Yokohama Rubber SWOT & PESTLE Analysis

ID : 52662153| Sep 2020| 15 pages

COMPANY PROFILE -Yokohama Rubber

Business Sector :Tires, Manufacturing

Operating Geography :Japan, Asia, Global

About Yokohama Rubber :

The Yokohama Rubber Company, Limited is a leading tire manufacturer producing motor vehicles tires. It has also diversified its business into high pressure hoses, sealants and adhesives, other industrial products, aircraft fixtures and components and golf equipment. It was founded in 1917 with a joint venture between Yokohama Cable Manufacturing and B.F Goodrich and is headquartered in Tokyo, Japan. In these more than 100 years of establishment, Yokohama has overcome many challenges and ensure its position as an industry leader. It employs around 27428 people at the start of 2020. The basic philosophy guiding Yokohama is "To enrich people’s lives and contribute to their greater happiness and well-being by devoting our wholehearted energies and advanced technology to the creation of beneficial products."
Yokohama strongly supports the passion for sports and has been supporting sports marketing. It has a sponsorship agreement with Chelsea Football Club and its brand logo is distinctly displayed on the Chelsea players’ uniforms. It also supports race activities of Team UKYO targeted at promoting sports and contributing to children’s development. It also has been long active in motor sports and participated in various races in Japan and overseas like Formula races, GT touring car races, rally races etc. Yokohama has planned a medium-term management plan called Grand design 2020 or GD 2020. It presents a framework to address any opportunity or threat in its way by redefining Yokohama strengths and deploying a growth strategy based on original approaches.
Yokohama’s GEOLANDAR X-CV and GEOLANDAR X-AT tires received the Chicago Athenaeum’s Good Design Awards in December 2019. Yokohama also received 3 prestigious awards at 2019 SEMA (Specialty Equipment Market Association) show.
Yokohama Rubber’s mission statement reads as “YRC aims to be a company which is trusted and valued by customers around the world.”

Yokohama Rubber Revenue :

Yen 650.5 billion– FY ending 31 December 2019 (y-o-y growth negligible)
Yen 650.2 billion– FY ending 31 December 2018 (y-o-y growth 0.6%)
Yen 646.3 billion– FY ending 31 December 2017

Competitive Analysis of Yokohama Rubber

SWOT

PESTLE

The SWOT analysis of Yokohama is presented below:

Strengths	Weaknesses
1. Strong and widely recognized technical excellence 2. World’s top motor sports events’ supporter 3. High performance in marine products, hydraulic hoses and sealing materials 4. Highly specialized commercial tires 5. Efficient production lines producing wide range of products 6. Extensive global network 7. Combining R&D efforts into one center	1. Manufacturing issue leading to voluntary recall 2. End of principal partnership with Chelsea 3. Higher production and fixed cost leading to lower profit
Opportunities	Threats
1. Increasing vehicle production leading to more demand of tires 2. Concept tires for increasing demand of electric vehicles 3. Regaining UHP tire market share	1. Increasing competition in tire manufacturing industry

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Detailed SWOT Analysis of Yokohama Rubber

Strength

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Weakness

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Opportunity

1. Increasing vehicle production leading to more demand of tires: With the growth of vehicle production, demand for tires is also expected to grow even faster worldwide. The automotive industry is expected to rise owing to the favorable conditions across geographies. All the vehicle production including passenger cars and commercial vehicles are said to increase in terms of production and consumption. The tires market is expected to grow by 4.6% CAGR. One of the segments Radial, has the potential to grow over 4.7%.

2. Concept tires for increasing demand of electric vehicles: The increasing popularity of electric vehicle calls for a rapid rise in electric vehicle production. The global electric vehicle market is expected to rise at a CAGR of 22.6%. The Asia Pacific region is supposed to be the largest contributor. The rising number of eco friendly measures along with the support from different governments is said to be the reasons for this expected rise. Yokohama is all set to tap this market even. It has developed concept tyres in its fuel efficient BluEarth Brand for Maruti Suzuki India Limited’s new concept electric vehicle. This was displayed at Auto Expo 2020 in New Delhi which attracts huge visitors.

3. Regaining UHP tire market share: In 2000s, Yokohama tire enjoyed around 10% share of North American UHP tire market with its Advan brand but had lost its position to its major competitors meanwhile. But now Yokohama has bounced back with a great product offensive in last 12 months. The Advan A052 tire came in 2019 followed by the release of Advan Fleva in March 2019. Next came Advan Sport A/S+ which had improved wet braking, mileage and snow performance. Yokohama with all its right strategy and product offerings plans to grab the UHP market again. Instead of the high competition, Yokohama tries to differentiate through quality products.

Threat

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The PESTLE/PESTEL analysis of Yokohama is presented below:

Political	Economical
1. Impact on trade war on products manufactured in China	1. Impact of increase in interest rate. 2. Impact of fluctuations in foreign currency exchange rates
Social	Technological
1. Connect with users by meeting their demand through hobby tires	1. Revolutionary technology to produce isoprene from biomass. 2. Multiple technological innovations in tire. 3. Implementation of FUJITSU intelligent dashboard for real time visibility
Legal	Environmental
1. Vulnerable to any change in tax laws, duties, quotas, tariffs and other trade restrictions due to global operations	1. Working towards sustainability in natural rubber procurement. 2. Sustainable production in agriculture and forestry through special tires.

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SWOT & PESTLE (combined)
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Detailed Pestle Analysis of Yokohama Rubber

Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Working towards sustainability in natural rubber procurement: Since Yokohama is a leading manufacturer of tires and other rubber products, it is aware of its social responsibility to ensure sustainability in production and consumption of natural rubber. It engages in multiple initiatives to fulfill this responsibility. It takes part in various global projects aimed at establishing standards for sustainable natural rubber. It has a procurement policy for sustainable natural rubber which reflects its stance and addresses the measures to converts that stance into action. It also provides framework for cooperation and sustainability across the supply chain. Yokohama also announced a MoU to cooperate with Rubber Authority of Thailand. This aims to provide economic support for Thai natural rubber farmers and improve traceability to ensure transparency and soundness across the supply chain.

2. Sustainable production in agriculture and forestry through special tires: Yokohama’s Alliance Group has been working towards development of a new special type of tire which would enable forestry vehicles to move with low pressure in the tire thus preventing the soil of the forest form becoming compacted. With this ELIT (Engineered Low Inflation Tire) Technology, Yokohama plans to stop the damage to the forest soil by the vehicles moving inside the forest. There is also the self-cleaning design for keeping dirt off the tire and many forestry industry professionals commented this tire as a real premium tire. Yokohama aims that these tires be used by as many forestry industry professionals as possible. These tires would then help in growth of forestry sector by preventing soil compaction and maintaining fertility of soil.