Toyota Company’s Strategic Analysis and Trends

Introduction

Precisely, SWOTT denotes “Strengths, Weaknesses, Opportunities, Threats, as well as Trends”. Its use in analyzing business’ environmental provisions is critical. It helps organizations to recognize their strengths as well as weaknesses. In addition, opportunities and threats within its industry can be established. Thus, SWOTT is a very critical tool for analyzing the strategic points of an organization (Williams, 2012). This paper reports on the SWOTT analysis carried out on the Toyota Company (see the SWOTT analysis table at the end).

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Analysis of the forces affecting Toyota Company

Economic factors have a great impact on how a business can market its merchandise. It determines the activities of consumers as well as their purchasing power. The economic forces involve the general economic situation as well as the purchasing power of customers as well as their preparedness to spend. In other words, economic forces basically imply the present state of the economy. Economic forces are influenced by several factors such as cost of living, rates of interest as well as inflation. Others include taxation, exchange rates, resource availability, and balance of expenditures. These factors have greatly affected the business environment of Toyota Company.

Global monetary impulsiveness that happened in the year 1990 is likely to stay for another long period of time. However, there are several lessons that have been learned to avoid unnecessary borrowing of cash. Toyota Company has made advancements to strengthen their economic policies. Nonetheless, a greater fraction of institutionalized capital is expected to cause destruction with both markets and currencies now and again. Mostly, developing economies will be at risk of these economic instabilities. Business activities are likely to grow in those countries where Toyota operates and strive to make progress and develop its regulatory, financial, and commercial transformations.

Economic forces have greatly influenced Toyota’s economic and marketing strategies. Presently, there is an economic crisis worldwide following the fall of the US investment banks in the year 2008. This has harshly impacted the car industry all over the world. Global sale of cars reduced drastically between 2008 and 2009. Toyota Company is one of the automobile industries that have been affected most by this collapse. According to the wall street journal, Toyota Company recorded a total loss of $6 billion in the year 2009.

Sales of Toyota cars are equally affected. In the same year, car sales from Toyota Company reduced by 15.1% as compared to the preceding year. This indicates that economic forces play a very big role in the development of Toyota Company.

Regulatory and legal factors also affect the business activity of Toyota Company. The legal system embraced in the country that Toyota executes business is connected to the issues affecting its political provisions. For instance, the extent of autonomy from political influence is a key factor in business realms. This has helped Toyota to develop and grow in other foreign countries. National laws and regulations influence business in regard to safety and health standards. Other factors incorporate employment trends, market probations/patenting. There are also regulations that administer activities taking place across borders.

Such forms of activities incorporate capital investments, dividend payments, and settlement of customs duties on imports. International laws/regulations, for example, pacts between nations governing the cross-border conveyance of harmful wastes, can also limit the operations of Toyota in transporting shipments through international borders. Through technological innovations, Toyota tries to continue producing cars that are not only cost-effective but also meet the gas emission standards of most countries. The recent development of gas and electric cars is one of the measures that Toyota takes to reduce environmental pollution while producing cars that meet the needs of its customers. This makes Toyota continue taking the lead in the market full of lots of completion.

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How Toyota Company deals with these issues

The major economic strategy of Toyota is focused on increasing the resources of its shareholders. Its business objective is to advance its manufacturing processes to produce cars that meet the demands of different regions and also in line with current market trends not only locally but also globally. In this manner, Toyota Company will be able to improve the living standards of individuals around the world while persistently growing in unification with society.

In July of the year 2000, Toyota Company started Toyota Financial Services Corporation. This corporation was mandated with the task of controlling their financial firms both abroad and home. In addition, this corporation was to widely improve their monetary service processes. Currently, Toyota provides car sales associated monetary services to over 3.5 million persons in around 22 nations. Toyota Company has embraced a cost efficiency initiative with an objective of funding its development strategy. Through the right use of principal abilities, resources, professionalism, and efficiency, the organization has made credible processes

Analysis of the supply chain operations of Toyota

The supply-chain structure of Toyota is part of the company’s strategy, which is carefully based on the Toyota production system. In a current highly competitive international market, corporations are forced to look for opportunities to make a competitive advantage for them to increase their market share and be able to thrive well. Supply chain management is thus an important aspect that is ignored by Toyota Company. Development in supply chain management can decrease costs for an organization and improve its efficiency. Its implementation requires a strategic approach.

Presently, Toyota Company is one of the typical corporations internationally. It mainly embraces a successful business practice without comprising its supply chain management. Their principle is Just in time. Kanban, lean industrial, kaizen, and others offer a competitive advantage for Toyota and provide efficacy in several commercial activities together with chain supply chain management.

The fundamentals of the just-in-time structure are being practical in revealing complications, pull manufacturing that is based Kanban, Total quality management, and removal of waste. Other areas of importance are minimizing inventory by connecting with suppliers in the scheduling process and uninterrupted improvement, refining equipment, and concentrating on co-operation. Capacity planning in any corporation is an element of supply-chain management for that particular company. Toyota’s method of capacity planning is that endeavors to eradicate inventory. To be able to achieve this, Toyota depends greatly on the pull system. Normally, the key objective is a constant improvement (Müller, 2011).

When it comes to opportunities, Toyota Company can take lead in some advantages. One of the leads is the rise of China as an economic power. It is anticipated that to realize that China is one of the fastest developing businesses for Toyota Company. With sustained growth in production within this country, the corporation will successfully minimize logistical difficulties and decrease the company’s process budget. Along with this, the corporation is also favored by the fact that the dollar is depreciating in value. The overall effect of this increased sales of Toyota cars within the US and also reduced buying costs.

Precisely, SWOTT denotes “Strengths, Weaknesses, Opportunities, Threats, as well as Trends”; nonetheless, its use in analyzing businesses is critical. Notably, it helps organizations to recognize their strengths as well as weaknesses. In addition, a company is able to establish and seize the available opportunities within its industry. Thus, this is a very critical tool for analyzing the strategic point of a corporation and its environment (Williams, 2012). Here SWOTT analysis is done for Toyota Company for the purpose of this assignment.

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SWOTT Analysis Table

Strengths

  • Global– Toyota is a globalized entity with a concrete widespread position in over 170 countries.
  • Economic– This company has great economic strength. In 1997, the company recorded considerable sales. Additionally, its growth hiked to nearly 29.3% in terms of sales.
  • Technological– Toyota company produces cars that are very effective in terms of fuel consumption. Besides, their cars have superior performance and less environmental effects.
  • Leadership– Toyota is a top industry in manufacturing and production. It increases its profit margin through effective lean production tactics. They insist on quality management and timely manufacturing and top performer in terms of research and development.
  • Structures-Toyota has developed good structures for excellent proliferation in the major markets such as the US and China. Actually, it’s the second leading car producer globally.
  • A culture-the strong culture of Toyota of producing cost-effective cars that meet the demands of its customers is their strength. Their principles and beliefs are also based on constant progress as well as respect for other people.
  • NB: The most important factor in this section is Leadership– this is because Toyota has shown credible leadership provision in its operations. It is top in the industry of manufacturing and production. It increases its profit margin through effective lean production tactics. They insist on quality management and timely manufacturing and top performer in terms of research and development.

Weaknesses

  • Strategic capabilities-There is weaknesses in the production capacity of Toyota due to poor strategic capabilities. Toyota manufactures most of its automobiles in the US and Japan. However, most of its competitors are staged worldwide for universal efficacy.
  • Intellectual property-Toyota is a Japanese car producer. Most people view this as the importation of intellectual property.
  • Processes and systems – Even though the cost of raw materials and profits are adversely affected by fluctuating exchange rates, there are no strong processes and systems that have been put in place by the company to compensate for such fluctuations or to cushion the company against losses.
  • NB: The most important factor in this section is Processes and systems– The cost of raw materials and profits are adversely affected by fluctuating in the exchange rates, there are no strong processes and systems that have been put in place by the company to compensate for such fluctuations or to cushion the company against losses.
Opportunities
  • Innovation–Toyota company is the first to develop commercial production hybrid gas-electric vehicles that use both gas and electric, for instance, the Prius model, which is based on innovative technologies and R&D activity. Given that oil prices do escalate every time this is an investment that highly suits customers who need alternative sources of energy.
  • Environmental-This is an opportunity because Toyota has developed new vehicles that meet the needs of both institutions and social groups. In addition, the establishment of electric cars as well as hybrid fuels helps in minimizing adverse environmental effects.
  • Strategy- Toyota Company continues to develop strategies to expand more intensively into new market segments; for instance, the recent introduction of the Aygo model by Toyota is meant to take some share of the market to the youth.
Threats
  • Competitive analysis-saturation, increased competition in the market as well as intensive marketing campaigns raises competitive pressures.
  • Social-escalating fuel costs and car maintenance costs have forced most families to abandon owning cars or use their cars less.
  • Resources-constant changes in the rates of exchange affect not only the profit margin of the company but also the cost of raw materials.
  • Legal and regulatory-Current environmental regulations and related anxiety regarding carbon emission have a serious sensitivity to environmental protection worldwide and standards of gas emission.
    NB: The most important factor in this section is Competitive analysis. There is a considerable rivalry in the industry. Toyota has to strategize its business models to counter such effects.
Trends
  • Legal and regulatory– there are emerging trends where car usage is changing usage. Governments are also encouraging other means of transport. Instead of driving, governments encourage cycling and enticements to use public transport.
  • Goals-With current environmental issues, Toyota aims to produce more fuel-efficient and environmentally sound cars.
  • NB: The most crucial factor in this context is the Legal and regulatory provisions – there are emerging trends where car usage is changing adversely. International laws are put in place to govern the automobile industry.

References

Müller, C. (2011). Case study and comparative strategic analysis of Toyota and Ryanair: The key differences in the operations strategy of manufacturers and service firms in terms of process design, supply chain, human resources, capacity, innovation, and quality management. München: GRIN Verlag GmbH.

Williams, C. (2012). Effective management: A multimedia approach. Mason, OH: South-Western/Cengage Learning.

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