Automotive Industry and Toyota

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

Location of FactorTYPE OF FACTOR
FavorableUnfavorable
InternalStrengths
Strong financial performance
Brand image
Strong performance in Asia region
Research and development activities
Toyota production system Weaknesses
Poor profitability of ‘financial services’ segment
Expenses related to post retirement benefits for employees ExternalOpportunities
Increasing demand for hybrid electric vehicles
Opportunities in Asian market
New models Threats
Economic slowdown
Competition in the global automotive market
Tightening emission standards
Appreciating Japanese Yen against US Dollar

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

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

Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance technologies developed by the organization. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid. Such moves can only firm up Toyota's interest and investment in hybrid...
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