Toyota Indus Motor Company Limited

SITUATION ANALYSISHISTORY•Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC).

•The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993.

•Toyota Motor Corporation and Toyota Tsusho Corporation have 25 percent stake in the company equity.

•IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres.

•Heavy investment was made to build its production facilities based on state of art technologies.

PRODUCT PORTFOLIOToyota Corolla• Small passenger car • Deals in six variants • Out performed its competition and established a market leadership position in Pakistan by maintaining market share and a sales growth of 14.6 percent per year.

Daihatsu Cuore• Passenger car • Economy segment of 850CC • Deals in four different variants• Increases its market share shows an impressive growth in a small car segments. (Currently Closed)

Hiace and HiluxIMC Hiace and Hilux also increase its market share by increasing its sales every year.

PRODUCT PORTFOLIO

Camry• New generation Camry introduced in the beginning of 2006-07• Shows an inspiring performance • Established a market leadership position

Land Cruiser/Prado• The new SUV category targeted Fleet Customers• Stunning performance • Established a market leadership in its category.

OPPORTUNITY AND ISSUE ANALYSIS

SWOT ANALYSIS

• Toyota has become the generic name in the Pakistan market.

• Toyota has a great strength for its XLI car.

• Ample availability of the spare parts in the markets.

• The price of spare parts is comparatively low

• Toyota vehicles have got a much stronger resale value than

other car in Pakistan.

STRENGTHS

WEAKNESSES

• The power steering is not speed sensitive.

• Air conditioning system in severe heat is in-effective.

• The company having internal operating problems because

of dependency on Toyota’s principles delivery of cars is

done after 2 to 3 months.

OPPORTUNITIES• Toyota can do better by focusing on segments much more

than presently being done.

• Daihatsu Coure is a major opportunity for Toyota to excel

further careful planning and the right time to launch the

new car can prove to be a success. Although it is being

closed.

• Prius or any other Hybrid / Fuel Efficient Car

THREATS• Honda has adopted aggressive strategies for capturing the

market.

• A major threat is the changing political and economic scenarios

of Pakistan.

• Import of re-conditioned cars is also considered as a threat for

the company.

• The planned car manufacturing plants of Hyundai and

Chevrolet can prove to be tough competition for Toyota if they

are successful.

ANALYZING OPPORTUNITIES• Pakistani market has many opportunities for the Indus

Motors.

• Toyota currently targeted upper class by producing luxury

cars to serve their segmented customers

• Toyota cars are better than Suzuki in mind of customers,

so company may easily capture a market share for this

segment as well which is currently facing a monopoly of

Suzuki.

OBJECTIVES• Profitability Balanced with customer

• Maximum brand exposure

• Image enhancement

• Technological leadership

• Human resource skills

GOAL FORMULATIONSTRATEGIC GOALS

• To control 45 percent of market share in the next year.

• To increase the number of hours offered in management

training courses.

• Efficient use of physical assets and financial resources,

such as human resources.

• Enhancing the quality of our product and reach 3S

Dealership Network.

• Enhancing corporate value and respect while achieving a

long-term growth for the benefit of our shareholders.

OPERATIONAL GOALS• Increasing sales by 10 percent.

• To increase productivity while working efficiently.

• To maximize customer satisfaction.

• Increase quality of sales and service.

TACTICAL GOALS• To sell more than 55000 units in the next year.

• Make sure that employees are well trained.

• Each department must accomplish their assigned task in

an effective manner.

• Every employee must follow the quality management

standards.

PLANNING PROGRAM

• Indus Motor Company, with support from Toyota Motor Corporation has worked closely with its 62 local vendors.

• Since the successful launch of the Corolla and its ever-increasing demand, company has been making continuous efforts to increase production and the current capacity enhancement program will boost.

• Its production capacity to 200 vehicles per day, generates production of around 50,000 vehicles per year.

• In this expansion plan, company will be investing over Rs 500 million so that the total investment in the project would exceed Rs 3.2 billion.

• Indus has embarked on to enhance in-house manufacturing, increased localization, cost reduction and production efficiency.

• The capacity expansion would not only offer more vehicles to meet the growing demand of the Pakistani market, but it would also yield greater revenue to the government through taxes and duties.

PROBLEMS OR ISSUESTHE NATURE OF PROBLEMS/ISSUES

• Numerous complaints reached Indus Motors of locking up

steering this resulted in the automobile having to being

towed to dealer locations for repair.

• The problem was caused by locking the steering wheel for

security purposes, which was stated as being the root

cause of the problem.

• Some Toyota models accelerators were mysteriously

getting stuck. This malfunction could possibly create many

dangerous driving conditions for consumers.

THE CURRENT PRACTICES/POLICIES/PROCEDURE

• Toyota’s inherent ability is to adapt, improve and

embrace changes even during the harshest times.

• They are giving training to their employees in order to

perform well and meet the demands of the customers.

• They are also working on technological aspects as they

are trying to make their cars fuel efficient.

• In order to keep their market leadership they are doing

good manufacturing practices in order to improve their

market share.

•The Customer Relations team focused on putting in

place customer-friendly policies and procedures at Indus

and its 3S dealerships to achieve quick turnaround on

customer inquiries and complaints to maximize

Customer Satisfaction.

UNDERSTANDING THE NEEDS

• Toyota should improve the quality of their cars and as

they are giving the promise of quality, durability and

reliability to its customers, some customers are

disappointed as well.

• They could introduce some programs which provide for

prompt maintenance of vehicles and have strong customer

appeal for speedy delivery of service of vehicles with

attention to quality detail.

SALES ORGANOGRAM (structure)• Their sales team is headed by manager sales and

marketing.

• One deputy manager assisted by two assistant manager

sales well supported by a team of five sales executives

achieves their targets prescribed by their senior

management & Indus Motors Company.

• There are fully computerized sales department with

remote terminals hooking up all sales areas with each

other.

• Their networking is managed by a receiving, new vehicle

preparation & delivery.

ACTION PROGRAMDEVELOPING STRATEGIES• Toyota aggressively marketed their cars as being fuel

efficient, environmentally friendly, and having better

quality than Pakistani automotive industry.

• Toyota was also able to identify new opportunities for

market development and spent time on product

development to tap into these markets.

• The company uses different strategies for promotion of

their products such as Advertising and Corporate

Communication.

• The company made special budget for ads to be

broadcasted on electronic media as well as print media.

ACTION PLAN• To achieve the forecasted sales company has developed

budgets to be spent on promotions.

• As the first quarter of fiscal year begins, the company

develops its electronic and print ads and in the meantime

working on Corporate Communication throughout the same

quarter.

• Each quarter will be treated with the same actions unless

and until any new potential threat from the existing

competitors are not being observed.

FINANCIAL PROJECTIONBUDGET PLANSALES FORECAST

The sales forecast is only for the Year 2012, which is

calculated by using a formula of sales forecasting

method which is called naïve method.

Formula: Next Year’s Sales = This Year's Sales * This Year's Sales /

Last Year's Sales

Next Year’s Sales (2012) = Rs. 63,355,325,000

MARKETING BUDGET

2012

Advertisement and promotion

40,000

Marketing research 25,000

Corporate communication 15,000

Others 10,000

Total Marketing Expenses

90,000

Marketing Budget Rs in ‘000

MILESTONE1989 Company Incorporated – Dec 171993 Corolla XE Launch – May 131996 Hilux Launch – Jan 20 / Corolla Diesel Launch – Apr 172000 Daihatsu Cuore Launch – Mar 252003 Daihatsu Cuore (CNG) Launch – Jan 292005 Corolla Altis Launch / IMV (CBU) 4x4 Hilux Launch2006 Capacity Expansion (200 units/day, 50,000 units/yr)2007 Cogen plant start up / IMV Hilux S/C 4x2 Launch – Nov2008 New Corolla (242L) Launch – Aug 19

Press Shop SVP – Oct 13300,000th Vehicle Line-off

2009 20th year of Company Incorporation 2010 Launch of New Prado, Fortuner, Avanza, Terios – Jan

400,000th Vehicle Line-off

2011 IMV 4x4 Launch – JanCorolla Ecotec Launch – Jul 450,000th Vehicle Line-off

2012 Launch of Vigo Champ

CONTROLSFEEDBACK MECHANISM

•Social Media Allows Getting Near Real-Time

Market Feedback On New Products

•Tapping Into Social Feedback to Improve

Chances of Launch Success

CONTROL MECHANISM•The purpose is to explain Toyota’s budgeting and

manufacturing control systems, both of which are integral

to the achievement of Total Quality Control (TQC).

•Most Japanese companies use the terminology "Kaizen"

(continuous improvement) and "Kanban" (Just-In-Time

Manufacturing).

•Toyota’s budgeting system is not purely based on target

costing, but instead on cost control, target costing, and

Kaizen.