Europe set to shine once more-Structural reforms to date, and future initiatives
Within the European markets, Yamaha Motor has been carrying out unification/structural reform of its European sales companies from 2012-2014, which by the end of 2014 will be transformed into one European company. The background, objective and initiatives of this project are explained here by YMENV Chairman Hajime Yamaji.
Background of the European Union and Structural Reforms
Europe, with its array of countries with varying history, cultures, and languages, has a population of 5 hundred million from its 28 member states of the EU. The GDP in 2013 exceeded 13 trillion Euro making up one quarter of the world’s GDP. Market integration began in 1957 with six member states joining the European Economic Community. From there it has continued to progress after the symbolic "shift to democracy from communism" with the fall of the Berlin Wall, and the "adoption of the common currency, the Euro". Yamaha's European business is now a large overseas market with a long history and outstanding sales 55 years after its start in the 60s.
At first, Yamaha Motor began exports and sales for its main European markets with the establishment of distributorships to act as importers. Then in response to the integration of the European markets, we proceeded with the establishment of the YMENV European headquarters, the affiliation and shareholding in distributors, and rolled out pan-European parts warehouses and pan-European unit warehouses as a means of enhancing pan-European logistics.（see Figure 1）
Yamaha Motor’s organization and corporate culture within Europe, however, remained the same as when the distributors were independent importers, and YMENV had limited ability to fully implement pan-European policies or to respond to higher mobility of human resources within Europe. In other words, each market focused on financial independence and preferred company-specific optimization in many aspects. As a result, it was not easy for Yamaha to conduct business activities in line with the direction of the European integration, and unified and harmonious communication between YMENV, which is the headquarters, and its subsidiaries was not always optimal.
When it came to sales expansion in those individual markets, however, they implemented policies and sales activities that were optimal with respect to the attributes of each market, which was also a strength of Europe. I have worked at YMENV headquarters as well as at distributorships in the past, and could use my experience gained during that time to help solve communication problems in this project.
Summary of Initiatives
Another significant concern in Europe was related to factory restructuring in Europe. From the second half of 2012, when it was completed, we launched a major restructuring of the sales and distribution organization, to achieve cost reduction while eliminating the problems above, but without compromising the strengths of each market. This originated from 2008, when the global financial crisis occurred, and the implementation of our restructuring was facilitated largely by Yamaha employees having a sense of urgency to "do something" in an environment where the market kept plummeting.
1. Change the way we work to disseminate our pan-European policies while capitalizing on the strength of operating in individual markets.
2. Carry out Mind-set Revolution involving the whole of Europe as "One team"
3. Consequential reduction of personnel and sales costs
The above three pillars were laid out.
We developed a grand design, which was endorsed by the European and Local Works Councils, following discussions held by a core team consisting of YMENV executives and the presidents of our major subsidiaries and the establishment of eight working groups across sales, marketing and corporate functions consisting of both YMENV and subsidiary staff members that would take market requests into consideration. We then standardized business activities, and integrated operations eliminating duplications between the headquarters and subsidiaries (especially in the corporate and sales support departments). Based on this, we endeavored to improve our operational efficiency supported by pan-European IT system integration.
These activities were performed in addition to normal work, and lasted for more than a year, which alone was undeniably tempting for the members. Nevertheless, we were all sharing the same awareness of issues, and united to work toward the same goals, which became a strong driving force for us. We are now using this experience to exert excellent leadership in our respective organizations.
The goals shared in those working groups included the area of operational standardization, namely, the introduction of an on-line product ordering/delivery date checking system for sales dealerships and the integration of warranty processing rules/processes to achieve unification of service management operations. In the area of headquarters-subsidiary elimination of operational duplication , we laid out goals such as central coordination of event operations/promotional brochures preparation in marketing activities; a shift to central management of accounting/financing operations for all countries, and promotion of pan-European HR policies and personnel mobility. Some of these projects have continued to date.
Activity Outcomes and Expectations for the Future
Early this year, a new multinational structure came in place, and the management at the YMENV headquarters now consists of a majority of people from the UK, France, Germany, Sweden and the Netherlands, next to the top positions held by Japanese expats. They all have experience as subsidiary executives while many non-executives were also picked from the pan-European HR pool to take up responsibilities in YMENV. The rationale behind it was our belief that the headquarters needed to develop market-oriented strategies, and that we needed to have first-hand market discernment, share market-specific best practices, and incorporate them into company policies. Going forward, it will be best if we can develop and roll out strategies for Europe by Europeans from a pan-European perspective. Also on the local front, 6 out of 11 locations have had a new local country manager, further advancing localization and bringing a new generation to the fore.
Our cost reduction, although it caused "pain", has allowed us to downsize to a smaller but excellent group of people, down by more than two thirds compared with the 2011 size, resulting in a decrease in costs including sales expenses by approx. 3.2 billion Yen per year. Moreover, we are also expecting to bring forth a major change to the way we think, which is more qualitative, as a result of operating under the banner of "One European team". In addition to the new structure and new way of conducting business activities from early 2014, the company format will shift to "Yamaha Motor Europe and its branch offices" in stages from December 1 this year (see Figure. 2). As our sense of belonging to the "one team" continues to increase, we believe that a platform will be created from which we can carry out business activities while striving to achieve across-the-border optimization, but taking into account market-specific cultural, historical, personal (interests and preferences) and legal attributes.
Since early this year, the European market has been sustaining a recovery in terms of business performance, on the back of the market trend of bottoming out and coming back up, the release of new products such as the MT-07 and the MT-09, and the exchange rate environment recovery. I am confident that we are now in a position to more clearly show the positive effect of the restructuring, as output from the market.
In Europe, the motorbike culture had already began to bud during the early Meiji era (1868-1912). Also advanced technologies such as racing were first introduced in Europe before spreading to the rest of the world. The motorbike has also been recognized as an outdoor sport, as well as wide-spread culture. This pattern also applies to the marine culture. In such an advanced market, I am confident that our Yamaha brand image can be further improved by originating European-led customer satisfaction improvement measures at the next level. We believe that the above will be possible if based on the concept of these structural reforms, which include the European One team, and sensitivity to the market itself.