Industry and External Environment Analysis: Toyota Motor Corporation

Topics: Automotive industry, General Motors Pages: 20 (4521 words) Published: September 17, 2015
Table of Contents

1. Introduction ............................................................................................................ 5 2. Industry Overview................................................................................................... 5 3. Toyota Motor Corporation ...................................................................................... 7 4. Porter’s Five Forces on Automobile Industry .......................................................... 8 4.1 Threat of new entrants ...................................................................................... 9 4.2 Threat of substitutes ....................................................................................... 11 4.3 Bargaining power of buyers ............................................................................ 12 4.4 Bargaining power of suppliers ......................................................................... 12 4.5 Rivalry between the existing competitors ........................................................ 13 5. Recommendation ................................................................................................. 14 6. Conclusion ........................................................................................................... 15 7. References ........................................................................................................... 16 8. Appendix .............................................................................................................. 18

EHP – PRBM030

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1. Introduction
In global business world, the main aim of most organisations is establishing unique or distinctive capabilities from their core competencies to achieve a competitive advantage in the market. A competitive advantage occurs when organisation can offer customers greater value (lower price, additional services and benefit) over competitors in its marketplace (Ehmke 2011). Strategy is a key assisting tool for a firm in any industry to gain the competitive advantages. Business strategy is ‘the long-term purpose and positioning of the organisation within its industry’ (Misra 2014). Today business environment is more complicated and more regulated especially in developed countries than in previous business era. A genuine strategy is always needed when business create a distinctive way ahead, against the influence of the environment by applying whatever core resources and competencies it belongs (Misra 2014). The firm seeks sustainable competitive advantage through these distinctive capabilities.

In this severely violent business world, the automobile industry is extremely competitive, with many large organisations trying to influence their competitive advantages to achieve the majority of market share and position (Business Wire Inc. 2013). This paper is to study the US automobile industry for Toyota Motor Corporation (Toyota) using five forces analysis that was developed by Michael Porter to identify competitive opportunities and attractiveness effectively within market or an industry. The framework for Porter’s five forces analysis consists of these competitive forces such as the threat of new entrants, the threat of substitutes, the buyer power, the supplier power and rivalry among the competitors (Porter 2008b). These five forces shape the strategy of organisations (Porter 2008b). The automobile industry analysis enables Toyota to understand what forces determine profitability of the automobile industry, what is the current absolute and relative profitability of the industry based on these forces, how these forces are changing and expected to change, and how those changes affect future profitability (Misra 2014).

2. Industry Overview

EHP – PRBM030

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The automobile industry is one of the most essential economics sectors and industries. It also represents 3 to 3.5% of GDP, and creates one in every seventeen jobs in the United States (US). The...

References: Business Wire Inc. 2013, ‘Research and Markets: Automobile manufacturing industry
in the United States - industry size & growth’, Regional Business News, 16 October,
8. Appendix
(Worldometers 2014)
(Jurevicius 2013)
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