Toyota Motor Strategic Review

Topics: Hybrid electric vehicle, Toyota, Plug-in hybrid Pages: 8 (2645 words) Published: February 21, 2013 Introduction

Overview of Toyota Motor Corporation in the context of its industry

The recession that started in the late 2007 had a profound impact on the automobile industry. By early 2009, the global automobile industry was in a deep slump and sales were dropping substantially. Retail gasoline prices of more than $4.00 per gallon combined with a powerful recession put the brakes on new car sales. One result of the high gasoline costs has been the strong demand for Toyota's Prius gasoline-electric hybrid car over recent years. Other carmakers were greatly encouraged in their own efforts to bring more hybrids to the market, but however consumers generally aren't as impressed with U.S. hybrid technology as they are with that of Toyota models. (Plunkett Research Ltd., 2009) The Toyota Motor Corporation is a multinational corporation and now the world's largest automaker in terms of sales, net worth, revenue, and profit according to Fortune Global 500. It was founded in 1926 as Toyoda Automatic Loom Works, Ltd. and has consistently been more productive than its competitors. The company has been widely recognized for the quality of its products and production systems. The company is already onto its third generation hybrid engine - which is incredible given that many manufacturers have not even begun to develop their first. (AUTOeBID)

Executive Summary

As it can be seen from Appendix 1, recently car sales are dropping substantially. However, Toyota is trying to overcome all the barriers car industry is facing and to continue to be the leader in the field. Its main strengths are its well-known brand name and the hybrid cars that the company produces. The well developed value chain gives competitive advantage, mainly due to the inbound logistics and the human resource chain. An emphasis is put on the new CO2 regulations and the success of the Prius -the most widely rolled-out environment-friendly system in the automotive industry to date. It is evident that Toyota has been hurt by the strength of the yen, which makes it less competitive and erodes the value of its earnings abroad. However, serious potential threat for the company is the strengthening of VW that is expected to become the main competitor of Toyota in the near future. According to the Ansoff matrix, the best strategic option for Toyota is Product development in existing market. However, different analysis and scenarios are presented in the following report that shows the current position and options for Toyota.

Strategic Review

Value Chain Analysis

Toyota's value chain is so well developed that it makes the company more profitable than the three largest automobile companies in the USA. (Henry, 2008)[1] The main strengths of Toyota's value chain are in the inbound logistics, due to the usage of Just-in-time production method, because it minimizes inventory cost. The other most valuable part of the chain is the Human resource. The employees are perceived as Human Capital. Toyota's HR department is aware that happy employees translate into better job performance. This equates to the kind of increased production and quality that renders satisfied customers.

Strategic Group Mapping

Toyota is positioned in the moderately low-price, high volume market. The company has managed to overcome mobility barriers and entered the luxury market with its Lexus brand, which is now competing with BMW and Mercedes. (Henry, 2008)


• Political:
In times of crises the Japanese government is subsidising Toyota. The adoption of new...
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