Analyzing Yanmar Aisa (S) Corporation Pte Ltd: Pestle Analysis and Porter's Five Forces Model

This report analyzes Yanmar Aisa (S) Corporation Pte Ltd using Pestle analysis and Porter's Five Forces Model. It discusses the political, economic, social, technological, legal, and environmental factors affecting the company. It also examines the threat of new entry, bargaining power of suppliers and buyers, threat of substitution, and competitive rivalry. Recommendations for the company are also provided.

Introduction
This report brings out an analytic discussion of Yanmar aisa (s) corporation Pte ltd by
using two important tools named as porter`s five forces model and Pestle analysis. The
company sells and manufactures air conditioning system and other related products. Yanmar
Aisa (Singapore) corporation Pte ltd provides sales and after sales-services of diesel engines
for industrial, driving, power generation system, remote monitoring systems and marine
products to the distributors in different parts of the world (YANMAR, 2019). The company
strives to offer life admirable life cycle value to its customers by providing products and
services. The company and its distributors undertake those activities that can enable the
customers to trust in products and services. Apart from this, all the types of marine
commercial such as marine commercial such as propulsion engine and auxiliary engine with
both high and medium speed. The Japan Quality Assurance Association awarded the
company with ISO 14001 certificate for all the small engines it produces (YANMAR, 2019).
Moreover, the company became the first enterprise who was awarded for marine diesel
engine by the international Maritime organisation. The company was established in 1989,
which is a Singapore based company (YANMAR, 2019). Finally, the company undertakes to
give certain recommendations by providing three generic business strategies. The
consolidated statements for the financial year depicts that the company has generated a
revenue of 749353 million yen in 2016 and 766176 million yen in 2017. The net profit for
2017 was 10843 million yen (YANMAR, 2019).
Pestle analysis
Political factors- The political environment of Singapore is stable. According to facts
of political and economic risk consultancy (PESRC), it is seen that country enjoys low
political risk and it encourages investment. Since after independence, due to relative stable
political conditions, the company is able to make business improvements. As the country`s

sector of operations are more based on petroleum refining industry and the country has a
potential to attract investment (Markets and markets, 2019). The government has also
launched an industry transformation programme in 2017, which will contribute to next phase
of development. In addition to this, under quality growth programme, the company will grow
and drive new values (Yanmar, 2017).
Economic factors- In last few years, Singapore has shown incredible economic
growth. The country is considered as high-income economy. It is seen that the country
promotes two sectors named as pharmaceutical and petroleum industry and these industries
have the potential to attract investment. As political risk is low which helps in accelerating
the economic boom, the Yanmar aisa (s) corporation Pte ltd have favourable conditions to
grow. The industrial sector of the company contributes nearly 24.5 percent to GDP in 2017
and 18.3 percent to GDP in 2018 (Lucintel, 2017). In order to increase the productivity and
the effect of transformational programs, government collaborated with the industry so that it
can identify the challenges and construct the solutions to transform accordingly.
Social factors- The Company aims to offer excellent life cycle values to the
customers with the help of services and products. The country`s population still rely on
traditional values but younger generation has the tendency to follow the western values. As
business, expect that there should be higher purchasing power of customers. The company
provides marine commercial speed engines that need engineering and technical services
(Mindtools, 2019). The reports suggest that local people dislikes blue collar jobs. Below is
the demand changes in the industry-

(Source: Maximize market research, 2019)
Technological factors- Availability has eased communication that increases the
connectivity. Technology advancement has huge significance in YANMAR AISA (S)
CORPORATION PTE LTD`s operations because the company engages in marketing of
diesel engines. E-commerce, eB2C model and widespread IT infrastructure has flourished its
operations (Lucintel, 2017). The country`s technological conditions will transform the digital
economy as the government of Singapore supports innovation, connected technology
infrastructure, and a good business environment. The company should undertake to establish
the aquaculture technology, which is capable enough in delivering a safe, secure, and stable
food supply. While considering the aquaculture technology, highly profitable oysters and
aquaculture can even produce on the surface or tidal flats with the help of oyster spats and
seedlings (Yanmar, 2017). The company`s technology is applied to cultivation of oyster that
is found in japan. Most importantly, the company has to apply science so as to enable their
marine engines to carry those heavy vessels in the ships (Chng, 2016).
Legal factors- the company engages technical and engineering services and the
government believes that electronic commerce needs strict rules and regulations. Some of the
important legislations include electronic transaction act, labour rights, intellectual property

rights, tax issues in relation to import and export procedures, and other e-commerce policy
initiatives. While working in the operations, a company has to provide safety regulations for
the employees working on technical system (Lucintel, 2017). Apart from this, in recent years,
various rules and regulations have been formed to tighten the emissions from the ships.
Environment factors- Establishment of seedling technology will be able to deliver
stable food supply, which is driven by the increasing demand of fishing resources by creating
new value through sustainable production of the marine resources. Yanmar is engaged in
delivering value added oyster stock by processing it through safe and valuable oyster
production process (Today, 2017). New international maritime organisation demands to
minimise the releasing of various gases such as NOx, SO2, and greenhouse gases from the
marine engines. The company has undertaken to form new software, which can promote EGR
technology to limit the emission of NOx particles and smoke. However, the company is well
complying with the environmental rules and also adopt new technologies to manufacture such
marine engine that can control the pollution (Today, 2017).
Porter`s five forces model
Threat of new entry- Every enterprise wants to engage in producing the marine
engines due to increasing liberalised economy and the large profits in the international trade.
However, a huge capital is needed to establish while purchasing huge engine motor
components. However, it is very difficult virtually to establish the container line business,
maintain the risk, and procure large capital to sustain the operating vessels. Moreover, there
is still a huge threat from APL, Maersk, and MSC who have started operating at international
level. Apart from need for huge capital, there are other more factors such as government
rules, policies, licensing which are to be followed (Munplanet, 2019).
Bargaining power of suppliers- The bargaining power of the suppliers is moderate
as motor components with high quality are not available. Labour cost, fuel, manufacturing

company, and infrastructure influence the supplier`s power (Mindtools, 2019). The main
supplier of engine parts is Japan and the supplier has to consider its packaging while
transporting it to the company because the cost of these services will be ultimately borne by
company in the form of freight charges.
With a social factor, the public of Singapore do not like to work as blue-collar
labours, which increases the living standards of the employees and labour costs have been
increasing. The company has to aim to serve its customers, as they are limited to domestic
boundaries. The company uses steam turbine, combined cycle, gas turbine, and CHP
installation market regulated by fuel and CHP technology (PR news wire, 2019).
Bargaining power of buyers- The bargaining power of buyers is less as they are not
subject and drive to down the prices. The buyers are tied to the organisation with the help of
contracts. The customers are not allowed to switch to other competitors. Increased demand of
the commercial vessels such as gas carriers and bulk carriers that has contributed to the
growth of marine engine market. It is clearly based on two factors price and the quality of
service. Price includes freight rate, cost of producing, cost of employing technology that
reduces gas emissions, and cost of advertising the engine among different niche market. In
some areas, buyers can be kings but while dealing with the transportation cargo, it has to
reach the company who are expert in manufacturing and ensure quality. Another service
factors include processing of data documents, movement of containers and bill of lading. It is
difficult to serve the customer with high quality due to increasing cost of fuel and
transportation system.
Threat of substitution- Ship operates through marine engines, which do not have strong
substitution, as hydropower cannot operates while carrying heavy vessels. Substitute goods
pose a threat to the business. Various players in the industry deals in various prices, quality,

and performance that will increase the attractiveness of marine engines. The cost of switching
is much higher as customer stick to current seller that will increase the attractiveness.
Moreover, if the fuel becomes very expensive then the company may change the mode of
transportation to bring its raw material. Moreover, if the country`s international trade starts
relying on road or rail transportation then the demand for marine engine sub components will
decrease (PR news wire, 2019).
Competitive rivalry- Some of the key players who acts as a competitors for Yanmar Co in
the global market are AB Volvo, caterpillar Inc., John Deere, Mitsubishi Heavy industries ltd,
and Scania AB. Moreover, the industry has more than 10 powerful competitors who are
engine manufacturers. All of them provides almost same quality; this indicates that the
competition is fiercing. More in-depth competitive outlook includes key mergers and
acquisitions, partnerships, new product launches, and other new developments while
considering high quality (PR news wire, 2019).
Recommendation
The company should conduct a research so that it can get a detailed insight and form
appropriate strategies to focus on target market. This market segmentation is based on vendor
offerings. As from the above analysis, it can be recommended that to stand in a highly
competitive market, the company have to attain cost leadership with differentiated product
and should serve to niche market (Markets and markets, 2019).
Differentiation- this recommendation deals with the market situation when the
company`s product is stuck in the middle of product life cycle. A differentiation strategy can
improve the inferior performance (Moon, Wesnyan, Hur, and Helm, 2014). This
differentiation comes from the taste and preferences of ports such as producing marine
engines that can lift weight very easily other it may get fail and drown the ship especially
these engines are needed at cargo ports. A focused approach can lead to identification of

better opportunities regarding power, application, fuel, and regional analysis. This will enable
the company to ease the decision-making and empower the strategies with an aim to provide
a holistic view of market information.
Cost leadership- Porter analysis suggests that if the company is able to achieve cost
leadership then it will perform above the average performers. Moreover, The Company will
command the prices within the industry and it will form strategies to stable the revenue
generated, which has been decreasing due to fluctuation in fuel prices (Moon, Wesnyan, Hur,
and Helm, 2014). Moreover, the company has the scope to expand its business from domestic
level to international level with the help of AI engine software and platform providers. The
company has to hire AI system experts who can integrate AI with the marine engines
(Markets and markets, 2019).
Niche market- complying with above two strategies is not enough but the company
has to modify its strategic approach in its generic framework in order to respond to certain
changes in business environment. According to porter, the company should either target the
available market who are the potential customers or should focus to target selected niche
market or any small group so that it can dominate the segment (Moon, Wesnyan, Hur, and
Helm, 2014). Finally, when the company is unable and lose to maintain its expertise its
existing product segment then the company aims to meet the unique needs and a special
attribute of particular customer group.
Conclusion
From the above discussion, it can be concluded that this report undertakes several
factors such as opportunities, challenges, drivers, and restraints that influence the growth of
the market. As a recommendation, the company should start integrating AI system with the
company`s operation. The Pestle analysis depicts that country supports the business but it
suffers from high labour cost. From the Poster`s five forces model, it is seen that company

suffers from high rivalry so it needs competitive advantages to stand in the market.
According to Porter analysis, threat of substitution has led to change in the service quality,
increase in transit time and increase in freight rates. While considering the switching costs,
customers are not affected much because of higher number of suppliers and other freight
forwarders present in the market. It is important to consider that these suppliers hardly make
any difference to any of the shipping lines either financially or socially. Loading of
containers has to treated carefully but it is placed by the third party where supplier may face a
line of challenges.

References
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