Strategic Managment-TOYOTA SWOT Analysis Essay Example

  • Category:
    Management
  • Document type:
    Assignment
  • Level:
    Masters
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    3
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    1557

Title: A detailed SWOT analysis of Toyota (The Firm)

Introduction

Toyota Motor Corporation (TMC) was founded in 1937 by Kiichiro Toyoda and is multinational automobile manufacturer whose headquarters are in Toyota, Japan. By 2009, it had employed over 71,000 people worldwide. It is the largest manufacturer of automobiles in the world. TMC has two categories of automobiles in its production, hybrid and conventional engine cars. Toyota was eighth among the 2000 companies ranked by Forbes in 2008 and was the first globally in automobile sales the same year. TMC’s product line includes cars made with incorporation of electric technology like hybrid electric drives and hybrid synergy drives. It also produces plug-in hybrids, all electric vehicles, over 70 models of cars, SUVs and crossovers, pickup trucks and luxury type vehicles. TMC is having a good run in business but like any other company, it has been having problems. The financial crisis in 2007 affected the corporation and in 2009, they reported a net loss of $4.2 billion. They recalled about 8 million vehicles in the period between 2009 and 2010 and in 2011 on March 31st; workers in a factory in Onnaing had a strike demanding higher pay. Despite the problems, Toyota has been stable for over 70 years (Charles & Hill, 2007)

Strengths

  • Toyota has made investments in the United States (US) and China and made huge profits especially in 2005. They have penetrated key areas of marketing making for a brilliant marketing strategy. The US is a major marker for automobiles and it opened up Toyota to more people and companies. China is the most populated country in the world and also a major market that helped Toyota tremendously. In 2005, the investments helped Toyota get net profits of up to $11 billion. Sales rose by 7.3%. TMC used focused marketing and targeted the right market with the right blend of goods.

  • TMC has diversified products with a wide range of preferences and specifications. They managed to become the second largest automobile producers behind General Motors in 2003. They sold 6.78 million units in this year. They knocked off their major rivals, Ford, to number three. Its products include sporting cars and luxury cars with good quality. TMC uses effective manufacturing approaches and techniques. They identify what their customers need and aim their production towards that.

  • TMC has branches all over the world with additional factories in 170 countries. They have formed a global organization that put them closer with their markets and help then save on shipping costs. The global diversity has put them in high ranks internationally and often making them the first choice for those who wish to purchase cars.

  • TMC is financially stable and strong. Sales increase in high percentages and finances help them meet market demands adequately.

  • TMC’s image is strong and supported by many based on their policies about making environmentally friendly cars and moving towards brands with fueling options that do not harm the environment. Its brand is recognized and appreciated.

  • TMC uses manufacturing approaches that ensure maximization of profits and product range. These approaches include Just In Time (JIT), Total Quality management and doing automobile research and developing new integrated brands.

  • The TMC workforce is highly productive and very motivated.

  • The JIT approach to manufacturing leads to factory operations of high quality of automobiles produced at lower costs.

  • TMC has been around for about 73 years enabling it to form strong and long term business relationships and partnerships with their suppliers.

  • TMC does thorough market research and utilizes the results of the research to produce car models that meet demands of customers.

  • TMC are capable of producing custom designed orders and offers their clientele superior customer care and services.

  • It is a well known fact that TMC is among the leaders in quality manufacturing of automotives.

  • TMC has good relations with its personnel creating a conducive and productive working environment.

  • The company has informal channels of communication and contact with employees at all levels within it.

  • TMC has a strong relationship with employment and has a massive labor force behind its manufacturing and, each of them adds value to their cars.

  • TMC is investing time and research towards finding a mutually beneficial balance between cycles of industry and the cycles of nature.

  • TMC shares the philosophy of Kaizen with other major Japanese companies. It aids mutual respect between them.

  • Also the Confucian respect for the levels of hierarchy within the company enables decisions to be implemented rapidly.

  • Toyota has become a household name and is trusted by many people who believe that its products are of good quality.

Weaknesses

  • Being one of the largest automobile companies, Toyota is selling in a market that is almost being over flown with car product supplies. They therefore need to make models that speak directly to customer needs.

  • A large amount of TMC’s products are marketed in the US and in Japan. They are therefore susceptible to political and economic conditions that affect these countries and, subsequently their markets.

  • Market upturns and down turns are unpredictable and may cause either under capacity or over capacity of their products respectively. TMC produces cars in high volumes and if they experience over capacity, they may experience losses and in the case of under capacity, they may miss out on good market opportunities.

  • TMC is a company whose origin and base is in Japan so it may not be readily accepted in some markets since it may be viewed as a foreign source or importer.

  • TMC produces the most automobiles for markets in the US and Japan. Their competitors may be concentrating on diverse markets worldwide and thus will benefit from global efficiency.

  • TMC experienced loses and faced a lot of criticism because of the recall of 8 million vehicles.

  • TMC‘s customer base is not segmented and they do not involve customers directly in the production process.

  • The research they do is less compared to the kind that their competitors engage in.

  • There is a very high responsibility placed on employees. They have to make sure that they produce what is required by their employers.

  • TMC management has few layers in their hierarchy and this lessens the opportunities for promotion.

  • Employees have a lot of pressure to produce effective machines and automobiles (Toyota Corporation, 2007).

Opportunities

Oil prices have shot up and there is increased demand for environmentally friendly vehicles. Toyota has produced Prius which is one such vehicle. It is one of the company’s hybrid-gas electric vehicles.

  • The technology for production of environmentally friendly vehicles was developed by TMC and it is selling it to other automobile manufacturers like ford.

  • TMC is developing Argo which is a new model targeting streetwise and urban youth. It is a particular modeled convertible that incorporates the nature of DJ and dance culture. The Argo will help TMC penetrate segmented markets.

  • Development of Hybrid cars by TMC meets the demand of social needs and institutional ones too.

  • TMC is expanding and penetrating Asian markets like China, Russia and India. These countries have rising populations that I turn increase demand (Bradford, 2007, p. 10).

  • The Japanese government has limited automobile imports to only 1% Japan. This means that more people in Japan will have to buy from Toyota.

  • Special import plans have been made for automobile producing technology and machinery lower the production costs and increase production.

  • The increase in demand is making suppliers seek new opportunities with TMC and they will likely get the supplies at cheaper prices.

  • The fuss of hybrid technology is spreading and TMC has the most developed technology to bring the most hybrids into the market (Marketing Teacher.com, 2011).

  • A major threat to TMC is having the need to recall their products. Their production is massive and recalls will lead to great losses and waste.

  • TMC faces strong and vicious rivalry in the automobile market. There is increasing competition almost daily with new comers from China and some parts of Europe coming up rapidly. The market is slowly being saturated with car manufacturers.

  • Their production material is facing threats from price fluctuations and shifts in rates of exchange. The raw materials include steel, fuel and rubber. They pose economic threats

  • There are changes in demographics which in turn affect demand. The need for large cars may become less if the number large families reduce.

  • Oil prices keep increasing which may make people opt not to own personal cars (Pfeifer, Schmitt & Voigt, 2005, p. 287-308).

TMC has been in existence for long and has formed manufacturing and marketing strategies that keep it strong under challenging situations. It is a trusted and popular brand name with a wide product range that has the potential to accommodate new ideas and demands from the market. All these factors make it a stable company with great potential. The threats and weaknesses it has are part of businesses and could be dealt with.

References

http://www.businessteacher.org.uk/business-resources/swot-analysis-database/toyota-swot-analysis/. Retrieved December 31, 2007, from 007Annual Report, 2Hoovers & Toyota CorporationCharles W. L. & Hill, Mcgraw Hill. (2007).

. 23, (4), 10. Strategic Direction
Bradford. (2007). Japan’s smooth operators: But does lean production damage the brand? 

http://www.oppapers.com/essays/Toyota-Swot-Analysis/144352Marketing Teacher.com. (2011). Retrived April 7, 2011,

www.toyota.com. Retrieved April 6, 2011, from Annual Report. (2007). Toyota Corporation

. 17 (4), 297-308.The TQM MagazinePfeifer, T., Schmitt, R. & Voigt, T. (2005). Managing change: quality-oriented design of strategic change processes.