Japan’s Suzuki Motor Corp to Shut Down Its Motorcycle Assembly Plant in Malaysia

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- Weaknesses

As a recognized organization, Suzuki Motor Corporation offers products that meet the needs of different income groups. The company manufactures many products from cars, motorcycles, all-terrain vehicles, outdoor marine engines, wheelchairs up to small internal combustion engines. Therefore, the organization need to have sufficient allocation to meet each client's demands and need to have several suppliers capable of supplying raw materials in different ways so that product manufacturing can be completed on time as this will ensure that customer needs are met on time and that they can also help the organization to improve its market share. In addition, some of the product produced is more expensive as compared to others. On top of that, lack of experience with foreign markets and heavy import tariffs on Suzuki's fully imported models also causes weaknesses to the company.

- Opportunity

To create an awareness on the environmental, it would be good for the organization to change its manufacturing design. Hence, manufacturing an eco-friendly vehicles that will have low or zero fuel emissions will help save the environment from any pollution. Moreover, the organization should create a better innovations and modernizations product to fulfill the needs it’s the customers. By having more strategic advertising on the product, it could boost its brand name and indirectly increase the organization’s sales and profit. Additionally, by having a large market to operate with global spare parts available in the market can be an opportunities to the company as it can increase demands for Suzuki’s motorcycles. Another way for the company to increase its sales is by increasing its purchasing power of middle class category.

- Threats

Since its existence, Suzuki Motor Corp has been performing really well but over the recent years, performance of the organization has fallen down due to many challenges they had faced. The major threat to the organization is that due to the various recalls that have taken place over the last few years, reputation of the organization can be effected which could result in downturn in the market share of the company[8]. The organization should work more to detect the problem or problem before the product is launched for use by the public so that it can be fixed and corrected. If these issues cannot be tracked, it may result in the decline in stock value and shareholders in the company, may involve huge cost and at the same time will affect the overall Suzuki Motors operations. Moreover, the inflation rates, heavy taxes and the increase in fuel prices are another threats that the company is facing. Other threats that could occurs comes from its tough competitors such as Toyota, Honda, Ducati, Kawasaki and many more. These competitors are selling cheaper imported cars to the society. Also threats happened when numbers of new technology driven players and manufacture are in market.

Besides SWOT analysis, Porter’s Five Forces of Competitive Position Analysis can also be used to explain the competitive strength in Japan’s Suzuki Motor Corp. It is a model of pure competition which implies that risk-adjusted rates of return should be constant across firms and industries[9]. Developed in 1979 by Michael Porter, this model is simple framework to access and evaluate the competitive strength and also position in a business organization. Thus, to understand better in the automotive industry, it is important for the company to use this model as it could provide better understanding whether recent products they produced are significantly and potentially profitable to the company. Porter’s Five Forces Model consist of Threats of New Entrant, Bargaining Power of Buyers, Bargaining Power of Suppliers, Threats of Substitute Product and Rivalry among Competitiors (See Diagram 1.4 for Porter’s Five Forces Model). Threat of new entrants or barriers to entry, Threat of substitute products and Rivalry among Competitors are forces that comes from horizontal competition while The bargaining power of buyers and The bargaining power of suppliers comes from vertical competition.

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Diagram 1.4: Porter’s Five Forces Model

- Threats of New Entrant - Barriers to entry measure how easy or difficult it is for new entrant to enter into the industry. This threats can involve for example from the Goverment policies and taxation, capital requirements, production cycle and learning curve, patents and proprietary knowledge, asset specificity, and economies of scale (cost advantages).

- Bargaining Power of Buyers – This is a forces to know how strong the position of a buyers is. It happen when the product differentiation is high and buyers get incentives in the form of cost discounts and serve better after sales services. Having a customer that has the leverage to determine the price is not a good position.

- Bargaining Power of Suppliers – This forces relates to what the suppliers can do in relationship with the company. It occur when the presence of substitute inputs is high and switching cost of suppliers is also high. Many suppliers rely on one or two motorists to purchase most of their products. If a motorcycle maker decides to change a supplier, it may affect the provider's previous business.

- Threat of Substitute Product - It happend when the technology is better and there are many intense player in the industry. If the product is easily substitued, it is then a threat to the company because it can compete with price.

- Rivalry among Competitors - The company will have to analyzed the level of competition between the existing players in the automotive industry. Since there are rivalry among competitors, the industry will become concentration and there will be a high fixed cost, diversity and low switching cost. The highly competitive industry usually gets low returns because the cost of competition is high.

Refer to the case study, the strategy used is appropriately justified. This is because, Suzuki Malaysia has its own competence but still fails to achieve its goals and objectives consistently over a period of time given. The company is in fact making losses. Moreover, the organization did not perform well and it is regarded as one of the weaker competitors in the market.

ARTICLE 1

PART B:

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Picture 1: Proton signs MoU and Licence Agreement with Suzuki

Referring to article given, Japan’s

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