Toyota SWOT Analysis

Toyota Motor Corporation

This SWOT analysis looks at Toyota, an automobile maker that now operates in nearly 200 countries around the world and is known for making fuel-efficient, economical vehicles, including cars, trucks, people carriers and sports utility vehicles. It is often viewed as being at the forefront of alternative fuel vehicles but has also faced criticism in recent years for its lack of quality and potential safety risks. However, the company continues to hold a strong market position and must look forward in terms of leveraging its strengths for identifiable opportunities while addressing its weaknesses and perceived threats in the market and even internally.

Strengths

  • The automaker has always had an innovative organisational culture, being the first to introduce now widely practiced management systems, including Total Quality Management (TQM), Kaizen, lean manufacturing and Kanban, which have all been proven to improve operations and performance.
  • The company is considered an innovator, being the first company to mass produce hybrid vehicles. Toyota's level of green vehicle technology is unsurpassed, which also gives it a significant competitive advantage as more consumers migrate towards these vehicles due to the price of petrol and concern over the environment.
  • It is a highly recognisable brand with significant brand equity with attributes that include environmental friendliness, social responsibility, durability, value and safety.
  • Toyota continues to be an industry leader in terms of output and revenues tied to its management systems. Although the competition has tried to replicate these systems, Toyota still excels as one of the most profitable automakers in the world.
  • The company offers a wide range of models, satisfying all types of consumer segments around the world and addressing unique needs and desires around the world.
  • Weaknesses

  • Toyota has undertaken numerous vehicle recalls in the last few years, which has hurt its financial performance and tarnished its brand. Along with the recalls, there have been lawsuits tied to vehicle failure, which have also caused the same financial and brand damage.
  • The company does not have a strong presence in emerging markets despite the opportunity for growth here, including China or India where fuel-efficient, green vehicles would be welcomed. As such, other vehicle companies have gained a foothold and left Toyota at a disadvantage.
  • Opportunities

  • Toyota will be able to continue to grow its green vehicle focus as consumers around the world are showing a greater interest in hybrid and electric vehicles due to the rising cost of petrol and emissions concerns.
  • In staying attuned to consumer needs and changing tastes as well as specific local needs, Toyota could continue to introduce models that satisfy these needs.
  • There is an opportunity to grow and expand into these emerging markets through acquiring other vehicle companies, which will add market share, market intelligence, sills and assets.
  • Threats

  • New emissions standards will continue to be introduced around the world without any standardisation, so this could challenge Toyota in terms of continuing to make more investments in new technology to meet these emissions standards. This would most likely mean less profit for Toyota in the short term.
  • There is the threat of the rise in raw material costs, which has been happening over the last few years and pushing Toyota and other vehicle manufacturers to find more innovative ways to construct the vehicles as well as to search for ways to expand the supplier network.
  • The threat of increasing competition is happening already for Toyota as more vehicle manufacturers are making hybrid and electric vehicles whilst other manufacturers have reorganised and are becoming more competitive in terms of models and pricing.
  • There is a constant threat from exchange rates for Toyota tied to the yen and its revenue from around the world. When the revenues are sent back to Japan, converting these to the yen has often resulted in lower profits.
  • Toyota regularly faces the threat of natural disasters as many of its manufacturing plants are located in countries that often are subjected to many types of natural disasters that often lead to downtime for these facilities. This increases costs in terms of the downtime as well as regular repair work to the facilities. This reduces production volume and overall profitability.