Toyota International Business Strategies - Essay Example

?International Management Table of Contents Introduction 3 Background 3 About the Company 3 Product Portfolio Mix 4 Analysis of Competitors 6 Corporate Strategy and Key Competence Areas 8 Response to Competition 10 Conclusion 11 References 12 Bibliography 13 Introduction Business environment in the twenty first century has been characterised by intense competition among the firms. This has led to a need for business organizations to provide greater value to a product or a service offering that would help in providing a competitive edge to the business organizations. Product offering is one of the most significant aspects of business organization’s strategic aspects that help a firm to provide greater value to the customers. The present study would analyse the business strategies of Toyota Motors Corporation with regards to achieving global competence. The study would specifically analyse the product offering and product based strategies of the firm and how these have been used by the firm to gain global competitive advantage. The choice of the organization assumes significance considering the fact that Toyota is one of the most formidable brands of the world and has a significant market share in the global car market. The company has a product offering that tends to offer the best products to the customers. It also has operations spread around major consumer markets of the world and is known for its operational and manufacturing excellence strategies. Background About the Company Toyota Motors Corporation is one of the most reputed car makers of the world. The automobile behemoth was established in the year 1937 and is presently one of the most formidable brands of the world with its stocks listed on the bourses of the US stock exchanges as well as Japanese stock exchange. The company is headquartered in Tokyo, Japan and has a capital worth 397.05 billion Yen as of 2010. The company has a total of 320,590 employees on active payroll as of March 2010. The main business area of the organization is in the areas of automobile production and sales. It has a multi product offering that helps in targeting a large number of market segments. The company is known for its innovations in product design and operational expertise that helps it to provide greater value to the customers (Toyota Motors Corporation, 2011). Product Portfolio Mix Toyota Motors Corporation is in the business of automobile manufacturing and sales and has a product offering that caters to almost all sections and segments. The company’s product offering includes cars that includes hatchbacks, sedans as well as luxury SUV’s, hybrid cars, trucks and commercial vehicles. The detailed products under the brand are provided in the table below: Table 1: Product Offering of Toyota Motors Corporation Cars Models Category Price (US $)   Yaris Hatchback 13155   Corolla Sedan 15900   Matrix Hatchback 16700   Camry Sedan 20195   Prius Sedan 23520   Sienna Minivan 25060   Avalon Sedan 33195         SUV RAV 4 SUV 22475   FJ Crusiser SUV 25790   Venza Crossover 27125   Highlander SUV 28090   4Runner SUV 30305   Sequoia SUV 40930   Land Cruiser SUV 68920   Trucks Tacoma Truck 16365   Tundra Truck 24435 (Source: Toyota Motors Corporation-a, 2011) As evident from the table shown above Toyota has a very large product offering that helps it to cater to a large number of customer segments. The prices of the vehicles have been formulated in a manner that would help the firm to target a wide customer audience. On one hand there are highly priced SUV’s and hybrid vehicles as well as price friendly hatchbacks that help it to meet the demands of a large section of the customers. The company’s product strategy follows an innovative approach with focus on looks, design as well as engine capacities. The company has continuously modified its product offering with respect to the changing demands of the consumer audience. The company has made it a part of its vision to produce more hybrid and green vehicles that are environment friendly (Toyota Motors Corporation-b, n.d., p.19). The company over the years has filled the void in its product offering by launching different products that have helped it to meet the demands of a large number of target market audiences. This is perhaps one reason why the firm has been chosen as one of the most formidable brands of the world (Hino, 2006, p.173). In addition to this the company has specified product offerings for different geographies. This has helped it to include the aspect of local culture and sentiments while operating in diverse markets across the globe. This product strategy of country specific product offering in which Toyota launches models depending on the tastes of the local market audience gives it a good competitive advantage as compared to its competitors. Analysis of Competitors In the context of the present study the two main competitors of Toyota Motors would be analysed with regards to their product offering in the market. These two brands include Ford Motors Company and Honda Motors both of which are strong competitors of Toyota Motors globally. Ford Motors Company is a US based automobile manufacturing organization that also has an impressive array of product offering. The company’s product portfolio also includes an impressive product offering that includes sedans, hatchbacks, trucks as well as hybrid and electric vehicles. These offer a significant competition to the products of Toyota across the global markets. The company scores above Toyota with regards to its pricing structure that is more competitive than Toyota. In addition the company also has an edge over Toyota Motors Company with regards to a larger number of models especially in the area of trucks and commercial vehicles. This is evident from the fact that there are about eight models of trucks offered by Ford Motors Company in contrast to only two product offerings in the similar line by Toyota Motors Corporation. However Toyota Motors Corporation scores over Ford Motors with regards to a larger number of product offering in the low priced range. Toyota Motors Corporation also has a larger number of SUV’s and crossovers as compared to its rival. Ford Motors has an edge over Toyota with regards to a larger number of product offerings in the commercial vehicles segment with Toyota offering only two models as compared to eight different models of the same category offered by Ford Motors Company (Ford Motors Company, 2011). Honda Motors is another significant competitor of Toyota Motors globally as well as in the Japanese car market. Honda motors scores over Toyota with regards to the pricing structure of the lower priced models including the hatchbacks. The prices are essentially more competitive than Toyota that offers a good competition in this segment. However Toyota scores over Honda motors on two major aspects that includes a better brand image and its positioning as a reliable brand. Secondly Toyota also scores over Honda with regards to its pricing structure in the higher end models like SUV’s and hybrid vehicles where Toyota’s products are priced much lower than that of Honda giving it a slight edge over its competitors. Honda does not compete with Toyota in commercial vehicles and trucks category as it does not offer any products under this segment (Honda Motors, 2011). Figure 1: Competitive Positioning of Toyota (Source: Northern Arizona University, 2010) The figure above clearly indicates the competitive positioning of Toyota Motors Corporation. It is very clear that Toyota scores over its competitors on the basis of high quality. However the pricing structure of the products is a bit tilted towards the higher side that offers an edge to its competitors. However the firm believes that by providing a good quality it can score an edge over its rivals as it would project a more formidable image of the organization amongst the members of the target market audience (Northern Arizona University, 2010). Corporate Strategy and Key Competence Areas Toyota Motors Corporation determines its competitive advantage by the virtue of its brand image and a formidable positioning in the minds of the target customers. Against the backdrop of this competitive advantage lies a well knit strategy of promoting research and development as well as enhancement of the learning curve of the organization. The organization’s strategy of learning locally and acting globally has also helped it to generate sustainable competitive advantage (Ichijo, Kohlbacher & Hitotsubashi University, 2006, p.1-3). The organization also draws competitive advantage from the competitive prices of its product. This has been possible due to the operational management techniques being adopted by the organization. The Total Production Systems adopted by the organization as a part of improving the operational aspects of the organization has led to cost advantages by reducing the number of defects and production with greater quality. This has served to improve the quality of products on one hand and also price advantage to the organization on the other hand (Emerald Group Publishing Limited, 2002). Figure 2: Productivity Analysis of Automobile Firms (Source: Spear, 2005, p.4) The figure above shows that Toyota gained an edge over its competitors on the virtue of improvements in the production and manufacturing areas. The company was able to gain the maximum increase in productivity levels owning to improvements in manufacturing and operational aspects. This has enabled Toyota Motors to provide products at lower costs that provides it an edge over its competitors in the markets (Spear, 2005, p.4). Finally Toyota motors strategy of thinking globally and acting locally has enabled it to include local culture and sentiments. This is the reason why the firm has a specified product offering in each of the different nations it operates based on the local consumer buying behaviour. This has also provided it a sustainable competitive advantage in the market (Phatak, Bhagat & Kashlak, 2007, p.210). Response to Competition Toyota has actively responded to the competition shown by its competitors in the market. The company launched its hybrid cars in an attempt to counter the competitor’s dominance in the lucrative market segment. The launch of the Prius models in the markets its entry in the hybrid cars market segment (Reinhardt, Yao & Egawa, 2006). In addition to this the company also derives competitive advantage from the aspect of lower costs and use of efficient manufacturing techniques that have enabled it to reduce cost and provide reduce the number of defects. This has also enabled it to adopt a competitive pricing structure that has enabled it to emerge as a formidable brand in the minds of the target customers. The company also has a presence in many nations across the world covering all the major markets including the developing markets of India and China that offer significant potential to the car makers around the globe. The company has a product offering that tends to suit the budgets of different categories of customers. Moreover the company’s products also cover all the major segments of automobile industry that includes product categories right from cars to trucks and commercial vehicles. In addition to this the firm’s ‘glocalisation’ strategy has also enabled it to achieve a good market share and a formidable positioning in the minds of the customers. Conclusion The analysis of the product strategies of Toyota Motors shows a good positioning of the organization. The company is one of the most renowned brands in the industry that has been possible due to the operational and a unique distinctive product strategy that has enabled it to provide quality products at competitive prices. The large array of products under its brand umbrella has enabled it to attract a large market audience. In addition presence in all the major markets has also provided it considerable opportunities to emerge as a formidable player in the market. The company also scores well ahead of its competitors in terms of reliability, quality and price. Along with this continuous innovations and emphasis of research and development has enabled it to emerge as a formidable player in the highly competitive and turbulent market. However certain areas like presence of few models and variants in the commercial vehicle category and the relatively high end pricing of the hybrid models has emerged as some of the main areas of concern for the organization. However with a focus on continuous improvements the company can achieve good profitability and sustainability in the future. Finally the consumer driven approach and adoption of a ‘glocalisation’ strategy has enabled it to emerge as one of the leading brands of the world. References Emerald Group Publishing Limited. (2002). How Toyota stays ahead of the pack: Hybrid becomes newest chapter in automaker success story. [Online]. Available at: http://www.emeraldinsight.com/journals.htm?articleid=1571477&show=html. [Accessed on June 29, 2011]. Ford Motors Company. (2011). All Vehicles. [Online]. Available at: http://www.ford.com/vehicles/. [Accessed on June 29, 2011]. Hino, S. (2006). Inside the mind of Toyota: management principles for enduring growth. Productivity Press. Honda Motors. (2011). All Models. [Online]. Available at: http://automobiles.honda.com/all-models.aspx. [Accessed on June 29, 2011]. Ichijo, K., Kohlbacher, F. & Hitotsubashi University. (2006). Global Knowledge Creation – The Toyota Way. [Pdf]. Available at: http://www.iamot.org/conference/index.php/ocs/10/paper/viewFile/1308/577. [Accessed on June 29, 2011]. Northern Arizona University. (2010). Competitive Analysis. [Online]. Available at: http://dana.ucc.nau.edu/~toyota-p/competitive_analysis.htm. [Accessed on June 29, 2011]. Phatak, A.V., Bhagat, R.S. & Kashlak, R.J. (2007). International Management. Tata McGraw-Hill Education. Reinhardt, F., Yao, D. & Egawa, M. (2006). Toyota Motor Corp.: Launching Prius. [Online]. Available at: http://hbr.org/product/toyota-motor-corp-launching-prius/an/706458-PDF-ENG. [Accessed on June 29, 2011]. Spear, S.J. (2005). Competitive Advantage Through Operations. [Pdf]. Available at: http://www.ihi.org/Ihi/Files/Forum/2005/Handouts/L13-b-Fixinghealthcarefromtheinsidetoday.pdf. [Accessed on June 29, 2011]. Toyota Motors Corporation. (2011). Overview. [Online]. Available at: http://www.toyota-global.com/company/profile/overview/. 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