Toyota Analysis - Case Study Example

NAME OF THE UNIVERSITY GENERAL ENVIRONMENT ANALYSIS TOYOTA NAME OF THE STUDENT ADM. NO: COURSE NAME: COURSE CODE: LECTURER NAME 1.0. Introduction Toyota Company is a leading car manufacturer, which assembles and distributes cars globally. The company prides itself in technological know-how, a reason that has reinforced the firm’s supremacy in the automobile industry. There are several outstanding factors that have made the firm attain the slot of market leader which includes good management, innovation and demographics. The market structure that Toyota Company operates is perceived differently; some term it monopoly, for the fact that the firm is a leading player in car exportation especially in developing countries (Hiroshu, 2012). Also, the market structure is viewed as an oligopoly, because of presence of other main players in the automobile industry like General Motors. Toyota is keen to understand competitors’ interventions and strategies at the market and respond to them accordingly by perfecting on its core competencies and capabilities. 2.0. Corporate Strategies and Plan Toyota Company embraces three basic corporate strategies that are founded in general operation of its market and business plan. This includes mission statement of the firm, the firm’s goals and core competency and sustainable competitive advantage. 2.1. Mission Statement of Toyota Company Toyota Company focuses in making the world a more flourishing society through the production and distribution of automotives. This makes the firm to be geared towards attaining a steady and long-lasting growth and development in future (Official Toyota Website). The achievement is meant to be harmonised by more than a few aspects which comprise of considerable surroundings, market demographics, internal environment, financial condition, value chain activities and availability of resources. 2.2. Toyota’s Goals The firm is devoted to provision of hybrid cars for each of the model it sells in the marketplace. This is intended to boost the Company’s overall sale of above one million hybrid vehicles worldwide each year (Official Toyota Website). The Company has developed its 2011/2012 Environmental Action Plan which enclosed in six diverse areas, namely; (1) Environmental Management (2) Changes in Energy and Climate (3) Quality of Air (4) Concerned Substances (5) Aspects of Recycling and Improved Resource Utilisation and (6) Societal Cooperation. Toyota Company is dedicated to trim down carbon dioxide emission and it’s assumed to take collective actions of making sure that the environment is conserved appropriately through the utilisation of declared fuel economy values. 2.3. Core Competency of and Sustainable Competitive Advantage The Company is committed towards the attainment of a better and more sustainable economy by being a market leader in production and exportation of automobile. The latest technology has enabled the firm to venture in diverse strategies like manufacturing of hybrid vehicles, a move that is likely to improve its growth and development over a given period of time. This will also help it achieve its set goals and objectives in the automobile industry. The Research and Development Division of Toyota Company is stuffed with experienced professionals of diverse experience in the industry, an aspect expected to keep it at top of the international market in product and service delivery. In addition, the Company’s varied distribution network around the world is believed to a factor that could extend its market to bigger levels (Official Toyota Website). 3.0. General Environment Analysis Toyota Company is termed as one of the leading car manufacturer and exporter globally. An aspect that makes it live up to its mission statement of being a global leader in production of automobiles that are liked everywhere and of good value. The firm has always worked towards the provision of best cars that equals value of customers’ money thus making world a prosperous society to belong to. Hiroshu (2012) asserts that Toyota Company has embarked in giving its clientele the best prices for vehicles at the market and yet still distributes best car models compared to its competitors. This could be the reason behind why customers find Toyota products irresistible at the marketplace, especially in upcoming markets in developing nations. The firm is also devoted in sustainable development as evident in its social responsibilities initiatives that are geared towards environment conservancy. The Company has been able exploit its strengths and opportunities and applies them to craft competitive edge in the automobile industry. For example, the broadly differentiated product line has been utilised to create a worldwide presence at the market. Toyota Company had formerly concentrated on the Japan, African and American markets, but with growing dynamics in the automobile industry, the firm has utilised its global presence strategy to enter into new markets in China and parts of Europe. Toyota Company has seized a strategic position in relation to sustainable development issues. With advocacy for environmentally friendly strategy to develop the auto industry and concerns over global warming effects, the firm has already secured a ready market for its hybrid cars (Official Toyota Website). The firm also intends to improve on this latest technology of hybrid vehicles and sell to other companies around the globe 4.0. SWOT Analysis According to Drucker (2006), for a comprehensive environmental analysis, an organisation has to take into consideration various factors in coming up with new products, renovating and re-inventing existing products and expanding into new potential markets. For this to happen in a systemic and more organised form they have to use various theory models and concepts (SWOT Analysis) to formulate and organise themselves well (Armstrong and Kotler, 2002). According to Armstrong and Kotler (2002) strength and weaknesses entails the internal surroundings elements of a firm and how impact on its operation, whereas opportunities and threats are normally external forces. Business environment for any company is a crucial aspect that affects its activities. For Toyota Company, business environment (external) has brought both opportunities and threats because of the uncertainties involved. To any business, external environment is indecisive, complex and dynamic which calls for more flexibility on the side of organisation in managing them. It’s very difficult for a firm to control an environment because of its unpredictability. The keys aspects surrounding the Toyota Company in terms of SWOT analysis are stated in the table below. 4.1. Internal Factors Internal factors entail strength and weaknesses of the Company as their impact starts from within the Company. The strength and weaknesses of Toyota Company are shown in the table below; Table 1. 4.2. External Factors External factors comprise of opportunities and threats normally originate from outside of the Company, some of the external factors that affect Toyota Company are stated in the table below; Table 2 5.0. Marketing Goals and Objectives Toyota Company has adopted a number of projections to focus in the existing and new markets, a move that is meant to help it realise its marketing goals and objectives. The Company has by now exploited product differentiation which it perceives as the best strategy of penetrating the automobile industry (Official Toyota Website). The firm has also resolved to embrace pricing mechanism in conquer the market and enjoy a competitive edge over its chief competitors like General Motors. Although, the cost of manufacturing a unit is anticipated to go up, mass production in Toyota plants is expected to offset the general cost thus production cost will not be a big concern for that case. This indicates that the firm will be in position to sell its cars at lower price and still make profit. Toyota Company has taken an advantage of mass production to penetrate the emerging markets of new economies with reasonably priced products. For instance, Chinese automotive market represents an extraordinary case of economic development for an emerging market and has the most growth potential in the world (Drummond & Ensor, 2005). It is per capita car ownership is still extremely low at 4.78, though, is estimated to grow significantly. Its domestic manufacturers and suppliers are still government-supported consolidation. The swiftness in supply and demand had been attributed to increased buyers at the market, sound economic reforms and fast transition to full market economy. 5.1. Demographics The population growth globally is constantly increasing the customers’ base in need of affordable cars. The rapidly growing urban population in major cities avails a great advantage to the firm’s realization of a market niche in the automobile industry growth. Changes in the social structures of people from emerging economies are favourable for businesses looking to venture in such markets, for example in China, there is availability of cheaper labour and large urban market. Stress and unemployment make people desperate for jobs thus providing cheaper and efficient labour force (Booz, 2007). There has also been the rising domestic demand for small cars that is attributed to rising incomes and a growing middle class as well as the perceived meaning of owning a car for convenience in travelling is also persistently at rise as well. Toyota Company has positioned itself strategically to successfully meet the increasing demand of cars for this growing population of customers worldwide. 5.2. Development of Strategic Focus Toyota Company is well-placed to capitalise on its strengths and opportunities it has to enter into the emerging markets and build a competitive edge in the automotive industry. For example, the extensively differentiated auto models are helping the Company to have more global presence. This can also be achieved through entering new markets like China and Europe. The company had in the past concentrated on the Africa, Japan and Korea markets and it needs to setup sound strategies to go through the other markets as well. 6.0. Value Chain Activities Toyota Company is committed to production of quality products at the market and made it a canon not to compromise on it beside the cut-throat competition in the automobile industry. This has made clients to remain loyal to the Company despite the turbulent moments it sometimes faces, because it does not bow to competitors pressure. Each one of Toyota’s products is designed to fit into specific target market. The design criteria for Toyota Company vary from top speed, capacity and exterior look such as colour and shape. The Company also launched modest sporty car models with a high speed, which are relatively preferred by younger and single people like celebs, who are adventurous is likely to widen its market share. The models also target the geographical features, cars that cruise rough terrain, or on the smooth tarmac road as and rugged road terrain. Such quality features of cars are deemed to create a positive image for the company and attract more customers to identify with the latest and existing car models globally. Toyota Company has embraced several activities which have been projected within a life span of 3 years as illustrated below showing the aspects that have been targeted every year. Year To be Achieved New Targeted Markets (millions) Cumulative Targeted Markets (millions) Today (2012) Working towards hybrid products 250 250 1st Year (2013) Introduction of pricing mechanism and price differentiation strategies. 320 600 2nd Year (2014) Enhancing hybrid products by use of new technologies 370 970 3rd Year (2015) Product differentiation to meet the needs of the market 420 1320 Table 3 7.0. Financial Condition The financial condition for Toyota Company has been stable for quite some time now, with slight ups and downs because of dynamics in global economy. The close look at previous financial years (FY), let’s say since 2005, the financial position for the Company was impressive with exception of 2009 as a result of economic downturn which left other players in automobile industry shut down. The impressive performance is illustrated below (Johnson, 2009). The introduction of efficient production technologies coupled with the Company’s entrance into new markets of emerging economies after 2009 economic downturn has posted impressive results for the firm. This is illustrated in the table below; Millions of Yen Financial Year (FY) 2009 2010 2011 2012 Projections 2013 Projections Net Sales Operating income Ordinary Income Net Income Research Divindends/yen 1,243,445 54,120 70,912 46,123 30,051 32 1,455,650 65,023 80.636 47,999 32,051 44 1,900,340 89,954 108,484 60,231 30,051 50 1,957,879 98,0530 125,444 81,234 20,051 60 2,000,534 99,760 14,343 57,576 30,051 78 Table 4 References Read More