An Evaluation of Toyota's Internationalisation Strategy and Growth

This report offers a comprehensive analysis of Toyota's internationalization strategy, examining its growth pattern, geographical expansion, and market entry modes. The study delves into the positive impacts of internationalization on Toyota's profitability and market share, while also exploring the company's value chain activities, including inbound and outbound logistics, marketing, and technology investments. Furthermore, the report identifies potential future risks, such as economic and financial uncertainties, currency fluctuations, and political and legal challenges that Toyota may face in the global market. The report concludes by highlighting the benefits of internationalization for organizational growth and revenue generation, emphasizing Toyota's position as a leading global automotive company.

INTERNATIONALISATION PATH OF TOYOTA

Table of contents

Introduction
Many Organisation adopt internationalisations strategy to sustain and achieve profitability.
Organisation expands their business abroad by employing the benefit of large sale economics
(Cohen, 2012). This essay evaluates the internationalisation path of Toyota which incorporates
the international growth pattern of the company with respect to its geographical entrance and
examines the positive impact of the adopted internationalisation strategy on Toyota. Further, the
study procedure includes the configuration changes in Toyota’s value chain activities. In last,
this study explores the future potential risk that may be faced by the company.
Discussion
Toyota’s international growth and its motivation
Toyota motor cooperation is a car manufacturing company headquarter is situated in Japan.
Toyota comes into existence on August 28, 1937, and was founded by Kiichiro Toyoda.
According to the 2017 report, its employee range becomes 364,445 further in 2019 it becomes
the tenth-largest company in the world by revenue (Balcet et al., 2012). Toyota was the first
automobile manufacturing company that launch 10 million vehicles per year. Toyota leading in
the global market through its hybrid vehicles and hydrogen fuel cell vehicles. Further, Toyota
sold approx. 7 million in the global market to more than 170 countries per year. In 2008, the
global automobile market declared Toyota as the world’s largest automaker. Toyota has
successfully operated its business operation across the globe including United States, Africa,
Russia, Australia, Pakistan, North America, etc. Toyota was launched SCION and Lexus in
North America and the united states market (Manna et al., 2011). In recent years, Toyota mainly
focuses to expands its market towards China because the propensity of Chinese consumption
criteria changes. Toyota decided to expand its market in china because of this motivation that
china is the second-largest economy in the world and this is the prime motive behind
globalisation. When a multinational corporation (MNC) operating its business and manages its
production in several other states but having its headquarter in the home country then it is known
as a transnational corporation(TNC) (Wood and Reynolds, 2014). The phenomenon behind
Toyota company is based upon a transnational corporation(TNC). Furthermore, the motivation
behind the international growth of the Toyota industry is skillful labours and employees. Toyota
motor cooperation is a key element of success is committed to engineering, designing, and build

cars perceiving to every target market area (Susan et al., 2012). Thus, there are always two sides
to globalization. In this regard, Toyota faced challenges in the context of new markets, multi-
choice of suppliers for services and raw materials, selection of inappropriate place for
investment, and cheaper labor cost while expanding in the global market. Due to this rationale,
Toyota faced countless crises in a competitive environment which badly hits Toyota’s market
profit. Thus besides these challenges, Toyota arose in the global market as a winner and because
of its responsible management, it remains successful to handle the critical situation effectively.
In 2009, Toyota as the market leader embraces 15% market shares among all the other
automobile industries (Pinkse, 2014).
Toyota’s international growth pattern in terms of mode entry and geographical entrance
Not all firms follow the common strategy to attain growth in the international market. Usually,
the growth pattern of a large firm in terms of mode entry is different from the small firm. Small
companies may not implicate subsidiary and steps of sales branch. Therefore, larger firms’
growth strategies may distinct in respect of globalisation. Every organisation adopted different
modes of the level to enter into the target market such as turnkey projects, establishing joint
ventures, exporting, franchising, licensing with a target or host country firm and sometimes
develop their own sole venture in the target country (Subrahmanya, 2017). Each and every level
of mode entry has its unique advantages and benefits it's up to the organisation that which mode
of entry they have adopted to grow its firm in the host country. After the establishment of the
export headquarters of Toyota in 1962, Toyota started to penetrate in the Euro market. Toyota
chooses its first market in Denmark because from there Toyota can access 7 countries to
distribute its product. Though Toyota faced challenges to distribute its car in markets of France,
the UK and Italy because of the existed car markets and their strong sales network. Hence, in
1965 Toyota launched Corona in the UK. After that Toyota launches its two consecutive cars in
the UK and gets a satisfactory result. After its successful attempt of launching Toyota becomes
the sole car importer in the UK. The oil crisis began in the 1970s, though in times of crisis
Toyota flourished economically and expand its business rapidly (Painter, 2014). In 1977, Toyota

made its car totally in Euro by licensing in Portugal. further, Toyota (GB) Ltd joint venture with
a Britain Car Company (Inchcape group) after its successful car exporting in the European
market (Todorov and Akbar, 2018). Before its entry mode through joint venture and licensing in
the global market, Toyota holds 51% shares in a public limited company. Toyota opened their
own European design center in the south of France in 1984 (McDermott ET AL., 2011). Further,
Toyota company which is located in the UK with the name of Toyota Manufacturing (UK) Ltd
came to Burnaston in North Wales to produce and launch the Carina E car. Currently, there are
many different brands of companies that are the distributors of Toyota and also owned by Toyota
like agreement distributors of Louwman & Parqui in the Netherlands (Bureau, 2011). After the
complete analysis on the international growth pattern adopted by Toyota, it comes under the
consideration that Toyota followed low-risk entry mode. Likewise, Toyota adopted licensing and
exporting at the beginning. Afterward its goes towards higher risk levels by adopting the joint
venture and fully owned ventures/subsidiaries. The evolution of a Toyota’s entry mode decision
is shown in the picture below.

Figure: The evolution of a firm’s entry mode decision
Toyota’s value chain activities.
Toyota is a global vehicle company and well known for its outstanding supply chain and
production capabilities. Toyota always believes to attain customer trust through its responsible
supply chain management (Funk, 2010). Hence, Michael E Porter developed a model for
managing the value chain activities in order to increase productivity. Toyota has excellent supply
chain and production management. A brief discussion is made on Toyota's value chain analysis.
There are two kinds of activities such as primary and support activities in the value chain. The
discussion on primary activities is made below:
Primary Activities
 Inbound logistics: it refers to storing the raw material and necessary accessories that used
in the product manufacturing. Toyota has handled its inbound logistics efficiently. Toyota
managed the world's largest supply chain. There are thousands of suppliers around the
globe that supply parts to Toyota’s distribution center and warehouses located worldwide
(Takita, and Leite, 2018).
 Outbound logistics: it refers to the distribution of the product and warehouse. Toyota has
numerous logistics centers and parts around the globe. Toyota supply chain management
handles thousands of orders and parts every day. Toyota gives a statement on its website,
“The Toyota Parts Centre Europe is its central distribution center, at the core of its parts
supply chain. The center is located in Belgium and ships thousands of parts every day to
its regional depots across the entire region” (Rajahonka and Bask 2016).
 Marketing & sales: Toyota always faced a high level of competition due to its rivals
because of this rationale Toyota makes major investments in the promotion and
marketing of its vehicles. Toyota follows the strong marketing mix strategies. The

company utilised a traditional medium strategy to promote its product and brand in
different states. The brand also uses its distribution and sales channels such as social
media and its own website for marketing. Toyota also promotes its brand and products in
events like races and motor races. According to the research, Toyota invested more than 4
Billion US dollars in advertising in the year 2015 and 2016 (Li, 2016).
 Operation & Services: Toyota expanding its operation around the globe. Toyota provides
se5rvices through its product through its large global distribution network. Besides its
various R&D and manufacturing sites, Toyota has numerous parts distribution center that
throughout the globe that provides easiness in product accessibility to its customer
(Monden, 2011).
Support Activities:
 Technology: Apart from primary activities, Toyota invested in technological innovation
for growth. Its research centers join hands with an institution like Stanford and MIT for
faster innovation. The company invested more in the domain of AI and Robotics for
innovation.
 Human Resource Management: as mention above in 2017 Toyota had 364.5K employees.
Toyota follows the philosophy of human-centered Monozukuri and focuses on the
development of human resources.
 Infrastructure: To prominent its place from japan to South and North Americas as well as
Europe and Asia, Toyota build large infrastructure through the globe.
 Procurement: In 2009, Toyota develops a procurement strategy with the trademark of
‘Toyota way of purchasing’ for its procurement staff. Hence, Toyota made a contribution
towards local economies through its procurement strategy.
The positive impact of internationalisation strategy adopted by Toyota 200
There are several organisation expanded their business to increase their profits and market shares
globally. In recent society, owning a vehicle is not a big issue. There are several automobile
industries that provide easiness for the customer to avail from car facility. Thus when a company
decides to expand its business it has to face the threat of its rival industry. Besides the fact, there
are several benefits and positive impacts to acquire the internationalisation strategy to increase

growth. Globally, Toyota Motor cooperation ranked is seventh among all the automobile
industries. Internationalisation strategy puts a positive impact on Toyota and currently the
company operating its 50 branches in 28 countries. According to the report, Toyota made a profit
of about 14.9 billion dollars. Adaptation of internationalisation strategy benefits a company with
respect to currency thus the revenue made by Toyota boosted further by tax abatements and
reduction of the operational costs. It is evident from the study that Toyota becomes the tenth-
largest company in the world by revenue. Toyota generated maximum revenue after following its
internationalisation strategy thus Toyota growing its profit continuously.
Future potential risk Associated with Toyota
Demands of vehicles are extensively depending upon the political, social, and economic
conditions and the introduction of new technology through the vehicle in a given market (Nath et
al., 2010). Hence, Toyota generated its major revenue through sales and marketing of its product
thus stable economic conditions are necessary for the smooth operation of the company.
Proceeding to this, from future regard Toyota may face economic and financial risk (Andrews et
al., 2011),. Thus, Toyota’s operations are subject to currency and interest rate fluctuations. Due
to the current pandemic that collapses the world’s economy and fluctuations in foreign currency
exchange rates may affect the operational strategy of Toyota. Hence, Toyota is sensitive to
variation in foreign currency exchange rates. Thus Toyota existed in the global market, the
Toyota may have affected by the fluctuation rates Japanese yen, Australian dollar, U.S. dollar,
and the euro, British pound, and Canadian dollar. According to the Toyota financial statement,
the Japanese yen may affect by the transaction and translation risk through the unfavourable
fluctuation occurrence in currency exchange. Thus fall in us dollar currency adversely affected
the Japanese yen. Change in the foreign currency exchange rate affected the material purchased
from foreign countries and Toyota’s product prices. From the future respect, continuous fall in
the dollar and foreign currency exchange rate may adversely affect Toyota’s financial conditions
(Lu et., 2017). Thus, Toyota may face political, legal regulated risk. The government may
implement extra taxes and other residues due to the fall in the economy of the country. Hence
there is numerous future potential risk are associated with Toyota (Piotrowski and Guyette,
2010).

Conclusion
Concluding the essay, this study identifying the benefits of internationalisation strategy that
assisted organisation to increase their growth and revenue. Thus the study is made by
considering the Toyota Motors Cooperation mainly based upon international growth and its
motivation. Through its internationalisation strategy and its enhanced value chain activities,
Toyota has become the tenth-largest company in the world by revenue and seventh-largest
automobile company across the globe. Further evaluating the positive impact of
internationalisation strategy adopted by Toyota. In last, the study represents the future potential
risk that may be associated with Toyota.
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