toyota stp strategies

7/30/2019 toyota stp strategies

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Report on Corporate Level Strategies of Toyota

Group No. 6: SYBBA B

Mihir Mandrekar B030

Surbhi Mehta B032Abhilasha Mohan Ram B034

Rohan S. Negi B035

Dhaval Pasad B037


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Table Of Content

Sr No. Topic Name Page No.

1 Introduction:

Vision & Mission

analysis

Surbhi Mehta

B032

3

2 Strategy:Diversification

Abhilasha MohanRam B034

7

3 Strategy:

Combination

Rohan Negi

B035

10

4 Strategy:

Integration

Dhawal Pasad

B037

15

5 SWOT Analysis Mihir Mandrekar

B030

19

6 Conclusion 25


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INTRODUCTION

The Toyota Group (Toyota Gurp) is a conglomerate company that

work together and mostly share the Toyota brand. Toyota Motor Corporation

abbreviated TMC, is a Japanese multinational automaker headquartered in Toyota, Aichi,

Japan. It is the third-largest automobile manufacturer in 2011 by production

behind General Motors and Volkswagen Group and the eleventh-largest company in the

world by revenue. In July 2012, the company reported it had manufactured its 200-

millionth vehicle.

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his father's

company Toyota Industries to create automobiles. Toyota Motor Corporation group

companies are Toyota (including the Scion brand), Lexus, Daihatsu, and Hino

Motors, along with several "nonautomotive" companies. TMC is part of the Toyota

Group, one of the largest conglomerates in the world.

The primary companies in the group are Toyota Industries Corporation and Toyota Moto

Corporation. It is also considered by many to be a keiretsu, although it does not contain amajor bank.

A keiretsu (system,series,grouping of enterprises, order of succession) is a set

of companies with interlocking business relationships and shareholdings. It is a type of

informal business group.

The member companies own small portions of the shares in each other's companies,

centered on a core bank; this system helps insulate each company from stock market

fluctuations and takeover attempts, thus enabling long-term planning in innovative

projects. It is a key element of the automotive industry in Japan.

Majority-owned subsidiaries

Toyota Industries Corporation (founded in 1926)

JTEKT Corporation (1935)

Toyota Motor Corporation (1937)

Toyota Auto Body, Co. Ltd. (1940)

Kanto Auto Works, Ltd. (1945)

Toyota Tsusho Corporation (1946)

Toyoda Gosei Co., Ltd. (1949)

Denso Corporation (1949)

Towa Real Estate Co., Ltd. (1953)

Toyota Central R&D Labs., Inc. (1960)

Toyota Communication Systems Co., Ltd. (2001)

Toyota Financial Services Corporation (2000)

Daihatsu Motor Co (1907; Toyota owns 51% of the company since 1999.)

Hino Motors (diesel trucks and buses. Toyota owns 50.5% of the company since 2001.)

Toyofuji Shipping Co. (Shipping company for Toyota vehicles overseas)


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Analysis of Vision & Mission Statement

By: Surbhi Mehta B-032

VISION

A vision statement for a company or organization focuses on the potential inherent in the

company's future, or what they intend to be. It contains references to how the company intends tomake that future into a reality, the vision statement is simply a description of the what,

meaning, what the company intends to become.

TOYOTAS GLOBAL VISION

Toyota will lead the way to future of mobility, enriching lives around the world with the safest

and the most responsible ways of moving people.

Through our commitment to quality, and respect to the planet, we aim to exceed expectations

and be rewarded with a smile.

We will meet our challenging goals by engaging the talents and passion of people, who believe

there is always a better way.

Future of Mobility Commitment to Quality

Enrichin lives around the World Constant Innovation


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The Statement gives voice to who they are as a global enterprise, the values they embody, an thegood that they are striving to accomplish. Designed to inspire all Team Members to even greaterthings, the Statement emphasizes Toyota's commitment to quality, innovation and respect for theplanet. At its heart is this signature statement: We aim to exceed expectations and be rewardedwith a smile.

One aspect of the vision is respect to the planet

The process for developing an Environment Action Process begins with the parent company in

Japan, Toyota Motor Corporation (TMC). Every five years, TMC develops a global five-year

environmental action plan (EAP).

Eg The ingenuity and persistence of team members at their Cambridge, Ontario plant, have

found a way to reduce annual water consumption of water by more than 13.2 million gallons

(50,000 cubic meters).

This has made their plant in Princeton, Indiana, honor as one of only two North American

recipients of the Water Champion award.


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MISSION

A mission statement is a statement of the purpose of a company, organization or person, its

reason for existing.

The mission statement should guide the actions of the organization, spell out its overall goal,

provide a path, and guide decision-making. It provides "the framework or context within whichthe company's strategies are formulated."

TOYOTAS MISSION

To provide safe & sound journey. Toyota is developing various new technologies from the

perspective of energy saving and diversifying energy sources. Environment has been first and

most important issue in priorities of Toyota and working toward creating a prosperous society

and clean world.

The mission statement of Toyota Indus Motors Company Ltd, defines the organization's

purpose and primary objectives. Its prime function is to provide a safe and sound

journey.

It provides a reason for being, which is one of the most important aspect of a mission

statement. The mission statement is clear and concise and provides focus and a sense of

direction.

Toyotas focus as mentioned in the mission statement is to develop new technologies and

to conserve energy. They also seek to be environment friendly.


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Strategy: Unrelated Diversification

(Creation of Toyota Motors from Toyota Industries)

By: Abhilasha Mohan Ram B-034

Background

In 1933, Toyoda Automatic Loom Works, Ltd created a new division devoted to the

production of automobiles under the direction of the founder's son,

Kiichiro Toyoda.

Toyoda Automatic Loom Works, Ltd was encouraged to develop automobile production

by the Japanese government, which needed domestic vehicle production partly due to the

worldwide money shortage and partly due to the war with China

Toyota Motor Co. was established as an independent and separate company in 1937.

The company was eventually founded by Kiichiro Toyoda in 1937 as a spinoff from hisfather's company Toyota Industries to create automobiles.

Toyota currently owns and operates Lexus and Scion brands and has a majorityshareholding stake in Daihatsu Motors, and minority shareholdings in Fuji Heavy

Industries Isuzu Motors, and Yamaha Motors. Toyota Industries has promoted diversification and expanded the scope of its business

domains to include textile machinery, automobiles (vehicles, engines, car air-conditioning compressors, etc.), and materials handling equipment, electronics, andlogistics solutions.

The company includes 522 subsidiaries. In 1983, Toyota Financial Services became a new subsidiary of Toyota Motor

Corporation in Japan. The Toyota Financial Services brand identity was officiallylaunched in December 1999.

TFS is a service mark that acts as an umbrella brand name used to market the products ofToyota Motor Credit Corporation (TMCC) and Toyota Motor Insurance Services, Inc.

(TMIS). TMCC was incorporated in California on October 4, 1982, and commencedoperations in May 1983 by approving a finance contract for a used Toyota Corolla inDenver, Colorado.

TFS provides retail and wholesale financing, retail leasing, vehicle protection plans andcertain other financial services to authorized Toyota, Lexus and Scion dealers, Toyotaforklift and Hino dealers as well as Toyota Material Handling, U.S.A. dealers, affiliates,and their customers in the United States.

http://www.toyotafinancial.com, http://www.toyota.com


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Analysis

Toyota Industries: Sales by Business Segment (FY 2012, Consolidated Basis)

"FY 2012" refers to the fiscal year ended March 31, 2012, and other fiscal years are referred to in a

corresponding manner.

http://www.toyota-industries.com/corporateinfo/corpdata/

1. Why is it unrelated diversification?

At the time of establishment of Toyota Motor Company, present day Toyota

Industries was in the business of making handlooms. This can be seen as a Conglomerate Diversification as Toyota expanded its

scope from Handloom Industry to Automobile Industry.

2. Reason behind Diversification

Sakichi Toyoda, a prolific inventor, created the Toyoda Automatic Loom

Company based on his groundbreaking designs, one of which was licensed to a

British concern for 1 million yen.

This money was used to help found Toyota Motor Company, which was

supported by the Japanese government partly because of the military applications.

The Japanese relied on foreign trucks in the war in Manchuria, but with theDepression, money was scarce. Domestic production would reduce costs, provide

jobs, and make the country more independent.

By 1936, just after the first successful Toyoda vehicles were produced, Japan

demanded that any automakers selling in the country needed to have a majority of

stockholders from Japan, along with all officers, and stopped nearly all imports.

Source: http://www.toyoland.com/history.html


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3. Benefits from Diversification

Less Competition: The Japanese government passed a law forcing the market

leaders, General Motors and Ford, to leave Japan. Also, failure of the

Government to encourage the large Japanese conglomerates (zaibatsu) to enter the

industry, made the government provide incentives for Toyota to do so, making it

the only licensed car manufacturer alongside Nissan in 1930s.

Portfolio Diversification: Toyota would be making vehicles alongside handlooms,

which would help them broaden their scope & grow as a Group. As of today

Toyota is the largest producers of carmakers, having dethroned General Motors

again!

The Japanese company sold 9.7 million cars and trucks worldwide in 2012,

although it's still counting. GM sold 9.29 million.

Toyota Motors ranked No.8 in the Fortune 500 list in the year 2011.

Toyota Financial Services has constructed a global network that covers

approximately 90% of the markets in which Toyota sells its vehicles. Mainly

concentrated on auto loans, leases and Toyota dealer floor plan requirements, TFS

provides auto sales financing to approximately 5.4 million customers. Thuseffectively helping in making their own cars more affordable to their potential

consumers all around the world. Again being a strategy that helps them a stronger

competitor in the market.


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Strategy: Sequential Combination- New United Motor Manufacturing, Inc.

(NUMMI) (Between Toyota & General Motors)

1. Joint Venture (Cooperation)

2. Divestment (Retrenchment)

Rohan Negi B-035

Background

Toyotas initial attempt to export compact cars to the U.S. in 1958 had failed because ofpoor Quality and styling. After redesigning their automobiles and improving quality, they

made a Second, and successful, entry into the American market. The oil crises of 1973 and 1978-79 greatly increased U.S. demand for compact and sub-

compact cars as gasoline shortages and sharp price increases occurred. Toyota and severalother Japanese manufacturers were well positioned to supply this growing market withtheir high quality, fuel-efficient vehicles.

The U.S. companies were not able to produce, in the United States, small cars at as low aprice or as high in quality as those made in Japan. Thus, at the time of the oil crises,American manufacturers were not in a position to compete effectively in the small carmarket.

When the American industrys marketing and manufacturing efforts failed to recapture thesub-compact market from the Japanese, the Reagan Administration convinced the Japanese

government to impose a limit on its exports --- a Voluntary Restraint Agreement (VRA) ---in 1981. The Japanese manufacturers still desired to increase market share in the U.S. beyond what

the VRA would permit. Honda thus started manufacturing automobiles in a plant inMarysville, Ohio in 1982 and Nissan began production in Smyrna, Tennessee in 1983.

Toyota preferred to manufacture only in Japan and export their cars to world markets. Withthe VRA, and Honda and Nissan now producing cars in the U.S., Toyota felt that it alsohad to establish manufacturing facilities there.


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Analysis1. How did the Joint Venture begin?

NUMMI was established at the site of a former General Motors Fremont Assembly

site that had been closed two years earlier in 1982 (GM plant since 1960).

GM and Toyota reopened the factory as a joint venture in 1984 to manufacture

vehicles to be sold under both brands.

Roger Smiths GM provided the land and buildings as its contribution to NUMMI

and Toyota pumped in at least $100M cash money, along with manufacturing

know-how.

Toyota held 50% of the company and GM the rest, with management largely from

Toyota.

2. Reason for JV?

The idea of reopening the plant emerged out of the need that GM had to build high-

quality and profitable small cars and the need Toyota had to start building cars in

the United States, a requirement due to the possibility of import restrictions by the

U.S. Congress. A joint venture was viewed as an approach that would lower the risk while

providing help in overcoming difficult potential problems. Toyota stated that it wanted to:

i. Gain experience with American unionized laborii. Gain experience with American suppliers

Toyota grew up with its own semi-captive set of keiretsu suppliers.Working with new suppliers was always a serious matter for Toyota.

iii. Help diffuse the trade issue between the United States and Japan.

NUMMI would act as an opportunity for General Motors to learn Toyotas

i. Lean manufacturing- It is a production practice that considers theexpenditure of resources for any goal other than the creation of value for

the end customer to be wasteful, and thus a target for elimination.

ii. Toyota production system- comprises its management philosophy and

practices. The TPS organizes manufacturing and logistics for the

automobile manufacturer, including interaction with suppliers and

customers.

iii. To obtain high quality vehicles for its Chevrolet division.

iv. GM hoped to apply what it learned from NUMMI to its other plants.

On the other hand, Toyota was already trailing Honda Motor Co. Ltd & Nissan

Motor Co., which was by then building cars in the US.

Also, GM had previously tried to compete with Japanese competition in compact

car manufacturing but met with a failure.


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3. Approach Taken:

In the original division of responsibilities for the joint venture, Toyota was to beresponsible for manufacturing while General Motors was to market all of theoutput. The only car to be produced was the Chevrolet Nova.

Key factors in Toyotas approaches, however, were:i. Developing cooperative management-labor relations;

ii. Careful selection and extensive training of workers;iii. Stressing teamwork and responsibility of the individual to the work group;iv. Putting safety and quality first, assigning the responsibility for safety and

quality to each worker, and giving them the authority to assure it.

4. Results

The NUMMI plant facility quickly became 40% more productive than the average

American car manufacturing facility.

Researchers at MIT estimated in 1988 that productivity at the NUMMI plant

exceeded that of all American-owned U.S. automobile plants, except Fords Taurus

facility with which it was approximately equal.

The cars produced have won numerous awards.

5. Divestment( End of the Joint Venture):

On June 29, 2009, General Motors announced that they would discontinue the joint

venture with Toyota leaving Toyota to single-handedly continue operations at the

plant.

Initially, Toyota offered GM a version of their hybrid car, Prius, to be sold under

GMs label but an agreement could not be reached.

On July 10, 2009, General Motors emerged from government backed Chapter 11reorganization after an initial filing on June 8, 2009. Two brands, Hummer and

Saab were sold, and two, Pontiac and Saturn were closed.

GM later filed for bankruptcy.

On August 27, 2009, Toyota announced that it would discontinue its production

contract with NUMMI. Toyota chose to do so as it already had excess production

capacity from other plants.

Production by NUMMI currently accounts for about 20 percent of Toyotas overall

car output in North America

The NUMMI plant ceased operations on April 1, 2010 ending the Toyota-GM joint

venture. California's last automobile manufacturing plant saw its last car, a Corolla,

roll off the assembly line


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6. Benefits from Joint Venture?

Toyota Starts Car Production in USA.

Establishment of NUMMI an important global step for Toyota.

At NUMMIs 20th Anniversary On February 12, 2004, Fujio Cho, President of

Toyota Motor Corporation, commented that NUMMI was Toyotas initiation inNorth American Production. We are very proud to build quality products with GM.

Without their partnership 20years ago, Toyota would not be where it is today.

At NUMMI, Toyota learned that it could work effectively with American unionized

labor.

The experience of Toyota at NUMMI has helped the company in realizing itsprimary objective. It successfully applied what it learned in the joint venture, and itsincreased confidence in its ability to successfully manufacture in other countries, innew wholly-owned factories in the U.S., Canada, Europe, and elsewhere. It has

increased its U.S. (and world) market share greatly over the past 20 years and ranksno.1 in the worldwide car manufacturer list today.

Toyotas share of the American market has been increasing steadily since it beganmanufacturing in the U.S. From 1993 to 2002, its share of the passenger marketincreased from 7.4 to 12.8 percent, and its share of the sports/utility marketincreased from 4.1 to 9.2 percent. The company now makes over 80 percent of itsprofits from the U.S. market.

It has made some adjustments to the approaches it used in Fremont while keeping

others the same:

i. Its next factory was established as a wholly-owned subsidiary, and

located it Georgetown, Kentucky where it could hire a non-union

workforce.

ii. Having found that it could achieve high productivity and quality with a

moderate level of automation, it decided that it could do even better by

investing in a higher level of automation for its new plant.

iii. Its favorable experience in Fremont has been followed with the

implementation of similar policies in selection, training, sharing of

information, and the use of the team approach in Georgetown. Toyota

made the greatest possible use of the experiences gained by the

executives and managers initially assigned to NUMMI.iv. Most of them were transferred as a group to the Georgetown factory.

The personnel manager was later transferred from Kentucky back to

Japan, where he was eventually put in charge of worldwide personnel

relations for Toyota.

v. The company did learn to work effectively with American suppliers or,

to put it another way, American suppliers learned to work with Toyota.


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7. Pitfalls

NUMMI has only turned a profit in one year, 1992. But, Bloomberg fails to

mention that the internal transfer pricing games are routinely played by large

companies in order to recognize profits only in the most tax advantaged

jurisdictions. So, outside of the bean counters at Toyota and GM, nobody really

knows the profitability of NUMMI.

Its United Auto Workers contract guaranteed workers $28 an hour compared with

$24 an hour in other Toyota plants.

Higher electric rates in California one of the factors leading to an increase in costs.

Throw in shipping costs to get parts from the Midwest and to send finished Toyota

Tacoma pickups and Corolla compacts across the U.S

It was one of the Japanese giants most expensive factories, if not the most

expensive

References:

http://userwww.sfsu.edu/ibec/papers/9.pdf

http://www.lean.org/shook/displayobject.cfm?o=1133

http://www.thetruthaboutcars.com/2009/07/nummi-not-so-nice-for-toyota/

http://www.businessweek.com/autos/autobeat/archives/2009/08/nummi_to_close.html

http://www.japantimes.co.jp/news/2009/07/12/business/toyota-mulling-liquidation-of-fremont-nummi-venture/#.UTxJaDe_T3M


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Strategy: Integration (Backward Vertical Integration)

(Toyota Motor Co. Establishes Toyoda Gosei Co.)

By: Dhawal Pasad B-037

OVERVIEW

I. Toyoda Gosei engages in Research, development, manufacture and sales of: Parts for

automobiles, conveyors, ships and various other transportation equipment; rubber, plastic and

urethane component

II. Corporate Timeline:

1. 1949

Toyota Motor Industry Co., Ltd. incorporates rubber research operations as Nagoya

Rubber Co., Ltd.

2. 1973 Changes name to Toyoda Gosei Co., Ltd.

3. 1990-1991

Establishes Meigi Logistics Center (logistics sector) Establishes Toyoda Gosei Kyushu

Co., Ltd. in Takeo, Saga Prefecture (rubber and plastic sector)

Establishes TG Technical Center (U.S.A.) Corporation in Michigan (now TG North

America Corporation) (design and technological development)

4. 1994

Establishes TG Pongpara Co., Ltd. in Chonburi, Thailand (plastic and urethane sector)

5. 1997

Establishes TG Kentucky Corporation (rubber and plastic sector)

Puts acoustic material using recycled PET fiber into practical use

Develops new recycling technology for rubber

Earns ISO 9001 certification for major products in Bisai, Inazawa, Heiwacho, and

Moricho Plants

Begins manufacturing and marketing green LEDs

6. 1998-1999

Increases equity holding in TG Pongpara and changes company's name to Toyoda Gosei

(Thailand) Co., Ltd.

Begins manufacturing and marketing New LEDs, "TG Blue" and "TG Green"

Earns ISO 14001 certification for Heiwacho Plant

Establishes TG Kirloskar Automotive Ltd.

Earns ISO 14001 certification for environmental management.


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ESTABLISHMENTS BETWEEN 2000-2010

Establishes Daicel Safety Systems America, LLC

Establishes Toyoda Gosei Rubber (Thailand) Co., Ltd.

Absorbs Toyoda Gosei Kyusyu Co., Ltd.

Establishes Toyoda Gosei India Pvt. Ltd.

Develops rear-end impact airbag

Develops rear seat center airbag

Opens Miwa Technical Center

Establishes TE Opto Corporation.

7. Shareholders Information

Major shareholders (ten from the top)

Shareholder's nameNumber of shares held

(thousand shares)

Holding ratio

(%)

Toyota Motor Corporation 55,459 42.65

The Master Trust Bank of Japan ,Ltd.(Trust) 7,752 5.96

Japan Trustee Services Bank,Ltd.(Trust) 6,158 4.73

Sumitomo Mitsui Banking Corporation 5,049 3.88

Japan Trustee Services Bank,Ltd.(Trust 9) 2,291 1.76

Nippon Life Insurance Company 1,714 1.31

SSBT OD05 OMNIBUS ACCOUNT -

TREATY CLIENTS1,501 1.15

The Dai-ichi Life Insurance Company,

Limited1,493 1.14

Mitsui Sumitomo Insurance Company,

Limited1,162 0.89

Toyoda Gosei Co., Ltd. Employee Stock

Ownership Plan1,044 0.80


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ANALYSIS

1. How did the Integration begin?

Toyota Motors was established in 1937 & within 10 years of inception was a big

player in the Japanese market.

Despite this, production wasnt high as the country was recuperating from the lossesof World War II & also because of the lack of availability of suppliers supplying

good quality parts & the expensive nature of products due to material shortages.

Toyota Motors Co. Ltd felt the need to expand the scope of its business, to bring

down the cost of production.

This led to the establishment of Toyoda Gosei Co. Ltd, which would supply Toyota

Motors with various car parts.

This can be seen as a move back in value chain as Toyota, which initially

manufactured cars, will now be making parts for its car rather than relying on

outsiders.

This can be seen as backward integration as with establishment of this industry, they

got closer to raw materials that are rubber and plastic parts.

2. Reason behind adopting this strategy?

As per Toyota Global Vision, Through our commitment to quality, constant

innovation and respect for planet, we aim to exceed expectations and be rewarded

with a smile.

To achieve this vision they came up with Toyoda Gosei co., Ltd to bring quality to

their automobiles by providing raw materials to Toyota Motors. They have been constantly bringing innovations in their operations as they started in

rubber sector have expanded and have a much diversified portfolio.

3. Benefits from this strategy:

Toyota Motors became the major stakeholder in company with 42.65% holding

ratio.

Toyoda Gosei Group is a global system supplier of automotive components and

LEDs with an extensive network. As a pioneer in the fields of polymer technologies

and optical semiconductors, they strive to become a true global system supplier to

bring happiness to customers all over the world.

Toyoda Gosei uses automation more wisely than its competitors. Automation for

them drives design of their processes.

At Toyoda Gosei, they look at a process that they know how to do very well, and

think of how to make that process better.


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Today, they have diversified themselves by providing various products and

technology :

Interiors andExterior parts{Automobileparts}

AutomotiveSealing Products{Luggage andDoor Weather

ship}

Functional Parts{Fuel TrainModules andPower train parts}

Safety SystemProducts{Air Bag andSteering Wheels}

OptoelectronicProducts{LED productsand applications}

General IndustryProducts{Construction andIndustrialMachineryComponents}

FoundationsTechnology{Basic Research,Design, etc}

RecycleTechnology{Development andAdoption ofRecyclingTechnology}

Over past few years you can see that there is no major change in sales. They are

slowly and constantly increasing their sales volumes thus by bringing up new

innovations.

Years Net Sales(millions of Yen)

Net Income(millions of Yen)

2001 292,883 4,058

2002 303,093 4,058

2003 344,842 17,258

2004 396,983 12,679

2005 435,539 10,585

2006 498,428 10,787

2007 593,454 15,943

2008 662,497 30,802

2009 546,380 3,951

2010 495,002 14,2552011 516,982 17,116

2012 504,518 8,971


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SWOT ANALYSIS

By: Mihir Mandrekar B-030

SWOT is an acronym for the internal strengths and weaknesses of a firm and the

environmental opportunities and threats facing that firm.

SWOT analysis can be done using a simple grid.

It is a widely used technique through which managers create a quick overview of the

companys strategic situation. The technique assumes that an effective strategy derives

from a sound fit between the companys internal sources (strengths and weaknesses)

and external environment (opportunities and threats).

The main aim of the technique is to maximize the strengths and opportunities and

minimize the weaknesses and threats. Accurately applied, this simple technique can be

used to derive successful strategies.

Example of SWOT analysis grid:


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SWOT ANALYSIS OF TOYOTA

A.STRENGTHS:

i. New Investments:a. New investment by Toyota in factories in the US and China saw profits rise, against

the worldwide motor industry trend which was suffering heavy losses. Net profits

rose 0.8% to 1.17 trillion yen ($11bn; 5.85bn), while sales were 7.3% higher at

18.55 trillion yen.

b. ANALYSIS :-

The company had the right mix of products for the markets that it served.

USA believes in living life king size and is obsessed with bigger cars.

Toyota primarily sold bigger cars like Fortuner and Qualis in the Americanmarket and this was a great success.

China on the other hand prefers fuel-efficient sedans. Toyota in China

marketed and sold cars like Prius, Corolla and Camry.

This was possible because of much focused segmentation, targeting and

positioning of their products.

ii. Manufacturing:

a. 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.

b. ANALYSIS :-

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.


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The company maximizes profits through Total Quality Management or

TQM which is an integrative set of principles and behavior adopted by

Toyotas management for continuously improving the quality of products

and processes.

The company makes a large range of vehicles for both private customers

and commercial organizations, from the small Yaris to large trucks.

Therefore, if the demand in one sector decreases, the company always

has other sectors as back up and the chances of a complete loss are low.

iii. Strong Brand Image :

a. Toyota currently sells 70 models of cars under its namesake brand with Corolla

and Prius as flagship models. Toyotas brand image is also associated with

environment friendly cars as it is a leader in manufacturing of green cars.

b. ANALYSIS :-

Toyota increases brand awareness, sells more cars in order to increase the

existing brand image.

Toyota through a series of surveys and studies of customer behaviorunderstood that customers are growing selective in terms of fuel efficiency

and CO2 emissions.

The management quickly decided to invest in green technology and

Toyota became one of the first companies to manufacture environment

friendly, hybrid and efficient cars like the Auris.

This greatly boosted their Brand image giving them competitive advantage

over their competitors.


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B.WEAKNESSES

i. Large scale Recalls :a) Toyota had quite a few large-scale vehicle recalls over the past few years. The

company recalled 9 million vehicles in 2009-2010 and 7.43 million cars in 2012.Such recalls does not only hurt the firm financially but significantly damagesfirms brand.

b) ANALYSIS:- Recalls have taken place mostly because of safety issues that have not

been met or because of certain defects in the cars produced. Toyota must ensure that the cars produced are faultless and of good

quality. An increase in recalls not only results in losses but also harms the brand

image of the company.

ii. Weak presence in emerging markets :a) Toyota markets most of its products in the US, Europe and in Japan. Therefore it

is exposed to fluctuating economic and political conditions those markets.

Emerging economies as China or India make only a small percentage of all

Toyotas sales.

b) ANALYSIS:-

The company in order to reduce this weakness has started to shift its

attention towards India and China, which is a good move. But, it must do

more to increase its market share in these emerging economies in order tocompete with General Motors which has a bigger market share especially

in China.

Toyota must also look towards Africa. Many African nations like

Tanzania, South Africa are experiencing high growth rates. Not many car

manufacturing companies have ventured into the continent. Toyota should

increase sales of cheaper, smaller cars in Africa. This will give them an

advantage over GM in the global scenario.


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C.OPPORTUNITIES

i. Hybrid and Eco friendly Technology :a) Lexus and Toyota now have a reputation for manufacturing environmentally

friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both arebased upon advance technologies developed by the organization.Toyota has also sold on its technology to other motor manufacturers, for exampleFord has bought into the technology for its new Explorer SUV Hybrid.

b) ANALYSIS:- Increasing fuel prices have boosted the demand for more efficient cars.

Customers today are more aware of the harm air pollution by vehiclescauses to the environment. Therefore, there is a big demand forenvironment friendly cars.

Since Toyota already has a first mover advantage in making hybrid ecofriendly cars, it should capitalize on this opportunity and invest more on

hybrid R&D and produce more environment friendly cars. This will result in huge profits and increase Toyotas market share.

ii. New Customer Segments :a) Toyota is to target the 'urban youth' market. The company has launched its new

Aygo, which is targeted at the streetwise youth market. The vehicle is a uniqueconvertible with inbuilt sub woofers.

b) ANALYSIS :- The youth of today have become more independent and wealthy. This has

created a big market for cars. Therefore Toyota is trying to capitalize onthis opportunity by introducing the new Aygo for the youth. It attempts to

capture the DJ culture and the nature of dance to market this car. Even though the profits earned through the new Aygo are not big, it has

helped Toyota increase its market segment, which is crucial for expansion.Moreover, this segment may prove to be highly profitable in the future.

iii. Global Expansion :a) Toyota is expanding its market share and operations in emerging economies like

India and China. Toyotas emerging market sales ratio reached 45% in 2011, anincrease of 10% in the three years since we achieved 35% in 2008. The ToyotaGlobal Vision calls for an emerging-market sales ratio of 50% by 2015.

b) ANALYSIS :-

Emerging economies have a huge demand for cars. Toyota must makesure it increases its market share in the developing economies in order tosurvive and compete in the global scenario.

By increasing localization and strengthening the supply chain system,Toyota is slowly expanding into emerging markets.


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D.THREATS:

i. Competition :a) 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.Volkswagen group is strongly growing and GM steps up after its reorganization tobecome more competitive than ever.

b) ANALYSIS :- There is nothing much that can be done to curb the rising competition.

But, competition can be fought by introducing new products, slashingprices, increasing market segments and innovation.

Toyota has introduced the Yaris which is a very cheap car and has alsosliced the costs of older versions of Corolla. The Aygo and Prius areexamples of innovative products by Toyota.

ii. Shifts in exchange rates :a) Most of Toyotas revenue and raw material come from foreign countries. The

profits earned abroad must be sent back to Japan and converted to yen.Appreciating yen exchange rate against other currencies means lower profits forToyota.

b) ANALYSIS :- This is a threat, which is very difficult to minimize. Toyota will have to

wait till the Yen depreciates but, this will result in delayed payments andincreased debts which is bad for the company.

Another solution could be setting up new bases in other countries so thatthey can enjoy their profits through the exchange rate of that country.


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Conclusion

Toyota Industries has promoted diversification through continuous innovation all through its lifeand expanded the scope of its business domains to include textile machinery, automobiles(vehicles, engines, car air-conditioning compressors, etc.), and materials handling equipment,

electronics, and logistics solutions.

All these Expansion Strategies adopted by Toyota has resulted in making Toyota one of the

largest Conglomerates.

Toyota Motors in itself has 522 Subsidiaries some of which are individually present in Forbes

Fortune 500 list

Today Toyota is the largest carmaker in the world leading General motors and the top selling

automaker. The Japanese company has sold 9.7million cars and trucks in 2012 leaving GM in

second place with 9.29million cars.

The backbone of their success being their sharp, well thought out and excellently implemented

strategies. It yielded excellent result over the years it brought them to the No. 1 position and if

maintained, there is no doubt about the fact that theyll maintain their position for years to come.

toyota stp strategies

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