Japanese Auto Makers and Their Competitive Place in Global Marketplaces: A Case Study of Toyota Corporation

Asia Pacific Business 1
ASIA PACIFIC BUSINESS
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Asia Pacific Business 2
Asia Pacific Business
Introduction
The Japanese automobile industry has greatly grown and surpassed the United States
automobile industry. Japan has been one of the leading global being among the 3rd biggest car
producing nations since the 1960’s, safeguarding its status as a world leaders in automotive
manufacturing and technology. The automotive components and cars account around 18% of all
manufacturing shipments in Japan. Japan has emerged to be a worldwide conglomerate in the
segment of auto manufacturing (Donnelly, Mellahi & Morris, 2002, pp. 30). Thus, the Japanese
vehicles are prominent for dependability, high-class of components, low purchasing price plus
low use of fuel. In addition, the mainly famous multinational corporations (MNCs) who
manufacture automobiles or who provide automotive parts, as well as servicing include Toyota
Corporation, Honda, Nissan, Mazda, Suzuki, as well as Aisin Seiki.
Toyota Motor Corporation is a big player in the Japanese automobile industry and in the
global world. Being Japan’s primary automobile manufacturer, and one of the global biggest
automobile corporations, the company evolution, competitive position and present strategies are
integral to its global competitiveness. The company’s position in the automobile industry
represents well the several issues that face the global automobile industry. As competitive
pressures increases, several Japanese multinationals are being absorbed by global groupings, like
Ford, General Motors (GM), Renault, as well as Daimler-Chrysler. Thus, the expanding groups
are aggressively challenging the primary Japanese manufacturers, Toyota and Honda, in both the
export, as well and domestic marketplaces. It is hence important to Toyota’s long-term approach,

Asia Pacific Business 3
which is productively sustains its competitive spot, as the global most effective auto
manufacturer, whilst controlling its designed transition to a novel competitive framework
(Gorzen &Makino, 2007, pp. 1149).
The question of the paper will be: To what extent have Japanese auto makers been able to
keep their competitive place as multinationals enterprises in global marketplaces? The paper will
examine the case of Toyota Corporation that will represent the Japanese automobile industry by
examining the Toyota’s foreign direct investment (FDI), how Toyota has succeeded as a
multinational firm, the management and organization of Toyota, and the role of the government
in stimulating FD
Foreign Direct Investment (FDI)
FDI is a procedure in which the firm of one nation (the home country) obtains ownership
of resources for the objective of managing manufacturing , distribution, as well as other
operations of a company in another nation (the host nation). In the latest decades, emerging
economies, which comprise East European nations, are expanding at a very high speed, plus
Japanese multinationals corporations look for novel marketplaces among them. Consequently,
between 2001 and 2008, the increasing pace of FDIs surpassed the export expansion. Thus, the
advancement was in regard to sales by the Japanese overseas subsidiaries that considerably
surpass the capacity of exports of Japan. Thus, these current trends are apparent amongst
economical segments, like transportation, as well as electronics, as well as amongst aggressive
industries like agriculture, clothing along with food (Wint & Williams, 2002, pp. 361). The
analysis of macroeconomic signs of Japan in the latest decades demonstrates a propensity to

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decline exports that is compensated by the preference of MNCs over the growth of foreign
operations engaging in external foreign direct investment. Japan’s evolution from a
straightforward exporter of brands to direct investor in the different economies of other nations
was because of increase of yuen plus the rise in wages of Japanese workers that resulted in the
realignment of Japanese stakeholders to nations with low-wage workforce (especially ASEAN)
(Stone & Jomini, 2002, pp. 223). Hence, the greater reliance on raw materials have stimulated
some analysts to draw consideration on the risk of de-locating investment that could have
changed Japan into a very prone nation, plus the relocate of valued-added overseas. Nonetheless,
the limitations of supplies along with the demands that acted towards growing production costs
made the Japanese corporation including Toyota to expand their operation in foreign nations,
especially in Europe and US (Hill, 2007, pp. 18).
The most widespread form of market entry for the company is FDI, in which the
corporation invests straight in facilities in an overseas nation to manufacture or marketplace their
products. In the auto sector, this is taken as the most vital and suitable technique of entry into
foreign markets. India has become a leading attraction for global automobiles like Toyota given
the huge prospect with middle-income masses aspiring to own a vehicle and plenty of raw
materials and low-cost labour. Through FDI, Toyota has been able to penetrate the Indian
marketplace plus has succeeded in controlling its manufacturing, distribution and other activities.
Capabilities and Resources
Eclectic Paradigm Model