Toyota Motor Vehicles
Background
Toyota Motor Corporation is a famous Japanese multinational corporation, and is considered the world’s second largest automaker of automobiles. The founder of Toyota is Kiichiro Toyoda, who born in 1894, and the son of Sakichi Toyoda, who was popular in the invention of the automatic loom.
Toyota motors became a mainstay of Japan economy 1n 1960. And it get great growth in this time. And the annual sale of TMC in Japan was about one million dollar I 1962
Introduction
Toyota Motor Corporation, being a multinational is the world’s largest automaker in terms of sales volume. As of 2008, Toyota employs approximately 316,000 people around the world in comparison to second ranked automaker General Motors’ 266,000 employees. The company is mainly engaged in automobile business and financial business.
In end of 1989, Toyota started its manufacturing in Europe by having two main manufacturing plants working in UK. It provides all ranges of cars from mini vehicles to big trucks.
Toyota Philosophy
Toyota’s management philosophy has evolved from the company’s origins and has been reflected in the terms “Lean Manufacturing” and Just In Time Production, which it was instrumental in developing. The Toyota Way has four components: 1) Long-term thinking as a basis for management decisions, 2) a process for problem-solving, 3) adding value to the organization by developing its people, and 4) recognizing that continuously solving root problems drives organizational learning.
They deals in wide range of cars like:
Avensis
Previa
Dyna
CBU Camry
Coaster
Land cruiser Prado
Fortuner
Toyota Motor’s main competitors:
General Motors (GM): It was the world’s largest selling vehicle producer but their market shares were decline in the 80’s and mid 90’s.
Ford: It was the second largest motor car selling and profit making company in the world right behind the GM Company.
Chrysler: It was the third main competitor of Toyota. The company was almost gone bankrupt during the 80’s but their government support their company and saved them.
Main Body
SWOT Analysis
(S)trengths
One of the main biggest strengths of Toyota is the JUST IN TIME concept. Just in Time spirit implies to the two opposing forces of providing fast and
flexible response, and yet building mechanisms and systems that are efficient and waste-free. The concept is to provide the right product and information, at the right time, in the right amount, in the right manner, while maintaining high standards of efficiency and cost control. JIT has resulted in ZERO inventory and enormous saving in the cost.
The company has recorded a strapping financial performance in recent years. Toyota Motor’s revenues increased at a compound annual growth rate of 11.1% during 2004-08.The Company also had witnessed a considerable increase in profitability. During 2004-08, the average operating profit margin and net profit margin of the company stood at 9.1% and 6.5%, respectively. The strong financial performance of the company has contributed to its market domination. This, in turn, enhances investors’ confidence in the company for investment.
Toyota is one of the top leading automotive brands in the world. In the annual ranking of top 100 global brands by BusinessWeek and Interbrand in 2008, Toyota figured in the sixth position. According to the survey, Toyota’s brand value has increased by 6%, to reach $34.1 billion in 2008. In addition, it is the highest ranking automotive brand name in the world. It is ranked well ahead of its competitors like Mercedes, BMW, Honda, Ford, Hyundai, Porsche and Nissan. For instance, in the same period, Ford has been faced with a number of troubles, including a failure to meet its goals for SUV mileage gains or to exploit its well-regarded Escape hybrid; subsequently, the brand value of Ford fell by 12%, to $7.9 billion in 2008. Toyota’s luxury car, Lexus, also has an independent ranking in the top 100 global brands. The brand value of Lexus was around $3.6 billion, with a ranking of 90. Some of the other popular product brands of the company include
Corolla, Camry, Sienna, Prius and Scion. The company’s strong brand image gives it considerable competitive advantage and helps the company to register higher sales growth in domestic, as well as in international markets.
In 2003 Toyota has beaten its rival Ford into third spot, to become the World’s second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified product range, highly targeted marketing and a commitment to turn manufacturing and quality. The company makes a large range of vehicles for both private customers and commercial organizations, from the small Yaris to large trucks. The company uses marketing techniques to identify and satisfy customer needs. Its brand is a household name. The company also maximizes profit through efficient manufacturing approaches (e.g. Total Quality Management).
(W)eaknesses
Usually big setup faces problems during oversupply as in it the company need to make sure that it is the models that consumers want. Toyota markets most of its products in the US and in Japan due to which they are always exposed to fluctuating economic and political conditions. Perhaps that is the reason that now the company is beginning to shift its attentions to the emerging Chinese market.
Toyota Motor provides pension benefits and other post-retirement health and life insurance benefits to employees. During the Year 2008, the company incurred post retirement benefit expenses of approximately $709.1m. The company also paid a total of approximately $671.5m for the post retirement benefit plans during 2007. Furthermore, by the end of March 2008, the company’s projected pension and post-retirement benefit obligations stood at approximately $14,865.9m as compared to the planned assets of approximately $11,256.4m, resulting into an unfunded status of approximately $3,609.5m. Sizeable unfunded post retirement benefits would force the company to make periodic cash contributions towards bridging the gap between post retirement benefits obligations and planned assets, which would reduce cash available for growth plans.
The company needs to keep producing the cars in order to retain its operational efficiency. Car plants represent a huge investment in expensive fixed costs, as well as the high costs of training and retaining labor. So if the car market experiences a down turn, the company could see over capacity. If on the other hand the car market experiences an upturn, then the company may miss out on potential sales due to under capacity i.e. it takes time to accommodate. This is a typical problem with high volume car manufacturing companies.
(O)pportunities
Worldwide demand for light hybrid electric vehicles (HEV) is estimated to reach 4.0 million units by 2015. Rising energy costs and increased emissions regulations are likely to increase the demand for HEVs, as hybrid engines are more fuel efficient and less polluting than conventional gasoline and diesel engines. The primary markets for HEVs will be within Triad countries (the US, Western Europe and Japan), although the quickly growing Chinese market is also expected to experience relatively strong demand for these fuel efficient and environmentally friendly vehicles.
Toyota Motor Company is keen to capitalize on the growing demand for hybrid electric vehicles. The company has spent a large amount of money for the development of hybrid vehicles over the years. The accumulative total of Toyota Motor’s hybrid vehicle sales reached 1.5 million in June 2008. Furthermore, the company plans to expand its hybrid lineup and achieve annual sales of one million hybrid vehicles by early 2010. For this, the company plans to introduce demand-creating products. The company also launched models such as the Prius and LS600h hybrids at the 2008 Beijing International Automotive Exhibition, held at the new China International Exhibition Center in Beijing. The company’s emphasis on hybrid technology will enable it to capitalize on the positive market trends in this segment to enhance its market position
Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance technologies developed by the organization. Such moves can only firm up Toyota’s interest and investment in hybrid R
