Toyota Company Strategic Planning

TOYOTA COMPANY
1.0 Companys Description
Toyota Motor Corporation is engaged in manufacture of passenger cars and their assembly, minivans, recreational and sport vehicles worldwide. Toyota has a network of more than 45 manufacturing companies and 12 plants affiliated in Japan. Toyota is working on its strategic global vision program of 2010. This program describes the long term Toyota’s policies like recycling of goods and pro-environmental stance. Toyota has its global vision to respect the different people and communities and providing the new marketing opportunities in Asian markets and aims to get more than 35% of vehicle by the tapping the emerging markets. In automobile industry the need of the local customization and global strategy required the regional production. After 1990 Toyota has become first organized car manufacturer. The main targeted markets of Toyota industry are the Europe, North America and Asia with capability to customize the regional markets. Toyota has reacted very quickly and bypassed the regional and trade barriers; based upon the local suppliers to impact the cost efficiencies.

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2.0 Strengths of Toyota
Toyota possesses much strength due to its quality products and reputation. Prices of the Toyota’s products are not affordable as the automakers in America, however Toyota has continued to succeed because customer rely and depend on its products. Toyota has been number one in sale of cars in 2007 and also 2008 better. Toyota has two different significant opportunities. Toyota has a step ahead of its competitors due to its hybrid products; as eco-friendly consumers demand the new brands. Toyota has scope to develop and design the technology for the advance models. Other opportunity lies in untapped market of youth; Scion has brought an inspiring revolution. The Marketing, product design and credit assistance are other hallmarks of Toyota which will prove to be great opportunities in future. Globally Toyota has several regions for its business and purchasing power of large China’s population has been recognized. This has created a place for the Toyota to set up its headquarters in China. The purchase of Toyota’s full size truck is increased in South America due to strengthen of its economy. In Middle East the demand of full size Toyota’s SUVs is increased. This has resulted in the acknowledgement of opportunities of Toyota. Toyota has acted according to the streamlines of its export system.
2.1 Global Strategy
Toyota is ranked among five best companies of automobile industry with total 500 companies. Toyota has made success in global strategies. It has a clear agenda to distribute the channels, production, marketing and supply chain aspects. Toyota’s best production system and continuous improvements are the essential pieces of its global strategy. Concept of Kaizen (continuous improvement) has empowered the company to think about the new strategies and methods no matter in any area of the company. TPS (Toyota Production System) makes a link between the global automaker to manage the supply chain system, inventory management, production capabilities and planning methods. This TPS has empowered the Toyota to dominate the global automobile industry. Actually the Toyota is based in Japan but it has established itself throughout the world. No doubt the Toyota is most well known automobile brand of the world. Toyota’s market is based upon the mission: Stable long-term growth, while striving for harmony with people, society and the environment” (Toyota Motor Corporation Home Page). Toyota is providing thousands of jobs in America. Cultural, economic and social issues have allowed the Toyota to move beyond the brand equity and shaped an international marketing place for Toyota and achieved the success as a global corporation.
3.0 Rivalry of Toyota
When Nissan and Toyota entered in American market the cost advantage for Toyota increased over the American companies. The market share of Toyota in Japan was higher which forced the Nissan to cut the costs of their best cars. Both Nissan and Toyota made rapid increase in shares in Japan. Toyota also impacted the car companies of America. Detroit made efforts to manufacture the small cars but could stay before the products of Toyota Company. Other rival companies included the Ford, General Motors and Volkswagen. It is best know that cars of America’s companies are cheaper in price but not reliable as compared to products of Toyota. Before Toyota the Volkswagen was main dominant company in USA market. Volkswagen being the best foreign car supplier company had shared 60% in USA market. For example Volkswagen Beetle was the best car in America before the Toyota introduced its Toyota Corolla in 1975. Volkswagen’s cars have the vibration problems but Toyota possessed the powerful cars without vibration problems. The yen currency also played an important role to sell the Toyota more cars than Volkswagen. Japan’s yen was weaker as compared to German mark which made the Japan’s currency and goods cheaper for the purchasers in America.
3.1 Bargaining Power: Toyota has facilitated the Buyers and supplier of Toyota’s cars as rental car companies liked to buy large number of cars which did not affect the overall prices of cars. When raw material for cars (steel, fiberglass and plastic) is lowered due in price there are many supplier and bargaining power of supplier is neglible.
The sale of Prius exceeded when overseas units were added to it. The launch situation of Pirus in America and Europe market occurred in a same as in Japan. Local municipalities and people who love to use the new technologies always purchase the Toyota cars.
3.2 Competitor Analysis
Toyota operates in car bodies and motor vehicle center. This analysis is done by comparing the Toyota Motors with other three main companies as shown below
3.2.1 Honda Motors: The sale of the Honda Motors during the year 2010 was noted to be 101.92 $ with 76% Automobile business.
3.2.2 Nissan Motors: The sale of the Nissan Motors cars was $ 89.31 billion during the year 2010 with automobiles 93%.
3.2.3 Motors Liquidation Company: This Company is based in USA and its sale during the year 2008 was noted as $148.98 billion with 99% automotive products.
3.2.4 Toyota Motors: The sale of the Toyota motors was $225.14 billion which decreased to 7.7% versus 2009, when company’s sale exceeded to 2010 year’s sale.
Consumers of Toyota cars prefer to purchase the Toyota’s cars because these are reliable motor cars. During the 2008 survey Toyota and Lexus model won the 11 segment awards out of total 19 (Toyota’s Home Page). This show the commitment of Toyota to its quality products; which also shows that quality of the Toyota Products is the same wherever they are manufactured. It can be said that these products are manufactured by the Toyota.
4.0 Current Attractiveness of Toyota
4.1 Relations with suppliers
Toyota has established good relations with its suppliers to build a harmonious and mutual society. As the business of Toyota has been expanded on a global scale the Toyota is stressing more on close relationships to achieve the customer’s satisfaction. Toyota does respect of its suppliers throughout the world to promote the development and mutual growth. Toyota believes in CSR activities and issued a guideline for the suppliers in 2009. Toyota is focusing to make joint manufacturing activities with suppliers to improve the working practices. To promote the sale of cars in next five years on the basic principle of “Customer first, dealer second, third manufacture” Toyota is acting on the policy to benefit their dealers. Toyota has more than 170 distributers and 8000 dealers located in overseas countries. In this way Toyota engages its partners in many ways.
4.2 Acceptable car building by Toyota
When Prius the first hybrid car was produced with new technology, it was expected to sale this car in various countries. Prius was welcomed at different locations which proved its popularity but usage conditions like culture, regulations and traffic situations were required to do more for the acceptance of Prius a global brand of Toyota. The potential problems and deep understanding of advantages was needed to be focused upon in two next years.
4.3 Innovative Cars
A hybrid system enabled the Toyota to produce the large medium and minivans for their customers. All designers of Toyota dreamed to build an innovative car which offered more enjoyment during driving and riding with low fuel consumption. Estima Hybrid is a example of such cars. Manufacturing of such cars was started before the Prius with great technical issues but Toyota was successful to introduce this kind of cars. As mentioned above Toyota wanted to expand its Hybrid system to evolve the automobile industry in next 5 years of 21st century. Company wants to produce more than 300,000 units per year in next few years.
Toyota Company wants improvement in its Environmental Action Plan 2011 in six key areas: Change in Climate and Energy, Air Quality, substances, recycling and resource utilization, Environmental management and Societal Cooperation. Company wants to reduce the Carbon dioxide emission to ensure that environment is kept clean by adopting and observing all economy fuels values.
5.0 Company’s Strategies
There are main four marketing mix components which are shaped in a way to fight the firms in market and provide the easy access to company’s products and services.
5.1 Product Strategy
The company is focusing on strategies to compete the other firms by adopting a mass production program to sell its product in global market. A hybrid product can enhance its production to meet the demands of changing market.
5.2 Location Strategy
Toyota is a global producer of automobiles and their components, Toyota has positioned itself at the most central locations where it has clear and very optimistic control over the company’s products and their delivery to customers. In next three years Toyota Company aims to achieve the 35% of market share.
5.3 Promotion Strategy
Toyota Company is determinant towards pricing mechanism which can give it an edge over its competitors. Company can get highest level in automobile industry by using the best pricing method to get the hold of market.
5.4 Pricing Strategy
Toyota Company is producing new vehicles of best quality which can be purchased at a reasonable price. The new pricing strategy is aimed to attract more customers throughout the world.
5.5 Target Market Strategies
Each unit of Toyota is designed in a way to attract the targeted markets. The design of the vehicle cars is based on their speed, external appearance like color and shape. There are two seat model cars with high speed, small in size designed for the adventurous young people. Young people like to make drives on smooth tarmac roads, rough and rugged terrains (Thomas, 2001). People in America have made complaints about the Toyota’s products in design and flair as compared to GM and Ford. Launch of V8 pick up resulted in response to this ambitious and a big volume of sale is in progress. Overall Toyota is giving hard time to its competitors as it experienced a recall and holding the leadership position in market.
5.6 Corporate Strategy
Stability, growth and efficiency are the main components of the company’s financial strategy. Company is optimistic towards the automotive market in producing the fuel-efficient, electro and segment vehicles in next coming years. Company is focusing to invest in the technologies for the sustainability and growth of advanced units to meet the customer’s needs. Adequate liquidity is the next step of Toyota Company to invite more investments to improve its technology for the next generation technology (Annual report of Toyota 2009).
Automakers in USA are in struggle to improve their strategies and operations to match the Toyota’s strategies and operations. US automakers have said that three dimensions of Toyota’s business plan they seek to emulate. These three dimensions include the Toyota’s Production System with manageable legacy costs, high quality vehicles and dealers network. Although the Toyota Production System (TPS) has encountered serious quality issues yet Toyota is dominating the American markets. Toyota is also replacing the GM products by giving the timely attentions to correct the issues with a best teamwork. Toyota has learn very painful lessons and concentrated on its TPS system with continuous improvement while other automakers have felt difficulty to implement these systems. Toyota has leant more about the US market and GM motors are also following to make the small cars like Toyota. GM could not continue to work at a joint venture with Toyota.
6.0 Potential Challenges for the Rivals of Toyota
The new firms need a strategy development to face the challenges of rivalry from Toyota. This strategy consists of creation of new brands and exploiting the new resources with new aspiration and distinct from Toyota. Mercedes is in effort to tackle these issues to make A-class small vehicles. Porter (1980) has defined the strategic group where firms or groups follow the same dimensions with similar strategy. The concept of strategic group was well developed in the following years (McGee and Thomas 1986). The use of the Porter’s five forces is very useful to examine the forces which act on the automobile industry. New entrants in automobile industry face the issues of capital requirements, brands equity, legislation and ability to distribute their products. Another force which offers barriers for the new entrants are the bargaining powers of buyers and customers. Toyota is well established automobile with best brands it will be hard for the new firms to get the share of automobile market in a short time. Customers always buy the car of well known company and avoid purchasing the car of new entered company.
Conclusions
In this paper we have discussed the history of the Toyota Company with new development in car industry. Competitors of the Toyota are also given with data of their sales and compared it with Toyota Company. The sale of the Toyota recorded in the financial year 2009 was higher than the year 2010. Toyota Company is focusing upon the global strategy to attract the world’s most famous markets throughout the world and achieving more than 35% shares of car markets. Automakers in USA are try to match the Toyota’s products by offering the best quality cars with reasonable prices. It is discussed that how the Toyota is providing best cars and services to its customers and suppliers by a strategic planning. Porter’s five forces are also included in this paper to analyze the impacts of these forces on automobile industry. We have learnt that Toyota is a leading the automobile industry due to its best strategic planning throughout the world.