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Toyota Analysis

4907 words - 20 pages

Analysis of Toyota Motor Corporation
By: Thembani Nkomo

This paper will explore the external and internal environment of Toyota Motor Corporation, and suggest recommendations to sustain its competitive advantage.

Analysis of Toyota Motor Corporation by Thembani Nkomo






EXTERNAL ENVIRONMENT OF THE AUTOMOTIVE INDUSTRY 2.1 Industry Overview and Analysis 2.2 Industry Life Cycle 2.3 Industry Demand Determinants 2.4 Porter’s Five Forces 2.5 Industry Cost Structure Benchmark 2.6 Industry Competitive Landscape 2.7 Major Competitors 2.8 Key Success Factors in Industry


INTERNAL ENVIRONMENT OF ...view middle of the document...

Skyrocketing fuel prices and growing environmental concerns have shifted consumers' preferences away from fuel-guzzling pickup trucks to smaller, more fuel-efficient cars. Some automakers embraced the change by expanding their small-car portfolios and diversifying into the production of hybrid electric motor vehicles. Other automakers were more reluctant to shift their focus from big to small cars, expecting the price of fuel to contract eventually, bringing consumers back to the big-car fold. When fuel prices did fall during the second half of 2008, it was due to the US financial crisis ripping through the global economy. This had a domino effect throughout the developed and emerging worlds, with many Western nations following the United States into recession. Industry revenue fell about 15.4% in 2009. 2 Pent-up demands will aid industry revenue growth, estimated at 2.1% in 2013, thus bringing overall revenue to an estimated $2.3 trillion. 3 Overall, the large declines followed by recovery are expected to lend the industry average growth of 2.2% per year during the five years to 2013. Throughout the past five years, growth in the BRIC countries supported production. Rising income in these countries led to an increase in the demand for motor vehicles. Also, Western automakers moved production facilities to BRIC countries to tap into these markets and benefit from low-cost production. Over the next five years, the emerging economies will continue their growth, and demand for motor vehicles in the Western world will recover. Industry revenue is forecast to grow an annualized 2.5% to total an estimated $2.6 trillion over the five years to 2018. 4 2.2. Industry Life Cycle This industry is in the mature stage of its life cycle. 2.3. Industry Demand Determinants Worldwide automobile demand is tied to vehicle prices, per capita disposable income, fuel prices and product innovation. On the supply end, vehicle prices stem from material and equipment costs, with higher steel and plastic prices raising manufacturers' purchasing costs and, ultimately, retail prices. During the past five years, automakers have been plagued with high steel and plastics prices, which have raised manufacturing costs and product prices. On the demand side, per capita disposable incomes determine affordability for consumers. As incomes increase, the propensity to purchase motor vehicles increases as they become more affordable. Incentives are used to generate sales during periods of low economic growth. Over the past five years, there has been a significant increase in the number of automobile financing companies being established in the BRICs. This has resulted in the number and range of automobile loans increasing, which has contributed to stronger industry demand. In the developed world, overall improved quality among most manufacturers has caused buyers to feel freer to use price to differentiate similar products. Consumers are increasingly better informed about a vehicle's...

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