cose I8

The Hondc-Ycrnohc War (A)*

Yamctha has not only steppecl on the raiL of a tiger, it has ground
it into
the earth. Yamaha wo tsubusu! [Crush. break, srnash, squash,

latLg ht e r, de







iss,ed by Honda's prcsident Kawashima, Januat-v I9g2.l

What had Yamaha done that caused such a violent reacrion from Honda's president
Kawashinla? The explanation begins in the early 1950s when there
were 50 competitors
tighting for position in the Japanese motorcycle marker. Demand was growing
,t"udily ot

over 40Vc per year. Honda was the number two competitor with a
market share of 207r. Its
was Tohatsu, the number one mororcycre manufacturer with
a 22 percent mar(,,.,Irh.rnrry
ket share. By most rneasures, Tohatsu', like the Shoguns whose military

might allowed them
to rule supretne, dominated the .Iapanese motorcycle landscape, Tohatsu's
after-tax profits
were 8Vc ol sales compared with Honda's 3.4Vo.It's debt-to-equity
ratio was 1.5 to 1, whiie
Honda's was 6 to l.In 1955, the widely held view of tire compeiitors
rn Japan's financial
community was:
Tohatsu: With Honda. one of tire two largest motorcycle manufhcturers.
However, it
is considerirbly more profitabre anci its frnancial condition is superior.
Honda: Hish growth contributed to Honda's market share, but overexpansion
deteriorated its flnancial condition because of excess borrowings.2

'rThis case *'as preparerl by Research Assisrant, Sonali Krishn::r, under:
the dir.ection olAssociate professor J. StewBlack. as rhe basis fbr class discussion.


Richard wirrger' "Fast Means Tough in the 90s." Tlrc E.rec'ur ive Speake
lKuirhu-Yoron (Conrpany
Handbook) (Tokyo: Diamond, March I 956),




I I , no. ,3

2 I 2- I 3.

(March I 990): L


The Honda-Yamaha War iA)

However, in the space of five short years, Honda emerged as the undisputed leader of
the Japanese motorcycle...

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