Toyota Car Paint Strategic Position Analysis: UK Automotive Industry

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Organizational Strategy

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Table of Contents
Introduction......................................................................................................................................3
Macro-environment factors.............................................................................................................4
Industry position..............................................................................................................................6
Internal capabilities and resources...................................................................................................8
Perspective of stakeholders............................................................................................................11
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

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Introduction
The report was developed with an aim to analyze the existing strategic position of Toyota car
paint in the automotive industry of UK. The macro environmental factors are analyzed in the
report. The report also analyzes the industry position by using porter’s five forces model. In
addition to this, the internal capabilities and resources and VRIO analysis is also done to analyze
the value, rareness, imitability, and organization of different factors of the company. The report
also discusses the perspective of the shareholders towards the company.

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Macro-environment factors
The macro environment factor includes political, economical, social, technological, legal, and
environmental factors which can be analyzed using Pestle analysis. The detailed analysis of
Pestle analysis is discussed below:
Political
This aspect involves government rules and policies which may support or obstruct the operations
of the company. In case of painting company of Toyota the government of UK is favorable as it
provides subsidies to the companies using eco friendly products. Toyota uses water-based paints
for painting their cars and also the pollutants are removed from the paint through smokestacks
(Toyota, 2019).
Economical
The economic factors involve conditions such as inflation rate and interest rate. The production
process is impacted by the rate of inflation in positive manner because the inflation rate in UK is
2.3% which is very low. Due to this reason, the cost of quality paint for the company is very low.
Also the inflation rate portrays the purchasing power of customers and 2.3% inflation can be
easily bear by the customers and they could spend more money on purchasing cars with high
quality paints.
Social
The social factors include education level, economic status, ethnicity and customers. Out of
which education level is appropriate for the painting company of Toyota. According to world
population review, the literacy rate of UK is 99% which is very high and affects the purchasing
habit of the customer that they prefer the quality over quantity (Worldpolulationreview, 2019).

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After considering the economic status and high literacy rate the company serves the customer
with the high quality paints which maintains the strategic position of the company.
Technological
In the manufacturing of the innovative products the technology plays the significant role.
Retaining the customer is the toughest task performed by the company and it is done by
providing them the quality product since the startup of the company. With the use of advanced
technology and robotics Toyota has been able to paint its vehicle by maintaining its quality.
Government is also supportive to company which installs advanced technology for producing or
using eco-friendly products. By providing the technological product to the customer the
company throws positive impact in maintaining the strategic position of the company (Tidd and
Bessant, 2018).
Legal
This aspect of pestle analysis determines the regulations and laws impacting the business of the
company. Toyota holds opportunity in providing paint of high quality which could satisfy the
requirements as per the environmental laws. In addition to this, the opportunity to offer
satisfactory and safer products can be exploited by Toyota which will fulfill the consumer laws
and enable the company to maintain strategic position. Since chemical will be used in the paint
therefore Health and Safety Act will be applicable on the company. The company needs to
ensure that health and safety of the workers working in the paint section of the company is not
affected by the use of paints.
Environmental
The government of UK is also concerned about the sustainability of the environment. In this
regard, ecological concerns are included by Toyota in their strategic decision making. Toyota

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uses water based paints to control air pollution. In addition to this, the manufacturing plants are
installed with solar panels which enable the company to save more energy. Also, facilities of
wastewater treatment are installed at the factories to clean the water and use it as little amount as
possible. Moreover, Toyota ensures low noise pollution by using sound-absorbing panels in their
equipments. All these factors used by Toyota favors the environmental concerns of the UK
government and enable the company to maintain strategic position (Toyota, 2019).
Industry position
In order to analyze the position of the company in the industry, porter’s five forces analysis is
used. The details of this are mentioned below:
Supplier’s bargaining power
In automotive industry of UK, the supplier’s ability to bargain is low. The reason behind this is
the large number of suppliers in the UK market which enables the car companies to choose
between different suppliers and switch to the one who offers the best deal to them (Dewwnter
and Heimeshoff, 2014). While some of the companies like Toyota produces their own paint and
get their vehicles painted in the manufacturing factory itself without interference of any third
supplier of paints which results in low bargaining power of suppliers.
Consumer’s bargaining power
The buyer’s ability in automotive industry of UK in terms of bargaining is moderate. This is
because of three reasons. At first, there are large numbers of customers who purchase cars in
Germany. The second reason is that the customers are price sensitive which restricts the
automotive company like Toyota to charge any extra amount from them on using high quality
paint. The third reason is that there are private paint shops from where the customers can get
their cars painted as per their desire at low costs. In order to balance this situation, premium paint

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quality is offered by the company to the customers. This enables the company to charge
relatively higher amount from the customers.
Threat of new entrant
The threat from new entrants in the automobile industry of UK is low. This is because the
country has strict legal requirement for establishing business in UK which is not possible for
every other new entrant to cope with. Moreover, the industry is already pre-occupied by big
brands like BMW and Mercedez which the new entrants are unable to compete with (Nurski and
Verboven, 2016). The existing big brands like Toyota and many other are recognized because of
their quality which cannot be provided by small businesses or new entrants in the market.
Industrial rivalry
Industrial rivalry or competition in the automobile industry of Germany is high. The numbers of
top quality brands in Germany are high which raise the competition scale of the industry. These
brands include BMW, Ford, and Volkswagen etc. This also restricts the industry to be ruled by
just one company as these competitive brands also provide high quality paints in their cars as
compared to Toyota.
Threat of substitutes
The threat from the substitute is moderate for the company due to the non-availability of
comparable substitute of cars. The only substitute is private painters which are generally avoided
by the people due to high living standard and preference to quality over quantity (Van Acker, et
al., 2016).

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Internal capabilities and resources
The internal capabilities and resources play a significant role for painting company of Toyota in
maintaining the strategic position in the automotive industry. Some of the internal capabilities
and resources are as follows:
Keep the environment clean
The floors of the painting areas are covered with plastic which beats dust and webbing is done
for wrapping the walkways. Air showers are installed so that dust can be removed from the
clothes. Likewise, sticky floor mats are installed so that the grit can be removed from the shoes.
The airborne particles are collected through the running water walls and a fine mist is sprayed
through humidifiers in order to keep the air clean. This results in a dust-free environment which
is mandatory for quality painting.
Dip tanks
Cars usually come to paint shop after proper welding is done to them. After this, the body shells
are passed through dip tanks in order to protect it from corrosion. The dipping makes the metal
clean and ready for painting and the areas vulnerable to damages and corrosion are protected.
The second phase of dip tanks contains phosphate liquid through which the shell is prepared for
electro-deposition. In the electro-deposition tank, the shell is passed through 800 volts which
provides anti-corrosion coating on the cars. This makes the car free from corrosion and painting
becomes long-lasting (Talbot and Talbot, 2018).
Skill training
The panel joints of the cars are required to be applied with sealant to protect it from moisture and
rain. This task requires workforce to be skilled and therefore the members undergo a training
program which lasts for six weeks to ensure proficiency before allowing them to the actual

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practice. This enables Toyota to provide an anti-corrosion warranty for 12 years and a guarantee
for surface rust which is valid for three years. This makes the company achieve a strategic
position in the market.
Flash finish
The company makes use of robotics to apply primer coat to the car where human hands cannot
reach (Jordan, 2016). This is done for reducing the risk of contamination and ensures moisture
free base coat to provide quality paint to the cars and enabling it to achieve a strategic position in
the market .
VRIO analysis
VRIO analysis is a framework which looks for value, rarity, imitability, and organization aspects of the
company and analyzes if these are the weaknesses or strengths of the company. The painting company
of Toyota has capabilities and resources and only some of them satisfy the requirement of VRIO. The
VRIO analysis chart is presented below:
VRIO analysis of painting company of Toyota
Capabilities and resources Valuable (V) Relevant (R) Imitable (I) Organization (O)
High efficiency of painting
process

Painting facilities in strategic
locations

Intelligent painting technology    
Pace in innovation for research
and development
   

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Discussion
High efficiency of painting process: The painting process of Toyota is highly efficient as the
company has skilled staff and latest equipment which ensures quick and quality paint. This area
of company has significant contribution in the competitiveness of the company. Although it is to
not relevant, imitable, and organization because each company has their own painting processes
which are highly efficient and some company also get their cars painted from third party to make
the process efficient (Ottman, 2017).
Painting facilities in strategic locations: The facilities of manufacturing of Toyota are globally
located and the process of painting is included in the manufacturing process only. Due to
international expansion, the company has painting facilities at strategic location. This is not rare
as other competitive brands of Toyota such as Volkswagen, Honda, and BMW etc have
manufacturing units which are present globally. This in turn makes it imitable as any company
with enough financial resources can establish its manufacturing units at strategic locations.
Intelligent painting technology: The capacity of intelligence-driven technology of Toyota refers
to the integration and development of artificial intelligence technology which assists or partially
automates the process of painting. Toyota makes use of robotics technology in the process of
painting (Bock, 2015). This only creates competitiveness as it is commonly used by other brands
as well. Also, anyone can easily imitate this technology unless Toyota introduces its own
artificial intelligence infused painting program and gets a patent for it.
Pace in innovation for research and development:
Toyota in actively involved in research and development to innovate its product line and also
make making the paint corrosion free. This is valuable as it competitive advantage is promoted
through it but on the other hand it can be imitated by other industry players as well. For example,

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Nissan and general Motors have similar strategies for research and development. This factor is
rare because it becomes difficult for the new entrants or smaller companies to achieve such a
capability of R&D.
Perspective of stakeholders
Employees, customers, and suppliers are some of the vey commonly known stakeholders of
painting company of Toyota. All of these stakeholders have their own perspective in context of
company’s strategic position. The employee needs are recognized and addressed by conducting
surveys. This results in establishing a culture of transparency and also improves the engagement
of employees at all levels of the organization (Hair, et al., 2015). On the contrary, the education
and training is provided to the employee to ensure perfection in painting process. The
satisfaction is delivered by the company to the customers by providing all product categories
over a single platform. In addition to this, the company also addresses the customer complaints
through surveys and tries to make changes in the product as per the suggestion or complaints
recognized in the survey. The perspective of the suppliers is positive towards the company
because it conducts meetings on regular basis. Through these meetings the company shares
knowledge and also discuss on the issues of the suppliers related to logistics and purchasing
(Monczka et al., 2015). In addition to this, the awards are also presented to the suppliers for
contribution and performing extra ordinarily for the company.
Current strategic situation of Toyota
Toyota currently holds a leading strategic position in the industry with the advancement of
technology and being eco-friendly in the process of painting their cars. The positive aspects of
the current strategic situation which differentiates the company from other brands include High
efficiency in the process of painting as the company has latest equipment and skilled staff. The

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company also has painting facilities at strategic location which is a positive aspect of the current
strategic position. The research and development of Toyota is also at pace which is a positive
aspect as it enables the company to make paint that is corrosion free. The negative aspect
includes regular training of the employees as they are required to be updated on advancement in
technology. This costs company huge amount on training. Another negative aspect of the
strategic position is that company has to ensure the safety and health of the employees working
in painting area.