1. Toyota Motor Corp.®
By: Zachary Lipson, Genevieve Effa & Bryan Juarez
Table of Contents
I. Executive Summary
1.1 Project’s Purpose…………………………………………………………………………………………………………………...2
1.2 The Opportunity……………………………………………………………………………………………………………………….2
1.3 The Company…………………………………………………………………………………………………………………..2-3
1.4 The Growth Plan……………………………………………………………………………………………………………………..3
II. Overview of the Key Aspects of Country Risk Analysis ………………………………………………………………………. 3-5
III. Analysis/Recommendation &
References…………………………………………………………………………………………………………. 5-6

2. 1.1 Project’s Purpose
Asia comes in at 4th place out of the top five largest markets for Toyota by sales revenue.
Our management team believes that if Toyota builds a manufacturing plant in Singapore we can
accomplish two major goals. It is vital to the wellbeing of our plan to establish a friendly
relationship with the government of Singapore. If they loosen their grip over the auto industry
more of its citizens would be able to purchase and own cars.
Our first goal we hope to accomplish is to be one of the first auto companies to sell cars
in the Singapore auto market. Technically, we won’t be the first auto company to sell cars in
Singapore. What we mean is that we will be the first auto company to engage in a full-scale
operation in the country. This is important because currently the government has a strong hand
over the auto industry by unusual government rules and regulations encumbering auto
manufactures from being able to mass-produce and sell cars to the citizens. Our second goal we
hope to accomplish is to expand our global production in Asia. Ironically, the Asian market is
one of our company’s untapped markets by sales revenue.
1.2 The Opportunity
1) Only 15 % of citizens of Singapore own a car1.
2) With the Singaporean economy booming over the last 15 years consumers will be
willing to consider purchasing an automobile2.
3) The automobile industry is minimal in Singapore, we believe with proper
coordination with the host country’s government, our company can ignite the automobile
industry in Singapore.
4) Asian regions have had large growth in automobile sales. Japanese FDI is a key
force of the automotive industry in Asia4.
Singaporean consumers are limited in choices:
• Singaporeans seeking to drive affordable cars have a very difficult time finding a
car that won’t break their wallet.
• Singaporeans who need a car for work and have no choice but to pay the inflated
prices are frustrated with doing so.
• Currently, there is no true competitive market for automobiles to correctly lower
the price of cars in Singapore. Our company hopes to establish a base price for cars that is
affordable for the average Singaporean family.
1.3 The Company
Toyota Motor Corporation manufactures and sales vehicles and parts. The company was
founded by Kiichiro Toyoda on August 28, 1937 and is headquartered in Toyota, Japan. The
company operates through the following segments: automotive operations, financial services,
and all other3.

3. Breakdown of Company Segments
1. Automotive Operations: Designs, manufactures, assembles and sells passenger cars,
minivans, trucks, and related vehicle parts and accessories. It is also involved with the
development of intelligent transport systems (ITS)3.
2. Financial Services: Offers purchase or lease financing to Toyota vehicle dealers and
customers. It also provides retail leasing through lease contracts purchased by dealers3.
1.4 The Growth Plan
Our plan for the time being is to enter to the Singaporean automobile market by pursuing
a FDI (foreign direct investment) strategy by building a Toyota automobile factory in Singapore.
Our growth plan is highly connected to the implementation of the IMV strategy. IMV stands for"
Innovative International Multipurpose Vehicle". The name is based on our intention to create
multipurpose vehicles that will meet the needs of consumers worldwide.
“The aims of the IMV Project are product appeal, low cost and efficiency, followed by
exchange-rate-fluctuation response capability. Toyota aims to enhance product value by
developing specialized models optimized to the tastes and environments of consumers in
emerging markets. We have also sought to reduce costs and gain efficiency by consolidating
production, transitioning from small-scale production at 11 companies to large-scale production
at four global supply bases. We are coping with the ever-strengthening yen by creating a
structure that maximizes local procurement…
The IMV Project is currently accelerating the process of globalizing production and
supply. Among the four global supply bases, Thailand serves as the base for Asia, with the other
global sites handling exports throughout the rest of the world” (Toyota.com)6.
“Toyota’s basic attitude toward our efforts in emerging markets henceforth can be
summed up as "Asia is our second mother base." What this means in practical terms is that we
will follow on from the IMV Project by strengthening our production and supply bases for
compact vehicles in Asia, move toward thorough localized procurement, and ensure and enhance
our cost competitiveness” (Toyota.com)6.

4. Below is a graph showing the history of the automobile industry in ASEAN countries6.
Below is a pie graph that shows the sales of IMV cars6:
(Asia makes up almost half of the IMV sales6)
2. Overview of Key aspects of Country risk Analysis
The country overall risk represents the potential impact on the company’s cash
flows; such risk has to be taken into account by the company when it decides if it will conduct a
new project in a particular country or not. The company will take a look at many key aspects
when making investment decisions; to be successful they will have to go over each of these
aspects and determine how risky a country is by doing research and collecting information about
the country.
1. Political Risk
There are many things that need to be analyzed when evaluating the Political
risk in the country, it’s critical for a company to understand the potential risk that develop by
investing money in a foreign country since laws, religion, and overall ways of doing business is
completely different. Main aspects that need to be measured are:

5. The Host Government; many of the actions and laws can affect the company’s
ability to do business, because most of these increase the cost of productions, things like Taxes,
regulation laws, Tariffs, etc. We want to recognize each one of these and incorporate them into
our product’s estimated cost.
War; It can have a huge impact in the company’s business cycles and therefore
affect the cash flows of the company, also it affects the safety of executives and employees of the
subsidiary. If the country contains a risk too high the company should not look for a safer
country to do business in.
Inefficient bureaucracy, it can affect the way the company does business, if
bureaucracy exists it can slow down the process of production or delivery of a company, also if
the company is looking into growing in other sections it can be blocked or sabotaged by
members of the government. It is important to discover the potential threat of this type of risk
and find alternative ways of dealing with it.
Corruption in the country, it can be seen at the firm level and at the
Government level. It increase the cost of production of the company in a very severe way and it
decreases revenue created by the company that really damages the competitive advantage by the
company.
2. Financial Risk
It should be considered when assessing the country analysis, it has a very
strong impact in the decisions made by the companies.
The most important part that needs to be evaluated is the Economic growth of
a country, because the growth of a country influences how the economy will be performing in
the short and long run, companies need to be certain that the country will be operating efficiently
and it will continue to maintain its performance in the future
There are many things that influence the states of a country but these are the three main ones are:
Interest Rates, Exchange Rates, Inflation. Each of them has a different impact
on the Economy and it needs to be careful evaluated.
The fluctuations of Interest Rates can have a negative impact in the Economy,
Countries that desire their economy to growth will maintain low interest rates in order to
stimulate borrowing and investment of firms in the country.
The Exchange rates volatility can influence the production of exports in a
country, it is important for a country to maintain a stable currency because it has a direct impact
on the imports and exports that a country produce and therefore in the Income of a country.
The Inflation rate fluctuations can have a negative impact in the company,
because it affects in a negative way the purchasing power of consumers when the inflation rate is
higher than expected and therefore the will not consume as many goods as they did before. It
also raises the prices of production for the company, which will affect the overall cost of

6. producing products. Also if the inflation rate rises by more than normal, expect the country to
raise interest rates in order to slow down the economy and decrease inflation, which also would
have an impact on the company’s ability to borrow money.
All of these aspects need to be considered when making an Investment
decision by Toyota Motor Corporation; it needs to understand the risk and how it will affect the
budget analysis in order to maximize the value of the project and company.
3. Analysis & Recommendation
To determine the overall country risk rating of our host country Singapore we
took a look at 6 factors in the country risk report: political, economic, legal, tax, operational, and
security. The factors we deemed most important were the political risk and economic risk. The
political risks were important because based on their country risk report Singapore has enough
political stability that their laws and policies are designed to facilitate foreign investment
wherever possible which also gives the government time to plan ahead for the long term8. The
economic risk were also very important because although they are politically stable, within their
economic conditions are tough because the government has controls on markets such as the
vehicle markets and that is anticipated to constrain spending by households and business. There
are also constraints on the labor market from tightening foreign labor supply restrictions which
limits their profit, output, and investment outlooks8.
For these reasons we rate Singapore with a country risk of 1.30 because
although economically they have some governmental conflicts, politically and financially they
are very stable and booming as a country. The country risk rating document also proves this
because certain factor’s ratings were deemed insignificant such as the political risk with a 1.50 or
the tax risk with a 1.00 rating. We recommend our company Toyota to enter the Singaporean
automobile market by pursuing a FDI (foreign direct investment) because right now there is
room for growth in that market and the government allows and facilitates foreign investments
wherever possible amidst the constraints on the vehicle market.
Works Cited
1. http://www.citylab.com/commute/2013/06/singapore-making-cars-unaffordable-has-only-made-them-more-desirable/5931/
2. http://www.straitstimes.com/news/business/economy/story/singapore-dollar-jumps-after-mas-stands-pat-monetary-policy-
20150414
3. http://quotes.wsj.com/TM/company-people
4. http://top-10-list.org/2011/04/14/top-10-selling-cars-in-asia/
5. http://top-10-list.org/2011/04/14/top-10-selling-cars-in-asia/
6. http://www.toyota-global.com/investors/ir_library/annual/pdf/2012/feature/
7. http://www.cnbc.com/id/100933908
8. Reference List 2014."Country Reports: Singapore." SingaporeCountry Monitor 1-20. Business SourceComplete, EBSCOhost
(accessed April 28,2015).