PESTEL or PESTEL is an acronym for Political, Economic, Social, Technological, Environmental and Legal. It is actually analysis of macro environment situation. It provides knowledge regarding the factors that are not directly affecting the business but indirectly influencing decisions.
Impact of Political Factors on Yamaha
Yamaha Corporation is a large scale global producer and supplier of musical instrument while the Yamaha motor Co Ltd is responsible for the manufacturing and supply of vehicles in different parts of the world. The domestic and international political climate effects the business operations of the company having an effect on the sales attained by the organization. A politically stable environment provides a strong basis for the business entities, while a country that is dealing with political issues offers a chaotic environment that is not conducive for business growth and development. A renowned business of the organization is Yamaha Motor Co. Ltd, which is involved in the supply of vehicles to different parts of the world. Apart from that, the company is a major producer of musical instruments (Yamaha, 2013). As it can be seen that Yamaha Corporation is a global organization which is also operating in areas that are marked by frequent political issues, the supply, distribution and sales of the company products can be negatively affected in such cases (Yamaha, 2013).
Impact of Economic Factors on Yamaha
Different types of economic pressures can have a significant impact on the way an organization manages its operations and the revenues it is able to generate in a given economic set up. The company’s goals that the management has established may become difficult or more challenging to achieve if there is a negative shift in the economic outlook of a region, resulting in lower sales and profitability than the projected figures (Yamaha, 2013). The Yamaha motor group has specifically faced some tough times due to the economic downturn that has spread on an international scale, effecting different regions across the globe. The company had to lay off its employees in order to manage the losses it faced due to economic slowdown. In addition to this, the manufacturing plants of Yamaha Corporation had to halt the production and in some cases the plants were shut down as a result of the rising financial pressure on the organization due to financial crisis.
Another notable economic factor that poses a risk for the profitability of the organization is issues such as appreciation of the yen which has been an area of concern for the management of Yamaha Corporation (Motor Sports Newswire, 2012). Inagaki (2015) has stated that the company is striving to establish a position in the car industry, with the aim to bring further growth to the organization.
Impact of Social Factors on Yamaha
The social factors that contribute in the growth or decline of an organization are mainly related to the taste and preference of the people that constitute the target market for a business entity. The needs of the target market when correctly identified and appropriately fulfilled by an organization can become a source of profitability as the satisfied set of customers become a growth driver for the company. The musical instruments that are manufactured by the organization re closely aligned with the social and cultural needs of the target market. Due to this focused production, the company has been able to earn $3,901,552 in sales (Thousands of US Dollars) in 2013, which shows the financial stability of the organization (Yamaha, 2013).
The social factors can also manifest in the form of consumer behavior that is shaped by the financial condition of a country. Therefore, it can be seen that the economic and social factors are linked with each other. A declining economy, marked by high rate of unemployment, layoff of workers and low progress of businesses propels the people to make purchasing decisions based on such conditions. As a result, the purchase of musical instruments and vehicles may be deemed as comparatively unnecessary, resulting in lower sales for the company. Kitamura and Hagiwara (2010) pointed out that Yamaha Motor Co has experienced lower sales and reduction in company shares. Due to the lower sales and low demand of motorcycles among the target market, the company had to consider the closure of its production plants to limit the impact of low net sales.
Impact of Technological Factors on Yamaha
Technology plays an important role in the development and progress of an organization as it provides a platform through which a firm can define and differentiate its products from the rival companies. Yamaha has been using different forms of technological advancements such as digital technology to manufacture musical instruments that produce high quality sounds (Yamaha, 2013). Along with that, the motorcycle manufacturing division obtains support from different forms of technology, adding up to date components in the products. The use of technological advancements has become an area of strength for the company. For instance, Front surround sound technology has enabled the company to appeal the target market positioning its products in an effective manner. The company also possesses technological tools that help the manufacturing plants in the processing of wood and different forms of metals to manufacture the instruments (Yamaha, 2013).
Impact of Legal Factors on Yamaha
There are different legal regulations that a company needs to be aware of in order to carry its business operations without any undue disruption. The factors such as intellectual property and taxation are included in the legal environment for Yamaha. The domain of intellectual property specifically is important for the organization as its sales and profitability is based on its ability to integrate cutting edge technology in the designing and manufacturing of the different products. Since some countries are not able to strictly implement the intellectual property protection policies, the company is exposed to the risk of loss arising out of violation of copyrights (Yamaha, 2013).
Impact of Environmental Factors on Yamaha
The public has become increasingly aware of the harmful impact organizations have on the environment, thus creating the demand for responsible practices adopted by the corporations. The environment protection agency and governments in different countries have been working together to ensure that the organization limit the harm they cause to the environment and participate in eco-friendly activities. Yamaha has followed the environmental protection policies and has engaged in different community development activities. For instance, the manufacturing and packaging of the company products is done in accordance to environmental policies, while the focus on biodiversity aims to promote environmental protection (Yamaha, 2013).
Inagaki, K. (2015, March 18). Yamaha drives ahead with third attempt at four wheels. Financial Times. Retrieved from http://www.ft.com/intl/cms/s/0/418c677e-cbc7-11e4-aeb5-00144feab7de.html
Kitamura, M & Hagiwara, Y. (2010). Sales Plummet on Debt Crisis, Yen. Bloomberg Business. Retrieved from http://www.bloomberg.com/news/articles/2010-07-14/yamaha-s-european-motorcycle-sales-plummet-on-debt-crisis-stronger-yen
Motor Sports Newswire (2012, February 16). Globalizing the Yamaha Motor Group’s Engineering, Manufacturing and Marketing Functions. Retrieved from https://motorsportsnewswire.wordpress.com/tag/yamaha-motor-group/
Yamaha. (2013). Annual Report. Retrieved from http://www.yamaha.com/about_yamaha/ir/publications/pdf-data/2013/ann/an-2013e.pdf