Business Strategy: Toyota's Porter's Five Forces Analysis Report

This report provides a detailed analysis of Toyota's business strategy, focusing on Porter's Five Forces framework to evaluate the competitive landscape. It examines the bargaining power of suppliers and customers, the threat of new entrants and substitutes, and the intensity of rivalry within the automotive industry. The report further explores Toyota's mission, vision, and objectives, highlighting its commitment to customer satisfaction, technological innovation, and environmental sustainability. It delves into Toyota's core values, including high product quality and ethical business practices, and discusses various strategic approaches like market penetration, market development, and product development, as well as the application of the Ansoff matrix. The report concludes with an overview of how these strategies contribute to Toyota's market share and brand image, emphasizing its dedication to customer trust, technological advancements, and corporate social responsibility.

BUSINESS
STRATEGY

Table of Contents
.........................................................................................................................................................2
INTRODUCTION...........................................................................................................................3
LO 3.................................................................................................................................................3
P 3 Toyota Porter's five forces analysis .....................................................................................3
LO 4.................................................................................................................................................5
P 4 Mission, vision and objectives of Toyota ..........................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A business organisation is always known by its work and efficiency of doing that work,
and before any work has to be started the organisation have to build a framework of the process
as how to achieve the set objective within the limited resource and with maximum efficiency for
those planning organisation appoint managers and market analysts who make the plans and all
the strategies for the organisation to be successful, as it helps in proving the business a
competent advantage if the strategic plans are allocated soundly. Report will discuss about the
Toyota's five porter's analysis and strategic planning. Toyota is a car manufacturing company
which was established in 1937 by Kiichirio Toyoda. Toyota manufactures its cars with different
subsidiary brands like Hino, Lexus, Ranz, Daihatsu. Toyota is the world's first company to
manufacture electric cars. It has established its base in UK before the recession hits the world.
LO 3
P 3 Toyota Porter's five forces analysis
Porter's five forces is called diamond model which helps us to understand the industry and
analyse its profits.
Power of suppliers
The bargaining power of suppliers in situation of Toyota is powerless as the company has
a widely distributed in many suppliers , as a result the suppliers cannot raise their voice for any
problem for against Toyota. As these suppliers are in small scale and can't go against Toyota.
And if the suppliers go against the company then the company can terminate that supplier which
will affect only the suppliers as the supplier will face a business loss ,as the Toyota has many
choices available in the market and can always replace them. As Toyota will always want to
maximize its profitability with lowering the costs.(Scholes, 2015) The company must put
emphasis on the establishing a strong base of supply chain of suppliers. Toyota is also known for
its innovations and techniques and finding alternatives for the production of the cars, which will
help the company to switch to alternatives if any of the suppliers increases the prices of their
goods. Toyota has also wisely created its own raw material supplier chain which is only
dependent on Toyota company to buy its product and this will decrease the chances of
bargaining from the suppliers.
Power of customers

The bargaining power of consumers for Toyota is very high as consumers are the king of
the market and they many choices in the market in the same industry, they can also compare
between different company's cars and then decide according to which one will be more
economical and cost efficient and has good performance and looks goods, with more
comparability in the offered price of the price. So Toyota has to ensure that the customer's
demand and satisfaction should be fulfilled with their wide range of cars in suitable price range
for the customers.(Akter and et.al., 2016) Toyota has a unique selling point as the company
make innovates its technology and designs of the cars which attracts the customers very easily.
Even though the technological advancements done by the company always has some chances
for shift of customers to different companies due to competition in the market. But Toyota can
solve that problem by launching new cars frequently so that customer does not loose hopes and
also lower the bargaining power of the customers which will increase the profits of the company.
New entrants
The threat of new entrants in automobile industry is very low as entering this industry
needs so much knowledge and much capital to invest in it. Toyota is an established company has
not to worry a lot on new entries of competitors in the market and focus more on its efficiency to
deliver its products to its customers and increase its sales and profit margin by it. Toyota has to
try convincing their customers of having their own vehicle and also launch some economical
range of cars with the high efficiency of fuel consumption of that demographic segment. This
will attract the customers to be attracted to buy cars from Toyota corporation. Toyota has to
bring new cars in the market as bringing new products in the market increase the customer of the
company. Toyota has also focused on the alternative fuels for lower the cost of the fuel
expenditure by keeping in mind the disposable income of that particular market. This will give
Toyota a competitive advantage for new entrants and will demotivates them not to establish well
in the market.(Olson and et.al., 2018)
Threat of substitute
Toyota has accomplished in creating a trust in the mind of the customer by delivering
such efficient cars, which ranges for all segments of population which is from lower middle to
upper class customers. But there can be a threat of new public mode transportation which is
effectively cheaper in comparison of buying their own car, in middle and lower middle class this
mindset is very likely to be found.(Higgins , Omer and Phillips , 2015) And the cost of changing

their product is also very low , this kind of substitute can shake the market share of Toyota. The
company needs to find a innovative technologies and strategies to entice the customers to buy
Toyota cars instead of opting public transportation. By launching low cost cars with high fuel
efficiency and suitable for small families can avoid this threat.
Rivalry
Toyota as the top leader in automotive industry promotes aggressive strategies in
promotions and marketing of their products as the company is facing competition by its rivalry
on daily basis. The competition of rivalry is not only about the innovative technologies they use
in their products it also includes prices of the products, design, fuel efficiency, commuter's
comparability and many more.(Amran and et.al., 2016) In some markets Toyota has to compete
with its rivalry and it becomes a cut throat competition many times. To resolve this problem
some major leading automotive companies had made a cartel with their rivals with some
conditions. This means they form a group or association in which they make some rules so that
there can peace be peace in the business as the cost for research and development affects the
profits of the company and any company will not want that.
LO 4
P 4 Mission, vision and objectives of Toyota
Strategic plan
Mission
Toyota have always been the leader company and has always focused on customer
satisfaction with their high efficiency of products with most durable and comfortable experience
of the passengers all over the world. Toyota also focuses on the latest innovation of technology,
they have also put a lot of emphasis on customer safety as safety of customer is Toyota's key
objective and try to reduce the road mishaps . And that can only be possible when the company
provide education to their employees about the rules and regulation of the products and services
they provide. As Toyota focuses on its quality standards which marks the company as more
dedicated in improving its product for better customer satisfaction and see their families happy.
Vision
Toyota has a very strong determination of fulfilling its own standards and is always
invested in the future technology. The company follows a long term strategies with all its
determination. (Schaltegger , Hansen and Lüdeke-Freund , 2016)The company keeps on

innovating its technology with the mindset of environment preservation . The company's
objective is to set a quality standard which all companies in the automotive industry follows it.
Toyota always contributes in corporate social responsibility which promotes the company to be
the leader of the industry.
Core values
Toyota's core value is establishing a high quality of the products. The company is doing
all its work ethically and lawfully. The company motivates their employees in different ways to
achieve their set objectives of the company and provide the customers more efficient products
with increased satisfaction (Toyota Motor Corporation Porter Five Forces Analysis, 2019).
Toyota treats its employees very well and create a very healthy environment for them.
Strategies of Toyota
There are various strategies that can be implemented by Toyota:
market penetration
It is the tactic in which firm can run business in existing market only, if this strategy is
implemented by Toyota then it would get benefit of raising sales in existing market and would be
able to satisfy local buyers. But this tactic will limit the firm in local market only as it would not
be able to gain attention of mass audience.
Market development
In this firm can expand its business in international market. Benefit of implementing this
strategy is that it would help in increasing sales by offering products and services to mass
audience. But as firm is unaware with the new market hence there is changes o getting failed in
the international market.
Product development
The company focuses on cumulative purchase of raw materials at a time at lowest price and will
focus on other aspects of products to increase the profits. . Toyota has to spend too much in the
research and development of the product to be on consistent on its position in the industry.
(Yuliansyah , Rammal and Rose , 2016)
Toyota follows Ansoff Matrix strategy . The company is ensuring its market coverage by
using this strategy. Toyota's marketing strategies also contributes in the growth of the company
which is place strategy, promotion strategy, pricing strategy, distribution strategy.

CONCLUSION
In this report there was detailed information about the business strategies of Toyota and
how does it affect its market share. The company is very determined to what it promises to its
customers to gain the trust of their customers and establish a big brand image in the world. The
company aims in constantly innovating its technology to provide more efficient products with
higher level of satisfaction of the customer. Toyota also focuses on environment and tries to find
the alternative fuels and other technology which does not affect the environment and also
provide comfort to the customer. The company also contributes in corporate social responsibility.
The company uses Ansoff matrix analysis as Toyota is an established company and this strategy
is only used by the companies which are already in the market and this strategies help the
company to grow their business more effectively.

REFERENCES
Books and Journals
Akter S and et.al., 2016. How to improve firm performance using big data analytics capability
and business strategy alignment?. International Journal of Production Economics. 182.
pp.113-131.
Amran A and et.al., 2016. Business strategy for climate change: An ASEAN perspective.
Corporate Social Responsibility and Environmental Management. 23(4). pp.213-227.
Higgins D, Omer T.C and Phillips J.D, 2015. The influence of a firm's business strategy on its
tax aggressiveness. Contemporary Accounting Research. 32(2). pp.674-702.
Olson E.M and et.al., 2018. The application of human resource management policies within the
marketing organization: The impact on business and marketing strategy implementation.
Industrial Marketing Management. 69. pp.62-73.
Schaltegger S, Hansen E.G and Lüdeke-Freund F, 2016. Business models for sustainability:
Origins, present research and future avenues.
Scholes M.S, 2015. Taxes and business strategy. Prentice Hall.
Yuliansyah Y, Rammal H.G and Rose E, 2016. Business strategy and performance in
Indonesia’s service sector. Journal of Asia Business Studies. 10(2). pp.164-182.
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