Strategic Analysis of Toyota (Essay Sample)

Strategic Analysis of Toyota
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The automobile sector is the world’s most competitive sector attracting a large sum of investment both locally and internationally. Toyota is a giant Asian vehicle manufacturer applying vast strategies to market its product across the globe. Considering the external analysis (industrial economics view), strategies as Porter, PESTEL and even SWOT are applied by Toyota in gaining the intended market niche.
Toyota PESTEL Analysis
Political
The political situation of a region or country can affect directly the market niche of Toyota Motor Company. Many customers are in search of vehicles that are fuel efficient negating the need for frequent refueling in the course of a journey. Few countries have this oil resource thereby export to other nations at a fee. Political instability around the world due to outbreak of clashes and wars will obviously affect the production of fuel which may force customers to opt for the hybrid vehicle (A., 2012). Toyota tried to maintain customer satisfaction by designing the hybrid car models i.e. those that could be powered by both the fuel and electricity
Economic
The prices for oil are varying across the globe; this makes the alternative for fuel-powered vehicles much expensive (A., 2012). The governments have also increased the taxes for this gasoline which further makes it expensive, but major world economies like China, the US and Russia have a growing demand for oil which necessitates the need for oil supply and prices to be stable throughout the year.
Socio-Cultural
A positive factor is that Toyota is the overall trailblazer when it comes to hybrid technology. This has been made possible by decades of research and testing in the area of hybrid technology which would provide their customers with a wide range of products/technologies to choose from (.F., 1996).
Technological
Toyota Motor Company has created and established its customers for the hybrid technology. This will provide a competitive niche over other market players since it will be in a position to create and innovate hybrid cars satisfying the customer’s needs. Though the prices still seem over the roof, Toyota may in fact partner with other motor companies like Hyundai to bring the eventual prices of hybrid vehicles are affordable for most people; this will in fact increase its market base (Brickley, Analyzing Managerial Decisions: Why Teams Fail;”Managerial economics and organizational architecture (5th ed.)", 2009).
SWOT Analysis
Strengths
Toyota Motor Company has a vast recognition all over the world; this creates a multinational brand and image which help drive up its sales of vehicles. The upward trend in the sales can be shown in the sales turnover of about £131,591 million in the year 2011. Due to efficient production and distribution systems, Toyota has gained the trust of its customers and continues to capture the wider world market (A., 2012).
Weakness
Most of manufacturing plants for Toyota Motor Company are in Japan and the US thereby are usually considered as foreign goods which savor a large percentage of taxes imposed by the respective governments (.F., 1996). This reduces the profit margins for Toyota whenever they manufacture and sell a motor vehicle while its competitors are utilizing cheaper labor and manufacturing cost in economies like China.
Opportunities
Considering the ever diminishing oil reserves and the rocketing oil prices, Toyota is looking at ways and means of bringing down the vehicle running costs. The idea could be realized through the introduction of hybrid car models, unlike the fuel guzzlers which would inflate the running costs of the vehicle making them unaffordable and unsustainable by the customers (A., 2012). Toyota would like to bridge this gap so that their customers can have comfortable means of travel while also affordable
Threats
There is the competitive pressure created in the car sales and manufacture; this pressure beckons Toyota to produce quality products so that they do not lose market leadership.
The materials used in the manufacture of vehicles have to be outsourced which pushes up the production costs if not well-managed.
Public transport is gaining favor among the European people which negates the need for use of personal cars to drive the children to school. This is likely to push down the demand for personal cars which will directly affect the sales.
Porter’s Strategies
Threat by New Entrants
The motor industry is a well-established industry and would require large sums of capital and technology. Therefore, there is minimum or no threat by new entrants as this industry needs a lot of resources. Toyota has to therefore continue to produce the quality products that satisfy the customer and also improve wherever possible (Brickley, Analyzing Managerial Decisions: Why Teams Fail;”Managerial economics and organizational architecture (5th ed.)", 2009).
Threat of Substitutes
In the Automobile industry, there are many players like Honda, GM, Hyundai and even BMW. Toyota has to ensure the high quality of its products or otherwise face replacement thereby losing the customer base for its products. Therefore, Toyota has to research and fulfill the customers’ needs to continue enjoying its market niche.
Intensity of Rivalry
The many players like Honda, BMW and GM offer stiff competition in the automobile industry. They have large capital and resources which they can easily use to entice customers. Therefore, Toyota has to continually upgrade its market strategies to continue enjoying the market leadership.
Considering the internal analysis (Resource-based view), strategies to look at include the Generic Strategy, Value Chain, Barney Model and the VRINE Model.
Barney Model
Toyota developed a clear system that nurtures employees and gives them the right direction. This employee support and desire to be at the top of the market contributes to the wide distributorship and dealership of Toyota products making them easily accessible to the customer network at the time of need; this led to the creation of the Toyota Production System (TPS) which has become the basic model in many production centres (Brickley, Managerial economics and organizational architecture (5th ed.) , 2009). The main aim of the TPS is to do away with waste and unevenness during operations by making what the customer requires, when he/she needs it and in the right quantity. This adds quality into the product and reduces the amount of errors that may occur during production.
Generic Strategy
Companies usually outsource their market to satisfy certain needs or demands. Toyota has over the years outsourcing market for its vehicles, going beyond the normal local Japanese market. This increased the size of its market while also increasing its revenue. With the right products, Toyota will solidify its market niche considering the stiff competition from GM and other automobile manufacturers (A., 2012). Toyota’s ability to satisfy unique customer needs i.e. fuel efficiency will make it have power over its buyers since they cannot get the same fuel efficient cars from other manufacturers.
Another generic strategy is choosing an investment strategy at the business level. Toyota have developed a distinctive technology and even is introducing the hybrid model. This act as its main identifier in the market while also reducing the vehicle’s dependency on fuel which is a diminishing resource (Alchian, 1972). These innovation will provide the Toyota market with a variety of products to choose from thereby increasing its market niche and profitability.
Valu...