I. Statement of the Problem & Sub-Problems
The recession that started in the late 2007 had a profound impact on the automobile industry. The global financial crisis had its impact on the world's largest automaker and Toyota is trying to cope with a shift in the global automobile industry. The challenge was to bring Toyota back to profits. Toyota has been in such a serious quality issues with its vehicles. Just within six months, almost 9 million cars have to be taken back for modification under the potential problems with floor mat, acceleration pedals, and braking, all of which were related to unintended acceleration problems by publics. II. Company Objectives
World domination with regard to car supply. Toyota seeks to achieve market leadership by delivering value to customers and providing high quality vehicles. III. Analysis of Related Case Facts
A. Porter’s Five Forces Analysis
1. Threat of New Entrants – Low
New entrants can’t enter the market easily as it requires huge capital investment, cutting-edge technology and the industry have already reached economics of scale. Brand loyalty among the buyers. They won’t easily switched to new brand as purchasing a vehicle incurred high cost.
2. Bargaining Power of Supplier – Moderately Low
Various types of suppliers in automobile industry such as cooling, electrical, fuel supply systems distributed across the globe. They own many interchangeable supplier and produced many components in the short time. Suppliers don’t own the power to determine the price.
3. Bargaining Power of Buyer – High
Can easily switch to other brands if they’re cheaper and better specifications such as Honda’s new Hybrid models which are more lucrative Toyota Prius.
4. Threat of Substitute – Moderately High
There are a lot of substitutes in automobile industry. When the price or the specifications of the vehicle is lack of favor, the substitutes will emerge. Besides from vehicles, buyer can opt for other substitutes such as bicycle, bus, train or even walking to reach their destination with petrol price hiking. However, it depends greatly on the consumers geographical location.
5. Competitive Rivalry – High
Competition between existing players is high. There is not much differentiation between players and their products. Other automobile companies are moving aggressively with their strategy to own higher market share with Hybrid models. B. Swot Analysis
Superior productivity and efficiency of Toyota Production System Toyota is the world’s largest vehicle manufacturer by production and sales Global strong brand awareness
Strong distribution and market efforts focused on high quality, sales and close involvement with customers It has initiated new technologies
Recalls caused quite severe financial impact
It is criticized as a foreign importer by Japanese local car producers In May 2009, they reported a record yearly net loss of $ 4.2 billion In 2005 faced criticism because of a large scale recall and quality issues
Recovery of auto industries
Positive growth trend in hybrid vehicle segment
Growing demand from major emerging markets India and China
Demand for fuel efficient, compact vehicles
In 2009 Bank of India decreased the interests on automotive bank loans Product innovation
Competiton in the global automotive market
Uncertainty in global economic condition
Weakening demand, increasing cost
Tightening emission standards
C. PEST Analysis
Laws and regulations mandated by the government/state/local assembles may put in measures to ensure that safe and ethical practices are being followed to promote fairness within the company. On the other hand, these laws, especially those foreign to Japanese customs create policies that imposes more profit loss for TMC because it is a foreign car company. Economic and Social Factors
The first that may impact TMC’s profit is that the...
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