YAMAHA MUSIC CORPORATIONS

BUSINESS STRATEGY

Syndicate 7 YP 55 C

Iqro Setiawan Jati 29116166

Zein Yurianto 29116193

Ariane Tania 29116235

Fedrian Maulana 29116252

Master of Business Administration Department

School of Business and Management Faculty
Bandung Institute of Technology
Jl. Gelap Nyawang no.1
BANDUNG
Yamaha (Global)

Yamaha Corporation is a company whose primary business is to manufacture and

sell musical instruments such as guitars, pianos, percussion instruments and more.
Apart from musical instruments, Yamaha have expanded their business into
manufacturing and selling other music-related products such as audio software and
products, and IT equipments. Moreover, Yamaha also expanded their business into
lifestyle-related products and the well-known Yamaha Motors. To be in such a big
business helped Yamaha appeal to an extensive range of customers.

Other than selling products that Yamaha manufacture, they also opened music
schools as well. Their music schools also had a good reputation themselves. They
had more than 700,000 students and developing in more than 40 regions and
countries Yamaha has numerous classes and different classes to cater to students of
different age group, interest and level of difficulty.

Corporate Objective of Yamaha

Yamaha's Corporate Objective is "Creating KANDO Together".

'Kando' in translation describes the sensation of strong excitement and satisfaction

derived from experiencing utmost quality and performance. Yamaha's corporate
objective is to enhance both culture and technology as a whole and passion which is
that of music and sound, with people all over the world.

Management Philosophy of Yamaha

Presented below is the 4 management philosophy of Yamaha.

Customer-Oriented and Quality-Conscious Management

Yamaha tries their best to meet the expectations and needs of the customers,
Yamaha by delivering services and products of fine quality, incorporating up-to-date
and conventional technologies together with polished creativity and artistry.
 Transparent and Sound Management

Yamaha achieves lasting development through transparent and sound management.

To have a transparent and sound management means to be honest, clear, logical
and reliable. Yamaha ensures a robust business performance so that the
shareholders will be delivered proper returns.

Valuing People

Yamaha makes every effort to be an organization that respects each person's

individuality and creativity. They also strive to let each person show their full potential
through their work.

Harmony with Society

To be harmonious with the society, Yamaha proves that they are a good corporate
citizen that adds to the development of the culture, economy and society by
observing laws, demonstrate high ethical standards, and striving to protect the
environment.
On the other hand, the philosophical framework of the Yamaha Group and consists
of five elements: the Corporate Slogan, Corporate Philosophy, Customer
Experience, Yamaha Way (mindset and manners), and Yamaha Quality (criteria for
quality).Three of these, the Corporate slogan, Corporate Philosophy and Customer
Experience, describe the Yamaha Groups reasons for existence, and represent the
fundamental principles that form the foundation of the Yamaha Group. In order for
Yamaha to achieve this ideal, the Yamaha Way and Yamaha Quality must be
adopted and practiced by all employees, and drawn from for daily inspiration and
guidance.

Yamaha Way

The Yamaha Way explains the mindset that all employees of the Yamaha Group
should adopt, and the manner in which they should act on a daily basis, in order to
put the corporate philosophy into practice.
Founder of Yamaha

Torakusu Yamaha was the Yamaha Corporation Founder & President (1887-1916).
That was how Yamaha's name came about. Yamaha was raised with a very liberal
education, studying engineering and astronomy. At the age of 19, Yamaha started his
own watchmaking and repair company which soon failed. After which, he worked as
a repairman, repairing gadgets like medical tools. There was one occasion, at a
school in a town of Hamamatsu, Yamaha was approached to repair a prized organ.
While repairing the organ, he learnt the interior workings of the organ.

Yamaha later created his own organ. He then brought his organ to the then Music
Institute (today's Tokyo National University of Fine Arts and Music). However the
organ was criticized terribly for its tuning. Starting from scratch and undaunted,
Yamaha began studying music theory and tuning. After months of struggles, he
managed to finish his organ. Stirred by the experiences he had, and the struggles of
studying tuning while holding a tuning fork in his hand, you could see how Yamaha
came up with the concept of the tuning fork symbol.

Yamaha made his own organs in 1887, bannered under Yamaha Fukin(Organ)
Manfacturing Company. Ten years later, the business was incorporated and then re-
named Nippon Gakki Co. (Japanese Musical Instrument Company). In October
1987, to mark the 100th anniversary of its founding, the company name is officially
changed to 'Yamaha Corporation'.
The History of Yamaha Music

MAR 1930 : The world's first research room is opened by Yamaha.

SEP 1959 : Yamaha opened The Yamaha Technical Laboratories.

DES 1972 : Indonesia Music School launch (as Yayasan Musik Indonesia).

APR 1985 : The Yamaha opens their Research and Development Studio in Japan,
Tokyo.

APR 1987 : The Yamaha opens their Research and Development Studio in
London.

MAR 1990 : The Yamaha opens their Distributor in Music Instrument in Indonesia
and Music instrument manufacturer.

FEB 2000 : Mobile Phone Melody Distribution Service begins in Taiwan and
Japan by Yamaha.

JAN 2001 : Audio and Video Products Sales Subsidiary was set up in China

AUG 2001 : Musical Instrument Sales Subsidiary was set up in South Korea.

OCT 2002 : Holding Company was set up in Europe

JAN 2005 : Yamaha Corporation acquires Steinberg Media Technologies GmbH,

Germany.

OCT 2005 : China Yamaha Music School launch.

Awards

APR 1904 : Honorary Grand Prize was awarded to Yamaha at the St. Louis
World's Fair.

NOV 1969 : The First World Popular Song Festival was staged by Yamaha in
Japan, Tokyo.

APR 1981 : JOC is held in the United Nations General Assembly Hall

NOV 1987 : The First Band Explosion World Final was staged by Yamaha in
Japan, Tokyo.

FEB 2007 : Technical GRAMMY Award was awarded to Yamaha Corporation.

Core Values of Yamaha Music

Yamaha strongly believes that by maintaining these core values, they can distinguish
the character of their company. Below are the five core values that will guide us un
how they make decisions, think, and behave.

CUSTOMER FOCUS

Yamaha strives to go the extra mile to delight their customers, turning them into their
advocates in the process. Yamaha wish to create long term relationships with their
customers by establishing loyalty, trust and confidence.

INTEGRITY & RESPECT

Yamaha strives to behave morally and ethically. They wish to earn the respect and
respect of their customers and people that they work with, by being open,
honourable and honest in their actions.

TEAMWORK

Yamaha "Work Together as One Team, As One Yamaha". They make effort to create
harmony and strike a chord with the people that they work with.

RESOURCEFULNESS

Yamaha strives to stretch their capacity and achieve more, enhancing to work with
what they have. They wish to be a people who steps up to what people might
consider "hard to achieve".

INNOVATION

Yamaha strives to be a people who embrace a new mindset, always driven to make
old things work better. They wish to be proactive in initiation change and
improvement.
Promises to Stakeholders

The entire Yamaha Group shares promises to our stakeholderscustomers,

shareholders, the people who work with Yamaha, and societyworking to improve
the satisfaction of each stakeholder and making effective use of our management
resources to achieve sustainable growth in order to maximize its corporate value.

Customer-Oriented and Quality-Conscious Management

Yamaha fully satisfies its customers by offering quality products and services that
incorporate new and traditional technologies as well as refined creativity and artistry.

Transparent and Sound Management

Yamaha delivers proper returns to shareholders by ensuring a solid business

performance and achieves lasting development through transparent and sound
management.

Valuing People

Yamaha strives to be an organization where each persons individuality and creativity

are respected and all can demonstrate their full potential through their work.

Harmony with Society

Yamaha is a good corporate citizen that contributes to the development of society,

culture, and the economy by observing laws, demonstrating high ethical standards,
and endeavoring to protect the environment.
Yamaha Music Core Competencies

1. Junior Course

This course is basically a group lesson for children from various ages. And its
never been too late too join this course until 8 years old.

This course is developing children in musicallity, hearing, improvisation, and

creativity.

Its provide potential access to a wide variety of market (especially musicians)

Teachers around the world has the same curriculum and teaching technique,
that given By Yamaha Training Department so education in here have a
international standard.

Yamaha developed books and material by themselves which is the material

are originally content by yamaha and they have multi-dicipline to arrange this
material.

Yamaha made student kit that will improve students ability.

Yamaha developed CD and even DVD for student practice at home. This CD
or DVD will help parents in guiding their children in practicing at home.

Group Lesson are designed to be creating fun interactial in music where

music can unite the people as music is universal language.
 Yamaha has 2 main instrument that suitable for children. It is piano and
electone

2. High Quality Standard Music Instrument

Yamaha Music Education are using their own product for the music instrument
which is high quality standard in international scoop.

Yamaha create various electronic music instrument that is suitable for different
purposes. (electone, clavinova, keyboard, electric piano, disclavier)

Yamaha produce all international music instrument in high quality standard

and being used by several artish world wide, such as chick corea.

3. Junior Original Concert

Yamaha creating this international event for yamahas student
Our Students are learning how to create their composition to create music.
This event is like a competition that if the students are qualified, they will
perform in a concert hall in international level

4. Yamaha Music Festival

Yamaha Music Education are developing this international event for those
students who shows great achievement in study and give them reward
(competition).

5. Teachers Competencies
Yamaha Music Education are developing their own standard of achievement
which is international graded. And Teachers has their own level.
Teachers are trained with passing requirements before teaching
Teacher are selected by audition

6. Special Course

Yamaha Music Education are developing special courses for those student
who shows integrity in studying and has a remarkable achievements. So that,
the students can learned more material for professional purposes.
 7. Concerning on Process

Yamaha Music Education are concerning to the process of learning music, as

skill of music is not instant. So Yamaha Music is not selling its examination
certificate for those who are not yamahas student.

Yamaha Music is basically franchise in music school world wide in 59

countries who conduct by Yamaha itself and investor.

Yamaha Material are completely comprehensive to develop the students.

SWOT Analysis

Strengths

Yamaha is one of the few music companies in Indonesia that sells a huge
variety of instruments. This makes it easier to find and purchase musical
instruments and music related products.
Most people will recommend Yamaha. This shows that Yamaha sells
instruments of good quality. That is one of the reasons why they would
recommend Yamaha to others.
Yamaha has music classes that are target to all age group.
Yamaha does have a good reputation among people.
International well-known brand in music industry.
Branches in 40 country.
The Best Franchise of music school with standard curriculum of teaching
procedure.
Qualified and Certified Teachers.

Weaknesses

Course fee is high compare with others.

Yamahas Electone is not well known.

Opportunities

Expand more branches in several cities in Indonesia.

Increase the number of students.
Increase the number of qualified and certified teachers.
Threats

There are a lot of competitors in music school that offer similar courses with
affordable fee.
Lot of corporation try to imitate us.

Recommendation

From the SWOT analysis, not a lot of people know that Yamaha specializes in
teaching Electone classes. Hence, I suggest that they can do more advertisements.
It could be on TV or on posters or brochures. Hence people will start to take not that
Yamaha offers Electone classes, which not many music schools offer. By putting up
more advertisements, Yamaha will be even better known as it will at the same time
be able to promote the company itself.

From the survey that I had done, there are still people who will recommend other
brands of instruments instead of recommending Yamaha's instruments. Hence, I
suggest that Yamaha could constantly improve with their instrument making. Hence,
Yamaha's instruments will be able to be on par with other brands of instruments.

Canvas Strategy
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Yamaha Purwacaraka
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Elfa Secoria

Allegria

Interview Takuya Nakata, President & Representative

Director of the Yamaha Corporation (done by
http://www.theworldfolio.com)

Yamaha began when its founder, Torakusu Yamaha, repaired an imported reed
organ in 1887. Since then, it has grown to become the worlds largest
comprehensive musical instrument maker and has expanded into the sound, music,
audio, semi-conductor and even golf businesses. President and Representative
Director Takuya Nakata takes a look at the companys rise and explains its four-part
strategy to further develop its three business segments to hit its ambitious 10-year
targets.
What has been your impression of the effects of Abenomics and what action
now needs to be taken to improve and further revitalize the economy and how
positive are you about Japans longer-term future and prospects?

If youre strictly talking about the Japanese economy, I believe that we operate in a
system where you cant really be optimistic about it for two reasons. First of all,
Japan is very much an export-oriented society and therefore the strengthening of the
yen has been putting some pressure onto our economic performance. At the same
time, if you talk about the weakening yen, this implies that our foreign customers will
increase as well, thereby enhancing growth. But the situation is still volatile. We
cannot know if we can still be very optimistic about our future to come.

Alongside the policies pushing for Abenomics and abiding by them, we decided to go
with a base up of our wages two years in a row as well, and this kind of approach
might be very much possible for larger corporations, but it is still unsure if this can be
achieved by SMEs. So I believe that, depending on how this goes, if it goes in a
better direction, the general population will move toward consumption and will follow
along as well. I intend to take responsibility for this movement as a corporation.

What in your opinion have been the key factors that have contributed towards
the success of Yamaha over the years?

Yamaha has been taking on many challenges over the years, guided essentially by
its pursuit of sound excellence and the delivery of music to the Japanese society. We
have been formulating a high-level passion towards this goal, in the form of
introducing music to this country.

With the pursuit of this sound and developing this principle, I believe that this has
largely followed the principle of trying to flourish in the minds of the people. By
abiding by this principle, we decided to not limit ourselves to just the musical side of
the business, but also to things that can achieve this in other shapes and forms, like
semi-conductors and golf clubs, and originally our motorcycle business that also
originated from this side, which eventually became its own entity.

You might ask, Why do you go ahead with making semi-conductors? Well, its all
because we were in pursuit of manufacturing better quality instruments. For
example, we manufactured the first electronic organ in 1959. Back then we were the
first one who made electronic organs using transistors, however the transistors back
then were very unstable. In order to achieve a better quality product, we decided to
go forward with manufacturing semi-conductors by ourselves that would later be able
to achieve a better quality final product.

In terms of the spirit or philosophy of the company, when Mr Yamaha initially

established the company, what are some of the styles or the manners in which
you manage your operations, which are still true today?

Our founder Torakusu Yamaha had a strong will that he wanted to introduce
instruments to Japanese society. This is very much what weve focused on and what
we continue to focus on. The fourth president Genichi Kawakami developed this
idea even further, going forward with making a more prosperous society for Japan.
So the two ideas were combined together and have been passed on to this day.

Yamahas share price over the past three years has moved from 654 per share
to more than 3,300 today, marking an incredible rise of more than 500%.
What, in your view, have been the key drivers behind such growth and how
does the group now look to both consolidate and sustain this growth over the
long term?

I believe that kind of stock price were getting from the market means the stock
market could very much view us in a favorable manner, which we are pleased with.
Four years ago our stock prices werent performing very well, and were among the
lowest in our history, so it is a large adjustment that has occurred. One factor that
has contributed to this is the fact that we have become more profitable over the
years.

Since the Lehman Shock, Yamaha has been experiencing a multitude of difficulties
and has been going through multiple stages of reconstruction. Over the past three
years such structural reforms have ultimately led to this kind of growth. The
depreciated yen, in addition, which was partly brought by Abenomics, has also
contributed to the improved performance of our operations.

Can you take us through the various ways you are innovating in the segments
in which you operate?

One of the strengths of Yamaha is that we have a multitude of technologies in-house,

ranging from sensory technology to our material processing technology to our digital
signal processing technology. I believe that we are able to leverage this technology
together to make something even better, and we are in the course of building a
structure to make it happen.

Until three years ago, all business lines were segregated based on product
categories, but then we decided to abolish that system and shifted to the system that
would help transcend the previously existed cross-departmental borders and function
more effectively.

What are some of the new concepts and ideas being worked on at the moment,
which will keep Yamaha competitive over the long term?

If you look at instruments, there are acoustic as well as electronic versions, and
Yamaha has been embracing them both in its operations. While we have been
evolving both of these, were also going forward with integrating these two types of
instruments. For example, if you take a piano, there is an acoustic piano that has
strings within the instrument. However, there is also a digital piano as well that has
been growing rapidly due to its functionality, where you are able to freely adjust the
volume and youre able to turn it down during the evening and youre able to have
various sounds as well besides a simple piano sound.

In addition to this, we have been introducing products that integrate all of these ideas
together. We have an acoustic piano with strings, hammers, soundboard, and
actions, but were able to control the volume and output as well. Not only on and off,
but also with adjustable volumes. It has digital sound source inside but instead of
using the conventional speakers, we use devices called transducers to vibrate the
soundboard. The performer enjoys a sense that the entire instrument produces the
sound.

We also have a guitar called the TransAcoustic guitar that has been a product of
such evolution that we just released recently at the trade show in Germany. Its an
acoustic instrument, but inside its body it has a device that vibrates and also digital
sound source. It looks like a normal acoustic guitar, a six-string guitar, but then
youre able to do things that you might be able to do on a 12-string guitar and also an
electric guitar as well.

You also have this technology that aids you in aging the wood for your
instruments. Perhaps you can tell us a bit more about that?

This is called Acoustic Resonance Enhancement (A.R.E.) technology and it uses

atmospheric pressure in order to age the wood material. We knew from experience
that guitar products make much better quality sound after 30-40 yearsso-called
vintage guitars. We took an engineering approach to analyze the composition of
wood and we realized that it changes as time passes.

So the guitarist for Queen, Brian May, realized that if he used wood material that was
placed by a fireplace, he found that it made a better sound, and there was indeed a
reason for this. So not only did we discover this, we researched exactly how we
could change the composition of wood and we were able to solidify this into formal
technology. The guitar to which this technology is applied is highly evaluated. In
Ginza we have the Yamaha Hall. The stage flooring is made out of wood material
that has undergone this process, which easily transmits the vibrations from musical
instruments and contributes greatly to a venues acoustics.

How do you coordinate your research and development in line with how your
products are being developed? How do those two departments work together?

We have R&D divisions under the Technology Unit where they do research on
technologies that might take many years, and we take the results from this division
and pass that on to the product development divisions under the Development Unit.
The Development Unit takes care of technology that will take only two or three years
maximum to make into a final product; but for technology where more time needs to
be taken in order to come up with a new product, then we let the Technology Unit
take care of it first at a different level from the product development.

This is the basic strategy that we implement and with this kind of approach, we are
able to come up with a new product every single year.

On April 13, 2016, you released your new midterm management plan Next
Stage 12. Could you explain what was achieved over the last midterm plan
and what now are the key areas of focus and priority for the company?

We were able to achieve all of the numerical targets outlined in our last management
plan, including 430 billion in sales, 30 billion in operating income, 7% in operating
income ratio, and 10% in ROE. We were able to clear all of these goals as a result of
structural reforms we had implemented.

We also set aside four key business strategies:

1. expanding sales in the electronics business domain,

2. accelerating growth in emerging markets as well as China,
3. strengthening cost-competitiveness,
4. developing new businesses.

We were able to achieve the first point, the expansion of our electronics operation,
as well as the third point, reducing costs, specifically by 7 billion. Regarding the
second goal of growth in emerging markets, as well as China, we were able to have
some results in China. However, because of the crisis situation in Russia and South
America, emerging economies had a sluggish growth.

Besides such macroeconomic factors, there are certain points that I believe need to
be addressed for our sales efforts too. We were not able to make progress as we
had planned in establishing and expanding optimal sales networks in each region.
This is something that will be further addressed in our next term plan.
Regarding our fourth point, on developing new businesses, we have gone through
M&A with two companies in the United States. We were not able to produce results
over the last period, but we intend to further address this in the next period.

One of the main focuses of this next plan is to take the Yamaha brand to the next
stage. I believe that by strengthening the brand, profitability will increase, which is
why we set an operating income ratio target of 12% as a KPI. I believe that by
elevating your brand, you will be also able to achieve further profit.

In order to strengthen the Yamaha brand, we have defined four key strategies in our
medium-term management plan. First of all, we would like to develop products with
distinctive individuality: enhance our products differentiation points, as well as
deliver new values. Secondly we need to enhance customer interaction: address
marketing through a more regional-based approach and reduce the distance
between our customers and us. Thirdly, we intend to continue with our cost-reduction
efforts. We plan to reduce our costs by the same factor that we achieved last time.
Fourthly were aiming for a new form of globalization. At this point at the end of the
last fiscal year, our overseas sales accounted for over two-thirds of our entire
operations. In 32 different countries we have subsidiaries and branches active
across the world. Given this situation, I believe that Yamaha has not attained full
globalization yet and thats why we stated this as one of the four key strategies. In
order to move forward with globalization, the utilization of local talent is crucial: I
believe one of the reasons why Japanese companies struggle with globalization is
because Japanese staff try to do everything by themselves. As we already have over
50 years of history operating overseas in 32 different countries, we have plenty of
local talent. I believe that we will be utilizing these sorts of talents in top-
management positions as well in the future. I believe that it is absolutely inevitable
and imperative to ensure that we use local efforts for good marketing.

So these are the four key strategies that were trying to go forward with, and on an
operational pivotal point, we have three business segments. We have been
developing businesses for further enriching peoples lives and establishing a
comfortable society, by utilizing Yamahas core competencies of technology that
crosses over sound and people. So the first business segment is the musical
instruments to enrich peoples lives, and the second is audio equipment for
establishing a comfortable society for the people. The third one is industrial
machinery and components, which we have defined at the start of our new medium-
term plan

Regarding our musical instruments, given that the market isnt growing that much,
we know that it is important to further strengthen the brand and thereby generate
more profit, specifically by an operating income ratio of 15%.

Regarding the audio operations, given that the market still has growth opportunities,
we intend to further grow our revenues, so that the operation will be comparable with
that of our instrument operations.

In the third area of industrial machinery and components, we have been focusing on
semiconductors previously. Going forward, we intend to extend this business to a
solution-based operation by offering components: transform the business from a
semiconductor manufacturer to a solutions vendor.

Musical instruments and audio equipment businesses account for about 90% of our
total sales, but we intend to further solidify the remaining 10%. We have been
providing sound LSIs to automotive manufacturers until now, but there has been an
issue of a high amount of noise inside these vehicles. By utilizing the know-how of
Yamaha, we are able to address this issue; we are offering total sound solutions to
achieve pleasant and comfortable sound environment as the connected cars are
becoming more popular as well as mobile phones. I believe that there is a growing
need for enjoying music in the car, and this is something that we can go into.

Almost two-thirds of Yamahas sales are made overseas and the North
American market represents almost 20% of these. What is the companys
focus on further expansion and growth across this market and what are the
strategies to aid the company gain a stronger foothold in the United States?

In the US market, we have over 30% share of pianos, as well as wind instruments.
For digitalized instruments we have a 50% share; however for the guitar market,
which is the largest market there, our shares are so very limited. So I believe that we
still have plenty of challenges in the guitar market, and we want to further expand
this business.
In the audio segment, I believe that there is still a lot of growth potential and growth
opportunities in the market, both in the consumer market, as well as the commercial
market. We first thought that the consumer audio market in the United States had
already stagnated, but we were wrong. We have been focusing on component-type
audio where theres a receiver as well as a speaker. The market for component-type
audio, indeed, seemed to be not growing much. On the other hand, the connected
audio and the multi-room audio markets have been showing tremendous growth. We
were struggling in the beginning, but now we are putting products into this market
continuously, so that might lead to further profitability and be our important business.

Professional audio is another field that has plenty of growth opportunities and
thereby we are focusing much on it. Of professional audio, products used for live
concerts are the area where Yamaha has strengths. But in addition to this, we intend
to expand business of equipment for conference rooms as well as meeting rooms of
companies. The market of products for companies meeting rooms has been growing
because they need conference phones. For this reason, last year we acquired a
company in Boston called Revolabs. We are strongly moving forward with the
production of new products.

How does the support of big artists help you to grow and establish Yamaha as
an international brand?

Supporting artists is a very important side of Yamaha, and something we intend to

further strengthen. Especially pop music, and artists like Elton John; I believe that we
already have a very solid relationship in this field regarding piano players. On the
other hand, as I mentioned early on, we are still a bit weak in the guitar field, and we
want to further strengthen the area thorough our R&D facilities in New York,
Nashville, and California.

Where you see the future of global Yamaha in 20 years?

We already have an established goal for the next 10 years, and that is to become a
global and indispensable entity for society. For specific KPI we have set an operating
income ratio target of 20% in 10 years. I believe that this is not an easy goal, but if
you look at all the high-end brands around the world, for example, Apple has 30% for
an operating income ratio, Coca-Cola has 23%, and so this is the level that were
aiming for.

What is your final message to readers?

Our corporate philosophy is with our unique expertise and sensibilities, gained from
our devotion to sound and music, we are committed to creating excitement and
cultural inspiration together with people around the world, and we state Sharing
Passion & Performance as our corporate slogan. I believe that we are able to
continue delivering new value to the world and Sharing Passion & Performance
through our products. We want everyone to continue to have high expectations for
Yamaha and the Yamaha brand.