Consumer-Buying-Motives<br />Toyota Motor Corporation (TMC) or Toyota is the Japanese multinational organization and the world largest automobile manufacturers, selling 7.5 million models annually on all five continents. At present, it employs 70,000 people. Like many enterprises that have made their mark in history, Toyota has been shaped by a unique set of values and principles that have their roots in the company's formative years in Japan.<br />The supply chain processes and strategies of Toyota are the fundamentals in its daily operations. By adhering Just-In-Time (JIT) manufacturing and Toyota Production System (TPS), Toyota emerges to be one of the world's largest automaker.<br />The case details the globalization strategies adopted by one of the world's leading automobile majors, the Japan-based Toyota Motor Corporation (Toyota). It examines the company's evolution from being Japan's number one automaker to a formidable competitor in the global automobile market by 2003. It examines the rationale behind Toyota's decision to concentrate on global expansion and studies the company's various globalization programs, focusing on the localization efforts. The case also analyzes the problems faced by the company within Japan and discusses the steps taken to overcome them. Finally, it examines the results of Toyota's globalization strategies and discusses its future prospects in the light of intensifying competition and demand saturation in its core markets, Japan and the US.<br />FLASHBACK OF TOYOTA<br />Japan’s Sakichi Toyota (Sakichi) diversified from traditional family business of carpentry into handloom machinery in 1897. Toyota Automatic Loom Works (TALW) founded in 1926 for manufacturing automatic looms. Sakichi invented a loom that stopped automatically when any of the threads snapped. This concept (designing equipment to stop so that defects could be fixed immediately) formed the basis of the Toyota production system (TPS) and later became a major factor in the company’s success.<br />In 1933, Sakichi established an automobile department within TALW and the first passenger car prototype was developed in 1935.<br />Toyota established in 1937.<br />Kiichiro Toyoda studied the US automotive industry during visit to Ford. In Japan he customize the Ford production system where each process in the assembly line produced only the number of parts needed at the next step on the product line. This system was named Just-in-Time (JIT)<br />Toyota flourished during the second world war by selling truck and buses to the army. The company launched its first small car (SA model) in 1947. During this period Toyota went into downsizing and restructuring the company into separate manufacturing and sales division. In 1950 Toyota Motor sales company Ltd was formed.<br />By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.<br />TOYOTA PHILOSOPHY<br />Toyota's management philosophy has evolved from the company's origins and has been reflected in the terms "Lean Manufacturing" and Just In Time Production, which it was instrumental in developing. <br />The Toyota Way has four components:<br />Long-term thinking as a basis for management decisions. <br />A process for problem-solving. <br />Adding value to the organization by developing its people. <br />Recognizing that continuously solving root problems drives organizational learning<br />ANALYSIS OF MARKETING OF TOYOTA<br />Toyota manufactures cars, which has a wide coverage from economic minibus to luxurious cars, SUV. The brand on sell includes Crown, Reiz, Vios, Corolla, Coaster and Prius. And Prius is the brand or car that Toyota has made a significant success in American market. It is a hybrid vehicle.<br />Toyota has made its way to America. In 1957, Toyota exported to America at the first time and established the selling company. In 1984, a joint venture was established with General motor. Co. And in 1997, Prius was first in production and had a launch in America. It was such a great success that Toyota conquered American market.<br />It is well known fact that American love cars so much. And due to oil crisis, Americans changed the need structure for cars, converting their needs to oil saving cars. While American car manufactures lacked producing such cars, then Toyota caught that opportunity and tried to occupy this niche market.<br />TOYOTA EVOLUTION, REASON FOR BECOMING LEADER AND PROBLEMS FACED BY TOYOTA <br />In 1995 Hiroshi Okuda became the president of Toyota. To improve company’s sales in domestic market Toyota adopted following strategy:-<br />Okuda chose to focus on the dealer network. Under this strategy Toyota took initiative to improve communication with its dealer.<br />It offered more incentives to increase sales and encouraged them to attract more prospects for test drives.<br />It identified the younger generation as the means to increase market share in Japan. Under this strategy it took aggressive measure to attract youngster to its product.<br />It also realized that the dealer outlets could play an important role in attracting younger customers. It recognized some functional discrepancies among its dealer outlets—Dealer outlets were located too close to each other in some places and even displayed the same model. Toyota adopted following strategy.<br />Toyota stopped supplying similar models to such dealer outlets to avoid unnecessary price competition.<br />It decided to take a strict stance with who failed to meet the targets and withdraw the monetary incentive scheme for them.<br />It also asked some of its dealer to restructure and rename their outlets in such a way as to attract younger buyer.<br />The company also invested around $200 million on advertising in fiscal 1995.<br />AS a result of Okuda’s strategy Toyota’s performance began picking up. As the financial base strengthened. Okuda decided to focus on improving the global sales performance, and took Toyota on the path of aggressive globalization. <br />The company’s overseas production increased from 1.22 million units per year in 1995 to 1.54 million unit per year in 1998.<br />While Toyota was drastically increasing its market share in the US, it was finding difficult to perform well in Europe and Japan.<br />Its market share was still below 40% in Japan despite aggressive marketing efforts.<br />The above scenario was due to a host of reasons like <br />Excessive capacity <br />Choosy customers<br />Surplus workforce<br />Intensified competition within Japan.<br />In 1998, Japan sales accounted for mere 38% of the company’s total sales compared to 52% in 1990. Also Toyota’s Japan sales contributed to a very small share of its profits.<br />By the late 1990s young buyers accounted for 30% of the customer base as compared to over 45% in the late 1980s. In 1998, models from rival companies such as Honda and BMW were more popular than the ones offered by Toyota. According to reports, Japanese youngsters felt that Toyota cars ‘lacked attitude’. Toyota realized that by losing its young customers to other companies, it ran the risk of losing its future market as well.<br />Alarmed by this scenario, Toyota embarked on an aggressive restructuring exercise and started a new company, Virtual Venture Co. to design and sell cars that appealed to the young generation. VVC experimented with many unconventional sales strategies to improve the Toyota models to people, It built a $83 million amusement park in April 1998, Where it displayed Toyota’s visions for future models and also allowed people to design their own cars.<br />Beginning in 1999, the company rolled out many new cars specifically designed for the young Japanese buyers. These cars such as Vitz compact, FunCargo compact, and MR-S sports car, had the distinctive looks and attitude sought by these buyers. More significantly, a majority of these were entry-level. To keep the prices down, Toyota shared platforms with other models.<br />Apart from these new launches, the company also launched upgraded versions of its existing models such as Windom (Lexus ES 300), Verossa and Brevis. To attract the young buyers, Toyota took the risk of even de-emphasizing the Toyota brand. For instance the new car bB, which became very popular with young buyers, had no visible signs of the ‘Toyota’ name, except for a Toyota symbol on the steering wheel. <br />As part of making the company’s dealer outlets more appealing to young buyers, the company renamed one of its five dealership chains Netz, and targeted it exclusively at entry-level buyers. Toyota also undertook aggressive marketing efforts such as focused advertising of its new models besides offering high cash rebates to buyers of its flagging models.<br />Toyota focused on streamlining and reducing its workforce and decided to hire contract employees against its policy of lifetime employment. It planned to cut about $678 million in costs, employment mainly by designing cars with fewer and simpler parts and by sharing platforms and parts among its models.<br />The factors that helped Toyota attain and sustain the leadership status in Japan are:-<br />Focus on dealer network.<br />Initiative to improve communication with its dealers.<br />It took aggressive measures to attract youngsters to its products.<br />It stopped supplying similar models to such dealers whose outlets were located too close to each other to avoid unnecessary price competition.<br />It decided to take strict stance with those dealers who failed to meet target.<br />The company invested heavily on advertising in fiscal in 1995. (around 200 million)<br />It embarked on an aggressive restructuring exercise.<br />It built a $83 million amusement park in April 1998, where it displayed Toyota’s visions for future models and also allowed people to design their own cars.<br />As part of making the company’s dealer outlets more appealing to young buyers, the company renamed one of its five dealership chains Netz, and targeted it exclusively at entry-level buyers.<br />It focused on streamlining and reducing its workforce and decided to hire contract employees against its policy of lifetime employment.<br />It planned to cut about $678 million in costs.<br />Problems the company faced in this market later on:-<br />The problem was drastically increasing its market share in the US, it was finding it difficult to perform well in Japan. Its market share was still below 40% in Japan despite aggressive marketing efforts. This happened because of number of reasons like:-<br />Excessive capacity<br />Choosy customers,<br />Surplus workforce<br />Intensified competition<br />It is already mentioned regarding problem faced by Toyota and the strategy it adopted to come out of the problem.<br />Over all the strategy it adopted to became leader in automobile market in Japan became the best practices in automobile sectors. <br />Toyota’s decision to spread its operations across various geographical regions & focus on young buyers in its core markets. <br />3 different program adopted that how localization of manufacturing was expected to help the company?<br />For though buyers 40 to 69 years old have averaged more than twice as many new-car buys since 1995, 25- to 34-year olds alone should pack $1.2 trillion in buying power by the end of this year. And they'll spend $70 billion of it on vehicles and other automotive purchases. Given that today's 18-year-old will buy about 13 vehicles during his or her lifetime from 8.4 in 1970. <br />The under-35 automotive market didn't exist a half century ago.Without doubt, entry-level buyers just out of high school and college are more image-conscious and brand oriented than older buyers. And automakers must snag these buyers when they don’t; it hurts their chances of getting them back later. But it's not easy. Generally, people no longer act their age. <br />"Over the past few years, the Jetta has been targeted at younger people, kids getting out of college. It's made a huge impression." It doesn't hurt that it's a quality product with a popular design, he adds. Meanwhile, in East Providence, R.I., Ford dealer Bob Tasca III sees young women going for the Jetta because it's "like a mini luxury car".On the other hand, Tasca Ford is mainly selling supposed youth magnet Ford Focus to customers over 45. Yet Tasca is excited about what the Focus is doing nationally: attracting younger buyers into the brand through edgy commercials and special editions, such as the Focus Street, whose marketing connects with the audience via techno-music. "You'll see a migration pattern," says Focus brand manager Bob Fesmire of the long-term prospects for Focus and the Ford brand. Some Focus owners will buy another; others those marrying and starting families will buy a different Ford, such as the Windstar, he says.<br />At Toyota, loyal but aging buyers have some observers concerned. Though the maker has ridden the wave of young Baby-Boomers in recent decades, its styling may not be hip enough for today's first-time buyers and new college grads. The Echo, though priced low, didn't resonate with younger buyers, but ended up drawing folks over 40. Under-35 buyers are "more educated than when I was their age," says one Toyota general sales manager. "They're not afraid<br />of the imports like their parents might have been. They want to make sure they're going to get something that will last them, give them good fuel economy, and make them feel safe." Price seems less important for young Toyota buyers, he adds.Young buyers who have money often make contact via the Internet, say dealers John Weinberger and Scott Vanderbeek. "They're looking for a specific luxury car that may not be in their hometown", says Weinberger of Continental Motors (including Acura, Audi, Bentley, Ferrari, and Rolls-Royce), near Chicago. Buyers in their 20s are after the 3-series and get hooked, say Roseville salesperson Candy <br />Beck, through BMW's college grad program with terms up to 60 months for financing or leasing a new or certified used Bimmer.One survey indicated that 78 percent of college students look at price first. Then comes reliability (75 percent). Also, 48 percent of students plan to buy a new car, but 52 percent intend to buy used which may be good news for makers with robust used-car certification programs. The 34 percent intending to buy new in the next year plan to spend less than $20,000.<br />Of course, dealers use some automaker incentives with young buyers. "We advertise the first-time buyer programs," says Earnhardt Auto Centers corporate general sales manager Steve Arey, who also does many secondary finance deals. Some college-grad incentives, such as Toyota's and Ford's, involve $400 rebates. And, says Arey, "We deal heavily in program cars. A lot of the Hyundai’s are really popular. They like that warranty." in any event, financing "is going to be the key. If they have the program for them, they'll buy [new] cars. If not, they'll buy used."<br />Rationale behind Toyota’s decision to spread its operation across various geographical region: <br />Early 70s prod & sales was behind from Ford and GM.<br />Domestic sale gone to decline.<br />The need to explore new markets and maintain a leading position is extremely urgent. Without proper localization, this can hardly become reality. Due to the growing market and increasing competition, localization is the right move forward.<br />Three different programs adopted<br />New Global business plan (1955-1998)<br />Global vision 2005 (1996 –2005)<br />Global vision 2010 (2002 – 2010)<br />New Global business plan (1955-1998): In June 1995, Toyota announced the 'New Global Business Plan,' aimed at advancing localization (of production) and increasing imports (through collaboration with foreign automobile companies) over a three year period. A major objective of this plan was to increase Toyota's offshore production capacity to 2 million units by 1998. This was the major proactive plan which is aimed for almost 43 years future. Keeping on the mind of location advantage Toyota mainly focused on overseas production. And on this concern Toyota established new plants and expanded the capacity of plants.<br />Especially in North America, in addition to expanding existing plants such as <br />Toyota Motor Manufacturing Kentucky, Inc. (TMMK) (from 400,000 units/year to 500,000 units/year) and <br />Toyota Motor Manufacturing Canada Inc. (TMMC) (from 100,000 units/year to 200,000 units/year), new plants such as <br />Toyota Motor Manufacturing, Indiana, Inc. (TMMI) and <br />Toyota Motor Manufacturing, West Virginia, Inc. (TMMWV) were brought online, increasing annual production capacity from 900,000 units in 1994 to 1.2 million units in 1998 (total production capacity is expected to increase to 1.25 million units/year in 2000). <br />In Europe, Toyota Motor Manufacturing France S.A.S. (TMMF) was established in France in November 1998. It is scheduled to go into operation in 2001, with an annual production target of 150,000 units of the Yaris, a strategic vehicle for the European market. In Asia as well, where economic stagnation has been continuing, TMC established a supply structure in anticipation of market recovery, starting up second plants in Thailand, Indonesia, the Philippines, and Taiwan. <br />Next, in the area of increasing imports, TMC strengthened the sales structure of the DUO stores, which sell VW/Audi cars, expanded imports of completely built-up cars, and began selling the Avalon, a passenger car made at TMMK, in May 1995 and the Toyota Cavalier, made by GM, in January 1996. TMC also expanded its efforts to increase imports, including foreign aftermarket parts, by establishing TACTI Corporation to procure and sell new brands of aftermarket parts and by increasing the number of its directly owned "jms" car shops to 28 by March 1999. <br />Furthermore, TMC implemented various steps to promote the "Toyota Global Optimum Purchasing System"and has made steady progress, e.g., facilitating access for prospective overseas suppliers by publishing the contents of its Supplier's Guide on the Internet (in November 1997), and constructing a Suppliers Center (in April 1998) which can be used for exhibiting new parts, etc<br />Although the New Global Business Plan has come to a close, TMC plans to continue expanding its business operations aggressively on a global scale in the future. <br />SPECIFIC DETAILS OF THE MAJOR AREAS ARE AS FOLLOWS:- <br />I. Advancing Localization <br />Since the New Global Business Plan was announced in 1995, TMC's overseas production has been expanding on schedule, increasing from 1.22 million units per year in 1994 to 1.54 million units per year in 1998. <br />1. North America<br />TMC's North American production capacity increased to 1.2 million units per year in 1998. In addition to expanding the existing plants, two new plants (TMMI and TMMWV) were brought online on schedule. <br />In the year 2000, TMC's total North American production capacity will increase to 1.25 million units per year with production starting of a new SUV model at TMMI. TMC also plans to exceed the originally announced localization plan by producing additional V6 engines (summer 1999) and starting production of automatic transmissions for the Camry (spring 2001), both at TMMWV. <br />North American production results increased from about 740,000 units in 1994 to about 1.01 million units in 1998. <br />In 1998 production at TMMK was about 480,000 units (1994 results were about 290,000 units). Expansion of production capacity to 500,000 units per year has been achieved as outlined in the plan. <br />The line-off ceremony for the Tundra was held in December 1998 at TMMI. Mass-production started in February 1999 and plans call for production of 100,000 units/year. Production of a new Tundra-based SUV is planned to begin in the fall of 2000. Total production capacity will reach 150,000 units. <br />Assembly of Corolla engines began in November 1998 at TMMWV, with a planned initial production level of 300,000 units per year. Production of about 200,000 V6 engines per year will begin in summer 1999. As a result, annual production capacity will reach 500,000 units in summer 1999. Coupled with the above increases, Bodine Aluminum, Inc. plans to expand its production of cast aluminum parts for V6 engines from the current level of 180,000 units per year to 380,000 units per year from early 2000. Beginning in the spring of 2001, moreover, TMMWV will start producing automatic transmissions for the Camry (at an annual production rate of 360,000 units). <br />In 1998 actual production at TMMC in Canada was about 170,000 units (1994 result was about 90,000 units). Expansion of production capacity to 200,000 units per year was achieved in 1997. Production of the new Solara model began in June 1998. <br />Total exports of vehicles from the U.S. amounted to 36,000 units. (The cumulative total for 1995 through 1998 was about 240,000 units.) <br />2. Europe<br />European production capacity expanded to 220,000 units by the end of 1998. Toyota Motor Manufacturing (UK) Ltd. (TMUK)'s second assembly plant started building Corolla lift-back models in September 1998. Total European production capacity will reach 350 - 400,000 units in 2001, when the French plant goes into production.<br />In 1998 vehicle production result at TMUK was about 170,000 units (1994 result was about 90,000 units). <br />In 1998 engine production at TMUK was about 110,000 units (1994 actual production was about 80,000 units). TMUK's engine production capacity will increase from the current level of 150,000 units/year to 200,000 units/year by the end of 1999, and to between 350,000 and 400,000 units/year in 2001. A casting process will also be added to the engine production process (with the start of production planned for 2000). <br />The new production company, Toyota Motor Manufacturing France S.A.S., established in Valenciennes, France, in October 1998 is proceeding with plant construction with the goal of starting production by early 2001 (at the rate of 150,000 units per year). <br />In order to support Toyota's European manufacturing operations, Toyota Motor Europe Manufacturing (TMEM) was formed in Brussels, Belgium, in October 1998. <br />In July 1998, TMC established a design center in the Cote d'Azur, France (with the start of operations planned for early 2000). <br />Exports of TMUK-produced cars to countries outside the EU, which began in 1996, reached about 7,000 units in 1998. (The cumulative total for 1996 through 1998 was about 18,000 units.) Exports of engines to Turkey reached about 8,000 units in 1998. (The cumulative total for 1996 through 1998 was 45,000 units.) <br />3. Asia and Oceania<br />Production capacity in Asia and Oceania expanded to 640,000 units in 1998. Against the background of stagnating economies and a shrinking automobile market in Asia, 1998 production result in Asia and Oceania was about 280,000 units (1994 actual production was about 410,000 units). To maintain local operations and employment levels, TMC has been taking such measures as the expansion of exports from local operations, support of training, and active support of management of parts makers and dealers. <br />In 1998 vehicle production in Taiwan was about 73,000 units (1994 actual production was about 65,000 units). <br />In 1998 vehicle production in the Philippines was about 11,000 units (1994 actual production was about 30,000 units). Production of constant-velocity joints was about 57,000 units. In addition, transmission exports to Japan began in March 1998. <br />In 1998 vehicle production in Thailand was about 35,000 units (1994 actual production was about 110,000 units). Production of engine blocks was about 100,000 units (1994 actual production was about 53,000 units). In April 1998, the export to South Africa began of Hilux production parts made in Thailand. In July 1998, the export of Corolla bumpers to Brazil began. In August 1998, the export of Hilux made in Thailand to Australia began. <br />In 1998 vehicle production result in Indonesia was about 17,000 units (1994 actual production was about 80,000 units). In February 1998, production began at P.T. Toyota-Astra Motor's (TAM) second plant (Karawang Plant). 1998 engine production at TAM was about 36,000 units (1994 actual production was about 70,000 units). <br />In China, Toyota continues to build our parts production network. In June 1998, the line-off ceremony for a constant velocity joint production joint venture was held. In July 1998, the line-off ceremony for a engine production joint venture was held. In January 1999, the line-off ceremony for a forged parts manufacturer was held. As for vehicle production, in November 1998, a manufacturer of compact buses was set up. TMC is also undertaking negotiations with the Chinese government on a small car project. In addition TMC has been providing support for increasing production capacity to 150,000 units/year targeting sales of 100,000 units per year for the Tianjin Charade. Finally, in February 1998 ToyotaTechnicalCenter (China), Ltd. was established to provide production and development support, with operations scheduled to begin in April 1999. <br />In 1998 vehicle production result in Malaysia was about 6,000 units (1994 actual production was about 17,000 units). 1998 production result of power steering units at T & K AutopartsSdn. Bhd. was about 27,000 units. 1998 actual production of lower ball joints was about 12,000 units. <br />In 1998 vehicle production result in Vietnam was about 2,000 units. <br />In 1998 vehicle production result in Australia was about 100,000 units (1994 actual production was about 78,000 units). 1998 exports of Australian-made Camrys totaled about 30,000 units. (The cumulative total for 1996 through 1998 was about 70,000 units.) <br />In 1998 vehicle production result in New Zealandwas about 4,000 units (1994 actual production was about 15,000 units). <br />4. Other regions <br />TMC is also moving forward with projects in the following regions, which were not included in the original plan: <br />In August 1998, Corolla production began in Indaiatuba, Sao Paulo, Brazil, with a production capacity of 15,000 units per year. <br />In India, TMC is preparing to start production of family type diesel passenger vehicles exclusively designed for the Indian market by the end of 1999. The plant building was completed in February 1999<br />As a result of the foregoing activities, the percentage of worldwide sales (excluding Japan) accounted for by overseas-produced vehicles reached 52% in 1998 (percentage in 1994 was 48%). <br />5. Parts related <br />For major parts, such as engines and stamped parts, as well as facilities and materials, TMC is making steady progress in localization, with local procurement being the rule. <br />In July 1996, TMC published the "Supplier's Guide" to foster understanding by new suppliers of TMC's procurement activities and sales approach procedures, as well as to help current suppliers understand better TMC's procurement policy and procedures. In November 1997, TMC published the contents of its Supplier's Guide on the Internet to facilitate access for prospective suppliers. <br />The "Global Optimum Purchasing System" is already in operation in North America and Europe, and preparations are underway to establish the same system in Asia and Oceania. The following three main pillars of this system are being enhanced: <br />New Supplier & New Technology Cultivation Program To cultivate new suppliers, TMC has been holding new parts exhibits, JAMA/CLEPA business talks (in November 1997), JAMA/MEMA business talks (in November 1998), theme exhibits such as "New manufacturing methods exhibition" and "World No. 1 activities exhibition," etc. TMC is aggressively promoting new parts exhibits for global suppliers. <br />Current Supplier Improvement Support Program As part of this program, an expected value system is being implemented in 11 countries worldwide. A system has been established in each region to spell out the expected values and to recognize those suppliers who meet them. In February 1999, a procurement policy explanation meeting was held in Japan with global suppliers in attendance.<br />International Price Comparison System This system went into full operation in August 1995, and is being promoted as a system for updating/adding price data and for applying such data to new products. <br />II. INCREASING IMPORTS <br />1. Increase of TMC cars produced overseas, and foreign makers' cars <br />Sales result of VW/Audi cars through DUO dealers were about 29,000 units. (The cumulative total for 1995 through 1998 was about 119,000 units.) At the end of 1998, the nationwide sales network consisted of 144 sales outlets. <br />Sales results of the Toyota Cavalier were about 7,000 units. (The cumulative total for 1996 through 1998 was about 28,000 units.) <br />Sales results of the Avalon made at TMMK were 4,000 units. (The cumulative total for 1995 through 1998, including the Scepter, was about 59,000 units.) <br />2. Purchasing and parts <br />In April 1998, to further facilitate sales by suppliers, TMC opened a SuppliersCenter (in ToyotaCity, AichiPrefecture) that can be used for exhibiting new parts, etc. <br />For the importation of originally equipped parts, TMC is promoting: <br />1) New Supplier & New Technology Discovery Program,<br />2) Current Supplier Improvement Support Program, and<br />3) International Price Comparison System, etc., of the "Global Optimum Purchasing System" which is based on fair and objective evaluation, utilizing the same approach TMC is using to promote local purchasing. <br />In April 1996, TMC established TACTI Corporation to procure and sell new brands of aftermarket parts. In November 1996, TMC began the operation of its directly owned "jms" car shops, and increased their number to 28 shops by the end of March 1999. The locations include: Sapporo (3), Kushiro, Hakodate, Hachinohe, Morioka, Sendai, Mito, Kooriyama, Utsunomiya (2), Chiba, Tokyo, Kanagawa (2), Aichi (2), Gifu, Kobe (2), Okayama, Takamatsu, Hiroshima (2), Fukuoka, Oita, and Kumamoto. <br />Cooperation with TACTI has significantly bolstered the lineup of imported products handled by TMC parts distributors. As part of a plan to increase the sales of TACTI products, efforts to increase sales are continuing. <br />3. Activities to promote understanding <br />TMC established an internal "contact point" in July 1995 to deal with inquiries related to handling foreign cars, and informed interested parties through visits and announcements. So far, there have been contacts from several foreign makers.<br />Global vision 2005 (1996 –2005): Cho decided to focus more on localization - he believed that by doing so, Toyota would be able to provide its customers with the products they needed, where they needed them. This was expected to help build mutually benefiting, long-term relationships with local suppliers and fulfill Toyota's commitments to local labor and communities. Cho defined globalization as 'global localization.' Therefore, besides focusing on increasing the number of manufacturing centers and expanding the sales networks worldwide, Toyota also focused on localizing design, development and purchasing in every region and country. <br />It’s implemented Kaizen and many philosophies. A new concept of just in time (JIT) also innovated. Also they adopted few western management practices in addition to the traditional Japanese ones. All practices gave ample of improvement as its Kentucky plant won four ‘Gold plant quality award’ from JD power and Association.<br />Global vision 2010 (2002 – 2010): In April 2002, Toyota announced another corporate strategy to boost its globalization efforts. This initiative, termed the '2010 Global Vision' was aimed at achieving a 15% market share (from the prevailing 10%) of the global automobile market by early 2010, exceeding the 14.2% market share held by the leader GM. The theme of the new vision was 'Innovation into the Future,' which focused on four key components: Recycling Based Society; Age of Information Technology; Development of Motorization on a Global Sale; and Diverse Society.<br />Considering the extremely competitive global market scenario and the nearly saturated demand in its core automobile markets (US and Japan ) &measures that could help the company achieve its global targets.<br />Toyota hopes that the 21st century will be truly prosperous for society, and aims to grow as a company together with its stakeholders, including customers, shareholders, business partners, and employees, through making things and making automobiles, while seeking harmony with people, society, the global environment and the world economy.<br />In order to put these management principles into practice, the "Guiding Principles at Toyota Motor Corporation" were established as the fundamental management policy. These principles were adopted in 1992 to codify the business spirit handed down since the company's foundation, and revised in 1997 to add the stipulation of legal compliance. Each of the seven items is a cornerstone of Toyota's business activities. <br />With 2010 as the turning point, in April 2002 Toyota adopted the Global Vision 2010 which proposes the corporate image for which Toyota should strive . Centered on the basic theme of "Innovation into the Future — A Passion to Create a Better Society," and with a view toward what society is expected to be like in the medium to long term, the Vision sets the course for the multi-faceted roles to be played by Toyota about society, people and the Earth.<br />The fundamental thinking for Global Vision 2010 has three elements: <br />1) To step beyond "harmonious growth" and demonstrate our responsibilities as a world leader;.<br /> 2) To benefit society through monozukuri (manufacture of value-added products) and "technological innovation"; and<br /> 3) To share prosperity with our employees.<br />In order for each employee to realize the image that Toyota is striving to achieve in the future, without complacency, it is important to undertake a paradigm change from the following three perspectives: <br />(1) Technology development / Product development; <br />(2) Management; and <br />(3)Profit structures.<br />In June 2003, Toyota introduced a new management system that features, among other enhancements, a streamlined board of directors and the new position of non-board managing officer, aimed at speeding up operations by making the decision-making structure less vertical. At the same time, the system hopes to strengthen corporate auditing efforts by increasing the number of outside corporate auditors. With global competition growing evermore severe, Toyota is striving to achieve the objectives outlined in Global Vision 2010 by boosting its competitiveness. <br />But it is very tough to achieve the goal of attain its 15% market share. The reasons behind it are as follows-<br />Under previous presidents, Toyota Motor Corp. had set a goal of reaching 15 per cent global market share in global vehicle sales sometime after 2010. Until last year's financial crisis, which sent sales crashing, it had been steadily expanding production toward that goal.<br />The executive, who spoke on condition of anonymity because he spoke to select reporters, said the automaker will still use numbers in their business plans, but "the vision" had changed under President Akio Toyoda.<br />Toyoda, who took office in June, wasn't comfortable with racing toward numbers, and instead wanted to return to the old-fashioned "Toyota Way" of understanding customer needs and developing products to fill them, the executive said.<br />"Our president doesn't like numbers or documents," he said.<br />But the executive made clear Toyota remains bullish on sales, especially in emerging markets, which now make up half of the global auto market.<br />A recovery in the U.S. auto market must come with bigger sales in China, South America, the Middle East and other emerging markets to work as the "two engines" of growth for a recovery, he said.<br />Toyota is hoping to sell more than 2 million vehicles in emerging markets this year, which will make up about a third of its overall vehicle sales, the executive said.<br />Earlier this week, Toyota raised its vehicle sales forecast for the fiscal year through March 2010, to 6.6 million vehicles from its initial forecast for 6.5 million vehicles.<br />The appointment of Toyoda, the grandson of Toyota's founder, has been viewed as a morale boost for workers, dealers and suppliers as the maker of the Prius hybrid and Lexus luxury car fights for a recovery.<br />Toyota racked up its worst loss in its seven-decade history for the fiscal year ended March, and is expecting to stay in the red for the fiscal year through March 2010.<br />Speaking on the New United Motor Manufacturing Inc., or NUMMI, plant in Fremont, California, a joint venture with U.S. automaker General Motors Corp., the executive said Toyota will make a decision by the end of August. Details on what to do must be worked out, he said without elaborating.<br />So this situation shows that it is the tough time for Toyota and tough to attain the15% market share.<br />Another reason is that if we analyze the financial position of Toyota then we find as follows.<br />If we see the financial report of Toyota then we find in 2009 financial year Toyota beared the loss of 437 billion yen. It only happens when any company could not sell up to that volume in which that company take out its costs of production and other cost which is related to production and final sales.<br />Now we should look another position of the company .<br />By above report of Toyota’s consolidated financial summary, We can analyze that the condition of Toyota in market will not be good because as they have projected for 2010, they will have to bear the loss next year also, according to the FY2010 forecast report.<br />So it’s tough to attain the 15% market share till 2010.<br />THE TOYOTA PRODUCTION SYSTEM<br />Toyota’s approach to automobile production, with its inherent quality controls, revolutionized the industry. Its “just-in-time” supply-chain concept has become a model for manufacturers around the world, and not just for automakers.<br />The Toyota Production System (TPS) calls for the end product to be “pulled” through the system. This means the right parts reach the assembly line at the right place, just as they are needed, and with no excess. <br />This approach represented a radical departure from conventional manufacturing systems, which require large inventories in order to “push” as much product as possible through production lines, regardless of actual demand. The idea of TPS, the contrary, is to produce only the products required in the precise quantities desired at a given point in time<br />Focus on flexibility<br />By basing production on demand rather than simply on capacity, Toyota manages to keep inventories, both of parts and of finished goods, to a strict minimum. But this is only one of the more obvious advantages of Toyota’s unconventional approach. By focusing on smaller production lots and producing only what customers require when they require it, Toyota has developed a flexibility and responsiveness that continues to set the standard for the industry. <br />With its Attention to continuous improvement (Kaizen), Toyota has attained die-changeover and machine-set times that are a fraction of its competitors'.Thus its capacity for reacting quickly to new market trends makes TPS an ideal system in today’s rapidly changing global business environment. <br />Just as important is ensuring quality control, and the delivery of reliable and dependable products to customers. If a problem arises at any stage of production, Toyota’s automatic error detection system, called “Jidoka”, flags the defect and enables line employees to take the necessary steps to resolve it on the spot – even if that means bringing production to a halt. <br />By calling attention to the equipment when an error first occurs, the Toyota system makes it easier to identify the source of the problem and prevents defects from progressing to subsequent stages of production. Only a system as agile and quality-oriented as TPS could make such measures economically possible.<br />This approach not only helps eliminate waste, which makes TPS more respectful of the environment, it also means that customers can rest assured that Toyota products will conform to the highest standards of quality, reliability and durability. <br />VALUE CHAIN ANALYSIS OF TOYOTA<br />The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organization. The 'margin' depicted in the diagram is the same as added value. The organization is split into 'primary activities' and 'support activities.'<br />PRIMARY ACTIVITIES<br />Inbound Logistics:<br />Here goods are received from a company's suppliers. They are stored until they are needed on the production/assembly line. Goods are moved around the organization. Toyota motors purchase their raw material from all around the world. In order to maximize their availability of raw material Toyota motors maintain good relationship with their suppliers. Toyota use JIT (Just In Time) approach for handling of raw material. <br />Operations:<br />This is where goods are manufactured or assembled. Individual operations could include organizing the parts to make new cars & the final tune for a new car's engine. Toyota motors are known for their reliability which comes from efficient operations. <br />Outbound Logistics:<br />The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. Toyota motors manage their own Show rooms in different countries. Toyota motors make their product easily assessable.<br />Marketing and Sales:<br />In true customer orientated fashion, at this stage the Toyota motors prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix.<br />Service:<br />This includes all areas of service such as final checking, after-sales service, complaints handling, training and so on. Toyota value their customers.<br />SUPPORT ACTIVITIES<br />Procurement:<br />This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. Toyota motors will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organizations), and e-Purchasing (using IT and web-based technologies to achieve procurement aims).<br />Technology Development:<br />Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. Toyota motors implemented production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments.<br />Human Resource Management (HRM):<br />Employees are an expensive and vital resource. Toyota motors manage recruitment and s election, training and development, and rewards and remuneration. Toyota motors consider their employees as HUMAN CAPITAL. The mission and objectives of the Toyota motor is the driving force behind the HRM strategy.<br />Toyota motors uses following techniques to retain their employes:<br />Recruitment <br />Selection <br />Training and development<br />Compensation <br />Maintenance<br />Firm Infrastructure:<br />This activity includes and is driven by corporate or strategic planning. Toyota motors implemented Management Information System (MIS), and other mechanisms for planning and control in different departments.<br />TOYOTA - ACROSS THE WORLD <br />AustriaBelgiumBosnia HerzegovinaBulgariaCanary IslandsCroatiaCyprusCzech RepublicDenmarkEireEstoniaFinlandFranceGermanyGibraltarGreat BritainGreeceSwedenSwitzerlandTurkeyUkraineToyota JapanToyota USHungaryIcelandIsraelItalyKazakhstanLatviaLithuaniaLuxembourgMacedoniaMaltaMoldovaMonacoNetherlandsNorwayPolandPortugalRomaniaRussiaSerbia and MontenegroSlovakiaSloveniaSpain<br />INTERNATIONAL STAGE COMPANY IS<br />08/05/2008 In Germany, J.D. Power and Associates publish 2008 CSI study : Hybrid Toyota Prius attains maximum approval ratings.<br />The independent body J.D. Power and Associates measures car owner satisfaction levels in 16 countries around the world. <br />08/05/2008 Prius ranked highest in J.D. Power & Associates' "What Car?" CSI study<br />The Toyota Prius has gained a second J.D. Power and Associates award after emerging as the highest scoring individual model in the 2008 UK Customer Satisfaction Index Study, retaining the position it held in 2007. <br />08/05/2008 Toyota Prius: number one in J.D. Power and Associates’ customer satisfaction index for the second year running<br />The independent body J.D. Power and Associates measures car owner satisfaction levels in 16 countries around the world. <br />28/02/2007 Euro NCAP awards all-new Corolla 5 star safety rating<br />The all-new Toyota Corolla has been awarded a maximum five-star safety rating for adult occupant protection in the highly regarded Euro NCAP tests. <br />22/12/2006 Toyota Auris gets 5-star safety rating<br />Euro NCAP confirmed that the new Toyota Auris has been awarded a maximum five-star rating for adult occupant protection in its safety crash test evaluation.<br />11/05/2006 Third year of International Engine of Year awards for Prius<br />For the third year in succession, the 1.5-litre petrol engine of the Hybrid Synergy Drive® has won best 1.4-1.8-litre engine in the awards and has also been named ‘Best Fuel Economy’ for its application in the Toyota Prius.<br />26/10/2005 New Toyota Yaris achieves 5 stars in Euro NCAP tests<br />The new Toyota Yaris has been awarded a 5-star safety rating and 35 points for adult protection in the latest round of Euro NCAP safety tests.<br />01/07/2005 Toyota wins J.D. Power German CSI for fourth consecutive time<br />Toyota has achieved the premier position in overall customer satisfaction for the fourth consecutive time, according to the J.D. Power and Associates 2005 Germany Customer Satisfaction Index (CSI) Study.<br />01/06/2005 Hybrid Synergy Drive rewarded for its excellent fuel economy<br />The Toyota Hybrid Synergy Drive system of Toyota Prius has been awarded two category wins in the International Engine of the Year Awards 2005.<br />01/06/2005 AYGO by Toyota awarded 4-star rating in Euro NCAP<br />The newly introduced Toyota AYGO has been awarded a four-star rating for adult occupant safety by the Euro NCAP testing programme. <br />The new Toyota Avensis: the safest car in its class according to Euro NCAP<br />The safety assessment organisation Euro-NCAP has recently introduced an even tougher testing regime – and Toyota’s Avensis 2003 rose to the challenge and passed with flying colours.<br />12/11/2004 Toyota Prius wins 2005 European Car of the Year<br />The Toyota Prius has been voted 2005 Car of the Year by the 58 members of the European Car of the Year Jury.<br />23/07/2004 Toyota maintains its success in German J.D. Power and Associates Customer Satisfaction Index Study SM<br />For the third consecutive year Toyota has been ranked highest overall in the German J.D. Power and Associates Customer Satisfaction Index Study SM <br />15/07/2004 An unrivalled safety accolade from Euro NCAP for the Toyota Prius<br />The Prius has been awarded Euro NCAP’s five-star rating for occupant safety and a record 43 points for child protection. <br />20/05/2004 The new Toyota Corolla Verso: the safest car in its class according to Euro NCAP<br />The new Toyota Corolla Verso is the safest car in its class according to Euro NCAP, having been awarded a 5 star maximum ranking <br />10/02/2003 Toyota success in German J.D. Power and Associates Customer Satisfaction Index Study SM<br />Toyota comes highest in an incredible 5 out of 7 award segments in the J.D. Power and Associates 2002 Germany Customer Satisfaction Index Study SM <br />BRRANDS :<br /><ul><li>CARSYARISCOROLLAMATRIXCAMRYCAMRY SOLARAPRIUSVENZAAVALONTRUCKSTACOMATUNDRAHILUX (VIGO)SUVs & VANSRAV4FJ CRUISERHIGHLANDERSEQUORIA4 RUNNERLANS CRUISERSIENNAHYBRIDSPRIUSCAMRY HYBRIDHIGHLANDER HYBRID</li></ul>WORLD WIDE CAR MANUFACTURERS<br />Alfa Romeo AustraliaHSV - Holden Special VehiclesMitsubishiCitron AustraliaPorscheSuzukiToyota AvenueNew FalconFord FocusMaseratiLotus Cars AustraliaDaimlerChrysler AustraliaSAABVolkswagenFordHoldenBMWAUDIHondaJaguoverLexusarLandMazdaMercedesNissanPeugeotProtonDaihatsu<br />AUTOMOTIVE INDUSTRY ANALYSIS <br />Overview of Automotive Industry AnalysisThe development of the automobile came from many different people from different countries. <br />The development stated in 1769 in France, with the invention of a three-wheeler that was powered by steam (Gale, 2003). <br />Then in 1800's the first internal combustion engine was created in Belgian and the first gasoline powered vehicle was constructed in 1885 in Germany (Gale, 2003). <br />Henry Ford built the first car in 1896 (Gale, 2003). He then revolutionized the industry with the invention of the assembly line. <br />PESTEL Analysis<br />Political<br /><ul><li>Laws and government regulations have affected this industry since the 1960's. Almost all of the regulations come from consumers increasing concerns for the environment and the concern for safer automobiles. The first safety act passed by Congress was in 1966 and was called the National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced manufacturers to improve the safety for the passengers, the driver visibility, and the braking of the car. It also stated that manufacturers had to inform the public when it had a recall on the cars.
The motivation for the passing of this safety act was Ralph Nadar's 1965 novel Unsafe at Any Speed: The Designed-in Dangers of the American Automobile. (Gale, 2004) Safety concerns were not the only concerns during this period. There was also growing concern for the environment even before the oil crisis. According to the article "Motor Vehicles and Passenger Car Bodies", Congress passed acts in 1965 and in the 1970's. The Vehicle Air Pollution and Control Act was passed in 1965. This was the first act to set standards for automobile pollution. Then in the 1970's, Congress passed the Clean Air Act that demanded a 90% decrease in automobile emission within the next six years (Gale, 2004).
In the 1970's the oil crisis caused another act to be passed. The Energy Policy and Conservation Act of 1975 stated that all automobiles must meet a certain mileage per gallon. The act demanded that all automobiles had to meet a standard of 20mpg by the 1980 model and then 27.5 mpg for the 1985 model. Then in 1992, the Intermodal Surface Transportation Act required the installation of front airbags. (Motor Vehicles and Passenger Car Bodies, 2004) </li></ul>Demographics<br /><ul><li>For many years now, the baby boomers generation has been the main target market for just about every product. As their generation is getting ready to retire and spend less money, the automakers are looking at the younger generations. Right now, the focus is starting to turn towards the baby boomers children (Generation X) who are in their mid 20's and 30's and Generation Y(Winter, 2002). GenYer's are now hitting the age where they are able to buy cars. According to Drew Winter, "Analysts say that five years from now Gen X and Gen Y combined will account for at least 40% of vehicle sales."
Americans today are choosing to purchase larger vehicles over passenger size vehicles. Today's generations are still buying the trucks, minivan and especially the SUV's, even with the ridiculous gas prices. It is not only the younger generations either; the boomers who are all reaching the retirement age are more interested in the bigger vehicles (Fetto, 2001). There activities after retirement are way more active then their parents. They are not just sitting around and playing golf or going on vacations. They are still working in some ways and being more active in their grandchildren's lives. Since the boomers are still active, they want to drive the same vehicles that their children drive in order to make life that much easier. Studies show that trucks, minivans and SUV's report increased sales nearly every year (Fetto, 2001).
The manufactures target the sales of their cars to certain people and their geographic location. Convertibles are not marketed toward people who live in parts of the world that are cold all year round. A good example of targeting markets is in Paris. A new is trying to be passed that SUVs are not allowed inside the city. They are taking up to much room and the vehicles use a lot of fuel. If this law is passed then SUV's will not be marketed toward people who live in Paris. Another example is that minivans are mainly marketed toward "soccer moms". They are marketed toward the moms because they are perceived, as needed a lot of room to haul kids around and the easy access the minivans provide. </li></ul>Economic<br /><ul><li>The automobile industry has a huge impact on the U.S. economy. The University of Michigan and the Center for Automotive Research stated that this industry is the major user of computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber. (Gale, 2004) The study also showed that for every autoworker there are seven other jobs created in other industries (Gale, 2004). These industries include anything from the aluminums to lead to vinyl. In 2001, the total sales of automobiles were 3.7% of the nation's gross domestic product. This percentage works out to be $375 billion dollars in sales. </li></ul>Technology<br /><ul><li>The internet has affected just about every industry in the world and has also had a huge impact on the automobile industry. A study was conducted by J.D. Power and Associates in 2002 and involved more 27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before making their purchases and out of that 60%, 88% went to the auto websites before going and taking a test drive. Business-to-business marketplaces have given the industry many opportunities because of the internet, such as more efficiency and lower cost. Ford, GM, and Daimler Chrysler announced in 2000 their plans to create a global online exchange for suppliers and the original equipment manufacturers. The exchange was originally called NewCo, and then it was changed to Convisint. According to Motor Vehicles and Passenger Car bodies, "In August 2002 General Motors announced it was about to begin sending requests for quotes to suppliers through Covisint using a tool called Quote Manager."
Concerns for the economy and global warming have caused the automobile industry to develop alternate fuel vehicles. In the beginning, automakers did not want to look into the development because of the high cost and the many risks involved. Because of new legislation, they had no choice but to come up with the technology to make the fuel-efficient cars. The automakers decided that electric cars would be the best way to meet the legislation demands. "Early models were unpopular because of slow cruising speeds and lack of performance, but by the end of the century, electric car production began to be practical."(Motor Vehicles) At the end of the 1990's manufacturers was coming up with the technology to produce internal combustion engine with an electric motor. Toyota and Honda were both selling the hybrid vehicles at retail value in 2001. </li></ul>Global<br /><ul><li>General Motors, Ford Motor Company, Daimler Chrysler, BMW, Volkswagen, Volvo, Toyota, Mazda, and Nissan Motor Company come together to create a new trade association created the Alliance of Automobile Manufacturers (Gale, 2004). The organization was to replace the American Automobile Manufactures Association that only consisted of American manufacturers, the goals of the associations "were to work together on public policy matters of common interest to provide credible industry information and data, and seek consistent global regulatory standards (Gale, 2004). The manufacturers also started merging in the late 1990's. American companies started buying foreign manufacturers created some of the largest foreign takeovers. In 19998 Daimler-Benz A.G. merged with Chrysler Cooperation to form DaimlerChryler A.G (Gale, 2004). Some other big mergers were Ford with Volvo, and General Motors and Saab (Gale, 2004). </li></ul>Sociocultural<br /><ul><li>Today's society judges people on the type of car you drive. Society does not like to admit to this but it is very true. Manufactures know this happens and targets their markets by these thoughts. For example, anyone who drives a mini van is perceived as a soccer mom. This is because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of junk because of what other people will think of him or her. Consumers also just feel better when they are driving a nice or new car, if makes them feel better about themselves.
Another aspect of the sociocultural is the environmental concerns for the need of fuel-efficient vehicles. Many environmentalists are worried about the impact that the gas cars have on the environment. There is even legislation that requires cars to average a certain miles per gallon. </li></ul>AUTOMOTIVE INDUSTRY FIVE FORCES OF COMPETITION MODEL<br />Threat of New EntrantsThe threat of new entrants is very low in the automobile industry. The industry is very mature and it has successfully reached economies of scale. <br />In order to compete in this industry a manufacture must be able to achieve economies of scale. For this to occur, manufacturers must mass-produce the automobiles so that they are affordable to the consumer. <br />Another barrier to entry is that it takes an incredible amount of capital to manufacture the automobiles. <br />It takes an extreme amount of capital not only to be able to manufacture the products but also to keep up with the research and development that is necessary for the innovation requirements. Access to distribution channels is another high barrier to entry. <br />A company must find a dealership to sell their automobiles or have their own dealership. Space in the dealerships lots is very limited making it difficult to have a wider variety of inventory. <br />Bargaining Power of SuppliersThe bargaining power of suppliers is very low in the automobile industry. <br />There are so many parts that are used to produce an automobile, that it takes many suppliers to accomplish this. <br />When there are many suppliers in an industry, they do not have much power. There are so many suppliers to this industry; manufactures can easily switch to another supplier if it is necessary. <br />Bargaining Power of BuyersThe bargaining power of the buyers is moderately high. The buyers being consumers purchase almost all of the industries output. <br />The manufacturers depend on them to stay in business. The buyers also are a significant portion of the industries revenue. If they can not keep their buyers happy then they risk losing them to their competitors. <br />The buyers have low switching cost if they are not happy. All the buyer has to do is sell the car they own and purchase a new one. The reasons why the power is not completely high is that the buyers are not large and few in number. <br />The buyers do not have the ability to integrate backwards into the industry. If they want a car then they have to purchase it from a dealership. <br />Threat of Substitute ProductsThere are not many substitute products for automobiles. Some of the substitutes are walking, riding bike or taking a train. <br />Substitutes products all depend on the geographic location of the consumer. In some cities such as New York or Chicago, a car is not as necessary. In cities such as those, the subway is the most effective means of transportation. However, in most places a person must have access to an automobile in order to get around. <br />Intensity of Rivalry among CompetitorsRivalry among the competitors is very strong is this industry. The major competitors are so closely balanced that it increases the rivalry. In order to gain market share in the automobile must gain market share by taking it from their competitors. <br />One of the other reasons there is such high rivalry is that there is a lack of differentiation opportunities. All the companies make cars, trucks or SUV's. The competitors are compared to one another constantly. <br />The price, quality, durability, and many other aspects of different manufacturers are greatly taken into consideration when deciding what type of vehicle to purchase. <br />When the different manufacturers advertise they even compare their products to their competitors. For example, the commercials will focus on areas where the company outperforms its competitors.<br />SWOT ANALYSIS<br />STRENGTH <br />Brand image<br />Market Leadership<br />Easy availability of spare parts<br />Dealership network<br />Suitable for rural area<br />WEAKNESS<br />Always charge the premium price<br />Management Control by local partner<br />OPPORTUNITY<br />Switching diesel market toward petrol and CNG market<br />Failure of competitor model <br />Unacceptability of competitor model<br />Price increase in 1000cc<br />THREAT<br />Government reducing the excise duty on imported car<br />IR interest rate Higher<br />Reduction in Diesel prices<br />Entrance of the new Firms<br />4 P’s of Toyota<br />PRODUCT is anything that can be offered to the market to satisfy a want or need<br />That includes<br />Physical goods<br />Services<br />Experiences<br />Events<br />Person <br />Organization<br />Information and ideas<br />DEMOGRAPHIC SEGMENTATION<br />FAMILY SIZE:<br />Large family size as in india would increase opportunities for growth in sales of Innova or Fortuner.<br />INCOME:<br />People falling in category of upper middle high income group and who have ability and willingness to buy,would go in for Toyota cars like land cruiser,prado,camry,etc.<br />PRICING STRATEGY<br />OPTIONAL-FEATURE PRICING: e.g. an Innova customer can order mud flaps,side steppers or other accessories.<br />PROMOTINAL PRICING:<br />Low Interest Financing: This technique is for short period and is mainly used in festive seasons.<br />Longer Payment Terms: The company stretchers loans over longer period and thus lower the monthly payments.<br />PRODUCT MIX:<br />SEDAN<br />COROLLA ALTIS<br />COROLLA ALTIS SPORT<br />CAMRY<br />SUV/MUV<br />TOYOTA INNOVA<br />FORTUNER<br />PRADO<br />LAND CRUISER<br />PROMOTION:<br />TOYOTA uses many different techniques of advertising as most of print advertisement of TOYOTA COROLLA is individually targeted at factors like comfort,performance,styling,power,leg room and driving pleasure.<br />The commercials mainly target at youth and young executives.<br />PSYCHOLOGIACAL SEGMENTATION:<br />SOCIAL CLASS:<br /><ul><li>People who belong to upper middle class and higher social status would opt for SUVs/MUV’s or sedan likecamry etc.</li></ul>PERSONALITY:<br /><ul><li>People who are in sporty attitude having unique style statement would settle for Toyota Altis sport model or Fortuner which would exhilarate their senses.</li></ul>COMPANY’S OWNERSHIP STRUCTURE<br />MARKETING DEPARTMENT<br />FUNCTIONS OF MARKETING DEPARTMENT<br />Arrange the events of the government institutes<br />Prepare the potential customer list<br />Make region performance report<br />Provide selling skills to dealers employee’s<br />Contact with the Govt. institutes<br />Contacts with the banks for leasing <br />Establish the new dealership network <br />Monitor the sale at dealers<br />TOYOTA – SUPPLY CHAIN<br />ORGANIZING AND STAFFING ANALYSIS<br />TOYOTA'S FUTURE CAR PLAN<br />As the U.S. government continues its investigation into the biggest recall scandal in Toyota's history, the embattled automaker's bosses clearly have plenty to worry about at present. <br />But the world's No. 1 auto manufacturer is still as focused as ever on the business of making cars and has some fascinating sheetmetal in the pipeline to prove it. Just one look at what's coming in the next five years will cement that fact. <br />Unusually exciting concepts for Toyota unveiled at the recent Tokyo Auto Salon -- the FT-86 G Sports Concept and the GRMN Sports Hybrid concept boasting a 400-horsepower V-6 and electric motor combination -- garnered headlines around the world, with company CEO Akio Toyoda front and center promoting them on stage. <br />Lexus is planning a next-generation version of its aging GS sedan which is expected to hit the market within two years. <br />A GS F version is also reportedly in the pipeline. The question is what will power the super GS. We've recently learned that Toyota is strongly considering dropping a detuned version of the LFA's thumping 552-horsepower 4.8-liter V-10 under the hood of a GS F model. <br />Targeting the likes of BMW's M5 head on, one source close to Lexus tells us that engineers will reduce the LFA's engine capacity to 4.6-liters and drop power to around 450 horsepower, with the aim of generating beefier bottom-end torque, making the new GS Japan's most powerful sedan ever. <br />GS F would employ a version of the IS F's 5.0-liter V-8, but forces inside Toyota are apparently now pushing hard for the V-10. <br />Word is that if the V-10 gets the green light, it may appear in at least one other vehicle to help spread the cost. <br />Another highlight of the GS F will be the incorporation of a Toyota-first rear-wheel 'torque split unit' that channels power between the right and left rear rubber in much the same way as Mitsubishi's AYC system or Honda's SH-AWD unit does, except that the Lexus system will only engage on the rears.<br />THANK YOU<br />