Toyota's Strategy and Initiatives in Europe

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Competition in the minicar segment
Competition in the minicar segment of the European automobile industry was high. Because a large number of competitive manufacturers were competing for market share, and their products were relatively similar. Economic uncertainty, high unemployment and increasingly high fuel prices had led to volume gains in this segment. Many big manufacturers had realized it, and had already entered the market with success somehow. Five forces analysis of Toyota Motor Europe(TME)

Rivalry among Competing Sellers - Strong
-TME had just entered this segment and there had been many rivals competing for market share. Other competitors, most of them had experienced for many years in this segment. They also had a lot of experience in automobile production and their size and capabilities were of a very high level. This led to a very high rivalry among sellers. -Each competitor was trying their best to differentiate their car in terms of performance and value which would possibly satisfy their customers. The new models were designed from time to time which raised the rivalry. -They needed to be very careful in making the decisions, because high fixed costs and low margins in this segment would result in substantial losses. All the other competitors were carefully focusing on costs reduction. -Some firms were in over-capacity which may lead to them cutting their price in order to keep demand. -Strong advertising campaigns and promotional offers were some of the strategies used by Peugeot, Citroen and VW to create awareness and a customer base. Potential new Entrants - Strong

-The number of global car manufacturers not already entered in this segment was high. They already had many of the resources, competencies and competitive capabilities. -The barriers to enter the minicar segment were low. Some other car manufacturers who produced in a large scale were easy for them to make minicars. -Many of the potential new entrants, they had known quite well about European automobile market and some of them had built plants for bigger cars. They also had good relationships with suppliers of raw materials and components. Substitute Products - Moderate

-The main substitute was a bigger car. There were so many choices and they offered more space and features. -Scooter could be a cheap and efficient means of transport. Scooters had low fuel consumption, lower maintenance costs, lower insurance costs. -Public transport had an impact on the minicar which was encouraged by government. Supplier Bargaining Power -Weak

-European suppliers were very eager to supply TPCA since this was seen as the entry point for supplying Toyota. European suppliers were struggling, as many of their traditional customers had cut their production volumes considerably in recent years. -Suppliers to TPCA could also qualify for PSA’s plant in neighboring Slovakia, about 250 km from Kolin. PSA had big plans at this plant, too. Buyer Bargaining Power - Weak

-The buyer bargaining power was relatively weak, because Toyota would be selling the Aygo through many of its existing dealers of its larger cars. They wanted to have a long deep relationship with each other. From doing 5 forces analysis, we can conclude that the competitive pressures TME faced were strong. Competition in the minicar Segment -Multicountry

The competition in the minicar segment of the European automobile industry could be described as multicountry. Firstly, because most international car manufactures had entered or would enter into the European minicar segment. Like BMW-Mini, Smart, etc. Secondly, in Europe different countries had different marketing characteristics of the minicar segment, which meant different levels of competition among them. For example, some western European countries compensated the purchase of minicar, while some countries didn’t in Eastern Europe. However, the increased demand was due to economical and energy issues in the European...
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