All business Organization are ultimately involved in the some basic activity, namely the transformation of inputs(resources) into outputs (goods(or)services).Business relates activities, That links an organization with outside world. Within an organization, a business is controlled by the behavior of its employees, management or decision makers. But externally a business is act upon by a score of factors, which range from customers to competitors and government. Hence, a business cannot be independent of the impact of these external factors. It should also be noted that a business has absolute control over all the internal factors, it has no control over the external factors. So often it becomes necessary for business houses to modify their internal decisions and policies, on the basis of the pressure from external factors.The Business Environment Risk Index (BERI) is an index that measures the risk versus potential returns of expanding their operations.
Every company wants to maximize their own profits, and minimize its costs. In global automobile industry, every company is chasing behind the profits and reducing the costs as well. The automotive vehicle manufacturing, components and retail raised over US$21.6 billion (January – September) in 2010, compared to US$281.1 million in 2009( Source: Data Monitor – Global Automobile Report – March 2009). In terms of value, this puts the industry in third place, behind only the insurance and banking sectors. Global automobile industry is not only for American and European , but also Japanese. Nowadays, in the United States, it is easily to see several types of Japanese car on the streets, and the amount of Japanese car becomes higher and higher. Toyota got 15.9% of global market share around the world, and it maintains going up (Global Automobile Manufacturers, 2007). This is an alert for American automobile manufacturers, and it is a message says “Here we come.” Facing a giant challenger (TOYOTA MOTORS)f rom Japan, the ways to against it for American automobile brands is the most important issue to develop. Challenger’s entry is not the only problem for American automobile brands, but also oil price keep going up, green environment, public transportation systems, and weak global economic. First of all, world’s oil price keeps going up because the world’s demand is higher than middle-east countries’ supply, and oil becomes a major natural energy resource for the planet. This is the main reason that the oil price keeps going up. Secondly, green environment is a trend of all around the world, especially for the Global Warming, carbon dioxide, and recycling. To solve this kind of problem, hybrid car is a trend to reduce the damage for green environment. Another issue is that more governments are trying to make citizens use public transportation systems. Bus, subway, railway, and rapid transit system are the major types of transportation in cities. This can be a huge impact for automobile industry. Finally, weak global economic can be a factor that makes people buy fuel-efficiency cars, which most are Japanese cars (eg,Prius).
TOYOTA MOTORS INTRODUCTION
Toyota Motor Corporation was found by Kichiro Toyoda, who was born in 1894. After the invention of automatic loom by his father Sakichi Toyoda became most famous person. Thirst of creating new ventures knowledge was acquired from his father, His entire life was dedicated towards the manufacturing of cars. After years of hard working, Completion of the A1 prototype vehicle in1935 was finally succeeded by him. That was the beginning of the history of the Toyota Motor Corporation. Toyota has landed in its 70th anniversary in 2008. It aims at widening its market with an array of new products with eco-friendliness. Even with more than 53 operating manufacturing competitors in its region of sales Toyota still stand stands in limelight.
Toyota Brand is most famous and familiar among the consumers in a large number of countries in the world and has been a part of their daily lives for more than 60 successful years now. The brand has been successful in attaining the image of ‘high quality and high performance’ due to its consistent and effective marketing performance throughout all these years. As a result, currently, the brand has been able to establish itself efficiently as one of the most popular brand names in the world. To maintain the high image of the brand, the company has always come up with various innovations in its respective business to outperform all its competitors.And Toyota has a favourable position in the market with regard to the quality and durable cars it produces.
SWOT ANALYSIS OF TOYOTA MOTORS
Global organisation which operates in 170 countries worldwide.
Effective brand name
Huge investment in Research & Development.
Environmental programmes widely promoted.
Second largest car manufacturer after Ford.
Offers wide range of products.
Toyota uses Quality Function Development (QFD).
Toyota Production System (TPS).
As one of the major car manufacturer and operating in various countries worldwide Toyota gained trust among the people based on quality, safety and huge brand name. It offers their customers with wide variety of cars and also concentrated on stylish affordable models for young buyers and segmented their customers according to their needs. Strong Research & Development provided them to launch new attractive model in the market and develop the existing range of models to achieve customer satisfaction and attract new customers (Toyota Motor: 2008 company profile).
The purpose of using QFD by Toyota is to make sure that the product or services actually meet the needs of the customers. By using this programme they managed to develop the quality of production and achieved trust among the people who seek for quality. (Alan Betts et al. 2006)
By adopting lean synchronisation they tried to eliminate waste throughout the production in any possible form. To reduce the inventory waste they adopted Just in Time (JIT) approach which means meeting customers demand simultaneously i.e. producing only when required. They used to call the whole process as Toyota Production System (TPS) through which they maximised their profits. (Alan Betts et al. 2006)
European Countries low share market.
European customers were not convinced.
Prestige brands are preferred by Europeans.
America and Japan was the main place of production.
When compared to customers from America and Japan the Europeans people’s needs and wants were different, though it recognised the needs of European market, the people prefer from the high prestigious manufacturers like: BMW, Mercedes. though Toyota had manufacturing unit in UK, To support the local market some buyers prefer to buying from local producers. (Richard.V, 2002)
Zero interest loans in Europe focused by Toyota.
Hybrid gas-electric models was firstly introduced by Toyota.
Aggressive expansion in emerging countries.
Highly innovative of new models.
Toyota holds Large market share in hybrid models.
Sustainability and robustness.
To promote the sales of the cars in American market, Toyota has launched zero-interest schemes. It is now planning to do the same in Europe. This kind of methods will provide them with an opportunity to increase the market share in European countries (The Economic Times. 2008).
Toyota was the first manufacturer to develop hybrid models. Toyota planned to expand their productions in emerging economic countries like India and China. Toyota is planning to launch hybrid vehicles in India to benefit Indian customers with cleaner emissions and high fuel efficiency. This would help them to increase their share in India markets. (The Economic Times. 2008).Toyota has recorded more global sales than General Motors in the first quarter of 2008. Toyota reported steady demand in Asia and strong demand in Europe in the period (The Economic Times. 2008).
Recession occurred Globally.
Changes in exchange rates of different countries.
Cheaper Public transportation.
Competitors are stronger.
Rising in home deliveries, pick-up and drop services.
Fuel prices increased and heavy taxation imposed.
Automobile industry has many manufacturers and the major competition is from the big players like BMW, Mercedes, Volkswagen, GM and Ford. Operating in different countries will affect the profits and cost of raw materials used. Other threats for Toyota may be considered as public transportation which is encouraged by the government by implementing heavy taxation. Increase in prices of fuel may also affect the sales of the company as people would prefer to use other cheaper transport (Toyota Motor: 2008 company profile).
The sales of Toyota have been decreased by 21.8% from the last November. Toyota recorded the biggest drop in its sale in last 8 years. Due to financial crisis in America demand decreased this year affected the sales and profit. Toyota had reported a loss of 150 billion yen by March 2009 which is first such annual loss since 1938 (The Economic Times. 2008).
MARKET ENVIRONMENT ANALYSIS
PESTLE (External Environment)
The External environment is composed of magnitude in the broader society that influences an industry and the firms within it. PESTLE is the most common tool used to analyze the External environment.
POLITICAL FACTORS :
They are the factor to the states holdings and they are recommended by the present conditions of economy. Capital markets ascertain the scenario for alternative mode of investing for corporation and organisation.
Presence of skilled labours in all levels can be ascertained and influenced the government and other regional agencies.
Due to inflation the interest rates are influenced by and other global economical climate. For instance with respect to bank of England, the interest and funding to organization is based on the interest of the government over the organization.
ECONOMIC ASPECTS OF TOYOTA:
First operating loss in 70 years reported by Toyota; acknowledge that after a decade of fast expansion, it no longer can escape the slow down plaguing the global into industry. It is said that it expect an operating loss of $1.6 billion for the fiscal year ,compare with operating profit of $25.2 billion a year earlier. The economic downturn hits Toyota with $2 billion in losses, due to recession in world markets.
Toyota struggle to become a truly global endeavour by respecting all peoples around the world, and promoting management with an emphasis on all its stakeholders.(Southern California public radio ,2009)
SOCIAL ASPECT OF TOYOTA:
Toyota’s aptitude to bring to market world-class vehicles to the market, in large part, on the craftsmanship and hard work of the tens of thousands of employees who build parts for automobiles and trucks. That’s why Toyota believes it’s important to support the communities where its suppliers are located.
The company established the Community Connection Program as a way to say thank you to its suppliers for their hard effort commitment and shore up.
Till now Over $1,000,000 were donated to 63 non-profit organizations in supplier cities across the world by Toyota and its suppliers.
Organizations should be aware of demographics changes as the structure of the population by ages, affluence; regions can have an important bearing on demand as a whole and on demand for particular products and services. Threats to existing products might be increasing: opportunities for differentiation and market segmentation might be
TECHNOLOGICAL ASPECT OF TOYOTA:
Toyota is continuously at work putting the technology of the future into the vehicles of today. Technology is widely familiar by various literatures on strategic management as part of the business.Toyota is working on many ways toincrease product quality that do less harm to society and environment.
Both manufacturing and service industries can be provided by new technology, but in turn its purchase will require funding and employee training possibly needed before it can be used.
Toyota had developed new technologies from the view of modifying engines so that they can use alternative fuels, such as compressed natural gas (CNG), instead of petrol and diesel, and these engines have been installed in commercially sold vehicles.
In the concept of “harmony of the people” Robot technology has been created.
ENVIRONMENTAL ASPECT OF TOYOTA:
Toyota covers a range of efforts such as dropping energy use , assisting reduction in traffic congestion and cutting green house gas emissions.
Toyota made and displayed posters at each worksite to raise employees awareness toward energy-saving(2 times/year).It total waste generated was four thousand tone in the year of 2009 and targeting to achieve 5 thounsand ton/year.
The company has reduced energy use by 22 percent and is now aiming to bring that to 35 percent. Many of Toyota’s achievements have come in waste reduction and recycling.
CO2 Emissions reduction (energy conservation) was reduced by making good use of nighttime surplus steam energy in the plant and switching the energy sourse to stream energy in some areas where heavy oil had been used.
Toyota Motor Europe considers climate change as one of the most significant global environmental issues and recognises that it poses a potentially serious threat to a broad spectrum of human living environments and natural habitats.
The last 15 years (1995-2009) rank among the 12 warmest years in the instrumental record of global surface temperatures.
LEGAL ASPECTS OF TOYOTA:
Toyota is concerned towards the following issues:
“Planning global Policies and Activities,
Corporate ethics and legal compliances,
Prime issues concerning risk management,
Issues concerning social contribution and new environment” (Toyota Motor Corporation 3, 2008)
TOYOTA’S PORTER’S FIVE FORCES
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