Toyota

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SWOT Analysis of Toyota

Strengths

• New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; .85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serves. This is an example of very focused segmentation, targeting and positioning in a number of countries.
• In 2003 Toyota knocked its rivals 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 lean manufacturing and quality.
• The company makes a large range of vehicles for both private customers and commercial organisations, 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).

Weaknesses

• Being big has its own problems. The World market for cars is in a condition of over supply and so car manufacturers need to make sure that it is their models that consumers want. Toyota markets most of its products in the US and in Japan. Therefore it is exposed to fluctuating economic and political conditions those markets. Perhaps that is why the company is beginning to shift its attentions to the emerging Chinese market. Movements in exchange rates could see the already narrow margins in the car market being reduced.
• The company needs to keep producing 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 labour. So if the car market experiences a down turn, the company could see over capapacity. 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.

Opportunities

• 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 organisation. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid. Such moves can only firm up Toyota’s interest and investment in hybrid R&D.
• Toyota is to target the ‘urban youth’ market. The company has launched its new Aygo, which is targeted at the streetwise youth market and captures (or attempts to the nature of dance and DJ culture in a very competitive segment. The vehicle itself is a unique convertible, with models extending at their rear! The narrow segment is notorious for it narrow margins and difficulties for branding.

Threats

• Product recalls are always a problem for vehicle manufacturers. In 2005 the company had to recall 880,00 sports utility vehicles and pick up trucks due to faulty front suspension systems. Toyota did not give details of how much the recall would cost. The majority of affected vehicles were sold in the US, while the rest were sold in Japan, Europe and Australia.
• As with any car manufacturer, Toyota faces tremendous competitive rivalry in the car market. Competition is increasing almost daily, with new entrants coming into the market from China, South Korea and new plants in Eastern Europe. The company is also exposed to any movement in the price of raw materials such as rubber, steel and fuel. The key economies in the Pacific, the US and Europe also experience slow downs. These economic factors are potential threats for Toyota.

SWOT Analysis Starbucks

Strengths

• Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004. The company generated revenue of more than $5000 million in the same year.
• It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries.
• Starbucks was one of the Fortune Top 100 Companies to Work For in 2005. The company is a respected employer that values its workforce.
• The organisation has strong ethical values and an ethical mission statement as follows, ‘Starbucks is committed to a role of environmental leadership in all facets of our business.

Weaknesses

• Starbucks has a reputation for new product development and creativity. However, they remain vulnerable to the possibility that their innovation may falter over time.
• The organisation has a strong presence in the United States of America with more than three quarters of their cafes located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business risk.
• The organisation is dependant on a main competitive advantage, the retail of coffee. This could make them slow to diversify into other sectors should the need arise.

Opportunities

• Starbucks are very good at taking advantage of opportunties.
• In 2004 the company created a CD-burning service in their Santa Monica (California USA) cafe with Hewlett Packard, where customers create their own music CD.
• New products and services that can be retailed in their cafes, such as Fair Trade products.
• The company has the opportunity to expand its global operations. New markets for coffee such as India and the Pacific Rim nations are beginning to emerge.
• Co-branding with other manufacturers of food and drink, and brand franchising to manufacturers of other goods and services both have potential.

Threats

• Who knows if the market for coffee will grow and stay in favour with customers, or whether another type of beverage or leisure activity will replace coffee in the future?
• Starbucks are exposed to rises in the cost of coffee and dairy products.
• Since its conception in Pike Place Market, Seattle in 1971, Starbucks’ success has lead to the market entry of many competitors and copy cat brands that pose potential threats.

‘Starbucks’ mission statement is ‘Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.’ The following six guiding principles will help us measure the appropriateness of our decisions’ more? Then go to Starbucks.

SWOT Analysis Dell

Strengths

• Dell is the World’s largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.
• Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer’s own specification. Components are made by suppliers, never by Dell. PC’s are assembled using relatively cheap labour. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.

Weaknesses

• The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causing electric shocks or fires.
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• Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World).

Opportunities

• Kevin Rollins replaced Michael Dell in 2004 as Dell’s Chief Executive Officer. Dell remained the company’s Chairman. Despite founder Dell’s massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow.
• Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell compete against iPod and other consumer electronics brands.
• Dell is making and selling low-cost, low-price computers to PC retailers in the United States. The PC’s are unbranded and should not be recognised as being Dell when the consumer makes a purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing costs.

Threats

• The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands, retaliation from competitors and new entrants to the market pose potential threats. Dell sources from Far Eastern nations where labour costs remain low, but there is nothing stopping competitors doing the same – even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer.
• Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets. Although it is a very lean organisation, orders do have to be placed some time ahead due to their size or value. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain.
• Dell’s commitment to customer value, to our team, to being direct, to operating responsibly and, ultimately, to winning continues to differentiate us from other companies. The Background section provides critical information and history about Dell’s business world.
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Strengths

• Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that ‘Business is war without bullets.’ Nike has a healthy dislike of is competitors. At the Atlanta Olympics, Reebok went to the expense of sponsoring the games. Nike did not. However Nike sponsored the top athletes and gained valuable coverage.
• Nike has no factories. It does not tie up cash in buildings and manufacturing workers. This makes a very lean organisation. Nike is strong at research and development, as is evidenced by its evolving and innovative product range. They then manufacture wherever they can produce high quality product at the lowest possible price. If prices rise, and products can be made more cheaply elsewhere (to the same or better specification), Nike will move production.
• Nike is a global brand. It is the number one sports brand in the World. Its famous ‘Swoosh’ is instantly recognisable, and Phil Knight even has it tattooed on his ankle.

Weaknesses

• The organisation does have a diversified range of sports products. However, the income of the business is still heavily dependent upon its share of the footwear market. This may leave it vulnerable if for any reason its market share erodes.
• The retail sector is very price sensitive. Nike does have its own retailer in Nike Town. However, most of its income is derived from selling into retailers. Retailers tend to offer a very similar experience to the consumer. Can you tell one sports retailer from another? So margins tend to get squeezed as retailers try to pass some of the low price competition pressure onto Nike.

Opportunities

• Product development offers Nike many opportunities. The brand is fiercely defended by its owners whom truly believe that Nike is not a fashion brand. However, like it or not, consumers that wear Nike product do not always buy it to participate in sport. Some would argue that in youth culture especially, Nike is a fashion brand. This creates its own opportunities, since product could become unfashionable before it wears out i.e. consumers need to replace shoes.
• There is also the opportunity to develop products such as sport wear, sunglasses and jewellery. Such high value items do tend to have associated with them, high profits.
•  The business could also be developed internationally, building upon its strong global brand recognition. There are many markets that have the disposable income to spend on high value sports goods. For example, emerging markets such as China and India have a new richer generation of consumers. There are also global marketing events that can be utilised to support the brand such as the World Cup (soccer) and The Olympics.

Threats

• Nike is exposed to the international nature of trade. It buys and sells in different currencies and so costs and margins are not stable over long periods of time. Such an exposure could mean that Nike may be manufacturing and/or selling at a loss. This is an issue that faces all global brands.
• The market for sports shoes and garments is very competitive. The model developed by Phil Knight in his Stamford Business School days (high value branded product manufactured at a low cost) is now commonly used and to an extent is no longer a basis for sustainable competitive advantage. Competitors are developing alternative brands to take away Nike’s market share.
• As discussed above in weaknesses, the retail sector is becoming price competitive. This ultimately means that consumers are shopping around for a better deal. So if one store charges a price for a pair of sports shoes, the consumer could go to the store along the street to compare prices for the exactly the same item, and buy the cheaper of the two. Such consumer price sensitivity is a potential external threat to Nike.

More for less positioning strategy has been used. Toyota is offering more benefits at a less price. It is the most trustworthy brand name. The very limited numbers in which it will be sold, which means that if a person have one of these then he/she will be only one of 900 people In a country of over a billion to own It. B) Is the new product evolved because of changing consumer behavior? Toyota has been known for

Its commitment towards the changing customer requirements so the new Egos Exclusive has been introduced to bring in freshness and exclusivity to the existing product. Toyota has also launched its car in both petrol and diesel. Consumers who are looking for aspects such as reliability and fuel efficiency are now also giving great preference to technology when buying and driving an automobile so Toyota has designed this car keeping In mind the preference of the buyers. Previous Otiose faced lots of criticism for Its unlearning design and below par quality of the Interiors but

Otiose Exclusive have all the essential elements that were previously missing and it is now more impressive to look at and provide a great driving experience. C) Resulted modification in the consumer behavior. Otiose with its latest model and new alluring features is getting great attention from the customers. The exclusive limited offer of providing only 900 cars In a country of population over a billion Is also helping Toyota In gaining customers Interest. Tells headlamp and ROVE. The Otiose Exclusive also has a new Bluetooth Audio system and s based on the G grade of the current lineup.

Otiose Exclusive being launched in both petrol and diesel is also attracting people interested in either of two. Toyota has also kept in mind the preference of the customers for fuel efficient car and has accordingly designed the product, thus making it a fuel efficient car. This along with various features of Otiose Exclusive has managed to attract lots of customers and has resulted in booking of cars in advance. D) Customization of marketing mix Elements of marketing mix PRICE List Price: RSI. Sacs to 7. 1 lacks

Credit Terms- Toyota Financial Services is offering Otiose Exclusive customers an exclusive opportunity to avail a 100% on road funding for seven years on a zero down payment scheme. Discount- Otiose Exclusive owners will also be offered a free Smile Service Package which will get them a 50% discount on service related to value added services. PRODUCT- Otiose exclusive new front full-chrome grille, new chrome garnish on the titillate, headlamp and ROVE. The Otiose Exclusive also has a new Bluetooth Audio system and is based on the G grade of the current lineup.

Toyota is offering this car n two existing colors – Classic Grey and Symphony Silver. Service- Toyota Financial Services is offering Otiose Exclusive customers an exclusive opportunity to avail a 100% on road funding for seven years on a zero down payment scheme. Toyota has also worked on reducing the time taken to service a vehicle through Toyota Express Maintenance Service which has brought down the servicing time to Just 60 minutes. Quality- Toyota Otiose Exclusive is offering superior ride and handling quality.

The sudden increase of the production complexity, in seat volumes and variations, made some evident flaws in the production capabilities of Toyota’s Georgetown production plant. The root problem TMM facing is lack of coordination and planning within the companies’ departments as well with its supplier KFS. For the supplier KFS, TMM didn’t assess their practical production capacity before launching new models. As a result, the sudden change of production volume due to new modifications caused a series of problems in supply quality and timing.

The frequent change of demand from TMM made KFS hard to respond and fulfill the orders. As the quality issue of seats occurred, it indicated that KFS was not ready to produce the new model seats with a high volume and to meet demand of variations. The JIT production strategy doesn’t allow supply issues, but in practice, TMM left the vehicles with problematic seats instead of shutting down the production line to avoid high cost, which against traditional TPS. As a result, a greater negative impact on the production line was created, such as more vehicles without seats stuck at overflow area.

Additional to the supply issues, the workers in the Georgetown plant were not well trained for assembling new models as well. When they found defective parts, TMM failed to follow up the solutions of such problems; delay in response also made the same problems to occur frequently. On the other hand, overtime became another issue due to low quality work. In the long run, our recommendation to TMM is to setup a cross functional team in order to manage the projects related to the production of new vehicle models.

Doing so will lead TMM to a better communication along the different departments and with its suppliers as well. Sharing forecasts and design of future parts in advance with suppliers will improve the production efficiency. Cooperation in design with the supplier will decrease the defective rate in parts production such as the car seats. It is also highly recommended to build up an in-house training program to coach workers to assemble new models appropriately. Workers will be more capable to solve the problem by themselves after training.

TMM needs to go back to the TPS and try to solve problems on the line instead of leaving them away. In the short run, TMM should give more time to KFS to fulfill the order, and when the problem occurred, it is better for them to solve together. Reviewing and tracing the problematic parts are necessary; the new team should focus on the complaints from bottom workers, and then give the information back to suppliers (KFS) as soon as possible. In this way, it is much easier to ensure the quality of new arrival parts and in case of the same problem occur again.

Toyota United States generated a net income of $22,661,000 as of March 31, 2008. This is definitely higher than the $18,964,000 net income that the company generated during the prior year of March, 2007. This 2007 net income figure is also very much higher than the prior year of March, 2006 net income figure of $ 15,990,000. (Reference: http://finance. yahoo. com/q/is? s=tm&annual) The Toyota Motors Corporation generated $15. 51Billion in net income for the month of October. This is clearly higher than the $-62. 76 billion in net loss that General Motors gathered for the same time period.

Another competitors, Ford Motors, generated a $-11. 77 billion in net loss for the same time period. The following paragraphs will explain why Japanese Car manufacturing, Toyota, was able to outwit and outgun its competitors in the United States and around world ( Ref: http://finance. yahoo. com/q/co? s=TM). The October 16, 2008 stock market report shows that New York Stock exchange share prices of car manufacturing companies varied. Ford Motor Stocks had dropped by 1. 3 percent to the tune of $. 03 per share of stock. The new share price of each Ford Motor Stock is now $2.27.

The General Motors New York stock market share of the company’s stocks had risen by $. 18 or 2. 9 percent to the new $2. 27 percent. Toyota Motors stocks listed in the New York Stock Exchange had also risen from 5. 4 percent or $3. 47 per share. The share of each Toyota Motors stock was now $67. 18 each. (Ref: http://biz. yahoo. com/ap/081016/autos_final_glance. html?. v=1) BODY Strengths. Toyota Motors of Japan set up its own car manufacturing facilities in the United States and China.

The company has successful overtaken U. S. giants in the car manufacturing industry like General Motors and Ford Motors its car products focus on market segmentation. It focused the people who preferred a different type of car that fills the discriminating tastes of the different types of car buyers in the United States, in Europe and other parts of the world. Ford has overtaken its American competitors in the car industry because its products are diversified to fit each unique market segment. It increased its marketing strategies in terms of price, produce, place and promotion.

It also innovated its production facilities to maintain high quality car products. The top three car manufacturers in the United States are Toyota, General Motors and Ford Motors(Kozminski & Cushman,1993). Weaknesses. Toyota sells most of its car products in the United States and Japan. The current car market is squeezed so that there is no elbow room to increase sales. The saturated U. S. car market segment has forced the U. S. car manufacturers to fight it out for the few prospective clients they could find locally.

The current depression in the United States has taken its toll on all sectors of the American Society. The current economic and political situation that creates a headache to the Bush Administration has made a very deep slowdown in the people’s need to buy cars in the United States. The large car manufacturing capital investments in the United States had precipitated to a drain in Toyota’s scarce money resources. Toyota reacted by transferring its manufacturing facilities to China in order to lower variable costs and expenses.

However, Toyota Manufacturing has to continue to produce cars in the U. S. in order to fill a sudden deluge for cars when the depression will be over. It would not be a good strategy for the company to only start manufacturing cars when the depression ends because it would be too late to fill the public’s renewed car needs in the United States. This will complement the current Toyota Just in Time management strategy. This is also synonymous with value chain management emphasized in the Western business strategy books(Ono,1988).

Executive Summary

Toyota Motor Corporation Australia (Toyota, Australia) which deals with a wide range of car segments has manufactured the Prius Car in the automotive industry which is one of the best hybrid synergy drive in today business environment. And provide a competitive advantage to other business by achieving and environmental friendly car and providing the best efficient fuel system. The report begins with the introduction of the company where brief background information on the company and discussion of the market in which the Toyota Company operates is explained.

A current Situation Analysis is conducted which gives a better understanding of Toyota, its different products, competitors and different environments in which it operates. After considering the internal and external environment a SWOT Analysis is conducted which tells us the strengths, weakness, opportunities and threats of the business environment. On the basis of these factors the critical issues are identified and marketing objectives and strategies have been defined. Towards the end a recommendation of change and implementation plan has been developed to improve the product.

Introduction

Toyota Motor Corporation Australia (Toyota Australia) is one of the Toyota Japan’s global manufacturing centres which deal with manufacturing vehicles. It is the largest automotive companies of the world.

It provides long term commitment to the different domestic and export markets. Toyota Australia head office and manufacturing activities are based in Melbourne. While the sales and marketing operations are based in Sydney. Toyota, Australia employees over 4500 people and more than thousands are employed for its suppliers and retailing networks. Toyota Australia locally built cars like Camry and Aurion. And it imports a wide range of passenger, 4WD and commercial vehicles including Corolla, LandCruiser, Yaris, Tarago, Kluger, HiAce, RAV4, HiLux, Prado and the revolutionary hybrid model Prius.

In addition to this it also distributes and sells the luxury Lexus brand of vehicles. ‘Toyota is Australia’s largest vehicle exporter and in 2008 exported 101,668 cars to over 20 countries worldwide. This strong export drive contributed over $1. 9 billion dollars (including parts and accessories) in revenue for Toyota Australia in 2008.

It was established in 1937, Toyota Group manufactures different kinds of automotives across 27 countries and regions throughout the world. And its vehicles are sold in more than 170 countries and region under different brand names like Toyota, Lexus, Daihatsu and Hino. Toyota Australia leads the automotive industry with respect to the environmental technologies with the success of the hybrid technology used in Prius. This report is going to achieve a situation analysis for Toyota Australia. It will consider different elements like internal environment, external environment, SWOT analysis and critical issues.

With the help of different marketing capabilities and development process marketing plan evaluation for Toyota Australia will achieved. We will consider secondary research for Toyota, Australia for analysis. Different sources for the secondary research data which are used for this marketing plan are as follows: Textbook, Internet data (company website and different web resources) and Journal articles.

Mission Statement

Toyota Mission Statement reads as follows: ‘We deliver outstanding automotive products and services to our customers, and enrich our community, partners and environment’.

The vision is to be the most respected and admired company. The four core values of Toyota, Australia are:

• Customer first
• Respect for people
• International focus
• Continuous improvement and innovation

It gives confidence to over 2 million drivers worldwide. The car which one drives is designed and engineered with the highest standards of quality and reliability. Toyota is the world’s leading hybrid system in the automotive industry.

Situation Analysis

Internal Environment

Products

Toyota Prius is a vehicle which is changing the world. It combines luxury, technology and environment. It’s a 1. 8 Petrol / Electric Hybrid Synergy Drive. This car is the world’s most advanced hybrid system.

Its key features are Smart Entry & Smart, 60:40 split retractable rear seats, Ecological plastic, LED headlamps, Three alternative driving modes, Superior hybrid synergy drive system, first beltless Toyota engine, shift by wire, Solar Ventilation System, Touch Tracer display, Head up display, Remote Air Conditioning System, Pre-collision safety system, Dynamic radar cruise control, emergency brake signal, Intelligent park assist, brake by wire, Vehicle stability control and traction control.

Financial and non-financial situation

The global economic crisis in July 2008 had a major impact on automotive markets. Toyota, Australia experienced a rapid deterioration in vehicle sales because of the downturn in the economy. This in turn resulted in lower profitability.

Vehicle manufacturing and Sales

During the year to 31st March 2009, Toyota Australia manufacturing operations produced 130,228 Camry and Aurion vehicles for domestic and export markets. Due to a strong sales performance for the first six months, the company was recognized in the Australian industry to achieve highest sales record during the year 2008.

In this period the domestic retail sales reached 238,983-2,336 units ahead on the previous year, and the sales volume represented a market share of 23. 6 per cent. There was 19. 2 per cent decrease in Australian industry new car sales from January to March 2009 as compared to the same quarter in 2008. Toyota Australia (including Lexus) sold 16,498 fewer cars in the first three months of 2009 as compared to the same period in 2008, which represented a 26. 6 per cent decrease in sale volume. During January 2009, the company implemented a general price increase for some of its imported vehicles due to a weaker Australian dollar.

Export Market

Toyota Australia is the country’s largest vehicle exporter. In 2008/2009 the company exported 94,955 Camry and Aurion vehicles to 20 countries which were Middle East, New Zealand and Pacific Islands. This was down from 99,395 in 2007/ 2008, due to the decrease in demand from Middle East Markets following the start of the global financial crisis. However for the calendar year, Toyota Australia exports reached 101,668 which was an all time record for the Australian automotive industry. The export program earned $1. 9 billion in revenue over the same period.

However for second half of the fiscal year, due to the global economic crisis impacted the entire business resulting in decline of sales in export and domestic markets. Global economic conditions will result in exports being lower in the 2009/2010 period. Despite the tough marketing conditions, the company continues to set new sales record. On a model basis, sales records were set for Corolla, Prius, Kluger, Yaris and HiLux. The 11,000th Prius Vehicle was sold in Australia during the period and globally, the one-millionth Prius was sold in April 2008.

The decline was due to the impact of the global economic downturn and changes to Luxury Car Tax implemented by the Federal Government in 2008 and increased competitor activity by companies like Honda.

Channels

Toyota automotives are available at different dealers over the world. It uses different integrating web services to provide information of the different vehicles online.

One can also get eBrochure and printed brochures and all the information for the vehicle on the Toyota Australia website (www. toyota. com. au). The main headquarters are in Japan

External Environment

Markets

The demand for cars has increased in recent times so the important aspect for the company is to get an appropriate market share in Australian market. The figure 1 is shown in Appendices which tells us the current market share of the company and sales of the new motor cars in recent years has increased.

As there is a concern for providing greener environment across the world, there exists an opportunity for Toyota Australia to create better fuel economy and reduced emissions car which caters to the need of environment. Toyota Prius is one such hybrid synergy drive system vehicle which provides best combined greenhouse and air pollution rating of any vehicle sold in Australia.

Competitive environment

Toyota Australia strong competitors in every segment are Ford, GM, Honda, Mercedes, BMW and Volkswagen. Car Sales. com Limited 2009) Toyota Prius main competitors within the market are Honda Civic Hybrid and Ford Fusion Hybrid car. Toyota Prius belongs to the lower/medium passenger car segment (C). Currently Toyota Prius provides maximum fuel efficiency as compared to other brands. It comes with a standard 1. 8L l4, 16 values engine.

Economic environment

Australia is a stable, democratic country with a strong competitive economy. Australia has one of the most outstanding economies of the world with skilled workforce.

There is a flexible labour market, an efficient government sector and a very competitive business sector within the country. The Australian economy is one of the fast growing within the world. Australia investment in ICT as a percentage of Gross Domestic Product is the third highest of Organisation for Economic Co-operation and Development countries. Australia is strong in Information and communication technology (ICT), innovation systems, business environment and human resource development. GDP for Australia expanded to 0. 0% over the last 4 quarters. The Australia Gross Domestic Product is worth 1015 billion dollars or 1. 64% of the world economy, as mentioned by the World Bank. Australia’s economy is occupied by its services sector, yet its economic success is based on lots of agricultural and mineral resources. Australia’s relative advantage in the export of primary products is a indication of the natural wealth of the Australian continent and its small domestic market. The country is a major regional financial centre and a fundamental component of the global financial system.

Demographic environment

The estimated population growth rate in 2009 for Australia was 1. 195%. The total population estimated was 21,262,641 out of which 18. 6% of the population was between the age group of 0-14 years , 67. % of the population was between the age group of 15-64 years and 13. 5% of the population was between the age group of 65 years and over. The target customers for Toyota Australia would fall into these two age groups ranging from 15 – 64 years and 65 years and over. The age structure is similar to that of New Zealand and the USA. These are the potential customers and Toyota needs to focus on them as they fall into the potential market for buying cars. In Australia 99% of male and female population are literate.

The statistic show that 78. % of people speak English, 2. 5% of people speak Chinese, 1. 6% of people speak Italian, 1. 3% of people speak Greek, 1. 2% of people speak Arabic, 1% of people speak Vietnamese, 8. 2% of people speak other language and 5. 7% of people speak unspecified language. There are different ethnic group like White, Asian, Aboriginal and others. Different religion like Catholic, Anglican, Uniting Church, Presbyterian and Reformed, Eastern Orthodox, other Christian, Buddhist, Muslim and others exist.

Social and Cultural environment

Australia has a multi cultural environment. It has different cultural group from all over the globe. Its diverse culture reflects liberal democratic traditions and social and cultural influences of the millions of migrants who have settled in Australia since World War II. Australia’s original inhabitants, the Aboriginals and Torres Strait Islanders peoples, have been living in Australia for at least up to 40,000 years. The rest of Australia’s people are migrants or descendants of migrants who have arrived in Australia from about 200 countries.

The defining feature of today’s Australia is the cultural diversity of its people, and the way they are united to each other. Australian has the right to express their culture and beliefs and to participate freely in national life. (Australian Department of Foreign Affairs Trade 2009). Toyota Australia needs to define an international standard which caters to the different cultural group so they can target the potential buyers within the market.

Political and legal environment

The political system in Australia consists of a federal parliamentary democracy. There are 6 states and 2 territories in Australia.

The legal system is based on English common law; accepts compulsory ICJ jurisdiction with reservations. There are no political pressures from the group leaders hence the company can start the business in Australia. The only problem here was when the Luxury Car tax was implemented by the Federal Government in 2008, Toyota Australia experienced a decline in sales on their luxury car segment range. Also environmental and safety measures needs to be implemented within the car with respect to the legal requirement for Australian standards.

Technological environment

In Australia the technological environment changes rapidly. Some of the technologies related to automotive industry are as follows: Environmental Technology like hybrid synergy drive, Safety Technology, IT Based Approach, Fuel Cell Technology, Personal Mobility and Robot Technology which are used in the modern cars. Such features increase the sales figures of the company. For Example: In Toyota Prius the hybrid synergy drive which gives a better fuel efficiency and reduces emissions is one of the key features which gave the opportunity to increase the sales figure of the company.

Toyota was the innovator for this hybrid synergy drive car and it captured the market using this technology. However these features also increased the cost of manufacturing the car. So Toyota needs to keep up with the pace, as the technological environment keeps changing rapidly and the competitors might come up with a better enhanced version of this technology.

Marketing Objectives

• Increase the sales for the coming year and regain the loss which occurred during the economic crisis.
• To increase the market share of the company.
• To attract new buyers for the car and retain the loyal old customers.
• To maintain the brand and standard within the market.

Marketing Strategies

Target Markets

The Toyota Prius has targeted this car at all levels of consumers. However the drivers ranging in an age group of 40 to 80 year old drive this car as they are environment conscious.

Toyota targeted the car which was affordable from middle to lower income groups. It fuel efficiency and less emission is very attractive to this kind of age group. Toyota is also designed to be used by people who are working in the in the city , because it features include switching of the engine whenever the Prius is stopped at a red light and give an extraordinarily good fuel consumption and excellent usable performance. Therefore Toyota Prius segments the market only by combining two demographic values which is income and age group and hence it targets these two segments of the market. The campaign of Toyota Prius says “Harmony between Man, Nature and Machine”, which means the car, has been absolutely designed for the use of the environment and everyday life. This car belongs to the lower/medium passenger car segment (C). Hence the competition is against the entire (C) car segment. So the company needs to be innovative in a manner.

Product strategies

The Toyota Prius has re-engineered the car and launch the third generation version.

The market in Australia is huge and profitable; so Toyota needs to launch the re-engineering project quickly and create new innovation to be a competitive leader within the consumer market. However on the company website it say it plans to launch an urban commuter battery electric vehicle by 2012. To improve the environment the new generation Prius has a 1. 8- litre four cylinder petrol engine which replaces the 1. 5- litre engine previous model. It has technology such as the solar ventilation system and remote air-conditioning system. It has features such as pre-collision safety system and intelligent parking assist.

It the ‘greenest’ car ever sold in Australia, thus it provides the lowest pollution emission and low fuel consumption. So Toyota Company can satisfy the customers and earn profit from the Australian Market. (Toyota 2009). c. Pricing strategies In view of target consumers, Toyota Company uses excellent technologies for the Prius cars. It is cogent to maintain the original price-positioning strategy. Most of the buyers don’t bother about the price. Toyota Prius car uses the Price Skimming Strategy. In this strategy the company will set a relatively high price in the beginning and then reduce the price over time.

As they are able to get consumers at every price point. Toyota Prius car is based on the innovation of hybrid synergy drive hence this innovation helps the company to use this pricing strategy. Competing with price will not support effective development. However, for the company to increase their profit the basic objective is to reduce the prospective cost (sunk cost). So it needs to use the price skimming strategy and capture the market before other competitors enter the potential market. And Toyota Company has always been an early innovator to do that.

Promotion Strategies

The different promotion strategy which were used by the Toyota Company for the Prius car were as follows: Television and print advertisements highlighted the evolutionary aspect of hybrid technology and freedom from depending on oil. Toyota has created online e-brochures with video clips which were sent to different people. Toyota also benefited from various celebrity endorsements that attracted attention to the new Prius car. Toyota also promotes motor show exhibitions. Example: The Melbourne Motor Show was the first public outing to display new Prius Cars.

Toyota has one unique characteristic which is to provide a greener environment friendly car as it produces low emissions. Recently they promoted in an advertisement saying ‘Harmony between Man, Nature and Machine’. (Ann Rodriguez and Chris Page 2004)

Distribution Strategies

Toyota Company has distribution centres in Australia. In 1999, Victorian Park Distribution Centre was opened at Altona. It uses the unique distribution methodology the Internet. One can find the dealer on the Toyota. com. au website. Dealers are classified with General Sales, Prius Sales, General Services, Prius Services and All Parts. One can get the relevant information of the dealer which would contain the address, Telephone, fax Phone and email address.

Recommendation for Change

• Lower the fixed cost of the whole process.
• Improving the procedure of the Research and Development.
• Build good relationship with other automotive companies in order to increase profits.
• Supporting supplier development by funding the on-site process improvement and cost reduction activities.
• Supporting dealers to apply Toyota Production System to improve customer service reduce costs and increase productivity.
• Producing Hybrid cars at the manufacturing plant within Australia.

Implementation Plan

• The main problem was maintaining a long life of the battery of the car. This is one of the biggest problems of the Prius car and the company should overcome this problem to increase the sales.
• The passenger side headlight goes off intermittently. This should be rectified by the company. It is a common problem found in most of the cars.
• Vehicle’s engine shutting off, at a speed of 35 miles per hour (mph) and 65 (mph). Launching advertisement campaign for Green Environment friendly vehicle.
• Providing great offers during festival like Christmas and Easter.
• Advertising the new features of the third generation car like Remote Air Conditioning System, Pre-collision Safety System, Intelligent Park Assist and Solar Ventilation System.

References

1. Kotler, Brown, Adam , Burton, ed. (2007), Marketing, Frenchs Forest: Pearson Education Australia.
2. Toyota 2009, Toyota Motor Corporation Australia Limited, Australia, viewed 9th November, 2009, ; http://www. toyota. com. u/about/company;
3. Toyota 2009, Toyota Motor Corporation Australia Limited 2009 Sustainability Report, Toyota, Australia viewed 10th November, 2009
4. Car Sales. com Limited 2009, Toyota Prius (2003-) (October 2003), Car Sales. com Limited 2009, Australia, viewed 10th November, 2009,
5. ANDiDAS. com,2003, Toyota Prius; Marketing Communication Plan, ANDiDAS. com, UK, viewed 10th November, 2009,
6. Yahoo 2009,Yahoo Autos, Australia, viewed on 10th November, 2009,
7. Australian Department of Foreign Affairs Trade 2009, Australia Today – Australia Now, Australian Department of Foreign Affairs, Australia, viewed 10th November, 2009,
8. TradingEconomics 2009,Australia GDP Growth Rate,Trading Economics, viewed 11th November, 2009
9. Central Intelligence Agency 2009, The World FactBook, Central Intelligence Agency, Australia, viewed 11th November, 2009,
10. Australian Department of Foreign Affairs Trade 2009, People, culture and lifestyle, Australian Department of Foreign Affairs, Australia, viewed 11th November, 2009,
11. Toyota Japan 2009, Technology, Toyota Motor Corporation, Japan, viewed 11th November, 2009,
12. Bulletin 2009, PriusChat Forums, PRIUSChat, Australia, viewed 11th November, 2009,
13. CarComplaints. com 2009, 2008 Toyota Prius , AutoBeef carcomplaints. com, Australia, viewed 11th November, 2009, ; http://www. carcomplaints. om/Toyota/Prius/2008/;
14. WebPublication Pty Limited 2008, Toyota Prius : Across a Continent , Autoweb, Australia, viewed 11th November, 2009,
15. Sheila Wilson 2005, Team : Toyota and Prius Marketing Strategies, Wilson Marketing, United States, viewed 11th November, 2009,
16. High Gear Media 2009, 2010 Toyota Prius Marketing Theme : Harmony Between Man, Nature And Machine, AllAboutPrius, Australia, viewed 11th November, 2009,
17. Toyota 2009, Hybrid Synergy Drive News, Toyota, Australia viewed 12th November, 2009
18. Toyota 2009, The New Prius Uses an Improved Hybrid System and New Engine, Toyota, Australia viewed 12th November, 2009
19. Toyota 2009, Experience Prius, Toyota, Australia viewed 12th November, 2009
20. Aisha Jones Scheffel 2008, The Right Pricing Strategy… priceless! ,ArticleBase. com, Australia, viewed 12th November, 2009 ; http://www. articlesbase. om/business-articles/the-right-pricing-strategypriceless-631704. html;
21. Ann Rodriguez and Chris Page 2004, A Comparison of Toyota and Honda Hybrid Vehicle Marketing Strategies, Rocky Mountain Institute, Australia viewed 12th November, 2009
22. Toyota 2009, Toyota Motor Corporation Australia Limited 2009 Sustainability Report – President Message, Toyota, Australia viewed 10th November, 2009
23. ConsumerAffair. com 2009 , Toyota Prius Battery Problem , Consumer Affair . com – Knowledge is Power , Australia, viewed 13th November, 2009,
24. Howard A. Gutman 2009 , Toyota Prius Headlight Defect , Law Offices of Howard A. Gutman, New Jersey viewed 13th November , 2009

Toyota Motor Co. Ltd. (TMC) was first established in 1937 as a separated company from Toyota Automobile Loom works, the leading manufacturing of weaving machinery. The Toyota Automobile Loom works was then headed by Saki chi Toyoda, the king of investors. TMC was then founded by Kiichiro Toyoda, Saki chi’s son. It has since blossomed into the leader it is today. The giant automaker faced its one and only strike in 1950. This event, however, supplied Toyota an important philosophy, giving it the labor and management system which helped Toyota to gain mutual growth and success in both domestic and overseas markets.

Today, this philosophy is very important to the structure of Toyota. Toyota’s production system improved in the late 1950s, establishing the ‘Toyota Production System. ‘ This system became the major factor in the reduction of inventories and defect in the plants of Toyota and its suppliers. It also underpinned all of Toyota’s operations across the world. It launched its first small cars in 1947. The operation outside Japan started in 1959 in Brazil and continued with growing network of foreign plants. Toyota celebrated its 60th anniversary in August 1997.

It believes that its local production can provide customers with the productions they need, giving it the stable and long-term growth. It also has a global network of design and research and development facilities, consisting Japan, North America, and Europe markets. It is now the world’s third largest manufacturer of automobiles in unit sales, but the first in its home. It plays an important role in the world’s automobile market even it stays behind General Motor and Ford, respectively. It earns and gains profits in international and domestic markets.

Toyota and world automobile industry The world automobile’s market is very competitive in these days. There are various numbers of automakers from many parts of the world. There are about 39 automakers in which comprising of Acura, Audi, BMW, Buick, Cadillac, Chevrolet, Chrysler, Daewoo Dodge, Fiat, Ford, GMC Truck, Honda, Hyundai, Infiniti, Isuzu, Jaguar, Jeep, Kia, Land Rover, Lexus, Lincoln, Mazda, Mercedes-Benz, Mercury, Mitsubishi, Nissan, Oldsmobile, Plymouth, Pontiac, Porsche, Renault, Saab, Saturn, Subaru, Suzuki, Toyota, Volkswagen, Volvo. 3 However, the key automakers are obvious. Toyota is one of those cars that are tied as the well-known vehicles worldwide.

This is because Toyota operates business in foreign countries, making its brand recognizable. Toyota gains a large share in global automobile’s market. This is because Toyota has various types of cars available for all classes of drivers. It has small cars to luxury sedans, full-sized pickup trucks, and crossover vehicles. For example, Corolla vehicles are for middle class people while Camry sedans suit high-class drivers. The main competitors of Toyota are General Motor and Ford who tie in the ranking of number one and two in the term of net sale and unit sale.

However, this ranking is in the world automobile’s market, but not in some regional automobile markets where Toyota stands at a higher ranking. For instance, Toyota vehicles are more popular in Asian countries as they are in the same region with Japan, making the Toyota’s cars more affordable than that of American and European cars. This is because Toyota does not have to spend much money for transportation cost as the distances between Asian nations are shorter for cars from Japan to be sent to other Asian nations.

Toyota’s positioning With many competitors, Toyota’s positioning in the automobile’s market is different from some of its competitors as they have different target segmentation. Conversely, Ford and General Motor are still its important competitors because they produce cars to serve same target group. Toyota also produces luxury vehicles to complete the automobiles of Volvo, Mercedes, Benz, Audi, and Porsche, for instance. Toyota’s ranking in the term of unit and net sales in other region such as North America and Europe, where the automobile markets are very competitive, is still behind that of General Motor and Ford.

Consequently, Toyota wants to expand its sales in these regions. Toyota’s performance in domestic and overseas in the recent years Japan: Toyota generates most of its profits domestically. Nevertheless, it lost some of its shares to foreign competitors who enter Japanese automobile market. According to the annual report of 2002, the market of Toyota in Japan is not as good as overseas market. Domestic vehicle sales, including Daihatsu and Hino vehicles, turned down 4. 6 %, from 2. 32 million units in the previous fiscal year to 2. 22 million units in fiscal 2002.

In spite of edging down less than one percentage point, to 42. 2 %, the Toyota brand’s market share, not include mini vehicles, and stay above the 40 % mark for the fourth consecutive year. Factoring in the mini vehicle market, and including the Daihatsu and Hino brands, Toyota’s share of the market was 38. 2 % models such as Corolla, Vitz, Estima, and Crown continued to be the strong sales. However, during fiscal 2002, impacted by the prolonged economic slump in the domestic market, vehicle sales in Japan’s automobile sector were down on the previous year.

On the other hand, Toyota successfully protected its market share of more than 40 % by proactively bringing new and fully remodeled vehicles to the market. 4 This is an important reason why Toyota seeks market overseas as it need money for investing in its home in order to complete its competitors in Japan. North America: Recently the automobile market in North America is optimistic.

In fiscal 2002, Toyota’s strengthen vehicle sales in North America, including Toyota and Lexus vehicles, rose 2. 7 % compared to the previous fiscal year’s 1. 73 million units, to reach a record high of 1. 8 million units. This was attributable to the effects of a brisk market, together with Toyota’s introduction of new models and the full remodeling of popular vehicles. Toyota’s relentless technological innovations aimed at improving fuel efficiency in all of its models are steadily growing. In 2001, with respect to fuel economy, Toyota models were highly ranked by the U. S. Environmental Protection Agency in a broad range of size categories, ranking as the fourth automaker that concerning about environment in which Honda is the first in this field.

While the Prius hybrid sedan and the RAV4 the small SUV brought their respective classes, the ECHO compact sedan and the Avalon large sedan also received high evaluations. Also, the Prius hybrid car, which was launched in the U. S. market in July 2000, is gaining increasing recognition in North America. It sold 18,000 vehicles in fiscal 2002. Toyota plans to continue bolstering its manufacturing base in North America with a view to achieving production capacity of 1. 45 million vehicles during 2003.

As part of these efforts, it s currently constructing a plant in Alabama to supply V8 engines for the Tundra, which is built at its Indiana plant, Toyota Motor Manufacturing, Indiana, Inc. (TMMI). Production in Alabama will get under way in 2003 and plans call for an annual output of 120,000 engines. Europe: During the year of 2002, Toyota’s vehicle sales in Europe continued to fare well, having sales rising from 690,000 units in the previous year to 730,000 units. The Company’s market share expanded to 3. 8 % on a calendar-year basis due to robust sales of the Yaris, which surpassed 210,000 units.

Toyota also continued to extend its local production – it built 260,000 vehicles locally in fiscal 2002, compared to 180,000 in the previous year. At Toyota’s plant in the United Kingdom, Toyota Motor Manufacturing (UK) Ltd. (TMUK), where the Corolla and Avensis are built, it manufactured 200,000 gasoline engines in the year under review. With TMUK slated to become its European engine production centre, Toyota also plans to bring together diesel engines there from 2003. In addition, progress was made in Toyota’s joint venture with PSA Peugeot Citro (PSA).

In March 2002, Toyota Peugeot Citro Automobile Czech s. o. (TPCA) was established in Kolin, in the Czech Republic, and plant construction under way, joining production of small cars will start from 2005 to target annual output of 300,000 vehicles. 6 Toyota’s goal is to achieve 800,000 unit sales and win a five % market share by 2005 accelerating its pace of localization in the European region. Mindful of this target, it founded Toyota Motor Europe (TME) in April 2002 as a holding company in Europe, in order to increase the efficiency of its European operations and augment the speed of business management decisions.

It also incorporated Diesel Clean Advanced Technology (D-CAT) which is cantered on its Diesel Particulate NOx Reduction system (DPNR), in 60 Avensis models as part of its environmental activities in Europe. The DPNR system is capable of simultaneously and continuously extracting particulate matter (PM) and nitrogen oxide (NOx) emissions from diesel exhaust fumes. Over a scheduled 18-month period, which started in March 2002, Toyota will monitor the performance of the vehicles in seven countries, including the United Kingdom and Germany.

Toyota tries to expend its business in Europe since the automobile market in this region is quite competitive. From the plan and strategies that it has been adopting so far, it invests a lot of money in this market, hoping to gain share in Europe. However, its share in this market is lower than those of other European automakers. Asia: Toyota gains fans in Asian countries as Toyota’s vehicles are more affordable than that of other European cars. The sales of Toyota The ASEAN automotive market expanded one % in calendar 2001.

Thailand and Malaysia recorded sales increases of more than 10 % while Taiwan and the Philippines contracted 17 % and 8 %, respectively. The ASEAN market recovered to 88 % of its 1996 peak as a whole. Toyota can display the largest share of sales in Indonesia, Thailand, the Philippines, Brunei, and Vietnam. It also extended its share of the markets in Thailand, Singapore, and Taiwan. Toyota’s steadfast position in the area resulted in sales of 210,000 vehicles in the Asian market in fiscal 2002. Sichuan Toyota Motor Co. , Ltd. SCTM) launched sales of the Coaster mid-size bus as the first vehicle produced locally in China to bear the Toyota badge in April 2001. 8 It is easy for Toyota to expand its business in this region as the culture is similar to the culture of Japanese. It also does not have to face the distance problem. Moreover, the trade integration between Asian nations also makes the business of Toyota move smoothly. Reasons for Toyota to engage international business activities Toyota is now operating business in more than 160 countries and going to expand more businesses in other countries.

What reasons encourage it to engage in international business activities? There are several main reasons that push Toyota to take on international business activities. Expand sales: First of all, Toyota wants to expand sales and make its name recognized. It produces vehicles matching people of every class. It has small cars to luxury sedans, full-sized pickup trucks, and crossover vehicles. For example, Corolla vehicles are for middle class people while Camry sedans suit high-class drivers. These various choices make people in foreign countries interested in buying Toyota’s vehicles.

When the number of people who are interested in buying Toyota’s automobiles increase, it raises its sales by joining international activities. Acquire resources: Companies look for foreign capital, technology, and information that they can use at home (Daniel ; Radenbaugh, 2001). Toyota opened Toyota Technical Center Inc. (TTC) the research and development (R;D) in California in 1977. This is not because the technologies and human resources in the US are better than in Japan. It is because the US government offers investing incentives to Japanese automakers to encourage them to operate business in the US to create jobs for local people.

TTC is a dynamic company that conducts the design-engineering and development of Toyota products, particularly those developed for North America market. In this case Toyota gets both capital and information as a fringe benefit to bring back home. For instance, after the success of Toyota Prius the hybrid vehicles which developed by TTC, it brought the hybrid technology information back to Japan. It then launched FCHV-BUS2 the fuel cell hybrid bus having zero emission and low noise for Japanese people. This is also how Toyota employs workers in industrialized countries where employees have high salary.

Minimize risk: Moreover, Toyota’s vehicle sales in Japan have been declining gradually because foreign vehicles such as American and European cars share the automobile market in Japan.  In contrast, vehicle sales of Toyota in North America, Europe, Asia, Central and South America, Oceania, and Middle East have raised. The annual sales in calendar 2001 in the US market, for example, were buoyant, reaching the second highest level ever, at 17. 18 million units. To minimize instability of sales and profits in the domestic market, Toyota decides to try to take advantage of the business cycle.

Toyota’s Major Factors Toyota is an automobile company whose operations extend beyond its domestic operations shores is faced with lots of hurdles and environmental factors, the extent to which it is able to combat these factors will determine how successful its operations will strive globally. Major challenges Low labor cost: The first reason is low labor cost. It is expensive to employ workers in Japan as it is a developed and industrialized country where people have high salaries and quality of life.

Most countries that Toyota controls operation re in Asiasuch as China and the Philippines where people have low wages and education. Alternatively, Toyota operates R&D in industrialized countries as workers with higher educations are needed for controlling R&D. For example, Toyota operates R&D in the US where people have higher education and it then controls operations in countries where it can find low labor cost. Transportation cost: In addition, cheap transportation costs are another important challenge. When companies export products overseas, they usually use CIF transport system which includes cost, freight, and insurance.

Exporters have to pay for all of the costs occurring from the shipment, making the products more expensive as importers will charge extra price (Hyman, 1983). In contrast, if companies control operation in the importing countries, they can use Ex-Work transport system instead of CIF. EX-Work is a transport system that purchasers can collect the products from factories of sellers. It is generally adopted by companies having subsidiaries and factories in importing countries. This is why Toyota has overseas affiliates and subsidiaries.

If it invests in importing countries, it will not only save transportation cost, but also does not have to be concerned much about fluctuations of exchange rates (Ball, 1982). Threat of new entrants: New entrants to an industry typically bring to its new capacity, a desire to gain market share and substantial resources. They are, therefore, threats to an established corporation. The threat of entry depends on the presence of entry barriers and the reaction that can be expected from existing competitors. Global entrants may pose a threat to Toyota’s market share, especially from other Asia, Europe ; U. S. A. car market leaders.

Toyota as global car manufacturing company started its production of vehicle outside Japan in 1959. Toyota has established its own car manufacturing plant in different countries in Europe and successfully operating its business activities. In terms of car manufacturing company index, the following companies are as follows:

1. Ford.
2. BMW.
3. Jaguar
4. Mitsubishi.
5. Suzuki.

Ford, BMW ; Jaguar already has secured market position in the British market environment, therefore their threat is made all the greater as they now have knowledge of the British market system and are building their customer and loyalty base. On the other hand Toyota is trying to adopt the market share in Europe. Toyota as a multinational enterprise has already launched its product to the online market and is currently mature stage of online product cycle. However Toyota’s online venture is in mature stage besides this they are always aware of what the potential threats to its business are. More established online car manufacturing company, who have already identified and possibly combated the risks to their market share may gain a competitive edge here, like rival Ford.

In a price sensitive and competitive industry achieving profits where prices are nailed down, low cost production is particularly difficult, especially if there is elasticity of demand, the loyalty of the customer may not be gained or retained unless cost incentives and quality assurance are customary. The purpose of online sales facilities is to boost more sales and gain profit. Customers are prone to repeat orders; the backbone of business profit, therefore switching costs is not such as threat if brand loyalty is a prevalent sales feature. Therefore Toyota may be viewed as a threat to other car manufacturing company such as Toyota.

Toyota Motor Corporation, common known simply as Toyota, is one of the famous automaker all over the world. Toyota is a multinational corporation headquartered in Japan and the world’s largest automaker by sales. Toyota is the largest automotive manufacturers. In 2007, Toyota Motor Corporation listed in the world’s 500 largest companies (Fortune Global 500). Nowadays Toyota is the world’s largest automotive manufacturers, are sold worldwide every year up to 7. 5 million different types of vehicles.

Toyota is also the brand’s parent company of Lexus, Daihatsu and Hino. Until to the March of 2003, the company’s total numbers of 65,551 employees, with all associated companies, there were totaling 264,096 employees. It is the largest in Japan, and the world’s third-largest business. Toyota’s overseas production networks have 50 foreign located in 27 countries and regions (Not included Japan). In addition, Toyota has also sold more than 170 countries worldwide.

The company risk faced by the Toyota’s such as the operation risk which includes industry and business risk, financial market and economic risks, political, regulatory and legal risks and other risk that faced by the company could significantly influence the decisions of the investors. Toyota is also facing the same risk in their global market where the demand for automobiles is affected by a number of factors which includes the social, political and general economic conditions, introduction of new vehicles and technologies, and price incurred by customers to purchase and operate vehicles.

Industry and business risk that Toyota regularly faces in the automotive market is highly competitive in the market which may influence Toyota to deal with the competition from the same automotive manufactures it operates. In the market where Toyota compete with other automotive manufactures are from the aspects of product quality and features, safety, reliability, the amount of time required for innovation and development, pricing, fuel economy, customer service and the terms of financing. The highly competitive market may lead to the lower the sales unit of the vehicle.

Besides that, Toyota is also faced with the risk which comes from the worldwide automotive industry which is highly volatile. Toyota market can be considerable volatility in demand and it is largely dependend on the social, political, and economic conditions. The weakness in the demand of Toyota will affect the financial condition and results of operations. Therefore, the volatility demand of Toyota may influence them into lower unit sales and cause the downward price pressure which in turn will affect Toyota’s current financial position and results of operation.

Furthermore, financial market and economic risks is also apparent to Toyota which included the fluctuations in foreign currency exchange rates and interest rate. Toyota are constantly exposed to the fluctuations of the currency in U. S. dollar, euro and to a less extent which is the Australian dollar, Canadian dollar, British pound and other currencies. Toyota primarily uses the currency of Yen in their trade. These fluctuations affect the way Toyota does their business.

Other than that, Toyota’s also face with the translation and transaction risk through the unstable of the exchange rate and therefore influence the consolidated financial statements that are presented in Japanese Yen. Changes in the foreign currency exchange rates may cause the company risk to increase because their product pricing and raw material that purchased from the other country can be directly affected. The company must manage effectively to avoid the negative impact from the fluctuation of the foreign currency exchange rate and the changes in the interest rate.

Other than that, Toyota is also facing the risk in the high prices of raw materials which they use in manufacturing their products. In the manufacturing work the raw material such as the steel, precious metals, non-ferrous alloys, aluminum, and plastic parts. The increase in price of the material cost may lead to the higher production cost for Toyota. The high price in the production cost must be bear by Toyota because they can’t pass all those costs on to its customers or absorb by their suppliers. In the long term, the high price of the production cost will affect the Toyota’s future profitability.

Therefore, the increase in price of the raw material cost must be manage well by the Toyota, if not it may lead to the company risk. (Toyota annual report, 2012) Political, regulatory and legal risk is also facing by the Toyota. The automotive company may face the various governmental laws and regulations which may influence the way of company doing their business. Most of the governmental and regulatory risk facing by the Toyota which regard to vehicle safety and environmental matter such as those emission levels, fuel economy, noise and pollution.

Toyota is required to implement the safety measures. The safety measures that must be implementing are like recalls for vehicles that do not or may not comply with the safety standards of laws and governmental regulations. The significant costs that incur for the Toyota in order to implementing the safety measures which is to meet the laws and governmental regulations may cause the Toyota’s financial condition and results of operations adversely affected. (Toyota annual report, 2012) There are various legal proceedings that Toyota may face.

The legal proceedings of various issues are regarding the product liability and infringement of intellectual property. Lastly, the political instabilities, fuel shortages or interruptions in transportation systems, natural calamities, wars, terrorism and labor strikes is the risk which subject to Toyota that conducting their business worldwide. Any occurrence of these events in the market that Toyota purchases materials part and components may result in delays in the operations of Toyota’s business which may adversely affect Toyota’s financial condition and their operation performance.

Besides that, there are other global risks that Toyota may have to face and manage it. Other global risk management that Toyota tries to manage includes those operation risk management, commodity price risk management, and Toyota reputational risk management. Those are also the important strategies that managed by the Toyota to reduce their company risk. Firstly, the operational risk is the risk of loss resulting from the failed or inadequate company internal controls and corporate governance.

These risks can occur in many forms including the error in doing business, failure of their internal control and causes by the company’s employees or those contracted to perform services for the company that and the vendors that do not perform in accordance with Toyota’s contractual agreement. Therefore, these event should be well manage to avoid any potentially losses or the damages which may dangerous the position of the company. Toyota managed those operational risks by adopting the several strategies to reduce the risk that they facing globally.

They diversifying their company operation and financing which exposure to the risk such as localized much of their production by constructing production units in the countries which they operates globally. Toyota can match the desired currencies of local revenue with local expenses through their local operation because they can easy to purchase most of the supplies and resources used in the production process. For example, Toyota can ask its suppliers in Malaysia to settle all the bills using Ringgit Malaysia.

This reduces Toyota’s exposure to changes in the value of Ringgit Malaysia. Other than that, Toyota takes the advantages in interest rate differentials by raising the funds in more than one place. This strategies is called diversify of its finance. For example is like Toyota borrows money from the different country such as Japan, United States or Europe which is simple to take the advantages of the interest rate differentials. They will borrow from the country where they expected the interest rate at that country may fall.

For example, if Toyota borrows from America and they expected the fall of interest rate in America which will lead to a fall in the value of dollars in relation to the YEN. Toyota, by taking the advantages of the interest rate in America will make loan and other commitments denominated in dollars less expensive in Yen terms. Therefore, Toyota will gain from the expected depreciation of dollar. Commodity price risk also one of the global risk that facing by the Toyota. As the commodity prices rises, the Toyota exposure to the changes in commodity prices which may directly influence their business operations.

The increase in the commodity prices will increase the will increase the company cost as well. The increase in the cost of the customer which cannot pass to the customer or absorb by the supplier can affected the company’s profit margin. The high or low in commodity price like non-ferrous alloys like aluminum, precious metals like palladium, platinum and rhodium and ferrous alloys that use by the company in their production of the motor vehicles may decide the high or low cost in the Toyota production.

However, the Toyota does not use the derivative instruments to hedge the fluctuation of the commodity price risk. They manage their commodities price risk by holding the minimum stock levels. Other than the operational risk management and commodities price risk management, the reputation risk management also important to the company of Toyota that operates globally. Toyota carries out their business with major operations in distant locations from corporate headquarters need to adopt a principle-based, rather than a entralized, rule-based approach to reputation building.

Toyota has hundreds of companies headquartered in other countries will have different culture and facing the different situation and image. Besides that, Toyota also putting their effort to built its reputation of the company on quality and reliability of their product. However, the incidence of the brake problem had caused their long-term reputation drops. They are trying to solve the problem and various actions had been taken to gain back their customer confidence toward their product.

The reputation is not built by one night but it needs the long term effort to gain the image of customer to a company. Other than that, Toyota always try to create a faster, more flexible framework for making communications decisions across borders, cultures, and time zones when problems merge with globalize reputation management. Toyota is putting their effort to gain back their customer confidence and their company reputation.

The reputation is important for a company because it can mainly influence the company sales and profit margin. Other than that, the company also manage their globalize reputation by using the influencer mapping which is the process of identifying technical, social, and political influencers. This program should be the long term implement and ongoing program to build the good relationship between the company’s managers and engineers, and those influential outsiders from the different location.

Therefore, Toyota may try to integrated reputation management by building the long term relationship with government leaders and their staff members, regulators, and non-governmental organizations and political parties. This is the important part of the globalized reputational risk management. Lastly, Toyota should continue their effort in building their reputation in globalized so their image in automotive manufactures can be well maintain and increase their profit margin for the company.