Toyota Case Study

Case Introduction

Toyota is one of the world’s leading automobile manufacturers. Recently Toyota displaced General
Motor from the position of the world’s biggest car manufacturer. Despite the huge successes in
past, Mr Akio Toyoda, president of the Toyota Motor corporation thinks that Toyota is entering into
a phase where it will face many dangers. It has already past the first three stages described by Mr
Collins, those stage are hubris born of success, desire for more success and third denial of risk and
peril. As Toyota enters into the fourth stage, it will have many challenges to tackle. But does Toyota
have the capability to tackle or avoid the danger or it will eventually fall prey to the fifth stage of
capitulation or death?

Recent events

 In the financial year ending March 2009, Toyota made a net loss of yen 437 billion, the first
since 1950.
 Yen 766 billion loss in three months to march alone, 2.5$ equivalent more than General
Motor.
 In the most recent quarter Toyota made a surprising profit of Yen 58 billion
 Yen has been appreciating , 1 yen raise can reduce yen 30 billion from Toyota’s bottom line
 Cash pile of yen 2.65 trillion, is the loss of its once seemingly unstoppable market share
momentum.
 Likely fall in car market share from 13.1% to 11.8%; it has been falling or flat in every region
except Japan
 Number of safety incidents reported with Toyota cars
Legal allegations by American lawyers on quality front


SWOT Analysis of Toyota

Strength

 Brand name Toyota is a by word for quality and reliability. Toyota was known for its superior
quality.
 Early leadership in commercialising hybrid system and electric vehicle technology
 Plan to extent the Prius brand to cover a range of low to zero emission vehicle
 Fine engineering, which is reflected in models such as Prius and iQ City.
 High quality control processes, such as kaizen.
 Cash reserve

Weakness

 Decreased quality which is reflected by many quality incidents

 Some dull models in European markets
 Quality problem can be result increased strain in production system
 Strategy to sell outdated models such as Yaris, and Auris in Europe
 Lack of focus on market share of emerging market which can provide nearly all the growth in
sales.
 Delay in producing low cost car for Indian market.
 Delay in development of cars for China Market

Opportunity

 Opportunity to retain the market share in US market if quality is improved

 Opportunity for growth in emerging markets

Threats

 Decrease in ranking in public survey

 Legal allegations hampering brand names
 Other auto makers catching up with Toyota’s quality
 Increased completion from other markers: VW increased its market share to 7.2% in US
 Scirocco coupe eco friendly brand from VW
 Loosing market shares in emerging markets from brands such as VW and Hyndai

Diagnosis

1) Toyota’s brand name is a bench mark of quality and it posses very high capability of
engineering.
2) Facing quality issues because of strain in production line
3) By improving the quality and promoting new models it can retain market share in US and
capture market share.
4) Despite being a bench mark for quality, Toyota has been reportedly alleged with quality
issue which is hampering its brand equity.
5) Outdated models are causing reduction in market share in few markets.
6) Toyota is facing tough competition faced in both US and other markets.

Suggested Solution

For analysis of the strategy required by Toyota in different regions lets use BCG Matrix to analyse
different regions separately.

High

Growth
Star Question Mark

Low
Dog
Growth Cash Cow
 High Market Share Low Market
Share

Cash Cow: (High market share and Low growth) – Currently in none of the markets Toyota is a cash
cow.

Dog (Low growth Low Market Share) : Europe region can be considered as Dog. In this market
Toyota has very less market share because of out dated models. The remaining brands together can
be called as cash cow as they posses almost all market shares. But by selling new zero emission and
other eco friendly models, where Toyota posses the leadership in innovation, Toyota can introduce a
new competition in this region.

Strategy Suggested: Product Differentiation and Market Penetration

Star: (High market share and High growth): Toyota can be considers a Star in US market. As the
market saturates, and it holds its market share, it can become a cash cow in this market. To hold the
market share, Toyota should work on improving its quality.

Strategy: Product Development

Question Mark: (Low market share and High growth): the emerging markets such as India can be
considered as question mark as they provide high growth opportunity.

Strategy: Market Penetration

To improve its quality without strain on production line, it should consider retrenchment strategy.