TOYOTA AND AL FUTTAIM MOTORS IN UAE

Understanding the amalgamation of Japanese and the Middle East Strategy

Submitted by Ahmad Farid Eidizada

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Selection of Topic
Al Futtaim is the largest distributor of cars in the UAE. Toyota is the biggest gainer for the company. After reading the book the Toyota way I have decided to prepare the project on this topic UAE has a market for cars. They range from Luxury cars to daily use simple cars. There is a huge competition in the market. But Toyota is the leader in terms of sales and customer service. Toyota is the sustaining company. It has gained the Purchasing power of the consumers in UAE. Even after a high demand for luxury cars, every fourth car in UAE is a Toyota. There is a high demand for it as it is reliable and the services are simply consumer oriented. Hence the following study shows how the both companies combine together in International Business for providing Best services to its customers in the Middle East. Their growing demand in the UAE

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Table of contents:

a) b) c)

Al Futtaim in UAE………………………………………………………………………………………………………………….4 About Toyota………………………………………………………………………………………………………………………..5 EGSOP (Environment-Government-StrategyOrganization/Operation-Performance)………………………………………………………………………………….6

d) Beginning of Toyota Middle East……………………………………………………………………………………………9 e) Top to down Approach by Toyota and Al Futtaim Middle east………………………………………….….9 f) Bottom-Up Approach………………………………………………………………………………………………………....13 g) SWOT analysis………………………………………………………………………………………………………….………….14 h) Learning from Toyota International Business in Middle East………………………………..…………….15 i) Bibliography…………………………………………………………………………………………………………..…………..16

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Al Futtaim in UAE

Al Futtaim group is the largest distributor of automobiles and automobile products in the UAE. It is the franchise for the TOYOTA cars and SUV in the UAE. Along with Toyota the company also has a large base for other Automobile companies and Luxury car companies Al Futtaim statistic show that every fourth car owned in the UAE is a TOYOTA. The TOYOTA is the budget friendly car while the owners enjoy the excellent after sales services provided by the AAL Futtaim motors company. The Parts Distribution Centre in Ramool, Dubai, is a perfect example of the company's after-sales service support, stocking over 100,000 line items and capable of ensuring spare parts delivery to any other outlet in the country within 2 hours of an enquiry. Al-Futtaim Motors is the largest distributor of automobiles and automotive products in the Emirates, with fully computerized showrooms plus fully equipped service workshops and parts facilities in every emirate. An aggressive Customer Satisfaction programme, designed to enhance service levels right across the company, from showroom to workshop, continues to foster customer relationships. Our ultimate goal is to consolidate our position as the number one distributor in the UAE by achieving new standards in customer satisfaction. Toyota vehicles in the United Arab Emirates are solely distributed by Al-Futtaim Motors
Source (Al Futtaim website)

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About Toyota (SOURCE YAHOO Finance)
Toyota Motor Corporation engages in the design, manufacture, assembly, and sale of passenger cars, minivans, and commercial vehicles and related parts primarily in Japan, North America, Europe, and Asia. It offers conventional engine vehicles, including subcompact and compact cars under the Corolla, Yaris, micropremium iQ, Passo, Ractis, Vitz, and Etios brand names; mini-vehicles, passenger vehicles, commercial vehicles, and auto parts under the Toyota brand name; mid-size cars under the Camry, REIZ, Avensis, and Mark X brand names; luxury cars under the Lexus and Crown brand names; Century limousines; sports cars under the Scion tC and Lexus brand names; sport-utility vehicles under the Sequoia, 4Runner, RAV4, Highlander, FJ Cruiser, and Land Cruiser brand names; pickup trucks under the Tacoma and Tundra brand names; minivans under the Alphard, Vellfire, Corolla Verso, Wish, Hiace, Regius Ace, Estima, Noah, Voxy, Sienta, Isis, and the Sienna brand names; cab wagons; large, medium, and small trucks; and large, small, and micro-buses. The company also offers hybrid cars primarily under the Prius and Crown brand names. Toyota Motor sells its products through dealers. In addition, it offers a range of financial services comprising retail financing, retail leasing, wholesale financing, insurance, credit cards, and housing loans. Further, the company designs, manufactures, and sells prefabricated housing; is involved in information technology related businesses, such as an e-commerce marketplace known as GAZOO.com; and engages in the sale promotion of KDDI communication related products, primarily the au brand. Toyota Motor Corporation has a strategic collaboration with Bayerische Motoren Werke Aktiengesellschaft for research in the field of lithium-ion battery cells. The company was founded in 1933 and is headquartered in Toyota City, Japan.

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EGSOP (Enviournment-Government-Strategy-Organisation/OperationPerformance) (Source the Toyota Way Book by Dr Jeffery Liker)

At Toyota and Al Futtaim
Environment: The community at Toyota depends on the root principle of “Respect people and continuous improvement”. This helps them serve their customers and employees in a better way. Also at Toyota they created the21st Century Diversity Strategy in the year 2001 in which they have multibillion dollar investment for development of the community, the human resources, procurement, the minority etc. This has not helped them get more positive results along with happy customers they have 30% of their employees from diverse back ground. Toyota has their HQ in the United States. They have been using their core principles to raise their performance in every country there have their presence. The principles are later discussed. At Al Futtaim the environment is more or less the same. Al Futtaim is much smaller compared to the major giant Toyota but their core principle is to move forward with continuous improvement. Their principles are rooted in the customs and their culture which they bring in the practice. Al Futtaim is also one of the best places t work with. The company has diverse employee pool where in people of many different nationalities can be found. Government: The CEO of Toyota Akio Toyoda enjoyed profits up to 16.1 Billion in the year 2007 when the Recession was hit in the US and in the same year it left behind its competitors like GM and Ford . Toyota is a private owned company whose top management is comprised of 29 Japanese men. It is when in 2009 they had to recall about 8 Million Toyoda cars from the market when the problem of unnecessary acceleration occurred. There was a question in the market about their pioneered Technology and quality assurance. This was handled by making up teams and solving reach and every detailed problem occurred. The company has had good financial record and has been maintaining or so. There was never intervened from the government for its performance or any issues as such. Al Futtaim CEO Omar Al Futtaim is one of the best business leaders in the UAE. In UAE the government support entrepreneurs’ and help them develop their business in every possible way. There are next to No taxes for foreign investments. Even in the case of Toyota UAE recorded profits amidst the slow economic atmosphere since 2009. Strategy: The strategy at both Toyota and Al Futtaim is preserving their principles and continuous improvement.

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Al Futtaim follows sustainability strategy in the market where they also strive for continuous improvement. There has been profit in terms of sale numbers for Toyota and Lexus in Al Futtaim. Toyota have their R and D center in the US and Japan. Green Manufacturing is one of their long term goals and creates environment friendly vehicles. Following grid represent of of Toyota move to save the Environment The TPS is the world famous strategy which many of the top notch companies around the world are following for their companies. Both the companies have centralized management.
Source: Toyota Motors website 2012/ company profile/Environment/ECO Cars (it is in the website sweety it’s a strategy) which is yet to come ? please ready tpyota diversity studied and written by me above)

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Operations: Toyota has its operations in the Global Automobile industry while Al Futtaim has various businesses under it. From Al Futtaim Finance to Franchise of many other companies like Branded watches and luxury cars etc. They also have build various malls across the UAE and owners of the City Center malls and the Mall of the Emirates in UAE. Al Futtaim has ties with Saudi where in they have built City Center Malls across the Middle East and Arab world. Performance: Toyotas Sales performance can be seen in the chart below:
Source: Yahoo Finance/TM/2012

Toyota has been performing exceptionally well when compared to its competitors globally. Due to this co laterally Al Futtaim has been doing well in the sales of Toyota cars in the Middle East there is a high demand for Lexus and Toyota land Cruiser in the UAE. The economic slowdown had caused problems in the Properties business of the AL Futtaim Group but the automobile side is doing pretty much better YOY.

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Beginning of Toyota Middle East
In the year 1955 the Al Futtaim group entrepreneurs set to import 28 Land cruisers on the Dubai port which marked the era of an unfathomable beginning of automobile industry in the UAE. This embarks in the history and the legacy is till continued as Toyota is the most dominating in the field of SUV and light vehicle cars in the Middle East. Al Futtaim group is the sole distributor for the Toyota card and SUV in Dubai. The Al Futtaim Group declares that the Toyota Automobile industry is booming in the Middle East Despite of the major economic crisis. From the Kingdom of Saudi to the city of Dubai and the neighboring countries Toyota is the most efficient car maker to grab the largest market share by number.

TOP-DOWN approach Toyota AND Al Futtaim
The Toyota Production Services is a world leader when it comes to building strategies and business plans. The JIT (Just in Time). Originally called "just-in-time production," it builds on the approach created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohio. The principles underlying the TPS are embodied in The Toyota Way. Al Futtaim embraces the JIT production of the Toyota Company and follows the suit in its sales strategy as well. There is a serious demand for the Toyota cars in the Middle East like recently in the month of July Toyota had to double the exports to the Middle East, The statistics say that Exports to Saudi Arabia surged by 79.7 percent to 13,776 units, representing 46.46 percent of the total exports in the first six months. Exports to the United Arab Emirates of 2,313 units and Oman of 965 units came in second and third place behind exports to Saudi Arabia. With the achievement, the firm was on track to meet its full year target of doubling its overseas sales to 60,000 units this year. “Al Futtaim was in the year 2000; the huge Al Futtaim Empire was split between two cousins, Abdullah and Majid, in an agreement brokered by Sheikh Mohammed bin Rashid Al Maktoum, then crown prince and now Dubai ruler, to end years of conflict at one of the emirate’s most important businesses.”(Financial Times article May 19 2008/ Family Breaks Business taboo) After the split the Al Futtaim Motors successfully marketed the Toyota cars and SUVs. They have an excellent after sales services and hence are the top by sales in the UAE. Looking at the recent flaws in the production of the Toyota cars are to some extent affecting the sales of the car on national level.

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Inside view of TOYOTA: THE TOYOTA PRINCIPLES (This my study copy right Vanessa) :P

• KAIZEN

• Respect for People

• Long-term philosophy

• The right process will produce the right results

• Add value to the organization by developing your people and partners

• Continuously solving root problems drives organizational learning

The Toyota way

The Toyota way

The Toyota way

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Key Sales of Toyota:

(Source Yahoo Finance/TM/History) Aisha yeah sales report hai 2008 se

2012 upto date jo rooz uodate hota hai) the website takes the credit no one is an author. The doctor will be dumb If he dsnt know yeh charts kahan se hai:P

The

Sales

Chart

for

Toyota

Motors

since

2008:

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Al Futtaim Motors Leadership
Lead under the leadership of Omar Abdulla, Al Futtaim is a leader in the automotive industry in the UAE. After the split in the year 2000 the company Al Futtaim motors trades in

Al-Futtaim Motors Co. LLC (exclusive distributor of Toyota, Lexus, Toyota Forklift, BT and Hino Trucks in the UAE) Al-Futtaim Trading Enterprises Co. LLC (exclusive distributor of Jeep, Dodge, Chrysler, Volvo and other) Al Futtaim Honda Al-Futtaim Auto & Machinery Co. LLC (Exclusive distributor of Volvo Trucks and Volvo Heavy machinery / Construction equipment, and other allied machinery for construction, transport, warehousing applications) (Wikipedia/Al Futtaim) ?? What is wiki pls mention the full name of site and also that which date this info was updated???

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Diversity
As UAE enjoys the diversity in the population as only 4.28% of the total population is Emirati population, Rest of which is expats and other nationals. Hence the industry also designed in such a way where in all the nationalities is given equal importance. With the growing number of expats causes employment opportunities to be lower for the UAE nationalities. Hence as a rule they follow Emiratisation and recruit Emiratis on timely basis.

Bottom - Up Approach
Recent Car Recalls in the UAE The recent problems face by Toyota manufactures and their growing problems after the sales of the vehicle has caused the market to panic about the quality issues of Toyota. Some of the major problems are as follows put forth by a Major Speaker and Critic Kay Planets 12

     

Evolve multiple components, vehicles and years of manufacture. Create dangerous safety issues – failing brakes and uncontrollable self-accelerating gas pedals. Were surfaced years ago yet are leading to recalls only under regulatory pressure. May not have had the attention of top management until after all hell broke loose. (Toyota’s CEO just recently committed to creating a senior level “quality committee” to look into the problem.) May not yet be truly resolved. While the accelerator fix has been identified, it’s unclear whether there’s an electrical system glitch causing some uncontrolled accelerations. Are not being presented truthfully. Toyota’s leaders make false statements that put Toyota in a better light, only to rescind these comments when a government agency points out the truth.

SWOT Analysis: Al Futtaim Motors
Strengths: Al Futtaim is a brand name in the Middle East. It is one of the best companies to be working with and building a career. Al Futtaim also looks at the strategies and is doing well in the long term strategies. After the split the automobile industry of the Futtaim group wasn’t affected. Toyota cars still had a major demand and Al Futtaim has done a very good job in supplying the market with the required

The company has a cultural divert which it has being maintaining professionally. Since UAE is not a democratic countries the laws are very strict which don’t allow the labors and other employees to exceed their rights and take unnecessary union meeting or cause shut down of the factory or ware house. Toyota is a brand which everyone is willing to buy. Al Futtaim offers a number of financial supports for the process of purchasing Toyota cars and SUVs along with other company’s vehicles. Weakness: Al Futtaim is a company lead by a single owner. And has most of the local population as the higher management. Hence the conflict of interest may arise. As the recent problems cause by the Toyota vehicles in the market are causing the company to provide answers to the customers. This is a difficult task to rebuild the trust that the people have in the vehicle. Opportunities: The Economic trend has not affected the purchasing power of the resident of UAE but since the end of 2012 and the coming years the economic conditions are said to improve and hence this may increase the demand in the market for Toyota vehicles Given the weather conditions in the UAE, Most of the cars fail to keep up in the harsh conditions. The only Automobile that sustains is the Toyota. Hence this can be used to gain more of the market share in UAE. Added to this Toyota has a number of Light vehicle cars and SUVs which are budget oriented and the purchase process is very much easier.

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Threats: The near competitors for Toyota are Honda, BMW, GM, KIA, etc in the UAE. Their market share is growing at a very slow pace but this cannot be neglected. New automobile component technologies (more electronic and less mechanical) should have led to new quality systems and far more careful attention to drivers’ experiences than Toyota provided. Whether it was over-confidence in its historical quality systems or pressure to keep production and profits rolling as demand grew, internal forces precluded a relentless drive to fine-tune internal systems to Toyota’s value promise as technology changed. Toyota is a brand name that has sustained in the market for years but slowly due to the problems in their quality and technology failure is raising a question to their loyal customers who have been using Toyota cars for generations now. This is a threat not just for Toyota but also the Al Futtaim Motors who have been dealing with the brand since 60 years now.

Lessons from International Business of Toyota
After every great climb is a fall same is the fact with Toyota. Al Futtaim is doing its best to maintain its after sales services and recalling the cars for servicing if there are any faults found in the manufactured cars. Globally Toyota has been having problems with its after sales servicing It is hopeful to see that once built Son and Father Company to once again take on the market and sustain its positive results. The make and the technology of the car is still attracting customer worldwide and generation loyal customers till want to give Toyota the preference over any other cars. Under their own principles of JIT and the TPS Toyota has a hope to sustain in the global as well as in the Middle East Market.

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Bibliography: “The Toyota Way “ Dr. Jeffery University of Michigan http://www.toyota-global.com/company/toyota_traditions/ WWW.YAHOOFINANCE.COM http://www.alfuttaimmotors.ae/ http://www.toyota.ae/

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