Yamaha Corporation's Corporate Strategy

Abstract

With a far more diversified product range than any of its competitors in the electronic keyboard market, Yamaha had pursued a corporate strategy of diversification since World War II. The company had branched into the cutthroat competition of television, VCR, and audio-equipment production. With only its manufacturing-related capabilities supporting these businesses, Yamaha Corporation did not fare well with them because top executives were not able to move aggressively on less-familiar turf and because independent-minded divisions failed to pool resources and expertise.

Excerpt

UVA-S-0139

Rev. Sept. 19, 2011

Yamaha Corporation's Corporate Strategy

In 1993, Yamaha Corporation (Yamaha) was the world's largest manufacturer of musical instruments, accounting for almost half of the world's new musical-instrument sales. With a far more diversified product-range than any of its competitors, Yamaha had pursued a corporate strategy of diversification since World War II. While Yamaha's musical and electronic instruments' businesses boomed from the 1950s through the 1970s, the profits from these core businesses were used to support its other businesses, the leisure-living and sporting-goods divisions, which were financial losers. By 1993, Yamaha owned a golf course, operated resort hotels, and produced furniture, golf carts, computer chips, televisions, videocassette recorders (VCRs), and audio equipment, as well as virtually every type of musical instrument. All of these businesses were positioned loosely under the umbrella of the Nippon Gakki holding company, together with Yamaha's sister companies, Yamaha Motor Corporation (motorcycles and snowmobiles), and the Yamaha Music Foundation, a network of music schools, teaching millions of children around the world.

Through its piano-making experience, Yamaha had developed capability in bending and laminating woods (for piano cabinets), the engineering of sounds, and expertise in marketing and distributing pianos. Yamaha subsequently applied its production, marketing, and distribution capabilities to guitars and drums. By striving for high production volume to meet local need, Yamaha strengthened its skills in producing efficiently and at low cost. Yamaha attained its position as world leader in musical-instrument sales by seizing markets for inexpensive beginners' instruments first, then conquering the middle-price range, and finally, expanding into the top-of-the-line market.

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Keywords: Corporate strategy, diversification