles. However, it is known the most for its excellent engineering and stylish motorcycles. Yamaha products sell in more than 180 countries and its financial performance has remained consistent for last several years. Now, Yamaha is eyeing growth in the Indian market. The motorcycle industry is marked by intense competition. There are are several other challenges too that can make growth difficult in the international market. To achieve faster growth, Yamaha is investing in research and innovation. The brand has a diversified product portfolio that includes motorcycles and other vehicles, industrial robots, power products, marine products and more. Operating in the international environment is now more challenging than ever because of the growing role of political, economic and legal factors. This is a PESTEL analysis of YAMAHA Motors. PESTEL is an acronym for Political, economic, social, technological, environmental and legal. All of these are important forces in the international business environment. Managers must understand how these factors can challenge or facilitate their business and formulate their business strategy accordingly.
Political forces have grown increasingly central to business all around the world. It is because governments and government agencies have grown stricter in their control of businesses and particularly the large ones. Government policies also play an important role in setting the business environment of a nation. While in some markets governments are more open to foreign businesses, in several of them it may be difficult to enter without a local partnership. The political environment of a market is directly related to its economic environment. Stable political environment leads to economic stability and in such an environment businesses can thrive. On the other hand unstable political environment can lead to economic instability and can cause disruption. Stable political environments are more suited for business because chaotic environments can lead to disruption of supply chain and distribution network. Yamaha is based in Japan which is known as a politically stable country. Moreover, trade relationships between Japan and other nations where Yamaha operates also matter. Good trade relationships lead to better business whereas trade wars can often result in losses for the private sector. In this way, political factors play an important role in business and in case of Yamaha too which operates in more than 180 countries.
Economic factors have always played a strong role in the making and breaking of large businesses. Not very long ago, the global economy experienced a recession and during that period several of the vehicle brands required being bailed out with government help. Such economic fluctuations can cause major difficulties for international vehicle brands. During periods of economic decline, the level of employment falls leading to reduction in customers’ spending power. Individuals and businesses employ cost cutting measures in such periods and therefore sales and revenue of large and international businesses like Yamaha can fall. Moreover, economic fluctuations and changing currency exchange rates also have an impact on the revenue and profitability of businesses. Economic situation around the globe has changed since the recession and most economies are performing well. This has led to people spending more on two wheelers. Fast growing Asian markets have thrown major opportunities before brands like Yamaha. In this way, the economic factors have got to play a very important role in the context of international businesses. Yamaha has seen its sales grow after the recession. If the world economy is in good health, this helps achieve higher sales. International brands like Yamaha have to watch for the economic scenario in their key markets.
Sociocultural factors have also grown highly important on the context of international business. Research has highlighted their role in terms of marketing and sales. Changing social trends can also have a major impact on businesses. The rise of the middle class and the millenial generation have also affected businesses. Millenial generation’s preferences are much different from that of the baby boomer generation. Businesses are doing their best to cater to the taste of the millenials. A good social image is also important for brands in the 21st century. It helps build customer loyalty and trust. Socio-cultural factors are important in the context of marketing too and it is why international brands like Yamaha use different marketing strategies to appeal to different markets. While the proliferation of technology has been able to bridge many gaps, keeping sociocultural factors in mind helps at understanding people’s taste and catering to it.
Technology is among the biggest sources of competitive advantage in the 21st century. The role of technological factors has grown important because of how technology can maximize productivity and help brands grow faster. The proliferation of digital technology has helped brands reach millions of people around the globe at the least expense. Social media has helped businesses market themselves with higher efficiency and at much lower cost. Technology is aiding growth of businesses in many other ways too. From manufacturing to supply chain, marketing and customer service, everywhere brands are using technology to effectively serve their customers. Yamaha is an innovative brand and invests a large sum in research and development every year. Focusing on research and innovation helps it bring better products to the market that serve its customers’ needs effectively. Technology is a major facilitator in the world of business and it is why most large businesses invest in it heavily.
Environmental factors have also acquired a special importance in the context of business. All around the world, governments are growing more and more cautious regarding the environmental impact of businesses. Apart from forming laws that prevent negative environmental impact, they are also encouraging environment friendly businesses. Yamaha is a brand that believes in sustainable production and business management. It has adopted environment friendly policies in production, supply chain and other aspects of business too. Apart from investing in emission reduction, the brand has also invested in environment friendly policies as well as creation of groupwide environmental management systems. Brands like Yamaha make huge investments in environment friendly policies and production systems which does not just help with securing a better future for the planet but also helps the brand build trust and the image of a sustainable and socially responsible brand.
Legal factors are now among most important affecting businesses all around the globe. Law and government agencies are now highly aggressive regarding compliance. Legal oversight of large and international businesses all around the world has grown a lot. No brand wants to be engaged in a tussle with law. It is because non-compliance can result in heavy fines ranging in billions. Several vehicle brands have already had such tussles in past. However, in this regard, Yamaha has maintained a cleaner image than others. It is because of the heavy emphasis it places on compliance and ethics in its business. From product quality to rider safety and labor as well as environment, there is a complex web of laws in each area that require to be complied with. Moreover, laws and regulations vary from market to market. Yamaha provides its employees compliance training each year. It has established a compliance hotline for reporting legal issues. Moreover, it has adopted various policies that ensure ethical business practices throughout the system. In this way, legal factors have acquired a very important place in business and large brands like Yamaha have to do their best to ensure that they do not violate any law in any of their markets. Noncompliance will not just hurt financially but will also create a poor impression on customers and society.
Yamaha Annual report 2016