External Analysis of the Automotive Industry

Topics: Toyota, Automotive industry, Hyundai Motor Company Pages: 3 (721 words) Published: February 19, 2014
Toyota Corporation is an organization that manufactures quality vehicles at a low price; together with marketing skills and brand recognition to utilize premium-pricing policies. Yet, Toyota is not without its share of corporate weaknesses and threats, which continually risk its competitive advantage. Weaknesses

Toyota is a massive enterprise, and being this large comes with even larger problems. Currently the global automobile market, due to the recession, is in a state of oversupply; automobiles must be manufactured to meet the demand of the consumers; they must be the models the customer desires. The Toyota Corporation markets the majority of its products to Japan and US markets; exposing itself to fluctuating political, economic and socio-cultural conditions within those markets. Inflation and exchange rate movements could see the current narrow limitations, being even more reduced; which create weaknesses for Toyota. Maybe that is the reason Toyota is starting to reallocate its strategic growth towards China's emerging markets.

In order for Toyota to maintain its operational efficiencies, it must continue producing vehicles. Automobile manufacturing facilities characterize massive investments in costly fixed expenditures, on top of the soaring costs of retaining labor. If the automobile industry experiences a decline, Toyota could very well find they are over capacity. Conversely, should the automobile industry experience an expansion; Toyota could possibly lose possible sales by reason of being under capacity. This is an emblematic weakness and concern within Toyota's high-volume manufacturing strategies.

Product recalls are always a looming threat for automobile producers. In 2005, Toyota had to recall almost a million vehicles due to damaged front-suspension structures. In October of 2010, Toyota recalled 1.53 million vehicles, due to gas pump and brake issues. In August of 2010, 1.3 million were recalled due to faulty...

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