Toyota Swot Analysis

Toyota SWOT AnalysisStrengths: Strategic Advantages
Kanban System-
Toyotas strategic aspect that differienates them from other automanufacturers is their production process. The just in time method has proven to be effectiveand efficient at saving costs for Toyota, therefore can charge less for their products. This givesthem a competitive advantage over other auto manufacturers. Only when the parts are needed,do the suppliers provide the parts due to an integrated supply chain system. Leanmanufacturing also cuts down on storage costs and increases inventory turnover and speeds upproduction. Toyota is about effectively using resources to maximize their production andmaximize elimination of unwanted costs. This lean manufacturing system has distinguishedToyota from any other organization and has greatly decreased costs and increase productproduction efficiency (Teresko, John).
Organizing Suppliers
- Toyota believes that to have an efficient manufacturing system, there needs to bestrong relationships with suppliers. Suppliers are a key component of the Kanban System, so it is vital tohave close relationships with them to keep them up to date on new changes. They have a strong horizonintegration verses most automotive companys vertical integration. Horizontal integration mergescompetitors to gain a competitive advantage with large organizations. Toyota found that horizontalmerge proves to be cost effective, risk reducing, and increase benefits (Hill, Charles W. L.).Understanding the importance of good relationships with suppliers, Toyota sought out to assist withmanagement, help engineering expertise, and even offered to finance potential investments (Hill,Charles W. L.). Toyota strives for the best and only goes after the best suppliers of Japan and now theUnited States (Vaghefi, M. Reza).Strengths: Cultural Advantages
Loyalty
- One of the major advantages in working with Toyota is their cultural advantages. One of thecultural advantages is respect for hierarchy authority. Japan is much more devoted to groups then toindividuals. Toyota reflects this in their employees devotion to the company and the constant desire toimprove it. One of their fundamental beliefs is that every employee deserves respect (The Toyotavision). Japanese value work differently then how Americans value work and it reflects in the quality of the product. When Toyota designs their automobiles, each Japanese employee had a part and they takepride in whatever part they have. Since there is this sense of respect for authority instilled in theJapanese employees mind, the top management makes the decisions. The decision making process ismuch quicker and implemented quicker due to this respect for hierarchy authority. This is one of Toyotas strongest competitive advantages; they believe in empowering every employee to beinnovative (Vaghefi, M. Reza).
Continuous Improvement
- Coming from a culture that highly values pride in products, Toyota continuesto work for improving the quality of the product, the manufacturing system, or relationships betweensuppliers. Toyota was built on the belief of continuous learning therefore this inspires continuousimprovement. Specifically, Toyota makes their employee teams figure out what the problem is whenone has occurred and traces the problem back to its origin. The employees are more educated on theproduct now and can be more attentive to look for similar defects (Hill, Charles W. L.). Another wayToyota is improving their internal structure was through organization. By organizing workforce intoteams that perform similar tasks and grouping those teams into areas with similar tasks teams, Toyotasmanufacturing system can be more efficient. Weakness
J
ust-in-time system -
Even though the Kanban or the JIT system has proven to be a competitiveadvantage for Toyota, it can be a weakness as well. The JIT system is so interdependent on one anotherthat no supplier is allowed to mess up even for a moment. The one supplier that does not provide thequality supplies to Toyota will halt the rest of production till the issue has been resolved. Betweenunions, strikes, and product quality malfunction, Toyota is relying on every supplier to be on time withthe best quality of products. Too much dependency can trickle down to parts of the manufacturing linesif the suppliers do not provide.Opportunities and Threats: Porters Five ForcesRisk of Entry by Potential CompetitorEntering the automobile market is expensive and risky. Some automobile companies constantlybattle against bankruptcy. Car companies are expensive to establish and expensive to maintain.Companies like Toyota, Honda, and Ford discourage new competition because of their wellestablished presence in the market.
Economics of Scale
 Toyota has worked on improving their lean manufacturing system tospread fixed costs more over production. They have surpass Ford and GM in production andcosts. They can produce 15 cars per worker which is far more then the 4.7 vehicles peremployee Ford can produce. By creating more cars to sell, Toyota has effectively spread theirfixed costs over more production (Hill, Charles W. L.).
Brand Loyalty
 Over the years, Toyota has proven to be a more reliable, dependable vehicle theAmerican made cars. Toyota builds cars for safety as well. In 2010, the Toyota Camry receivedthe highest possible grade for safety according to the National Highway Safety Administration.They design cars to appeal to all types of social demographics and are now selling hybrids toaccommodate the high petrol prices.
Absolute Cost Advantages
 Because of their just in time system, Toyota has been able tosignificantly reduce costs and therefore have increase their profits more.Customer Switching costs  Cars are liquidity assets and switching from one company to anothercan be easy. All customers have the opportunity to but whatever brand they desire, but oncestuck with that vehicle, they are not as easy to dispose of.Rivalry among Establish CompaniesDuring the present times, competition between major automobile companies is intense.Between the large automobile companies in the States, competition continues to increaseespecially in tough economic times. Toyota has succeeded in narrowing the sales gap betweenFord and GM. Now Toyota holds 18.4% of the market share of passenger cars while Ford holdsto 15.4% and GM is 19.3%.
Industry Competitive Structure
 Toyota competes in a consolidated industry in that there arefew but powerful companies competing with them. Consolidated companies are interwoven intheir market because what one company does can have direct impact on a competitor. ForToyota, bringing in the just-in-time method has transformed how Ford and GM assemble theirproducts. Toyota is the leader in cutting costs and continuous improvements which havebrought new challenges to Ford and GM.
Cost Conditions
 What makes Toyota different from rivalries is their strict cost cuttingtechniques. This along with lean manufacturing and continuous improvement go together toproduce a strong business model. Since Toyota highly depends on lower fixed costs, theycounted on strong sales to increase profits and continuous grow which creates intense rivalry.
Exit Barriers
 Automobile industries create high exit barriers since so much investment isneeded to get an automobile organization started and maintained. Bargaining power of BuyersBuyers can negotiate prices down since cars are plentiful. When there are plenty of product outin the market, buyers can afford to be more precise and have higher standards for productquality. In the case of vehicles, buyers can have some negotiating power over the vehicles price.Ultimately, automotive companies need to learn how to enhance their profits while keepingprices down. This is where Toyotas technique of cost cutting is a competitive advantage.Bargaining power of SuppliersSuppliers do not have much power in the automotive market. There are other means of automotive companies to get the parts then need if the suppliers charge too much. Acompetitive advantage that Toyota has is their strong relationships with their suppliers.Substitute ProductsAs the customers are becoming more environmentally conscience, more people are riding theirbikes or taking the bus to work. For personal reliable transportation, there are no substituteproducts for vehicles. People will always need a personal, safe, dependable way of transportation