Category: Toyota

Our sample essay will focus on Toyota and Mercedes competitive advantage and marketing strategy case study.

Introduction

This paper will compare two companies, namely, Toyota and Mercedes, which are among the worlds best automobile manufacturers and sellers. The goal is to examine their competitive priorities and operations strategies. The paper will also discuss how these companies implement and reflect their competition priorities in their processes, procedures, and management practices. In addition, it will provide the details and analysis of these companies processes, discussing how they use the operations to compete. The last part of the paper will give a brief conclusion that provides a forum on which other researchers can use as the basis of their study.

Competitive Strategies

Toyota

Toyota Motor Corporation is a Japan-based multinational manufacturer of automotive. Fane et al. (2003) reveal how it strives to contribute to the development of a more advanced society by making automobiles and running its businesses through the production and sale of vehicles. The company focuses on mass-production of vehicles that are affordable to the low-end customers. In February 2016, Toyota became the worlds 13^th largest business entity with hefty sums of revenue. Two years earlier (2014), Toyota had as many as 338,875 employees across the world. In 2012, it ousted both the General Motors and Volkswagen Group as the worlds largest manufacturers of automobiles by production. It reported having manufactured not less than 200 million vehicles in July 2012. Another prestigious record of Toyota Motor Corporation is that it is the first company in the world to have produced over 10 million vehicles in a single year  a record that it announced in 2012 and 2013 (Toyota 2016).

Mercedes Benz

According to the historical records, this companys name first appeared as Daimler-Benz in 1926. However, its origins date back to the 1901 Mercedes of Daimler-Motoren-Gesellschaft and the 1886 Benz Patent-Mortowagen of Karl Benz. The latter is also the worlds first automobile to use gasoline. Mercedes-Benz is a Germany-based multinational corporation and a branch of the Daimler AG that manufactures automobile. According to Chakraborty (2013), it specialises on making buses, trucks, coaches, and luxury vehicles. Unlike Toyota, this company focuses on the high-end class that seek luxurious and expensive vehicles. Until 2013, Maybach, which is an ultra-luxury brand of Daimler, operated under the cars division of Mercedes-Benz. However, its poor sales led to the stoppage of its production. Currently, it exists under the Mercedes-Maybach that replicates the ultra-luxury models of Mercedes cars. An example includes the Mercedes-Maybach S600 that the company manufactured in 2016 (Mercedes Benz 2016).

Operation Strategies

Toyota

Despite being in the same industry, it is crucial to point out companies usually adopt unique strategies to maintain their competitiveness in the market (Kelton, Sadowski, & Zhu 2014). The world recognises Toyota as a top manufacturer and producer in the automobile industry. It uses a set of operation strategies to achieve its goals and objectives. For starters, Toyota makes its management decisions using the long-term philosophy, sometimes at the expense of the short-term targets. It creates a continuous pattern flow that enables it to bring both the internal and external issues to the surface, including using programmes for levelling out the workload and the pull systems to control production (Fane et al. 2003). The company promotes the culture of avoiding fixing issues in an effort to maximise the quality of production from the start while standardising its tasks to guarantee employee empowerment and continuous improvement (Slack, Brandon-Jones, & Johnston 2016).

Toyota uses a visual control to make sure that no problems remain hidden. It has also adopted the use of highly reliable and tested technologies that help it to serve both its processes and people. It also strives to grow leaders who understand how it works, run their errands in line with the companys philosophy, and/or teach it to the other junior employees. Through this approach, the enterprise develops exceptional teams and people who understand and follow its philosophy. Toyota also expects the staff to respect its extended network of suppliers and partners, including helping them to improve, as well as challenging them (Seuringa & Müllerb 2008; Lintona, Klassenb, & Jayaramanc 2006). From a general perspective, Toyota has a set of strategic measures for managing its operations (Mula 2006).

Mercedes-Benz

Just like Toyota, Mercedes-Benz handles many operations for its management duties. For example, it reorganised its production operations of vehicle architecture in 2014 to reduce fixed costs, lift productivity, and/or improve flexibility. With the new approach dubbed the Mercedes-Benz Operations or MO, Mercedes-Benz aimed at limiting investment for each line of model. The new system helped the company to move away from a manufacturing programme run by individual factories to a system of learning that revolves around design lines and vehicle architecture (Zhua, Sarkisb, & Laic 2008).

Another strategy that this company uses to gain competitive advantage over its rivals involves implementing volume growth with a stable workforce that can help it to increase efficiency. Unless it has well-established staff members, Mercedes-Benz is likely to struggle to improve the level and quality of production. Reducing the HPV (Hours per Vehicle) production by nearly 40 percent in a span of 10 years is a significant move that helps the Mercedes-Benz to cut down overproduction. Boysen, Fliedner, and Scholl (2010) reveals how it also standardises its plants to ensure a blend of the plans with the actual operations.

Competitive Priorities

Toyota

Flexibility

Awwad, Khattab, and Anchor (2013) regard a flexible business entity as one that responds to the changes in circumstances promptly. Toyota produces vehicles in five brands, which give it more room to shift towards the model with high demand. These approaches are strategic, tactical, and operational since they help the company to meet the buyers needs, gain competitive advantage over its competitors, and/or balance its production level (Awwad, Khattab, & Anchor 2013). In fact, in July 2014, Toyota was Japans largest company by both market capitalisation and revenue. In general, the company is the market leader in selling hybrid electric vehicles around the globe and one of the worlds largest corporations that promote the adoption of the same (hybrid electric vehicles) by the international markets.

Quality

Unless a business can provide services or produce products of high quality, it cannot compete in the marketplace (IfM 2016). Although Toyota received its first Award of Quality Control at the early stages of the 1980s, it has faced quality problems in more than one instance due to its use of the recall programme (Wilhelm & Camuffo 2016). However, it is dedicated to manufacturing quality vehicles that help it fetch high sales year after year. With this tactical strategy, Toyota finds it easy to command a significant market share (Barnes 2008). Historically, Toyota Motor Corporations founder, Kiichiro Toyoda, established it in 1937 as a spinoff from Toyota Industries, his fathers company, to manufacture automobiles. However, Toyodas company became operational when it was still a branch of Toyota Industries in 1934 when it made the first machine referred to as the Type A Engine. Two years later (1936), it created the first passenger car dubbed the Toyota A. Currently, the company manufactures cars in various brands such as Toyota, Lexus, Daihatsu, and Ranz among others.

Cost

Being global merchandise, Toyota uses three cost strategies to cater for customer demands, earn profits, and/or fight its competitors. The company practices cost leadership by charging lower prices relative to its competitors, as well as those of standardised and related products. It also practices economies of scale. Toyota also upholds cost differentiation where it provides unique products (the brands of vehicles), conducts research, markets its products, and/or adopts a flexible mode of production. The company also uses cost focus where it charges its products according to the geographic location. Cost is a strategic, tactical, and operational measure that Toyota deploys to attain its consumers requirements, attain competitive edge over its rivals, and equilibrium its production capacity (Slack & Lewis 2008).

Time

Delivery is considered a competitive priority because buyers focus on satisfying their wants and needs at the right time and in the right quantity. Toyota is a master of timely deliverance of products, a strategy that enables to lead in production and sales of vehicles. For example, it became the first company in the world to have produced over 10 million vehicles in a single year between 2012 and 2013. Timeliness is a strategic, premeditated, and an effective measure that the company uses to achieve its clients demands, competitive benefit over its contestants, and a sense of stability in its manufacturing level.

Mercedes-Benz

Flexibility

Given its flexible approach to manufacturing luxury and ultra-luxury vehicles, Mercedes-Benz cars operate under two divisions  Production of Smart Cars and Mercedes-Benz. Since it recognises the economic constraints and the rise in fuel levy, it has also resorted to manufacturing battery-electric and full-electric vehicles to cater for the financial pressures of its customers. Mercedes-Benz uses flexibility for strategic, reasons to remain a top-notch company in the market. For instance, the company has two subsidiaries, namely, Mercedes AMG and Maybach. It also has one alliance, China. In the latter, Daimler AG works in partnership with BYD Auto to manufacture and market battery-electric cars called Denza within China. Out of the collaboration, Daimler AG announced in 2016 that it planned to sell Mercedes-Benz brands of all-electric vehicles in China. In 1999, Mercedes-AMG became a subsidiary of Mercedes-Benz of majority ownership when it became an integration of the DaimlerChrysler.

Quality

Since it is one of the worlds top manufacturers of sumptuous and ultra-luxury vehicles, Mercedes-Benz values the production of high-class cars. Hence, it focuses on making durable, unique, and aesthetically attractive cars. The production of quality products is a strategic measure that helps Mercedes-Benz to maintain the luxury status, gain competitive edge, acquire high profits, and/or control its production level (Sousaa & Vossb 2008).

Cost

Since Mercedes Benz does not manufacture as many vehicles as Toyota, it charges high prices for its cars. Currently, it has recognised the financial limitations and rise in the price of gas. It has also adopted the making of battery-electric and full-electric automobiles to accommodate the financial pressures of its customers. Mercedes-Benz uses cost as a strategic and tactical measure for ousting its competitors in revenues and sales, as well as bridging the gap between it and the companies that produce large volumes of vehicles (Hetzner 2014).

Time

Time management is one of Mercedes Benzs best qualities that enable it to run its business operations, such as the yearly models and car nomenclature. The lovers of Mercedes-Benz car brands are accustomed to new models that come almost on an annual basis. For that reason, timeliness is a strategic method that enables it to meet its annual and periodic targets such as new models and car nomenclature. It is also tactical as the Company uses it to raise the bar for its competitors.

Company Processes

Since they are multinational manufacturers of automobile, Toyota and Mercedes-Benz use a range of procedures that give them the competition edge over their rivals (Kouvelis, Chambers, & Wang 2006 ). Some of the processes that they share include working in partnerships with other companies and opening branches in various parts of the world. These strategies enable them to expand their operations across the world. Every company seems to have a particular plan that defines its business operations relative to other automobile companies. Toyota depends on producing more vehicles to a significant market share where it can earn more revenues compared to its competitors whereas Mercedes-Benz manufactures most luxurious and expensive vehicles to achieve similar goals.

Conclusion

Business performance is a reflection of the enterprises level of competition. Those that compete best get high rewards such as high sales, a significant market share, and a large customer base among others. On the contrary, less ambitious ventures do not enjoy similar rewards. As outlined in this paper, a review of the operations of Mercedes-Benz and Toyota reveals that they have good competitive strategies. While the latter tends to rely on mass production for ousting the other companies, the previous one uses quality and pricing to its advantage. In addition, the two companies have adopted perfect methods managing competition. Although this paper focuses on Mercedes-Benz and Toyota, it forms a basis in which other researchers can compare any set of businesses.

References

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Chakraborty, S 2013, Redefining excellence, Human Capital, vol. 1, no. 1, pp. 24-29.

Fane, G, Vaghefi, M, Van Deusen, C & Woods, L 2003, Competitive advantage the Toyota way, Business Strategy Review, vol. 14, no. 4, pp. 51-60.

Hetzner, C 2014, Mercedes reorganise manufacturing operations to reduce costs, Web.

IfM 2016, Quality, Time, Cost & Flexibility, Web.

Mula, R 2006, Models for production planning under uncertainty: A review, International Journal of Production Economics, vol. 103, no. 1, pp. 271285.

Kelton, D, Sadowski, R & Zhu, N 2014, Simulation with Arena, McGraw-Hill, New York, NY.

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Mercedes Benz 2016, Mercedes Benz, Web.

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Introduction

In today’s world, no matter where you are, you could see the cars which have the emblem of “TOYOTA” on their bodies. In 2018, Toyota has 51 manufacturing bases in 28 countries or regions and it sells automobiles in more than 170 countries (Figure 1). According to “Best Global Brands 2019 Rankings” conducted by Interbrand (2019), Toyota ranked the 7th in the world. Given these situations, to see the significance of transnational corporations in globalization, this paper tries to focus on Toyota (in this paper, it means Toyota Motor Corporation) and examine the process in which Toyota became such a global-scale company. Besides, the paper sees how Toyota has expanded its business into foreign markets under the trade conflicts between Japan and the U.S. In addition, in understanding more about Toyota as a contemporary transnational corporation, the paper tries to cast an eye on its global images and labor issues. To sum up, through the whole paper, I will argue how Toyota has grown into such a huge global company by seeing its historical development, and show some distances between its global discourses and practices, specifically focusing on its labor issues.

The process in which Toyota became “global”

This section sees mainly when and where Toyota broadened its business overseas, and then, focusing on the United States, how Toyota succeeded in becoming a global automobile company under the trade conflict. Toyota’s history as a global company began with Japanese postwar economic growth. After the WW2, as the domestic economy was recovered, Toyota had rapidly grown into the top automobile company within Japan. In fact, in 1955, the amount of selling cars by Toyota was 7,055, which was about 13 times larger than the one in 1950(Toyota, 2012). As the domestic market was highly matured, Toyota began to look at foreign markets by the 1950s. Although its overseas expansion started from China in accordance with national policy, after The Foreign Exchange and Foreign Trade Act was established in Japan to enhance free trade doctrine in 1949, it began to exports to wider areas (Toyota, 2012). In 1955, Toyota started exporting “Land Cruisers” to Brazil or Columbia, where four-wheel-drive cars was demanded for transportation in oil mines or large firms, and subsequently, it began to export to Myanmar, Australia and Thailand (Toyota, 2012). However, around 1960s, third world countries tried to implement import substitutions and produce automobiles domestically rather than importing. Considering those policies and its own sourcing efficiency, Toyota started establishing its own plants overseas. By 1970, Toyota made 17 plants mainly among South East Asian and South American countries, and the amount of offshore production was 75,575 cars (Toyota, 2012). Additionally, at that time, Toyota’s export was conducted through “knock-down kit,” which is defined as “a production method whereby all of the parts of an automobile are delivered as a set and assembled locally” (Toyota, 2012). This system made it possible for foreign governments to admit Toyota’s export to support domestic production. Like these, after domestic market was matured in 1950s, Toyota aimed to expand its business mainly around South America or Asia, and at the same time, tried to do some attempts to overcome barriers of exporting through overseas production or “knock-down kit.”

In the historical analysis of Toyota, it is also important to see Toyota’s expansion in the United States under the trade conflict. The first Toyota export to the United States was in 1957 but at that time, American automobile industry was in its peak prosperity. In 1955, the big three American automakers, GM, Ford and Chrysler, had 95 percent of the domestic market share and 60 percent of world production (Bernstein, 1997). In such situations, Toyota’s effort to export its cars to the United States could be described as “laughable” (Bernstein, 1997). However, in 1980, the total demand of automobiles in the United States decreased by 16 percent but by contrast, the U.S. market share of Japanese automobiles increased 21.3 percent (Bernstein, 1997). The reasons of the dramatic growth of Japanese automobile industry are discussed in various ways, but the one of them could be Japanese cars’ high performance. Although after 1960s, American automakers focused on the design or comfortableness of cars, Japanese companies had to improve its product quality to compete in its developing domestic market (Bernstein, 1997). However, eventually, these successes led to the huge backlash from the United States. For example, United Auto Workers (UAW), one of the largest labor unions in the United States, argued that Japan was “exporting unemployment” (Toyota, 2012). Eventually, from 1981, Japanese government agreed its voluntary export restraint to the United States, which forced Toyota to make the decision of the local production within the United States (Toyota, 2012). As mentioned above, before that time, Toyota had already started offshore manufacturing but most of its plants were in relatively developing countries which have lower labor cost or easy access to raw materials. However, to avoid the trade conflict with the United States, Toyota determined to do its production in one of the biggest developed countries. In 2011, the amount of completed automobile production in North America was the largest and accounted for 31 percent of all offshore production in Toyota (Figure 2). Therefore, it could be said that the trade disputes between Japan and the United States allowed the growing of Toyota’s offshore manufacturing in the United States, a huge developed country.

Toyota’s global image and its labor issues

To see the discourses and real practices in globalization, this section examines Toyota’s global image and its labor issues, that lied behind the image. When you see the website of Toyota, you could find “Toyota Global Vision.” There are numerous mentions about Toyota’s philosophy in global business but in whole, it is emphasized two notions, “future” and “high quality”. The vision says that “Toyota will lead the future mobility society” and aim “sustainable growth” (Toyota, 2019). On the header picture of Toyota’s Facebook account page, there are two cutting-edge automobiles and a robot with the words, “start your impossible” (Figure 3). When you look at the annual report for shareholders, recently, Toyota’s net revenue has remained on the same level, which might make Toyota try to show the possibility of its future growth (Toyota, 2019). Besides, in “Toyota Global Vision”, Toyota puts emphasis on its “commitment to quality” or its spirit of improvement (kaizen in Japanese) (Toyota, 2019). In the press conference about the recall of Toyota’s automobiles in 2010, Akio Toyoda, the president of the company, commented “the quality is the lifeblood” of Toyota (J-CAST, Inc, 2019). In addition to those, as one of the most notable global images, Toyota has historically developed its manufacturing management, which is called Toyota Production System (TPS). For instance, Toyota has employed “just in time” production, which is defined as the way to produce just the only demanded amount only when it is needed (Cusumano, 1985). “Lean manufacturing” is also one of the examples and it aims to save mainly seven wastes; overproduction, inventory, motion, defectiveness, transportation, over-processing and waiting (Chiarini, 2014). Through those three distinctive images: future growth, high quality of products, and its original production system, Toyota is trying to create positive image in the world.

However, when it comes to its labor circumstances, Toyota has several issues. For example, there is an argument that Toyota’s production system to eliminate waste as much as possible led to more major accidents than in other Japanese automobile companies including suicides (Akamatsu, 1982). Try to lower the price of products, Toyota has a huge amount of irregular employment from South East Asia, but according to the National Labor Committee (NLC), they are confiscated their passports and forced to work for 16 hours a day and seven days a week, but they are paid less than half of the legal minimum wage (Abowd, 2008). There is also a criticism to point out the fewer female employees in Toyota because of their childbirth leave (Besser, 1996). Furthermore, in Japan, the death of one of the workers in Toyota, Kenichi Uchino, got a huge attention as karoshi, the death from overworking. According to his wife’s calculation, his working hour was more than 144 hours per month but the company reported it as about 45 hours (Toyokeizai, 2008). As these examples shows, Toyota’s attempt to maintain high quality of product leads to some severe circumstances for labor forces.

Conclusion

From 1960s, to gain a new market, Toyota started to expand its export to South American and Asian countries, and at the same time, Toyota tried to do offshore manufacturing to avoid import substitution. In addition, to overcome the trade conflict, on a large scale, Toyota also started doing offshore production in the United States. Regarding Toyota’s global image, there are three characteristics, “future” growth, “high quality” of products, and Toyota Production System. However, by trying to sustain its high quality, Toyota has some severe circumstances for workers, which could be described as the contrast between discourses and realities of transnational corporations. Given these historical processes and contemporary challenges, it is necessary to keep paying attention to the “future” of Toyota in the changing automobile industry.

Introduction/Executive Summary

1.1 Description of context

Since its inception, Toyota Motor Corporation has built its success around the core philosophies of its production system. The company has obsessed over innovation and efficiency throughout all its business processes (Hill, 2011). Presently many of Toyota’s direct and indirect competitors have adopted similar processes and have been able to close in on Toyota’s competitive advantage significantly (Hill, 2011). Due to this, these competitors are prompting Toyota to change or adjust its strategy to deal with this problem.

1.2 Identification of Subject matter

This report takes a close look at the global industry of automobile manufacture. As well as using the case study, ‘Toyota: The Rise of a Global Corporation’ for a company analysis, with specific focus on the revolutionary lean production system used by Toyota and a comparison with the traditional mass production process. Through a SWOT analysis this report identifies weaknesses and problems that the company faces and in conclusion hopes to offer possible solutions and recommendations.

2. The Global Industry

2.1 Global Industry analysis

Toyota Motor Corporation is a major player in the vehicle manufacture industry. The industry is in better place than it was five years ago, over that time the industry has grown by 4.5% to reach the $3 trillion revenue it’s acquires today. In this timeframe the number of businesses has declined by -0.6% and employee rate has grown by 4.4% (Statista, 2019). In this time the automobile industry has been turbulent, seeing fuel prices rise steadily and environment concerns have shifted consumer preferences away from high fuel consuming vehicles to more eco-friendly cars. Global initiatives such as the Paris Agreement has shaken up the automobile market and several companies have embraced the change in order to comply with the stricter emission laws on new vehicles. These companies have worked on diversifying their small car productions with electric vehicles. While there are still automakers that are resistant to change as they are still anticipating that the cost of fuel will inevitably contract. Fuel prices did drop in 2008 after the US financial crisis, forcing many western nations to follow the US into recession (Krauss, 2008). The industry has seen large declines in revenue, such as the production and revenue fall in 2009, however the industry has seen an average growth of 2.2% per year (Statista, 2019). Through the last five years, Brazil, Russian, India and China have all experienced growth that has enabled the manufacture of vehicles. A rise in the standard of living in these country’s has facilitated an increase in disposable income which in turn has led to a surge in demand for automobiles. Many manufacturers have set up plants in these developing countries to gain a foothold in these markets and benefit from lower production costs. By 2020, almost a 50 percent rise in global profits for automotive OEMs is expected (McKinsey & Company, 2013). The new profits will come mainly from growth in emerging markets. Soon, internet connected car technologies and driverless cars are set to stir up another revolution in the motor vehicle sector and manufacturers will be faces with a variety of new challenges.

2.2 Demand Determinants in the Automotive Industry

Global vehicle demand is strongly connected to the prices of fuel and automobiles, the disposable income per capita, the availability of public transport, economic development and product innovation. In contrast, the factors that determine supply can be, the cost of inputs and raw materials, technological advancements and taxes. Raw materials are hovering at a six-year high, and automakers are wrestling with the volatile cost of steel and plastics (Sedwick, 2018). Thus, increasing product prices. However, on the demand side where disposable income determines customer demand. Major economies such as the U.S, Japan and China are experiencing all-time highs of increased disposable income (Trading Economics, 2019), thus the tendency to purchase luxury goods such as motor vehicles increases as they are now more affordable. Fuel price fluctuations also influence the demand for vehicles by type, for instance during times of high fuel prices more fuel-efficient vehicles are sought after.

2.3 Competitors and Market Share

Market share concentration in the automobile industry is low as the largest automakers are estimated to account of about a third of the total global revenue. Toyota to date are leading in the market share for automobiles holding 9.46% of the market, followed by Volkswagen (7.38%), Ford (5.83%), Nissan (5.42%), Honda (5.39%) with 66.52% being held by various other smaller car makers (Statista, 2019). (See appendix 1).

• Competitors –
• Competitor: Volkswagen Group
• Founded in: 1937 (81 years)
• Location: Headquarters is in Wolfsburg, Germany
• Size: Volkswagen own 100 production facilities across 27 countries
• Product/service range: Automobiles, commercial vehicles, internal combustion engines, motorcycles and turbomachinery.
• Production Output: 11,018,000 units per year
• Market Share: 7.38%
• Competitor: Ford Motor Company
• Founded in: 1903 (115 years)
• Location: Headquarters in Michigan, U.S.
• Size: Ford have 62 plants worldwide
• Product/Service range: Automobiles, Luxury vehicles, commercial vehicles, automotive parts, pickup trucks and SUVs.
• Production Output: 6.6 million units per year
• Market Share: 5.83%
• Competitor: Nissan Motor Co., Ltd.
• Founded in: 1933 (85 years)
• Location: Headquarters in Yokohama, Japan
• Size: Nissan have 45 facilities across 28 countries
• Product/service range: Automobiles, luxury vehicles, commercial vehicles, outboard motors, forklift trucks.
• Production Output: 5,556,241 units per year
• Market Share: 5.42%
• Competitor: Honda Motor Company, Ltd.
• Founded in: 1948 (70 years)
• Location: Headquarters is in Tokyo, Japan
• Size: 31 plants in across 16 countries
• Product/service range: Automobiles, commercial vehicles, luxury vehicles, motorcycles, scooters, electric generators, water pumps, lawn and garden equipment, rotary tillers, outboard motors, robotics, jet aircraft/engines, thin-film solar cells and telematics.
• Production Output: 5 million units per year
• Market Share: 5.39%

3. Company Analysis

3.1 Summary of Toyota

The Japanese company Toyota Motor Corporation is a major player in the vehicle manufacture market that designs, produces, assembles, both commercial and consumer vehicles and their associated parts. Toyota has a strong distributing presence in many developed countries and is currently the most controlling vehicle manufacturing corporation internationally.

3.2 Brief History of Toyota

Toyota began in 1933 as a small motor vehicle division of the notable Toyoda Automatic Loom Works. Due to the Japanese war with China, automobile production was endorsed by the government and in 1934 (Hill, 2011) the company produced the engine that would power its first vehicle. Not long after the conclusion of the conflict in 1937 TMC split from its parent company. During World War 2 Toyota was contracted to produce trucks for the Imperial Army. Following WW2, Toyota experienced significant economic strife and was near bankruptcy but was revived by an order from the US in Korea (Hill, 2011). The next notable advance was the development of a separate sales subsidiary, aptly named the Toyota Motor Sales Co. Within the same decade, the Crown became the first vehicle Toyota sold on the United States Market. During 1957 Toyota built both an American and a Brazilian plant. The company’s focus changed to global expansion during the 1960’s, penetrating the European market in 1962 (Upathamwaranon, Guo, 2016), and within the decade Toyota had built a strong foothold in the global motor vehicle market. Toyotas global presence continued to rise in the next few decades, with plants being built throughout America and Europe. In 2008 Toyota experienced a slump largely due to the US economic recession. Recently Toyota has recalled and stopped production of multiple models over its lifetime, in 2012 Toyota declared a settlement of over US$1 Billion to settle a lawsuit due to mechanical problems in some of its vehicles.

As of 2018, Toyota Motor Corporation boasts a net revenue of USD$263 Billion, a production output of 8,964,394 units, and 369,124-member strong workforce (Toyota Motor Corporation, 2018).

3.3 Analysis of Toyota’s production process

The Toyota Production System (TPS) is a business system invented by Toyota that is centered around the smoothing of processes and the institution of a constantly improving atmosphere. It is structured as a set of tools that are used in all facets of Toyota. It controls everything from the design of new products and their manufacture, company logistics, to how the company interacts with suppliers and clients. Some of these tools include, Kanban, Autonomation, and Jidoka. The core philosophy of the system is the optimal allocation of resources and the identification and steady elimination of waste in order to improve the flow of work. By improving production flow and efficiently applying resources, Toyota can produce higher quality goods in a shorter time.

TPS as two main philosophical bases. The business theories of ‘Just in time’ and Jidoka. Just in time refers to the efficient use of allocated resources and the manufacture of only what is required, and when. Jidoka, means Autonomation, a cost-efficient form of automation where the machine facilitates the detection correction of production abnormalities. It is a quality control process that prevents the manufacture of defective products.

The TPS can be understood as a systematic augmentation of the production process with the goal being to reduce the cost of production per vehicle. These resource management activities start at the product design stage and permeate throughout the entire development process. Each department endeavors to attain set times and then to reduce them enacting improvement activities. The process is all inclusive, involving everyone from the engineers to the chief leaders.

3.4 Comparison of Toyota’s Lean production Process and traditional mass production

Strengths

One of the main strengths of the TPS is the JUST IN TIME model. Built on the two opposing philosophies of providing fast and flexible response, and yet building mechanisms and systems that are efficient and waste-free. The concept is to use resources where and when they are needed, while maintaining high standards of efficiency and cost control. The minimization of waste is arguably one of the most significant benefits of the TPS and JIT. Compared to mass production, where long traditional production runs create a massive inventory and tie down significant amounts of capital in storage, with TPS there is almost no inventory required which frees up that capitol. This is another critical advantage of the lean production system and JIT. Toyota has an incredibly strong focus on R&D, operating one of the largest facility networks among the automotive companies, with 15 research facilities in 8 different countries. The efficiency and capital savings from the lean production system allowed Toyota to spend upwards of 1.08 Trillion Yen or A US$10 Billion in the research sector during the 2018 fiscal year (Trefis, 2018). Where the TPS saves money through efficiency, traditional mass production aims to gain massive economies of scale by spreading fixed costs out over large production runs (Hill, 2011). There is a significant risk in mass production, as if the initial machine settings are incorrect long production runs may result in many defects.

Another Innovation of the TPS was the overhaul of the workforce. A short fall of traditional mass production was the poor distribution of labour and the inefficiencies that it caused. Each assembly worker was only given a single task, compared to the variety of tasks members of the TPS workforce were trained to do. The theory behind this was the that worker would gain experience with their task and become more proficient at it (Hill, 2011). Another problem with this system was the vast amount of additional manpower that was required for maintenance. Due to this division in the work force, foremen who have no role in assembly are employed. In TPS the workforce is grouped into teams that are given multiple tasks. Each team has a leader who coordinates the team and performs their role as an assembly line worker. The team also performs non-assembly operations, such as housecleaning and minor tool repair (Hill, 2011). This reduces the need for specialists and fosters a supportive culture for solving problems (Johnston, 2001). In the TPS problems are a deviation from the standard and not the result of any individuals mistake, the cause of the defect is identified, and a long-lasting solution is found that prevents the problem from reoccurring.

Weakness’

With TPS and lean manufacturing in general, little to no inventory Is kept on hand. the TPS depends heavily on the suppliers to reliably provide materials for the manufacturing process. External factors that disrupt this chain e.g., employee strikes and transportation delays can create manufacturing holdups that can cause critical problems for the company. Suppliers may be unable to deal with the demand for products and this can significantly and negatively affect the manufacturing process. Due to this supplier dependency, any disruption along this delicate supply chain can be detrimental to Toyota.

Just in Time allows for no margin of error and vilifies any deviance from optimal process for both the equipment and the workforce. This can significantly affect the motivation and mental health of workers (Mehri, 2006). While this efficiency has led to better performance maintaining such levels may not always be possible. Equipment or labour failure can lead to major inconsistencies within lean and can make the entire operation fall behind. In mass production facilities, there is a backlog/ storage of components, materials and parts housed onsite. If a supply pathway is disrupted, employees can just move over to another machine if one fails or they can retrieve a replacement part/component from storage. Not only does the TPS rely heavily on a possibly volatile source for almost all supplies, the efficient philosophy of lean production means Toyota loses out the benefits of an economy of scale (Sean Ross, 2019).

Opportunities

Mass customisation has recently appeared as a strong source of competitiveness in the motor vehicle market (Blecker and Friedrich, 2006). It is the ability of the firm to quickly design, produce, and deliver products that meet specific customer requirements at close to mass production prices (Dollarhide, 2019). Just in time production is based on producing in small lot sizes which is enabled by set-up time reductions allowed by the kaizen philosophy at Toyota. Just in time provides the ideal situation to implement a mass customization system into the TPS (Abdallah, Matsui, 2009), as JIT can deal with the demand uncertainty associated with offering customized products. It is an opportunity for the TPS more-so than for traditional mass production because despite the advantages of economies of scale and supplier flexibility, it is difficult to move materials and information between departments in a mass production system.

There is a significant opportunity for Toyota Motor Corporation to diversify both in the conglomerate and concentric sense to invest in other areas of technology and machinery.

Threats

The dominant automotive firms compete in terms of technological advancement to further improve their products and gain an increasing control of the market. If Toyota were to miss these opportunities, it could reduce their performance compared to firms like General Motors, Volkswagen and Tesla. These companies are technologically competitive and have the brand power, resources, and systems to continue the technological advancement of their products and processes. These companies compete directly against Toyota through aggressive innovation and marketing to increase their market share. Rapid technological innovation among these competitors also increases their competitive advantages. As the current most valuable car brand in the global industry (Padeanu, 2018), Toyota has the potential to utilize technologies that present new and unique opportunities for the multinational business.

Another threat to Toyota is the price of oil and how it is continuing to rise over time (DiChristopher, 2019). This is causing customers to look for increasingly economical options from the automotive industry. The International Energy Agency states the projected number of electric vehicles on the road will increase to 125 million by 2030 (DiChristopher, 2018). Toyota must continue to develop cars that are either hybrid, electric or with better fuel economy. Else, they could lag behind other competitors that satisfy customers’ preferences regarding fuel economy and environmental impact.

4. Discussion of Problems and Challenges facing the TPS

Despite Toyota developing the incredibly efficient TPS and being the highest rated automobile manufacturer in the world, Toyota still faces difficulties and challenges today. One such issue is sustainability, sustainability is a problem that affects all industries, and in the automotive industry, the topic focuses on fuel economy and the environmental impact of current business practise. Climate change and global warming is an ever-present and rising issue that the world is having to face. High-profile influencers across the globe are calling for urgent action in the form of political, economic, and social reform (Walker, 2019). A 2010 Nasa study declared that motor vehicles were the strongest cause of climate change in the world (Atkin, 2018). Toyota is in the position to make significant, positive change due to the TPS. Both the Just in Time method and the Kaizen model are perfect for implementing new eco-friendly and efficient technologies, as the penultimate philosophy of lean manufacturing is efficiency. The TPS also allows for the quick adoption and implementation of new designs and engines that improve the fuel economy of its products. Toyota can utilise the technological advances in some of its existing models, such as the Prius and Camry, and implement them across their entire range, specifically on its trucks/ large vehicles. This will help address environmental concerns and exploiting this opportunity will help the improve brand image, customer perception, and customer loyalty.

While Toyota is undoubtedly making progress with its TPS and refining its manufacturing efficiency, the gap between competitors in the global car manufacturing market is narrowing (Hill, 2011). Firms such as Volkswagen and General Motors have invested heavily into improving their productivity and the quality of their products and Volkswagen actually invests more capital into research and development than Toyota (Casey, Hackett, 2014). Toyota has recently suffered setbacks in the American market, where they have suffered from the perception that their products “lack design flair” (Hill, 2011). This poses an opportunity for the TPS in the form of mass customization. Firms usually adopt mass customization strategies as a response to market turbulence and customer demand for variety and uniqueness. This implies that customer relationship management is a focal point for mass customization success. Therefore, the first step for firms considering mass customization should be the creation of a system that allows the firm to work closely with its customers. Such a system is expected to assure that customers could be involved at any stage of the production process starting from the design and ending with the postproduction customization. Fortunately, the TPS has incredibly short set up times (Hill, 2011), this allows for a much wider range of possible products and is perfect for the adoption of mass customization. This coupled with the incredible database of customer preferences (Hill, 2011), provides the perfect bedrock for a mass customization system to be set up in the TPS.

This system can address both the threat of new entrants creating market opposition and the aggression of existing competition. The systems allow for better productivity. This system would augment existing efforts and ensure manufactured products have some form of competitive advantage. These changes can increase Toyota’s appeal through increased efficiency and greater customer approval. through this, the company can deal with the threats facing the vehicle manufacturing industry.

5. Conclusions and Recommendations

5.1 Possible recommendations for the company and summary of findings

With the premier innovation and production system Toyota possesses, the focus of their endeavours should now be on the development of new technologies. With the issues of today, such as dwindling fossil fuels and severe climate change technological advances are required to maintain Toyotas market control. Having already mastered lean production, Toyota needs to maintain the philosophy of Kaizen, to produce the highest quality products as efficiently as possible. A more permanent reward system for employees could be implemented to maintain employee motivation and incentivise workers to uphold the quality brand image Toyota has come to be known for. This will also focus workers to detect defects quicker and to avoid mistakes. Another recommendation for Toyota is the adoption of a mass customization system, as discussed in the case study Toyota suffers from poor product perception and a lack of customer satisfaction (Hill, 2011). A mass customization system would be easily implemented using the TPS due to its inherent modularity and efficiency. A recommendation for Toyota is to implement a product-oriented management system that satisfies the requirements for all business areas (Berkel, Kampen, & Kortman, 1999). This endeavour augments any customization operations and services to help better address customers’ preferences and desires, leading to increased customer satisfaction.

5.2 Implications drawn from the report

From this paper, it is evident that Toyota is one of the top corporations in the vehicle manufacturing industry. This report is an external analysis of the threats and opportunities the company must face in order to maintain and improve its current market position. Some of Toyota’s decisions are direct responses to the current threats. However, if Toyota is to really address the issues, more action is needed to exploit the opportunities identified in this report.

Executive Summary

This is about environmental analysis for one of the world’s largest automobile company Toyota. This whole report contains about Toyota and this report basically focused on internal environmental and external environmental analysis and identifying the impact to the organization. Also contains competitive analysis for Toyota and identifying most suitable strategies to overcome competitors. Finally, this report makes us to develop comprehensive strategic management plans with strategies, objectives, and tactics by applying theories, concepts, and models for Toyota.

List of abbreviations

• PESTEL – Political, EconomicSocio-culturalal, Technological, Ecological, Legal
• SWOT – Strengths, Weaknesses, Opportunities, Treats
• TTC – Toyota Tsusho Corporation
• AI – Artificial Intelligence
• BCG – Boston Consulting Group

Introduction

Importance of strategic management and the role of a strategic manager

Strategy management is the skills and knowledge of planning and implementing to achieve the goals, vision and mission of a company. Strategy management is very important to a company. There is a Japanese saying that “When you are dying of thirst, it’s too late to think about digging a well” (Anon., n.d.). So we must be ready for upcoming problems before it’s too late and strategic management helps us to do that.

There are strategic managers in companies. They are very important to the company. They focus about the future of the company and they give long term plans to improve customer satisfaction and strategies to compete with competitors. They help to achieve company goals and ensure that company aligns with its vision and mission.

Toyota

Toyota Motor Corporation is a well-known multinational automotive company. Its headquarters is in Toyota City, Aichi, Japan. By revenue Toyota is the sixth largest company in the world. It was founded on 28th of August 1937 by Kiichiro Toyoda. In 2008 Toyota became the world largest automaker. Toyota expanded their business all over the world including America, China, Australia, Africa and Russia. More than 360,000 employees work in Toyota. Their profit for 2018 is more than 173,000 millions of yen (Anon., 2018). Toyota was the first automobile maker to produce more than 10 million vehicles per year. Toyota also started making hybrid and electrical vehicles. Toyota Prius series is the world’s top selling hybrid series. Under Toyota Motor Corporation they also have four other brands. They are Lexus, Hino, Ranz and Daihatsu.

So this report contains PESTEL analysis, SWOT analysis, Porter’s Five Forces Model and strategies about Toyota Motor Corporation.

Toyota Global Vision

“Reward with a smile by exceeding your expectations”

Toyota Lanka

Toyota Lanka is the exclusive distributor for Toyota in Sri Lanka. It is owned by Toyota Tsusho Corporation (TTC), Japan. Toyota Lanka is the only automobile company in Sri Lanka which is fully owned by its parent company. It was established in 1995. Toyota Lankas current managing director is Shungo Yoshioka. Toyota Lanka gives Sri Lankan people automobile sales, servicing and spare parts. Toyota Lanka sells passenger cars, commercial vehicles, trucks and sport cars. Especially Toyota Lanka sells country suited automobiles with a high quality and also Toyota Lanka has a good customer service. They deliver vehicles island wide. Since 1995 Toyota Lanka has established lots of branches island wide. Ratmalana, Maharagama, Negombo and Kurunegala are the key branches of Toyota Lanka.

Other service stations in Toyota Lanka:

• Panchikawatte
• Kandy
• Galle
• Kalutara
• Ampara
• Nugegoda
• Gampaha
• Anuradhapura

Toyota Lanka Vision

“To become the most respected &admired total auto mobility solutions provider in the country”

Toyota Lanka Mission

“To create delighted life-time customers & lifetime delighted employees”

PESTEL Analysis

1. P – Political
2. E – Economic
3. S – Socio-cultural
4. T – Technological
5. E – Ecological
6. L – Legal

PESTEL analysis is a part of the external environment analysis. It helps to analyze macro environmental factors of a company.

PESTEL analysis of Toyota

Political factors on Toyota

• Tax policies
• Government stability
• Trade regulation

Economic factors on Toyota

• Growth rate
• Currency exchange rate
• Customer demand

Socio-cultural factors on Toyota

• Cultural differences
• Trends
• Education level
• Diversity

Technological factors on Toyota

• Using AI(Artificial Intelligence)
• Numerical flexibility
• Research funding
• New vehicle models
• Functional flexibility

Ecological factors on Toyota

• Environmental regulations
• Weather
• Minimizing the wastages
• Make green products

Legal factors on Toyota

• Consumer protection laws
• Employment laws
• Discrimination laws

Critical analysis in to political impact

Tax policies impact a lot to the company. Importing vehicle tax is very high in some countries. In Sri Lanka tax rate for vehicles is about 300%. So people demotivate to buy a new vehicle because of the price. Also tax for big foreign companies is very high in Sri Lanka. Also government stability is important. When the government becomes unstable they try to collect money from putting more taxes and laws. Trade regulations also impact to the company. Company has to export and import complied with those regulations. It takes more time and money.

Critical analysis in to economic impact

Economic factors are also important to the company. When the growth rate increase in a country it is good for the company. When the growth rate increases the labour costs will be decreased because there are lots of people and less job opportunities. Currency exchange rate is also impact to the company. If Toyota imports from a supplier and currency rate of the suppliers country is low compared to Yen (All accountings of the Toyota motor corporation is done by Yen), then it is good for the company. That could also go other way and it is not good for the company. Other thing is customer demand. In an economic slowdown, the demand for vehicles will be decreased. Because of that employee demand will be low too. So Toyota will have to decrease the employee recruitment amount, rewards and incentives to save their profits. Sometimes the company has to lay off employees and it’s depending on the economic condition.

Critical analysis in to socio-cultural impact

When Toyota deals with other countries, it is very important to learn about other cultures. Cultures are different from a country to another country. So Toyota always tries to get the employees from the same country to work in their branches. It is very easy to communicate with customers because employees know the culture. Also Toyota has to work with the trends or else customers won’t buy the vehicles. These days people are more concern about hybrid and electrical vehicles. So Toyota started making vehicles such as Toyota Prius. Education level is important to the company specially in recruiting employees. Education level of the employees will impact on the performance of the company. Toyota also thinks about diversity. Toyota makes different kinds of vehicles such as traveling vehicles for traveling people, etc.

Critical analysis in to technological impact

As a big company Toyota also stared to use AI for their factories. It helps to reduce production cost and it’s fast. Because of the growth of technology Toyota reduced employees. Most of the workers who had temporary jobs were released from the company as a numerical flexibility. Toyota is funding a big amount of money for research. From research Toyota develop more types of vehicles such as luxury vehicles, budget vehicles, racing cars, etc. Their luxury-type vehicle brand is Lexus. Also Toyota is concerned about functional flexibility. Toyota trains their employees for multitasking. It can help Toyota in an economic crisis.

Critical analysis in to ecological impact

There are lots of environment regulations. Companies should protect the environment. Toyota is always trying to stop water and air pollution. So they make green products hybrids and electric vehicles. It reduces the pollution. Toyota also minimizes the wastages. They manage their factory waste and they recycle their waste. Some factors like weather is also impact to the company. Whether especially impacts to their transportation. It is hard to transport vehicles during a storm or in a heavy wind especially from the ships.

Critical analysis in to legal impact

Consumer protection law is very important. Vehicles should be made by exact standards. So Toyota does lots of standard checks before releasing a vehicle to the market. There is also an employment law. It is for employee’s safety. It includes industrial safety, protecting workers rights, the minimum salary for employees, etc. Discrimination law is also impacts to the company. Some countries don’t allow some kinds of vehicles and also doesn’t import modified vehicles from that kind.

SWOT analysis

1. S – Strengths
2. W – Weaknesses
3. O – Opportunities
4. T – Threats

SWOT-analysis helps to identify internal strengths, weakness, and also external opportunities, treats of a company.

SWOT analysis of Toyota:

Strengths of Toyota

• Having a strong brand name (S1)
• Having big financial resource (S2)
• Equipped with latest technology (S3)
• Having a good production system (S4)

Weakness of Toyota

• Product recalls (W1)
• Depending on suppliers (W2)

Opportunities for Toyota

• Focusing the developing countries (O1)
• Investing on new technologies (O2)
• Green vehicle technology (O3)

Treats for Toyota

• Having lots of competitors (T1)
• Passenger safety issues (T2)
• Changing of the prices of fuel (T3)
• Raw materials having high prices (T4)

Strategies for Toyota from SWOT analysis

• Lots of cars from Toyota were been recalled in last years. Because of that media spread lots of negativity about the company. But Toyota has the latest technology. So they must build new machines to check the quality of their vehicles. (S3,W1,T2)
• Toyota has a good production system. They manage their waste very efficiently. Also Toyota focuses on developing countries. So they should make low cost vehicles by improving their production system and developing countries will buy more vehicles for a lower price. (S4,O1)
• These days people try to make machines environment friendly. Toyota is making lots of green vehicles. Because Toyota has a big financial resource they can try to improve their hybrids and electrical vehicles to be more environment friendly. So changing fuel prices won’t be a problem for green vehicles. (S2,O3,T3)
• Most of the times Toyota depends on their suppliers. Also raw materials having a very high price. Because Toyota have a good financial resource and a good production system, they can start making some materials that they are buying from their suppliers or they can buy some companies who are selling raw materials. It will reduce their costs. (S2,S4,W2,T4)
• There are lots of competitors for Toyota. Honda and Mitsubishi are some of their Japanese competitors and Toyota also has Indian and Chinese competitors too. But it’s hard to compete with Toyota especially because of their strong brand name. In order to keep their brand name stronger they should try new vehicle models and improve the quality of their vehicles. (S1,T1)

Porter’s Five Forces Model

• Rivalry among existing contenders
• Bargaining power of buyers
• Bargaining power of suppliers
• Threat of new entrants
• Threat of substitutes

Porter’s five forces framework is used to analyze the competition of a business.

Applying porter’s five forces model to Toyota

Rivalry among existing contenders – High

In worldwide market Toyota has lots of contenders. The following external factors make competitive rivalry strong.

• High forcefulness of firms
• Low number of large firms
• High separation of firms

Automobile organizations are forceful against one another especially because of marketing and innovation. Toyota has to contend with high assortment of organizations and those organizations separate through eco-friendliness, cost, style, etc. Despite the fact that there are lots of small automobile companies, Toyota just contends with small number of larger companies. Toyota’s brand name makes it easier to rival with contenders.

Bargaining power of buyers – High

Toyota’s clients legitimately influence the business through incomes. Following factors makes the bargaining power of buyers strong.

• Low exchanging costs
• Easy to find data

The low exchanging costs imply that clients can undoubtedly change from Toyota to a contending company at no additional expense. This change commonly happens when clients purchase another vehicle. Also because of new technology customers can easily find data about the company and vehicles. That makes customers easier to choose a vehicle from a company.

Bargaining power of suppliers – Low

Toyota’s providers plan to impact the organization to improve their organizations but it is not easy thing to do because of the following reasons.

• Lots of suppliers are available worldwide
• Easy to find materials

There are lots of automobile part suppliers worldwide. So for those suppliers it is not easy to bargain with automobile companies. Also it is easy to find raw materials such as rubber, aluminium, etc. so the suppliers won’t be able to bargain with big automobile companies.

The threat of new entrance – Low

The threat of new entrants is very low for Toyota because of the following reasons.

• Need to find a high capital
• Hard to build a good brand name

It is hard to start an automobile company. There are lots of entry barriers to start an automobile company. Main barrier is capital. Starting an automobile company will cost a lot and also there are lots of rules and regulations to start an automobile company. It will take years to build a good brand name and people hesitate to try a new brand name. So the new entrants can’t affect Toyota.

The threat of substitutes – Moderate

Substitutes influence Toyota’s business by contending with the organization’s items. These are the treats of substitution.

• Exchanging costs are low
• Moderate amount of substitute availability

Customers can easily move from Toyota to a substitute. Using bicycles and public transportation are some substitutes and it takes low cost to exchange. And because of the moderate amount of substitute availability customers will exchange quickly. So because of those reasons threat of substitutes are moderate for Toyota.

Applying models, theories, concepts, and models, interpret and devise strategic planning for Toyota

The industry life cycle for Toyota

Figure 1

According to the industry life cycle Toyota is in the maturity stage. So the market has reached its maximum size and industry growth is likely to be zero.

Marketing strategies to use in maturity stage

• Product modification
• Increasing the usage rate
• Do more research
• Make products for a lower price than market

BCG Matrix for Toyota

Companies restructure the portfolio of their firms’ businesses to accelerate growth. Boston Consulting Group (BCG) is a helpful tool to guide portfolio planning. This matrix locates the firm’s individual businesses in two dimensions,

• Horizontal axis – Relative market share
• Vertical axis – Market growth

Figure 2

Toyota can be included in cash cow category. In cash cow category market share is high but the market growth is low and their earnings are high and stable.

Toyota should create new car designs using new technology to Target more customers to grow their market more.

The Ansoff Matrix for Toyota

The Ansoff matrix can be used by senior managers, marketers, and executives to devise strategies for future growth.

Figure 3

Market penetration

• Starting an environment friendly program – Together Green
• Sponsoring for motor racing – agreement with speedway
• Starting a motor racing club – Etios Motor Racing

Market development

• Started making many product lines for customers – Trucks, SUVs
• Overseas business – Making in Japan and exporting worldwide

Product development

• Manufacturing automated driving vehicles
• Manufacturing hybrids and electric vehicles

Diversification

• Launching a ski boat line
• Establishing Marine Business Division
• Establishing Biotechnology and Afforestation Business Department
• Acquiring the Japan Flying Service

Conclusion

This report contains about Toyota and also about Toyota Lanka and its vision and mission. Introduction to PESTEL analysis and applying PESTEL analysis for Toyota and a critical analysis on PESTEL. Then contains introduction to SWOT analysis and applying SWOT to Toyota and critical SWOT analysis on Toyota. Also this report contains introduction to porter’s five forces analysis and applying porter’s five forces analysis for Toyota. Also contains industry life cycle for Toyota and BCG matrix for Toyota. Finally in this report contains introduction to Ansoff matrix and applying Ansoff matrix for Toyota.

References

1. Anon., 2018. Annual Financial Report. Toyota Industries Coporation.
2. Anon., n.d. Google Scholar. [Online] Available at: https://scholar.google.com/.
3. Anon., n.d. inspirational proverbs, quotes, sayings. [Online] Available at: https://www.inspirationalstories.com/proverbs/japanese-when-youre-dying-of-thirst-its-too-late/.
4. Anon., n.d. Panmore Institute. [Online] Available at: http://www.panmore.com.
5. Anon., n.d. Research Methodology. [Online] Available at: http://www.research-methodology.net.
6. Anon., n.d. Toyota Lanka. [Online] Available at: http://www.toyota.lk/.
7. Anon., n.d. Toyota Official Website. [Online] Available at: https://www.toyota.com/.
8. Anon., n.d. Wikipedia. [Online] Available at: https://www.wikipedia.org/.
9. Fujimoto, T., 1999. The Evolution of a Manufacturing System at Toyota. New York: Oxford University Press.

Toyota Corolla Altis 1.8

1. Company description:

Toyota Motor Corporation (Toyota), incorporated on August 27, 1937, conducts business in the automotive industry. The company also conducts business in finance and other industries. The company segment includes Automotive, Financial Services, and all others. Toyota Motor Corp. engages in the manufacture and sale of motor vehicles and parts. The Automotive Operations segments designs manufacture assembles and sells passenger cars, minivans, trucks, and related vehicle parts and accessories. It is also involved in the development of intelligent transport systems. The Financial Service segments offer to purchase or lease finance to Toyota vehicle dealers and customers. It also provides retail leasing through lease contracts purchased by dealers. The all other segment deals with the design and manufacture and sale of housing, telecommunications, and other businesses. Toyota Motor Company’s headquarter is in Toyota, Japan.

2. Product Description:

A product description is a structured format of presenting information about a product which includes its benefits, form, presentation, price, purpose, etc. . A good product description should include a detailed description of the product, its special features which differentiate it from other products unique selling points and utility of the product.

3. Marketing management orientation:

1. Production concept: Toyota Corolla has become the most economical and affordable car for different customers. Pricing is also based on segmentation. Toyota Corolla uses both penetration pricing and economy pricing strategies to reach the demands of its customer. For instance, during the introduction of the Toyota Corolla in the US, they used the penetration strategy. This pricing strategy is based on low prices and high quality of the vehicles. The objective of this pricing strategy was to reach the middle class and working customers. Whereas, Toyota Corolla cars are distributed through a wide range of networks that reach the targeted population in the required time frame.
2. Product concept: Corolla Altis 1.8 is economical in price but the product is amazing. Toyota Corolla is the most successful product of all the Toyota group’s products. This is because of its adaptability, reliability, and dependability. If we talk about interior then there is comfortable leather foamed seat corners, Rear reclining seats with split-folding, Bucket type front seat, Toyota connects app, Rear seat USB charger and for exterior, there is a front parking camera view, wide-angle reverse parking camera view, Speed auto door lock, Smart trunk opener, Side skirt and colored mud flaps, Headlamps and Rearlamps, front fog lamps and many other amazing qualities.
3. Selling concept: Toyota Corolla is promoted and advertised using different methods. Some of the commonly used aspects of the promotion of Toyota Corolla include advertising, sales, promotions, personal selling, and public relations. For example, the Toyota Corolla 2011 was promoted through television where a Japanese renowned artiste was featured. The adverts are also featured on the Toyota website where the prices and features are also available. A company should focus on their selling concept to sell their product, and to gain the attention of the customer’s company always highlight the specifications of the product.
4. Marketing concept: On this version, the front-end presentation varies by model grade, with the sportiest faces incorporating a body-colored chin. Front headlights are of the bi-beam LED variety, and LED rear lamps are standard across the model grade. The interior design, meanwhile, showcases elements drawn from a “sensuous minimalism” concept, offering a clean, sleek, and refined look.
5. Societal marketing concept: Toyota Corolla hasn’t done any societal marketing till now. But maybe in the future, they do something in which customer gets satisfaction, the company gets profit and society gets benefits.

4. Microenvironment:

5. Macroenvironment:

Macro environment analysis!

Toyota Motor Corporation’s macro-level analysis is a strategic tool to analyze the target market and potential consumer market. Demographical, Political, Economic, Social, Technological, Environmental & Legal factors that impact the macro environment of Toyota Motor are explained below;

Changes in the macro-environment factors can have a direct impact on not only the Toyota Motor Corporation but also can impact other players in the Automobiles & Parts industry. They can impact an individual firm’s competitive advantage or overall profitability levels of the Consumer Goods industry.

Demographics:

Demographics play a vital role in defining the target market and target consumers, it defines the strategies to market the products. Demographics include age, gender, social class, income, marital status, family size, etc. Toyota Corolla Altis 1.8 demographics are considered a significant variant.

According to the survey and reviews of Pakistani consumers following our the demographic factors

Age; 25-38

Gender; men

Social class; upper-middle-class

Income; 80k-120k per month

Family size; 4-8 children

Political factors:

Political factors play a significant role in determining the factors that can impact Toyota Motor Corporation’s long-term profitability in a certain country or market. Toyota Motor Corporation is operating in the Automobiles & Parts industry in Pakistan since last two decades and expose itself to different types of political environments and political risks.

Following are some key political factors influencing the macro environment of the corolla.

1. Political stability and importance of Automobiles & Parts sector in the country’s economy.
2. Level of corruption – especially levels of regulation in the Consumer Goods sector.
3. Legal framework for contract enforcement
4. Favored trading partners Anti-trust laws related to Automobiles & Parts
5. Pricing regulations – Are there any pricing regulatory mechanism for Consumer Goods
6. Taxation – tax rates and incentives in automobile industry

Economic factors:

Economic factors that Toyota Motor Corporation are considering in Pakistani market are –

1. Government intervention in the free market and related Consumer Goods
2. Exchange rates & stability of host country currency.
3. Skill level of workforce in Automobiles & Parts industry.
4. Labor costs and productivity in the economy
5. Business cycle stage (e.g. prosperity, recession, recovery)
6. Economic growth rate
7. Unemployment rate
8. Inflation rate
9. Interest rates

Social factors:

Social factors plays a vital role in companies reputation also creates great organisational culture.

Social factors of Toyota Motor Corporation considered in Pakistani markets are as follow ;

1. Education level and education standard in the Toyota Motor.
2. Culture (gender roles, social norms etc.)
3. Attitudes towards health, environmental consciousness, etc.

Technological factors:

Technological advancement plays a vital helps not only company to strive in the market but also introduce a new field and sectors.

Technology analysis involves understanding the impacts in Pakistani market.

1. Technology’s impact on product offering
2. Impact on cost structure in Automobiles & Parts industry
3. Rate of technological development

Environmental factors:

Before entering new markets the firm should carefully evaluate and observe the environmental standards that are required to operate in those markets.

Following are some environmental factors;

1. Weather
2. Climate change
3. Recycling
4. Waste management in the Consumer Goods sector Attitudes toward “green” or ecological products
5. Attitudes toward and support for renewable energy

Legal factors:

Legal framework and institutions plays vital role in protecting the intellectual property rights of an organization, legal factors sometimes provide edge to the company and in some cases they create a great setback for the organisation.

The following factors should always be considered;

1. Anti-trust law in Automobiles & Parts industry and overall in the country.
2. Discrimination law
3. Copyright, patents / Intellectual property law
4. Health and safety law
5. Data Protection

6. Market segmentation:

Corolla segment the Pakistan market demographically according to income & covers Toyota is mainly targeting:

• Upper Class
• Upper Middle Class
• Lower Middle Class

Whereas. Segmentation and targeting is necessary to position the brand in the minds of the customer, hence leading to brand loyalty. Single segment concentration: Through concentrated marketing firm gain deep knowledge about segment’s need. Making revenue through one segment.

Toyota corolla market segmentation Corolla targeted its segment by its models also which target different income group. Like,

• Corolla Xli (1300 cc)
• Corolla Gli (1800 cc)
• Corolla Altis
• Corolla Saloon

And these Models vary on different price points depending of their specificatios so that’s how Toyota Corrola Targets Different income groups.

Geographic Segmentation

Cities:

Karachi, Lahore, Islamabad, Rawalpindi, Peshawar, Abottabad, Bahawalpur, D.G.Khan, Dera ismail khan, Faisalabad, Gujranwala, Hyderabad, Mardan, Mirpur A.K,

Multan, Quetta, Rahim Yar Khan, Sahiwal, Sargodha

Sialkot

Density

Urban, Suburban

Climate

Dry & Hot, Cold

Demographic

Age

18-50+

Family Size

Single, 2members, 2-4 members, 4+ members

Income(per year)

Under 50Lakhs, 1crore or 1crore+

Occupation

Businessman, Employer, farmers, Official, transporter

Generation

Third generation, Next Generation

Psychographic

Social Class

Higher, Upper Middle, Middle,

Effective Segmentation of Toyota

Toyota chooses their segments on effective ways. These ways helps Toyota to have a clear overview of the segmentations done by them. The effective measurements that they choose for their segmentation are:

• Measurable: Segmentation done by Toyota is thoroughly researched and analyzed. As a result they have clear measurement about size, purchasing power and profiles of the targeted segments.
• Accessible: Toyota can easily reach into the core of their segments and have a profound access because of their vast knowledge and ability over these segments.
• Substantial: Toyota chooses segments in the market that are highly profitable for the company.
• Differentiable: Since Toyota has a clear knowledge over their segmented market, they know which consumer wants what product. So Toyota differentiates their consumer on their choices and creates effective segmentation for them.
• Actionable: Toyota does their segmentation on the basis of their resources and serves each and every one of them efficiently. They don’t choose segments which are out of their capability.

7. TOYOTA’s Market Targeting

Evaluating Toyota Market Segmentation:

• Segment size and growth
• Segment structural attractiveness
• Company objective and resources

Selecting Toyota’s Target Market Segmentation:

• Type of marketing
• Remarks
• Explanation
• Undifferentiated marketing(mass marketing)
• Ignore by Toyota
• The company basically does not follows the mass marketing strategy.
• Differentiated marketing
• Followed by Toyota
• Toyota offer different model of car for different segments like Corolla Xli, Gli, Altis or Grande.
• Concentrated Marketing
• Followed by Toyota
• Toyota has offer some exotic cars like Grande series some specific groups
• Micromarketing
• Ignore by Toyota
• Not possible

8. Differentiation:

Product. Company strategy starts the strong consumer relationship with an introduction to the newly reinvented Corolla with features that satisfy their needs in safety, reliability, and style at a cost that meets their approval. We bring these qualities to life in commercials, billboards, magazine articles, advertisements, and social network posts. Company non-interactive communications identify awards the Corolla has won for maintaining the highest rating in safety; the addition of voice-activated, navigation, and onstar devices that keep the driver in-the-know while keeping their hands on-the-wheel; and head restraints that limit the result of injury to the head during rear-end collisions. Additionally, we employ interactive product differentiators which accompany consumers down the marketing funnel with courteous services prior to service—such as child centers, hassle-free sales, and on-site educational and discount opportunities for parents and their new driver—and care after purchase—such as reminder maintenance emails and texts, birthday wishes and bonuses, and future loyalty discounts.

Channel. Because maintaining company relationship with the consumer is so integral to Corolla’s future audience, we also focus on the difference the Corolla offers in channels. Reflective of the ease of communication with Toyota we look beyond the traditional methods of telephone and emails—we embrace company modern market with text messages and notifications sent directly to the Corolla’s console. As the future consumes this new audience, the Corolla’s amenities will grow to adopt additional communication techniques that allow the consumer to directly connect to the nearest Toyota dealership simply by pushing a button on the steering wheel. By deploying a communication strategy that enables consumers to connect with Toyota as conveniently as possible and retains qualities of modern and traditional communication devices, we generate a service that all consumers within company market are able and happy to use.

As communication contributes immensely to perception and image, we seek to point out current communication channels and strategies that provide an easier means for company consumers to schedule repairs, communicate with company representatives, and file claims on warranty related issues. These strategies will be provided to company audience through traditional means as well as more up-to-date means that match company market, such as mobile applications, the Toyota website, the dealer website, and texting to a short code—or shortened phone numbers that are more easily read and remembered.

Image. These efforts attempt to position the Corolla by adjusting image—or the way company audience views and perceives the Corolla. Currently and according to company consumers, the brand is bland. The Corolla is not new. We make it new by giving it new technologies that relate to company audience such as GPS, onstar services, XM radio, and mobile device integration capabilities. While these partnerships and extras are easily and relatively inexpensive to add to the basic Corolla Model, the amount consumers are willing to pay for these features in a brand they can trust is surmounting.

To achieve further matching of company product to company audience, we focus not on amending the car, but working with what it already has available. For example, the colors available for the Corolla include:

• Barcelona Red
• Black sand pearl
• Magnetic Grey
• Classic Silver
• Super White
• Sandy Beach
• Nautical Blue
• Tropical Sea.

The colors listed in italics represent colors that reflect an older consumer. The simple solution is to use colors that inspire a hip and young feeling. Toyota may even consider adopting bright colors such as yellow to better target the younger audience. Modifications that are available and can be offered include round tail lights and side decals.

9. Promotion strategy (& positioning):

Toyota Corolla Altis 1.8 is one of sublime products of Toyota Motors and has potential target market upto 35% out of all Toyota Motor products.

Toyota (TM) has become one of the top ten biggest advertising spenders over the time. The company spent 435 billion on advertising and sales promotions during fiscal 2015. 1.7 billion is been spent on Toyota Corolla Altis since its launch all around the globe. These advertising and sales promotion activities primarily focus on traditional advertising channels, including print and electronic media, as well as outdoor advertising.

Along with that Toyota Corolla have dealership contacts with showroom owners to display and sell their products also

Accessories like Traction Control is been introduced in the-car so as to improve its traction on rainy and snowy surfaces. It will also enhance high speed cornering stability. This new product feature will attract extra customers in Pakistani market

Positioning:

Toyota’s uses both differentiation and low cost as generic strategies to try and gain a competitive advantage, over their competitors in the automotive industry. The market scope that Toyota uses is a broad one that encompasses nearly every type of customer that is in the market to purchase an automobile. Toyota is able to target such a large market because they have something for everyone. Toyota has four wheel dn. trucks and SUVs for the outdoor types or those who live in areas that face severe weather conditions. hybrid models like the Prius for t. eco-friendly Customers that are interested using de environment along with the standard cars for general, everyday use. Additionally, Toyota provides vehicles for all price range. From the low price Toyota Corolla line of cars to the high priced luxury line of cars and SUVs with Lexus, Toyota has something for everyone.

The car Toyota Camry is a one of the series of Toyota product produced by the Japanese into the auto market since 1980 and sold in most automobile markets worldwide. These series of Toyota produced cars are what is popularly known and referred to as the mid-sized range of cars by the Europeans. Though, the Northern Americans and the Australians refer to these series of Japanese car as an intermediate series automobile. The Camry range of automobile is a standardized car with its size having the requisite qualities for or relatively larger in size than that of a compact and are generally classified under a subsuming series or with a general group of executive car or family car as regarded by the Europeans.

Robinson Aaron noted that the name Camry means crown and it is the change of Communicated word or written word of another language into a more comprehendible English form, and was derived from the Japanese word which is Kanmuri (Robinson, “Cars and drivers, 2007”).

The Toyota Camry model of cars is a direct conventional Japanese automobile mid-sized car; with the important attributes and have the quality that is characterized by good substantial engineering, Surpassing in quality craftsmanship, and having firm value of money, making it difficult to be competed with by other automobile manufacturers.

The Toyota Camry range of cars also has a trade mark state of being held in high esteem and honour for its quality of being dependable or reliable and also has a second hand value for money.

The Camry range of Toyota automobile comes with series of brand, although with the first production of the hatch back model in the year 1983 which drew the automotive world into the appreciation of the Japanese range of cars. Relatively, the Camry models of automobile are perceive or thought about as less sporty than rival automobiles, owing towards their relaxed and adjust for better functioning shock absorber.

Although, Toyota Camry cars serves exactly the same purpose as other cars in practical use, in the likes of sport utility vehicles (SUV) with an engine size range of 6.0 litres, because the Toyota Camry is more Skilfulness in avoiding wasted time and effort and also saves fuel unlike the sport utility vehicle or jeeps or better still other automobiles manufactured in other parts of the world.

However, the mileage of the sport utility vehicles range of cars is equivalent to double of that of the Toyota Camry, thereby making the small size of Toyota Camry cost less than that of a sport utility vehicle or other cars in the range of the SUV.

In spite of this, due to the global change in the size of automobile worldwide, it makes the Toyota Camry have a major benefactive role because of its look in small size and also elegance and sumptuousness, thereby giving it the standard of a deluxe car. The Toyota Camry is easier to drive, hence, having a minimal insurance cover compared to the sport utility vehicles.

Robinson (2007) further stated that with the small body built of the Toyota Camry and constructive inflexibility it makes the car safe both for the driver and other road users.

The car was produced through the use of special high formed steel and imprinted to the cars roof and the construction of the front seats attachment is created to move from one place to another without colliding with the crash amount of goods across the car.

Additionally, it gives other road user’s clear visibility to other cars or vehicle on the road thereby avoiding oncoming danger, unlike the range of sport utility vehicles which causes problem to other road viewers because of their huge body.

In conclusion, Toyota Camry is one of the most reliable mid-sized or luxurious cars for its safety and smaller look, making it one of the most appreciated luxurious cars in the world with well engineered craftsmanship, low maintenance and minimal fuel consumption.

Work cited

Robinson, Aaron. “Toyota Camry”. Wheels magazine. Sydney, New South Wales: ACP Magazines. 2006. Web.

Robinson, Aaron. Car and Driver. Hachette Filipacchi Media U.S. February, 2007. Web.

Toyota is a highly successful conglomerate that requires no introduction. Toyota products are well-known all over the world because of affordability and performance. The company made its U.S. market debut in the late 1950s and since then it manages to take a major slice of the American automotive market. Its major source of revenue is the manufacture and sales of cars, trucks, SUVs, vans, and hybrids. The secret to its success is just-in-time inventory and lean management systems an example of a sociotechnical system. These were created because the company considered the social side of manufacturing.

The said company was able to determine quickly that main competitors like Ford, General Motors, and Chrysler cannot match their socio-technical systems that enabled the Japanese automaker to significantly reduce costs. When Toyota was just beginning to make a name in the United States, its management team was able to develop strategies that have come to be known as a just-in-time system and lean management system. As a result, the company was able to reduce waste such as 1) overproduction; 2) waiting; 3) unnecessary transport; 4) over-processing; 5) excess inventory; 6) unnecessary movement; 7) defects; and 8) unused employee creativity (Liker, 2004 p.89). Toyota was able to achieve a competitive advantage, selling cars at a higher margin because it was able to reduce operational costs.

A lean management system and the just-in-time system can be considered a sociotechnical system because it enhances the work efficiency of the employees. At the same time, it can boost employee morale. The workers are inspired because of the trickle-down effect of the success of Toyota. The increase in revenue means job security for many of them and at the same time, it increases employment benefits (Hino, 2006, p.10). But the most important thing is that the improvement in efficiency and the reduction of errors in the workplace also means that workers were able to accomplish much and work less as compared to their counterparts in other companies.

The significant difference in having sociotechnical systems can no longer be denied. The competitors took notice. Consider for instance that in the fiscal year 2002 alone, Ford Motor Company suffered a $5 billion loss while in the same fiscal year Toyota had a net profit of $5 billion (Lawfer, 2004, p. 24). There may be other factors at play but no one can deny that the sociotechnical systems within the organization played an important role in the firm’s success. Toyota must seek to continually improve its sociotechnical system keeping in mind that the system was not only designed to reach a high level of efficiency but also to reduce burnout. If the company can achieve this goal then there is no stopping the Toyota juggernaut.

The sociotechnical systems established at Toyota gave the company the needed competitive advantage over its main rivals. It is not easy to understand how a Japanese firm can be planted within the United States and beat companies like Ford and Chrysler. Corporate leaders at Toyota were able to develop the correct mix of a socio-technical system that eliminated waste. This enabled the workers to accomplish more in a shorter period. However, the company must not be complacent and must continue to find ways how to improve its sociotechnical system. It must be refined to create a balance between efficiency and prevention of burnout among its workers. Toyota is the best proof that if the organization considers the social side of their operation, then, they can expect amazing results.

References

Hino, S. (2006). Inside the Mind of Toyota: Management Principles for Enduring Growth. New York: Productivity Press.

Lawfer, M. (2004). Why Customers Come Back: How to Create Lasting Customer Loyalty. New Jersey: Career Press.

Liker, J. (2004). The Toyota Way: 14 Management Principles from the World’s Greatest Manufacturer. New York: McGrawHill.

In the recent past, technology has increasingly been adopted in organizations. It assists in developing efficiency and thus customer satisfaction. The competitiveness of a business is vested on the quality of its management decisions. A number of systems that aim at meeting a certain objective in the business arena have been developed. They are either home-made or all user systems (commercial systems).

One area that has gained much advocacy from the potential benefits an organization can derive from is data-resources management; data resources management involves using information and communication systems to develop a data warehouse where management can refer when making corporate decisions (Johnson, 2008). This paper discusses the effect that Data resources management has on an organization, it will use Toyota Corporation as the sample company.

Data resources management

Data resources management cannot be given a single definition but it entails a combination of issues and processes. They are intangible assets which are unique to different business and can be improved with experience and information interpolation. The most important factors that are considered are human assets that companies have.

Human beings have different talents and capabilities; however tapping this asset requires strategic operation and management. Other than utilizing the knowledge and experience that the employees have, there is the need to use available information to grow and develop knowledge and expertise in employees.

Information can be internal and external information and how well the information is utilized can result to growth of knowledge; effectiveness, and efficiency in doing business. To effectively utilize information, organizations should move from information hoarding to sharing of information that they are holding for the benefit of others; this is son despite that there are some private information that a company (Singh & Soltani, 2010).

The affect of the specific technology on organizations

With well organized Data resources management, there are numerous advantages that a business is likely to get. The success of a business is dependent on the quality of decisions that managers at different level make.

High quality decision leads to competitive advantage. One of the most critical decisions that managers should make is one that reduces cost of production. Data resources management tools assist a company to develop a cost cutting policy by recognizing areas of inefficiency and rectifying them. With a reduced cost of production, then it can sell at a lower price than its competitors (March & Kim,1988).

For example, city of Albuquerque utilized Data resources management to develop mechanisms to cut down their cell phone bill; they managed overtime and identified areas of inefficiency in their operations. The resultant was saving the city $2 million in a period of three years. Toyota in, Tokyo, Japan recognized that it was double paying its shipment in 2000. The amount that it had already double paid was to the tune of $800,000.

When making decisions, managers need to be informed and have reliable past, current and futurist data. With futuristic decisions, a company is likely to satisfy its current and future customers. When making strategy for a company, there are generally three approaches; cost strategy, differential strategy, and flow strategy.

In a cost strategy a company aims at improving its efficiency to a level that it becomes the least cost producer. In a differential strategy, the business aim at getting unique products that will attract the greatest number of customers and meet their need (Bowditch, Buono & Stewart, 2008).

Data resources management system offers a chance to analyze the treads of customers and thus a business will always be ahead of its customers and competitors in their products. This will eventually give the business an upper hand. Flow strategy is all about establishing a certain area that has un-tapped market then entering the market.

When there is data, a business will always be aware of emerging opportunities in the business world, venture into them after analyzing them using the available data. One of the major hindrances of making the right decision is lack of information; Data resources management assists a company to gauge its level of relationships with suppliers and customers.

The enhanced relationship assists in making decisions that aim at strengthening the relationship and eventually gain customer loyalty. In a well managed Data resources management environment, there is data from other companies in the same industry thus a company can gauge itself with others in same industry more effectively, this will assist in marketing decisions; Marketing strategies are well made if current business position is know (Kumar & Thondikulam, 2006).

Toyota was incorporated in 1937 in Japan by Kiichiro Toyoda; it has grown to be the world number one automobile provider. It assumed the number one automobile producer in 2008 after it surpassed general motors.

The company operates on a five principal policy; Kaizen (continuo’s improvement), teamwork, Challenges, Respect and Genchi Genbutsu (go and see). As long as computerization was developed, the company has continuously adopted technology. Up-to 1999, the company’s IT employees and research analysts used to run reports that took days even weeks to make (Toyota official Website, 2011).

In 2000, cooper, the company’s data manager, accepted a proposal from a staff to acquire Oracle database and Essbase software. They were both developed by Hyperion business-intelligence Company. The same year of implementation, the systems bore fruits; an analysis discovered what can be referred to as an “honest” mistake whereby railcars were scanned twice resulting to billing twice (Key & Tompson, 2009). The tread had continued for a while, but the company had not realized what was going on.

On the other part the billing company had no ill motive but it had not realized what was going on. Immediately the company saved $800,000. With this breakthrough in shipment management a decision to embrace data resources management tools; in 2001, the company decided to deploy a technology expert Mike Burkes; in his word he said that the difference between the old system and the new one is that the new one was able to pinpoint hot spots in the system and give managers room to look for solutions in those areas.

He equated the system to traffic lights, where green represents a good practice; yellow an acceptable one and red, danger. For example, if the system shows that deliveries are not made on time, this is sign of danger (red light) that calls for solution immediately. Using the system the company was able to understand the need of its customer’s as well creating efficiency and cost reduction strategies (Chong Keng-Boon Binshan & Pei-Lee, 2010).

In 2003, Toyotas revenue (sales) was $132 billion shillings. This was $52 billion lower that what general motors’ made in the same period. However, after embracing the efficiency that came with the system and the principle of Kaizen, profits that the company made in 2008 despite world economic crisis was $ 4.2 billion, 0.4 billion higher than its competitor General Motors’.

Today they are using the same system to develop new models in the market in line with the needs of customers. There are some challenges that come with adopting Data resources management, they include risking exposing an organizations strategies, risking reliance on the system for making decisions, and following the recommendations offered by the system without giving it a human thought (Lingling, Jun, Yong & Xiaohui, 2009).

Recommendation on how to mitigate the effects of the technology

The challenges offered by implementing data resources management within an organization can be solved from the onset/preparation stage. At this point the management should ensure they have contracted expatriates to develop the system and create the system in such a manner that feeding and getting information is controlled.

Access should be restricted and certain places like the system servers should only be accessed by few individuals. With a right system, it can have the ability to alert relevant authority in the event of some hampering and assist in making the right decisions (Perrott, 2008).

Data resources management depends with the information that has been fed, the management should ensure that information getting to the system is of high quality and the sources vetted. There is no wisdom in feeding the system with the wrong information and expecting it to assist make effective, quality, and reliable decisions.

With the realization of the benefit that data and information can do in an organization, the segment has been commercialized by some companies but they fail to deliver well researched information (Wang, Hult Ketchen & Ahmed, 2009). Business leaders should ensure they get information from companies of high integrity and ethical standing.

References

Bowditch, J. L., Buono, A. F., & Stewart, M. M. (2008). A primer on organizational behavior. Hoboken: John Wiley & Sons.

Chong, A., Keng-Boon, O., Binshan, L., & Pei-Lee, T. (2010). TQM, knowledge management and collaborative commerce adoption: A literature review and research framework. Total Quality Management & Business Excellence, 21(5), 457-473.

Johnson, R. (2008). Knowledge management in the Web 2.0 Age. Associations Now, 4(1), 57.

Key, M., & Tompson, H. (2009). Knowledge Management: A Glass Half Full. People & Strategy, 32(4), 42-47.

Kumar, S., & Thondikulam, G. (2006). Knowledge management in a collaborative business framework. Information Knowledge Systems Management, 5(3), 171-187.

Lingling, Z., Jun, L., Yong, S., & Xiaohui, L. (2009). Foundations of intelligent knowledge management. Human Systems Management, 28(4), 145-161.

Perrott, B. (2008). Knowledge management from an industry perspective: Findings from an industry study. Journal of General Management, 34(1), 55-70. March, S., & Kim, Y. (1988). Information Resource Management: A Metadata Perspective. Journal of Management Information Systems, 5(3), 5-18.

Singh, A., & Soltani, E. (2010). Knowledge management practices in Indian information technology companies. Total Quality Management & Business Excellence, 21(2), 145-157..

Toyota official Website., 2011. Toyota Corporation. Retrieved from www.toyota.com

Wang, C., Hult, G., Ketchen, D., & Ahmed, P. (2009). Knowledge management orientation, market orientation, and firm performance: an integration and empirical examination. Journal of Strategic Marketing, 17(2), 99-122.

Toyota Land Cruiser GXR is an iconic 4×4 vehicle globally known for its capabilities and reliability. It is an off-road vehicle packed with luxury features transforming it into a common family car in cities worldwide. Toyota provides the market with two choices: luxury specifications and entry-level specifications, both with the same prowess on the road and off-road. The extra features and comfort of the luxury choice separate it from the entry-level specifications. The Land Cruiser’s interior and exterior design makes it ideal for conversion into a ballistic proof vehicle to withstand certain caliber arms and a specific level of explosions.

Numerous protection levels advise the type of ballistic protection to build on a vehicle. The region and the use of the car will guide the owner on the required level of protection. For instance, a Land Cruiser in New York can be designed to protect the owner against handguns and small-caliber weapons, but a vehicle used in a conflict zones will need protection from assault rifles and explosions. The European standardization committee released an EN 1063 standard to define ballistic protection levels (Ojoc et al., 2020). The committee assigned the protection levels from the least protected vehicle, B1, to the highest civilian armament level, B7. The ballistic level of protection depends on the owner of the vehicle’s requirements.

B1 to B2 protection levels protect the occupants against 9mm handguns and lower. This ballistic level of protection is often considered too low and rarely used. Another ballistic specification is the B3-B4 protection which can withstand sporting rifles and handguns with lower bullet velocity. B5 level can offer the occupants of vehicle protection from AK-47 and other assault rifles. The vehicle must be fitted with at least 7.5mm steel on the opaque areas. Alternatively, the most common civilian protection levels are the B6 and B7. The former can stop armor-piercing rounds, while the latter stops armor-piercing rounds from high-velocity rifles (“What are the Differences,” 2019). The B7 protection level is the highest acceptable protection for civilian vehicles, although military units can have higher specifications.

The standard Toyota Land Cruiser 4WD 5.7L V8 is a big vehicle compared to common compact SUVs. The car has specifications of 194.9 inches in length, a wheelbase of 112.2 inches, and 77.6 inches. The car has a gross vehicle weight of 3,300 kg, a maximum roof load of 200kg, a maximum load weight of 685kg, and a towing capacity of 750kg (“2021 Land Cruiser,” n.d.). These specifications give the Toyota Land Cruiser enough power and torque to be a vehicle of choice for most users in rugged terrains. After armoring the vehicle, the weight can increase to over 4300kg, depending on client specifications. Additional requirements and specifications can add an excess of 200kg on an already armored car.

Constructing a bullet proof body can be a complicated process to an unprofessional. The extra weight must be attached to a rigid frame. The frame is attached to the vehicle chassis, giving it a strong base to hold all the additional material. The front panels, pillars, doors, seatbacks, and armored panels are attached to the frame. The armored glass has to stop high-caliber bullets with little or no fragments after a gunshot. The glass has an incorporated polycarbonate layer which prevents the glass from shattering upon impact (“Model Description,” n.d). The bullet-proof glass is designed in the same curvature as the initial glass to ensure that the original’s external car appearance remains the same. The bullet-proof glass should be able to withstand high-velocity bullets and absorb kinetic energy.

Civilians commonly use B6 ballistic specifications because of its enhanced security features. It can protect the occupants of a vehicle from the commonly used assault rifles. The B6 specifications use opaque and transparent material, which meets the European union CEN 1063 specification standards to armor the land cruiser. High-quality armor steel is retrofitted on the roof and all four doors. The glasses on the doors, back, and windscreen, are replaced with multilayered laminated glass to withstand a gunshot at close range. The glass is laboratory tested and conforms to the CEN 1063 standards (“Model Description,” n.d). The floor is retrofitted with armor steel, able to withstand two DM 51 hand grenades simultaneously detonated. Furthermore, the floor should be able to protect the occupants against anti-personnel mines. B6 ballistic protection is sufficient for any VIP who needs a bullet-proof vehicle.

The armoring design should be so that it does not compromise the original structure’s integrity. The steel is a self-supporting structure integrated into the vehicle cab eliminating the risk of increased weight on the car’s integrity. The door armor plate, windows, and any other armor component overlap on the doors’ interior armor frame. Additionally, the hinges on the doors are reinforced on the pillar and the armor frame in the door so that the door weight is supported by the pillar frame and not the original vehicle frame. The hinges must be heavy-duty with a built-in doorstop to prevent undesired door openings (“Model Description,” n.d). The fuel tank is reinforced with a steel armor plate, and the battery is protected with at least 6.5mm high-quality armor steel.

Apart from the ballistic protection, there are additional mechanical adjustments that must be done to the vehicle. The suspension has to be upgraded to hold the additional weight from the armoring. The five wheels are replaced with run-flat systems, enabling the vehicle to move with a gun shot on the tires. Other upgrades are optional and can be provided at the request of a customer. These include ballistic radiator protection, brake upgrade, full engine sides protection, heavy-duty alloy rims, gun ports, 2-way intercom, on board communication equipment, and additional blast protection (“Model Description,” n.d). Additional specifications can be ordered depending on the intended use of the vehicle. Specifications and level of ballistic protection will determine the type and cost of materials used.

Toyota Land Cruiser GXR design and reliability make it the perfect armoring choice for many individuals. The level of ballistic protection will depend on the owner and the use of the vehicle. B7 ballistic protection is the highest civilian protection standard available. Military vehicles can be fitted with higher standards which can protect the occupants from bigger explosions. The process of armoring a vehicle includes designing a rigid steel frame that will bear the additional weight. The original integrity of the vehicle remains intact because of the frame. Care must be given to the glass replacement so that it remains in appearance as the original. A well-designed armored car can protect the occupants from hand grenades, handguns, and high-velocity sniper rifles. The level of ballistic protection is a preference of the vehicle owner, although the user can determine the builder’s specifications.

References

Model description: 17YM Land Cruiser 4.5L GXR diesel B6 armored. Dazzle. Web.

Ojoc, G. G., Pirvu, C., Sandu, S., & Deleanu, L. (Eds.). (2020). Standardization in testing ballistic protection systems. In IOP Conference Series: Materials Science and Engineering (Vol. 724, No. 1, p. 012049). IOP Publishing. doi:10.1088/1757-899X/724/1/012049

What are the differences between armor levels? (2019). Inkas.

2021 Land Cruiser. (n.d.). Toyota.

Introduction

Product liability law describes some commodities as rationally dangerous and/or unsafe for people consumption. As a result, when defective products cause injuries to people who use them, manufacturers, product distributors, or designers among other parties are held liable for damages. While exercising due care, manufacturers sometimes distribute faulty products without their knowledge. In a bid to avoid expensive class lawsuits against defective products, the Toyota Company recalled about 9 million vehicles in 2009 and 2010. This paper discusses product liability law with reference to this example of mitigating expenses in the payment of damage claims at the Toyota Company. The purpose is to provide an opportunity to look at product liability law in more depth and to develop an understanding of how this specific legal issue affects business operations and business decision-making. This goal is accomplished through a discussion of the background to product liability law, its basic theories, and defences to product liability lawsuits with reference to product liability legal issues.

Background to Product Liability Law

In the legal practice, it is unusual to set up universal policies that can be followed consistently. However, the case of Winterbottom v. Wright established such a unique general rule in 1842. Mr. Winterbottom sustained wounds upon the breaking up of the vehicle, which he was steering. As Jacobs reveals, the cause of collapse was established as poor construction. Mr. Wright was the manufacturer of the coach. He had retailed it to Postmaster General, which then engaged in an agreement for providing the means that were required for drag the coach. The coach owner hired Mr. Winterbottom as the driver. When Mr. Winterbottom suffered damage as resulting from poorly constructed coach, he sued Mr. Wright for negligence. The court dismissed the suit citing the general rule that a party that did not enter a contract with a manufacturer cannot sue the manufacturer for negligence, even if the cause of damage can be proven as attributed to poor manufacturing of the product. This claim implies that only a party in privity can sue a seller. Thus, Mr. Wright could not assume liability for a product he had manufactured.

The above precedence completely closed doors for legal suits involving any party that lacked privity key. The universality of the applicability of the precedence was transformed through the stipulation of exclusions to the broad privity statute. The first exception was provided for in situations involving a seller selling products or goods, despite him or her knowing that the products are defective, and that they can cause damage to a buyer who is unaware of the defectiveness of the goods or products. According to Jacobs, exclusion was also provided for commodities that are “deemed inherently or imminently dangerous such as guns, explosives, food and drinks, and drugs”. The case of MacPherson v. Buick Motor Co., which was settled in 1916, further enlarged the exception of imminently dangerous.

In the case, Justice Cardozo held that the exception of ‘inherent danger’ cannot only apply to products such as poisons and/or products alike in nature, but also to all products , which may cause destruction during their normal use. Thus, if any product that is negligently made poses threat to the life of its user, it amounts to the causation of danger. In his verdict, Justice Cardozo stated that if there exists supplementary information that any potential situation or element that can cause hazard to its consumers will be utilised by people other than its procurers, with consideration of the agreement or not, the producer of such an element is under a permissible compulsion to make it devoid of laxity. This claim implies that producers owe a duty of care to consumers of a commodity, with the agreement notwithstanding. In this sense, the case of MacPherson v. Buick Motor Co. provided legal remedy to persons who are not parties to any contract that involves the sale of products, which can cause harm including vehicles.

The reasoning behind the MacPherson v. Buick Motor Co. ruling was embraced by courts in many jurisdictions. It never attracted any serious challenges in its application. Consequently, the legal doctrine of privity was swept away. Legal experts ceased disputing against the premise that manufacturers are subject to assuming full liability for negligence in the manufacturing of their products. The case also made it reasonable that product liability should include parties foreseeable or anticipated to be influenced by the use of product by way of suffering injury due to product defects or even dangerous condition of use. Hence, if a shopper acquires merchandise from a third vendor, he or she can indict the producer for indemnity arising from slackness in plan or authentic development of the merchandise. This assertion establishes the legal discourses of strict liability in the product liability law as discussed in the next section on the theories of product liability law.

Theories of Product Liability Law

In many jurisdictions, people suffering injuries from the use of products may deploy one or even more of the three fundamental theories of product liability law to file a legal suit against a manufacturer. These theories are negligence, strict liability, and breach of warranty.

Negligence

Manufacturing companies are required to manufacture products while paying attention not to act in negligence to duty of care that they owe other people who are likely to use their products. In the most fundamental interpretation, negligence refers to the act of exercising legal duty by avoiding injuring people who use, or are likely to use products as Daller confirms. The concern that a producer would normally show is a function of the conditions that he or she comprehends when he or she makes a commodity. In fact, this revelation is one of the facts in a case that a court establishes while ruling on a lawsuit involving breach of duty of care through negligence.

In legal suits involving negligence, ignorance is not a defence. However, a subjective question arises in terms of what reasonable people can do when having full awareness and/or when subjected to the same circumstances as the defendant. Alternatively, this case is termed as constructive knowledge, which contrasts the actual knowledge. Courts use the premise of constructive knowledge for determination of the reasonableness of an act, in some particular prevailing circumstances, to mitigate injuries accruing from the use of products. For granting of suit against negligence, the plaintiff must prove that the damages suffered because of the use of a product were foreseeable by a manufacturer so that the product manufacturer can reasonably pay attention to his or her duty of care.

The above requirement implies that manufacturers do not owe all people duty of care. For instance, supposing a person decides to open up ignition system of a Toyota car following the failure of the system so that he or she can manually start the car, only to suffer severe shock as a result. Although, it is a good idea to claim that the Toyota Company had a duty of care while manufacturing the car by making it safe for people to consider alternative means of starting it, a person suffering such damages may not be owed a duty of care as manual ignition is not the standard way of starting a car. Thus, with reference to product liability law, it becomes a pity that the persons who suffered injuries started the car using the wrong procedure. In other words, such injuries were caused by the car owner’s negligence.

Failure to exercise duty of care amounts to its breach. However, the plaintiff must demonstrate proximity between injury and breach of duty of care for negligence lawsuit to be granted. This principle is termed as ‘but for’ causation. It applies in a case where a product manufacturer may raise a defence that injuries occurred due to cases of failure to warn or due to negligence of the product user. The universal law in a laxity lawsuit is exercising of commonplace concern together with a requirement for producers to provide secure and good-conditioned commodities. The case of Saylor v. Toyota Motor Sales, USA, Inc. exemplifies the applicability of negligence as a major theory that a plaintiff may rely on when claiming damages for injuries caused by a defective product. The suit involved a claim for payment of damages for death of four members of a family who died while driving Lexus ES350. The car had acceleration pedal problems, thus prompting it to stick. The driver lost control while the car accelerated to 120mph, thus killing the four occupants. The Toyota Company was held liable.

In the bid to avoid liability for defective products, which lead to expensive lawsuits, the Toyota Company recalls vehicles that are discovered to have defects. In 2010, the company recalled Lexus cars, trucks, and scion models from 2005 to 2010. These cars had breaking problems together with sticking accelerator pedals. The company remedied all recalled cars without charging the persons who had bought them. Yet, at the dawn of 2012, Toyota accepted to resolve a class-action court case for payment of damages amounting to $1.1 billion. This case evidences that manufacturing organisations are liable for making or assembling products using defective parts without discovery of such defects. The case of Saylor v. Toyota Motor Sales, USA, Inc. demonstrates that retailers need to take extra care while offering products in the market place. It follows that producers are indebted a duty of concern to people retailing their commodities, relatives to the retailers, passers-by, individuals hiring commodities, and persons who may even hold a merchandise for a purchaser.

Strict Tort Liability

In product liability law, strict liability involves liability without the necessity of a proof of proximity or fault. Two principles are applied when granting class-action lawsuits involving strict liability. The petitioners must ascertain that any manufactured good that is to them brought is faulty. Secondly, the product must cause the injuries. Hence, in stringent accountability lawsuits, the jury centres on the commodity as opposed to the behaviour of its producer. Thus, any proof of wrongdoing on the part of the manufacturer is not necessary.

Stringent legal responsibility holds in all lines of supply of merchandise. However, in the US, such modifications were made to the law. Many states require that plaintiffs provide a proof of negligence on the part of the retailer. This requirement emanated from the claim that innocent retailers would suffer injustice due to malpractices of the manufacturers who are located far away from the states, who buyers may find hard to sue. Proof of defect requires an understanding of the sources of defect in a product.

Products’ defects may originate from manufacturing defects, design defects, and failure to warn. Products have manufacturing defects if they deviate from other identical products, failure to meet design specifications, and/or failure to meet performance standards. In case of the Toyota Company, such defects may emerge from inappropriate assembly, using sub-standard components, loose parts, use of defective materials, and missing parts. As revealed in the case of Pena, et al. v. Toyota Motor Corp, in the automobile company, manufacturing defects may also emerge from lack of testing of each unit supplied to the market. Design faults occur when the settings of the manufactured goods make it reasonably hazardous to the customer.

As a universal principle in the merchandise plan, care must be taken to make commodities when bearing in mind the anticipated unconventional application together with ways of mishandling the good. One important issue that is considered in design fault lawsuits is whether producers have any additional secure design option. Otherwise, they should warn that defects are present in a product when a manufacturer fails to provide adequate signs, labels, or instructions.

Breach of Warranty

Warranties are minor terms, which do not form part of chief necessities for the existence of a contract. In case of breach of warranties, aggrieved parties sue for damages, but not the end of the contract. In the due process of selling products, negotiations are encountered. Negotiations that involve the purchase and sale of goods either fall into representation or term categories. Terms are either expressed or implied. According to Allen & Overy Lawyers, expressed terms encompass terms that are set out in an agreement by parties engaging in a contract. Implied terms are not set out expressly in the contract. However, law, usage, or even custom implies them.

Warranties are subdivided into express and implied warranties. Express warranties are incorporated in the sales contract. Otherwise, they are spoken in the process of negotiations. They can also be created through silence. Silence may create a wrong impression concerning the quality of a given product on sale. For manufactured products such as vehicles, an important source of express warranties involves the design specification and/or examination of samples that are shown to customers, or even on buying a product. In case of warranties that are created upon buying a product, the buyer presumes that another shipment would conform to the previous product performance and quality. In the past, people could not take legal action against any violation of state guarantees if not in privity with the individual providing the service agreement. However, courts strictly enforce such warranties today on the grounds that people alleging their breach depend on them in making purchasing decisions.

While a confirmatory act is a precondition for the creation of articulated permits, implied guarantees are supposed to hold unless “the seller clearly and unambiguously disclaims in it writing as part of the sale agreement”. Both express and implied warranties are important for manufacturing organisations. Any suit alleging breach of warranties amounts to expensive settlements. Miller v. Toyota Motor Sales USA, Inc. serves as an important case showing how breach of warranties may increase financial risks to a manufacturer.

Defence for Product Liability Lawsuits

Defence to product liability lawsuits takes two general forms. They include those, which seek to avoid liability and those seeking to reduce the degree of liability. One of the mechanisms of avoiding liability is the statute of limitations. It requires the petitioner to present a court case within a specified period. Failure to do so amounts to dismissal of the claims even if they are valid. Nevertheless, there are exceptions to this defence. Where offended people are below the stipulated age, the time required to file a claim does not add up not unless such people reach approximately 20 years. The discovery rule is applied in situations where injured people do not immediately learn about the injury. For instance, upon exposure to asbestos, time may only begin to count when the injured persons discover facts that are appropriate for the identification of the damage to file a claim.

Statutes of response follow similar principles to statutes of limitation. However, time only begins to run from the date of manufacturing a product or the date of sale. Although variations between states exist on the time of validity of statutes of response, it is ten years in many states in the US. Another defence that is available to a defendant is the principle of unavoidable danger. Manufacturers have legal obligations to ensure they take precautions together with ensuring adequate warning. They are required to provide appropriate instructions on proper use of products. However, the ruling may not hold producers and retailers strictly liable for situations where merchandise may be inevitably hazardous, but needed by the community. For instance, pharmaceutical manufactured drugs can cause harm if not reasonably used.

In product liability lawsuit, the defendant may cite the principle of contributory negligence in his or her defence. This involves situations in which injuries are caused by more than one causes. A standard that is used by many jurisdictions involves denial of recovery where the plaintiff is responsible for more than 50 percent of the fault leading to an injury. In some jurisdictions, the principle only reduces the recovery depending on the percentage of the plaintiff’s fault. Other defence principles that are available to the defendant in a product liability lawsuit include the principle of misuse, risk assumption, and alteration.

The principle of failure to mitigate may enable product manufacturers to escape liability. The law demands that people need to take appropriate and reasonable actions to ensure that injuries do not get worse. Thus, failing to mitigate them implies that an injured individual contributed to his or her injuries through negligence in acting reasonably. Consequently, failure to mitigate does not amount to a defence that seeks to escape liability. It seeks to reduce the damage recovery awards that the defendant would have paid anyway. The principle of a failure to mitigate any risk ensures that the jury does not serve injustice by punishing a product manufacturer through imposing strict liability for mistakes done by the plaintiff.

Bibliography

Allen & Overy Lawyers. Guide to Basic Principles of English Contract Law. London: Advocates of International Development, 2010.

Daller, Morton. Product Liability Reference Desk. New York: Wolters Kluwer Law and Business, 2013.

Jacobs, Edward. “Judicial Reform of Privity and Consideration.” Journal of Business Law 3, no. 2 (1986): 312-335.