0
Executive Summary
The Indust Industry ry Study Study provid provides es an overall overall analy analysis sis and report report about about the motorcy motorcycle cle manufacturing and assembly industry. The objective of this report is to describe the study of the motorcycle manufacturing and assembly industry and analyze the data gathered with respect to the attractiveness of the industry and its opportunities for investment. The study includes a detailed analysis of the firms in the Philippine motorcycle manufacturing and assembly industry. This included international brands such as Honda, awasa!i, "amaha, "amaha, and Suzu!i and local brands such as #laze $otortech. In order to have a deeper grasp of the industry, the group conducted a case study on Blaze Motortech Co. (Blaze), a motorcycle manufacturing company in the Philippines. #laze $otortech %o. is a very interesting company because since its inception, #laze $otortech %o. has has used used unco unconv nven enti tion onal al sell sellin ing g and and mar! mar!eti eting ng meth method ods. s. &nli &nli!e !e othe otherr moto motorcy rcycle cle manufacturing companies, #laze focuses on introducing and e'panding sales of its products to the middle middle to lower income income consumers consumers in rural areas. The researchers were able to gather data mainly from open resources such as news articles, online articles and company websites. They also loo!ed at S(% reporting documents, )TI reports, and other government reports on the industry. The group was also privileged to gain insights regarding the industry through interviews with the managers of #laze $otortech. They also obtained financial documents including the balance sheets, and income statements. In the assessment assessment of #laze $otortech $otortech %o. based on its attractiveness, attractiveness, the researchers considered it competent in the mar!et. *ne of the reasons is because major competitors such as, Suzu!i, awasa!i, "amaha and others are mainly focused on mar!eting their products to urban areas leaving most of the opportunities of profitability in the rural areas to #laze. +long with this is the companys reputation- it can be safely assumed that its only a matter of time before #laze can be considered a household name since it caters to the needs of consumers who want products that fit into their budget. %onsidering the e'ternal environment that may affect affect its produc productio tion, n, #laze, #laze, in the group groupss perspe perspecti ctive, ve, is one one of the more more promis promising ing companies in the $otorcycle $otorc ycle $anufacturing Industry. There could be some issues for the companys supply and demand outloo! because according to their financial statements, instead of trending upwards li!e they did bac! then, theyre starting to incur more losses. This is problematic because they aimed to cater towards the lowerincome households but then the fact that the losses are starting to pile up, this means that their products are in their stoc!rooms. stoc!rooms. This points to the notion that the supplies supplies are there but then the demand isnt. #ut with that in mind, it shows that #laze has the
1
Executive Summary
The Indust Industry ry Study Study provid provides es an overall overall analy analysis sis and report report about about the motorcy motorcycle cle manufacturing and assembly industry. The objective of this report is to describe the study of the motorcycle manufacturing and assembly industry and analyze the data gathered with respect to the attractiveness of the industry and its opportunities for investment. The study includes a detailed analysis of the firms in the Philippine motorcycle manufacturing and assembly industry. This included international brands such as Honda, awasa!i, "amaha, "amaha, and Suzu!i and local brands such as #laze $otortech. In order to have a deeper grasp of the industry, the group conducted a case study on Blaze Motortech Co. (Blaze), a motorcycle manufacturing company in the Philippines. #laze $otortech %o. is a very interesting company because since its inception, #laze $otortech %o. has has used used unco unconv nven enti tion onal al sell sellin ing g and and mar! mar!eti eting ng meth method ods. s. &nli &nli!e !e othe otherr moto motorcy rcycle cle manufacturing companies, #laze focuses on introducing and e'panding sales of its products to the middle middle to lower income income consumers consumers in rural areas. The researchers were able to gather data mainly from open resources such as news articles, online articles and company websites. They also loo!ed at S(% reporting documents, )TI reports, and other government reports on the industry. The group was also privileged to gain insights regarding the industry through interviews with the managers of #laze $otortech. They also obtained financial documents including the balance sheets, and income statements. In the assessment assessment of #laze $otortech $otortech %o. based on its attractiveness, attractiveness, the researchers considered it competent in the mar!et. *ne of the reasons is because major competitors such as, Suzu!i, awasa!i, "amaha and others are mainly focused on mar!eting their products to urban areas leaving most of the opportunities of profitability in the rural areas to #laze. +long with this is the companys reputation- it can be safely assumed that its only a matter of time before #laze can be considered a household name since it caters to the needs of consumers who want products that fit into their budget. %onsidering the e'ternal environment that may affect affect its produc productio tion, n, #laze, #laze, in the group groupss perspe perspecti ctive, ve, is one one of the more more promis promising ing companies in the $otorcycle $otorc ycle $anufacturing Industry. There could be some issues for the companys supply and demand outloo! because according to their financial statements, instead of trending upwards li!e they did bac! then, theyre starting to incur more losses. This is problematic because they aimed to cater towards the lowerincome households but then the fact that the losses are starting to pile up, this means that their products are in their stoc!rooms. stoc!rooms. This points to the notion that the supplies supplies are there but then the demand isnt. #ut with that in mind, it shows that #laze has the
1
resources and capabilities to meet the demand. The company boasts a competitively low price compared to its competitors li!e awasa!i, Honda, and "amaha but again since its brand recogni recognitio tion n isnt isnt as impactf impactful ul as the other companie companies, s, this this tends tends to the nonsale nonsale of its products. Ta!ing a loo! at everything thats been said with regards to the companys supply and demand, it shows that the company does wish to e'pand e'pand their operations operations but their main problem is putting that into action. They must also compete with getting their name out in terms of branding because the none'istence of their branding isnt helping with their sales. If the company doesnt doesnt focus on remedying remedying this issue, it could go on to ruin whats whats left of the companys identity and therefore lose out on more possible income. The issue with #laze is that they are only spreading via word of mouth and, while that is certainly an effective techni/ue, it doesnt branch out to as much potential customers as they would have if they went out and ris!ed ma!ing an advertisement, whether on a billboard or on television. The cost may be more than what they might get in return but the fact of the matter is that they must try something new in order to boost their sales while remaining true to their identity, which is the sale of motorcycles at a much affordable cost. #ased on the information collected from the study, it can be concluded that the motorcy motorcycle cle manufa manufactu cturin ring g indust industry ry is an attract attractive ive indust industry ry since since the mar!et mar!et is not yet saturated. The level of competition stays at the medium level despite the large number of firms in the mar!et mainly because of the high preference of 0ilipinos towards motorcycles. Some of the possible threats to consider in the industry is the already established trust of the consum consumers ers toward towardss major major foreign foreign players players such such as "amaha, maha, awasa! awasa!ii and Suzu!i Suzu!i-- the increasingly difficult opportunities for profitability- and constant threat of new products from other firms. &sing &sing the data data gather gathered, ed, the research researchers ers recomm recommend end the follow following ing to the firms firms wishing to enter in the Philippine motorcycle manufacturing and assembly industry1 0irst, the firm must have have the necessary necessary resources resources such such as capital capital investmen investments ts to cover cover the high investment costs on e/uipment, plants, etc. Second, the firm must be ready to constantly come up with new concepts, concepts, new and differentiated differentiated product product offerings offerings in order to get the attention of consumers in the mar!et. Third, the firm must be ready to compete in terms of price with a large number of competitors. *n the other hand, in order for a firm to retain its mar!et share, the researchers recommend the following1 0irst, the firm must differentiate its brand by establishing good relations rela tions with its customers by providing convenient services. It must also be able to protect its brand from misleading misleading and counterfeit counterfeit products. Second, Second, the firm must be able to differentiate its products among its competitors. It must have something
2
new to offer that other firms cannot offer. Third, the firm must utilize economies of scale. It must be able to procure products from its suppliers at a low cost and it would be better for the firm if it has access to its distribution channels.
3
Table of Contents
I. The 2esearch...........................................................................................................................3 4. 6.
$ethodology............................................................................................................................5 Significance of 2esearch 0indings1..........................................................................................5
II. The 0irm and its Internal (nvironment................................................................................. 7 4. 6. :. 3. 5.
#ac!ground History..................................................................................................................7 *wnership 8 $anagement Profile...........................................................................................9 $ission;
#H+=s?, if any, of the organization......@ The 0irms
III. The Industry and its %ompetitive (nvironment.................................................................46 4. 6. :. 3. 5. 7.
Industry definition..................................................................................................................46 #ac!ground history.................................................................................................................46 %urrent industry size...............................................................................................................43 $ar!et Structure, supply 8 demand conditions, stages of industry life cycle........................45 $ajor Players in the $otorcycle $anufacturing Industry......................................................4B Ceading Practices 8 %ompetitive Strategies in the $otorcycle Industry................................4@
I<. The Dational and =lobal (nvironment...............................................................................6: 4. 6. :. 3. 5. 7.
Sociocultural environment.....................................................................................................63 Technological (nvironment....................................................................................................6B (conomic Trends....................................................................................................................6@ Political or 2egulatory (nvironment......................................................................................:: Datural 2esource (nvironment...............................................................................................:5 =lobal (nvironment...............................................................................................................:9
<. Industry +nalysis and 2ecommendations............................................................................34 4. +nalysis of mar!et structure, supplydemand conditions, industry life cycle including implications on the industry............................................................................................................34 6. +nalysis of industry structure using Porters 5 forces and implications on industry-..............33 :. SE*T analysis for the firm >major strengths, wea!nesses, opportunities, threats? and implications-....................................................................................................................................39 3. ey or critical success factors >what it would ta!e for the firm to survive and flourish in this business?-................................. .................................. ................................. .................................... 56 5. %onclusion with 2ecommendations for the firm as well as for the industry...........................5:
#ibliography.............................................................................................................................55
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I. The Research
1. Methodology
The group determined to focus on the business of the $otor $anufacturing Industry, while going about the manufacturing and sale procedures of $otorcycles in the process. The group conducted a case study on #laze $otortech %orp., the first and only 0ilipino motorcycle manufacturer. The group studied how the corporation operates and through this, the group can have a sense of how the industry wor!s. The paper focused on the case study of #laze $otortech %orp., particularly in evaluating their strengths and wea!nesses. The group conducted the gathering of data on the companys bac!ground, beliefs and perspectives, its management profile and its specific industry structure as well as relevant financial statements and other company documents and analyzed how these factors are manifested in the companys performance and operation. $ost importantly, the group studied how the company contributes to the movement of the whole industry, considering the dynamic e'ternal trends of the society in formulating and implementing its mar!eting strategies and e'ecuting business decisions. In order to gather data, the group utilized different research methods. 0irst, the researchers used library and internet research to have a bac!ground on the company. They also conducted interviews with the companys managers and !ey decision ma!ers. Eith the company managers consent, they obtained general business strategies and /uantitative data such as sales and !ey financial figures. The group also made use of information that was readily available from the companys website, social media pages, brochures and other available public documents. Castly, the group also utilized different forms of media that included several online resources such as news articles. The study was limited to the motorcycle manufacturing industry in the Philippines. The study focused mainly on #laze $otortech %orp. but will also have comparisons from industry competitors to highlight #laze $otortechs strengths and wea!nesses. 2. Significance of Research indings
The study was meant to give its sta!eholders a behindthescenes view of the company which should help them understand how the business runs and whether they should invest into it. Since #laze $otortech %orp.s appeal of cheap yet durable motorcycles are towards the lowincome households, the study was mainly conducted for them. nowing how
5
the business wor!s will allow its potential buyers and investors to !now whether the company is worth investing in. #laze $otortech %orp.s pride is found in its ability to reduce production costs by using !noced down parts as compared to its competitors. Ehile this has an advantage for #laze $otortech, it also poses vulnerability because it offers an opportunity for competitors to bring more value to their motorcycles without #laze $otortechs strategy of reducing costs.
II. The irm and its Internal Environment 1. !ac"ground #istory
#laze $otortech %orp. is a firm that produces and sells lowcost motorcycles in the Philippines with the target mar!et of low income consumers . The company started in 6FFB with its plant formerly located in Pasig %ity. In 6FF9, the firm invested 446.95: million pesos, 6F4G of the re/uired company fi'ed assets, to establish a new manufacturing factory based in $eycauayan, #ulacan. Through the years, the company grew as they shifted their focus from $anila to the provinces as their new target mar!et in selling their motorcycles. Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6FFB are as follows1 4FF,@9@,[email protected] PHP >assets? 4, :9,@69,975.@7 PHP >revenues?, 4:.46G >gross margin?, >3,5@3,::9.57? PHP >operating loss?, >:,BF7,B4:.F4? PHP >net loss?6. It also has a negative profit margin of >@.56G? >profitability ratio?, an inventory turnover of 4.6B>efficiency ratio?, and a current ratio of F.9B >li/uidity ratio?. Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6FF9 are as follows1 44,3F6,43B.5B PHP >assets? :, 5:,:B4,9B@.@6 PHP
>revenues?,
49.6BG
>gross
>45,5@5,[email protected]? PHP >net loss?. 3
margin?,
>47,3@B,:66.@3?
PHP
>operating
loss?,
It also has a negative profit margin of >[email protected]?
>profitability ratio?, an inventory turnover of 4.7F >efficiency ratio?, and a current ratio of F.5@ >li/uidity ratio?.
1 Appendix A: Blaze Motortech Corp., Balance Sheet, as of ear ended 200! 2 Appendix B: Blaze Motortech Corp., "nco#e State#ent, as of ear ended 200! 3 Appendix C: Blaze Motortech Corp., Balance Sheet, as of ears ended 200$ and 200% 4 Appendix &: Blaze Motortech Corp., "nco#e State#ent, as of ear ended 200$ and 200% '
Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6FF@ are as follows1 4:6,:@4,@@4.7B PHP >assets? 5, B:,6F3,964.@B PHP >revenues?, [email protected] >gross margin?, >7,649,[email protected]? PHP >operating loss?, >7,F47,6B9.64? PHP >net loss?7. It also has a negative profit margin of >9.66G? >profitability ratio?, an inventory turnover of 6.3B >efficiency ratio?, and a current ratio of F.7B >li/uidity ratio?. Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6F4F are as follows1 4:4,9:7,396.96 PHP >assets? B, 9@,6B:,B36.36 PHP >revenues?, :F.66G >gross margin?, 4,@6B,F46.47 PHP >operating income?, 4,379,F56.@6 PHP >net income? 9. It also has a profit margin of 4.75G >profitability ratio?, an inventory turnover of 5.3B>efficiency ratio?, and a current ratio of F.B@@7 >li/uidity ratio?. Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6F44 are as follows1 6F4,@3F,747.39 PHP >assets?, @77,775,:97.3B PHP >revenues?, :5.:BG >gross margin?, B6:,6F3.FF PHP >operating loss?, 4,FF:,[email protected] PHP >net loss?4F. It also has a profit margin of 4.5FG >profitability ratio?, an inventory turnover of @.59>efficiency ratio?, and a current ratio of F.56 >li/uidity ratio?. Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6F46 are as follows1 496,637,@7F.FB PHP >assets? 44, 3:,3:6,[email protected] PHP >revenues?, 3B.:5G >gross margin?, 745, [email protected] PHP >operating income?, 4,4:6,4F3.7F PHP >net income?46. It also has a profit margin of 6.74G >profitability ratio?, an inventory turnover of 3.F@ >efficiency ratio?, and a current ratio of F.36 >li/uidity ratio?. Their size in terms of assets, revenues, gross margins, operating and net profits as of year ended )ecember :4, 6F4: are as follows1 49F,7:@,559.79 PHP >assets? 4:, 44,:4B,3B4.B@ PHP
>revenues?,
B.9@G
>gross
margin?,
>46,74F,639.37?
PHP
>operating
loss?,
>44,4@9,:FF.FF? PHP >net loss? 43. It also has a negative profit margin of >@9.@5G?
5 Appendix C ' Appendix & ! Appendix (: Blaze Motortech Corp., Balance Sheet, as of ears ended 2010 and 2011 $ Appendix ): Blaze Motortech Corp., "nco#e State#ent, as of ears ended 2010 and 2011 % Appendix ( 10 Appendix ) 11 Appendix *: Blaze Motortech Corp., Balance Sheet, as of ears ended 2012 and 2013 12 Appendix +: Blaze Motortech Corp., "nco#e State#ent, as of ears ended 2012 and 2013 13 Appendix * 14 Appendix + !
>profitability ratio?, an inventoryj9 turnover of 4.B: >efficiency ratio?, and a current ratio of F.:7 >li/uidity ratio?.
Gross and Proft Margin (in %) 2013.0 2012.0 2011.0 2010.0 200%.0 200$.0 200!.0 *ross Mar,in
Col-#n2
Net and Operating income/(loss) (in PHP) 200!.0 200$.0 200%.0 2010.0 2011.0 2012.0 2013.0
perati, "nco#e/oss Col-#n1
$
Assets and Revenues (in PHP)
As se ts
e e n-e s
To illustrate better, here are graphs for the 6FFB6F4: financial statement analysis of #laze $otortech %orporation1
Ecienc! and "i#uidit! Ratio (in times)
C-rrent atio
Col-#n1
200!.0 200$.0 200%.0 2010.0 2011.0 2012.0 2013.0
#laze $otortech %orporation, being a stoc! corporation, have an authorized capital stoc! of 46F million pesos, a subscribed capital stoc! of 5F million pesos and a paidup capital stoc! of 5F million pesos. #laze $otortechs product line include1
%
0rom the top left, starting with their cheapest motorcycles is the #laze Hubs priced at P43,FFF. De't is #laze #uzz priced at P49,FFF. 0or the mid tier they have #laze #rute priced at P69,5FF and #laze Tri' at P:5,5BF. +s for their premium motorcycles, they have #laze Stealth for P39,FFF and #laze Pyre for P56,5FF. These are just e'amples of the firms products representing the entry, mid and top tier models
2. $%nershi& ' Management (rofile
&HAREHO"'
)REA&,RER
*OAR' O+
$EO/ PRE&('
$ORPORA)E &E$RE)AR-
$OO/%i ce
A$$O,N)A
General
OPERA)(ON & MANAGER
The !ey owners and decision ma!ers are depicted in the above chart of #laze $otortech %orp.s organizational structure.
The chart shows the structures chain of
command in the corporation and its hierarchy of people. Castly, the companys %(*, $r. Cim, is also appointed as the president while the companys %** is also appointed as vice president. ). Mission*+ision*+alues, !ig #airy -udacious oals /!#-s0, if any, of the organiation
The company does not have a formal statement for their mission and vision but according to their +rticles of Incorporation, the purpose of the company is to provide low cost motorcycles to the low income class especially those located in the provinces and to
10
manufacture their own parts firstly, for their consumption and ultimately, to supply other companies. . The irm3s +alue Chain (rimary -ctivities a. Inbound 4ogistics
#laze $otortech ships its parts directly from %hina. $ethods of shipping involve commercial couriers either by sea or by air. Since #laze $otortech has a standing contract with its supplier, %hong/ing oayeng $otorcycle Industry %o. Ctd., it has been stipulated in their contract that half of the shipping fee will be shouldered by the supplier and the other half will be shouldered by the company. b. $&erations
The owners opted to not disclose to the group their methods and manufacturing processes. In general, when he company gets the raw materials from the supplier, they assemble the unit together with the parts they ma!e. Eith #laze $otortechs investment in establishing their main motorcycle production facility located now in $eycauayan, #ulacan last 6FF9, they have been able to move out of Pasig and e'pand. c. $utbound 4ogistics
The output product which are motorcycles and spare parts are shipped to two warehouses, and from there, to over 6F outlet stores nationwide, some of which are in
+s mentioned before, their target mar!et is the low income class in the provinces. Therefore, it is only fitting that their products are priced ranging from P49,FFF to P65,FFF for their entry level tier to up to P36,FFF for their high end tier. #ecause of this nature, the company do not need endorsements nor e'pensive advertisements. Their way of reaching out are just posters and traditional word of mouth mar!eting. e. Service
11
+s the company would put it, their competitive advantage lies in their service. 2epairs and parts are accessible and available locally so the company doesnt have the per order basis of getting the spare parts. (ngineers are also accessible locally. Eith this, the customers will be able to save time by getting their parts and repairs done faster because of the stoc! and employee setup which are available and accessible.
Secondary -ctivities
a. (rocurement
#laze $otortech has an e'isting technical licensing agreement with %hong/ing oayeng $otorcycle Industry %o. Ctd. for the supply of some of !noc!ed down parts that are not locally manufactured. #ut the companys %(* said that it will prioritize local procurement to promote local parts manufacturing and its supporting industry. b. irm Infrastructure
+side from one e'clusive accountant, the company has no separate department for +ccounting and Human 2esources. #ut since the company is still small and does not need fre/uent updating of boo!s and manpower, it is understandable that the firm infrastructure is leaning towards disadvantageous as compared to industry competitors. c. #uman Resources
Ehen admitting employees, the %(* himself screens and interviews the prospect employees. Their lineup of engineers have a common bac!ground of wor!ing for other motorcycle manufacturing li!e "amaha and awaza!i. (mployees of the outlet stores come from the province where they are located. d. Technology 5evelo&ment
+lthough the comple' parts are still being imported, the company said it is now developing body frames, plastic parts and electrical components initially for their own consumption. Cater on, the firm plans to supply to other manufacturers and distributors of motorcycles.
12
+alue 6et%or"
*la.e
$ong#ing 1oa!eng Motorc!cle
Pilippine +inance Association (nc2
Partas )ransportation $o2
'epartment o0 )rade and (ndustr!
*oard o0 (nvestmen
Ma!3an4
Motor %eicle 'evelopment Program artici ant.
The above chart shows the companies affiliated with #laze $otortech %orporation. 0irstly, %hong/ing oayeng $otorcycle Industry %o. Ctd. is #laze $otortech %orp.s raw materials supplier from %hina.
Secondly, Partas Transportation %o. provides additional
transportation in shipping motorcycle units. De't, Philippine 0inance +ssociation Inc. is a financial institution that lends credit to #laze $otortech %orp. Similarly, $ayban! also lend credit to #laze as well as finance personnel from $ayban! to help #laze while they were just a start up. Castly, as re/uired by )epartment of Trade and Industry, the $otor
+s stated before, in terms of physical resources, the firm owns one motorcycle production facility, a fleet of three transport truc!s, two warehouses for storing processed outputs and over 6F outlet stores nationwide. Cast 6F44, the firms vice president, +ger iocho, pitched the value of motorcycles at the 4:th national convention of the Philippine 0inance +ssociation Inc., a group composed of credit lenders and ris! management e'perts, as a possible investment venture in line with their bid to e'pand. Theres also the partnership with $ayban! which started in 6F4F to lend the firm credit and finance personnel. +s of now, the firm is only building its name to be the first 0ilipino motorcycle manufacturers. #ut the engines and more comple' technologies are still imported- only the designs are trademar!ed. The locations of the branches are also very much in line with the companys purpose of providing cheap motorcycles because they are all located in the provinces. In terms of their specialists, #laze $otortechs engineers are the ones who designed the motorcycles. The engineers have prior e'perience wor!ing in international motorcycle companies. +lso
13
mentioned earlier, the firm does very well in their customer service and /uality control, using the localization of parts as an advantage.
III. The Industry and its Com&etitive Environment 1. Industry definition
The industry concerned with #laze $otortech is that of manufacturing and assembling motorcycles. (ssentially, a motorcycle is a two and threewheeled motor vehicle powered by an internal combustion engine with a cubic inch displacement. $ajority of the demand for motorcycle, specifically 9F95G, comes from the fact that it can be fitted with a side car. In addition, recent development by food establishments started to use such types of vehicles for their food delivery services45. %onversely, the industry has yet to produce some of the comple' parts li!e the engine because of various aspects such as the Philippines economic and political standings.47 *ther than that, the parts as well as the whole unit are assembled here. It is important to note that the industry is not concerned with retail selling or selling to the public. It merely supplies the retailers. However, as for #laze, it controlled its distribution by forward vertical integration. The corporation #lazing Eills, a separate corporation with the purpose of selling motorcycle units to the public, e'clusively gets their motorcycles from #laze $otortech. 0or the purpose of this research, the focused industry will be manufacturing and assembling but it will also include some aspects of the distribution to see the complete business process. 2. !ac"ground history
The industry of the manufacturing and assembling of motorcycles started upon the investment of apanese manufacturing corporations. This industry developed rapidly with the participation of local corporations. This catered to the need for cheap means of private transportation especially in the rural areas. 0our pioneers started the industry namely, Honda, awaza!i, Suzu!i and "amaha. 0rom these four, 69 more companies including that of %hinese, Taiwanese, Thai, $alaysian and Indian brands entered the Philippine mar!et.
In spite of this, the apanese brands
15ineda, 7. 1%%4 Motorcycle and Parts Industry: Impact of Trade Policies on Performance, Competitiveness and Structure. hilippine "nstit-te for &eelop#ent St-dies, 1815
1'&acid, 9. 200$ RP rm to produce low-cost motorcycle. Manila B-lletin Aailale at: https://666.hihea#.co#/doc/1*181%00%$$%1.ht#l Accessed: 1' March 201'. 14
remained as the dominant players with an B5G mar!et share 4B. %urrently, the Philippine mar!et for motorcycle manufacturing and assembling is not yet saturated. +s reported by +ger iocho, Thailand leads in motorcycle manufacturing with a saturated mar!et of :14 ratio or 76 million population use 6F million motorcycles. This was followed by Indonesia with an 4414 ratio or 66 million motorcycles sold to 633 million customers. Eith the Philippines position in customertomotorcycle ratio of 6314, #laze hopes to improve this ratio and other +sian suppliers have been eyeing them to produce economies of scale 49. +mid a global recession in 6FF9, iocho even said that sales in motorcycles are still increasing and is the fastest growing industry in the automotive sector.4@J #oth in production and consumption, the Philippines has been a top performer across South (ast +sia in the said industry. 2eports by the $otorcycle )evelopment Program Participants +ssociation, Inc. >$)PP+? states that in 6F46, motorcycle production in the Philippines surpassed $alaysia. $otorcycle registrations e'perienced an increase from 6.5 $illion in 6FFB to more than 3 $illion in 6F46 6F. +ccording to the )epartment of Trade and Industry, The motorcycle sector has potential to e'pand manufacturing and sales operations in the Philippines due to the affinity of the 0ilipinos with motorcycle usage. 0rom leisure and personal use to business needs, the motorcycle is a viable means of transport in urban and rural areas. The growing 0ilipino middle class sees motorcycles as efficient and costeffective for both personal and business needs. Eith easy access to credit, sales potential in the country is promising.J64 Eith the dominance of foreign corporations, the establishment of #laze $otrotech is a milestone in the industry. In 6FFB, the corporation invested P446.95: million for the establishment of a new motorcycle production facility in $eycauayan, #ulacan. This was a significant milestone for the company, having a facility with complete e/uipment to produce motorcycles. This was also a milestone in the industry considering they are the first 0ilipino company
to
establish
a
motorcycle
production
facility
in
the
Philippines.
1!Motorcycle - securing te future of Pilippine industries 2015 &epart#ent of 9rade and "nd-str. Aailale at: http://ind-str.o.ph/ind-str/#otorccle/ Accessed: 1' March 201'.
1$-zon, ".;. and Careza, 7. 2011 Rising fuel costs lead to motorcycle !oom in P". "n<-irer. Aailale at: http://-siness.in<-irer.net/20'3/risin8 f-el8costs8lead8to8#otorccle8oo#8in8ph Accessed: 1' March 201'. 1% "id., p.12 20Motorcycle #evelopment Program Participants $ssociation 2012 Aailale at: http://ind-str.o.ph/6p8content/-ploads/2015/05/5th89"&8Mr8e=anos8presentation8on8 #otorccle.pdf Accessed: 1' March 201'.
21 "id., p.12 15
Programs catering to this industry by the government is considerably, also a milestone. The %omprehensive $otor
Opportunities
)reats
Contin-in increase in de#and
roliferation of copcat #otorccles and fa>e parts and co#ponents
oo# for local innoation
oad safet iss-es a?ectin Motorccle sales infrastr-ct-ral ris>s li>e incorrect #otorccle lanes
&eelop#ent of s-pportin ind-stries e.. die cast, precision #achiner
Co#plex oern#ent proced-res i#portation, reistration
"nconsistencies on ordinances local s. national @ea> enforce#ent of oern#ent re-lations
). Current industry sie The motorcycle production industry in the Philippines has seen an increase of
producers in the past couple of years. #laze $otortech became the first local producer of motorcycles in 6FFB. The company enjoyed tremendous growth in terms of sales in the last 7 years but has since ta!en a dive in terms of net income. +s of this report, #laze is currently facing five major competitors in the local motorcycle production industry, namely, Honda, Suzu!i, ymco, awasa!i and "amaha, along with 69 other competitors 66. This is a problem for #laze $otortech because their aim is to be the top motorcycle producer for the lower income households. Devertheless, as the companys vision is to provide motorcycles for those with low income, the company may
22Motorcycle - securing te future of Pilippine industries 2015 &epart#ent of 9rade and "nd-str. Aailale at: http://ind-str.o.ph/ind-str/#otorccle/ Accessed: 1' March 201'. 1'
choose to capitalize on that and use it as their competitive advantage against the said international companies. #eing part of the motorcycle production industry, #laze $otortech and other companies contribute F.BG to the =)P while providing around :5,FFF people with jobs >5,FFF direct employments- :F,FFF indirect? 6:. %ompanies li!e #laze depend on industries such as iron 8 steel, rubber, petrochemical, and electrical in order to produce their motorcycles. This creates a need for those industries that help their manufacturing cycle continue so that motorcycle production companies can sustain their own production. Cocal companies that offer the industries stated here, such as iron 8 steel, can stand to benefit from the rising need of these motorcyclemanufacturing companies. Eith that in mind, this could lead to the rise of a 4FFG locally produced motorcycle and the local production industry may be positively affected leading to an internal growth.
$otorcycle $anufacturing Industry Cin!ages 63
Ru33er &ector Electrical (ndustr! "n=ection, Moldin Petrocem (ndustr! (ron 5 &teel (ndustr! "n=ection/Moldin, 7ac--# )or#in )o-ndr, forin, #etal castin, tool die
A-to#otie -er arts rod-cers A-to#otie (lectrical arts rod-cers A-to#otie lastic arts rod-cers A-to#otie Metal arts and rod-cers
Oters Manu0acturers Che#ical and Allied A-to arts rod-cer
'ealers
$onsumers
. Mar"et Structure, su&&ly ' demand conditions, stages of industry life cycle.
The industry displays a type of imperfect competition, which is monopolistic competition due to the large number of firms available in the mar!et. Several international brands such as the apanese Suzu!i, "amaha and awasa!i- Taiwanese, ymco and local
23 "id., p.13 24Motorcycle #evelopment Program Participants $ssociation 2012 Aailale at: http://ind-str.o.ph/6p8content/-ploads/2015/05/5th89"&8Mr8e=anos8presentation8on8 #otorccle.pdf Accessed: 1' March 201'.
1!
brands such as #laze $otortech and 2&SI $otorcycles are vying for mar!et share. )ue to the large number of firms competing for sales, among other factors, the industry tends to e'perience a medium level competition. #ecause of this, firms in the industry compete by distinguishing their brand and offering differentiated products in an effort to gain significant control over their competitors. + firm in the motorcycle manufacturing industry differentiates their products through different ways such as establishing good relationship of trust with their customers. 0or this reason, #laze $otortech develops its brand by establishing a good reputation among its customers. #ecause parts and their e'pert technicians are available locally, #laze can offer hasslefree and fast aftersales services. #y doing this, they establish a good reputation among their customers.
65
In the case of #laze $otortech, it offers different motorcycle models and variants suited to the particular needs, demands and demographics of its target mar!et. 0or e'ample, one of the product offerings of #laze is the #laze +lto, a scooter e/uipped with a 465cc engine, complete with round headlight and circular mirrors that display the classic 7Fs vintage appeal.67 In addition, to satisfy the demands of the younger consumers, one of the companys product offerings is the #laze Pyre, a scooter e/uipped with a sporty body and a similar 465cc engine. In light of the price war going on in the industry, #laze $otortech competes by offering a variety of products with wide range of competitive prices to cater to the demands of their mar!et. #ecause their main target mar!et is the lower income class, the company offers one of the most economical and affordable motorcycles in the industry the #laze #uzz, with a retail price of P49,FFF. The main competitive advantage of #laze, being a local brand that manufactures and assembles motorcycles locally is their capability to offer products at a price range of P49,FFFP55,FFF 6B relatively low compared to the P:@,FFF P665,FFF price range of its other international competitors such as awasa!i, Honda and "amaha. #y having competitive price offerings, a firm in the industry can have a significant control on the prices on which other competitor firms must compete with. #ased on the 6FF9 industry data, the Philippines position in customertomotorcycle ratio is 6314. +s iocho said, #laze hopes to improve this ratio and other +sian suppliers
25"id. p.15 2', ;. 201' %&$'( Scooters) Aailale at: http://666.-nox.ph/6heels/#eet8laze8ne6est8top8scooters/ Accessed: 1' March 201'. 2!"id. p.15 1$
have been eyeing them to produce economies of scale.J 69 This is an opportunity, if ta!en by #laze, that would translate to demand. In 6F43, there is still great demand for motorcycles. +ccording to the +S(+D +utomotive 0ederation report, the demand for motorcycles rose to 66.6 percent from the 475,B:@ units in 6F4: to 6F6,35B units in 6F43.
6@
#laze $otortech is at its growing stage given its efforts on ac/uiring significant amount of capital in its effort to e'pand its mar!et share. #y investing significant amounts on establishment of new facilities and on research and development, it can better satisfy the needs and demands of its customers at a lower cost.
:F
Similarly, the industry of manufacturing and assembly of motorcycles is also in its growing stageKthis is implicated by the constant increase of demand, a pressure to increase output, the willingness of the players to e'pand and stay relevant, and the deliberate invitation of the Philippines to foreign firms to invest and enter the Philippine mar!et of motorcycle production.
7. Ma9or (layers in the Motorcycle Manufacturing Industry #onda Motors (hili&&ines
Honda motorcycles have emerged in the industry even before their recently established plant. +s said on their site, Honda is well!nown for its innovative spirit, technological standards and passion for e'cellence.J *ne of its main policies is %orporate Social 2esponsibilityJ. This principle mainly consists of two fundamental beliefs, which are three joysJ that pertain to the joys of buying, selling and creating, and the other is the respect for the individual personJ. :4 2espect for the
2$ -zon, ".;. and Careza, 7. 2011 Rising fuel costs lead to motorcycle !oom in P". "n<-irer. Aailale at: http://-siness.in<-irer.net/20'3/risin8 f-el8costs8lead8to8#otorccle8oo#8in8ph Accessed: 1' March 201'. 2%Cr-z, C. 2014Pilippine demand for motor veicles, motorcycles outpaces rest of $sean in *+. Aailale at: http://intera>son.co#/-siness/$'5$$/philippine8de#and8for8#otor8 ehicles8#otorccles8o-tpaces8rest8of8asean8in81< Accessed: 1' March 201'. 30, . 200% %&$'(: Te irst PI./ motorcycle !rand0 Aailale at: http://666.#otorcclephilippines.co#/for-#s/sho6thread.phpD1!11!'8 BAE(89he8)irst8";F8Motorccle8Brand Accessed: 1' March 201'. 31 +onda hilippines "nc. http://666.hondaph.co#/ao-t/, accessed March 201' 1%
individual is shown through Hondas response to the necessities of certain societies in which they relate to upon in business and even in the environment. Eith regards to its safety measures, Honda developed its own driving center >HS)%? that aims to help drivers especially in the motorcycle industry. It is !nown to be the first motorcycle driving school in the Philippines and is also recognized by the Cand Transportation *ffice. The center mainly teaches the fundamentals of driving motorcycles and the safety measure in order to be a responsible driver. Honda also applies measures to ensure that their products are least harmful to the environment. In fact, it has passed the Euro 2 Ka measurement on how a vehicle is environment friendly. They are also accredited by the Philippine %lean +ir +ct 2egulation. :6 +ccording to their +nnual 2eport, based on the location of +sia, Honda has sold around 34,7FF units during the calendar year 6F43 and has increased by B.@G during the following year 6F45. Its sales revenue in +sia during 6F43 was 9@3,F:: "en >$illions? and 4,F5F,3@F "en >$illions? during 6F45, which suggests 4B.5G change. ::
:amaha Motors (hili&&ines
Eith branches located in #atangas, $andaluyong, $andaue and )avao, "amaha claims to strive to realize peoples dreams with passion through the ne't innovation that provides value and deep satisfaction.J Its $anagement Principles include %ustomer Satisfaction, which creates values to fill in the needs of the customers, Shareholders and (mployees Satisfaction, which is aiming for a corporate environment that envelops selfesteem, and Society Satisfaction, :3 which thrive to fulfill its social responsibilities to the country and the rest of the world. Its +ction guidelines consist of )elivering #eyond ('pectation, Eor!ing as *ne, &nwavering )edication, and %ultivating Spirit.:5 In the +nnual 2eport, "amaha has sold about 5,FBB >Thousand &nits? during 6F4: and 3,94@ >Thousand &nits? dung 6F43 in +sia, which brings about 5.4G change. Its revenue on $otorcycles was estimated to be 74F, F:F "en >$illions? during 6F4: and 746,45@ "en >$illions? during 6F43 which brings F.:G change. :7
32 "id., p.1' 33 +onda Motors Co. http://6orld.honda.co#/inestors/lirar/ann-alGreport/2015/honda2015ar 8all8e.pdf, accessed March 201' 34 Fa#aha Motors hilippines, http://666.a#aha8 #otor.co#.ph/ao-tG-s/corporate.ht#l, accessed March 201' 35 "id., p.1! 20
;a%asa"i Motors (hili&&ines
Having been established in the country for over 3F years, awasa!i is considered by many to be one of the leading motorcycle manufacturers in the industry. Its main branch is located in $untinlupa, $anila. awasa!i $otors are !nown for their average price cost but high /uality motorcycles. Its main venture is manufacturing motors mainly used for tricycles, which are not only utilized in the Philippines but also distributed in other parts of the world. Its main vision is to be considered the #est #rand in +siaJ through its value added products and services. Its corporate values are based on teamwor!, leadership, integrity and /ualityconsciousness. 0inally, their fourfold legacy contains the value of Stability, %redibility, )ominance, and Pride.:B #ased on their +nnual 2eport, awasa!i reported a net income of :F, 973 "en >$illions? during 6F4: and :9,7F4 "en >$illions? during the year 6F43. :9
Estimated Mar4et &ares Percentage +onda 25
Fa#aha 40
Ha6asa>i ther Brands
5 30
#ased on research, the estimated shares of the major International Players such as "amaha, Honda, and awasa!i comprised about B5G of the industry. 0rom this, the group based the individual mar!et shares of the international brands from their annual revenues. #laze, on the other hand, can be attributed to the minority which is found in *ther #rands. <. 4eading (ractices ' Com&etitive Strategies in the Motorcycle Industry
3' Fa#aha Motors Co., http://loal.a#aha8 #otor.co#/ir/ann-al2014/pdf/2014ann-alGallG(.pdf, accessed March 201' 3!Ha6asa>i hilippines, http://>a6asa>i.ph/co##-ter/ao-t8-s.php, accessed March 201' 3$ Ha6asa>i Motors Co.,http://loal.>a6asa>i.co#/en/corp/s-stainailit/report/eniron#ental/pdf/14Gho->o >-soGdiest.pdf, accessed March 201'
21
This section aims to show how each of the competing companies in the motorcycle industry differentiates from each other and how the companies derive from these differences their competitive edge in the mar!et.
Mar"eting*Sales ' Com&etition #onda, :amaha and ;a%asa"i Kthe one thing each of these companies has in common is
their passion towards building motorcycles that caters for innovation and value in their products and for their customers.
#onda Hondas innovation is established in their safe, efficient, economical, and
environmentfriendly technology and motorcycles. 0irstly, Honda offers to impart the s!ill and responsibility in using their motorcycles through the Honda Safety )riving %enter >HS)%?, which includes the following courses :@1 #asic $otorcycle 2iding Safety %ourse
$otorcycle >6E?
6F hrs.
$otorcycle Intermediate %ourse
4F hrs.
0leet Safety 2iding %linic >6E?
4 day
$otorcycle S!ills %ertification
4 day
Safety 2iding Seminar
half day
0urthermore, Honda mar!ets for minimizing environmental hazards through their (uro 6 standard, which !eeps their motorcycles with ecofriendly and clean gas emissions. In addition, Honda provides for its customers different types of motorcycles with the categories Scooter, Sport, &nderborne and #usiness. $oreover, Honda prides itself of their technological e'pertise, continuous research and development and meticulous /uality control. Instilled in their products are the result of years of e'perience, dating bac! to the establishment of $ariwasaHonda Inc. in 4@B:, a joint venture by Honda and $ariwasa
3%+onda hilippines "nc., I+onda Safet &riin CenterJ, http://666.hondaph.co#/hsdc/hilippine8oad8Safet8Condition, accessed March 201' 22
)istributors Inc. 0urthermore, Honda also offers power products such as engines, power generators, water pumps and spare parts such as motorcycle accessories, helmets, the Honda 3T *il and Preventive $aintenance Parts. In addition, Honda promotes for customers social interaction and connection for their passion in motorcycles through 67 different clubs located in different areas in the Philippines, with L2$ #i!ers %lub, %lub MoomerL Philippines, Honda 2iders %lub $untinlupa and Honda %lub %#44F Inc., just to name a few. Castly, it reaches out in the mar!et through motorsports events and multimedia commercials. 3F
:amaha N *n the other hand, "amahas mission to provide e'ceptional value and deep
satisfaction to its customers and products is reflected by its brand slogan, Revs your Heart 41. This is established as "amaha, with its commitment to providing for the highest level of /uality, provides for a 2ev Translator +pp, available to the +ndroid and +pple *S. +s ta!en from their website, it is an application to translate enginelanguage which "amaha $otor has developed to encourage better communication between people and engines.J 36 +lso, "amaha e'tends its value to its customers through "%C&#, a club membership f ree and open to owners of "amaha motorcycles, that offers endless privileges and unlimited benefits, with discounts of products and free touring adventures, just to name a few. 0urthermore, "amaha offers a variety of motorcycles, with categories under Ceaning $ultiEheel >C$E?, +utomatic, $oped, Street, *ff2oad and #usiness.
In addition, "amaha mar!ets the
"M*D(, a flagship shop of "amaha with a beautiful faOade that welcomes the customers upon their arrival and with wide glass windows giving them a glimpse of what is insideJ, which features the "amaha 2unway, #ig #i!e Mone, %ommuter Mone, %af and =allery and $eeting rooms.3:
;a%asa"i = awasa!i mar!ets its products through two different types1 the commuter bi!e
and the leisure bi!e. (ach bi!e provides for a more specific use for its customers. %ategories under these types are #usiness, Standard, &nderborne and Scooter. Castly, what highlights awasa!i is their easily available service centers, which is widely available throughout the Philippines. Cocating these service centers is made convenient, as their address, contact nos.,
40 "id.,p. 1% IAo-t KsJ 41Fa#aha Motor hilippines "nc., http://666.a#aha8#otor.co#.ph, accessed March 201' 42 Fa#aha Motor Co.,td., http://loal.a#aha8 #otor.co#/ao-t/rand/apps, accessed March 201' 43 Fa#aha Motor hilippines "nc., http://666.a#aha8#otor.co#.ph 23
toll free nos., operating hours and other miscellaneous information is readily accessible in their website.33 Hondas top rated motorcycle price ranges from 65! to 4BF! PHP, while awasa!is ranges from 65! to 5@F! PHP and "amahas ranges from 39.@!465! PHP. The prices ranges of the top rated motorcycles from these companies is illustrated in the table below?1 H*D)+
+E+S+I
"+$+H+
Honda )ream 44Fi P6F,FFF N
awasa!i 2ouser 49F>#ajaj? P6F,FFF N
"amaha 2S44F0 P39,@FF
Honda %#3FF P5F,FFF N
awasa!i #o'er %T45F>#ajaj? P56,5FF N
"amaha STL P7:,@FF
Honda %#265F2 P75,FFF N
awasa!i %urve P74,@FF N
"amaha $io Soul i P77,@FF
Honda %2065F P4:F,FFF N
awasa!i M4FFF P55F,FFF N
"amaha "#2 465 P79,9FF
Honda %2035F P4BF,FFF N
awasa!i Dinja 4FFF P5@F,FFF
"amaha Tricity P465,FFF
0or the purposes of this research, assuming that price ranging from 45,FFFphp65,FFFphp is as economy motorcycle, two products namely Honda )ream 44Fi and awasa!i 2ouser 49F is considered as part of the competition of #laze $otortech.
$&erations and 4ogistics #onda = Honda prides itself to have the leadingedge paint facility, which utilizes the use of
%ationic (lectro )eposition >%()? bath, to ensure seamless coating, proper paint adhesion and total anticorrosion,J as ta!en from their website. It also received the first annual #est Auality +ward granted by Honda $otor %o., Ctd. of apan.
35
Honda, as ta!en from their 6F4: +nnual 2eport, purchases raw materials and parts from numerous e'ternal suppliers, and relies on certain suppliers for some of the raw materials and parts which it uses in the manufacture of its products.J37+lso, Honda manufactures its motorcycle products through its subsidiary company, the Honda Philippines Inc., formerly established as the $ariwasaHonda Inc. This company is based in Tanauan, #atangas.3B
44 Ha6asa>i Motors hils. Corp., http://>a6asa>i.ph, accessed March 201' 45 +onda Cars hilippines "nc., IMan-fact-rinJ, http://666.hondaphil.co#/corporate/Man-fact-rin/LMan-fact-rin, accessed March 201' 4' +onda Motor Co., td., Ann-al eport 2013, http://6orld.honda.co#/inestors/lirar/ann-alGreport/2013/honda2013ar 8all8e.pdf, accessed March 201' 4! +onda Motor Co., td., I+onda Co##e#orates 30 Fears of Motorccle rod-ction and Sales in the hilippines,J http://6orld.honda.co#/ne6s/2003/2030'11.ht#l, accessed March 201' 24
:amaha N"amaha obtains the heavy components from vendors in apan and Thailand. 39
+lso, raw materials of "amaha such as tin, tantalum, tungsten, gold, $ineral 2esources, are mined in the 2epublic of %ongo. Then, "amaha $otor Philippines Inc. >"$PH?, which was established 55 years ago in $a!ati, manufactures its motorcycles in a plants located in Cipa %ity, #atangas and Caguna Industrial Par!. +fter manufacturing the products, these are sold domestically through dealers.
;a%asa"i N awasa!i and its )evelopment of an +utomatic 2aw $aterials 0eed System for
a Scrap Shredding Plant replaces normal operations by plants in processing raw materials3@. Their manufacturing plant is located in $untinlupa %ity. It utilizes the use of fluidized bed !iln system along with their !iln facility, the % 2oller $ill and %P 2oller $ill. 5F These are then distributed to motorcycle dealers throughout the Philippines.
inancial and #uman Resources Management #onda N Hondas employees, as ta!en from the website, practices a culture with 5
established management policies. It promotes among its associates the challenging spiritJ which serves as Hondas corporate culture.54 +lso, HS)% instructors have undergone a onemonth e'tensive s!illup training and attitude building under the supervision of super instructors from 2ainbow $otor School >apan? and #u!it #ato! )riving %enter of Singapore.J This shows that HS)% instructors are highly/ualified in fulfilling services to customers which promote for #uilding a %ommunity of Safe 2oad &sers,J HS)%s slogan.56
4$ Fa#aha Motors hilippines "nc., Strateic Manae#ent ro=ect eport 2011, http://666.scrid.co#/doc/'0!!1$53/Strateic8Manae#ent8 ro=ect8eport8Fa#aha8Motors, accessed March 201' 4% Ha6asa>i +ea "nd-stries, td., IScopeJ, https://666.>hi.co.=p/scope/pdfGe/scope102.pdf, accessed March 201' 50 Ha6asa>i +ea "nd-stries, td., I"nd-str lantsJ, https://loal.>a6asa>i.co#/en/ind-strialGe<-ip#ent/ind-strialGplants, accessed March 201' 51 +onda hilippines "nc., ICareerJ, http://hondaph.co#/careers, accessed March 201' 52 +onda hilippines "nc., Ihilippine oad Safet ConditionJ, http://hondaph.co#/hsdc/hilippine8oad8Safet8Condition, accessed March 201' 25
:amaha = "amahas job benefits include the following1 $edical, $iscellaneous allowance,
Coans, )ental, Sports >e.g. =ym?, Par!ing, Insurance, 2ice Subsidy, Shuttle;Transportation, $eal +llowance, Incentives.5: + job vacancy for their sales manager re/uires the following /ualifications1 • • • • •
• • • • •
$ale, :6 N :B years of old =raduate of any 3 year #usiness %ourse or $#+ Eith at least 4F years Sales or 2etail Sales and $ar!eting e'perience. Eith 5 year Sales $anagement e'perience. Previous e'perience in $otorcycle or automotive company is an advantage but not re/uired. $otorcycle (nthusiast. =ood in +nalyzing, Planning and 0orecasting Sales. Peopleoriented and Team player. Eith above average Degotiation and %ommunication S!ills. Eith valid drivers license.
;a%asa"i N awasa!is financial management is handled by their finance 8 accounting
division. *n the other hand, the Personnel 8 Cabor +dministration )ivision, with Personnel )epartment, Human %apital )evelopment )epartment, Cabor +dministration )epartment and Safety 8 Health $anagement )epartment under it, handles its human resources management.53
I+. The 6ational and lobal Environment
1. Socio>cultural environment &nderstanding the sociocultural environment of the Philippines is important for any
competitive business in any industry loo!ing to earn profit. +s a result, these factors, such as vehicle prefereces, target mar!et based on the population and employment, would also be important for the #laze $otortech as it affects how the business will go about in developing their value chain. To begin with, here is a loo! at the development of the Philippines population
53 (xcite Media Serices +, "nc., IFa#aha Motor hilippines,J http://666.exciteserice.ph/detail/5$40153, accessed March 201' 54 Ha6asa>i +ea "nd-stries, td., Iranizational ChartJ, https://loal.>a6asa>i.co#/en/corp/prole/oranizationGchart.ht#l, accessed March 201' 2'
Source1 Eorldometers , Population o the Philippines, http1;;www.worldometers.info;world
population;philippinespopulation, accessed +pril 45, 6F47. +ccording to the data above, the Philippines population in 6F47 is about 4F6 million and its growth rate is 4.53G. This means that an estimated number of 4.5 million increases the population every year. +lso, the median age of the population is 63.3, which means that the age distribution is summarized by 63.3 and that the Philippines population is generally represented by this value. Castly, the urban population is only about 33.9G which indicates that 55.6G or 57 million of the population lives in rural areas. To better illustrate the age demographic of the population of the Philippines, here is a loo! at the 6F43 age demographic1
Source? Inde' $undi, Population Pyra!id,http1;;www.inde'mundi.com;philippines;ageQstru cture.html, accessed +pril 45, 6F47
2!
The data above is the output of the values below. +lso, the blue horizontal bars represent the male age group while the red bars represent the female age group.
+ge structure1 F43 years1 ::.BG >male 49,3@:,779;female 4B,B5:,:5@? 4563 years1 4@G >male 4F,347,:59;female 4F,F33,B63? 6553 years1 :BG >male 6F,F:4,7:9;female 4@,B@7,535? 5573 years1 5.9G >male 6,996,B4@;female :,:B6,395? 75 years and over1 3.5G >male 6,4F:,5@7;female 6,BB:,4:@? >6F43 est.? 55 +s shown above, the Philippines population for both genders, is mainly composed of people between the ages 6553.
This age group is characterized as the wor!ingage
population, thus ma!ing the Philippines a country mainly represented by a population of wor!ers. De't, as mentioned in the data from The Eorld #an! =roup, :FG of the Philippines population is employed for agriculture. 57 This would mean that about :F million of the Philippines population wor!s on the agricultural industry. Castly, the data below will show the preferences of 0ilipinos in purchasing vehicles.
55 Central "ntellience Aenc, 9he @orld )actoo>, $ge Structure, https://666.cia.o/lirar/p-lications/the86orld8 factoo>/elds/2010.ht#l, accessed April 15, 201'. 5' 9he @orld Ban> *ro-p, (mployment in $griculture, http://data.6orldan>.or/indicator/S.A*.(M.ES, accessed April 15, 201'. 2$
Source1
#usiness Eorld Publishing %orp., By the nu!bers" Ridin# in $ande!, http1;;www.bworldonline.com;content.phpRsection*nline('clusive8titlebythenumbersridingin tandem8id@:F7:, accessed +pril 45, 6F47.
The data shows that for the total of B.7 million registered vehicles in the Philippines, about 55G of this or 3.6 million are motorcycles;tricycles. This shows that the usage of motorcycles is the main preference compared to driving a car, which would then be considered a driver of demand for consumers in purchasing vehicles for the 0ilipinos. =iven the Philippines sociocultural environment as mentioned in all the data above, #laze $otortech is able to ta!e advantage of these conditions and demand in the mar!et. 0irstly, #laze $otortech does this by targetting the rural mar!et, which would give them more value as 55.6G of the population lives in the rural areas.
Secondly, #laze
$otortech focuses on mar!eting their products to the wor!ing class, particularly those wor!ing in the agricultural industryKthe reason behind this is found in #laze $otortechs motorcycle structure as these are mainly built to function on gritty roads of the rural and agricultural areas. This would again, give #laze $otortech additional value as the Philippine environment, as mentioned above, is mainly represented by the wor!ingage population and composed of around :FG those wor!ing in the agricultural industry.
Castly, selling
motorcycles brings more value to #laze as 0ilipinos prefer purchasing motorcycle due to the fact that its more mobile and it costs less to ac/uire compared to buying a car. To conclude, the sociocultural trends discussed gives #laze $otortech opportunities they can e'ploit as it is in line with their strengths. These trends are the following1 the Philippines having 55.6G of its population in the rural areas, the significant size of 0ilipino wor!ers belonging to the agricultural industry and the 0ilipinos preference over motorcycles. These trends give #laze $otortech the opportunities not only to cultivate its strengths but also to gain a larger share in the industrys mar!et. 2. Technological Environment
In the motorcycle manufacturing industry, and for most other industries for that matter, technological trends are considered as one of the most important trends to loo! at
2%
because these tend to be the big game changers in an industry. These range from the production of much more costeffective motorcycles, creation of electric motorcycles, having new gear with which motorcycle enthusiasts may add to their vehicle in order to enjoy the ride better, etc.
Electric Motorcycles
*verlapping with environment trends, motorcycle companies have started to loo! at ma!ing their vehicles electric in order to help save the environment. There has been a demand for motorcycle companies to ma!e their products more environmentfriendly. Studies were done in order to see whether motorcycles are more harmful to the environment than cars and it has been proven that motorcycles tend to have higher carbon emissions than cars. This is attributed to the fact that motorcycles, including scooters, do not have the same /uality of pollution control standards li!e cars. The study shows that motorcycles produce 67F grams of %*6 in the urban areas, 4@F in rural areas, and ::F in highways. In contrast to this, cars produce :4F grams of %* 6 in the urban areas, 49F in rural areas and 66F in highways. 5B This shows a trend wherein the motorcycles that have long been thought to lessen %* 6 emissions which caused the public to patronize motorcycles instead of cars. +s an e'ample, Mero $otorcycles is an emerging company that focuses on creating motorcycles that are environment friendly.59 In line with the %lean +ir +ct of 4@@@ which is hinged on the idea of pollution prevention rather than control, some Philippine manufacturers have lessened or stopped altogether the production of 6stro!e engine motorcycles instead opting for the much more lesspolluting model, the 3stro!e engine. 5@
5!Ber>ele, . 201'. Motorcycle pollution. NonlineO osiah.er>ele.ed-. Aailale at: http://=osiah.er>ele.ed-/Miniro=ects/Motorccleoll-tion.ht#l NAccessed 12 Apr. 201'O. 5$Eero#otorccles.co#. 201'. Te 1rowt Strategy - %uilding a glo!al %rand 22 '(R. M.T.RC/C&(S. NonlineO Aailale at: http://666.zero#otorccles.co#/co#pan/strate.php NAccessed 11 Apr. 201'O. 5%Caparas, F. 201'. Te Pilippine Clean $ir $ct: (leven years of partnersips for cleaner, ealtier air . NonlineO &enr.o.ph. Aailale at: http://666.denr.o.ph/ne6s8and8feat-res/feat-res/2%8the8philippine8 clean8air8act8eleen8ears8of8partnerships8for8cleaner8healthier8air.ht#l NAccessed 11 Apr. 201'O. 30
Smart&hone Connectivity
In todays smartphone hungry society, motorcycle companies have ta!en advantage of this opportunity to let their customers have the ability to customize their ride e'perience, albeit through the smartphone. +n e'ample of this is the smartphone controlled (lectronic %omputer &nit >(%&? of #osch motorcycles. The smartphone will be connected to the (%& either through #luetooth or %onnectivity %ontrol &nit >%%&? which will then allow the rider to be updated by the (%& about the motorcycles information. 0or e'ample, the (%& can alert the rider when to have the motorcycle serviced in order to have its repairs and fine tune it to the best of its capabilities once more. +s of now, the (%& is also planned to display other information such as speed, distance travelled, lean angle, and the li!e. &nli!e any other technology seen against antitheft, this new (%&smartphone connectivity is also planned to have a remote immobilizer system wherein the smartphone will be a sort of !ey to starting the motorcycles engines thereby rendering it useless unless the rider has their smartphone with them. 7F +nother e'ample, as discussed earlier, is the 2ev Translator app of "amaha. This is a bold step in terms of technology for the motorcycle industry because this poses a lot of different possibilities as to how motorcycle users can ride their motorcycles and how they can further enjoy riding a motorcycle.
Cornering -!S
In order to understand why this is becoming a trend in most motorcycles, one has to understand what an +ntiloc! #ra!ing System >+#S? is. Its more commonly used in superbi!es in order to maintain deceleration while maneuvering around a corner.74 The importance of this is that more and more companies are letting the cornering +#S feature be included in their motorcycles. +n e'ample of this +#S is the #osch $otorcycle Stability %ontrol which allows the rider to have an increased chance of preventing losing traction. $ost motorcycle accidents in the Philippines are caused by ignorance of not using a motorcycle helmet while riding and losing traction due to either slippery surfaces or rec!less driving. The fact of the matter is that the +#S is being offered but most reject because of
'0ee, . 2014. %osc to launc (C3 wit smartpone connectivity . NonlineO Bi>e "ndia. Aailale at: http://i>eindia.in/osch8to8la-nch8ec-8 6ith8s#artphone8connectiit/ NAccessed 12 Apr. 201'O. '1Blain, . 201'. %ra4ing ard in a corner: %M56s lean angle-sensitive $%S Pro. NonlineO *iz#a.co#. Aailale at: http://666.iz#a.co#/#68 as8pro8hp48cornerin/33034/ NAccessed 14 Apr. 201'O. 31
various reasons such as added cost. In some cases, the +#S is being promoted as a safety net just in case an issue occurs with regards to the motorcycles traction and therefore prevent an accident.76 ). Economic Trends Dational economic trends can greatly affect the motorcycle manufacturing industry
considering that the Philippine governments pressure for the whole manufacturing industry to increase production. Daturally, the said industry reacts to the growth or decline of the economy as one of the contributors. #ut based on recent developments in the economy of the Philippines, the motorcycle manufacturing industry will be e'periencing significant growth assuming there wont be any large scale catastrophic event such as multiple super typhoons all passing by at the same time. +s of last year, economists reported that the Philippines has finally escaped the dreaded economic boombust cycle. The boombust cycle is an economic phenomenon in which the economy boomsJ or reaches its pea! then bustsJ or it regresses bac! to the level before it booms. Eith this out of the way, the economic growth of the Philippines will accelerate starting in 6F45 with a high growth trajectory.7:
Source? )rance8resse, A. 201'. 6Pilippines escaped !oom-!ust cycle6. NonlineO ABS8 CB; ;e6s. Aailale at: http://ne6s.as8cn.co#/-siness/01/2%/15/philippines8escaped8 oo#8-st8ccle NAccessed 13 Apr. 201'O.
The country has also seen a phenomenal drop in inflation rates. This would greatly affect the prices of producing a unit. Since inflation rate is the rate at which goods and services prices are increasing every year, the labor cost needed to produce a unit of motorcycle would be cheaper, thus the final product is also cheaper. Cower inflation rate
'2eEilla. 201'. 5y Motorcycle Sta!ility Control systems matter . NonlineO Aailale at: http://666.rezilla.co#/co##on8tread/6h8 #otorccle8stailit8control8sste#s8#atter NAccessed 10 Apr. 201'O. 7:0rancePresse, +. >6F47?. %Philippines escaped boo!&bust cycle% . onlineU +#S%#D Dews. +vailable at1 http1;;news.abscbn.com;business;F4;6@;45;philippinesescapedboombustcycle +ccessed 4: +pr. 6F47U.
32
translates to lower prices and in this case, the trend of dropping inflation rates would be favorable to the industry for producers and consumers ali!e. This latest figure in inflation reached its record low at F.3G last *ctober 6F45.
Source? Hr-er, &. 2014. $#% Sees Ro!ust 1rowt in Pilippines in 78*9 and 78*. NonlineO Asian &eelop#ent Ban>. Aailale at: http://666.ad.or/ne6s/ad8sees8 ro-st8ro6th8philippines820148and82015 NAccessed 13 Apr. 201'O.
+s for the motorcycle manufacturing industry, the economic stability will bring about a more consistent rate of production since an erratic economy would also lead to unpredictable sales with the continuing changes in inflation and other costs li!e ta'es, growth in employment, increase in capital stoc!s, better competition and raise in investment. True enough, the industry responded to this trend and has started to see development. +sian )evelopment #an!ing, in its flagship publication, stated the the motorcycle industry contributed Php 9.6 billion worth of valueadded. In the same year, the industry produced around 4.F56 million motorcycles, ma!ing the Philippines 9 th in the worlds motorcycle production, overta!ing apan, and 3th in +S(+D, surpassing $alaysia. 73J Eith all of that progress though, the industry still wasnt able to saturate domestic mar!ets with the motorcycle ratio of 6314. +n opportunity may lie here for #laze to increase the overall motorcycle production with the Philippines bid to improve the motorcycle ratio. To put things into perspective, Thailand leads with a 41: ratio followed by Indonesias 4144 ratio. %ertain implications will arise when this ratio is improved and the most obvious one is lower retail prices. The industrys reply, according to the +S(+D +utomotive 0ederation, is an increased 69.B per cent in the first and second /uarter of 6F45. +ccording to the same organization, In the period, 344,793 motorcycles and scooters were produced in the Philippines. In uly 6F45 alone, 77,35: motorcycles and scooters were assembled in the country, a tenth more than the 7F,6B7 in the same month in 6F43. Sales in the seven months rose by 7.6 per cent to 34B,@:4.J The presented data shows that the Philippines posted the
'4Hr-er, &. 2014. $#% Sees Ro!ust 1rowt in Pilippines in 78*9 and 78*. NonlineO Asian &eelop#ent Ban>. Aailale at: http://666.ad.or/ne6s/ad8sees8ro-st8ro6th8 philippines820148and82015 NAccessed 13 Apr. 201'O.
33
fastest growth in motorcycle production in +S(+D, but still ran!s low in terms of volume.J #ut with this rate of growth of the industry, it would be safe to say that it can catch up in terms of raising the output to improve the motorcycle ratio.75 +lthough the main focus of the industry has been increasing output, there has been constraints in meeting the demand. The supply chain gap gives us an overview of these constraints. &pstream, there has been constraints in the industries of metal casting, rubber, petrochemical and electrical industries. Ehile in downstream, it includes dealership networ!s and distributors around the country. +ll of these industries point to the following binding constraints1 underdeveloped local parts manufacturing sector, short model life cycle, lac! of testing facilities and smuggling and proliferation of counterfeit motorcycles and parts. These factors hold bac! the industries in meeting the demand.77 $eanwhile, the industry sees a lot of headroom for development. In #*Is report, 0ilipinos will continue to use motorcycles in various travel needs and livelihood. 7BJ The industry has the capacity to e'perience tremendous growth in the near future give its rate of growth right now and the developments that have been happening in the economy. +s for the drivers of mar!et growth of the motorcycle industry, the $otorcycle )evelopment Program Participants +ssociation >$)PP+? in its motorcycle industry development roadmap report, identified several drivers for growth1
Source? $)PP+, >6F47?. Motorcycle 'ndustry Co!petitiveness Road!ap.
The drivers of growth are categorized in two ways1 The Industry and the +ssemblers. The industry, in this case, will be concerned on the demand or consumer side while the
'5ees, M. 201'. PilStar %usiness. NonlineO hilStar. Aailale at: http://666.philstar.co#/-siness/5'31!!/rp8seen8shiftin8#otorccle8preferred8#ode8 transport NAccessed 13 Apr. 201'O. ''Board of "nest#ents hilippines, 201'. Industry #evelopment for Inclusive 1rowt. Manila: B" hilippines.
'! "id., p.30 34
assemblers would pertain to the supply or the producer side. *n the industry side, first is the rising per capita =)P. It is accepted that the general trend in individual income or per capita =)P is increasing. Increasing urbanization calls for the need of cheap, private transportation, and motorcycles help fill this need. Inade/uate public transport ma!es people patronize the use of privatized transport. +ccess to favorable credit terms strengthens the consumers to purchase on credit without the high interest rates. =overnment incentives would just lower the total cost of the motorcycle for the consumers. 79 +s for the assemblers, directions of principal owners would give the firm a sense of direction through certain goals that would push the firm to reach /uotas. Population and possession ratio has been discussed in the earlier parts using the term customertomotorcycle ratio. 0avorable demographics pertains to the target consumers of the producers as discussed previously. The opportunity for brand mar!eting gives the firms headroom to increase their mar!et shares.7@ The same organization also presented some dampeners of growth. These factors hinder the growth of the industry.
Source? $)PP+, >6F47?. Motorcycle 'ndustry Co!petitiveness Road!ap.
The $)PP+ enumerates these factors that dampen the growth of the motorcycle manufacturing industry. 2edundant government processes pertain to the interactions of the firm and the government through the re/uirements needed by the government li!e securing certain permits and ma!ing reports and other documents. &nderdeveloped local parts sector, as discussed in the previous parts, pertain to the technological level of the Philippines. Then there are issues regarding Intellectual Property 2ights in which the Philippines has yet to
'$M&A, 201'. Motorcycle Industry Competitiveness Roadmap. '% "id., p.31 35
catch up with international international standards. standards. High production production costs contributed contributed by additional additional costs not critical to the production of the actual units li!e ta'es. Technical smuggling is also an issue faced by both the government and the firms. +nd finally, there are road safety issues that need to be resolved. BF . (oliti (olitical cal or Regu Regulat lator ory y Enviro Environme nment nt
The political and legal environment of the Philippines plays a very crucial role in the manufacturing industry, specifically in the motorcycle manufacturing industry. Several laws and policies are being implemented in order to protect the interests not just of the businesses and the consumers, but also a lso the economic growth of the country.
Com&rehensive Motor +ehicle 5evelo&ment (rogram
('ecutive *rder Do.9BB, s. 6F4F, otherwise !nown as the %omprehensive $otor $<) >$<)P? P?,, recog recogni nizes zes the the moto motorr vehi vehicl clee indu industr stry y as a significant contributor to the countrys economic output, employment, investments, e'ports and the develo developme pment nt of small small and medium medium scale scale parts parts and compon component entss manufa manufactur cturing ing establishments.J B4 (* 99B covers industries that produce;assemble motor vehicles that are in !noc!ed down condition. The scheme is aimed to increase the volume of vehicle manufacturing operations by providing privileges to motor vehicle manufacturers. The privileges of the participants in the $<)P are the following1 a. Income Ta' Ta' holidays the firm;company can be granted ta' reductions depending on their projects netvalue added, job generation, etc. b. +dditi +dditiona onall deduct deduction ion for labor labor e'pens e'penses es the firm;com firm;compan pany y can be grante granted d additio additional nal deduction from the ta'able income of 5FG of the wages, subject to different factors. 0or e'ample, if a firms project is located in less developed areas, the deduction can go as high as 4FF GB6 Eith the continued growth in the demand for motor vehicles, there is a need for more companies to invest in the motor vehicle manufacturing industry. In order to satisfy the high Roadmap . !0M&A, 201'. Motorcycle Industry Competitiveness Roadmap. s) 2010. Pcial *azette of the ep-lic of the hilippines) hilippines ) !1(;ecutive .rder o) <==, s) 2010. N;";(O Aailale at: http://666.o.ph/2010/04/23/exec-tie8order8no8$!!/. NAccessed 15 April 201'O.
!2Incentives !2Incentives to Motor >eicle Manufacturers 201'. &S9. N;";(O Aailale at: http://pcieerd.dost.o http://pcieerd.dost.o.ph/i#aes/do6nload .ph/i#aes/do6nloads/presentatio s/presentationG#aterials/clrG nG#aterials/clrG 0'142012/0$GC7G@or>shopGB"G"ncentiesGCana.pdf. N;";(O NAccessed 15 April 201'O. 3'
demand for motor vehicles, development programs such as the %omprehensive $otor
Intellectual (ro&erty Code
2epublic +ct Do. 96@:, otherwise !nown as the Intellectual Property %ode of the Philippines is a state policy that recognizes that an effective intellectual and industrial property system is vital to the development of domestic and creative activity, facilitates transfer transfer of techno technolog logy y, attracts attracts foreig foreign n investm investment ents, s, and ensures ensures mar!et mar!et access access for our products.JB3 It protects the e'clusive rights of individuals and entities to their intellectual properties and creations. In the manufacturing industry, specifically in the motorcycle manufacturing industry, it is impo importa rtant nt that that a comp company any has has secur security ity over over the the e'clu e'clusiv sivee right rightss on thei theirr bran brand, d, trade tradema mar! r!,, and and prod produc ucts ts.. It is impo import rtan antt that that a comp compan any y, for for e'am e'ampl plee a moto motorcy rcycle cle manufacturing company to protect their brand because it is what defines the identity of the company. 0or e'ample, awasa!i is a well !nown motorcycle brand in the Philippines. It was able to establish a good relationship of trust with its customers because of its years of e'perie e'perience nce in provid providing ing durabl durablee motorcy motorcycles cles.. Eith Eith this, this, many many mislead misleading ing brands brands and counterfeit products trying to imitate awasa!i motorcycles have emerged in the mar!et. The emergence of these brands can negatively affect the sales of awasa!i motorcycles and create a bad image for the company. Thus, it is important for manufacturers such as awasa!i to
!3(xec-tie rder rder ;o. $!!, s. 2010. Pcial *azette of the ep-lic of the hilippines. N;";(O Aailale at: http://666.o.ph/2010/04/23/exec-tie8order8no8$!!/. NAccessed 15 April 201'O. 78*A. C".or. N;";(O Aailale at: http://pci=.or/lo/6p8 !4R$ <7?@) 78*A. docs/A$2%3.pdf. NAccessed 15 April 201'O.
3!
protect their brand, trademar!, products and other intellectual properties from threats such s uch as misleading brands and fa!e products.
Consumer -ct of the (hili&&ines
+rticle @B of 2+ B:@3 otherwise !nown as the %onsumer +ct +ct of the Philippines states that, +ny 0ilipino or foreign manufacturer, producer, and any importer, shall be liable for redress, independently of fault, for damages caused to consumers by defects resulting from design, manufacture, construction, assembly and erection, formulas and handling and ma!ing up, presentation or pac!ing of their products, as well as for the insufficient or inade/uate information on the use and hazards thereof.J
B5
This provision states that companies can be held liable if it is proven that the products that that they sell are faulty faulty or defecti defective. ve. In the manufac manufactur turing ing indust industry ry,, specific specifically ally in the motorcycle manufacturing industry, it is important for companies to ensure that their products are free from any defects, which could compromise the safety of their customers, which can ma!e the company vulnerable to law suits, which can give it a bad image. This provision underscores the need for companies to ensure the /uality of their products before ma!ing them available to the customers. 2igorous research r esearch and development and /uality assurance chec!s must be made in order to avoid unnecessary costs arising from recalls, repairs and legal suits.
@arranties
However, 2+ B:@3 re/uires companies to provide warranties on contracts of sale. +ccording to this law, in case that the product has a defect or malfunctions without being caused by unreasonable use, the company must remedy the product within a reasonable time. It permits the consumer to as! for replacement of parts or repair free of charge in case that the product is deemed to be defective. Eith these, motorcycle companies are obligated to provide service warranties and free repairs in case that the units they sold are deemed to be defective. 7. 6atur 6atural al Reso Resour urce ce Envir Environ onmen mentt
Eith the continuing change of the climate status along with the rise of pollution within the country, a change in the industry also would li!ely occur. Such fact is apparent in
!5 "id., p. 34 3$
the motor manufacturing industry. There have been environmental catastrophes that have occurred and some happening in the present that may be vital to the growth of the industry.
@aste Management
Eith the rapid increase in the population in the country especially in urban areas, it is estimated that from here on, the amount of waste generated will also continue to increase. 0rom 6FF5 to 6F4F, appro'imately 3,947 tons of waste has increased in between totaling to 69, 9B5 tons during the year 6F4F. B7 0actors that caused the rise of solid waste is the lac! of cooperation from the civilians along with private firms and poor supervision in select areas. Easte $anagement is a factor in the motor manufacturing industry since the production of motorcycles includes utilizing raw and intermediate materials that are to be thrown away once the final product has been produced. Thus, a company is compelled to learn how to properly allocate the wastes used in production with proper segregation. +lso, environmental regulations have been established to support the cause specifically for proper waste management such as 2.+. @FF: better !nown as (cological Solid Easte $anagement +ct of 6FFFJ which is created generally to adopt a systematic, comprehensive, and ecological solid waste management program.JBB
-ir and @ater (ollution
)ue to pollution in general, these two vital resources if not depleted have been contaminated consistently during the past years. )epletion of supply of clean water and the contamination of air has been the effects of the rise of pollution in the country. Source? ational Solid 5aste Status Report NonlineO p. !0. Aailale at: http://666.ide.o.=p/apanese/-lish/&o6nload/eport/2010/pdf/2010G431G05.pdf NAccessed 14 April 201'O
In the graph, appro'imately :.56 billion dollars or 4B6.:9 billion pesos has been the cost due to the combined damages of water and air pollution. B9
!'ational Solid 5aste Status Report NonlineO p. !0. Aailale at: http://666.ide.o.=p/apanese/-lish/&o6nload/eport/2010/pdf/2010G431G05.pdf NAccessed 14 April 201'O
!! a6phil.net. .A. %003. NonlineO Aailale at: http://666.la6phil.net/stat-tes/repacts/ra2001/raG%003G2001.ht#l NAccessed 14 April 201'O !$ (niron#ent and ;at-ral &isasters. Aran>ada hilippines, NonlineO. Aailale at: http://666.inestphilippines.info/aran>ada/cli#ate/eniron#ent8and8 nat-ral8disasters/ NAccessed 14 April 201'O 3%
It affects the motor industry in terms of the level of production that can be realized ta!ing into account the occurring pollution within the area of production. +lso, vital resources such as water and o'ygen are also being used for the production process of motorcycles. #ecause of the decrease of resources, a decrease in the level of production also occurs. 2egulations li!e 2.+. @6B5 better !nown as The %lean Eater +ctJ and the 2.+. 9B3@ better !nown as The %lean +ir +ctJ have also been observed in order to lessen the damage caused by these types of pollution.B@
Emission
The Philippines is ran!ed 434 st in the world in terms of annual carbon dio'ide >%*6? emissions per capita in metric tons.9F +lthough it is considered to be low compared to other countries, it annual increase in tons may be a cause of concern in the future for businesses including the motor manufacturing industry. + reason why the amount of tons emitted in a country should be considered in this industry is due to the fact that the products of the motor industry itself are the ones causing the continuous emissions of carbon dio'ide. It may earn profit to a business but without the proper measures, it would contribute greatly to the pollution caused by carbon and in the bigger picture, global warming. +nd with the rise of the rate of global warming, it would affect not only the motor manufacturing industry but all industries that depend on natural resources to produce. Eith this, the industry would be e'periencing an increase in
!% a6phil.net. .A. %2!5, $!4%. NonlineO Aailale at: http://666.la6phil.net/stat-tes/repacts/ra2004/raG%2!5G2004.ht#l NAccessed 14 April 201'O $0 hilippines: C2 (#issions per capita. )actsh, NonlineO. Aailale at: http://666.factsh.co#/statistic8co-ntr/philippines/co2Qe#issions, QperQcapita NAccessed 14 April 201'O 40
environmental costs imposed by the government which will increase the cost of doing business.
Solution
%ertain strategies have been conducted by various motor manufacturing sectors to lessen %*6 emissions and in a way, publicly advertising their products that are so called ecofriendlyJ.
Product category
0ocus
+utomobiles
Pursuit of development of ne'tgeneration vehicles that match Suzu!iVs focus on small cars )evelopment of lowcost hybrid vehicles )evelopment of small electric vehicles suitable for dayto day transportation
$otorcycles
)evelopment of electric motorcycles for the global mar!et
Hydrogen fuel cells
)evelopment of light, compact, lowcost aircooled fuel cells94
Suzu!i has created a reen $echnolo#y Plan wherein they modify their materials, process of production and even employee activity in ways that would help the environment. +n e'ample given is their future vision for products that would help the environment rather than cause harm to it. 96 "amaha also developed its own environmental policy wherein the company pledges to prevent climate change and protect biodiversity, develop technologies to help the environment and complying to environmental regulations and laws.J 9:
$1 S-z->i *reen olic. S-z->i NonlineO Aailale at: http://666.loals-z->i.co#/corporate/eniron#ental/reenGpolic/ NAccessed 14 April 201'O $2 "id., p.3! $3 Corporate Social esponsiilit, Fa#aha NonlineO Aailale at: http://666.a#aha.co#/ao-tGa#aha/csr/eniron#ent/eniron#entallG conscio-sGprod-cts/ NAccessed 14 April 201'O 41
To respond to their policy, they apply measures such as (nergy and 2esource %onservation, 2esource $aintenance, +version of substances with environmental loads and manufacturing products that support the environment.J93
<. lobal Environment The -SE-6 Integration
The +S(+D Integration, through the +S(+D (conomic %ommunity, aims to unite its 4F countries >#runei, %ambodia, Indonesia, Caos, $alaysia, $yanmar, Philippines
Singapore, Thailand and
Single $ar!et Production base is about creating a single mar!et wherein the outsourcing and e'porting products from the manufacturing sector will be made easier and would reach various nearby countries within the region. 97
$4 "id., p.3! $5 Benets of the AS(A; Co##-nit R A(C. $S($ 3P, NonlineO Aailale at: http://asean-p.co#/enets8asean8econo#ic8co##-nit8aec/ NAccessed 15 April 201'O $' "id., p.3$ 42
%ompetitive (conomic 2egion is wherein the vision of the +S(+D %ommunity is the rise in the lever of competition within manufacturers that is proof of a growing economy in each country.9B (/uitable (conomic )evelopment aims to aspire for the cooperation of the manufacturing sector to understand and comply in order for them to be members of the integration.99 Integration in =lobalized (conomy which states that the +S(+D (conomic %ommunitys vision of being a greater force in the global economy provided that all the members will cooperate for the common cause of integration.9@ It will affect the $otor $anufacturing Industry in terms of the eventual flow of trade. Through the +S(+D Integration, there would be more established liberal policies that would ma!e way for better process for e'portation of final products and importation of highclass raw intermediate materials. The motor companies here in the Philippines will not only enjoy a vast e'pansion of production, they can also import materials located in other neighboring countries that would boost the efficiency of their products. +lso, a proposed elimination of tariffs would lift a burden to traders from payment within and outside of the country. However, another effect of the integration is the e'pansion of the industry and thus, increase in competition since most businessmen within the organization may opt to establish business sites in the Philippines. +long with the increase in demand, which would lead to higher profits, there would also be neighboring establishments that may be within the same line of manufacturing. #ecause of this, local companies must come up with strategies to stand out from other businesses or, leaving the country and e'panding the business within the neighboring countries instead. +ll in all, a freer flow of trade would be a sign of growth but also a rise in the level of competition between businessmen within the +S(+D.
C$(21 /Conference of (arties0
The recent %*P was held in Paris and it was the 64 st time of the convention. *riginated from #erlin then progressed through the more famous yoto Protocol, and in the present, the Paris agreement. The %*P is designed for the meeting of various leaders of many
$! "id., p.3$ $$ "id., p.3$ $% "id., p.3$ 43
countries called from the call of climate in order to conduct solutions to lessen harmful gases being emitted. @F +nnually, the %*P is hosted by different members of the organization. The goal is to review the past meetings, whether or not the changes a year ago were implemented and create further regulations on how most countries could cut bac! on their carbon emissions to lessen the chances of climate change and the rise of temperature. In fact, within the meeting, it is stated that the main aim was to !eep global warming below 6 degrees %elsius. @4 Eith the recent negotiations to cut bac! on the %arbon (mission per capita, the meetings held in Paris would greatly affect even a small business here in the Philippines. In terms of the $otor $anufacturing Industry, the recent discussions would lead to the industry to adjust and comply with the change in the standard. If there was a specific limit to the emission of gas, the motor manufacturing business must ensure that they would duly comply with the limit and a more drastic approach would be developing new technologies that not only lessens carbon emission, but can actually function without causing harm to the environment. In short, the results of the annual meetings must be duly complied with and thus, changing the way motor products are utilized by the consumers and processed by the manufacturers.
+. Industry -nalysis and Recommendations 1. -nalysis of mar"et structure, su&&ly>demand conditions, industry life cycle including im&lications on the industry Mar"et Structure
The industry manifests a type of imperfect competition, which is monopolistic competition. In the Philippine motorcycle industry, there is a large number of buyers and sellers such as awasa!i, Honda and Suzu!i as international brands and #laze $otortech and Haus $otors as local brands. In spite of this, there is still an e'ertion of monopolistic power as presented in the estimated mar!et shares percentage. %urrently, apanese firms such as Honda, awasa!i and "amaha dominate the mar!et industry. The 0ilipinos perceived value for these brands attributes to their dominance. This is because these brands are already established pioneers in producing innovative and efficient motorcycles. Thus, many 0ilipino consumers already trust these brands. 0or e'ample,
%0 C8 @hats it all ao-tD. K;( Cli#ate Action, NonlineO Aailale at: http://666.cop21paris.or/ao-t/cop21/ NAccessed 15 April 201'O @4 Ibid., p.:@
44
awasa!i is a welltrusted brand, given that it has already been in the country for 3F years. +lso, Honda is well !nown for innovative technologies in their products, while "amaha is well !nown for their performance bi!es catered to bi!e enthusiasts. It can be seen that these firms differentiate not only their product but also their brands by creating a certain identity in the customers perception. #y doing this, they gain value and competitive advantage against their competitors. *n the other hand, local brands such as #laze $otortech can dominate parts of the Philippine mar!et by targeting specific areas and consumers. #laze $otortech prides itself in producing motorcycles at a much lower cost compared to other motorcycles sold locally. #y shifting their focus from $etro $anila to the provinces, and catering to the needs of the low income consumers, they gain some control in the sales of motorcycles in some areas. #y offering their products at relatively low prices, they are able to differentiate their products and establish their brand as the 0ilipino seller of low cost motorcycles. They are also able to partially control the prices of motorcycles in the mar!et. #y offering their products at a low cost, they are forcing other firms to follow and offer their products at a low price. The imperfect competition implies that firms in the industry will compete aspects such as technology in order to differentiate their products. #osh $otorcycles, for e'ample, aims to increase the motorcycle riders e'perience by developing (lectronic %omputer &nit >(%&? in their motorcycles. This type of technology can greatly appeal to the Philippine mar!et given the rampant amount of motorcycle theft in the country. +lso, Mero $otorcycles, an upcoming company, aims to revolutionize the motorcycle industry by focusing on the production of the environment friendly electric motorcycles.
(roduct 5ifferentiation
The motorcycle manufacturing industry may loo! unattractive given the high capital and cost re/uirements and the already large number of firms competing for mar!et share. However, loo!ing at possible high profit margins along with some growth opportunities, it can be said that the there is potential for success in investing in the industry. The !ey to success in this industry is product differentiation. 0irms in the motorcycle manufacturing industry must be able to differentiate their products, to ma!e their product stand out. They can do this through different methods such as establishing a brand that has good relations with the consumer or providing low cost products or innovating technologies. If the firm is able to differentiate their products to a certain e'tent, it can achieve a mini monopoly.J They can dictate the prices in which they can pressure other firms to follow. #y ma!ing their
45
product offerings different from others, a company can gain competitive advantage and some significant control over the mar!et.
Su&&ly
Though the supply of motorcycle parts is important in the motorcycle manufacturing industry, the suppliers of motorcycle parts do not have very high bargaining power since they are not highly differentiated from each other e'cept when it comes to some features and /uality. There is a high number of companies, foreign and local, that supply raw materials to firms in the motorcycle industry.
Eith the high number of parts and components
manufacturer, the price becomes the arena of competition for the suppliers. This can turn out to be advantageous to motorcycle manufacturers and assemblers as they can obtain motorcycle parts and components at low costs, thus decreasing the cost of production, which in turn increases profit. In order for a firm to ma'imize profits in the motorcycle manufacturing industry, it must ta!e advantage of economies of scale. It must be able to obtain raw materials such as parts and components from a supplier that offers volume discounts. It would also be beneficial if the firm has integrated its operations by buying from affiliated suppliers and by having access to distribution channels. In the case of #laze $otortech, it has a technical licensing agreement with %hon/uing oayeng $otorcycle %o. Ctd, its main supplier for its parts and components. The final products are distributed through 6F outlet stores nationwide.
5emand
%urrently, the Philippine mar!et for motorcycle manufacturing and assembly is not yet saturated. +ccording to +ger iocho, the Philippiness position in motorcycle ratio is 6314. This presents an opportunity for manufacturers since there is still room to increase their mar!et share and translate the opportunity to demand. In 6F43, there is still great demand for motorcycles. +ccording to the +S(+D +utomotive 0ederation report, the demand for motorcycles rose to 66.6 percent from the 475,B:@ units in 6F4: to 6F6,35B units in 6F43. 0irms such as the local manufacturer #laze hopes to improve this ratio and other +sian suppliers have been eyeing them to produce economies of scale.
Industry 4ife Cycle
4'
The motorcycle industry is in its early maturity stage. =enerally, the sales of motorcycle are still increasing, but the growth of sales is decreasing for some products. )ue to the large number of firms vying for sales and competing for mar!et share, the main aspect of competition in the industry becomes the price. 0irms competing for price are forced to cut the prices of their product offerings, thus lowering their profit margins. +lso, because there is relatively average competition in the mar!et, there is a need for advertising;endorsements, sales promotions which leads to higher cost of operations. In order to attract more consumers, firms also have to come up with promos such as sales discounts and freebies, which also add up to the costs. 0irms have been able to maintain the motorcycle manufacturing industry in the maturity stage and prevent its decline by constantly coming up with new ideas in order to add value to their products. They do this by improving their products and ma!ing it more appealable to the consumers. $otorcycle manufacturers constantly redesign their models in order to !eep up with the ongoing tastes and preferences of the consumers. )epending on the ongoing trends, they ma!e revisions in their products such as model changes;updates >face lift?. 0irms retool their products by adding e'tra features such as technological advancements. +n e'ample is the +ntiCoc! #ra!ing System>+#S? in order to ma!e motorcycles safer. 0irms can also repurpose and innovate their products by offering new and uni/ue product offerings. #efore, a buyer first buys a motorcycle and then he brings that motorcycle to a third party in order to convert into a tricycle. Dow, motorcycle manufacturers such as the local manufacturer 2&SI are offering readymade tricycles. This can appeal to consumers because of the less hassle and lower cost. +n e'ample of product innovation is the product offering of Auadro, a Swiss company. They are offering : or 3 wheel motorcycles. +ccording to their website, their main goal is developing compact three and fourwheel leaning vehicles in order to offer a uni/ue and superior level of safety, comfort and fun. +nother product innovation is the plan of Mero $otorcycles to widely produce environment friendly electric motorcycles. In order for firms to maintain their mar!et share, they must be able to constantly !eep up with the ongoing trends. However, there are associated costs in doing this. 0irms must constantly be on the loo! for the ongoing preferences of the consumers and match their product offerings on those preferences in order to ma'imize sales and retain their mar!et share. +lso, firms must ta!e into account the prices in which they offer their products. If it were too high, consumers would tend to patronize their competitors more, or if it were too low, their profit margins would suffer. In order to ma'imize profits in the motorcycle
4!
manufacturing industry, a firm must be able to determine the optimal prices in which they can offer their products and they must continuously innovate their products to satisfy the needs and demands of the consumers and to stand out among their many competitors.
2. -nalysis of industry structure using (orter3s 7 forces and im&lications on industryA Threat of Substitutes
Substitutes, when in the conte't of the $otor $anufacturing Industry, can ta!e up various forms specifically in the line of transportation such as low priced brands of cars and even transportation via commute. #laze however, can live with the situation considering the type of consumers that the said firm wants to target. In a rural area, most people consider buying products that are Wcheap but more importantly, a product that can live up to what the consumers pay for it. +lso, modes of transportation li!e trains and buses are seldom found in rural areas, meaning that they have to wait a long time to find a way of transportation. #laze, on the other and, introduces products that are well worth the price that can benefit its consumers in terms of a decent and safe mode of transportation.
s e s a h c r u P d n a s t s o % .
#uyer power
s l a i r e t a $ f o e m u l o < .
. Price Sensitivity of
r e w o P r e i l p p u S Threat of Dew (ntrants . =overnment Policies . #rand Identity . 0irm &ni/ueness
8
%ompetitive 2ivalry
%ustomers . #uyer Incentives
. %ompetitive +dvantage . #rand Identity e t u t i t s b u S r e v o s e g a t n a v d + . . Industry %oncentration . )iversity of 2ival 0irms
e t u t i t s b u S o t n o i t a n i l c n I . s e t u t i t s b u S f o f f o . e d a r T . s e i r t s u d n i r e h t o n i s t u c d o r p e v i t a n r e t l a f o n o i t a r t n e c n o % . s e t u t i t s b u S f o t a e r h T
Still, with the advancement of technology in the transportation sector, #laze must figure out how to surpass the substitutes in other industries by considering the tradeoffs in buying each product. #laze must emphasize the advantages in buying its products and proving that the consumers could never go wrong in giving their products a chance. 0urthermore, the $otor $anufacturing firms must e'plain why buying their product can bring much more benefit than going with alternatives. +n e'ample would be e'plaining that not only do motorcycles re/uire less gas, but are also more efficient and can transport even in
4$
the narrowest areas. + high threat of Substitute will occur once other alternative products from different industries emerge and attract consumers. To decrease this threat, #laze must present its advantages of trade off for the consumers to eventually refer to them rather than the said substitutes.
!uyer (o%er
+s a manufacturing firm, it is the responsibility of #laze to !eep its long time and new customers satisfied not only with their products but also with the way that the firm handles its customers. 0or #laze $otortechs circumstance, since its customers are mostly well within the rural areas, the focus of the firm should be within the location itself. In rural areas, the buying power is considered wea! since there is a large number of consumers but only few manufacturing firms are trying to sell their products. Donetheless, a firm could not continue to do its business without the loyalty of its customers and #laze must not ta!e this privilege for granted. $any factors affect how the buyer power affects the industry. 0irstly, the firm must show that the consumers are going to have hard time in finding an alternative since the product that is being sold to them is top of the line at a decent price range. Second is the brand loyalty. 0irms must consider first in trying to publicize its brand to every class in the society. *nce a firm is being mentioned, then it could focus on the advantages of its products. Third are the incentives that buyers are going to benefit from buying the product. Since most buyers are sensitive about the price range, firms such as #laze must point out why a product priced is as it is and the worth of the product once used. +lso, the firm must cite what the incentives are once a buyer considers their product in terms of purchasing it. + discount or even freebies are e'amples of incentives for buyers. Eith this, an implication to #laze would be the firm will grow to be a price ma!er if #laze will continue to develop its brand.
Su&&lier (o%er
There is a strong supplier power when there are few companies in the industry selling more of the same products to the buyer industry. In this case, the supplier power in the motor manufacturing industry is strong since there are only a handful of firms that are selling motorcycles in the country. In this case, the suppliers have control of the prices of the materials for production considering its vitality. +lso, a supplier has more leverage when
4%
there are no substitutes or alternatives that can compete with the products that the buyer firms are selling. + supplier also has more power when its products are important for the production of the buyer firm in the industry. 0or #laze, the supplier of the vital materials such as engines has more leverage since there are only few alternatives in the engine selling business. Ehen #laze does not perform /uite as well as others, suppliers may opt to find other companies since the investment may go down and #laze loses its importance as the suppliers customer. + strong Supplier Power occurs when the business, in an urgency to get the right materials, turn to the supplier with the utmost regard and thus, endangering the profit ma!ing and even the efficiency of the firm. + wea! Supplier power will occur when, the firm li!e #laze finds alternatives in terms of supplying its raw materials.
Threat of 6e% Entrants
0or the motor manufacturing industry, the threat of a firm newly competing is highly unli!ely since firms of the motor manufacturing industry have made a name for themselves and it too! years for them to finally boost sales and be well !nown throughout the country. 0or #laze, since rural areas are its target, a new player may be a threat but once they get to introduce themselves to most parts of the country, a threat li!e this would be highly ineffective of their sales power. *ther factors that affect new entrants are government policies, barriers, cost of switching and brand name. +ll in all, if #laze wants to lessen the threat of a new competitor, it must first establish its name in the mar!et as a bona fide motorcycle manufacturer. Eith this, players would be discouraged in engaging especially in rural areas since the business of #laze can be considered a household name in that specific area. Having that said, #laze should be focusing now on building up its name.
Com&etitive Rivalry
#laze $otortech is one of the various $otor $anufacturing firms that are located in the country. &nfortunately, #laze $otortech is not considered to be a household name yet particularly among urban areas since from the start, the main focus of #laze is to e'pand its production among rural areas. Hence, popular brands of motorcycles are growing further in every urban area as well as the rural ones in the country. In terms of competitive rivalry, #laze could not compare with other firms in urban locations.
50
Ehen it comes to industry concentration, each firm has a distinct mar!et share in the industry. #laze, in our previous pass, is located within the pie graph as Wother brands, which ma!es up just 65G of the industry and assumes that it has little share in the industry. It means that in terms of product sales and growth, #laze is lagging behind other famous brands such as Suzu!i, "amaha and awasa!i. Since the target of #laze depends only on the location, the firm has a hard time on mar!eting its products in every part of the country. In )iversity of 0irms, each firm in the $otor $anufacturing industry has its own mar!eting strategy to lure consumers into buying its product, whether it is the green initiative, having discount rates, or the gas efficiency factor. Suffice to say, #laze can present that its factor of mar!eting is that its price range can go well beyond what the other firms are offering. Since its target is the rural area, it is just natural for #laze to mar!et its products below its e'pected price range. This is how product sales go for #laze with the price range as a vital factor for sales. + higher concentration and diversity of firms will constitute to a higher %ompetitive 2ivalry but once #laze figures out its advantage that ma!es it stand out, eventually, the pressure from rivals will lessen.
). S@$T analysis for the firm /ma9or strengths, %ea"nesses, o&&ortunities, threats0 and im&licationsA •
Strengths
• • • • •
@ea"nesses
• • • • •
$&&ortunities •
• •
Has own manufacturing facility 0ast service and repairs and easily accessible parts #udding name in the province for low priced motorcycles %an be another source of income by attaching a side car 2elationship selling )ecreasing sales %annot match mar!eting of competitors Eea! brand loyalty. Cow trust levels. *nly have one supplier 2elatively wea! firm infrastructure %an manufacture and supply electric parts, body frames and plastic parts to other manufacturers. Increasing demand. Deed to saturate the mar!et considering the motorcycle ratio Cow gas prices =overnments call to increase production in light of the +S(+D Integration to remain competitive
51
•
•
Threats • •
• •
Patriotism
International brands shifting their products to accommodate low income households. Tighter competition. Dew and cheaper technology from other manufacturers *ther domestic manufacturer may join with the same goal of producing a pure 0ilipino motorcycle %hinaPhilippine dispute affecting business Intellectual Property related incidents
Strengths
#laze $otortechs greatest strength would be their own P446 $illion manufacturing facility in #ulacan. This allows them to have more control in their production, they can easily reorganize the facility to focus more on manufacturing parts if they want to and the location is ideal considering that it is in the province and that their stores are around that province. Their office is also relatively accessible from the facility with the distance of $anila and #ulacan. #laze would also benefit from the new government project, $2TB, which is the new railroad system that would connect $anila and #ulacan. Their competitive advantage in their value chain is also a strength of the firm. Eith local manufacturing, locally stored parts and locally based engineers and mechanics, the firm boasts of fast, easy and hasslefree service. This would allow the customers to save time in repairs. Through the years, #laze has also been building its name to be associated with low income motorcycles. In rural, agricultural areas of the Philippines, the name #laze has created a traction for the farmers or other people there to consider #laze in buying motorcycles. Since #laze motorcycles can be fitted with aftermar!et side cars, this can also be another source of income for the consumers. Ta!ing into account the target mar!et of #laze as well as their size and location, they are able to e'ecute relationship selling wherein they get to !now their customers well when transacting business. @ea"nesses
The firm has been e'periencing decreasing sales starting 6F4F. Ehen they invested in their manufacturing facility, their sales grew e'ponentially from 6FFB to 6FF@ but starting 6FF@, sales went went down gradually and significantly. The company also stated that since their target consumers are the ones in the low income brac!et, they wouldnt need to put money on mar!eting. #ut as international brands shift their product lines to more
52
economically driven prices with the same standard for mar!eting, #laze seems to be having a hard time catching up with mar!eting. +lso with the coming of international brands, comparing #lazes products with other international brands would show the trust gap between the firms. International brands are already established with their products and it is already tested whereas #laze is still loo!ing for ways to increase their mar!et share and ma!e their brand and products !nown. +s of now, the value of trying out a new product is less than the value of a more safe and testedJ brand. #ut this of course would be subject to the economical means of the consumers. +s for the business itself, it only has one supplier. +ny disputes or unforeseeable events that may happen that would concern the firm and the supplier may render #laze unable to continue business. %onsidering their current size as a business today, they are still relatively small as compared to their international competitors but a growing business must be supported with a solid firm infrastructure which the firm lac!s. $&&ortunities
%urrently, the sales of #laze are coming only from their sale of motorcycles and parts. Since theyre investing in developing their own electric parts, body frames and plastic parts, they can supply other manufacturers with these. #lazes
The greatest threat #laze is currently facing is that the international brands shifting their product lines to a more economically driven price range. This would entail tighter competition in the industry. %oming with this, these international companies may have the means to invest more in improving their products technologies that may give them the leverage in features or lower costs. The branding of the 0ilipino $otorcycle may also be
53
compromised when a domestic corporation enters the industry with the same purpose as that of #laze. The continuing strained relations of Philippines and %hina may also affect the business considering that #lazes supplier is based in %hina. Then, there are of course some Intellectual Property related incidents li!e copycat products or fa!e parts of the same brand with cheaper prices circulating in the mar!et. (ro&osed strategies
2econciling the e'ternal forces and the internal characteristics of the business, the group proposes certain strategies that the company may ta!e or avoid1
Strengths>$&&ortunities Strategies
Since the company already has its own manufacturing facility, this can be used also to produce a surplus of parts that can be sold to other manufacturers. This would increase the companys revenues. The company may also further strengthen the mar!eting of the 0irst 0ilipino $otorcycleJ as to appeal to the consumers patriotism given that the company enforces relationship selling. To cope up with the increasing demand, the company can invest
54
more into fi'ed assets that would help them produce more li!e machinery and. The company should also ta!e advantage of the governments incentives by getting raw materials fre/uently since there will be no import ta' on it. Eith low gas prices, the company can highlight the opportunity cost of commuting and the tradeoffs of getting their own motorcycle. Strengths>Threats Strategies
In light of international brand entering the mar!et, #laze should highlight its competitive advantage which is their fast and accessible service as compared to their competitors. Eith this, the company should also allocate for their research and development so as to not be left behind in terms of technology. #laze, as of the moment, should also ta!e advantage of the fact that they are the only 0ilipino manufacturer of motorcycles. This would invo!e an initial reaction of increased sales if they remain the only one. @ea"nesses>$&&ortunities Strategies
Since there is an increasing demand but the company e'periences decreasing sales, it is a sign for #laze to improve its mar!eting strategies, reach out to more locations and also to produce more units. Ehen transacting business, #lazes sales personnel should always highlight the service they will be getting if they buy a #laze motorcycle. #laze should also loo! for another supplier that may complement its product lines as for the moment and can serve as a bac!up for the primary supplier. Eith the goal to increase production, firm infrastructure should also be improved by admitting more specialists and more support departments to aid the business. @ea"nesses>Threats Strategies
Since the international companies bring with them more specialized technologies, it would be best to avoid a direct applestoapplesJ comparison with their products. Try to mar!et a different aspect of the product li!e the low cost, or patriotism instead. =etting a legal department would also be practical to ensure that the firm has the capabilities of dealing with any IP related issues. 0urthermore, the need to loo! for another supplier is strengthened with the Philippine%hina dispute going on.
. ;ey or critical success factors /%hat it %ould ta"e for the firm to survive and flourish in this business0A
#laze $otortechs contribution to the Philippine community, which is ma!ing the first 0ilipino motorcycle, is a big factor in their success. It shows that there is a chance for
55
0ilipinos to create their own brand of motorcycle which is worthy of being produced at such a fast rate. 2einforcing this factor, #laze might be well of to find a niche in the industry. To further support that, #laze must also loo! at other !ey factors1 X
('pand their mar!et
X
(stablish credibility
X
#e able to garner public attention
X
Strengthen brand loyalty The firm is the very first company that produced and sold locally made motorcycles.
This is a great plus for them because it highlights that 0ilipinos can buy their own products and even promote them to a point. #ecause of this, sales of #laze $otortech Inc. can still go up /uic!ly despite its decline due to other factors. ('panding their mar!et also entails them to not only maintain their relevance with the lowerincome households but also to the lower middle and uppermiddle class income households in order to generate at least some amount of interest to allow their sales to increase. $ar!et e'pansion transitions well onto the ne't point because the brand is not that well !nown outside of their area of operations such as the provinces. (stablishing #lazes credibility is also an important factor. $ost motorcycles found in the Philippines are from the li!es of Honda and awasa!i whereas the #laze $otortech brand is still trying to ma!e a name for itself. In the provinces, they are beginning to shape up because of the direct comparison of prices by the consumers whose top consideration in buying is the cost. 0or #laze to reinforce this, they must highlight #lazes service as some sort of e'tra feature. (stablishing credibility would ta!e time but it will prove to be very beneficial once it is established. In order for the firm to succeed in a field wherein there is a competition, the firm must be able to gather a following that would then strengthen and establish their image while also enhancing brand loyalty. + company who has solid rapport with its members;followers gives a positive outloo! about the company that would spread throughout the mar!et. In this case, strengthening brand loyalty and credibility will allow #laze $otortech to remain relevant and innovative in the industry. Improving mar!eting strategies while not compromising the cost might also be beneficial in enhancing brand loyalty. 7. Conclusion %ith Recommendations for the firm as %ell as for the industry
5'
The #laze $otortech manufactures and sells motorcycles for the people who wor! in the agricultural sector and those living in rural areas. It is the first 0ilipino motorcycle firm that manufactures its own products within its factory in the Philippines. This section will conclude the discussion on the industry that #laze $otortech falls under and the discussion of the firm itself. To begin with, the mar!et structure of the motorcycle industry in the Philippines is a monopolistic competition. Eith this type of mar!et structure, there are many firms competing for mar!et share. Thus, the competition in this industry is around medium level. However, the fact that international brands wield monopolistic powers should be recognized. In order for a firm to retain its mar!et share and stay relevant in the industry, it must be able to differentiate its products either by offering it at lower prices or by offering new and innovative products. In addition, the industrys supplydemand conditions are relatively high, considering the abundant amount of suppliers and the general increase in demand as stated by the +S(+D +utomotive 0ederation. In addition, the industry is still at its early maturity stage which indicates a general increase in sales for some firms.
+ll of these generally implies a
productive industry with opportunities that can be e'ploited in the industrys growing mar!et. +s for Porters five forces, the threat of new entrants is highly unli!ely because of the elaborate government policies, pree'isting brand identity and firm uni/ueness companies, such as Honda, awasa!i, and "amaha already possess. +lso, the threat of substitutes to motorcycle products is medium given how motorcycles are the preferred vehicles of 0ilipinos. In particular, with #laze $otortechs circumstance, this threat would lean towards low as the substitute products for vehicular use in rural areas and by wor!ers from the agricultural industry, such as jeepneys, cost more and is less practical for the areas geographical condition. De't is the buyer power, which is relatively low because of the high amount of consumers for the industry. This attributes to the ability of the industry to raise the prices of motorcycles. Ci!ewise, there is a low amount of suppliers in the industry which implies a high cost for materials needed in manufacturing motorcycles. %onsidering all given factors, it is deemed that the competitive rivalry within the industry is around the medium level. In light of this and the industrys high concentration and diversity of firms, it is recommended that firms in the industry continue to invest more in research and development which would give them an edge over their competitors by catering to what consumers are loo!ing for, such as manufacturing motorcycles intended for the use of the wor!ing age population.
5!
De't, the strength of #laze $otortech is found in its own manufacturing facility which ma!es services convenient and promotes relationship selling. Secondly, its wea!ness is shown by its decreasing sales, inability to match competitors, wea! brand loyalty and firm infrastructure and the fact that it only has one supplier. Thirdly, its opportunities lie in its ability to manufacture and supply parts to other manufacturers, the increase in demand of its target mar!et, low gas prices, the governments encouragement to improve competitiveness and its ability to mar!et its products as the 0irst 0ilipino $otorcycle.J Castly, the threats given are the tighter competition imposed by international brands, better technology from competitors, ability of other firms to manufacture their own 0ilipino motorcycle,J the %hina Philippine dispute affecting business and the IP related incidents. *f course, to address these problems, strategies such as investing more in 2esearch and )evelopment to match the technological advancement of competitors, loo!ing for more suppliers other than the present one and generally appealing more to their target mar!et through reducing costs and prices while improving technological /uality is recommended in order for #laze $otortech to remain in the industry and e'perience growing profit. 0urthermore, #laze $otortech has to focus on e'panding its mar!et, establishing credibility, garnering public attention and strengthening brand loyalty.
These would be
necessary if #laze $otortechintends to increase the interest in their products. In summary, in addition to ta!ing into account the SE*T of #laze $otortech and the !ey factors that would affect it, it must also consider the industrys current situation and apply the mentioned strategies, along with its adjustment with the different e'ternal trends in order to maintain a competitive #laze $otortech %o.
!ibliogra&hy
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