Analysis of Toyota's Vision statement along with analysis of 3corporate level strategies implemented by them & SWOT

1. TOYOTA
Group 6: SYBBA B
Name Roll No.
Mihir Mandrekar B030
Surbhi Mehta B032
Abhilasha Mohan Ram B034
Rohan Negi B035
Dhawal Pasad B037

2.  The Toyota Group (トヨタグループ Toyota Gurūp) is
a conglomerate company that work together and mostly
share the Toyota brand.
 Toyota Motor Corporation abbreviated TMC, is a
Japanese multinational automaker headquartered
in Toyota, Aichi, Japan.
 It is the largest carmaker in the world

3.  The primary companies in the group are Toyota Industries
Corporation and Toyota Motor Corporation. It is also considered by
many to be a keiretsu, although it does not contain a major bank.
 A keiretsu (system, series, grouping of enterprises, order of
succession) is a set of companies with
interlocking business relationships and shareholdings. It is a type of
informal business group.

4. Majority-owned subsidiaries
 Toyota Industries Corporation  Aisin Seiki Co., Ltd. (1949)
(founded in 1926)
 Toyoda Gosei Co., Ltd. (1949)
 JTEKT Corporation(1935)
 Denso Corporation(1949)
 Toyota Motor
Corporation(1937)  Toyota Boshoku
Corporation (1950)
 Toyota Auto Body, Co. Ltd.
(1940)  Towa Real Estate Co., Ltd. (1953)
 Aichi Steel Corporation (1940)  Toyota Central R&D Labs.,
Inc. (1960)
 Kanto Auto Works, Ltd. (1945)
 Toyota Communication Systems
 Toyota Tsusho Co., Ltd. (2001)
Corporation (1946)

5. Toyota’s Global Vision

6. “Toyota will lead the way to future of mobility, enriching lives
around the world with the safest and the most responsible ways
of moving people.
Through our commitment to quality, and respect to the planet,
we aim to exceed expectations and be rewarded with a smile.
We will meet our challenging goals by engaging the talents and
passion of people, who believe there is always a better way.”

8.  One aspect of the vision is “respect to the planet”
 The process for developing an Environment Action Process
begins with the parent company in Japan, Toyota Motor
Corporation (TMC).
 Every five years, TMC develops a global five-year
environmental action plan (EAP).
 This has made their plant in Princeton, Indiana, honor as one of
only two North American recipients of the Water Champion
award.

9.  The Statement gives voice to who they are as a global
enterprise, the values they embody, an the good that
they are striving to accomplish.
 Designed to inspire all Team Members to even greater
things, the Statement emphasizes Toyota's commitment
to quality, innovation and respect for the planet.
 At its heart is this signature statement: We aim to exceed
expectations and be rewarded with a smile.

10. TOYOTA’S MISSION
“To provide safe & sound journey. Toyota is developing
various new technologies from the perspective of
energy saving and diversifying energy sources.
Environment has been first and most important issue in
priorities of Toyota and working toward creating a
prosperous society and clean world.”

11.  Toyota‟s Mission Statement defines the organization's
purpose and primary objectives.
 Its prime function is “to provide a safe and sound journey.”
 It provides a reason for being, which is one of the most
important aspect of a mission statement. The mission
statement is clear and concise and provides focus and a
sense of direction.
 To develop new technologies and to conserve energy.

12. CORPORATE LEVEL
STRATEGY
1. Expansion: Diversification
2. Expansion: Integration
3. Combination: Joint Venture & Divestment

13. EXPANSION
Diversification:
From Textiles to Automobiles
(Unrelated)

14.  In 1921, Sakichi Toyoda founded Toyoda Automatic Loom
Works
 In 1926 Toyoda Automatic Loom Works, Ltd. was established
 Toyoda Automatic Loom Works Ltd., producing looms that
stopped automatically if there was the slightest problem
 The looms were so successful that in 1929, Sakichi sold the
rights to his Type-G automatic loom to Platt Brothers, a huge
British textile company, for one million yen

15. Then why Diversify?
Why automobiles?

16.  1913 - Assembly line production technique
developed by Henry Ford
 Military subsidies act of 1918 - Japan
 1920s - Automobile Industry was growing
 1930s - Japan was gearing up for war: demand for
trucks
 Automobile manufacturing Enterprise Act in 1936 –
Japan
 Competitor Nissan: not well prepared to start the
auto business without the American alliance, Ford.

17. •Capital (money)
•Competition in textile sector
•Protective environment from the government
•Large Volumes Demanded: Military
•Nissan at a disadvantage

18. Automobile Market in Japan
40000
35000
30000
25000
20000
Domestic Production
15000 Imports
10000
5000
0
*includes both cars and trucks
Source: Cusumano, 1985

19. How did they go from
textiles to
Automobiles?

20.  Went to the US and observed „Fordism‟ in action
i.e. assembly line production and developed a
Japanese version of it
 Reverse Engineered motor cycle engines and
vehicles made by GM, Ford and Chrysler
 Ordered machine tools for their prototype from
Germany

21. Their Very First Prototype
[Model A1 1934]

22. Model G1 [1935]
Model AA, AB, AC [1935,1936]

23.  1937: Toyota Automobile Company Ltd is established
 1938: Honsha Plant then known as Koroma Plant is set
up
 Concept of Just – In – Time is developed
 Concentrated on manufacturing of Trucks rather than
Passenger Cars till the end of World War II

24. Passenger cars manufactured by Toyota
700
600
500
400
300
Units
200
100
0
Source: Cusumano,1985

25. Production of Cars and trucks by
Toyota
60000
50000
40000
30000 Trucks
Cars
20000
10000
0
1946 1947 1948 1949 1950 1951 1952 1953 1954
Source: Toyota global, Cusumano, 1985

26. Since then..

27. Segmental Sales of Toyota
[2011-12]
Source: Toyota Global

28. Market Share

30. Toyota first became No. 1 in
2008 and held the position for
three years. GM held the top
spot for almost eight decades
before being dethroned.
Toyota sold 9.75 million
vehicles 2012, compared with
9.29 million for GM regaining
its No. 1 position after a down
year 2011 at No. 3 due to the
tsunami in Japan.

31. EXPANSION
Integration

32. Toyoda Gosei Co. Ltd
Toyoda Gosei engages in
Research, development, man
ufacture and sales of: Parts
for
automobiles, conveyors, ship
s and various other
transportation equipment;
rubber, plastic and
urethane component

33. Timeline
 1949
 Toyota Motor Industry Co., Ltd. incorporates rubber
research operations as Nagoya Rubber Co., Ltd.
 1973
 Changes name to Toyoda Gosei Co., Ltd.
 1990-1991
 Established Meigi Logistics Center (logistics sector)
 Establishesd Toyoda Gosei Kyushu Co., Ltd. in
Takeo, Saga Prefecture (rubber and plastic sector)
 Established TG Technical Center (U.S.A.) (design and
technological development)

34.  1994
 Established TG Pongpara Co., Ltd. in Chonburi, Thailand (plastic
and urethane sector)
 1997
 Develops new recycling technology for rubber
 Earns ISO 9001 certification for major products in
Bisai, Inazawa, Heiwacho, and
 Moricho Plants
 Begins manufacturing and marketing green LEDs

35. 1998-1999
 Begins manufacturing and marketing New LEDs, "TG
Blue" and "TG Green“
 Earns ISO 14001 certification for Heiwacho Plant
 Established TG Kirloskar Automotive Ltd.
 Earns ISO 14001 certification for environmental
management.

36.  ESTABLISHMENTS BETWEEN 2000-2010
 Established Daicel Safety Systems America, LLC
 Established Toyoda Gosei Rubber (Thailand) Co., Ltd.
 Established Toyoda Gosei India Pvt. Ltd.
 Develops rear-end impact airbag
 Develops rear seat center airbag
 EstablishesdTE Opto Corporation.

37. How did the
Integration begin?

38.  Toyota Motors was established in 1937 & within 10 years of
inception was a big player in the Japanese market.
 Toyota Motors Co. Ltd felt the need to expand the scope of its
business, to bring down the cost of production.
 This led to the establishment of Toyoda Gosei Co. Ltd, which
would supply Toyota Motors with various car parts.
 This can be seen as a move back in value chain as
Toyota, which initially manufactured cars, will now be making
parts for its car rather than relying on outsiders.

39. Reasons behind
adopting this strategy

40.  As per Toyota Global Vision, “Through our commitment
to quality, constant innovation and respect for planet, we
aim to exceed expectations and be rewarded with a
smile.”
 To achieve this vision they came up with Toyoda Gosei
co., Ltd to bring quality to their automobiles by providing
raw materials to Toyota Motors.

41. Number of shares held
Shareholder's name Holding ratio (%)
(thousand shares)
Toyota Motor Corporation 55,459 42.65
The Master Trust Bank of Japan ,Ltd.(Trust) 7,752 5.96
Japan Trustee Services Bank,Ltd.(Trust) 6,158 4.73
Sumitomo Mitsui Banking Corporation 5,049 3.88
Japan Trustee Services Bank,Ltd.(Trust 9) 2,291 1.76
Nippon Life Insurance Company 1,714 1.31
SSBT OD05 OMNIBUS ACCOUNT - TREATY
1,501 1.15
CLIENTS
The Dai-ichi Life Insurance Company, Limited 1,493 1.14
Mitsui Sumitomo Insurance Company, Limited 1,162 0.89
Toyoda Gosei Co., Ltd. Employee Stock Ownership Plan 1,044 0.80

42. Analysis
 Toyota Motors became the major stakeholder in
company with 42.65% holding ratio.
 Toyoda Gosei Group is a global system supplier of
automotive components and LEDs with an extensive
network.
 As a pioneer in the fields of polymer technologies and
optical semiconductors, they strive to become a true
global system supplier.

43.  Toyoda Gosei uses automation more wisely than its
competitors. Automation for them drives design of their
processes.
 At Toyoda Gosei, they look at a process that they know how
to do very well, and think of how to make that process
better.
 Today, they have diversified themselves by providing various
products and Technology.

44. Interior and Exterior Parts
Console Boxes
Front Bumper Spoilers Base, Room
Lamp
Cockpit Modules Radiator Grilles
Hybrid Wheels

45. Automotive Sealing Parts
Luggage
Weatherstrip
Opening Trim Weatherstrip
Door Weatherstrip

46. Functional Parts
Power Train Parts
Fuel Tank Modules

47. Safety System Products

48. Optoelectronic Products

49. General Industry Products
Home Construction Components
Mobile Phone cases

50. Recycling Technology

51.  There has been a tremendous increase in their Net Sales (in
millions) from ¥292,883 in 2001 to ¥504,518 in 2012.
 Even though there is increase in net sales but there is not a
greater change in their Net Income (in millions) which has
increased from ¥4,058 in 2001 to ¥8,971 in 2012.
 In 2009, there was no major effect on Net sales but Net
income fell drastically. (Net Sales: ¥546,380 and Net
Income: ¥3,951)(in millions).

52. Corporate Level Strategy
 Strategy: Combination
 Joint Venture(Cooperation) +Divestment(Retrenchment)

53. Background
 Toyota‟s Failed initial entry attempt.
 Demand for compact cars.
 Incompetence of U.S. automakers.
 Trade Barriers
 Strong Competition

54. Analysis:
Beginning Reasons Approach Taken Results End
Benefits

55. I. How did the Joint Venture Begin?
 General Motors provided the land & buildings as its
contribution to New United Motor Manufacturing Inc.
 Toyota put in at least $100M, along with manufacturing
know-how.
 New United Motor Manufacturing, Inc. (NUMMI) was
born as an automobile manufacturing plant in
Fremont, California.
 Partnership: 50-50

56. II. Reasons behind the
Joint Venture
Toyota General Motors
Need to start building cars in the To build high-quality & profitable
United States due to the small cars .
possibility of import restrictions.
Help diffuse the trade issue Learn Toyota‟s:
between the United States and i. Lean manufacturing
Japan. ii. Production System
Gain experience with American Implement learning at other
suppliers. plants.
Gain experience with American To obtain high quality vehicles for
unionized labor. its „Chevrolet‟ division.
To catch-up with competition. Failure to compete with Japanese
automakers.

57. III. Approach towards the Joint
Venture & Result
 Responsibility:-
i. Manufacturing - Toyota
ii. Marketing - General Motors
 Key factors in Toyota‟s approaches, however, were:
i. Developing cooperative management-labor relations;
ii. Careful selection and extensive training of workers;
iii. Stressing teamwork and responsibility of the individual to the work group;
iv. Putting safety and quality first, assigning the responsibility for safety and
quality to each worker, and giving them the authority to assure it.

58. Results:
i. Improved Productivity
ii. Researchers at MIT estimated in 1988 that productivity at
the NUMMI plant exceeded that of all American-owned
U.S. automobile plants, except Ford‟s Taurus facility with
which it was approximately equal.
iii. The cars produced have won numerous awards.
iv. The plant won J.D. Power awards as the second or third
best automotive plant in North America six times between
1994 and 2002.

59. V. End of Joint Venture
(Divestment)
Calendar U.S. sales
 June 29,2009 - General Motors bails out. Chg/yr.
Year (vehicles)
2004 4,707,416
 Attempts to sustain the venture fail. 2005 4,517,730 4.0%
2006 4,124,645 8.7%
 July 10, 2009 - GM Files for bankruptcy.
2007 3,866,620 6.3%
 August 27, 2009 - Toyota makes a decision. 2008] 2,980,688 22.9%
2009 2,084,492 30.1%
 April 1, 2010 - NUMMI Plant ceases operations.
General Motors
Region 2006 2007 2008 2009
N.America 2,738.3 2,822.2 2,441.8 1,975.4
Europe 1,124.1 1,238.6 1,119.5 886.0
Asia 1,106.7 1,329.6 1,438.6 1,533.9
Worldwide 7,921.6 8,429.3 7,996.1 6,979.6
Toyota Sales by region

60.  New United Motor Manufacturing,Inc. only
turned a profit in one year, 1992.
 One of Toyota‟s most expensive factory:
i. High Worker Wages.
ii. Higher fixed costs.
iii. High transportation costs.
The Final Car

61. Benefits
 Toyota Starts Car Production in USA.
 Toyota learned to work with American unionized labor.
 Confidence to expand.
 Increase in US market share.
 The company did learn to work effectively with American suppliers or, to put
it another way, American suppliers learned to work with Toyota.
 Its next factory was established as a wholly-owned subsidiary.

62. SWOT ANALYSIS

63. What is SWOT ?
 Strengths, weaknesses, opportunities and threats
 Quick overview of the company‟s strategic situation
 An effective strategy derives from a „fit‟ between the
company‟s internal sources and external environment
 Aim is to maximize the strengths and opportunities and
minimize the weaknesses and threats
 Can be done using a grid

64. Example of SWOT analysis grid :

65. SWOT ANALYSIS
TOYOTA

66. STRENGTHS
 New Investments :
New investment by Toyota in the US and China saw profits rise, against the worldwide
motor industry trend which was suffering heavy losses. Net profits rose 0.8% to
1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion
yen.
ANALYSIS –
 The company had the right mix of products for the markets that it served
Eg: Fortuner in USA , Prius and Corolla in China
 Very focused segmentation, targeting and positioning of their products

67.  Manufacturing :
In 2003 Toyota knocked its rivals Ford into third spot, to become the World's
second largest carmaker with 6.78 million units. The company is still behind
rivals General Motors with 8.59 million units in the same period.
ANALYSIS –
 Diversified product range, highly targeted marketing and a commitment to lean
manufacturing and quality.
 The company maximizes profits through Total Quality Management or TQM
 The company makes a large range of vehicles for both private customers and
commercial organizations, from the small Yaris to large trucks.

68.  Strong Brand Image :
Toyota currently sells 70 models of cars under its namesake brand with
Corolla and Prius as flagship models.
Toyota‟s brand image is also associated with environment friendly cars as
it is a leader in manufacturing of „green‟ cars.
ANALYSIS –
 Increases brand awareness, sells more cars in order to increase the
existing brand image
 Through several surveys, Toyota understood that customers are growing
selective in terms of fuel efficiency and CO2 emissions
 Invested in „green‟ technology became one of the first companies to
manufacture environment friendly cars like the Auris

69. WEAKNESSES
 Large Scale Recalls :
The company recalled 9 million vehicles in 2009-2010 and 7.43
million cars in 2012. Such recalls have not only hurt the firm
financially but significantly damaged the firm‟s brand.
ANALYSIS –
 Recalls have taken place mostly because of safety issues that
have not been met or because of certain defects in the cars
produced.
 Toyota must ensure that the cars produced are faultless and of
good quality

70.  Weak presence in emerging markets :
Toyota markets most of its products in the US, Europe and in Japan.
Emerging economies as China or India make only a small
percentage of all Toyota‟s sales.
ANALYSIS –
 To reduce this weakness has started to shift its attention towards
India and China, which is a good move. But, it should do more to
compete with GM
 Toyota must also look towards investing in Africa

71. OPPORTUNITIES
 Hybrid and Eco friendly technology :
Toyota has a reputation of manufacturing eco friendly cars like the Prius
based upon advanced technology developed by the organization.
Toyota has also sold on its technology to other motor manufacturers.
Example - Ford has bought into the technology for its new Explorer SUV
Hybrid.
ANALYSIS –
 There is a big demand for eco friendly and fuel efficient cars
 Since Toyota already has a first mover advantage in making hybrid eco
friendly cars, it should capitalize on this opportunity and invest more on
hybrid R&D and produce more environment friendly cars.

72.  New Customer Segments :
Toyota is to target the 'urban youth' market. The company has launched its
new Aygo, which is targeted at the streetwise youth market. The vehicle is
a unique convertible with inbuilt sub woofers.
ANALYSIS –
 The youth of today have become more independent and wealthy. This has
created a big market for cars and Toyota is trying to capitalize on this
opportunity by introducing the new Aygo
 The profits earned are not big but, it has helped Toyota increase its
market segment which is crucial for expansion. This segment may prove
to be highly profitable in the future

73.  GLOBAL EXPANSION :
Toyota is expanding its market share and operations in emerging
economies like India and China.
Toyota‟s emerging market sales ratio reached 45% in 2011, an
increase of 10% in the three years since we achieved 35% in
2008. The Toyota Global Vision calls for an emerging-market sales
ratio of 50% by 2015.
ANALYSIS –
 Toyota must make sure it increases its market share in the
developing economies
 Toyota must also work towards investing in Africa

74. THREATS
 Competition :
Toyota faces tremendous competitive rivalry in the car market with new entrants
coming into the market from China, South Korea and new plants in Eastern
Europe.
Volkswagen group is strongly growing and GM after its reorganization has
become more competitive than ever.
ANALYSIS –
 Toyota is reducing the threat of competition by introducing new
products, slashing prices, increasing market segments and innovation.
 Toyota has introduced the Yaris which is a very cheap car and has sliced the
costs of older versions of Corolla. The Aygo and Prius are examples of
innovative products by Toyota.

75.  Shifts in exchange rates :
Majority of Toyotas profits and raw materials come from foreign countries.
Appreciating yen exchange rate against other currencies means lower
profits for Toyota.
ANALYSIS –
 Very difficult to minimize this threat
 Toyota will have to wait till Yen depreciates but this will increase debt
 Toyota should consider setting up new bases in foreign countries

76. THANK YOU!