Automotive Industry and Toyota Essay Sample

Automotive Industry and Toyota Pages
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Toyota Motor is one of the leading auto manufacturers in the world. Toyota sells its vehicles in more than 170 countries and regions worldwide. Toyota’s primary markets are Japan, North America, Europe and Asia. It is headquartered in Toyota City, Japan and employed about 316,121 people as on March 31, 2008. Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of FactorTYPE OF FACTOR
•Strong financial performance
•Brand image
•Strong performance in Asia region
•Research and development activities
•Toyota production system Weaknesses
•Poor profitability of ‘financial services’ segment

•Expenses related to post retirement benefits for employees External Opportunities
•Increasing demand for hybrid electric vehicles
•Opportunities in Asian market
•New models Threats
•Economic slowdown
•Competition in the global automotive market
•Tightening emission standards
•Appreciating Japanese Yen against US Dollar SWOT Analysis Toyota
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•New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serves. This is an example of very focused segmentation, targeting and positioning in a number of countries. •In 2003 Toyota knocked its rivals Ford into third spot, to become the World’s second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified product range, highly targeted marketing and a commitment to lean manufacturing and quality. The company makes a large range of vehicles for both private customers and commercial organizations, from the small Yaris to large trucks. The company uses marketing techniques to identify and satisfy customer needs. Its brand is a household name. The company also maximizes profit through efficient manufacturing approaches (e.g. Total Quality Management). Weaknesses

•Being big has its own problems. The World market for cars is in a condition of over supply and so car manufacturers need to make sure that it is their models that consumers want. Toyota markets most of its products in the US and in Japan. Therefore it is exposed to fluctuating economic and political conditions those markets. Perhaps that is why the company is beginning to shift its attentions to the emerging Chinese market. Movements in exchange rates could see the already narrow margins in the car market being reduced. •The company needs to keep producing cars in order to retain its operational efficiency. Car plants represent a huge investment in expensive fixed costs, as well as the high costs of training and retaining labour. So if the car market experiences a down turn, the company could see over capapacity. If on the other hand the car market experiences an upturn, then the company may miss out on potential sales due to under capacity i.e. it takes time to accommodate. This is a typical problem with high volume car manufacturing. Opportunities.

•Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance technologies developed by the organization. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid. Such moves can only firm up Toyota’s interest and investment in hybrid R&D. •Toyota is to target the ‘urban youth’ market. The company has launched its new Aygo, which is targeted at the streetwise youth market and captures (or attempts to) the nature of dance and DJ culture in a very competitive segment. The vehicle itself is a unique convertible, with models extending at their rear! The narrow segment is notorious for it narrow margins and difficulties for branding. Threats.

•Product recalls are always a problem for vehicle manufacturers. In 2005 the company had to recall 880,00 sports utility vehicles and pick up trucks due to faulty front suspension systems. Toyota did not g ive details of how much the recall would cost. The majority of affected vehicles were sold in the US, while the rest were sold in Japan, Europe and Australia. •As with any car manufacturer, Toyota faces tremendous competitive rivalry in the car market. Competition is increasing almost daily, with new entrants coming into the market from China, South Korea and new plants in Eastern Europe. The company is also exposed to any movement in the price of raw materials such as rubber, steel and fuel. The key economies in the Pacific, the US and Europe also experience slow downs. These economic factors are potential threats for Toyota.

What is the swot analysis of Toyota?
Toyota Motor Corporation

•Global organization, with a strong international position in 170 countries worldwide. •High financial strength (1997, sales turnover, £131,511 million), sales growth of 29.3%[1] •Strong brand image based on quality, environmental friendly (greener), customized range. •Industry leader in manufacturing and production. Maximizes profit through efficient lean manufacturing approaches (e.g. Total Quality Management) and JIT (Just in Time) manufacturing and first mover in car research and development[2]. •Excellent penetration in key markets (US, China, EMEA) and now the second largest car manufacturer in the world, surpassing Ford. Weakness

•Japanese car manufacturer – seen as a foreign importer.
•Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may be more strategically located worldwide to take advantage of global efficiency gains. •Some criticism has been made due to large-scale re-call made in 2005, quality issues.

•Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas and electric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at an all time high – this investment and widening of product portfolio fits consumers looking to alternative sources of fuels away from gas guzzling cars[3]. •To expand more aggressively into new segments of the market. The launch of Aygo model by Toyota is intended to take market share in youth market. •To produce cars which are more fuel efficient, have greater performance and less impact on the environment. •To develop new cars which respond to social and institutional needs and wants. The development of electric cars, hybrid fuels, and components reduces the impact on the environment. Toyota’s Eco-Vehicle Assessment System (Eco-VAS) has helped in production, usage, and disposal[4]. •Continued global expansion – especially in the emerging markets e.g. China and India, Russia, where population and demand is accelerating.

•Saturation and increased competition, intense marketing campaigns increasing competitive pressures[5]. •Shifts in the exchange rates affecting profits and cost of raw materials. •Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially new cars). As household budgets tighten – this could lead a decline in new car sales and possible rationalization of dealerships. •Changing demographics e.g. number of large families is declining. Undermining the demand for large family cars[6]. •Changing usage – families using the car less for taking children to schools. Home deliveries. Businesses – restricting business travel (tele-conferencing). Governments encouraging alternative forms of transport – cycling and incentives to use public transport across Europe. •Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who have chosen not to own a car, or decided to use their car less.

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