market strategies of toyota

7/28/2019 Market Strategies of Toyota

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ASSIGNMENT

ON

TOYOTA


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Toyota Motor Corporation (TMC) or Toyota is the Japanese multinational

organization and the world largest automobile manufacturers, selling 7.5 million

models annually on all five continents. At present, it employs 70,000 people. Like

many enterprises that have made their mark in history, Toyota has been shaped by a

unique set of values and principles that have their roots in the company's formative

years in Japan.

The supply chain processes and strategies of Toyota are the fundamentals in its dailyoperations. By adhering Just-In-Time (JIT) manufacturing and Toyota Production

System (TPS), Toyota emerges to be one of the world's largest automaker.

The case details the globalization strategies adopted by one of the world's leading

automobile majors, the Japan-based Toyota Motor Corporation (Toyota). It examines

the company's evolution from being Japan's number one automaker to a formidable

competitor in the global automobile market by 2003. It examines the rationale

behind Toyota's decision to concentrate on global expansion and studies the

company's various globalization programs, focusing on the localization efforts. The

case also analyzes the problems faced by the company within Japan and discusses

the steps taken to overcome them. Finally, it examines the results of Toyota's

globalization strategies and discusses its future prospects in the light of intensifying

competition and demand saturation in its core markets, Japan and the US.


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FLASHBACK OF TOYOTA

Japans Sakichi Toyota (Sakichi) diversified from traditional family business of carpentry into

handloom machinery in 1897. Toyota Automatic Loom Works (TALW) founded in 1926 for

manufacturing automatic looms. Sakichi invented a loom that stopped automatically when any of

the threads snapped. This concept (designing equipment to stop so that defects could be fixed

immediately) formed the basis of the Toyota production system (TPS) and later became a majorfactor in the companys success.

In 1933, Sakichi established an automobile department within TALW and the first passenger car

prototype was developed in 1935.

Toyota established in 1937.

Kiichiro Toyoda studied the US automotive industry during visit to Ford. In Japan he customize the

Ford production system where each process in the assembly line produced only the number of

parts needed at the next step on the product line. This system was named Just-in-Time (JIT)

Toyota flourished during the second world war by selling truck and buses to the army. The company

launched its first small car (SA model) in 1947. During this period Toyota went into downsizing and

restructuring the company into separate manufacturing and sales division. In 1950 Toyota Motor

sales company Ltd was formed.

By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.

TOYOTA PHILOSOPHY

Toyota's management philosophy has evolved from the company's origins and has been reflected in

the terms "Lean Manufacturing" and Just In Time Production, which it was instrumental in

developing.

The Toyota Way has four components:

1. Long-term thinking as a basis for management decisions.2. A process for problem-solving.3. Adding value to the organization by developing its people.4. Recognizing that continuously solving root problems drives organizational learning


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ANALYSIS OF MARKETING OF TOYOTA

Toyota manufactures cars, which has a wide coverage from economic minibus to luxurious cars,

SUV. The brand on sell includes Crown, Reiz, Vios, Corolla, Coaster and Prius. And Prius is the brand

or car that Toyota has made a significant success in American market. It is a hybrid vehicle.

Toyota has made its way to America. In 1957, Toyota exported to America at the first time and

established the selling company. In 1984, a joint venture was established with General motor. Co.And in 1997, Prius was first in production and had a launch in America. It was such a great success

that Toyota conquered American market.

It is well known fact that American love cars so much. And due to oil crisis, Americans changed the

need structure for cars, converting their needs to oil saving cars. While American car manufactures

lacked producing such cars, then Toyota caught that opportunity and tried to occupy this niche

market.


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TOYOTA EVOLUTION, REASON FOR BECOMING LEADER AND PROBLEMS FACED BY

TOYOTA

In 1995 Hiroshi Okuda became the president of Toyota. To improve companys sales in domestic

market Toyota adopted following strategy:-

Okuda chose to focus on the dealer network. Under this strategy Toyota took initiative toimprove communication with its dealer.

It offered more incentives to increase sales and encouraged them to attract more prospectsfor test drives.

It identified the younger generation as the means to increase market share in Japan. Underthis strategy it took aggressive measure to attract youngster to its product.

It also realized that the dealer outlets could play an important role in attracting younger customers.

It recognized some functional discrepancies among its dealer outletsDealer outlets were located

too close to each other in some places and even displayed the same model. Toyota adopted

following strategy.

Toyota stopped supplying similar models to such dealer outlets to avoid unnecessary pricecompetition.

It decided to take a strict stance with who failed to meet the targets and withdraw themonetary incentive scheme for them.

It also asked some of its dealer to restructure and rename their outlets in such a way as toattract younger buyer.

The company also invested around $200 million on advertising in fiscal 1995.AS a result of Okudas strategy Toyotas performance began picking up. As the financial base

strengthened. Okuda decided to focus on improving the global sales performance, and took Toyotaon the path of aggressive globalization.

The companys overseas production increased from 1.22 million units per year in 1995 to 1.54

million unit per year in 1998.

While Toyota was drastically increasing its market share in the US, it was finding difficult to perform

well in Europe and Japan.


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Its market share was still below 40% in Japan despite aggressive marketing efforts.

The above scenario was due to a host of reasons like

Excessive capacity Choosy customers Surplus workforce Intensified competition within Japan.

In 1998, Japan sales accounted for mere 38% of the companys total sales compared to 52% in

1990. Also Toyotas Japan sales contributed to a very small share of its profits.

By the late 1990s young buyers accounted for 30% of the customer base as compared toover 45% in the late 1980s. In 1998, models from rival companies such as Honda and BMW

were more popular than the ones offered by Toyota. According to reports, Japanese

youngsters felt that Toyota cars lacked attitude. Toyota realized that by losing its young

customers to other companies, it ran the risk of losing its future market as well.

Alarmed by this scenario, Toyota embarked on an aggressive restructuring exercise and started a

new company, Virtual Venture Co. to design and sell cars that appealed to the young generation.

VVC experimented with many unconventional sales strategies to improve the Toyota models to

people, It built a $83 million amusement park in April 1998, Where it displayed Toyotas visions for

future models and also allowed people to design their own cars.

Beginning in 1999, the company rolled out many new cars specifically designed for the young

Japanese buyers. These cars such as Vitz compact, FunCargo compact, and MR-S sports car, had the

distinctive looks and attitude sought by these buyers. More significantly, a majority of these were

entry-level. To keep the prices down, Toyota shared platforms with other models.

Apart from these new launches, the company also launched upgraded versions of its existing

models such as Windom (Lexus ES 300), Verossa and Brevis. To attract the young buyers, Toyota

took the risk of even de-emphasizing the Toyota brand. For instance the new car bB, which became

very popular with young buyers, had no visible signs of the Toyota name, except for a Toyota

symbol on the steering wheel.

As part of making the companys dealer outlets more appealing to young buyers, the company

renamed one of its five dealership chains Netz, and targeted it exclusively at entry-level buyers.

Toyota also undertook aggressive marketing efforts such as focused advertising of its new models

besides offering high cash rebates to buyers of its flagging models.

Toyota focused on streamlining and reducing its workforce and decided to hire contract employees

against its policy of lifetime employment. It planned to cut about $678 million in costs, employment

mainly by designing cars with fewer and simpler parts and by sharing platforms and parts among its

models.


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The factors that helped Toyota attain and sustain the leadership status in Japan are:- Focus on dealer network. Initiative to improve communication with its dealers. It took aggressive measures to attract youngsters to its products. It stopped supplying similar models to such dealers whose outlets were located too close to

each other to avoid unnecessary price competition.

It decided to take strict stance with those dealers who failed to meet target. The company invested heavily on advertising in fiscal in 1995. (around 200 million) It embarked on an aggressive restructuring exercise. It built a $83 million amusement park in April 1998, where it displayed Toyotas visions for

future models and also allowed people to design their own cars.

As part of making the companys dealer outlets more appealing to young buyers, thecompany renamed one of its five dealership chains Netz, and targeted it exclusively at entry-

level buyers.

It focused on streamlining and reducing its workforce and decided to hire contractemployees against its policy of lifetime employment.

It planned to cut about $678 million in costs.

Problems the company faced in this market later on:-The problem was drastically increasing its market share in the US, it was finding it difficult to

perform well in Japan. Its market share was still below 40% in Japan despite aggressive marketing

efforts. This happened because of number of reasons like:-

Excessive capacity Choosy customers, Surplus workforce Intensified competition

It is already mentioned regarding problem faced by Toyota and the strategy it adopted to come out

of the problem.

Over all the strategy it adopted to became leader in automobile market in Japan became the best

practices in automobile sectors.


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Toyotas decision to spread its operations across various geographical regions &

focus on young buyers in its core markets.

3 different program adopted that how localization of manufacturing was expected

to help the company?

For though buyers 40 to 69 years old have averaged more than twice as many new-car buys since1995, 25- to 34-year olds alone should pack $1.2 trillion in buying power by the end of this year.

And they'll spend $70 billion of it on vehicles and other automotive purchases. Given that today's

18-year-old will buy about 13 vehicles during his or her lifetime from 8.4 in 1970.

The under-35 automotive market didn't exist a half century ago.

Without doubt, entry-level buyers just out of high school and college are more image-conscious and

brand oriented than older buyers. And automakers must snag these buyers when they dont; it

hurts their chances of getting them back later. But it's not easy. Generally, people no longer act

their age.

"Over the past few years, the Jetta has been targeted at younger people, kids getting out of college.

It's made a huge impression." It doesn't hurt that it's a quality product with a popular design, he

adds. Meanwhile, in East Providence, R.I., Ford dealer Bob Tasca III sees young women going for the

Jetta because it's "like a mini luxury car".

On the other hand, Tasca Ford is mainly selling supposed youth magnet Ford Focus to customers

over 45. Yet Tasca is excited about what the Focus is doing nationally: attracting younger buyers

into the brand through edgy commercials and special editions, such as the Focus Street, whose

marketing connects with the audience via techno-music. "You'll see a migration pattern," says

Focus brand manager Bob Fesmire of the long-term prospects for Focus and the Ford brand. Some

Focus owners will buy another; others those marrying and starting families will buy a different Ford,

such as the Windstar, he says.

At Toyota, loyal but aging buyers have some observers concerned. Though the maker has ridden

the wave of young Baby-Boomers in recent decades, its styling may not be hip enough for today's

first-time buyers and new college grads. The Echo, though priced low, didn't resonate with younger

buyers, but ended up drawing folks over 40. Under-35 buyers are "more educated than when I was

their age," says one Toyota general sales manager. "They're not afraid

of the imports like their parents might have been. They want to make sure they're going to get

something that will last them, give them good fuel economy, and make them feel safe." Price

seems less important for young Toyota buyers, he adds.

Young buyers who have money often make contact via the Internet, say dealers John Weinbergerand Scott Vanderbeek. "They're looking for a specific luxury car that may not be in their

hometown", says Weinberger of Continental Motors (including Acura, Audi, Bentley, Ferrari, and

Rolls-Royce), near Chicago. Buyers in their 20s are after the 3-series and get hooked, say Roseville

salesperson Candy


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Beck, through BMW's college grad program with terms up to 60 months for financing or leasing a

new or certified used Bimmer.

One survey indicated that 78 percent of college students look at price first. Then comes reliability

(75 percent). Also, 48 percent of students plan to buy a new car, but 52 percent intend to buy used

which may be good news for makers with robust used-car certification programs. The 34 percent

intending to buy new in the next year plan to spend less than $20,000.

Of course, dealers use some automaker incentives with young buyers. "We advertise the first-time

buyer programs," says Earnhardt Auto Centers corporate general sales manager Steve Arey, who

also does many secondary finance deals. Some college-grad incentives, such as Toyota's and Ford's,

involve $400 rebates. And, says Arey, "We deal heavily in program cars. A lot of the Hyundais are

really popular. They like that warranty." in any event, financing "is going to be the key. If they have

the program for them, they'll buy [new] cars. If not, they'll buy used."

Rationale behind Toyotas decision to spread its operation across various geographical region:

1)

Early 70s prod & sales was behind from Ford and GM.2) Domestic sale gone to decline.3) The need to explore new markets and maintain a leading position is extremely urgent.

Without proper localization, this can hardly become reality. Due to the growing market and

increasing competition, localization is the right move forward.

Three different programs adopted

New Global business plan (1955-1998) Global vision 2005 (19962005)

Global vision 2010 (2002 2010)

New Global business plan (1955-1998): In June 1995, Toyota announced the 'New Global

Business Plan,' aimed at advancing localization (of production) and increasing imports (through

collaboration with foreign automobile companies) over a three year period. A major objective

of this plan was to increase Toyota's offshore production capacity to 2 million units by 1998.

This was the major proactive plan which is aimed for almost 43 years future. Keeping on the

mind of location advantage Toyota mainly focused on overseas production. And on this concern

Toyota established new plants and expanded the capacity of plants.

Especially in North America, in addition to expanding existing plants such as

Toyota Motor Manufacturing Kentucky, Inc. (TMMK) (from 400,000 units/year to500,000 units/year) and

Toyota Motor Manufacturing Canada Inc. (TMMC) (from 100,000 units/year to200,000 units/year), new plants such as

Toyota Motor Manufacturing, Indiana, Inc. (TMMI) and Toyota Motor Manufacturing, West Virginia, Inc. (TMMWV) were brought online,

increasing annual production capacity from 900,000 units in 1994 to 1.2 million units

in 1998 (total production capacity is expected to increase to 1.25 million units/year in

2000).


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In Europe, Toyota Motor Manufacturing France S.A.S. (TMMF) was established in France in

November 1998. It is scheduled to go into operation in 2001, with an annual production target

of 150,000 units of the Yaris, a strategic vehicle for the European market. In Asia as well,

where economic stagnation has been continuing, TMC established a supply structure in

anticipation of market recovery, starting up second plants in Thailand, Indonesia, the

Philippines, and Taiwan.

Next, in the area of increasing imports, TMC strengthened the sales structure of the DUO

stores, which sell VW/Audi cars, expanded imports of completely built-up cars, and began

selling the Avalon, a passenger car made at TMMK, in May 1995 and the Toyota Cavalier,

made by GM, in January 1996. TMC also expanded its efforts to increase imports, including

foreign aftermarket parts, by establishing TACTI Corporation to procure and sell new brands

of aftermarket parts and by increasing the number of its directly owned "jms" car shops to 28

by March 1999.

Furthermore, TMC implemented various steps to promote the "Toyota Global Optimum

Purchasing System"and has made steady progress, e.g., facilitating access for prospective

overseas suppliers by publishing the contents of its Supplier's Guide on the Internet (in

November 1997), and constructing a Suppliers Center (in April 1998) which can be used for

exhibiting new parts, etc

Although the New Global Business Plan has come to a close, TMC plans to continue expanding

its business operations aggressively on a global scale in the future.


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SPECIFIC DETAILS OF THE MAJOR AREAS ARE AS FOLLOWS:-

I. Advancing Localization

Since the New Global Business Plan was announced in 1995, TMC's overseas production hasbeen expanding on schedule, increasing from 1.22 million units per year in 1994 to 1.54

million units per year in 1998.

1. North America

TMC's North American production capacity increased to 1.2 million units per year in 1998. In

addition to expanding the existing plants, two new plants (TMMI and TMMWV) were brought

online on schedule.

In the year 2000, TMC's total North American production capacity will increase to 1.25 millionunits per year with production starting of a new SUV model at TMMI. TMC also plans to

exceed the originally announced localization plan by producing additional V6 engines

(summer 1999) and starting production of automatic transmissions for the Camry (spring

2001), both at TMMWV.

North American production results increased from about 740,000 units in 1994 to about 1.01

million units in 1998.

In 1998 production at TMMK was about 480,000 units (1994 results were about290,000 units). Expansion of production capacity to 500,000 units per year has been

achieved as outlined in the plan.

The line-off ceremony for the Tundra was held in December 1998 at TMMI. Mass-production started in February 1999 and plans call for production of 100,000

units/year. Production of a new Tundra-based SUV is planned to begin in the fall of

2000. Total production capacity will reach 150,000 units.

Assembly of Corolla engines began in November 1998 at TMMWV, with a plannedinitial production level of 300,000 units per year. Production of about 200,000 V6

engines per year will begin in summer 1999. As a result, annual production capacity

will reach 500,000 units in summer 1999. Coupled with the above increases, Bodine

Aluminum, Inc. plans to expand its production of cast aluminum parts for V6 engines

from the current level of 180,000 units per year to 380,000 units per year from early

2000. Beginning in the spring of 2001, moreover, TMMWV will start producing

automatic transmissions for the Camry (at an annual production rate of 360,000 units).

In 1998 actual production at TMMC in Canada was about 170,000 units (1994 resultwas about 90,000 units). Expansion of production capacity to 200,000 units per year

was achieved in 1997. Production of the new Solara model began in June 1998.

Total exports of vehicles from the U.S. amounted to 36,000 units. (The cumulativetotal for 1995 through 1998 was about 240,000 units.)


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2. Europe

European production capacity expanded to 220,000 units by the end of 1998. Toyota Motor

Manufacturing (UK) Ltd. (TMUK)'s second assembly plant started building Corolla lift-back

models in September 1998. Total European production capacity will reach 350 - 400,000 unitsin 2001, when the French plant goes into production.

In 1998 vehicle production result at TMUK was about 170,000 units (1994 result was about

90,000 units).

In 1998 engine production at TMUK was about 110,000 units (1994 actual productionwas about 80,000 units). TMUK's engine production capacity will increase from the

current level of 150,000 units/year to 200,000 units/year by the end of 1999, and to

between 350,000 and 400,000 units/year in 2001. A casting process will also be added

to the engine production process (with the start of production planned for 2000).

The new production company, Toyota Motor Manufacturing France S.A.S., establishedin Valenciennes, France, in October 1998 is proceeding with plant construction with

the goal of starting production by early 2001 (at the rate of 150,000 units per year).

In order to support Toyota's European manufacturing operations, Toyota MotorEurope Manufacturing (TMEM) was formed in Brussels, Belgium, in October 1998.

In July 1998, TMC established a design center in the Cote d'Azur, France (with the startof operations planned for early 2000).

Exports of TMUK-produced cars to countries outside the EU, which began in 1996,reached about 7,000 units in 1998. (The cumulative total for 1996 through 1998 was

about 18,000 units.) Exports of engines to Turkey reached about 8,000 units in 1998.

(The cumulative total for 1996 through 1998 was 45,000 units.)


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3. Asia and Oceania

Production capacity in Asia and Oceania expanded to 640,000 units in 1998. Against the

background of stagnating economies and a shrinking automobile market in Asia, 1998

production result in Asia and Oceania was about 280,000 units (1994 actual production was

about 410,000 units). To maintain local operations and employment levels, TMC has been

taking such measures as the expansion of exports from local operations, support of training,and active support of management of parts makers and dealers.

In 1998 vehicle production in Taiwan was about 73,000 units (1994 actual productionwas about 65,000 units).

In 1998 vehicle production in the Philippines was about 11,000 units (1994 actualproduction was about 30,000 units). Production of constant-velocity joints was about

57,000 units. In addition, transmission exports to Japan began in March 1998.

In 1998 vehicle production in Thailand was about 35,000 units (1994 actual productionwas about 110,000 units). Production of engine blocks was about 100,000 units (1994

actual production was about 53,000 units). In April 1998, the export to South Africa

began of Hilux production parts made in Thailand. In July 1998, the export of Corolla

bumpers to Brazil began. In August 1998, the export of Hilux made in Thailand to

Australia began.

In 1998 vehicle production result in Indonesia was about 17,000 units (1994 actualproduction was about 80,000 units). In February 1998, production began at P.T.

Toyota-Astra Motor's (TAM) second plant (Karawang Plant). 1998 engine production at

TAM was about 36,000 units (1994 actual production was about 70,000 units).

In China, Toyota continues to build our parts production network. In June 1998, theline-off ceremony for a constant velocity joint production joint venture was held. In

July 1998, the line-off ceremony for a engine production joint venture was held. In

January 1999, the line-off ceremony for a forged parts manufacturer was held. As for

vehicle production, in November 1998, a manufacturer of compact buses was set up.

TMC is also undertaking negotiations with the Chinese government on a small car

project. In addition TMC has been providing support for increasing production capacity

to 150,000 units/year targeting sales of 100,000 units per year for the Tianjin Charade.

Finally, in February 1998 ToyotaTechnicalCenter (China), Ltd. was established to

provide production and development support, with operations scheduled to begin in

April 1999.

In 1998 vehicle production result in Malaysia was about 6,000 units (1994 actualproduction was about 17,000 units). 1998 production result of power steering units at

T & K AutopartsSdn. Bhd. was about 27,000 units. 1998 actual production of lower balljoints was about 12,000 units.

In 1998 vehicle production result in Vietnam was about 2,000 units. In 1998 vehicle production result in Australia was about 100,000 units (1994 actual

production was about 78,000 units). 1998 exports of Australian-made Camrys totaled

about 30,000 units. (The cumulative total for 1996 through 1998 was about 70,000

units.)

In 1998 vehicle production result in New Zealandwas about 4,000 units (1994 actualproduction was about 15,000 units).


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4. Other regions

TMC is also moving forward with projects in the following regions, which were not included in

the original plan:

In August 1998, Corolla production began in Indaiatuba, Sao Paulo, Brazil, with aproduction capacity of 15,000 units per year.

In India, TMC is preparing to start production of family type diesel passenger vehiclesexclusively designed for the Indian market by the end of 1999. The plant building was

completed in February 1999

As a result of the foregoing activities, the percentage of worldwide sales (excluding Japan)

accounted for by overseas-produced vehicles reached 52% in 1998 (percentage in 1994 was

48%).

5. Parts related

For major parts, such as engines and stamped parts, as well as facilities and materials,TMC is making steady progress in localization, with local procurement being the rule.

In July 1996, TMC published the "Supplier's Guide" to foster understanding by newsuppliers of TMC's procurement activities and sales approach procedures, as well as to

help current suppliers understand better TMC's procurement policy and procedures. In

November 1997, TMC published the contents of its Supplier's Guide on the Internet to

facilitate access for prospective suppliers.

The "Global Optimum Purchasing System" is already in operation in North America and Europe,and preparations are underway to establish the same system in Asia and Oceania. The following

three main pillars of this system are being enhanced:

New Supplier & New Technology Cultivation Program To cultivate new suppliers,TMC has been holding new parts exhibits, JAMA/CLEPA business talks (in

November 1997), JAMA/MEMA business talks (in November 1998), theme

exhibits such as "New manufacturing methods exhibition" and "World No. 1

activities exhibition," etc. TMC is aggressively promoting new parts exhibits for

global suppliers.

Current Supplier Improvement Support Program As part of this program, anexpected value system is being implemented in 11 countries worldwide. A system

has been established in each region to spell out the expected values and to

recognize those suppliers who meet them. In February 1999, a procurement

policy explanation meeting was held in Japan with global suppliers in attendance.

International Price Comparison System This system went into full operation inAugust 1995, and is being promoted as a system for updating/adding price data

and for applying such data to new products.


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II. INCREASING IMPORTS

1. Increase of TMC cars produced overseas, and foreign makers' cars

Sales result of VW/Audi cars through DUO dealers were about 29,000 units. (Thecumulative total for 1995 through 1998 was about 119,000 units.) At the end of 1998,

the nationwide sales network consisted of 144 sales outlets.

Sales results of the Toyota Cavalier were about 7,000 units. (The cumulative total for1996 through 1998 was about 28,000 units.)

Sales results of the Avalon made at TMMK were 4,000 units. (The cumulative total for1995 through 1998, including the Scepter, was about 59,000 units.)

2. Purchasing and parts

In April 1998, to further facilitate sales by suppliers, TMC opened a SuppliersCenter (inToyotaCity, AichiPrefecture) that can be used for exhibiting new parts, etc.

For the importation of originally equipped parts, TMC is promoting:1) New Supplier & New Technology Discovery Program,

2) Current Supplier Improvement Support Program, and

3) International Price Comparison System, etc., of the "Global Optimum Purchasing

System" which is based on fair and objective evaluation, utilizing the same approach TMCis using to promote local purchasing.

In April 1996, TMC established TACTI Corporation to procure and sell new brands ofaftermarket parts. In November 1996, TMC began the operation of its directly owned

"jms" car shops, and increased their number to 28 shops by the end of March 1999.

The locations include: Sapporo (3), Kushiro, Hakodate, Hachinohe, Morioka, Sendai,

Mito, Kooriyama, Utsunomiya (2), Chiba, Tokyo, Kanagawa (2), Aichi (2), Gifu, Kobe (2),

Okayama, Takamatsu, Hiroshima (2), Fukuoka, Oita, and Kumamoto.

Cooperation with TACTI has significantly bolstered the lineup of imported productshandled by TMC parts distributors. As part of a plan to increase the sales of TACTIproducts, efforts to increase sales are continuing.


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3. Activities to promote understanding

TMC established an internal "contact point" in July 1995 to deal with inquiries relatedto handling foreign cars, and informed interested parties through visits and

announcements. So far, there have been contacts from several foreign makers.

Global vision 2005 (1996 2005): Cho decided to focus more on localization - he believed that by

doing so, Toyota would be able to provide its customers with the products they needed, where they

needed them. This was expected to help build mutually benefiting, long-term relationships with

local suppliers and fulfill Toyota's commitments to local labor and communities. Cho defined

globalization as 'global localization.' Therefore, besides focusing on increasing the number of

manufacturing centers and expanding the sales networks worldwide, Toyota also focused on

localizing design, development and purchasing in every region and country.

Its implemented Kaizen and many philosophies. A new concept of just in time (JIT) al so innovated.

Also they adopted few western management practices in addition to the traditional Japanese ones.

All practices gave ample of improvement as its Kentucky plant won four Gold plant quality award

from JD power and Association.

Global vision 2010 (2002 2010): In April 2002, Toyota announced another corporate strategy to

boost its globalization efforts.

This initiative, termed the '2010 Global Vision' was aimed at achieving a 15% market share (from

the prevailing 10%) of the global automobile market by early 2010, exceeding the 14.2% market

share held by the leader GM.

The theme of the new vision was 'Innovation into the Future,' which focused on four key

components: Recycling Based Society; Age of Information Technology; Development of

Motorization on a Global Sale; and Diverse Society.


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Considering the extremely competitive global market scenario and the nearly

saturated demand in its core automobile markets (US and Japan ) &measures that

could help the company achieve its global targets.

Toyota hopes that the 21st century will be truly prosperous for society, and aims to grow as a

company together with its stakeholders, including customers, shareholders, business partners, and

employees, through making things and making automobiles, while seeking harmony with people,

society, the global environment and the world economy.

In order to put these management principles into practice, the "Guiding Principles at Toyota Motor

Corporation" were established as the fundamental management policy. These principles were

adopted in 1992 to codify the business spirit handed down since the company's foundation, and

revised in 1997 to add the stipulation of legal compliance. Each of the seven items is a cornerstone

of Toyota's business activities.

With 2010 as the turning point, in April 2002 Toyota adopted the Global Vision 2010 whichproposes the corporate image for which Toyota should strive . Centered on the basic theme of

"Innovation into the Future A Passion to Create a Better Society," and with a view toward what

society is expected to be like in the medium to long term, the Vision sets the course for the multi-

faceted roles to be played by Toyota about society, people and the Earth.

The fundamental thinking for Global Vision 2010 has three elements:

1) To step beyond "harmonious growth" and demonstrate our responsibilities as a world leader;.

2) To benefit society through monozukuri (manufacture of value-added products) and"technological innovation"; and

3) To share prosperity with our employees.

In order for each employee to realize the image that Toyota is striving to achieve in the future,

without complacency, it is important to undertake a paradigm change from the following three

perspectives:

(1) Technology development / Product development;

(2) Management; and(3)Profit structures.

In June 2003, Toyota introduced a new management system that features, among other

enhancements, a streamlined board of directors and the new position of non-board managing

officer, aimed at speeding up operations by making the decision-making structure less vertical. At

the same time, the system hopes to strengthen corporate auditing efforts by increasing the number

of outside corporate auditors. With global competition growing evermore severe, Toyota is striving

to achieve the objectives outlined in Global Vision 2010 by boosting its competitiveness.

But it is very tough to achieve the goal of attain its 15% market share. The reasons behind it are asfollows-


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Under previous presidents, Toyota Motor Corp. had set a goal of reaching 15 per cent global market

share in global vehicle sales sometime after 2010. Until last year's financial crisis, which sent sales

crashing, it had been steadily expanding production toward that goal.

The executive, who spoke on condition of anonymity because he spoke to select reporters, said the

automaker will still use numbers in their business plans, but "the vision" had changed under

President Akio Toyoda.

Toyoda, who took office in June, wasn't comfortable with racing toward numbers, and instead

wanted to return to the old-fashioned "Toyota Way" of understanding customer needs and

developing products to fill them, the executive said.

"Our president doesn't like numbers or documents," he said.

But the executive made clear Toyota remains bullish on sales, especially in emerging markets,

which now make up half of the global auto market.

A recovery in the U.S. auto market must come with bigger sales in China, South America, the Middle

East and other emerging markets to work as the "two engines" of growth for a recovery, he said.

Toyota is hoping to sell more than 2 million vehicles in emerging markets this year, which will make

up about a third of its overall vehicle sales, the executive said.

Earlier this week, Toyota raised its vehicle sales forecast for the fiscal year through March 2010, to

6.6 million vehicles from its initial forecast for 6.5 million vehicles.

The appointment of Toyoda, the grandson of Toyota's founder, has been viewed as a morale boost

for workers, dealers and suppliers as the maker of the Prius hybrid and Lexus luxury car fights for a

recovery.

Toyota racked up its worst loss in its seven-decade history for the fiscal year ended March, and is

expecting to stay in the red for the fiscal year through March 2010.

Speaking on the New United Motor Manufacturing Inc., or NUMMI, plant in Fremont, California, a

joint venture with U.S. automaker General Motors Corp., the executive said Toyota will make a

decision by the end of August. Details on what to do must be worked out, he said without

elaborating.

So this situation shows that it is the tough time for Toyota and tough to attain the15% market

share.


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Another reason is that if we analyze the financial position of Toyota then

we find as follows.

If we see the financial report of Toyota then we find in 2009 financial year Toyota beared the loss

of 437 billion yen. It only happens when any company could not sell up to that volume in which that

company take out its costs of production and other cost which is related to production and final

sales.

Now we should look another position of the company .

By above report of Toyotas consolidated financial summary, We can analyze that the condition of

Toyota in market will not be good because as they have projected for 2010, they will have to bear

the loss next year also, according to the FY2010 forecast report.

So its tough to attain the 15% market share till 2010.


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THE TOYOTA PRODUCTION SYSTEM

Toyotas approach to automobile production, with its inherent quality controls, revolutionized the

industry. Its just-in-time supply-chain concept has become a model for manufacturers around the

world, and not just for automakers.

The Toyota Production System (TPS) calls for the end product to be pulled through the system.

This means the right parts reach the assembly line at the right place, just as they are needed, andwith no excess.

This approach represented a radical departure from conventional manufacturing systems, which

require large inventories in order to push as much product as possible through production lines,

regardless of actual demand. The idea of TPS, the contrary, is to produce only the products

required in the precise quantities desired at a given point in time

Focus on flexibility

By basing production on demand rather than simply on capacity, Toyota manages to keep

inventories, both of parts and of finished goods, to a strict minimum. But this is only one of themore obvious advantages of Toyotas unconventional approach. By focusing on smaller production

lots and producing only what customers require when they require it, Toyota has developed a

flexibility and responsiveness that continues to set the standard for the industry.

With its Attention to continuous improvement (Kaizen), Toyota has attained die-changeover and

machine-set times that are a fraction of its competitors'.Thus its capacity for reacting quickly to

new market trends makes TPS an ideal system in todays rapidly changing global business

environment.

Just as important is ensuring quality control, and the delivery of reliable and dependable products

to customers. If a problem arises at any stage of production, Toyotas automatic error detection

system, called Jidoka, flags the defect and enables line employees to take the necessary steps toresolve it on the spot even if that means bringing production to a halt.

By calling attention to the equipment when an error first occurs, the Toyota system makes it easier

to identify the source of the problem and prevents defects from progressing to subsequent stages

of production. Only a system as agile and quality-oriented as TPS could make such measures

economically possible.

This approach not only helps eliminate waste, which makes TPS more respectful of the

environment, it also means that customers can rest assured that Toyota products will conform to

the highest standards of quality, reliability and durability.


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VALUE CHAIN ANALYSIS OF TOYOTA

The value chain is a systematic approach to examining the development of competitive advantage.

It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a

series of activities that create and build value. They culminate in the total value delivered by an

organization. The 'margin' depicted in the diagram is the same as added value. The organization is

split into 'primary activities' and 'support activities.'

PRIMARY ACTIVITIES

Inbound Logistics:

Here goods are received from a company's suppliers. They are stored until they are needed on the

production/assembly line. Goods are moved around the organization. Toyota motors purchase their

raw material from all around the world. In order to maximize their availability of raw material

Toyota motors maintain good relationship with their suppliers. Toyota use JIT (Just In Time)approach for handling of raw material.

Operations:

This is where goods are manufactured or assembled. Individual operations could include organizing

the parts to make new cars & the final tune for a new car's engine. Toyota motors are known for

their reliability which comes from efficient operations.

Outbound Logistics:

The goods are now finished, and they need to be sent along the supply chain to wholesalers,

retailers or the final consumer. Toyota motors manage their own Show rooms in differentcountries. Toyota motors make their product easily assessable.

Marketing and Sales:

In true customer orientated fashion, at this stage the Toyota motors prepares the offering to meet

the needs of targeted customers. This area focuses strongly upon marketing communications and

the promotions mix.

Service:

This includes all areas of service such as final checking, after-sales service, complaints handling,

training and so on. Toyota value their customers.


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SUPPORT ACTIVITIES

Procurement:

This function is responsible for all purchasing of goods, services and materials. The aim is to secure

the lowest possible price for purchases of the highest possible quality. Toyota motors will be

responsible for outsourcing (components or operations that would normally be done in-house are

done by other organizations), and e-Purchasing (using IT and web-based technologies to achieve

procurement aims).

Technology Development:

Technology is an important source of competitive advantage. Companies need to innovate to

reduce costs and to protect and sustain competitive advantage. Toyota motors implemented

production technology, Internet marketing activities, lean manufacturing, Customer Relationship

Management (CRM), and many other technological developments.

Human Resource Management (HRM):

Employees are an expensive and vital resource. Toyota motors manage recruitment and s election,

training and development, and rewards and remuneration. Toyota motors consider theiremployees as HUMAN CAPITAL. The mission and objectives of the Toyota motor is the driving force

behind the HRM strategy.

Toyota motors uses following techniques to retain their employes:

Recruitment Selection Training and development Compensation Maintenance

Firm Infrastructure:This activity includes and is driven by corporate or strategic planning. Toyota motors implemented

Management Information System (MIS), and other mechanisms for planning and control in

different departments.


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TOYOTA - ACROSS THE WORLD

Austria Belgium Bosnia Herzegovina Bulgaria Canary Islands Croatia Cyprus Czech Republic Denmark Eire Estonia Finland France Germany Gibraltar Great Britain Greece Sweden Switzerland Turkey Ukraine Toyota Japan Toyota US

Hungary Iceland Israel Italy Kazakhstan Latvia Lithuania Luxembourg Macedonia Malta Moldova Monaco Netherlands Norway Poland Portugal Romania Russia Serbia and Montenegro Slovakia Slovenia Spain
http://www.toyota.at/http://www.toyota.be/http://www.toyota.ba/http://www.toyota.bg/http://www.toyota-canarias.es/http://www.toyota.hr/http://www.toyota.com.cy/http://www.toyota.cz/http://www.toyota.dk/http://www.toyota.ie/http://www.toyota.ee/http://www.toyota.fi/http://www.toyota.fr/http://www.toyota.de/http://www.toyota-gib.com/http://www.toyota.co.uk/http://www.toyota.gr/http://www.toyota.se/http://www.toyota.ch/http://www.toyotasa.com.tr/http://www.toyota.ua/http://www.toyota.hu/http://www.toyota.is/http://www.toyota.co.il/http://www.toyota.it/http://www.toyota.kz/http://www.toyota.lv/http://www.toyota.lt/http://www.toyota.lu/http://www.toyota.com.mk/http://www.toyota.com.mt/http://www.toyota.md/http://www.toyota.fr/http://www.toyota.nl/http://www.toyota.no/http://www.toyota.pl/http://www.toyota.pt/http://www.toyota.ro/http://www.toyota.ru/http://www.toyota.co.yu/http://www.toyota.sk/http://www.toyota.si/http://www.toyota.es/http://www.toyota.es/http://www.toyota.si/http://www.toyota.sk/http://www.toyota.co.yu/http://www.toyota.ru/http://www.toyota.ro/http://www.toyota.pt/http://www.toyota.pl/http://www.toyota.no/http://www.toyota.nl/http://www.toyota.fr/http://www.toyota.md/http://www.toyota.com.mt/http://www.toyota.com.mk/http://www.toyota.lu/http://www.toyota.lt/http://www.toyota.lv/http://www.toyota.kz/http://www.toyota.it/http://www.toyota.co.il/http://www.toyota.is/http://www.toyota.hu/http://www.toyota.ua/http://www.toyotasa.com.tr/http://www.toyota.ch/http://www.toyota.se/http://www.toyota.gr/http://www.toyota.co.uk/http://www.toyota-gib.com/http://www.toyota.de/http://www.toyota.fr/http://www.toyota.fi/http://www.toyota.ee/http://www.toyota.ie/http://www.toyota.dk/http://www.toyota.cz/http://www.toyota.com.cy/http://www.toyota.hr/http://www.toyota-canarias.es/http://www.toyota.bg/http://www.toyota.ba/http://www.toyota.be/http://www.toyota.at/


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INTERNATIONAL STAGE COMPANY IS

08/05/2008 In Germany, J.D. Power and Associates publish 2008 CSI study : Hybrid Toyota Prius

attains maximum approval ratings.

The independent body J.D. Power and Associates measures car owner satisfaction levels in 16

countries around the world.

08/05/2008 Prius ranked highest in J.D. Power & Associates' "What Car?" CSI study

The Toyota Prius has gained a second J.D. Power and Associates award after emerging as the

highest scoring individual model in the 2008 UK Customer Satisfaction Index Study, retaining the

position it held in 2007.

08/05/2008 Toyota Prius: number one in J.D. Power and Associates customer satisfaction index

for the second year running

The independent body J.D. Power and Associates measures car owner satisfaction levels in 16

countries around the world.

28/02/2007 Euro NCAP awards all-new Corolla 5 star safety rating

The all-new Toyota Corolla has been awarded a maximum five-star safety rating for adult occupant

protection in the highly regarded Euro NCAP tests.

22/12/2006 Toyota Auris gets 5-star safety rating

Euro NCAP confirmed that the new Toyota Auris has been awarded a maximum five-star rating for

adult occupant protection in its safety crash test evaluation.

11/05/2006 Third year of International Engine of Year awards for Prius

For the third year in succession, the 1.5-litre petrol engine of the Hybrid Synergy Drive has wonbest 1.4-1.8-litre engine in the awards and has also been named Best Fuel Economy for its

application in the Toyota Prius.

26/10/2005 New Toyota Yaris achieves 5 stars in Euro NCAP tests

The new Toyota Yaris has been awarded a 5-star safety rating and 35 points for adult protection in

the latest round of Euro NCAP safety tests.

01/07/2005 Toyota wins J.D. Power German CSI for fourth consecutive time

Toyota has achieved the premier position in overall customer satisfaction for the fourth

consecutive time, according to the J.D. Power and Associates 2005 Germany Customer Satisfaction

Index (CSI) Study.

01/06/2005 Hybrid Synergy Drive rewarded for its excellent fuel economy

The Toyota Hybrid Synergy Drive system of Toyota Prius has been awarded two category wins in the

International Engine of the Year Awards 2005.


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01/06/2005 AYGO by Toyota awarded 4-star rating in Euro NCAP

The newly introduced Toyota AYGO has been awarded a four-star rating for adult occupant safety

by the Euro NCAP testing programme.

The new Toyota Avensis: the safest car in its class according to Euro NCAP

The safety assessment organisation Euro-NCAP has recently introduced an even tougher testing

regimeand Toyotas Avensis 2003 rose to the challenge and passed with flying colours.

12/11/2004 Toyota Prius wins 2005 European Car of the Year

The Toyota Prius has been voted 2005 Car of the Year by the 58 members of the European Car of

the Year Jury.

23/07/2004 Toyota maintains its success in German J.D. Power and Associates Customer

Satisfaction Index Study SM

For the third consecutive year Toyota has been ranked highest overall in the German J.D. Power

and Associates Customer Satisfaction Index Study SM

15/07/2004 An unrivalled safety accolade from Euro NCAP for the Toyota Prius

The Prius has been awarded Euro NCAPs five-star rating for occupant safety and a record 43 points

for child protection.

20/05/2004 The new Toyota Corolla Verso: the safest car in its class according to Euro NCAP

The new Toyota Corolla Verso is the safest car in its class according to Euro NCAP, having been

awarded a 5 star maximum ranking

10/02/2003 Toyota success in German J.D. Power and Associates Customer Satisfaction Index

Study SM

Toyota comes highest in an incredible 5 out of 7 award segments in the J.D. Power and Associates

2002 Germany Customer Satisfaction Index Study SM


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BRRANDS :

CARS

YARIS COROLLA MATRIX CAMRY CAMRY SOLARA PRIUS VENZA AVALON

TRUCKS

TACOMA TUNDRA HILUX (VIGO)

SUVs & VANS

RAV4 FJ CRUISER HIGHLANDER SEQUORIA 4 RUNNER LANS CRUISER SIENNA

HYBRIDS

PRIUS CAMRY HYBRID HIGHLANDER HYBRID

WORLD WIDE CAR MANUFACTURERS

Alfa Romeo Australia

HSV - Holden Special Vehicles

Mitsubishi

Citron AustraliaPorsche

Suzuki

Toyota Avenue

New Falcon

Ford Focus

Maserati

Lotus Cars Australia

DaimlerChrysler Australia

SAABVolkswagen

Ford

Holden

BMW

AUDIHonda

Jaguover

Lexusar

Land

Mazda

Mercedes

Nissan

Peugeot

ProtonDaihatsu
http://www.autopages.com.au/ap.php?u=worldcarshttp://www.autopages.com.au/jmp2.php?p=529http://www.autopages.com.au/jmp2.php?p=529http://www.autopages.com.au/jmp2.php?p=541http://www.autopages.com.au/jmp2.php?p=541http://www.autopages.com.au/jmp2.php?p=542http://www.autopages.com.au/jmp2.php?p=542http://www.autopages.com.au/jmp2.php?p=832http://www.autopages.com.au/jmp2.php?p=832http://www.autopages.com.au/jmp2.php?p=908http://www.autopages.com.au/jmp2.php?p=908http://www.autopages.com.au/jmp2.php?p=909http://www.autopages.com.au/jmp2.php?p=909http://www.autopages.com.au/jmp2.php?p=1125http://www.autopages.com.au/jmp2.php?p=1125http://www.autopages.com.au/jmp2.php?p=1159http://www.autopages.com.au/jmp2.php?p=1159http://www.autopages.com.au/jmp2.php?p=1477http://www.autopages.com.au/jmp2.php?p=1477http://www.autopages.com.au/jmp2.php?p=1616http://www.autopages.com.au/jmp2.php?p=1616http://www.autopages.com.au/jmp2.php?p=1617http://www.autopages.com.au/jmp2.php?p=1617http://www.autopages.com.au/jmp2.php?p=1656http://www.autopages.com.au/jmp2.php?p=1656http://www.autopages.com.au/jmp2.php?p=1656http://www.autopages.com.au/jmp2.php?p=1617http://www.autopages.com.au/jmp2.php?p=1616http://www.autopages.com.au/jmp2.php?p=1477http://www.autopages.com.au/jmp2.php?p=1159http://www.autopages.com.au/jmp2.php?p=1125http://www.autopages.com.au/jmp2.php?p=909http://www.autopages.com.au/jmp2.php?p=908http://www.autopages.com.au/jmp2.php?p=832http://www.autopages.com.au/jmp2.php?p=542http://www.autopages.com.au/jmp2.php?p=541http://www.autopages.com.au/jmp2.php?p=529http://www.autopages.com.au/ap.php?u=worldcars


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AUTOMOTIVE INDUSTRY ANALYSIS

Overview of Automotive Industry Analysis

The development of the automobile came from many different people from different countries.

The development stated in 1769 in France, with the invention of a three-wheeler that was powered

by steam (Gale, 2003).

Then in 1800's the first internal combustion engine was created in Belgian and the first gasoline

powered vehicle was constructed in 1885 in Germany (Gale, 2003).

Henry Ford built the first car in 1896 (Gale, 2003). He then revolutionized the industry with the

invention of the assembly line.

PESTEL Analysis

Political

Laws and government regulations have affected this industry since the 1960's. Almost all ofthe regulations come from consumers increasing concerns for the environment and the

concern for safer automobiles. The first safety act passed by Congress was in 1966 and was

called the National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced

manufacturers to improve the safety for the passengers, the driver visibility, and the braking

of the car. It also stated that manufacturers had to inform the public when it had a recall on

the cars.

The motivation for the passing of this safety act was Ralph Nadar's 1965 novel Unsafe atAny Speed: The Designed-in Dangers of the American Automobile. (Gale, 2004) Safety

concerns were not the only concerns during this period. There was also growing concern for

the environment even before the oil crisis. According to the article "Motor Vehicles and

Passenger Car Bodies", Congress passed acts in 1965 and in the 1970's. The Vehicle Air

Pollution and Control Act was passed in 1965. This was the first act to set standards for

automobile pollution. Then in the 1970's, Congress passed the Clean Air Act that demanded

a 90% decrease in automobile emission within the next six years (Gale, 2004).

In the 1970's the oil crisis caused another act to be passed. The Energy Policy andConservation Act of 1975 stated that all automobiles must meet a certain mileage per

gallon. The act demanded that all automobiles had to meet a standard of 20mpg by the

1980 model and then 27.5 mpg for the 1985 model. Then in 1992, the Intermodal Surface

Transportation Act required the installation of front airbags. (Motor Vehicles and Passenger

Car Bodies, 2004)


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Demographics

For many years now, the baby boomers generation has been the main target market for justabout every product. As their generation is getting ready to retire and spend less money,

the automakers are looking at the younger generations. Right now, the focus is starting to

turn towards the baby boomers children (Generation X) who are in their mid 20's and 30's

and Generation Y(Winter, 2002). GenYer's are now hitting the age where they are able to

buy cars. According to Drew Winter, "Analysts say that five years from now Gen X and Gen Y

combined will account for at least 40% of vehicle sales."

Americans today are choosing to purchase larger vehicles over passenger size vehicles.Today's generations are still buying the trucks, minivan and especially the SUV's, even with

the ridiculous gas prices. It is not only the younger generations either; the boomers who are

all reaching the retirement age are more interested in the bigger vehicles (Fetto, 2001).

There activities after retirement are way more active then their parents. They are not just

sitting around and playing golf or going on vacations. They are still working in some ways

and being more active in their grandchildren's lives. Since the boomers are still active, they

want to drive the same vehicles that their children drive in order to make life that much

easier. Studies show that trucks, minivans and SUV's report increased sales nearly every

year (Fetto, 2001).

The manufactures target the sales of their cars to certain people and their geographiclocation. Convertibles are not marketed toward people who live in parts of the world thatare cold all year round. A good example of targeting markets is in Paris. A new is trying to be

passed that SUVs are not allowed inside the city. They are taking up to much room and the

vehicles use a lot of fuel. If this law is passed then SUV's will not be marketed toward people

who live in Paris. Another example is that minivans are mainly marketed toward "soccer

moms". They are marketed toward the moms because they are perceived, as needed a lot

of room to haul kids around and the easy access the minivans provide.


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Economic

The automobile industry has a huge impact on the U.S. economy. The University of Michiganand the Center for Automotive Research stated that this industry is the major user of

computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber.

(Gale, 2004) The study also showed that for every autoworker there are seven other jobs

created in other industries (Gale, 2004). These industries include anything from the

aluminums to lead to vinyl. In 2001, the total sales of automobiles were 3.7% of the nation's

gross domestic product. This percentage works out to be $375 billion dollars in sales.

Technology

The internet has affected just about every industry in the world and has also had a hugeimpact on the automobile industry. A study was conducted by J.D. Power and Associates in

2002 and involved more 27,000 new vehicle buyers. The study showed that 60% of thebuyers referred to the internet before making their purchases and out of that 60%, 88%

went to the auto websites before going and taking a test drive. Business-to-business

marketplaces have given the industry many opportunities because of the internet, such as

more efficiency and lower cost. Ford, GM, and Daimler Chrysler announced in 2000 their

plans to create a global online exchange for suppliers and the original equipment

manufacturers. The exchange was originally called NewCo, and then it was changed to

Convisint. According to Motor Vehicles and Passenger Car bodies, "In August 2002 General

Motors announced it was about to begin sending requests for quotes to suppliers through

Covisint using a tool called Quote Manager."

Concerns for the economy and global warming have caused the automobile industry todevelop alternate fuel vehicles. In the beginning, automakers did not want to look into the

development because of the high cost and the many risks involved. Because of new

legislation, they had no choice but to come up with the technology to make the fuel-

efficient cars. The automakers decided that electric cars would be the best way to meet the

legislation demands. "Early models were unpopular because of slow cruising speeds and lack

of performance, but by the end of the century, electric car production began to be

practical."(Motor Vehicles) At the end of the 1990's manufacturers was coming up with the

technology to produce internal combustion engine with an electric motor. Toyota and

Honda were both selling the hybrid vehicles at retail value in 2001.


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Global

General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota,Mazda, and Nissan Motor Company come together to create a new trade association

created the Alliance of Automobile Manufacturers (Gale, 2004). The organization was toreplace the American Automobile Manufactures Association that only consisted of American

manufacturers, the goals of the associations "were to work together on public policy

matters of common interest to provide credible industry information and data, and seek

consistent global regulatory standards (Gale, 2004). The manufacturers also started merging

in the late 1990's. American companies started buying foreign manufacturers created some

of the largest foreign takeovers. In 19998 Daimler-Benz A.G. merged with Chrysler

Cooperation to form DaimlerChryler A.G (Gale, 2004). Some other big mergers were Ford

with Volvo, and General Motors and Saab (Gale, 2004).

Sociocultural

Today's society judges people on the type of car you drive. Society does not like to admit tothis but it is very true. Manufactures know this happens and targets their markets by these

thoughts. For example, anyone who drives a mini van is perceived as a soccer mom. This is

because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is

thought to be wealthy. No one wants to be seen driving an unattractive piece of junk

because of what other people will think of him or her. Consumers also just feel better when

they are driving a nice or new car, if makes them feel better about themselves.

Another aspect of the sociocultural is the environmental concerns for the need of fuel-efficient vehicles. Many environmentalists are worried about the impact that the gas cars

have on the environment. There is even legislation that requires cars to average a certain

miles per gallon.


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AUTOMOTIVE INDUSTRY FIVE FORCES OF COMPETITION MODEL

Threat of New Entrants

The threat of new entrants is very low in the automobile industry. The industry is very mature and

it has successfully reached economies of scale.

In order to compete in this industry a manufacture must be able to achieve economies of scale. For

this to occur, manufacturers must mass-produce the automobiles so that they are affordable to the

consumer.

Another barrier to entry is that it takes an incredible amount of capital to manufacture the

automobiles.

It takes an extreme amount of capital not only to be able to manufacture the products but also to

keep up with the research and development that is necessary for the innovation requirements.

Access to distribution channels is another high barrier to entry.

A company must find a dealership to sell their automobiles or have their own dealership. Space in

the dealerships lots is very limited making it difficult to have a wider variety of inventory.

Bargaining Power of Suppliers

The bargaining power of suppliers is very low in the automobile industry.

There are so many parts that are used to produce an automobile, that it takes many suppliers to

accomplish this.

When there are many suppliers in an industry, they do not have much power. There are so many

suppliers to this industry; manufactures can easily switch to another supplier if it is necessary.

Bargaining Power of Buyers

The bargaining power of the buyers is moderately high. The buyers being consumers purchasealmost all of the industries output.

The manufacturers depend on them to stay in business. The buyers also are a significant portion of

the industries revenue. If they can not keep their buyers happy then they risk losing them to their

competitors.

The buyers have low switching cost if they are not happy. All the buyer has to do is sell the car they

own and purchase a new one. The reasons why the power is not completely high is that the buyers

are not large and few in number.


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The buyers do not have the ability to integrate backwards into the industry. If they want a car then

they have to purchase it from a dealership.

Threat of Substitute Products

There are not many substitute products for automobiles. Some of the substitutes are walking,

riding bike or taking a train.

Substitutes products all depend on the geographic location of the consumer. In some cities such as

New York or Chicago, a car is not as necessary. In cities such as those, the subway is the most

effective means of transportation. However, in most places a person must have access to an

automobile in order to get around.

Intensity of Rivalry among Competitors

Rivalry among the competitors is very strong is this industry. The major competitors are so closely

balanced that it increases the rivalry. In order to gain market share in the automobile must gain

market share by taking it from their competitors.

One of the other reasons there is such high rivalry is that there is a lack of differentiation

opportunities. All the companies make cars, trucks or SUV's. The competitors are compared to one

another constantly.

The price, quality, durability, and many other aspects of different manufacturers are greatly taken

into consideration when deciding what type of vehicle to purchase.

When the different manufacturers advertise they even compare their products to their

competitors. For example, the commercials will focus on areas where the company outperforms its

competitors.


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SWOT ANALYSIS

STRENGTH Brand image Market Leadership Easy availability of spare parts Dealership network Suitable for rural area

WEAKNESS Always charge the premium price Management Control by local partner

OPPORTUNITY Switching diesel market toward petrol and CNG market Failure of competitor model Unacceptability of competitor model Price increase in 1000cc

THREAT Government reducing the excise duty on imported car IR interest rate Higher Reduction in Diesel prices Entrance of the new Firms


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4 Ps of Toyota

PRODUCT is anything that can be offered to the market to satisfy a want or need

That includes Physical goods Services Experiences Events Person Organization Information and ideas

DEMOGRAPHIC SEGMENTATIONFAMILY SIZE:

Large family size as in india would increase opportunities for growth in sales ofInnova or Fortuner.

INCOME:

People falling in category ofupper middle high income group and who have ability and willingness

to buy,would go in for Toyota cars like land cruiser,prado,camry,etc.

PRICING STRATEGY

OPTIONAL-FEATURE PRICING: e.g. an Innova customer can order mud flaps,side steppers or other

accessories.

PROMOTINAL PRICING:

1. Low Interest Financing: This technique is for short period and is mainly used in festiveseasons.

2. Longer Payment Terms: The company stretchers loans over longer period and thus lowerthe monthly payments.


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PRODUCT MIX:

SEDAN

1. COROLLA ALTIS2. COROLLA ALTIS SPORT3. CAMRY

SUV/MUV

1. TOYOTA INNOVA2. FORTUNER3. PRADO4. LAND CRUISER

PROMOTION: TOYOTA uses many different techniques of advertising as most of print

advertisement of TOYOTA COROLLA is individually targeted at factors likecomfort,performance,styling,power,leg room and driving pleasure.

The commercials mainly target at youth and young executives.PSYCHOLOGIACAL SEGMENTATION:

SOCIAL CLASS:

People who belong to upper middle class and higher social status would opt for SUVs/MUVs orsedan likecamry etc.

PERSONALITY: People who are in sporty attitude having unique style statement would settle for Toyota Altis sport

model or Fortuner which would exhilarate their senses.


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COMPANYS OWNERSHIP STRUCTURE


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MARKETING DEPARTMENT

FUNCTIONS OF MARKETING DEPARTMENT

Arrange the events of the government institutes Prepare the potential customer list Make region performance report Provide selling skills to dealers employees Contact with the Govt. institutes Contacts with the banks for leasing Establish the new dealership network Monitor the sale at dealers


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TOYOTA SUPPLY CHAIN

ORGANIZING AND STAFFING ANALYSIS


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TOYOTA'S FUTURE CAR PLAN

As the U.S. government continues its investigation into the biggest recall scandal in Toyota's history,

the embattled automaker's bosses clearly have plenty to worry about at present.

But the world's No. 1 auto manufacturer is still as focused as ever on the business of making carsand has some fascinating sheetmetal in the pipeline to prove it. Just one look at what's coming in

the next five years will cement that fact.

Unusually exciting concepts for Toyota unveiled at the recent Tokyo Auto Salon -- the FT-86 G

Sports Concept and the GRMN Sports Hybrid concept boasting a 400-horsepower V-6 and electric

motor combination -- garnered headlines around the world, with company CEO Akio Toyoda front

and center promoting them on stage.

Lexus is planning a next-generation version of its aging GS sedan which is expected to hit the

market within two years.

A GS F version is also reportedly in the pipeline. The question is what will power the super GS.

We've recently learned that Toyota is strongly considering dropping a detuned version of the LFA's

thumping 552-horsepower 4.8-liter V-10 under the hood of a GS F model.

Targeting the likes of BMW's M5 head on, one source close to Lexus tells us that engineers will

reduce the LFA's engine capacity to 4.6-liters and drop power to around 450 horsepower, with the

aim of generating beefier bottom-end torque, making the new GS Japan's most powerful sedan

ever.

GS F would employ a version of the IS F's 5.0-liter V-8, but forces inside Toyota are apparently now

pushing hard for the V-10.

Word is that if the V-10 gets the green light, it may appear in at least one other vehicle to help

spread the cost.

Another highlight of the GS F will be the incorporation of a Toyota-first rear-wheel 'torque split unit'

that channels power between the right and left rear rubber in much the same way as Mitsubishi's

AYC system or Honda's SH-AWD unit does, except that the Lexus system will only engage on the

rears.

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market strategies of toyota

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