TOYOTA

TOYOTA MOTOR MOTOR

CORPORATION CORPORATION

Toyota
Motor Corporation
is a multinational
corporation based
in Toyota City,
Aichi, Japan and
was founded by
Kiichiro Toyoda.
In 2010, Toyota
was the largest
automobile
manufacturer in terms of production. In addition to manufacturing automobiles, Toyota also
produces robots and provides financial services through its Toyota Financial Services division.
The Toyota Motor Corporation is listed on the Nikkei as well as the New York Stock Exchange.

BOSTON CONSULTING GROUP MATRIX:

The Boston Consulting Group Matrix is a model used in portfolio planning and is based
on a companys market share versus the market growth rate i. Market growth really depicts
industry attractiveness while market share depicts competitive advantage ii. The BCG Growth
Share Matrix illustrates that an increase of a companys market share will increase cash
generation, otherwise more profitii. It also illustrates the fact that as the market growth of a
company increases, cash consumption is higher, meaning that companies must invest in assets to
increase capacity and thus increased cash consumptionii. An ideal company would need to have
products that contain both high growth products that require cash investments and products with
low growth that generate a large amount of revenue in order to create long term company value ii.
There are four categories in the BCG Growth Share Matrix, with two dimensions as shown in
Figure 1. Products of the company are placed in the BCG matrix and result in the following four
categories in the company portfolio: Stars, Cash Cows, Dogs and Question Marks i. Stars require
a large amount of cash investment however; stars are also large cash generators and are known as
the leaders of the business due to their high relative market share ii. If the product keeps up the
market share, it may become a cash cow when the growth rate of the market declines i. Cash cows
are the foundations of the companys product linei. It has a high market share but low market
growth.i As the product in the product life cycle matures, it will generate the most cash, with
relatively stable growthi. This means that the product will not drastically change, but the
company could still seek large amounts of revenue from the product i. A truly diversified product
will have products that are cash cows in order to be more sustainable in the long termii. As the
market share begins to wither and the product refuses to grow in the market, as in the demand for
the product does not significantly
increase, the product will become a
dog in the market. Dogs have low
market share as well as a low market
growth ratei. This kind of product does
not generate cash nor consume cash in
terms of investment. On the other
hand, Question Marks are rapidly
growing and consume large cash
investmentsi. However, the products
have low market cash, resulting in a
net consumption of cash.i It also has
Figure 1: BCG Growth Share Matrix. Source: netmba.com
the potential to gain market share and
become a star, while it could potentially lose market growth and also become a dog i. Question
marks require further understanding before further investmentsi.

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 BCG GROWTH-SHARE MATRIX OF TOYOTA MOTOR CORPORATION-
IDENTIFICATION AND ANALYSIS

Toyota Camry Toyota Prius

Market Growth

Hybrid

BCG Growth
Share Matrix -
Toyota Toyota RAV4

Toyota Corolla
QUADRANT 1: QUESTION
MARK Market Share

In terms of Toyota, hybrid cars such as the Toyota Prius would be a question mark in the market.
This is due to the fact that hybrids are rather new entrants in the market. Since question marks
have high growth but low market share, Toyota hybrids would be perfect examples of question
marks. The Toyota Prius is the leading hybrid in global sales in 2010 iii. In October 2010, Toyota
Prius hit 2 million in global sales and it hit 1 million in April 2011 in America iv. In September
2011, the Prius in North America sold 9,325 units and sold 93,243 units calendar year to date
(2011)v. These figures relate to the high market growth of the product. At the same time, the
market share for hybrids is relatively low compared to regular automobilesiii. As popular as the
hybrids are due to consumer awareness, tax incentives and fluctuating oil prices as well as
emission standards, the hybrid market only comprises of 1.8% of the retail vehicle market in the
U.Siii. In western U.S., the retail registrations for hybrid cars composed of 5.5% iii. This could
potentially change as the consumer awareness increases in underdeveloped regions and the
Toyota Prius could potentially gain market share.

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QUADRANT 2: STARS

A star in the automobile sector of Toyota Motor Corporation would be the Toyota Camry. The
Camry has been in the market since 1982 and is the best selling car in the United States for over
the past decade. It is currently in the rising growth stage of the product life cycle. In September
2011 alone, Toyota sold 24,851 units and sold 229,521 units in 2011 to date v. This is low
compared to 30,769 units sold in September 2010 and 250,830 units sold in 2010 altogether v.
The Camry has a high market share and since the units sold are high in the US market, it requires
cash investment in order to improve the product and maintain company profits. The high growth
and market share has allowed investors to invest in the hybrid model of the Camry and this could
potentially become the next star as consumer awareness for hybrids increase to promote
environmental sustainability.

QUADRANT 3: CASH COW

Looking at the portfolio of Toyota, the Toyota Corolla is the cash cow. Having been in the market
since 1966, the Toyota Corolla has reached its maturity stage in the product life cycle. This
means that the relative market share for Toyota Corolla is low and the product will not grow in
the market any long. This results in the Corolla being produced for the sake of raking in profits.
Another reason the Corolla is simply a cash cow is due to little cash investments. The Corolla
does not require investments to improve the product, as its market share in the US market is
relatively low, compared to that of the Camry or the Prius. In September 2011, the retail sales for
the Corolla were 16,147 units and a total of 186,891 units in 2011 to date v. This was lower than
the retail sales in the previous year, which were 209,186 units in 2010 in total and 21,060 units
for September 2010 alonev.

QUADRANT 4: THE DOG

Toyota Motor Corporation has a few products that could be classified as dogs in the BCG matrix.
One such product is the Toyota Rav4. It has reached the end of its product life cycle and does
neither generate cash nor does it require cash investment to improve the product vi. According the
chart to the right, the compact cross utility vehicles sold in September 2011, the Toyota Rav4,
sold 7,649 units this year compared to 14,685 units sold in September 2010 v. Toyota owns 11.5%
of the total U.S. market, which is about 4% lower than the previous year of 15.3% vii. This means

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that it has relatively low market share compared to the Detroit Big Three. This is mainly due to
its product recalls in 2009-2010 year and the earthquake and tsunami of March 2011. This recall
diluted Toyotas image and market share in the North American market. The demand for CUVs
has faded and despite Toyotas improvements, the RAV4 has little potential in the North
American Market.

QUESTION MARKS CONVERTED INTO STARS OR DOGS

At the moment, the Toyota Prius is at its beginning of the product life cycle. Having been
introduced into the market at 1997, the Toyota Prius has been one of the most successful and
profitable automobiles in the U.S. market. The Prius hybrid is the leading global automobile in
terms of global sales, having sold over 2
million units this year, and 1 million in the
U.S. alone.iv Even though, the Prius is
experiencing a high growth, it does not have a
large market share at the moment. As hybrid
cars are introduced in the emerging markets
such as BRIC and the product and consumer
awareness increases, the Toyota Prius has the
ability to increase its market share and growth
to become a star globally.

STARS CONVERTED INTO CASH COWS

The Toyota Camry has the potential to be converted into Cash cows. According the BCG Growth
Share matrix, a cash cow is essentially a product that has reached its maturity and has low
growth, while sustaining a high market share. The product has been in the market for nearly 30
years and has been selling successfully in the North American market. At the moment, the
original Camry is facing high growth, however as its successor the Toyota Camry hybrid gains
market share, it may become a cash cow along with the Toyota Corolla.

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 Works Cited

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autosales.html#autosalesE (accessed October 30, 2011).

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http://www.netmba.com/strategy/matrix/bcg/ (accessed October 25, 2011).

"BCG matrix explained." Management Methods | Management Models | Management

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(accessed October 25, 2011).

"Chart Of The Day: Compact CUVs In September And YTD | The Truth About Cars."

New Car Reviews, Ratings & Pricing, Auto News for New Models.

http://www.thetruthaboutcars.com/2011/10/chart-of-the-day-compact-cuvs-in-

september-and-ytd/ (accessed October 30, 2011).

"Toyota Prius Sets 1 Million Sales as Green Car Benchmark | Hybrid Cars." New Hybrid

Reviews, News & Hybrid Mileage (MPG) Info | Hybrid Cars.

http://www.hybridcars.com/news/toyota-prius-sets-1-million-sales-green-car-

benchmark-29731.html (accessed October 26, 2011).

"Toyota USA Newsroom | September 2011 Sales Chart." Toyota USA Newsroom |

Home. http://pressroom.toyota.com/releases/september+2011+sales+chart.htm

(accessed October 26, 2011).

EVWorld.Inc. "US Forecast to remain Leading Hybrid Car Market 2012." US Forecast to

remain Leading Hybrid Car Market 2012. evworld.com/news.cfm?newsid=23563

(accessed October 26, 2011).

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i http://www.netmba.com/strategy/matrix/bcg/

ii http://www.valuebasedmanagement.net/methods_bcgmatrix.html

iii http://evworld.com/news.cfm?newsid=23563

iv http://www.hybridcars.com/news/toyota-prius-sets-1-million-sales-green-car-benchmark-29731.html

v http://pressroom.toyota.com/releases/september+2011+sales+chart.htm

vi http://www.thetruthaboutcars.com/2011/10/chart-of-the-day-compact-cuvs-in-september-and-ytd/

vii http://online.wsj.com/mdc/public/page/2_3022-autosales.html#autosalesE