What is competition like in the mini-car segment of the European automobile industry? What do we learn about the nature and strength of the competitive pressures Toyota Motor Europe (TME) faces from doing a five-forces analysis?
Competitive Rivalry – Major European competitors include VW, BMW, Ford, Fiat, and PSA (the holding company that owns the Citroen and Peugeot brands). Toyota enjoys a very loyal customer base. The company has consistent, high-ranking quality marks.
New Entrants – The mini-car segment is undergoing renewed growth due to global economic factors. To sustain market position in a slow growth market, many brands have tried or will try to enter this segment. New entrants to this segment have tried various strategies without much success.
Buyer Power – The European mini-car segment represents low buyer power. That is, the switching costs are high while the average length of ownership is long. Also, reputation and services/features are important to buyers, which further weaken buyer power.
Substitute Products – Toyota is a leader in hybrid technology, environmental initiatives, and quality. These facts coupled with the narrow selection of substitutes, decreases the competitive pressures associated with substitute products.
Supplier Power – Because Toyota is one of the few firms that produces mini-cars in the target price range (10,000) with suitable features, it enjoys relatively strong supplier power.
The competitive outlook for Toyota in the mini-car segment of Europe remains good. While competition is strong, Toyota has key competencies that allow the company to succeed in this environment.
Is competition in the mini-car segment of the European automobile industry best described as global or multi-country? Why? Which type of international strategy is TME using in its international operations? Competition in the mini-car segment of the European auto industry is best described as multi-country because:
Buyers in different countries...
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