Toyota is the leader of the hybrid technology with its Prius. The Prius was the world’s first mass-produced hybrid car (Case, paragraph 2, ‘The Prius…higher speeds.’). Toyota used the Prius as the centre-piece of their campaign to give themselves a more environmental image compared to their rivals. The reason why the Prius was such a success and other hybrid models were having troubles to get buyers, is that the buyers of the Prius want to make a statement about themselves. They want to show people that they are more environmentally aware then other people.
Toyota recently had some troubles with their cars in 2010 (Case, paragraph 7, ‘In 2010…brake problems.’). They had to re-call 437,000 hybrid cars because of some brake problems. All over the world people want to have this new hybrid car but the world’s second-largest car market is China (Case, paragraph 8, ‘China, meanwhile…surges ahead.’) The second-largest auto industry used to be in Japan but China overtook it three years ago and China is going to surpass the United States as well. But although they had to deal with some setbacks, Toyota is planning to develop the hybrid technology even further. They spent over $1 billion on research and development and they have plans to produce six new hybrid cars by the end of 2012 (Case, paragraph 10, ‘By the end…by 2020.’). But Toyota is not the only company producing hybrid vehicles any more. The degree of rivalry is getting bigger and that’s why the question now is whether Toyota should continue with the development of their hybrid technology, or should they invest in new technology that enables them to produce fully electric cars?
To analyse whether Toyota should stick to hybrid technology or invest in a new technology, I decided to use the Five Forces Model. This model contents the following forces: 1. The degree of rivalry 2. Threat of new entrants (and entry barriers) 3. Supplier power 4. Buyer power 5. Threat of substitutes (Book ‘An...
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