Mechanics

THE HONDA-YAMAHA WAR

THE HONDA-YAMAHA WAR started in 1981 when Yamaha announced the opening

of a new motorcycle factory. That factory made Yamaha the world’s largest motorcycle

manufacturer, a prestigious position previously held by Honda. Honda had been

concentrating on its automobile business, but now, faced with Yamaha’s challenge to its

motorcycle business, it counterattacked.

In the war that followed, Honda provided customers with increasingly higher levels of its

manufacturing outputs. It raised the levels of its market qualifying outputs, cost and

delivery, by cutting prices and flooding distribution channels. It raised the levels of its

order winning outputs, innovativeness and performance, by introducing new products and

raising the technological sophistication of current products. At the start of the war, Honda

and Yamaha each had 60 models of motorcycles. Over the next 18 months, Honda

introduced or replaced 113 models, while Yamaha could manage only 37 changes. Honda

also introduced four-valve engines, composite materials, direct drive, and other features.

Since Yamaha could not provide these manufacturing outputs at the new market

qualifying levels, let alone at order winning levels, demand for Yamaha products

disappeared. At one point, Yamaha had more than 12 months of inventory in its dealer

showrooms.

Finally, Yamaha surrendered. In a public statement, Yamaha’s president announced, “We

want to end the Honda Yamaha war. It is our fault. Of course, there will be competition

in the future, but it will be based on a mutual recognition of our competitive positions.”

Analysis

Honda raised the level of its market qualifying outputs, cost and delivery, and its order

winning outputs, performance and innovativeness, so much that it almost forced its

competitor, Yamaha, out of the industry.

Honda’s production systems were more suitable for providing the order winning outputs

than Yamaha’s. Honda used operator-paced line flow and JIT...