Toyota SWOT Analysis

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Toyota Motor Corporation

Strengths

  • Global organization, with a strong international position in 170 countries worldwide.
  • High financial strength (1997, sales turnover, £131,511 million), sales growth of 29.3%[1]
  • Strong brand image based on quality, environmental friendly (greener), customized range.
  • Industry leader in manufacturing and production. Maximizes profit through efficient lean manufacturing approaches (e.g. Total Quality Management) and JIT (Just in Time) manufacturing and first mover in car research and development[2].
  • Excellent penetration in key markets (US, China, EMEA) and now the second largest car manufacturer in the world, surpassing Ford.

Weakness

  • Japanese car manufacturer - seen as a foreign importer.
  • Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may be more strategically located worldwide to take advantage of global efficiency gains.
  • Some criticism has been made due to large-scale re-call made in 2005, quality issues.

Opportunities

  • Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas and electric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at an all time high - this investment and widening of product portfolio fits consumers looking to alternative sources of fuels away from gas guzzling cars[3].
  • To expand more aggressively into new segments of the market. The launch of Aygo model by Toyota is intended to take market share in youth market.
  • To produce cars which are more fuel efficient, have greater performance and less impact on the environment.
  • To develop new cars which respond to social and institutional needs and wants. The development of electric cars, hybrid fuels, and components reduces the impact on the environment. Toyota’s Eco-Vehicle Assessment System (Eco-VAS) has helped in production, usage, and disposal[4].
  • Continued global expansion - especially in the emerging markets e.g. China and India, Russia, where population and demand is accelerating.

Threats

  • Saturation and increased competition, intense marketing campaigns increasing competitive pressures[5].
  • Shifts in the exchange rates affecting profits and cost of raw materials.
  • Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially new cars). As household budgets tighten - this could lead a decline in new car sales and possible rationalization of dealerships.
  • Changing demographics e.g. number of large families is declining. Undermining the demand for large family cars[6].
  • Changing usage - families using the car less for taking children to schools. Home deliveries. Businesses - restricting business travel (tele-conferencing). Governments encouraging alternative forms of transport - cycling and incentives to use public transport across Europe.
  • Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who have chosen not to own a car, or decided to use their car less.[7]


[1] Hoovers & Toyota Corporation, 2007, Annual Report

[2] International Business 6e by Charles W. L. Hill, Mcgraw Hill

[3] Toyota Corporation, 2007, Annual Report

[4] www.toyota.com

[5] http://news.bbc.co.uk/2/hi/business/6346325.stm

[6] CD Rom, Census Data 1990 (Age Structure and Issues)

[7] http://www.marketresearchworld.net/index.php?option=content&task=view&id=1263&Itemid=

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