Toyota Motor Company: Losing its Quality Edge?

ISSUES:
1. The recall of cars with sticky acceleration pedals and the media
2. Increasing maintenance costs of vehicles, rising fuel price and changing customer
preference are challenging threats

PROBLEMS:
1. Could Toyota regain its quality edge in the future?
2. Does the goal of becoming number one auto maker in the world have lost focus on
quality?

SWOT ANALYSIS
Strengths
1. Strong brand equity
2. Innovative culture
3. Long-term relationship with supplier
4. Environmentally safe, quality, durability, reliability, and value for money and
convenient

Weakness
1. Customers not segmented
2. Customers are not being involved in the process
3. Limited Research and Development
4. Lack of a proper sales strength

Opportunities
1. Population Growth
2. World Trade Organization (WTA)
3. Globalization
4. Advance Technology

Threats
1. Political Risk
2. Declining economic growth on a global scale
3. Credit Unavailability
4. The recall of cars with sticky acceleration pedals and the media
5. Increasing maintenance costs of vehicles, rising fuel price and changing customer
preference are challenging threats

TOWS ANALYSIS

IFAS
1. Strong brand equity
2. Innovative culture
3. Long-term
relationship with
supplier
4. Environmentally safe,
quality, durability,
reliability, and value
for money and
convenient

EFAS

O
1. Population Growth
2. World Trade
Organization (WTA)
3. Globalization
4. Advance Technology

T
1. Political Risk
2. Declining economic
growth on a global
scale
3. Credit Unavailability
4. The recall of cars
with sticky
acceleration pedals
and the media attack
5. Increasing
maintenance costs of
vehicles, rising fuel
price and changing
customer preference.

1. Customers not
segmented
2. Customers are not
being involved in the
process
3. Limited Research and
Development
4. Lack of a proper sales
strength

SO

WO

S01: Market Development

(S1,O1)

WO1: Joint venture with

other (W3,O3)

SO2: Market Penetration

(S2,O2)

WO2: Operation
improvement process
(W2,O4)

ST

WT

ST1: Product Development

(S4,T5)

WT1: Liquidation (W4,T2)

ST2: Defensive Strategy

(S1,T4)

WT2: Takeover by the others

company (W4,T3)

STRATEGIC DIRECTION
SO Strategy
Market Development
Being a strong market leader currently, Toyota has the benefit of increase in demand in the
automotive sector in order to achieve more profit in sales.
Market Penetration
Toyota with a strong global presence across the world can use its potential to invest in the
emerging economies like Brazil, China to exploit more benefits these countries possess
To penetrate existing markets is to offering innovative techniques and customer oriented
products
WO Strategy
Joint venture with other
Toyota can offering improved products in order to overcome the loss in sales and negative
impact on its brand image by overcome their research and development with other
manufactures.
Operation improvement process
As the demand for Toyota vehicles is increasing currently can give some support to Toyota, if
the resources are being distributed equally and therefore will give less amount of time to
work on manufacturing facilities specifically in those countries where they are considered to
be expensive.

ST Strategy
Product Development
Offering innovation in products can prevent Toyota from increase in fuel prices and
customers also will have several alternatives.

Defensive Strategy
Toyotas most products are best known for its quality and innovation that can minimize any
bad impact on brand image against its competitors in the manufacturing sector.

WT Strategy
Liquidation
The effect of market capacity can be reduced by focusing on some segments that is able to
afford expensive manufacturing facilities and high standard products which will help Toyota
to produce cars of its best quality
Takeover by the others company
The best alternative is to shift some of the manufacturing operations in other countries
company. That is less influenced by the Yen fluctuation and can improve its financial
conditions affected by economical/political instability at the same time.

RECOMMENDATION
The best strategy to be recommended to Toyota Motor Company is defensive strategy
because the brand image of Toyota is been known for year for offering the high quality
vehicles. The recall of the vehicles will end up to be positive as the company had taken
responsibility for their fault. It shown that Toyota have been proactive by taking
responsibility and quality related to customer problems.