Toyota Company SWOT Analysis - Term Paper Example

?Toyota Company SWOT Analysis Toyota Motor Corporation (TMC) is best known to be a multinational automaker which has its basis in Japan. The company was founded in 1937 by Kiichiro Toyota and currently its headquarters is Toyota Aichi Japan. Toyota Motor Corporation (TMC) is the largest automobile manufacturer by sales and production worldwide. The company’s employees are over 320,808 individuals in different parts of the world. Its major engagement involves the automobile business and the financial business. The company has two popular brands namely; Toyota and Lexus. The Toyota Company was introduced in America in 1957. At that time the start of the company was poor and it managed to manufacture a car which was known as Toyopet. However, Toyota Company came back strongly into the market in 1965. At that time they manufactured the 90-horsepower Corona sedan which became popular in the market. Since then, the company has been able to manufacture different brands which include; the Corolla, Camry, Toyota trucks, the Lexus luxury brand, Scion and the first gas and electric hybrid Prius (Hino, 2006). Prius was the first worldwide and was manufactured purposely for the 21st century. Among the many consumers of the company, Americans have remained supportive to the company. According to Kurtz, (2008), they have been attracted by the company car’s quality, dependability and its reliability. The company’s mission statement is to be able to sustain growth which is profitable through the provision of perfect customer experience and support in dealership. Toyota Company has several strengths and weaknesses. The strengths include; Company’s High financial strength; the investment of the company in several factories located in the US and china resulted in increased profits in 2005. This was unique from the well known worldwide trend in the motor industry. The net profits of the company rose rapidly and higher sales were also witnessed. This outstanding performance of the company resulted from Toyota’s right mix of products for all the markets served by the company. The company’s segmentation, targeting and positioning is well focused in several countries worldwide (McCraw, 1997). The second strength of Toyota Company is its popularity as an Industry leader in manufacturing and production. In 2003, Toyota Company became the second largest carmaker in the world with a total of 6.78 million units. The company surpassed its top rivals like Ford which was in the third position. Toyota Company came second after the General Motors’ which had a total of 8.59 million units during that period. According to Bohm, (2009), several factors have contributed greatly to the company’s strong position in the industry. These include the range of the company’s product which has remained diversified; the company’s marketing which is well targeted and the continuous commitment of the company to remain lean in its manufacturing business and observation of quality. The company specialty is to make different vehicles of a wider range both for the private customers and other different commercial organizations. Its products include Yaris which consists of both the small and the large trucks. The company is also able to identify and meet different needs of customers through utilization of different marketing techniques. The brand of the company is considered to be a household brand. In addition, different manufacturing approaches which are efficient such as Total Quality Management (TQM) has enable the company to fully maximize its profits. Toyota Company also has certain weaknesses which include; Just in time system, Even though the company’s JIT system is among Toyota’s competitive advantage it can also be classified as a weakness. The JIT depends largely on other systems and this requires all the suppliers to follow what company wants. In case a given supplier fails to meet the quality standards of the company, the whole production process will be interfered with. The company’s activities will come to a standstill until when the problem has been solved. Toyota expects every supplier to be timely and to offer the best products which are of high quality. The second weakness is inefficiency; the major problem facing most vehicle manufacturers is the product recall which may be persistent. In 2005, Toyota Company was forced to recall a total of 880,000 of its sports utility vehicles and pickup trucks because of the machines front suspension systems which were faulty. The company however did not reveal the cost which the recalled cars would cost in the market. Most of the faulty cars were later sold in the US and others sold in Japan, Europe and Australia. The third weakness is the huge investment; Toyota Company will have to continuously produce its products for the company to be able to retain its operation that is efficient. The company’s car plants constitute huge investment in its fixed costs that are expensive together with increased costs of training and retaining labour. Hence, in case of existence of downtown in the market, over capacity could be witnessed in the market. On the other hand in case of an upturn experience in the car market, the company will lose the potential sales because of its minimal capacity. In most cases this problem is common in the car manufacture of high volume. The company can minimize its weaknesses in different ways. First, is the weakness of Just In Time (JIT) system, it can overcome this problem by reserving supplies required in order to ensure the company’s productions runs smoothly without being interfered with by shortages of the necessary materials. Secondly, the company can also train its engineers, this will ensure that the cars produce by the company are free from faults. Hence, reduces the cases of the company’s products being recalled from the market. Finally, concerning the huge investment, Toyota Company can lease their car plants or sell if it is not being fully exploited. Toyota Company also has various opportunities and threats. Among the opportunities of the company is innovation. The Lexus and the Toyota have maintained good reputation because the vehicles manufactured are considered to be environmentally friendly. RX 400h hybrid belongs to the Lexus while Prius belongs to the Toyota brand. The company’s improved technologies which have been developed have provided an appropriate basis for both the Lexus RX 400h hybrid, and the Toyota Prius. The company has witnessed increased sales of the new hybrid vehicles. This has mainly been contributed by the oil prices which have continued to increase rapidly. The company has also managed to sell its technology to other different motor manufacturers such as Ford. Ford acquired the Toyota’s technology purposely for its new Explorer SUV Hybrid. Such activities have strengthened Toyota’s company interests and investment in the hybrid R&D. The second opportunity is the company’s economies of scale. Toyota Company has been focused on advancing its manufacturing system which is in place. The system is known to be lean and the company’s aim has been to distribute the fixed costs over its production. Hence, in terms of costs and production, the company has surpassed its top rivals such as Ford and GM. It has the ability to produce a total of 15 cars per employee; this is higher than the total of 4.7 cars per employee that can be produced by its rival company Ford. Through the production of several cars for sale, the fixed costs of Toyota Company are effectively distributed over the high production of the company. The company’s threats include; a saturated market, the Company being big has been exposed to several problems. The current condition in the cars market is not conducive. The worldwide market is faced with increased supply; therefore manufacturers who are dealing with cars have to ensure the models which they are producing fit the specifications needed by consumers. Most of the Company‘s products are marketed in the US and in Japan. These expose the company’s products to the political and economic conditions which are ever fluctuating. This reason can justify well the reason why the company is moving its attention to the current Chinese market. The exchange rates movement could reduce the car market which already has narrow margins. The second threat of the company is increased competition. Just like all other car manufacturers, Toyota Company is faced with high competitive rivalry in the market. Competition is increasing in a rapid manner on a daily basis especially with the market having several new entrants from china, South Korea and other several new plants which have been established in the Eastern Europe. In addition, the company is faced with different changes in prices of the raw materials which are mainly used in the company. They include rubber, steel and fuel. Slow downs are also common in the major economies in different locations such that in the Pacific, the US and Europe. Potential threats are posed to the Toyota Company by these economic factors. Summary Toyota Company can capitalize on its opportunities in order to increase its sales hence, increasing the company’s profits. It has to utilize its current innovative ways to improve on quality of their production in order to maintain and improve the current reputation of the company and to boost the sales of the company. It should also produce more environmentally friendly cars in order to meet the high demand in the market. Secondly, the company should also utilize its economies of scale to be able to produce more vehicles. This way the company will be able to cut on its costs and increase its profits due to increased sales. Toyota company has to also neutralize its threats which it include the saturated market and increased competition. The company will have to seek for other markets in different regions rather than focusing on the current markets. The company has already shifted its attention to the Chinese market; hence it should exploit all the available opportunities. In the case competition from rivals, the company will have to diversify and to fully exploit all the available marketing promotions in order to increase its sales (Ferrell and Hartline, 2008). References Bohm, A. (2009). The SWOT Analysis. Germany: GRIN Verlag. Ferrell , C. & Hartline, M. (2008). Marketing Strategy. New York,NY: Cengage Learning. Griffin, R. ( 2006). Management. New York, NY: Cengage Learning. Hino, S. (2006). Inside the mind of Toyota: management principles for enduring growth,New York,NY: Productivity Press. Kurtz, D. (2008). Contemporary Marketing. New York,NY: Cengage Learning. McCraw ,T. (1997).Creating modern capitalism: how entrepreneurs, companies, and countries triumphed in three industrial revolution. UK: Harvard University Press. Read More