Toyota Case Study

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Toyota Case Study Introduction

Study made by any organization to analyze its internal strengths and weaknesses besides scrutinizing its exterior opportunities and strengths is known as SWOT analysis. For starting a new business or entering a foreign market PESTLE analysis is used as this tool helps in determining macro-environmental factors.

Company Name

Toyota Motor Corporation

Type of industry

Automotive

Headquarters

Toyota City, Japan

Sales / Revenue

$272 billion

Area Served

918.32 km2 (354.57 sq mi)

Number of stores

51

Competition

Mercedes Benz, BMW, Ford, Honda

USP

Wide range of cars, service, distribution network with international presence

Target Group

Zonal and provincial market conditions

Products

Automotive, Luxury vehicles, Commercial vehicles, Engines

Website

http://toyota-global.com/

Toyota SWOT Analysis

Strengths

  • The brand equity is the greatest strength Toyota possess
  • Toyota aims at strengthening its human resources due to which, this automobile company has succeeded in witnessing a workforce of 370,870 skilled employees
  • Toyota runs its business in 28 countries all across the globe due to its excellent global supply chain.
  • It takes care of customer safety by which Toyota was awarded as top safety pick in 2018

Weaknesses

  • R & D department of Toyota is incapable in innovating new technology and use long lost inventions of Germany in terms of technology
  • Price distribution is one of the greatest weaknesses at Toyota $60,000 is charged for a Lexus GX car whereas it has the same specifications as a $40,000 4-Runner.
  • Toyota’s luxury car line ‘Lexus’ failed to impress its consumers

Opportunities

  • Competitor companies are focusing on making environment friendly cars
  • Toyota can invest in its R&D in order to ensure future growth
  • Toyota can invest to develop heavy machinery and robotics in order to diversify its business

Threats

  • There are high chances for competitive companies like Mercedes Benz, BMW, Ford to give tough competition to Toyota
  • Rapid price hike of fuel imposed huge threat on cars which consume more fuel

Toyota Analysis

Toyota sells over 10 million cars per year. It manufactures a hybrid vehicle name ‘Pruis’. As per the case study by Toyota, it is the best selling hybrid automobile in the world. Toyota’s loyal helping hands, vast supply chain and customer safety precautions are the elements make Toyota a world renowned brand (Jothi and Kalaivani, 2015).

Inspired from the ideas of Yamauchi et al. (2017), it can be mentioned that Toyota does not prefer to invest money in innovation sector. Instead of making something on their own, they prefer to buy previously used innovations in terms of technology. The case study of Toyota revealed that, Supra paid BMW for engine installation. Consumers pay a generous amount for buying a luxury car however; Lexus which is the luxury line of Toyota is not worth its value. The company does not even invest in making their products of high quality, powerful tech systems while keeping the maintenance cost low (Coetzee et al. 2016).

As per the case study of Toyota, Toyota needs to make hybrid or electric cars or cars that have better fuel economy. Competitive companies are investing in innovations with rapid technology and making fuel efficient cars (Raslavičius et al. 2015). The cars they make are one of the most sold cars in the world which helped them to be 4th positioned in sales revealed the case study done by Toyota. 

Toyota PESTLE Analysis

Political

  • The Labor Standard Act made it mandatory for employers to make their employees work for more than 40 hours a week
  • The Labor Union Act suggests that organization inside a company can be made to improve working and economic conditions of workers
  • World Trade Organization led Japan towards trade liberalization
  • Vehicles in this country require “type approval” on the basis of Automobile Type Approval Guidelines

Economic

  • GDP took a leap of 0.4%
  • 20.9% of total exports made by Japan are vehicles which are making a business of $154.1 billion
  • Unemployment rate of Japan is 5.1% with 3.34 million people being unemployed among 65.9 million labor force

Social

  • Japan has a population of 12.68 crores with an annual decreasing rate of 0.2%
  • 60.06% of Japanese belong in the age limit of 15-64years
  • Annual Household Income per Capita in Japan has reached $18,265.314

Technological

  • Vehicle manufacturing companies are using ‘robotics technology’ or ‘artificial intelligence’
  • Industrial products including luxury cars, food packaging and high-performance films use ‘Advanced Biomimetic Technology’

Legal

  • Japanese Patent Law states that an intellectual property is patented by the first party that applies for patenting it.
  • According to Industrial Safety and Health Law, in case health hazard or issue is being reported the company has to take necessary action in resolving the problem.

Environmental

  • The Environment Law 1993 directs the automotive manufacturers to work in the way of innovation to achieve a green future
  • Air Pollution Control act states the manufacturers to manufacture cars meeting the specs given by the government

Analysis

The work style reform law has introduced some new guidelines from April 1st 2019 which has strictly permitted to work not more than 45 hours a week as overtime. Japanese companies have introduced labor unions to improve working conditions and economic status of workers (Kamoto and Scanlan-Dyas, 2019).

In the year 2017, Japan had a GDP of $ 4.87 Lakh Crores which is increasing by 1.7% annual rate (Tradingeconomics.com, 2019).As per the case study of Toyota; Toyota has a major role in the exportation of cars in Japan.

As stated by Liu and Westelius (2017), rather than facing a growth, population has decreased by a rate of 0.27% every year. It is leading Japan towards having 35% senior citizens of the total number of residents. Income-inequality has always been a problem for Japan. Annual Household Income per Capita in Japan has reached $18,265.314 in 2018.

As per the case study of Toyota, car manufacturers of Japan have always given preference in using artificial intelligence or robots. It eliminates the probability of errors in the workplace (Takahashi, 2015). According to the case study by Toyota, Japanese people have developed a technology using the functions and extraordinary structures of living organisms. From the case study of Toyota, legalizing of ownership or patent ship in Japan has simple steps while health and safety is an issue that has always been handled strictly according to Japanese law and enforcement.

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Reference List

Coetzee, R., Van der Merwe, K. and Van Dyk, L.,(2016). Lean implementation strategies: how are the Toyota Way principles addressed?. South African Journal of Industrial Engineering, 27(3), pp.79-91.

Jothi, K. and Kalaivani, P., (2015). A Study on Financial Performance of Honda and Toyota Automobile Company A Comparative Analysis. Journal of Progressive Research in Social Sciences, 2(1), pp.33-35.

Kamoto, W., and Scanlan-Dyas, J., (2019). Automotive. Available at:https://gettingthedealthrough.com/ [Accessed on 20 August 2019]

Liu, Y. and Westelius, N., (2017). The impact of demographics on productivity and inflation in Japan. Journal of International Commerce, Economics and Policy, 8(02), p.1750008.

Raslavičius, L., Azzopardi, B., Keršys, A., Starevičius, M., Bazaras, Ž. and Makaras, R., (2015). Electric vehicles challenges and opportunities: Lithuanian review. Renewable and Sustainable Energy Reviews, 42, pp.786-800.

Takahashi, M., (2015). Sheet steel technology for the last 100 years: Progress in sheet steels in hand with the automotive industry. ISIJ International, 55(1), pp.79-88.

Tradingeconomics.com (2019). Japan GDP Growth Rate. Available at: https://tradingeconomics.com/ [Accessed on 22 August 2019]

Yamauchi, T., Yoshikawa, T., Takamoto, M., Sasaki, T., Matsumoto, S., Kayashima, K., Takeshima, T. and Takahashi, M., (2017). Overwork-related disorders in Japan: recent trends and development of a national policy to promote preventive measures. Industrial health, pp.2016-0198.

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