Toyota's Competitive Advantage: Strategies, Analysis, and Tools

This report provides a comprehensive analysis of Toyota's competitive advantage, examining the factors that contribute to its success in the automotive industry. The analysis begins with an introduction to the competitive landscape and the importance of strategic planning. The main body of the report delves into various strategic development tools, including SWOT analysis, PESTLE analysis, Porter's Five Forces model, and generic strategies such as cost leadership and differentiation. The SWOT analysis assesses Toyota's strengths, weaknesses, opportunities, and threats, while PESTLE analysis examines the political, economic, social, and technological factors influencing the company. Porter's Five Forces model evaluates the competitive forces within the industry, and generic strategies explore Toyota's approach to cost and differentiation. The report concludes by summarizing the key findings and emphasizing how Toyota utilizes these tools to develop effective marketing strategies, overcome challenges, and maintain a competitive edge in the global market. The analysis highlights how these tools enable Toyota to capitalize on its strengths, mitigate weaknesses, and respond effectively to market dynamics.

COMPETITIVE
ADVANTAGE

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Every organisation affect from various micro and macro environment and develop the
strategy to overcome these factors accordingly. In this study we will discuss the various factor
that can affect Toyota and how they develop marketing plan or strategy with the use of various
tools.
MAIN BODY
Explaining strategy development tool and how are they used in Toyota
Developing strategy is an essential step between identifying organisational objectives and
develop and implement some strategies or make the change to meet them. Strategic planning
include analysing internal and external impacts on the industry and then mapping out an
approach to deal with these impacts (Bharadwaj, Fahy and Varadarajan, 2015). Strategies can be
developed by various tools such as PESTLE, SWOT, Porter's five forces model, Ansoff's model,
Ghemawat's AAA model, Generic strategies, etc. In this essay we are going to use four strategy
development tool:
SWOT Analysis
The SWOT analysis is used in strategic development to identifying organisation's
strengths, weaknesses, opportunities and threats. After identifying these the company can access
how to develop effective marketing strategy by capitalising the strength, minimizing the effects
of weakness of the organisation, organisation will able to create opportunities with the use of its
strength and able to reduce the impact of any threats.
Strength- Toyota have strong market position in various geography across the world and
brand recognition which gives it significant competitive advantage. The industry have strong
focus on research and development which directing to developing new products and strategy,
improving existing products and developing new technologies in the specific areas(Darroch,
Miles and Jardine, 2015). Toyota is known for durability, value for money, reliability and
convenient, also the brand image is based on quality and environmental friendly.
Weaknesses- In the recent past years, Toyota has conducted number of product recall
which can affect the brand image. They spend a lot of money on advertisement which can
increase the cost of the cost of the product. Toyota should develop a plan to cut off these extra
cost which affect the overall cost of the product.
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Opportunities- Toyota have opportunity to and known for producing fuel efficient,
smaller auto-mobile without compromising in the quality can attract the customer (Hatch and
Howland, 2015). With the uncontrollable increase in fuel prices, Toyota found the solution as
producing hybrid gas car which is fuel and environmental effective.
Threats- Toyota faces strong competition in various market because of the globalisation.
Increase in maintenance cost, fuel prices are rising are threat to the Toyota. The organisation can
PEST Analysis
There are various number of factors that could affect the organisation. PEST analysis is
very essential and helpful tool to understand of growth and losses of a particular market and it is
useful to analyse the benefits and available opportunities for TOYOTA itself.
Political- The political factor is essential for the multi national company like Toyota. It
help to know about the country's particular requirement, rules and regulations, policies and
security. Political factor affect on the spending power of consumer (Saeidi, Sofian and et. al.,
2015). For example, Any recently produced cars must abide by with the European vehicle
emission standards and regulations, this is also known as euro standards, that is why Hybrid cars
with lower CO2 emissions have high demand and support from the government because it is
friendly to the environment. But Toyota's high CO2 emission have higher rates of tax charges.
Economical- It influence the organisational development and growth and affect the
consumer demand. The dependency on foreign oil and gas can affect the country's economic
growth. Consumer are affected with the raising prices of fuel which can affect their preferences
as they prefer to buy cars wit smaller efficient engines. Car prices generally dependent on price
elasticity of oil of the country.
Social- Toyota has come up with new strategy of making cars specifically to target at
Australian customers(Tan and Sousa, 2015). The consumers are more environmental friendly
and the preferences are affected by raising in fuel rates.
Technological- This factor is main driver of globalization and it is essential for
competitive advantages, it is recommended that the auto-mobile industry should concentrate on
it. Toyota can develop the strategy to innovate new alternative fuel such as hybrid engines and
electronic motors, it will reduce air pollution and attract consumers to the products they offer.
Porter's Five Forces Model
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This tool help to understand where the organisation power lies in terms of present
competitiveness and future positioning strength. These forces include existing competition
between suppliers, bargaining power of buyers, threat of new entrants and substitutes to the
market, By using the tool in the organisation helps to understand the balance of power and to
analyse areas of possible profitability.
Power of supplier: The limited population of supplier across the world creates the
medium force that influence Toyota (Bharadwaj, Fahy and Varadarajan, 2015). This bargaining
power is higher when the supplier are fewer. Majority of supplier do not have forwards
integration and control of the distribution raw material.
Power of buyer: The buyer can affect by the low switching cost, by this buyer can easily
switch to other brand. The substitute of Toyota can be found by the consumer, it is important to
develop the strategy to ensure that the Toyota match the consumer preferences.
Threat of substitute... There are many brands that are offering the substitute products in compare
to Toyota products such as bicycles, public transportation. Toyota can make their products more
accessible, convenient and affordable.
Competition with Toyota: Toyota competes with the high variety of organisation which
different through fuel efficiency, cost, style and brand image (Hatch and Howland, 2015).
Company compete with few large brands. To overcome this force Toyota must have
comprehensive strategy to identify the strong force of competition.
Threat of new entrants: This force is less affecting than the bargaining power of customer and
competition force because there are a lot of barriers that weaken the effect of new entrants on
Toyota. Toyota developing effective strategy to growing its business and maintain the position in
the market as one of the top auto-mobile industry in the world
Toyota's generic strategy
Cost leadership: The aim of this leadership is to become the low cost price industry. It is
important to utilize the resources very effectively. Toyota makes its position as providing low
cost products with good quality (Saeidi, Sofian and et. al., 2015). Their strategy is to proving low
cost products but they do not compromise with the quality.
Focus strategy: The strategy is concern with the focus of the company on one specific
niche market. That can be either cost focus or differentiation focus. Toyota is using this strategy
by combining both the focuses they provide hybrid cars which is cost effective.
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Differentiation strategy: This strategy is concerned wit the products which concentrate on
the consumer who are willingly attract special features product than the competition (Tan and
Sousa, 2015). Company attract those type of consumer as their target customer and provide them
products with innovate in the existing products.
CONCLUSION
The above study analysed the factors that affect Toyota's profitability include SWOT
analysis, PEST analysis, Porter's five forces model and generic strategy. The report discussed
that Toyota used these factors in their strategy plan and effectively overcome their weaknesses
and threats. Also it analysed that if the company make such plan, they will compete their
competitors in effective manner and attract consumer. With that it enabled the company to use
competitive advantage.
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REFERENCES
Bharadwaj, S.G., Fahy, J. and Varadarajan, P.R., 2015. Sustainable competitive advantage in
service industries: a conceptual model and research propositions. In Proceedings of the
1992 Academy of Marketing Science (AMS) Annual Conference. (pp. 441-443). Springer,
Cham.
Darroch, J., Miles, M. and Jardine, A., 2015. Market creation: a path to sustainable competitive
advantage. In Proceedings of the 2008 Academy of Marketing Science (AMS) Annual
Conference (pp. 331-331). Springer, Cham.
Hatch, N.W. and Howland, C., 2015. When Does Competitive Advantage Improve Customer
Welfare?. In Academy of Management Proceedings (Vol. 2015, No. 1, p. 18091).
Briarcliff Manor, NY 10510: Academy of Management.
Saeidi, Sofian and et. al., 2015. How does corporate social responsibility contribute to firm
financial performance? The mediating role of competitive advantage, reputation, and
customer satisfaction. Journal of business research. 68(2). pp.341-350.
Tan, Q. and Sousa, C.M., 2015. Leveraging marketing capabilities into competitive advantage
and export performance. International Marketing Review. 32(1), pp.78-102.
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