Professional Documents
Culture Documents
Table of Contents
1.0 Abstract................................................................................................................................3
2.0 Introduction..........................................................................................................................4
3.0 SWOT Analysis....................................................................................................................4
4.0 Developing Business Choice................................................................................................5
4.1 Business Focus.................................................................................................................5
4.2 Corporate Choice.............................................................................................................6
4.3 Product development........................................................................................................6
4.4 Market Penetration...........................................................................................................7
4.5 International Choice.........................................................................................................7
5.0 Evaluation of Strategic Choices: SAFe Criteria...................................................................8
5.1 Market Penetration...........................................................................................................9
5.2 Product Development.......................................................................................................9
5.3 Cost leadership...............................................................................................................10
6.0 Strategy Selection...............................................................................................................10
7.0 Stakeholders expectations:.................................................................................................11
8.0 Conclusions and Recommendations..................................................................................12
9.0 References..........................................................................................................................13
1.0 Abstract
The purpose of this paper is to analyze the business environment of Toyota motor
corporation and identifies strategic choices available to the company and their impacts to
the organization. The paper analyzed internal and external environment of TMC using
SWOT framework. It then evaluated business strategies used by Toyota at business,
corporate level and international level. The findings identified strong brand reputation and
innovative culture as Toyotas key strengths while large number of recalls and weak
presence in emerging markets as Toyotas weaknesses. Opportunities include emerging
markets and positive attitudes towards green cars while stiff competition and rising cost
of raw materials as major threats. It further revealed that the use of differentiation and
cost leadership at business level, market penetration and product development strategies
at corporate level and exporting, licensing and acquisition strategies at international level.
The report suggested the use market development strategy to mitigate intense competition
in automobile industry and meets market demands.
2.0 Introduction
This paper analyzes the business environment of Toyota motor corporation and identifies
strategic choices available to the company and their impacts to the organization. Internal
Swot analysis identified strengths and weaknesses of Toyota while external Swot analysis
identified opportunities and threat in external business environment (Henry, 2008). The
paper recommends appropriate strategies to help Toyota meet expectation of key
stakeholders and attain company goals and objectives. Toyota Motor Corporation is
engaged in design, manufacture, assembly and sale of automobiles and related auto parts
and accessories. The company was founded in 1933 and is headquartered in Aichi, Japan
and has grown to become one of the successful and reputable automobile firms in a global
motor industry. It currently employs over 338, 875 full time employees (Toyota Motor
Corporation, 2013).
Weaknesses
$30 Billion
Weak
Innovative culture
sales
Opportunities
presence
in
emerging
markets
Threats
cars
Emerging markets
currencies
Natural disasters
Cost leadership strategy in Toyota has increased its market share by offering vehicles at
affordable price to cost sensitive customers. Toyota produces vehicles at low cost and can
reduce price to gain market share from competitors. The challenge of maintaining
profitability and returns by offering lowest price in the market has been addressed by high
asset turnover through reduced per unit cost of production in mass production, innovation
and effective strategy (Toyota Motor Corporation, 2013). Toyota uses standardization
strategy in the design of car with few cases of during the design of cars to reduce
production runs has adverse effects on profitability of Toyota. The company also
maximizes the use of resources and operates strictly on the policy of low cost of
production (Toyota Motor Corporation, 2013).
Strategic choices
Suitability
Acceptability
Feasibility
Market Penetration
High
Moderate
High
Product development
High
High
High
Market development
Moderate
Moderate
Low
Diversification
Low
Low
Low
Cost leadership
High
High
High
Differentiation
High
Moderate
Moderate
Focused differentiation
Low
Low
Low
Feasibility: TMC views technological development as the future of the company and
motor industry. The company is expected to discover several ground-breaking
technologies after Prius model to remain competitive in the market. Product development
is feasible given the technology and the expertise of Toyotas work force. It has made
rapid progress in product development and is certainly feasible to grow in automobile
market (Medeiros, 2007).
increase market share in emerging markets where Toyota has minimal presence. Cost
leadership will allow Toyota to offer quality cars at affordable price to price sensitive
customers in emerging markets and increase its market share.
Primary expectation
Secondary expectation
Financial return
Added value
Pay
Satisfaction and training
Supply good and services
Quality
Credit worthiness
Payment on time
Payment
Long term relationship
Safety and security
Contribution of quality
Compliance
Improved competitiveness
Figure : Stakeholders expectation
Source : Johnson and Scholes, 2002
is dynamic and innovative culture has enabled Toyota to develop cars that meet the
market. Swot analysis identified strong brand reputation, brand portfolio, industry
leadership and innovative culture as Toyotas key strengths while large number of recalls
and weak presence in emerging markets as Toyotas weaknesses. Opportunities include
changing customer needs, acquisition of other firms emerging markets and positive
attitudes towards green cars while stiff competition, natural disasters, the risk of exchange
rate and rising cost of raw materials as major threats. The use of product development and
cost leadership strategy is recommended to enable Toyota produce automobiles that meets
the needs of the market and complies with environmental requirements and expand its
market share in emerging markets.
9.0 References
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Harvard Business Review, 45(1), 71-83
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(2013) TOYOTA
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from http://f1.gpupdate.net/en/news/2009/09/30/toyota-monitoring-f1-costs-closely
5. Henry, A. (2008). Understanding Strategic Management, Oxford University Press
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Greatest Manufacturer, McGraw Hill.
9. Lynch, R. L. (2012). Strategic Management (2nd ed.). New York: Pearson
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(2013) Toyota
Motor
Corporation, Available
at:http://www.associatedcontent.com/article/267670/toyota_motor_corporation_strate
gic.html?cat=27 (Accessed: 6th June 2014).
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for Non-specialists. Berlin: Butterworth-Heinemann
12. Plunkett Research Ltd. (2009) Automobiles and Trucks Overview, Available
at:http://www.plunkettresearch.com/Industries/AutomobilesTrucks (Accessed:
6th
June 2014).
13. Renertsen, D. (2009). The principles of product development flow: Second
Generation lean product development. Celeritas.
14. Toyota-global.com, 2014. Toyota Global Site | Annual Report 2010. [online] Available
at: <http://www.toyota-global.com/investors/ir_library/annual/pdf/2010> [Accessed
12th June. 2014].