2.2 The Micro-Environment
Organizations' ability to do business is affected by the micro-environment directly. The microenvironment consists of competitors, customers, suppliers, intermediaries and other stakeholders (Palmer, 2000).
2.2.1 Competitors
The major players in the motorcycle industry are Honda, Yamaha Motor, Chongqing Loncin Industy and Jiangmen Dachangjiang, generating about 56 per cent of the market share (Datamonitor, 2010). Among the industry leaders, Honda dominates the market, holding 24.7 per cent of market share, followed by Yamaha, Chongqing and Jiangmen (see Figure 2) (ibid). As evident in Figure 2, the motorcycle industry is dominated by muti-national companies.
:Figure 2: Global motorcycle market share: % share, by volume, 2009
Source: Datamonitor 2010
Major Competitors’ analysis:
Honda Motor:
Honda Motor(Honda) is the leading manufacturer of automobiles and motorcycles in the world (Datamonitor, 2010). In the motorcycle business, it created unit sales of 10,114,000 units motorcycles in the year 2009. In the short term plan, Honda officials in charge of product development stated in 2011 that they will launch a new model of electric scooter in the Japanese market targeting delivery service firms or other firms who were concerned about vehicle noise. (ProQuest, 2010a).
Yamaha Motor Co., Ltd:
According to Datamonitor 2011, Yamaha Motor(Yamaha) is a Japan-based multinational company. In Yamaha’s whole business, the profit margin remained steady growth at a rate of approximately 4 per cent each year from 2005 to 2007 but only witnessed a measly increase of 0.1 per cent in 2008 and suffered a significant decrease to -18.7 per cent in 2009(ibid). For Yamaha in the short run, the President of Yamaha Motors Hiroyuki Yanagi indicated that Yamaha will launch three inexpensive motorcycle models in the Chinese and Indian market by 2012. Furthermore, in 2012, Yamaha intends to reach sales volume of one million motorcycles in China and 500,000 units in India (ProQuest, 2010b).
2.2.2 Customers
The global market is divided into Americas, European and Asia-Pacific segments in this research. The study by Datamonitor(2010) shows that the Asia-Pacific market has occupied the highest proportion of market share at a total of 45.1 per cent, whereas the Americas and European markets account for 34.6 per cent and 20.30 per cent respectively (see figure 3)(ibid). It can be seen that Asia-Pacific dominates almost half of the market.
Figure 3: Global motorcycles market segmentation II: % share, by volume, 2009
Source: Datamonitor, 2010
According to the Euromonitor International (2011b), it is apparent that the top six countries in terms of motorcycle ownership are Asian countries. Until 2010 Taiwan has ranked No. one among the world, in which 83 per cent of the total population possess motorcycles, followed by Vietnam, Thailand, who respectively have 74.1 per cent and 71.2 percent of their population owning bicycles. In addition, the possession of motorcycles reveals the upward trends among these countries with regards to motorcycle ownership from 2005 to 2010 (see table 1)(ibid).
Table 1: Possession of Motorcycle Source: Euromonitor International 2011
2.2.3 Suppliers:
The supplier is a foundational element for any business; however, without the key supplier or raw materials, finished products may result in being made by raw materials of lower quality or expensive substitutions. Key raw material suppliers for the motorcycle industry are steel sheets and aluminum, casting and steel sheets and also some finished components such as seats, batteries, and tires (Datamonitor, 2010). The above mentioned raw materials are similar to automobile raw materials in that they can be classified into two big categories: Tires & rubber and auto parts & equipments. These materials are much cheaper to source from specialist suppliers than to manufacture in house (ibid). In the past years the costs of raw material has been growing, especially in steel, aluminum and copper, meanwhile, there is a increase in plastics based products because of soaring cost of gasoline (Datamonitor, 2011b). This impacts the industry players’ profits margins.
2.2.4 Intermediaries
Intermediaries are usually wholesalers or retailers, who not only sell the products but also provide valuable service to customers on time. They play important roles between producers and consumers to match their the needs. In the motorcycle industry, multinational companies’ products are usually sold by means of franchised dealerships or retailers.
2.3 Macro-environment
External factors influence an organization but they can not be controlled by an organization. They consist of exogenous factors such as the political environment, economic environment, social/cultural environment and technological environment (Palmer,2000).
2.3.1 Political Environment
The political environment is made up of legislation regulating business and increased emphasis on ethics and socially responsible actions (Kotler and Armstrong, 2010). Almost every country has set emission standards for the motorcycle, motor scooter, and mopeds. For example, ACEM(2010) stated that the European Commission set the 4th Road Safety Action Programme, putting focus on vulnerable road users. As a result, European motorcycle manufacturers have adopted more stringent rules in favour of safety-oriented communication in order to approach ethical and socially responsible legislation.
2.3.2 Economic Environment
The changing of economic environment affects customer purchasing power and spending patterns (Kotler and Armstrong, 2010). Consumer’s spending confidence and saving confidence are connected to the economic environment.
In 2008, the global economy was under economic recession and most industries were affected by the volatile downturn in market activity. The report reveals that UK consumers’ spending confidence and saving confidence appear to be negative presumably due to consumer concerns about the strength of economic recovery, spending cuts and public sector job losses (see Figure 4) (Mintel, 2011).
Figure 4: Spending and saving confidence, March 2001-June 2010
* 3-month moving average
Source: GfK NOP/European Commission/JGFR
Furthermore, compared to 2010, there has been a fall in global GDP growth as well as higher unemployment rate (see figure 5) (IMF, 2011). These two economic trends also influence consumer’s purchasing power negatively, effecting reducing it.
Figure 5: GDP Growth & Unemployment Rate (IMF, 2011)
Source: IMF staff estimates
2.3.3 Social & Cultural Environment
In the past few years, attitude toward lifestyle is changing. Riding motorcycles have been considered leisure activity both in western and eastern countries in recent years. However, there are the growing concerns about the eco-friendly and environment reservation issue in public. This impacts the design of motorcycle.
2.3.4 Technological Environment
Technology is fundamental factor in influencing business, which includes faster
pace of technological change, high R&D budgets, and increased regulation (Kotler and Armstrong, 2010). In the motorcycle industry, stricter emission standards on a global scale calls for the redesign of the motorcycle. This contributes to higher costs of manufacturing and R&D spending. The EU has one of the severest emissions regulations; currently it is not allowed to sell vehicles that do not meet emission standards (Datamonitor, 2010).
Reference:
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Datamonitor (2010) Global Motorcycles. [online]. London: Datamonitor. Available from: [Accessed 14 Oct 2011].
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Euromonitor International (2011a) Consumer Expenditure on Purchase of Cars, Motorcycles and Other Vehicles: National statistical offices/OECD/Eurostat. Global Market Information Database (GMID) [online]. Available from: [Accesed 20 Oct 2011].
Euromonitor International (2011b) Possession of Motorcycle. Global Market Information Database (GMID) [online]. Available from: [Accesed 20 Oct 2011].
IMF (2010) World Economic Outlook (WEO). [online]. Available from [Accesed 20 Oct 2011].
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Americas consists of Canada, Mexico, the United States, Argentina, Brazil, Chile, Colombia, and Venezuela.
European consists of the United Kingdom, Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, the Czech Republic, Hungary, Poland, Romania, Russia, and Ukraine.
Asia-Pacific consists of Australia, China, India, Japan, Singapore, South Korea, and Taiwan.
