The paper "Toyota - New Market Entries and Expansion" is a good example of a business case study. Toyota uses a strong differentiation strategy to reach almost every segment of the market in the automobile industry. They have cars for almost everyone; four-wheel trucks and SUVs for the outdoor rough terrain, standard, everyday use cars and such specialized brands as the Prius for the eco-friendly. In addition to that, they also produce vehicles across all price ranges, from low-cost models like the corolla line to the high cost, high-end market cars like the Lexus, with numerous models in between. 1.2 Design strategy Toyota has a production system called TPS or the Toyota Production System that has constantly facilitated high-quality designs.
The Toyota Production system is based on a lean manufacturing strategy. This concept also includes such manufacturing concepts as the Just-in-time strategy and six sigma. Toyota’ s TPS works on the principles of elimination of waste, determination of profit margins and maintenance of worker mindset (Ohno, 1978). 2.0 New trade theory Developed in the seventies, the new trade theory is based on the principle of improving returns on economies of scale.
In fact, according to some experts, economies of scale have been more influential to companies than their competitive advantage. Toyota’ s use of the new trade theory is on the scale of its production. Outside Japan, Toyota has more than 50 production companies in over 27 regions across the world. To put a clearer perspective on the matter, in the financial year 2012, the company produced 7453781 vehicles across the world, with 3940000 in Japan and the rest spread across various production centers across the world. In addition, it has an extensive production network that ensures an even wider reach. 3.0 Eclectic paradigm Major world companies are increasingly looking for new markets to invest.
The eclectic paradigm posits that companies must meet three conditions; location advantages, ownership advantages and internationalization advantages (Gray, 2003). 3.1 Location advantages Toyota has an extensive production and distribution network (Nkomo, 2013). Its production sites are spread all over the world, divide roughly into three. A third of its production assets are in Japan, a third in Europe and the rest in North America. The company still intends to grow and expand into more markets.
The objective of its location strategy is to reduce the cost of export for finished vehicles, prevent friction arising from regional trade situations and contribute to local economic ecosystems (Hino, 2002). 3.2 Ownership advantage Toyota has a strong culture of focus on research and development to improve aspects of quality, functionality, safety and environmental record its focus on research and development is focused on the improvement of both old and new products. Its production and business strategy is guided by the Toyota philosophy, borne from years of tradition, toyotaism and the Toyota Production Strategy. 3.3 Internationalization advantages Toyota’ s globalization strategy is based on three driving forces (Hino, 2002).
As production trends continue to focus on environmental strategies, Toyota has entered into various production partnerships across the world with such companies as GM and Ford. Environmental technologies require large investment capital for research and development and are increasingly moving from elements of competitive advantage to necessities in vehicles. It has also internationalized its production, with centers of production and distribution set up across the world; Europe, Japan and North America.
Additionally, they have standardized all their production technology across centers of the world.