Toyota Motors: Porter's Diamond, 5-Forces, and Positioning Strategies

This report analyzes Toyota Motors, focusing on two key assignments. The first assignment applies Porter's Diamond Model to understand the factors contributing to Toyota's competitive advantage, including factor conditions, demand conditions, firm strategy, and related industries, along with the influence of chance and government. It also utilizes Porter's Five Forces to evaluate competitive rivalry, supplier and buyer power, and the threats of new entrants and substitutes within the automotive industry. The second assignment focuses on Toyota's product positioning, exploring product differentiation, identification of market gaps, and cost leadership strategies. It examines the brand's position relative to competitors using a positioning map and discusses the impact of bargain brands. The report provides a comprehensive overview of Toyota's strategic approaches to maintain a competitive edge in the global automotive market.

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Assignment No 1
Company Name: Toyota Motors
The Porter’s Diamond Model
The Porter’s analyses discuss the impact of national conditions on firm’s international
competitive advantage and are based on three principles:
1. The competitive performance of a country and the performance of the firms are interrelated as
a country’s “success” depends on the firm’s performance and the performance of the firms
depends on the on the nation’s environment;
2. For a country to sustain its competitive advantage its firms must maintain its competitive
advantage through constant innovations and development of resources and capabilities.
3. Dynamic conditions of national environment are of the major impact on firm’s ability to
innovate and develop.

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The four determinants of competitive advantage include:
 Factor conditions :
The economy's position in factors of production such as skilled labour, physical
resources, capital or infrastructure necessary to compete in a given industry.
 Demand conditions :
The nature of the local demand for the industry's product or service.
 Firm Strategy, structure and rivalry conditions :
The conditions in the economy governing how companies are created, organized, and
managed and the nature of domestic rivalry.
 Related and supporting Industries:
The presence or absence in the economy of supplier industries and related industries that
is highly competitive.
Two factors influence the development of these determinants:
 Chance :
Acknowledging the extent to which an industry’s competitiveness is related to its
historical path of development;
 Government:
The ability of government is to manage the determinants of advantage to the benefit of
their basic industries.

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Porter’s 5-forces analysis
1. Competitive Rivalry between Existing Players:
The competition among firms in the industry normally determines the industry overall
competition. Moreover, in some industries firms compete so aggressively that they price
products below costs level. In other industries firms compete in non price dimensions such as
marketing and innovation. The intensity of rivalry depends on sic factors: the concentration in
the industry, rate of market growth, cost conditions, product differentiation, switching costs, and
exit barriers.
Competition players are likely be high when:
 There are many players of about the same size
 Players have similar strategies
 There is not much differentiation between players and their products
 many rivals competing for market share
 most of them were experienced
 each competitor was trying their best to differentiate their car in terms of performance
and value

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2. Bargaining power of supplier:
The relationship between producers and suppliers is similar to the relationship between
producers and buyers. The main issues are the ability of firms in the industry to switch between
different input suppliers and the relative power of each party.
Moreover we can say:
 Low bargaining power
 The market dominated by large number of suppliers
 Suppliers were not in good condition during that time
 The switching costs from one supplier to another was low
3. Bargaining Power of Buyers:
The bargaining power of buyers is dependent on several circumstances that include the amount
of the product’s suppliers, buyers’ concentration, product’s level of differentiation, buyers’ price
sensitiveness.
There are some explanations which can define further:
 The bargaining power of the buyers is moderately high in mini-car segment
 Customers have low margins and are price sensitive
 The buyers are a significant portion of the industries revenue and all manufacturers are
dependent on them
4. Threats of New Entrants:
The threat of new entrants is low because huge capital and cutting-edge technology is required.
Moreover, the threat of entry rather than actual entry may make established firms to lower their
prices to the competitive level. The major sources of entry barriers are economies of scale,
capital requirements, cost advantages (high fixed costs), product differentiation, access to
distribution channels, governmental and legal barriers.
5. Threat of substitute products:
The presence of substitute products can reduce profitability in an industry due to the limited
prices. The costs of switching to substitutes, the buyer’s willingness to substitute, and the relative
prices and performance of substitutes influence the threat level.
Moreover we can say:
 Pressure from some of the substitutes available
 There are plenty available and can offer more power and space
 Threat from two-wheelers
 Switching costs for customers are very low in mini-car segment
Assignment No 2

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TOYOTA
Product Positioning
Product Differentiation:
The main goal of product positioning is to keep your product different from other brands. If your
product is differ and unique then you are on top of your customers mind when they are
considering a purchase. Product differentiation refers to how Toyota makes their product differ
from other brands like designing, pricing and marketing.
Gaps in the Market:
The perceptual map of product positioning can be used to identify the gaps in the market. It
means that how Toyota makes their product potential for buyers. Toyota chooses to fill the gap
of high quality in average price. So we can say that Toyota uses the quality gap to tackle the
market.
Cost Leadership:
Toyota has achieved low-cost leadership status because it has developed considerable skills in
efficient supply chain management and low-cost assembly capabilities and because its models
are so well-positioned in the low-to-medium end of the price spectrum. These are enhanced by
Toyota’s strong emphasis on quality.
Bargain Brands:
Brand is created by the support of people’s expectations and appreciation. Toyota is facing
problems because local suppliers from china are providing cars at very low price, it attracts the
customer because they want low price rate.
Brands:
 Porsche

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 Ferrari
 BMW
 Audi
 Mercedes
 Ford
 Hyundai
 Honda
 Toyota
 Suzuki
 Chevrolet
 Daihatsu
 Other China Brands
POSITIONING MAP
Porsche
Ferrari
Audi
Ford
Mercedes
Hyundai
Daihatsu
Toyota
ChevroletHonda
Suzuki
Other China Brands
BMW