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Assignment On Toyota
Assignment On Toyota
ASSIGNMENT
ON
TOYOTA
(Submitted on April, 1st 2010)
SUBMITTED TO
RESPECTED PROF.DEVANG DESAI
FACULTY GRBS, VAPI
SUBMITTED BY
MOHAMMAD IQBAL
KHAN
HARDIK SHAH
FRENI ANTALA
TOYOTA
TOYOTA
FLASHBACK OF TOYOTA
Japans 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 companys success.
In 1933, Sakichi established an automobile department within TALW and the first
passenger car prototype was developed in 1935.
Toyota established in 1937.
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)
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.
By 1952 Toyota made a turnaround. In 1957 Toyota entered in the US market.
TOYOTA PHILOSOPHY
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.
The Toyota Way has four components:
1. Long-term thinking as a basis for management decisions.
2. A process for problem-solving.
3. Adding value to the organization by developing its people.
4. Recognizing that continuously solving root problems drives organizational
learning
3
TOYOTA
TOYOTA
TOYOTA
Its market share was still below 40% in Japan despite aggressive marketing
efforts.
The above scenario was due to a host of reasons like
Excessive capacity
Choosy customers
Surplus workforce
Intensified competition within Japan.
In 1998, Japan sales accounted for mere 38% of the companys total sales
compared to 52% in 1990. Also Toyotas Japan sales contributed to a very small
share of its profits.
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.
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 Toyotas visions
for future models and also allowed people to design their own cars.
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.
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
TOYOTA
young buyers, had no visible signs of the Toyota name, except for a Toyota
symbol on the steering wheel.
As part of making the companys 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.
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.
The factors that helped Toyota attain and sustain the leadership status in
Japan are:
Problems the company faced in this market later on: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:
Excessive capacity
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TOYOTA
Choosy customers,
Surplus workforce
Intensified competition
of
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.
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 dont; it hurts their chances of getting them back
later. But it's not easy. Generally, people no longer act their age.
"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
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TOYOTA
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.
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
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
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.
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 Hyundais
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."
Rationale behind Toyotas decision to spread its operation across
various geographical region:
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TOYOTA
1) Early 70s prod & sales was behind from Ford and GM.
2) Domestic sale gone to decline.
3) 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.
TOYOTA
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.
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
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.
TOYOTA
I. Advancing Localization
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.
1. North America
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.
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.
North American production results increased from about 740,000 units in
1994 to about 1.01 million units in 1998.
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.
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.
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.)
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TOYOTA
2. Europe
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.
In 1998 vehicle production result at TMUK was about 170,000 units (1994
result was about 90,000 units).
In July 1998, TMC established a design center in the Cote d'Azur, France
(with the start of operations planned for early 2000).
13
TOYOTA
TOYOTA
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.
4. Other regions
TMC is also moving forward with projects in the following regions, which
were not included in the original plan:
5. Parts related
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.
TOYOTA
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.
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:
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.
Sales results of the Toyota Cavalier were about 7,000 units. (The
cumulative total for 1996 through 1998 was about 28,000 units.)
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TOYOTA
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.)
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.
TOYOTA
parties through visits and announcements. So far, there have been
contacts from several foreign makers.
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.
Its 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.
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.
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TOYOTA
TOYOTA
Toyota is striving to achieve the objectives outlined in Global Vision 2010 by
boosting its competitiveness.
But it is very tough to achieve the goal of attain its 15% market share. The
reasons behind it are as followsUnder 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.
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.
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.
"Our president doesn't like numbers or documents," he said.
But the executive made clear Toyota remains bullish on sales, especially in
emerging markets, which now make up half of the global auto market.
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.
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.
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.
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.
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.
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.
So this situation shows that it is the tough time for Toyota and tough to attain
the15% market share.
20
TOYOTA
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.
Now we should
company .
look
another
position
of
the
21
TOYOTA
22
TOYOTA
Focus on flexibility
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 Toyotas
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.
With its Attention to continuous improvement (Kaizen), Toyota has attained diechangeover 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 todays rapidly changing global business environment.
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, Toyotas 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.
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.
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.
23
TOYOTA
PRIMARY ACTIVITIES
Inbound Logistics:
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.
Operations:
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.
Outbound Logistics:
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.
Marketing and Sales:
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.
Service:
This includes all areas of service such as final checking, after-sales service,
complaints handling, training and so on. Toyota value their customers.
SUPPORT ACTIVITIES
Procurement:
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
24
TOYOTA
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).
Technology Development:
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.
Human Resource Management (HRM):
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.
Toyota motors uses following techniques to retain their employes:
Recruitment
Selection
Training and development
Compensation
Maintenance
Firm Infrastructure:
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.
TOYOTA
Austria
Hungary
Belgium
Iceland
Bosnia Herzegovina
Israel
Bulgaria
Italy
Canary Islands
Kazakhstan
Croatia
Latvia
Cyprus
Lithuania
Czech Republic
Luxembourg
Denmark
Macedonia
Eire
Malta
Estonia
Moldova
Finland
Monaco
France
Netherlands
Germany
Norway
Gibraltar
Poland
Great Britain
Portugal
Greece
Romania
Sweden
Russia
Switzerland
Turkey
Slovakia
Ukraine
Slovenia
Toyota Japan
Spain
Toyota US
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TOYOTA
TOYOTA
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.
26/10/2005 New Toyota Yaris achieves 5 stars in Euro NCAP tests
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.
01/07/2005 Toyota wins J.D. Power German CSI for fourth consecutive
time
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.
01/06/2005 Hybrid Synergy Drive rewarded for its excellent fuel
economy
The Toyota Hybrid Synergy Drive system of Toyota Prius has been awarded two
category wins in the International Engine of the Year Awards 2005.
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TOYOTA
20/05/2004 The new Toyota Corolla Verso: the safest car in its class
according to Euro NCAP
The new Toyota Corolla Verso is the safest car in its class according to Euro
NCAP, having been awarded a 5 star maximum ranking
10/02/2003 Toyota success in German J.D. Power and Associates
Customer Satisfaction Index Study SM
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
BRRANDS :
CARS
TRUCKS
YARIS
TACOMA
COROLLA
TUNDRA
MATRIX
HILUX (VIGO)
CAMRY
CAMRY SOLARA
PRIUS
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TOYOTA
VENZA
AVALON
SUVs & VANS
HYBRIDS
RAV4
PRIUS
FJ CRUISER
CAMRY HYBRID
HIGHLANDER
HIGHLANDER HYBRID
SEQUORIA
4 RUNNER
LANS CRUISER
SIENNA
Ford
Holden
BMW
AUDI
Honda
Jaguover
Lexusar
Land
Mazda
Mercedes
Nissan
Peugeot
Proton
Daihatsu
TOYOTA
Overview of Automotive Industry Analysis
The development of the automobile came from many different people from
different countries.
The development stated in 1769 in France, with the invention of a three-wheeler
that was powered by steam (Gale, 2003).
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).
Henry Ford built the first car in 1896 (Gale, 2003). He then revolutionized the
industry with the invention of the assembly line.
PESTEL Analysis
Political
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
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TOYOTA
Act required the installation of front airbags. (Motor Vehicles and
Passenger Car Bodies, 2004)
Demographics
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."
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
32
TOYOTA
toward the moms because they are perceived, as needed a lot of room to
haul kids around and the easy access the minivans provide.
Economic
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.
Technology
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-tobusiness 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
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TOYOTA
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.
Global
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TOYOTA
Sociocultural
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.
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TOYOTA
Another barrier to entry is that it takes an incredible amount of capital to
manufacture the automobiles.
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.
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.
Bargaining Power of Suppliers
The bargaining power of suppliers is very low in the automobile industry.
There are so many parts that are used to produce an automobile, that it takes
many suppliers to accomplish this.
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.
Bargaining Power of Buyers
The bargaining power of the buyers is moderately high. The buyers being
consumers purchase almost all of the industries output.
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.
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.
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.
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TOYOTA
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.
SWOT ANALYSIS
STRENGTH
Brand image
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TOYOTA
Market Leadership
Easy availability of spare parts
Dealership network
Suitable for rural area
WEAKNESS
Always charge the premium price
Management Control by local partner
OPPORTUNITY
Switching diesel market toward petrol and CNG
market
Failure of competitor model
Unacceptability of competitor model
Price increase in 1000cc
THREAT
Government reducing the excise duty on imported
car
IR interest rate Higher
Reduction in Diesel prices
Entrance of the new Firms
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TOYOTA
4 Ps of Toyota
PRODUCT is anything that can be offered to the market to
satisfy a want or need
That includes
Physical goods
Services
Experiences
Events
Person
Organization
Information and ideas
DEMOGRAPHIC SEGMENTATION
FAMILY SIZE:
Large family size as in india would increase opportunities for growth in sales of
Innova or Fortuner.
INCOME:
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.
PRICING STRATEGY
OPTIONAL-FEATURE PRICING: e.g. an Innova customer can order mud
flaps,side steppers or other accessories.
PROMOTINAL PRICING:
1. Low Interest Financing: This technique is for short period and is mainly
used in festive seasons.
2. Longer Payment Terms: The company stretchers loans over longer
period and thus lower the monthly payments.
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TOYOTA
PRODUCT MIX:
SEDAN
1. COROLLA ALTIS
2. COROLLA ALTIS SPORT
3. CAMRY
SUV/MUV
1. TOYOTA INNOVA
2. FORTUNER
3. PRADO
4. LAND CRUISER
PROMOTION:
PSYCHOLOGIACAL SEGMENTATION:
SOCIAL CLASS:
People who belong to upper middle class and higher social status would opt for
SUVs/MUVs or sedan likecamry etc.
PERSONALITY:
People who are in sporty attitude having unique style statement would settle for
Toyota Altis sport model or Fortuner which would exhilarate their senses.
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TOYOTA
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MARKETING DEPARTMENT
TOYOTA
Monitor the sale at dealers
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TOYOTA
TOYOTA
dropping a detuned version of the LFA's thumping 552-horsepower 4.8-liter V-10
under the hood of a GS F model.
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.
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.
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.
Another highlight of the GS F will be the incorporation of a Toyota-first rearwheel '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.
THANK YOU
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