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Slide Toyota Final (2)

Slide Toyota Final (2)

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Published by: sabrinaadn on May 31, 2012
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Business Economics and Decision Analysis ZCZB6023



ZP00965 ZP00688 ZP00915



8th largest company in the world

Established in 1937

annual revenue hovers around US$186 million dollars and Workforce of 290,000 people worldwide

Renowned for its amazing cost cutting initiatives

• The Toyota Company is a leader in the car manufacture, assembly and distribution the world over. • A very efficient management style that the company uses has been one of the reasons for the firm’s good performance. • The market structure can be seen as an oligopoly. This is due to the fact that there are other key players like GM who are peer competitors

• Mission of Toyota is to manufacture cars that meet the customer needs in constantly; • They comply with local, national and international laws and regulations as well as the culture; • Believe that management interacting with its stakeholders is of the greatest importance

Mercury and Volvo.  Ford motors company . marine engines and of course automobiles. Mich. Mazda.Ford Motor Company. Competitors  Two of the many companies that are direct competition are: Honda motors company . Jaguar. a global automotive industry leader based in Dearborn. generators. the company's core and affiliated automotive brands include Ford. With about 300. from simple beginning as a small Los Angeles store to a top manufacturer if of motor cycles.. . power equipments. manufactures and distributes automobiles in 200 markets across six continents. Lincoln. ATVs. Land Rover.000 employees and 108 plants worldwide.Hondas heritage began in the year began in the 1959.

0 10. 2010 3 Automakers Global.341. Group Toyota GM Volkswagen Units 8.476. as it has put a cross a number of strategies to enable it Top reach the set target.557. and it is projecting to have most of the market by the end of 2013.192 7.• Toyota Company has been producing vehicles and significant products that are not expensive and readily available. OICA.065 % Share 11. • This has been a significant factor that has enabled the Company to have a major cut in the market .4 .9 9.351 8.

steel and fuel. Toyota faces tremendous competitive rivalry in the car market. Toyota has previously concentrated on the Japan and American markets and it needs to setup strategies to penetrate the other markets as well. Competition is increasing almost daily. The company is also exposed to any movement in the price of raw materials such as rubber.  Toyota has taken a good position as far as sustainable development is concerned. with new entrants coming into the market from China. Toyota Company is able to apply its strengths and opportunities it has to create a competitive edge in the industry. South Korea and new plants in Eastern Europe. These economic factors are potential threats for Toyota . The key economies in the Pacific. As with any car manufacturer. the US and Europe also experience slow downs.

• The Company is also conscious about sustainable development.• Toyota Company is one of the world’s leaders in car export and it appears to literally be living its mission. . • The company is working towards the end of creating a society that is prosperous by providing their clientele with the best value for their money. which is to be the world leader in the creation of automotives that are best in terms of value. and this can be clearly seen in its different corporate social responsibilities as well its sustainable development initiatives aimed at reducing the pollution of the environment.

 Toyota has catered for all car needs that may arise for any individual with their wide range of motor vehicles. . They range from small sports cars to big family vehicles and trucks as well as vans.  The customers comprise a varied group of people. Toyota’s customers are very diverse and they range from the low income earners to the very rich. incomes. with differing ages. geographical locations. and social and cultural statuses.

newsletters. In such a case.  Once individuals purchase the company’s product. the product buyer and purchaser is not actually the product user. and other informational sources. . Toyota products on individual basis according to their specific needs. Product awareness is enhanced through advertisements. In some cases we have organizations purchasing cars for their firm’s usage or for their employees. there is an increased exposure to its other products. website information.

The design criteria range from top speed. .• Target Market • Each of Toyota’s products is designed to target a specific market. small. capacity and exterior appearance like color and shape. two-seat model cars for the relatively younger and single people who are adventurous to the big fiveseat models for the family set up. • There is a high speed.

giving them a better image of Value and a better price on the same top quality merchandise.• Value Proposition • Toyota. . • Toyota’s value proposition has been built upon quality and reliability.

• Competitive Strategy • Toyota relied on having a very strong relationship with its suppliers to achieve greater efficiency • Just In Time (JIT) system of inventory management. . the company has greatly improved its position inside of the Marketplace. which was pioneered by Toyota.

Barriers to Entry Buyer Bargaining Power new entrants is very low Bargaining power of the buyers is moderately high Supplier Bargaining Power Threat of Substitutes Intensity of rivalry Bargaining power of suppliers is very low Threat of substitute products is high (switch to other brand) The competitors is very strong is this industry .

Buyers and sellers have perfect information Firm engage in price competition and react optimally to prices charged by competitors.• Toyota’s market structure is Oligopoly • The criteria: Industry dominance by few large firms Products sold by these firms are either differentiated or identical in nature Barriers to entry exist. .

Product Recall Lack of Supply Issues in Toyota Restructuring Toyota’s Management Quality Issues Pricing Decisions .

00 sports utility vehicles and pick up trucks due to faulty front suspension systems. The majority of affected vehicles were sold in the US. while the rest were sold in Japan. •In 8 million the number of Toyota cars now pulled in for repair worldwide since November 2009 Reputation decrease •Tarnish Toyota’s reputation as being reliable vehicle. Europe and Australia Lost confidence •Reinstating legitimacy of Toyota in buyers. buyers have lost faith .PRODUCT RECALLS •In 2005 the company had to recall 880.

although possibly less costly than consequential costs caused by damage to brand name and reduced trust in the manufacturer. • The recall is an effort to limit liability for corporate negligence (which can cause costly legal penalties) and to improve or avoid damage to publicity. • Recalls are costly to a company because they often entail replacing the recalled product or paying for damage caused by use. .• A product recall is a request to return to the maker a batch or an entire production run of a product. usually due to the discovery of safety issues.

Toyota's luxury brand. Toyota's low-cost brand. The recalled models are: • 2009-2010 RAV4 2009-2010 Corolla 2009-2010 Matrix 2005-2010 Avalon Certain 2007-2010 Camrys 2010 Highlander 2007-2010 Tundra 2008-2010 Sequoia • Within 5 years Ford recalled about 14. have been affected. eight Toyota models have been recalled to fix the sticky accelerator issue.3 million vehicles . or Lexus.• Currently. No models from Scion.


2010 Jan 29. 2007 US: 55.Sep 26. 2010 . US: 3. 2009 Nov 26. 2009 Jan 21.000 Camry and ES 350 cars in "all-weather" floor mat recall. China: 1. 2010 Jan 27.1 million Toyotas added to amended floor mat recall Europe.3 million Toyota vehicles recalled due to faulty accelerator pedals US: 1.8 million Toyotas added to faulty accelerator pedal recall Nov 02.2 million vehicles US: 2.8 million Toyota and Lexus vehicles again recalled due to floor mat problem US: floor mat recall amended to include brake override and increased to 4.

000 MY 1998–2010 Sienna minivans for possible corrosion of spare tire carrier cable Apr 16.Feb 08. 2010 Feb 08.000 MY 2010 4WD Tacoma pick-up trucks recalled over concerns about possible defective front drive shafts US: 600.300 MY 2010 Camry vehicles recalled over potential brake tube problems US: 8.000 hybrid vehicles in brake recall following 200 reports of Prius brake glitches. 2010 Worldwide: 436. 2010 World: 21.000 MY 2010 Toyota Land Cruiser Prado and 13. 2010 Apr 19.000 Lexus GX 460 SUV's recalled to reprogram the stability control system US: 50.000 MY 2003 Toyota Sequoia recalled to reprogram the stability control system Apr 28. 2010 . 2010 Feb 12.[ US: 7.

17 million vehicles for gas pedals that become trapped on floor hardware . 2011 – US: Toyota recalls an additional 2. 2011 February 22. US: 7.May 21. 2010 Japan: 4.000 MY 2010 LS for steering system software update World: 270. US & Canada: approximately 1.13 million Corolla and Corolla Matrix vehicles produced between 2005 and 2008 for Engine Control Modules (ECM) that may have been improperly manufactured February 22. 2010 August 28. 2010 July 5.000 Avalons and LX 470s for replacement of steering column components.509.000 Crown and Lexus models for valve springs with potential production issue US: 412. 2010 July 29.


• brake problems on the hybrid car QUALITY ISSUES • prospect of billions of dollars in charges and operating losses • Toyota’s short tenure a complete failure PRODUCT RECALLS PROFIT LOSS .

Do you agree with Toyota decision to recall back even it is a big cost for them? IS THERE A NEED to change the supplier change since the bad qualities from their suppliers? .

and they have demonstrated by their action that they can be trusted . not by words. it exemplifies the responsible party for the community worldwide Saving the industry and themselves from more lossesdue to legal suits and acts Put safety and reliability over revenues and profitsgain confidence through trust is built by trustworthy behaviors.YES because.

suppliers Supply chain structure SOLUTIONS RECOMMEND ED outsourcin g Manufacturer .

S. and Japanese investigators • Ensure no further difficulties on the road for the affected or other models • Extended warranties to reassure current owners • Internal activities that offer assurance that Toyota truly understands why the problems occurred. and is undertaking actions to prevent any . reinstall faith • Resolution of the problems to the satisfaction of U. potential re-purchasers. reveals them publicly.• Owners. and prospective buyers.

other firm will follow because another firm will offer lower price but same technology or used of the product. The best decision Toyota should not increase their price.  Therefore from this theory Toyota should not increase price of car. Thus. it will lead their customer to choose another substitute with same technology the car. it because the firm involve in oligopoly in order word if a leader like Toyota firm increase its prices other firm or their competitor in this industry were not follow because the fear of losing the customer. it will lead to decline the revenue of the .  But if firms reduce its prices.

• Toyota (Thailand production) has barriers to export many cars to Malaysia due to high Import Duty. Excise Duty and Sales Tax imposed by Malaysia Government even though there is a high demand • This is done to protect Malaysia automobile industry • This cause Toyota car price to increase and reduce demand in Malaysia market .

00 + RM65.142.380.4 – RM72.CEPT JENIS/KAPASIT I ENJIN DI DE CJ ≥2000.00) = RM 78.00) jumlahnya: (RM3.00 + RM7.<2500 5% 90% 10% Toyota Estima 2.30 .00 (5% +90% + 10% ) x Harga CIF Kereta (RM72.• CBU Rate since 2006 ASEAN .238.380.378.619.

00 + RM7.30 This import car tax prices will be added back to the CIF price of the car RM 78.142.380.00) (RM3.378.00 + RM65.619.00 = .238.378.4 – RM72.Toyota Estima 2.380.30 + RM72.00) = RM 78.00 (5% +90% + 10% ) x Harga CIF Kereta (RM72.380.

• Price not including price/gains to be be set by the major distributors • Price not salesmen profit prices including • Price not including insurance and road .

Excise Duty and Sales Tax will reduce the car price and this will increase demand in Malaysia market • Toyota should increase production by 2015 to capture the increase demand due to .• AFTA implementation 2015 will reduce Import Duty. Excise Duty and Sales Tax • Reduction in Import Duty.

 Toyota faces a large enough drop in unit sales and revenue that it will be forced to fire a substantial number of its factory and white collar staff. higher-skilled employees to maintain their core competencies.  The extreme nature of economic stress forced the company to rely on social mechanisms to induce older employees to leave the company. . Toyota announced that overtime and the yearly bonus would be cut for all employees. paid overtime was also eliminated. and within a few months. During the Tsunami crisis. Toyota companies will first let go of lowerskilled part-time employees and workers while holding on to salaried.000 people. The firm currently employees 320.  During restructuring.

 Moreover Toyota was being able to rely on policies used in liberal market economies. Regarding the transaction cost concept in the economic what the Toyota do in term of restructuring the firm is reasonable. such as severance packages. In order word Toyota will lead to minimize the cost and maximum the profit the firm and it will cover all the debt facing by Toyota. to induce employees to leave the company. . The pay-byperformance policy also became a contentious issue.  Transaction costs were referring to the costs associated with acquiring an input that is in excess of the amount paid to the input suppliers.

 However this problem will effect at worker. Instead of motivating employees to be more productive. whereby it will reduced moral and trust in the firm. . the lack of criteria used to determine performance and the increase in service overtime coupled with a cut-back in paid overtime meant that it was a camouflage for management to extract more work for less pay.

 Toyota it would cancel overtime at its four directly owned vehicle plants in Japan while other subsidiaries and affiliates would also reduce vehicle assembly. due shortage of Thai-made parts as floods in that country disrupted supply. . Toyota Motor Corp would "trim production" at its japans’ vehicle assembly factories.

Toyota has said it would also pull back production in Indonesia. Toyota had ramping up production at home since last month to make up lost due to 11 Mac earthquake and tsunami that struck northeast Japan and also disrupted the supply with the supply of about 100 parts affected in Thailand. Vietnam. . and Philippines.

In order word there several factor will lead to the shifter of supply curves.  The theory market supply and demand state. The several factor which are input price. technology or government regulation. . taxes. number of firm. and producer expectations. Refer with the case of Toyota want to trim the production itself. using supply and demand framework also can predict how changes in one or more supply shifter will affect the equilibrium quantity and price of production good and services. It is deserve it for their firm it because one of the appropriate ways implement in theory of economic in supply and demand market. substitutes in production.

. However when refer the Toyota wants to trim their production it refer to the factor where the producer expectation whereby due shortage of Thai-made parts as floods in that country disrupted supply. there will less produce of production of car. As result it will lead to minimize the cost during the crisis. Toyota estimated an output loss of about 6000 vehicles in Japan. Therefore Toyota will reduce their quantity of supply by using cancel overtime at its four directly owned vehicle plants in Japan while other subsidiaries and affiliates would also reduce vehicle assembly thus.

 Supply chain monitoring to be important  Toyota Motor Corp should pay attention to the welfare of workers toward high motivation of works  Appropriate decision making  Producer expectation must be accurate to minimize the uncertainty condition or risk.  Build more subsidiary company of Toyota in order to diversify the uncertainty risk  Establish an Intelligence Department/Team to tackle the recall issue – recall involving recurrence problem .

created a great opportunity for Toyota to re-look into their old quality systems and improve on their products. LESSON LEARNT New strategies are evolved: with enhanced research & development and step-up of quality control introduce a better product and with proper corporate governance .

to recognize the impact that how will a poorly managed crisis impact a business operation many preventative measures can be stepup to prevent an issue evolving to a crisis. a hard learning experience for Toyota. it had also created opportunity for other companies injects a reminder or lesson to Toyota competitors or any other businesses. .build on its reputation and slowly regain its customers' confidence thr continuous improvement of its products and well conversed communication.

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