Strategic Management Report: Toyota Company's Competitive Analysis

This report presents a comprehensive strategic analysis of Toyota Company, examining its industry environment and organizational capabilities. It begins with an introduction and scope of evaluation, followed by a detailed company analysis, including its vision, mission, and competitive advantages. The report then delves into a SWOT analysis and a resource-based view, exploring both tangible and intangible resources. Part 2 focuses on strategy, including Porter’s Five Forces and generic strategies like cost leadership and broad differentiation. The report also considers mergers, acquisitions, and alliances, culminating in recommendations and a conclusion. The analysis highlights Toyota's strengths in market position, R&D, and quality products, while also addressing weaknesses like product recalls and declining sales. The report emphasizes the importance of innovation, particularly in hybrid and electric vehicles, and provides insights into the company's strategic approach within the competitive automotive industry. This report provides a complete overview of Toyota's strategic direction and competitive landscape, offering a comprehensive understanding of the company's performance and future prospects.

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Strategy Management
Fundamental issues related to strategic management

Research Proposal 2
Contents
Part 1 Industry environment and the organization capability..........................................................3
1.0 Introduction................................................................................................................................3
Scope of Evaluation.........................................................................................................................3
2.0 Company Analysis.....................................................................................................................3
2.1 Vision and Mission....................................................................................................................3
2.2 Competitive Advantages............................................................................................................4
3.0 Swot analysis.............................................................................................................................4
4.0 Resource based view (Tangible and Intangible)........................................................................6
Part 2................................................................................................................................................8
5.0 Strategy......................................................................................................................................8
6.0 Porter’s Generic Strategies........................................................................................................9
7.0 Mergers, Acquisition and Alliances........................................................................................10
8.0 Recommendations....................................................................................................................10
9.0 Conclusion...............................................................................................................................11
References......................................................................................................................................12

Research Proposal 3
Part 1 Industry environment and the organization capability
1.0 Introduction
The main aim of this report is to focus on the environmental analysis and organizational
capability. Toyota Company will be taken into consideration in order to accomplish the
researches in which various factors will entail that have contributed to the poor performance of
Toyota Company. Along with that strategies will be discussed under this assignment for the
purpose of growing the business of the company. At last, the recommendations will be made in
order to bring better change within the company so that they can stay in the competitive market
for a long time.
Scope of Evaluation
2.0 Company Analysis
Toyota Company is an automobile Japanese company that connects in the manufacturers, design,
and sale of commercial vehicles, passenger cars, and connected components and accessories
majorly in Japan, Europe, Australia, and Asia. The company has dealt in a number of brands
such as Hino, Daihatsu, and Lexus. It is the eighth main company in the world and the
company’s revenue was $213 billion and the employee of the company is around 333,498 people
(Toyota, 2018). The core competence of Toyota Motor Corporation is its aptitude to produce
automobiles of immense excellence at best prices, thus providing a worth for money to the
clients.

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2.1 Vision and Mission
The vision of Toyota Corporation
The vision statement of the company shows the long-term strategic direction of the company for
the long term in the automobile industry. The vision statement of the company is “Toyota will
lead the way to the prospect of mobility, inspiring lives around the world with the safest and
most accountable ways of affecting people”.
There are major areas of Toyota company is included in the vision statement. It entails the
company aims to accomplish the leadership in the worldwide market. along with that the vision
statement of the company shows that the company goes ahead on the basis of the quality,
environmental conservation, and innovation. Hence, the company involves corporate social
responsibility in its vision statement.
The mission of Toyota Corporation
The mission statement is different for its businesses in various markets. In the context of the
automobile manufacturing and sales, the strategic action in technology is entailed in the mission
statement of the company. hence, the mission statement of Toyota company is as follows:
“Create vehicles that are popular with consumers.” It shows that the company provides
vehicles with full of safety to prevent the lives of customers as well as overall development of its
products to make customer satisfied.
 Provide Optimization of infrastructure to local communities
 Truth and integrity
 True mutual trust with customers
 Contribute to economic development

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 Address employees’ education under “Genchi-genbutsu” philosophy,
2.2 Competitive Advantages
The company has distinctive competencies in its production system which is known as the
“Toyota Production System”. This system is dependent on the Lean Manufacturing concept.
There is involvement of some innovative practices such as Kaizen, Six Sigma and Just In Time.
The company has put a lot of efforts in making distinctive image of the company all over the
world. This different capability has led to a cutthroat benefit that has specified Toyota a market
leader position and sustainable brand name.
3.0 Swot analysis
Aspects Rank
Strengths  Strong market position
and brand recognition
 Strong focus on R&D
 Extensive production
and distribution
network
 Great Quality Products
 Innovative
Organizational Culture
2
1
3
4
5

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Weaknesses  Product recalls could
affect brand image
 Declining sales in key
geographic segments
 Poor allocation of
resources as compared
to peers
 Vulnerable supply
chains
 Small profit margins
on low priced
subcompact cars
2
3
4
5
1
Opportunities  Growing global
automotive industry
 Toyota poised to
benefit from growing
partnership with BMW
 Strong outlook for the
global new car market
 make use of the
growing interest in
ecological and
environmentally-
2
1
3
4
5

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friendly cars
 Investment on
Innovation
Threats  Extreme rivalry
 Valuing Japanese Yen
a main unease
 Natural disasters could
impact production
structure
 a constant threat from
exchange rates
 the threat of the rise in
raw material costs
4
1
3
4
2
The above-mentioned table shows that Toyota Company has some factors in the form of the
strengths, weaknesses, threats, and opportunities that can impact the performance of the
company. The company has one of the good positions in various geographies across the world.
The company has a market share of 13.4% in Asia, 12.2% in North America and 4.3% market
share in Europe (Nkomo, 2013). This represents the strength of the company, along with that, a
strong focus on R&D operations at 14 facilities globally. The company is poised to advantages
from the developing partnership with BMW. It shows the huge chance for the company to
expand its business globally in which the company is signed a memo of sympathetic motive at
long-term strategic collaboration in the fields of technological (Rajasekera, 2013). Hence, the

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firm viewpoint for the global new car market joined with the launch of a new product in the
company that gives a growth opportunity for the company (Vilanova, Lozano and Arenas, 2009).
In the context of the weaknesses, it has been found that the company has made various products
recalls in the recent past, which could influence the brand image and entire sales of the company
(Lucky and Takim, 2015). For instance, in 2011, there were 111,000 models which recalled
because of the damage to aspects of the substrate and potential shutdown of the hybrid system
(Piotrowski and Guyette 2010). Along with those declining sales in key geographic is another
weakness of the company which can become the major threat for the company in future terms.
There is a massive fear of intense competition as amplified competition can lead the company
towards the lower vehicle unit sales and a great catalog. The major threat for the company is the
appreciating Japanese Yen as the company has the nature of sensitive in the context of the
fluctuations in foreign currency exchange rates (Heller and Darling, 2011). It has been evaluated
that the great bonding of the Japanese Yen adjacent to the US dollar that would have the material
unfavourable consequences on operating result of the Toyota company that can put negative
impact over the valuation of the company (Victor and John, 2011).
4.0 Resource based view (Tangible and Intangible)
Tangible resources
Physical Asset
Physical assets are essential resources of Toyota Company as the company owns the physical
resources in the structure of manufacturing plants, equipments, offices and vehicles. It has been
found that in 2014, the total value of the property of Toyota Company stood at $76 billion.

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Financial Resources
The financial condition of Toyota Company is healthy as the revenue of the company is
amounted to $ 228 billion, developing its top the largest company in the relation of the
revenues. The net income of the company is around $ 4.5 billion in 2014.
Human resources
Toyota Company has around 300,000 employees all over the world. The company provides
quality services to them and involve them to make important decisions on the behalf of the
company (Magee, 2008).
Intangible resources
Intellectual resources
It has been found that the company has a number of intellectual resources. The brand of Toyota
is significant all over the world that attracts a number of customers to buy the product of them.
the company has categorized its brand for all kinds of people. it has many brands such as
Corallo, Lexus, RAV 4, Probox and SUV.
Technical resources
In the context of the technical resources, Toyota Company is a market leader when it comes to a
manufacturing technology. To enhance the manufacturing operation, the company is eager to
invest in the technology (Monden, 2011). Along with that, the company uses this technology to
help activities of the management and operation.
Goodwill

Research Proposal 10
Goodwill is the term which is related to the value of the company beyond the asset value of the
company. The image of the company has been depicted by goodwill.

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Part 2
5.0 Strategy
Porter’s 5 forces
Porter’s five forces of Toyota company are mentioned below which would be helpful in
elaborating the condition of the company in the competitive market.
The threat of new entry (weak)
The threat of new entry in the context of the automotive industry is weak in the point of view of
Toyota Company. It would not be possible for the new company to invest more in the
automotive industry to compete with existing brands (Heller and Darling, 2011). There is a
number of products in the automotive industry that is majorly differentiated by design and
engineering quality. Innovation act is considered as the barrier for the new entrants since patents
do not permit to involve in the existing markets.
The threat of substitutes (weak)
There is a number of substitutes available in the market that can influence customers to switch
from one product to others. These are train, planes and another type of transportation. Substitutes
can easily offer customers to get a similar price with the same convenient. it shows the weak
factor of the threat of substitutes (De Felice, Petrillo, and Autorino, 2014).
Bargaining power of buyers (strong)

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There are many buyers in the market that prefer the car to get more convenience. Buyers have
many options in the automobile industry to choose the car which makes their nature flexible in
the decision-making process (Dul and Neumann, 2009). Buyers are most sensitive about the
price and their decisions are widely based on the cost of the vehicle.
Bargaining power of suppliers (weak)
The company has many suppliers and in a number of cases, suppliers are a subsidiary of
companies. Suppliers of the company do not pose a threat of forwarding integration. Company
uses a different kind of materials to manufacture the product and the supplier can switch from
one brand to another due to the availability of a number of companies in the same industry
(Takeuchi, 2008).
Competitive rivalry
The company has a massive range of competitors in the industry such as Hyundai, Volkswagen,
Ford, BMW, Audi, Mercedes, and GM. However, the industry is large but it has the mature
feature. Customers of this industry are loyal to their brands and there is the moderate threat of
being acquired by the competitor.
6.0 Porter’s Generic Strategies
The cost leadership generic strategy and the broad differentiation generic strategy are used by
Toyota Company. The aspect of cost leadership includes the reducing the cost of operations and
the price of the products. The broad differentiation strategy entails improving the uniqueness of
business and product to make sure competitive advantages of Toyota Company. A major aim of
the company is to correspond to generic strategy of Toyota Company for the purpose of reducing

Research Proposal 13
the production costs to achieve cost leadership. Just in Time manufacturing method has been
implemented by the company which is known as the Toyota Production System (Kaneko and
Nojiri, 2008). It is the procedure that helps company to address the impact of waste over the
company and inventory cost and response time. As a result, the company is able to generate the
maximum business efficiency. Innovation is the major impact that leads to attractive products for
all market segments. The company differentiates itself from its competitors on different levels.
First and primary, the quality products of the company help to build and invent designs in order
to develop the brand image of the company globally. The company has invented hybrid and
electric car that represents the stand of the company in the innovative market. There is another
factor which makes difference of this company to another and this factor is the technology which
facilitates company to claim the global leadership position (Datta, 2010).
Source: (Datta, 2010).
To attain the generic strategies of the company, the more focus of the company is on the
intensive strategies.
Market Penetration

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Market penetration is the intensive growth strategy of the company as it helps to support the
growth of the business by attracting and reaching more customers. Toyota makes sure that each
product of the company reaches every market (Hill, 2017).
Product Development
The company uses product development in the form of the secondary intensive growth strategy.
There is an intensive strategy which is used by the company to attain the generic strategy which
helps them for rapid innovation.
Market Development
The company has a global presence as it has been found that the market development is just
considered as the supporting intensive growth strategy for the business. The company growth
significantly by developing its product globally and expand its business internationally
(Kapferer, 2012).
7.0 Mergers, Acquisition and Alliances
It has been announced by Toyota Motor Corporation that a mutual agreement to merge three of
its information technology subsidiaries in January 2019. There are three companies of Toyota
Communication Systems Co., Ltd. (TCS), Toyota Caelum Inc. (TCI) and many more which will
include under the merger process. Each company has its own potential as TCS has the skills of
development of core systems; TDC is specialized in the introduction of networks as well as
infrastructures and TCI in the growth of the manufacturing support systems (Toyota, 2018).
In the context of Alliances, it has been found that Mazda and Toyota have developed a monetary
corporation. The company will take a 5% stake in the smaller company in which Mazda will

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attain a 0.25% stake in Toyota in the form of the deal (Hanley, 2017). The merger of both
companies will take the production cost around $1.6 billion and the number of employees will be
more than 5,000 at the beginning of 2021. It would have the utmost capacity of 300,000 vehicles
(Schilling, 2010). With respect to Toyota Acquisition Strategy, it has been found that the
company has acquired Daihatsu, Cascade Corporation and Hino Ottawa Gatineau.
8.0 Recommendations
Toyota Corporation is the multinational company that leads globally and attract millions of
customers towards its products. However, the company has a number of factors that make it
different from others but there are some suggestions mentioned below in order to make
improvement the system for getting more competitive advantages in the completive market.
It has been analyzed from above mentioned porter’s diamond model that the competitive
performance of the country and the company are interlinked. The national environment of the
country is dynamic that impact the performance of the company. The recommendations are
mentioned below regarding bring improvement within the organization.

Research Proposal 16
 Toyota should carry on embarking on intensive efforts to reinforce its organization
platform and elevate the value of corporate.
 It is vital for the company to promote its business and cost structure in order to reform to
realize solid management platforms in order that it can provide a response in a quick
manner to the amending market circumstances.
 Toyota should keep focusing on the expansion of the business into emerging countries
with the help of monitoring the conditions of the market (Debnath, 2015).
 It is vital for the company to consider developing Lexus in a priority in the market of
China. This will help it to become advantageous with other car manufacturers in the
luxury segment.
 It is vital for the company to follow the improvement of environmentally energy-saving
products at the time of developing the functions and services which is demanded by the
customers. There should be three businesses in the company which should be focused by
the company (Chen, Lindeke and Wyrick, 2010). These are “solutions” in the range of
materials handling equipment, “key components” in the range of car air-conditioning
compressors and last one is “mobility” in the range of focusing on the domains of
vehicles as well as agencies.
 Toyota should focus on the power of the workplace which can be increased by taking
consideration of the use of human resources and endeavor to natural worldwide human
resources.
 The company must focus to sustain industries and social infrastructure around the world
by constantly supporting the products and services that define the needs of the customer
for the purpose of contributing to producing a concerned society.

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9.0 Conclusion
It has been concluded from above discussion that the strategic management has significant
importance within the business that helps the company to grow in the competitive market.
Toyota Company has put a lot of efforts in making an effective working environment. This
report has entailed the description of the company with a mission and vision statement. Along
with that the swot analysis has been done under this assignment in order to elaborate the section
of the strengths, weaknesses, opportunities, and threats by which the company can overcome the
issues. Innovation is the core heart of the Toyota Company that helps the company to remain in
the completive market by becoming a market leader. Toyota has a strategic tool to make an
effective culture of the company and to focus on continuous development by implementing the
Just In Time approach. In the context of Porter's generic strategy, it has been found that the main
focus of the company is on the cost leadership strategy as it makes a product by taking
consideration of the affordability of the customers.
References
Chen, H., Lindeke, R.R. and Wyrick, D.A., 2010. Lean automated manufacturing: avoiding the
pitfalls to embrace the opportunities. Assembly Automation, 30(2), pp.117-123.
Datta, Y., 2010. A critique of Porter's cost leadership and differentiation strategies. Chinese
Business Review, 9(4), p.37.
De Felice, F., Petrillo, A. and Autorino, C., 2014. Maintenance Strategies and Innovative
Approaches in the Pharmaceutical Industry: An Integrated Management System
(IMS). International Journal of Engineering Business Management, 6(Godište 2014), pp.6-29.

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Debnath, S.C., 2015. Environmental regulations become restriction or a cause for innovation–a
case study of Toyota Prius and Nissan Leaf. Procedia-Social and Behavioral Sciences, 195,
pp.324-333.
Dul, J. and Neumann, W.P., 2009. Ergonomics contributions to company strategies. Applied
ergonomics, 40(4), pp.745-752.
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of the remote causes and effects of Toyota's transmission malfunctions in cars, International
Journal of Engineering and Applied Sciences, ISSN: 2394-3661, Volume-2, Issue-8, August
2015.

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Magee, D., 2008. How Toyota became# 1: leadership lessons from the world's greatest car
company. Penguin Books India.
Monden, Y., 2011. Toyota production system: an integrated approach to just-in-time.
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2018.
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https://newsroom.toyota.co.jp/en/corporate/21269526.html. Accessed on 27th Nov 2018.

Research Proposal 20
Victor, L. H., and John, R. D., 2011. Toyota in crisis: Denial and mismanagement, Journal of
Business Strategy, 32(5), 4-13.
Vilanova, M., Lozano, J.M. and Arenas, D., 2009. Exploring the nature of the relationship
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