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COMPANY PROFILE

Yamaha Corporation

REFERENCE CODE: A06204BF-E48B-4196-BC78-251CC730FDF9

PUBLICATION DATE: 19 Feb 2015
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Yamaha Corporation
TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................3
Key Facts...............................................................................................................3
Business Description...........................................................................................4
History...................................................................................................................5
Key Employees.....................................................................................................9
Key Employee Biographies................................................................................10
Major Products and Services............................................................................12
Revenue Analysis...............................................................................................14
SWOT Analysis...................................................................................................16
Top Competitors.................................................................................................21
Company View.....................................................................................................22
Locations and Subsidiaries...............................................................................26

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Yamaha Corporation
Company Overview

COMPANY OVERVIEW
Yamaha Corporation (Yamaha or 'the company') is engaged in the manufacture and sale of musical
instruments, electronic products, network-related products and a range of other products. The
company operates in Asia, the Americas, Europe, the Middle East and Africa, and Oceania. It is
headquartered in Shizuoka, Japan and employed 27,714 people as of March 31, 2014, of whom
7,863 were temporary employees.
The company recorded revenues of JPY410,304 million ($4,103 million) during the financial year
ended March 2014 (FY2014), an increase of 11.8% over FY2013.The operating profit of the company
was JPY25,994 million ($259.9 million) in FY2014, compared to JPY9,215 million ($92.2 million) in
FY2013. The net profit of the company was JPY22,898 million ($229 million) in FY2014, compared
to JPY4,122 million ($41.2 million) in FY2013.

KEY FACTS
Head Office

Yamaha Corporation
10-1 Nakazawa-cho
Naka-Ku
Hamamatsu
Shizuoka 430 8650
JPN

Phone
Fax
Web Address

http://www.yamaha.com

Revenue / turnover 410,304.0

(JPY Mn)
Financial Year End

March

Employees

27,714

Tokyo Ticker

7951

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Yamaha Corporation
Business Description

BUSINESS DESCRIPTION
Yamaha focuses on a number of business areas including musical instruments, audio equipment,
and electronic devices. It also offers golf products, automobile interior wood components, and factory
automation (FA) equipment, and operates recreation facilities. As of March 31, 2014, the company
operated through 77 subsidiaries in Asia, the Americas, Europe, the Middle East and Africa, and
Oceania.
The company operates through four business segments: musical instruments, audio equipment,
electronic devices and others.
The musical instruments segment provides a range of musical instruments, which include pianos,
digital musical instruments, wind instruments, string instruments, percussion instruments, educational
musical instruments, and soundproof rooms. It serves individual customers and professionals through
its music schools and English language schools.
The audio equipment segment offers audio equipment such as audio/video (AV) receivers, speaker
systems, front surround speakers, and desktop audio systems. It also offers professional audio
equipment (PA equipment) like mixers and power amplifiers. In addition to these, the segment also
offers commercial online karaoke equipment, and information and telecommunication equipment
like routers and conferencing systems.
The electronic devices segment offers semiconductors.These products are used in music instruments
and networks such as mobile phones and amusement devices.
The others segment includes golf products business, automobile interior wood components, and FA
equipment operations. It also includes the recreation business of the company.

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Yamaha Corporation
History

HISTORY
Yamaha was established in 1887 by Torakusu Yamaha. He set up the forerunner to the company
in 1897, with the formation of Nippon Gakki Co. (Nippon Gakki or 'the company'). In the same year,
the company recorded its first export order to Southeast Asia.
The company produced its first piano in 1900, and full production began in 1902. Nippon Gakki
produced its first harmonica under the Butterfly brand name in 1914. In 1921, the company established
Yokohama factory. Nippon Gakki started production of hand wound phonographs in 1922.
Nippon Gakki opened acoustics research room in 1930. Corporate diversification began in 1932.
The company diversified its business further with the production of pipe organs and acoustic guitar
in 1942.
The company opened its building in Tokyo Ginza in 1951. The business diversification continued in
1954 with the inauguration of the Yamaha Music School and the production of the first Hi-Fi player.
The company began motorcycle production in the same year, and its success in this field led to the
foundation of Yamaha Motor in 1955.
Yamaha de Mexico, Nippon Gakki's first overseas subsidiary, was formed in 1958. The company
opened its technical laboratories in the following year. This was followed by the opening of Yamaha
International Corporation in the US in 1960. Further product line diversification happened in the
1960s, with the company producing electric organs, wind instruments, archery equipment, skies,
guitars, drums and stereos. The company formed Yamaha Recreation in 1962.
The company established Toba Hotel International in 1964. Nippon Gakki started production of wind
instruments and also extended its music schools abroad with the opening of the first overseas
Yamaha Music School in Los Angeles in 1965. The company launched its electric guitars and drums
in 1966. This was followed by the opening of Yamaha Music Schools in Mexico, Canada, Europe,
Thailand and West Germany. In the same year, Nippon Gakki's most famous musical product, the
CF piano, was launched and Nemunosato, a resort was opened. Two years later, Nippon Gakki
established Taiwan Yamaha Musical Instruments Manufacturing.
The company established Kaohsiung Yamaha and Yamaha Canada Music in 1970. Nippon Gakki
started semiconductor production in 1971. The company launched wind instruments developed in
cooperation with the Vienna Philharmonic Orchestra in 1972. In the same year, Nippon Gakki
established Yamaha Exporting in California. The company established Yamaha Musique France,
Yamaha Musical do Brasil and Yamaha Musical Products, Michigan in 1973. In the following year,
the company started production of NS1000M speaker, synthesizer, and CSY-1 and PM1000 products.
In 1975, Yamaha Svenska in Sweden, Yamaha de Panama and Yamaha Indonesia were established.
The company's subsidiaries Yamaha Music Manufacturing and Yamaha Kyohan were launched in
1979.

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Yamaha Corporation
History

Yamaha Electronics and Yamaha Elektonik Europa were launched in 1981. The company developed
a line of carbon composite golf clubs in 1982. In the same year, the company also introduced a
compact disc player, the CD-1. Nippon Gakki began to manufacture skis and ski boots in 1984. In
the same year, the company also began production of industrial robots.
The company established Yamaha Music Australia, Yamaha Electronics (UK) and Yamaha-Hazen
Electronica Musical S.A in 1986. The company changed its name to Yamaha in 1987. In the same
year, Yamaha opened its Artist Service Center in Paris. In 1988, the company established Yamaha
Electronique France.
In the 1980s, Yamaha launched the silent instrument range. The range comprised traditional
instruments such as violin, piano, brass, drums that can only be heard through headphones. In 1995,
the company launched theater sound system.
Yamaha founded its own record company, Yamaha Music Communications, in 2000. In the same
year, Yamaha also began its mobile phone ringer melody distribution service in Japan and Taiwan.
In 2002, it commenced a 16-tone polyphonic ring melody distribution service with KG
Telecommunications Company, a mobile phone company in Taiwan. Also in 2002, Yamaha closed
Archery Products Business. Yamaha established an investment holding company in China, an
AV/information technology (IT) manufacturing company in Suzhou, China named Yamaha Electronics
(Suzhou) Company, and a holding company in Europe.
Yamaha marketed its Vocaloid singing synthesis technology in 2003. The company also established
a musical instrument manufacturing subsidiary in China and withdrew from the Compact
Disc-Recordable/Rewritable business during the same year.
The company merged two of its subsidiaries, Yamaha Music Nagoya and Yamaha Music Hamamatsu,
into one and named it as Yamaha Music Tokai in 2004. In the same year, Yamaha established a
company in New York, named Yamaha Artist Services, to provide piano and wind instrument artist
services. The company entered into an agreement with Klipsch Audio Technologies for the
development of speakers and home theater systems and sales of Klipsch products in Japan.
The company introduced its synthetic music mobile application format (SMAF) service in China in
2005. In the same year, Yamaha of America ventured into Wi-Fi musical instrument systems, under
which users would be able to download more content from the internet using Wi-Fi. Further in 2005,
Yamaha and Fuji Photo Film entered into an agreement to introduce Labelflash technology, a
technology to burn high quality images directly into a specialized dye layer on the disc. During the
same year, the company consolidated its piano division into its Kakegawa Plant. Further, Yamaha
opened the Design Studio London in the UK for product design. Later in 2005, the company acquired
Steinberg Media Technologies, a German musical software and equipment company based in
Hamburg.
In 2006, Yamaha established Yamaha Commercial Audio Systems in North America to expand and
strengthen its commercial audio business in Canada and the US. During the same year, the company
dissolved Kaohsiung Yamaha, a subsidiary manufacturing guitars in Taiwan; and two of its AV

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Yamaha Corporation
History

equipment sales subsidiaries, Yamaha Electronics, China (YECH) and Yamaha Electronics Trading,
Shanghai (YETS) in China.
In the following year, Yamaha dissolved Music E-Net, a wholly-owned subsidiary located in Tokyo
and engaged principally in sales of musical instruments through internet. During the same year,
Yamaha purchased all the issued shares with voting rights of Fuji Sound Company (Fuji Sound)
held by Aso Corporation. Fuji Sound is engaged in the design, development, manufacturing,
installation, adjustment, and maintenance of PA equipment and facilities in Tokyo.
In 2007, Yamaha sold the commercial real estate of four of its resort and recreation businesses,
including Kiroro Associates, Toba Hotel International, Nemunosato and Haimurubushi to Mitsui
Fudosan.
Yamaha split off its automobile interior wood component business and merged it with Yamaha Fine
Technologies, a consolidated subsidiary engaged in the manufacturing and sale of FA equipment,
metal molds, and components, in 2007. In the same year, Yamaha established a sales subsidiary
for musical instruments and AV equipment in the Russian market. Yamaha merged two domestic
wholly-owned musical instrument sales and marketing subsidiaries, Yamaha Music Osaka and
Yamaha Music Kobe, into a new company in 2007.
In 2008, Yamaha established a sales company, L. Bosendorfer Klavierfabrik GmbH (Bosendorfer),
in Japan for distributing pianos and other products. During the same year, Yamaha consolidated its
six overseas sales subsidiaries with business locations in Europe into Yamaha Music Holding Europe
GmbH (YMHE), Yamaha's holding and managing company in Europe. Also in the same year, Yamaha
acquired Nexo SA, a manufacturer of professional speaker systems. Further in 2008, Yamaha
announced the merger of its two subsidiaries Yamaha Sound Technologies and Fuji Sound, which
are engaged in providing engineering services related to PA equipment.
The company took over all the business operations of its consolidated subsidiary Bosendorfer Japan
and following the transfer of those business operations it dissolved that company, in 2009. During
the same period, Yamaha announced the realignment and strengthening of its seven wholly-owned
Yamaha Music regional companies located in Hokkaido, Tohoku, Chugoku, Shikoku, Kyushu and
the Tokyo metropolitan area, to strengthen its domestic sales capabilities. Further in 2009, three
lawsuits were filed against Yamaha Corporation of America (the company's US subsidiary) and other
musical instrument companies in the US for allegedly raising retail prices of musical instruments
and therefore causing harm to consumers who purchased such musical instruments.
In 2010, Yamaha filed lawsuits against Axell Corporation for patent infringement. The lawsuits were
filed in the Tokyo District Court and alleged that Axell Corporation's sound large scale integrated
circuit (LSI) and multifunctional LSI infringe on five Japanese patents owned by Yamaha for sound
data reproduction and synthesizing technologies.
In 2011, the company announced the mass production and shipments of its new triaxial geomagnetic
sensor integrated circuit for smartphones and tablet personal computers. Later in 2011, Yamaha
merged its subsidiaries Yamaha Music Winds Corporation and Yamaha Music Craft Corporation.

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Yamaha Corporation
History

In 2012, Yamaha merged its US subsidiary Yamaha Electronics Corporation, USA into Yamaha
Corporation of America. In mid-2012, the company acquired additional shares of Jeugia Corporation,
a musical instrument dealer. During the same period, Yamaha entered into a business alliance with
Fuji Television Network to jointly develop new applications for smartphones and tablet terminals that
utilize infosound, Yamaha's proprietary means of transmitting digital information that uses high
frequency sound range.
The company completed the integration of Japanese wind instrument factories to Toyooka in 2012.
Later in the year, Yamaha opened a sales subsidiary in Vietnam for musical instruments and AV
products.
In 2013, the company announced plans to merge its eight musical instrument sales companies in
Japan as part of its structural reform to increase management efficiency and strengthen financial
position. In the same year, Yamaha announced plans to merge Yamaha Electronics Marketing
Corporation (YEMJ) and Yamaha Music Lease Corporation (YML) into Yamaha Music Trading
Corporation (YMT). As a result, YMT will be renamed as Yamaha Music Japan Co., Ltd.
Yamaha KHS Music Co. became a wholly-owned subsidiary of the company, further in 2013.Yamaha
KHS Music Co. was formed in 1996 as a joint venture between Yamaha (50% ownership) and Kung
Hsue She Trading Co. The corporate name of Yamaha KHS Music Co. was changed to Yamaha
Music and Electronics Taiwan Co., Ltd.
Yamaha settled the lawsuits filed against Axell Corporation for patent infringement, in January 2014.
In the same month, the company acquired Line 6, a US-based musical instruments and audio
equipment manufacturer. This acquisition helped the company to expand its portfolio of modeling
guitar processing products and PA equipment to accelerate growth in the musical instruments and
audio equipment area.
In March 2014, the company signed an agreement with Revolabs, to make Revolabs its wholly-owned
subsidiary. Revolabs is engaged in developing, manufacturing, and selling products such as wireless
microphone systems for corporate conference rooms and wireless conference phones. This merger
will enable Yamaha to provide unique solutions for the diversifying needs of the audio equipment
market in future.
Yamaha concluded a basic agreement for the transfer of its semiconductor manufacturing subsidiary
Yamaha Kagoshima Semiconductor to Phenitec Semiconductor Corporation, in October 2014. The
transfer contract is scheduled to be signed in March 2015, and the transfer is expected to take place
in October 2015.

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Yamaha Corporation
Key Employees

KEY EMPLOYEES
Name

Job Title

Board

Takuya Nakata

President and Representative Director

Executive Board

Motoki Takahashi

Managing Executive Officer and Director

Executive Board

Masao Kondo

Senior Executive Officer and Director

Executive Board

Masato Oike

Senior Executive Officer and Director

Executive Board

Haruo Kitamura

Outside Director

Non Executive Board

Hiroyuki Yanagi

Outside Director

Non Executive Board

Yoshikatsu Ota

Outside Director

Non Executive Board

Yutaka Hasegawa

Senior Executive Officer

Senior Management

Akira Iizuka

Executive Officer

Senior Management

Hirofumi Osawa

Executive Officer

Senior Management

Hiroshi Sasaki

Executive Officer

Senior Management

Kazunori Kobayashi

Executive Officer

Senior Management

Satoshi Yamahata

Executive Officer

Senior Management

Shigeki Fujii

Executive Officer

Senior Management

Seiichi Yamaguchi

Executive Officer

Senior Management

Hitoshi Fukutome

Executive Officer

Senior Management

Teruhiko Tsurumi

Executive Officer

Senior Management

Shinobu Kawase

Executive Officer

Senior Management

Kimiyasu Ito

Executive Officer

Senior Management

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Yamaha Corporation
Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Takuya Nakata
Board: Executive Board
Job Title: President and Representative Director
Since: 2013
Mr. Nakata has been the President and Representative Director at Yamaha since 2013. Prior to
that, he served as the Deputy Senior General Manager of Musical Instruments and Audio Products
Sales and Marketing Group at the company. Mr. Nakata also served as the Senior Executive Officer
at Yamaha and President at Yamaha Corporation of America. He was Director and Executive Officer
at the company and also served as the Executive Officer. Mr. Nakata joined Yamaha in 1981.

Motoki Takahashi
Board: Executive Board
Job Title: Managing Executive Officer and Director
Mr. Takahashi currently serves as the Managing Executive Officer and a Director at Yamaha. He
joined the company in 1974 and has held a variety of positions, including President at Yamaha
Europe, Executive Officer at Yamaha, General Manager of Corporate Planning Division, and Director
and Executive Officer among others.

Masao Kondo
Board: Executive Board
Job Title: Senior Executive Officer and Director
Since: 2014
Mr. Kondo has been a Senior Executive Officer and Director at Yamaha since 2014. He served as
the Senior Executive Officer and Senior General Manager of Sound and IT Business Group; Director
and Executive Officer; and Executive Officer at the company. Mr. Kondo joined the company in 1978
and served as the General Manager of AV Products Division.

Masato Oike
Board: Executive Board
Job Title: Senior Executive Officer and Director
Since: 2014

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Yamaha Corporation
Key Employee Biographies

Mr. Oike has been a Senior Executive Officer and Director at Yamaha since 2014. He joined the
company in 1982 and has held various positions, including as the President of Yamaha Music Holding
Europe; President of Yamaha Music Europe; Executive Officer; and Senior Executive Officer.

Haruo Kitamura
Board: Non Executive Board
Job Title: Outside Director
Since: 2010
Mr. Kitamura has been an Outside Director at Yamaha since 2010. He served as an Outside Corporate
Auditor at the company from 2009. Mr. Kitamura is currently a Supervisory Director at MID REIT
and an Outside Director at MonotaRo Co. He is also an Outside Corporate Auditor at Rohm.

Hiroyuki Yanagi
Board: Non Executive Board
Job Title: Outside Director
Since: 2011
Mr. Yanagi has been an Outside Director at Yamaha since 2011. He joined Yamaha Motor Co. in
1978 and currently serves as its President, Chief Executive Officer and Representative Director.
Previously, Mr.Yanagi served as a Senior Executive Officer at Yamaha Motor Co. and as its Executive
Officer.

Yoshikatsu Ota
Board: Non Executive Board
Job Title: Outside Director
Since: 2012
Mr. Ota has been an Outside Director at Yamaha since 2012. He currently serves as a Director and
the Chairman of the Board at Konica Minolta. He joined Minolta Camera Co. in 1964 and served as
its Director, Managing Director, and President and Representative Director. Mr. Ota was appointed
Director, Vice President and Representative Executive Officer at Konica Minolta in 2003 and Director,
President, Chief Executive Officer and Representative Executive Officer in 2006.

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Yamaha Corporation
Major Products and Services

MAJOR PRODUCTS AND SERVICES

Yamaha is engaged in the manufacture and sale of musical instruments, electronic products,
network-related products and a range of other products. The company's key products and services
include the following:
Products:
Musical instruments:
Digital pianos
Portable keyboards
Synthesizers
Trumpets
Flutes
Saxophones
Guitars
Violins
Drums
Timpani
Marimbas
Recorders
Audio equipment:
Mixers
Power Amplifiers
AV receivers
Speaker systems
Front surround speakers
Desktop audio systems
Commercial online karaoke equipment
Routers
Conferencing systems
Electronic devices and others:
Semiconductors
Golf products
Automobile interior wood components
FA equipment
Services:

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Yamaha Corporation
Major Products and Services

Piano tuning
Music lessons
Brands:
Yamaha

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Yamaha Corporation
Revenue Analysis

REVENUE ANALYSIS
Overview
Yamaha recorded revenues of JPY410,304 million ($4,103 million) in FY2014, an increase of 11.8%
over FY2013. For FY2014, Japan, the company's largest geographic market, accounted for 40.9%
of the total revenues.
The company generates revenues through four business segments: musical instruments (63.9% of
the total revenues in FY2014), audio equipment (25.7%), electronic devices (4.6%) and others
(5.8%).
Revenues by segment
In FY2014, the musical instruments segment recorded revenues of JPY262,310 million ($2,623.1
million), an increase of 11.4% over FY2013.
The audio equipment segment recorded revenues of JPY105,485 million ($1,054.9 million) in FY2014,
an increase of 14% over FY2013.
The electronic devices segment recorded revenues of JPY18,828 million ($188.3 million) in FY2014,
an increase of 25.2% over FY2013.
The others segment recorded revenues of JPY23,679 million ($236.8 million) in FY2014, a decrease
of 0.6% compared to FY2013.
Revenues by geography
Japan, Yamaha's largest geographical market, accounted for 40.9%* of the total revenues in FY2014.
Revenues from Japan reached JPY167,903 million ($1,679 million) in FY2014, an increase of 1.3%
over FY2013.
Europe accounted for 18.2% of the total revenues in FY2014. Revenues from Europe reached
JPY74,863 million ($748.6 million) in FY2014, an increase of 23.5% over FY2013.
North America accounted for 16.2% of the total revenues in FY2014. Revenues from North America
reached JPY66,635 million ($666.4 million) in FY2014, an increase of 20.8% over FY2013.
Asia, Oceania and other areas accounted for 24.6% of the total revenues in FY2014. Revenues
from Asia, Oceania and other areas reached JPY100,901 million ($1,009 million) in FY2014, an
increase of 18.2% over FY2013.

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Yamaha Corporation
Revenue Analysis

*Percentages are rounded-off.

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Yamaha Corporation
SWOT Analysis

SWOT ANALYSIS
Yamaha is engaged in the manufacture and sale of musical instruments, electronic products,
network-related products and a range of other products. The company operates through 77
subsidiaries in Asia, the Americas, Europe, the Middle East and Africa, and Oceania. Yamaha's
strong foothold in the music instrument industry provides it with substantial bargaining power as well
as stabilizes its financial growth. However, increase in counterfeit products may have an adverse
impact on the brand image of the company and, in turn, affect its sales.
Strengths

Weaknesses

Strong presence in the music instrument

industry
Diversified business portfolio
Business structural reforms
Strong intellectual property

Dependence on Japanese economy for

revenue generation

Opportunities

Threats

Strengthening presence in emerging

markets
Growing global music instrument industry
Positive outlook for the semiconductor
market

Increase in counterfeit products

Risk of natural calamities

Strengths

Strong presence in the music instrument industry

Yamaha is one of the world's largest comprehensive musical instrument manufacturers, supplying
a full line-up of musical instruments. It operates through 77 subsidiaries in Asia, the Americas,
Europe, the Middle East and Africa, and Oceania. The company also has a network of music schools
in 40 countries worldwide, with nearly 700,000 students. Its products range from pianos, wind
instruments, and other acoustic instruments to electronic and digital products. Its diverse musical
instrument offerings meet the various needs of amateur as well as professional musicians.Yamaha's
wide customer reach and broad operations across 40 countries consolidated its foothold in the music
instrument industry. Therefore, the company's strong foothold in the music instrument industry
provides it with substantial bargaining power as well as stabilizes its financial growth.
Diversified business portfolio

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Yamaha Corporation
SWOT Analysis

Yamaha has a varied set of business operations spanning across manufacturing and sale of musical
instruments, audio and video products, network-related products and electronic devices and also
includes operating music schools and other music related facilities. It derives its larger share of
revenues from the music instruments segment, but at the same time, the company's operations in
audio equipment as well as electronic equipment markets provide it with an opportunity to add to its
revenues and simultaneously enable the company to explore new territories and markets. In addition,
it provides recreation facilities which include resort and golf courses to thousands of customers each
year.This diverse business set-up gives Yamaha the edge over the traditional players who concentrate
only on musical instruments or AV range of products. It also enables Yamaha to cater to a larger
group of customers, with varied preferences and purchasing power.
Business structural reforms
During FY2011, the company began the implementation of a three-year medium-term management
plan. The company as part of its 'Yamaha Management Plan' (YMP125) is reorganizing its
manufacturing bases. In 2011, Yamaha merged its subsidiaries Yamaha Music Winds Corporation
and Yamaha Music Craft Corporation. The merged companies enabled to share production facilities,
consolidate procurement and purchasing activities, and rationalize their staff divisions. By promoting
measures to reform manufacturing, the merged company contributed to further sustained development
of Yamaha's wind, string, and percussion instruments businesses. In 2012, Yamaha merged its US
subsidiary Yamaha Electronics Corporation, USA into Yamaha Corporation of America. This merger
helped realize synergies and increased management efficiency, primarily in administrative business
processes, by implementing closely coordinated sales and marketing of musical instruments and
AV products. During 2012, the company completed the integration of the Saitama factory with the
Toyooka factory in the wind instrument business. The integration helped the company to achieve
greater efficiency by transferring manufacturing processes to overseas production bases and thereby
increasing the overseas material suppliers.
Furthermore, in FY2013, the company reorganized its sales and marketing structure for musical
instruments and audio equipment in Japan. Yamaha also restructured its domestic bases including
the semiconductor business. As part of business structural reforms in its sales and marketing
structure, Yamaha set up the wholesale business as a separate company and consolidated its
nationwide sales bases to the bases of Tokyo and Osaka. Yamaha also integrated its eight retail
sales companies into one company, thereby reducing costs and streamlining businesses. In the
semiconductor business, the company restructured its production system, which included reducing
fixed costs at Yamaha Kagoshima Semiconductors, its manufacturing subsidiary, resulting in higher
profitability.
Yamaha started the Yamaha Management Plan 2016 (YMP2016), its medium-term management
plan that covers the three-year period beginning from April 1, 2013. In FY2014, the first year of the
plan, Yamaha achieved year-on-year increases in sales and earnings by implementing various
initiatives. These initiatives included expanding and upgrading product development and sales
channels, the ongoing business structural reforms, and reducing costs.

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Yamaha Corporation
SWOT Analysis

Yamaha, through these restructuring activities and continuous improvement activities, improve
operational efficiency and increase its profitability.
Strong intellectual property
The company's success is dependent on intellectual property rights as it plays an important role in
maintaining the competitive position in a number of markets that Yamaha operates. The company
owns intellectual property rights, including patents based on its proprietary technologies, and
accumulated business know-how. Recently, Yamaha implemented several measures to integrate
its business, research and development, and intellectual property strategies in order to maximize
the contribution of intellectual property to business earnings. It also formulated patent strategies
tailored to operations in specific business segments in order to differentiate itself from competitors,
gain business advantages, and enable licensing to third parties. These strategies include identifying
target technical fields for patent acquisition, such as core technologies, new businesses and new
technologies, and developing a strong patent portfolio by concentrating on its core competencies.
At the end of FY2014, the company owned a total of approximately 5,800 patents and utility models
in Japan. Outside of Japan, Yamaha held nearly 5,200 patents, mainly in the US, Europe and China.
In addition, the company held around 855 design rights in Japan and overseas at the end of FY2014.
Hence, the company's strong intellectual property allows it to bring new, innovative products to
market and maintain technological leadership, which, in turn, enables the company to expand its
customer base and generate incremental revenues.

Weaknesses

Dependence on Japanese economy for revenue generation

Although Yamaha has business presence in Asia, the Americas, Europe, the Middle East and Africa,
and Oceania, it is highly dependent on the Japanese market for majority of its revenues.The company
generated 40.9% of its revenues from Japan in FY2014. The company's dependence on Japan limits
its growth potential.Yamaha loses out on the huge growth opportunities offered by the other markets
for volume and revenue expansion, due to its modest presence in such markets. High dependence
on the Japanese market makes the company vulnerable to the demand dynamics of this region.
Moreover, Yamaha is also exposed to risks associated with the economy, while its competitors with
significant operations in diverse geographic regions are guarded against such a risk. Thus, lack of
geographic presence in high growth markets puts the company at a disadvantage.

Opportunities

Strengthening presence in emerging markets

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Yamaha Corporation
SWOT Analysis

Yamaha is expanding its presence in emerging markets such as China, Indonesia, India, Brazil, and
Russia. For instance, as part of strengthening its presence in China and other emerging markets,
the company earlier invested its management resources basing on key policies including developing
and launching products adapted to the Chinese market, expanding its sales network. In FY2014,
Yamaha announced plans to achieve growth of more than 34% in real terms over the three years
leading up to 2016 in China and other emerging countries. The targets of YMP2016 for FY2016 are
consolidated net sales of JPY430,000 million ($4,300 million), operating income of JPY30,000 million
($300 million), and return on equity (ROE) of 10%. In FY2015, the company plans to accelerate
growth in China and other emerging countries, which is a priority business strategy for achieving
the above mentioned targets. The company plans to have stronger product development tailored to
each market and reinforce sales channels and sales staff during FY2015. Furthermore, Yamaha
plans to focus on expanding Yamaha music schools and conducting school music educational
activities in China and other emerging countries in order to increase its market share. In the emerging
markets, Yamaha continues to focus and implement its sales strategy for Indonesia, India, Brazil,
and Russia.
Such initiatives to strengthen its presence in China and other emerging markets will enable the
company to deliver strong revenues and increase its market penetration.
Growing global music instrument industry
The global music instrument industry has been growing at a steady rate in the recent times. According
to industry estimates, the global market for music instrument industry is expected to grow at a
compound annual growth rate of 3% during 201216. The growth is attributable to increasing
disposable income of consumers as well as growing interest in leisure activities.
Yamaha offers a wide range of music instruments, including pianos, digital musical instruments,
wind instruments, string instruments, percussion instruments, educational musical instruments, and
music entertainment software. Furthermore, to accelerate its growth in the musical instruments and
audio equipment area, the company acquired Line 6, a US-based musical instruments and audio
equipment manufacturer, in FY2014. This acquisition expanded the companys portfolio of modeling
guitar processing products and PA equipment. Therefore, Yamaha is well positioned to tap the
growing global music instrument industry for its top line growth.
Positive outlook for the semiconductor market
The semiconductor market is expected to grow globally in the future. According to industry estimates,
the global semiconductors sales surpassed $330 billion in 2014, an increase of nearly 10% compared
to 2013. This growth was attributable to increased sales across most end product categories. The
worldwide semiconductor market is expected to register a strong growth in 2015 and beyond.
Yamaha offers semiconductors that can be used in music instruments and networks such as mobile
phones and amusement devices. The company also focuses on technical development in new fields
such as digital amplifiers and LSI for installation in vehicles. Therefore, positive trends in the

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SWOT Analysis

semiconductor industry could contribute to the company's top line growth and enable it to expand
further.

Threats

Increase in counterfeit products

The electronics manufacturing industry is struggling to compete with black market, parallel import
and smuggled goods.Yamaha faces a strong threat from these goods as the company manufactures
consumer electronics. The spread of counterfeit goods has become global in recent years and the
range of goods subject to infringement has increased significantly. According to the Intellectual
Property Rights (IPR) Seizure Statistics by Customs and Border Protection (CBP) Office of
International Trade, the number of IPR seizures in the US reached 24,361 in 2013, representing an
increase of 7% over 2012. China remained the primary source country for counterfeit goods,
accounting for 68% of all IPR seizures by the Manufacturer's Suggested Retail Price (MSRP).
Consumer electronics continues to feature among the top products seized, accounting for 20% of
the total number of seizures in 2013. Furthermore, in Europe, the total number of detention cases
in 2013 stood at 86,854 according to European Commission.
Low quality counterfeits reduce consumer confidence in branded products. Yamahas product sales
could be affected due to the widespread counterfeits.
Risk of natural calamities
Yamaha has significant presence in its domestic market, Japan. The company's head office, domestic
plants and major subsidiaries are located in Shizuoka Prefecture in the Tokai region of Japan, in
which a major earthquake has been predicted for years. Japan is prone to earthquakes, tsunamis
and other natural disasters. Moreover, the companys overseas manufacturing plants are concentrated
in China, Indonesia and Malaysia; key countries where the outbreak of unexpected natural disasters
may arise. Any such occurrence of natural disasters and unforeseen emergencies may affect the
company's business performance in the future.

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Yamaha Corporation
Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Yamaha Corporation

Kawai Musical Instruments Manufacturing Co., Ltd.

Sony Corporation
Steinway & Sons
PianoDisc

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Company View

COMPANY VIEW
A transcript of an interview given by Takuya Nakata, the President and Representative Director at
Yamaha, is given below. This has been taken from the companys Annual Report for FY2014.
Could you describe Yamahas performance in fiscal 2014?
Consolidated net sales in fiscal 2014 were 410 billion, an increase of 11.8% year on year. Operating
income increased a substantial 182.1% to 26 billion, and net income came to 23 billion. These
figures, in each case, surpassed those of the previous fiscal year for the second consecutive year.
Key factors behind this increase were the steady recovery of mature markets, as well as steady
progress made in reducing fixed and other costs through successful business structural reforms. In
the first year of the medium-term management plan, even with favorable foreign currency translation
effects and last-minute demand from the consumption tax increase in Japan, we were able to take
a decisive first step to achieving our targets.
Of course, there still remain challenges to the attainment of steady growth, a target of our plan, but
we have made explicit those challenges that we need to be aware of in order to achieve our plan
and have more clearly defined the direction that we must take in the remaining two years of YMP2016.
How do you assess Yamahas performance after the first year of YMP2016?
Sales profit was achieved according to plan, supported by the positive effects of foreign currency
translations. We steadily carried out the measures of the first year of the medium-term management
plan, the pillars of which include the expansion and upgrading of sales channels, cost reductions,
and investments for growth.
In August 2013, we eliminated the divisional system in the musical instrument and audio equipment
segments, established manufacturing and development groups, and realigned into a functional
organization that includes the existing sales and marketing group. We tore down the walls of individual
cultures in each business division that were the by-product of a vertical organization and in their
place we created an environment where the various technologies and production facilities owned
by Yamaha are utilized across the Company. The challenge facing us from this point forward is how
to turn the wealth of potential arising from the interaction of differing internal cultures in varied
business domains such as development, manufacturing, and marketing into advantages for Yamaha.
Another major accomplishment was the return to profitability of the electronic devices business.
Contributing factors were the reduction of fixed costs through business structural reforms and the
rebound in sales. We will continue to focus on new product development that takes advantage of
strengths unique to Yamaha while closely monitoring changes in the global semiconductor business.

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Company View

How will you speed up growth in China and other emerging countries, one of the key strategies of
YMP2016?
The numerical targets of YMP2016 for fiscal 2016 are consolidated net sales of 430,000 million,
operating income of 30,000 million, and ROE of 10%. In fiscal 2015, we will continue to work to
accelerate growth in China and other emerging countries, which is a priority business strategy for
achieving those targets. Our goal is to achieve growth of 30% or more in real terms over the three
years leading up to 2016.
Our basic strategy is the same as in the first year, and that is to have stronger product development
tailored to each market and to reinforce sales channels and sales staff. Further, we will continue to
aggressively expand Yamaha Music Schools and conduct school music educational activities in
China and other emerging countries with the goal of increasing the size of the market.
In China, despite the relative slowdown in the markets overall growth, continued growth of acoustic
piano demand is expected. Moreover, we are beginning to see higher growth for digital pianos, so
we will also focus on this market.
In emerging markets, we will continue to take a sales strategy that is appropriate for Indonesia, India,
Brazil, and Russia and swiftly implement it. To accelerate sales growth, Yamaha has established
footholds in Vietnam by setting up a local sales subsidiary, and in South Africa with the establishment
of a representative office.
Emerging countries are changing moment to moment, and therefore our challenge is to take the
optimal approach after assessing the local business customs of each country. We constantly pursue
the most effective measures by turning the PDCA cycle and examining whether the local subsidiary
is properly implementing Yamahas business strategy.
What is Yamahas sales growth strategy in the electronics business domain?
Another one of our priority business strategies is to expand sales in the electronics business domain.
Our goal is to achieve sales growth of about 30% for the duration of YMP2016 in the three fields of
digital keyboard instruments, professional audio equipment, and information and communications
technology (ICT) devices. In the area of digital keyboard instruments, which includes digital pianos,
we have been working to develop appealing products that precisely meet market needs.
Professional audio equipment is a domain in which recent organizational realignment efforts are
likely to pay off, so we will continue to aggressively develop and launch new products. To compete
with new market entrants who launch products in the lower price segments, we will speed up product
development with the focus on planning high value-added products that take advantage of Yamahas
technology and know-how, and its strength in the field of sound. We will deliver the high product
reliability and strong product support capabilities required by professional audio equipment and
swiftly launch products that meet market needs.

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Yamaha Corporation
Company View

Even though sales are still relatively small, ICT devices are steadily paying off as the product domain
expands.
How successful has new business development and M&A in particular been?
In YMP2016, with the goal of promoting business growth through M&A and capital alliances as a
priority business strategy, we established a special investment framework for new business
development. An investment ceiling of 30,000 million was established for investment in M&A and
capital alliances, and a ceiling of 3,000 million for investment in venture companies. In line with
this policy, we turned Line 6, Inc. (Headquarters: California, U.S.A.) and Revolabs, Inc. (Headquarters:
Massachusetts, U.S.A.) into wholly owned subsidiaries in fiscal 2014.
Line 6 has an excellent reputation for guitar peripherals, such as amplifiers loaded with the best
digital technology, PA equipment, and other products. With overlapping product development
capabilities based on strengths Yamaha has developed in both acoustic and digital technologies,
along with the modeling and wireless technologies of Line 6, the Yamaha Group is set for even
greater growth in the musical instrument and audio equipment domains.
In addition, Revolabs possesses extremely high and unparalleled technological capabilities in the
area of wireless microphones and conferencing systems. In our view, the market will expand
significantly by merging audio equipment with networking technology. We therefore believe that
Revolabs possesses major technological advantages in this domain.
The importance of technology in audio equipment is growing year by year. By combining our products,
technologies, and sales channels we will not merely add, but multiply, our strengths, and considering
the high potential for generating new values in our business, we expect to make new future
investments.
What efforts are you making to reach the medium-term management plans cost-cutting target?
In YMP2016, we pursue production efficiency improvements and cost reductions with the goal of
lowering costs by 15,000 million over a three-year period.
Let me cite three areas of cost reduction. The first is production efficiency improvement, the second
is procurement cost reduction, and the third is fixed cost reduction. Our major success in the first
year was in the first area, where we improved production efficiency by sharing our best practices
through organizational realignment. In the second area, as part of our shift to overseas production,
we set up a system that reduced procurement costs by raising the rate of local procurement and
producing parts locally. In the third area, we successfully reduced fixed costs through the integration
of our domestic production facilities.
At the Indonesian plant, efforts to raise the rate of local procurement and locally integrate production
have paid off and recently our production capabilities have greatly improved. We will further reduce
procurement costs through our procurement department in Shenzhen, China that was incorporated
in October 2013 and thereby strengthening our purchasing.

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Yamaha Corporation
Company View

What is your financial strategy and approach to returning profits to shareholders going forward?
The Yamaha Group continues to build a solid foundation with an equity ratio of 61.9% at fiscal 2014
year-end. We will firmly adhere to financial policies that balance investments and dividend payments
on the basis of maintaining financial stability and soundness. On the other hand, we want to flexibly
and expeditiously take on growth investments for the next growth phase. With regard to returning
profits to shareholders, Yamaha has set a goal of 30% or more for its consolidated dividend payout
ratio based on continuous and stable dividend payment. In fiscal 2014, Yamaha paid an annual
dividend of 27.0 per share. In fiscal 2015, we plan to pay an annual dividend of 27.0 per share.

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Yamaha Corporation
Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES

Head Office
Yamaha Corporation
10-1 Nakazawa-cho
Naka-Ku
Hamamatsu
Shizuoka 430 8650
JPN
http://www.yamaha.com

Other Locations and Subsidiaries

Yamaha Canada Music Ltd.
135 Milner Avenue
Scarborough
Ontario
M1S 3R1
CAN

Yamaha Corporation of America

6600 Orangethorpe Avenue
Buena Park
California 90620
USA

Yamaha Music (Asia) Pte. Ltd.

Blk 202 Hougang Street 21
Singapore 530202
SGP

Yamaha Music Australia Pty., Ltd.

Level 1
99 Queensbridge Street
Southbank
Victoria 3006
AUS

Yamaha Music Europe GmbH - Branch

France
7 rue Ambroise Croizat
Zone d'activites de PariestC Croissy
Beaubourg 77183
FRA

Yamaha De Mexico, S.A. de C.V.

Javier Rojo Gomez 1149
Col. Guadalupe del Moral
MEX

Yamaha Music Europe GmbH (UK)

Sherbourne Drive
Tilbrook
Milton Keynes
MK7 8BL
GBR

Yamaha Music India Pvt. Ltd.

Spazedge building
Ground Floor Tower A
Sector 47 Gurgaon- Sohna Road
Gurgaon
Haryana
IND

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Locations and Subsidiaries

Yamaha Music Europe GmbH - Branch Italy

Viale Italia 88
20020 Lainate (Milan)
ITA

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Yamaha Musical do Brasil Ltda.

Rua Fidencio Ramos
302 Cj 52 e 54
Torre B Vila Olimpia
Sao Paulo 04551 010
BRA

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