Toyota Case

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1. Why do you think Toyota waited so long to move much of its manufacturing for European sales to Europe?

Automobile manufacturing is a capital intensive industry. If Toyota moved its manufacturing to Europe, it needed plenty of fixed assets like factories and machines. As Euro was going weaker and weaker to Yen, Toyota had suffered continuing losses. This made it risky if it failed to eliminate or decrease the losses. Besides, automobile manufacturing needed a large scale, so if the movement couldn’t result in a large scale, it wouldn’t help.

2. If Britain were to join the European Monetary Union, would the problem be resolved? How likely do you think it is that Britain will join?

If Britain were to join the European Monetary Union, Toyota could use cheaper materials in Britain than in Japan. This would help the problem when manufacturing in Britain.
I don’t think Britain will join the EMU.

3. If you were Mr.Shuhei, how would you categorize your problems and solutions? What was a short-term and what was a long-term problem?

The problem is that Euro is getting weaker and weaker to Yen. This makes lower margins. A short-term solution is to make some strategies to manufacture new products, like Yaris. A long-term solution is to decrease the cost, or to decrease the risk of exchange rate, like moving more manufacturing to Europe.

4. What measures would you recommend Toyota Europe take to resolve the continuing operating losses?

Moving more manufacturing to Europe is the best way to resolve the continuing operating losses. They can still manufacture in large scale to reduce cost, or increase the price of vehicles imported to Europe.

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