A REPORT ON

MARKETING STRATEGIES OF TOYOTA IN INDIA

Submitted by:

Nanak Syal

B.COM (Hons)

ENROLLMENT NO: A7004614157

MARKETING

Under guidance of:

Dr. KHUSHBOO AGNIHOTRI Mr. R.P. Gupta

Asst. Professor Professor

ABS, Lucknow ABS, Lucknow

AMITY BUSINESS SCHOOL

 AMITY UNIVERSITY UTTAR PRADESH LUCKNOW

ACKNOWLEDGEMENT

This project report would not have been possible without the support and guidance

of my teacher. I would express my heart-felt gratitude towards and, without whose

guidance and support, I would not have been able to understand the objective of

the project and this project would not have been complete. He has been really

understanding and supportive in explaining all the details with patience. I would

express my gratitude towards him for taking time out of him schedule to guide me

during the report.

THANK YOU
 STUDENT’S CERTIFICATE

Certified that this report is prepared based on the summer internship project undertaken

by me in “TOYOTA” From 10th August 2015 to 19th October 2015, under the able guidance

of assistant professor Dr.Khushboo Agnihotri in the partial fulfillment of the requirement

for award degree of B.com from Amity University, Uttar Pradesh.

Date: _____________

Signature Signature Signature

NANAK SYAL Dr.KHUSHBOO AGNIHOTRI Prof. V.P. Sahi

(Student) (Faculty Guide) Director (ABS)

AMITY UNIVERSITY, LUCKNOW

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Sundeep, a student presently studying at the AMITY BUSINESS SCHOOL, LucKNOW

Campus.

The student named above desires to undertake Dissertation / training program as student in the

institute / Department / Center AMITY BUSINESS SCHOOL, Amity University as a part of

his studies. The competent authority of the institute where the student is presently studying has

officially recommended the student, confirming his antecedents, track record and good moral

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internship / training workplace. Confidential information may include, but is not limited to, trade

secrets, proprietary information, customer information, customer lists, methods, plans,

documents, data, drawings, manuals, notebooks, reports, models, inventions, formulas,

processes, software, information system, contracts, negotiations, strategic planning, proposals,

business, alliances, and trading materials and / or any other intellectual property of the

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The student / intern agrees to observe the confidentiality requirements of the Amity University,

its Disciplinary procedure in all respects and any additional requirements set out by the Amity

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respects.

As University intern, I agree that:

1. I will use confidential information only as needed by me to perform my legitimate duties

as intern. This means, among other things that.

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may compromise the confidently of confidential. Reports made in good faith about

suspect activities will be held in confidence to the extent permitted by law, including the

identity of the individual reporting the activities;

4. I will be responsible for my misuse or wrongful disclosure of confidential information

and for my failure to safeguard my access code or other authorization to access

confidential information. I understand that I have no right or ownership interest in any

confidential information referred to in this agreement. The University may at any time

revoke my access code, other authorization or access or confidential information. At all

time during my internship with AmityUniversity, I will act in the best interests of PMC.
I have read and understand the above definition of “ confidential information “ I agree that I

will not at any time, both during and after my enrollment in University Internship,

communicate or disclose confidential information to any person corporation or entity.

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internship and that a report of the breach will be made by the concerned Head of Institution.

HAVE READ THE ABOVE CONFIDENTIALITY AGREEMENT AND AGREE TO ITS

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 AMITYUNIVERSITY, UP

LUCKNOW

DECLARATION

Title of project report: MARKETING STRATEGIES OF TOYOTA MOTORS IN INDIA

I understand what plagiarism is and am aware of the University’s policy in this regard

I declare that

(a) The work submitted by me in partial fulfillment of the requirement for the award of degree

B.COM(H) assessment in this MARKETING STRATEGIES OF TOYOTA MOTORS IN

INDIA my own; it has not previously been presented for another assessment.

(b) I declare that this MARKETING STRATEGIES OF TOYOTA MOTORS IN INDIA is my

original work. Wherever work form other source has been used, all debts (for words data,
 arguments and ideas) have been appropriately acknowledged and referenced in accordance with

the requirements of NTCC Regulations and Guidelines.

(c) I have not used work previously produced by another student or any other person to submit it as

my own.

(d) I have not permitted, and will not permit, anybody to copy my work with the purpose of passing it

off as his or her own work.

(e) The work conforms to the guidelines for layout, content and style as set out in the Regulations

and Guidelines.

Date: ------------- Name of student : NANAK SYAL

Enrolment no : A7004614157

Programme Name : B.COM(H)

FACULTY CERTIFICATE

Forwarded here with a summer internship report on MARKETING STRATEGIES OF TOYOTA

MOTORS IN INDIA submitted by NANAK SYAL Enrollment No. A7004614157 , student of BCOM

3RD Semester (2014-17)

This project work is partial fulfillment of the requirement for the degree of Bachelors in Commerce from

Amity University Lucknow Campus, Uttar Pradesh.

PROF. ………………………..

AMITY UNIVERSITY,

LUCKNOW CAMPUS

UTTAR PRADESH

TABLE OF CONTENTS

INDEX

CHAPTER 1

 INTRODUCTION
 ECONOMY OF INDIA

INDIAN MARKET

AUTOMOTIVE INDUSTRY IN INDIA

TOYOTA KIRLOSKAR MOTORS

CHAPTER 2

 LITERATURE REVIEW

 OBJECTIVES OF STUDY

CHAPTER 3

 RESEARCH METHODOLOGY

 SCOPE OF STUDY

CHAPTER 4

 COMPANY PROFILE

 PRODUCT RANGE

MANUFACTURED LOCALLY

IMPORTED

DISCONTINUED

 FINANCIAL PERFORMANCE

 COMPETITIVE ADVANTAGE

 MANAGEMENT PRACTICES

 PORTER’S FIVE FORCES OF THE AUTOMOTIVE INDUSTRY

 SWOT ANALYSIS

 INDUSTRY BUSINESS LOCATIONS

  MAP OF TOYOTA’S WORLDWIDE OPERATIONS

CHAPTER 5

 CONCLUSION

 BIBLIOGRAPHY

CHAPTER 1

INTRODUCTION

INTRODUCTION TO THE TOPIC

The Economy of India is the tenth-largest in the world by nominal GDP and the third-

largest by purchasing power parity (PPP). The country is one of the G-20 major economies, a

member of BRICS and a developing economy that is among the top 20 global traders according to

the WTO. India was the 19th-largest merchandise and the 6th largest services exporter in the world in

2013; it imported a total of $616.7 billion worth of merchandise and services in 2013, as the 12th-

largest merchandise and 7th largest services importer. India's economic growth slowed to 4.7% for

the 2013–14 fiscal year, in contrast to higher economic growth rates in 2000s. The Indian Finance

Ministry projects the GDP growth for fiscal 2014 will be 5.5%. IMF projects India's GDP to grow at

5.6% over 2014-15. Agriculture sector is the largest employer in India's economy but contributes a

declining share of its GDP (13.7% in 2012-13). Its manufacturing industry has held a constant share

of its economic contribution, while the fastest-growing part of the economy has been its services
sector — which includes construction, telecom, software and information technologies,

infrastructure, tourism, education, health care, travel, trade, banking and other components of its

economy.[7]

The post independence-era Indian economy (from 1947 to 1991) was a mixed economy with an

inward-looking, centrally planned, interventionist policies and import-substituting economic model

that failed to take advantage of the post-war expansion of trade and that nationalized many sectors of

its economy. India's share of global trade fell from 1.3% in 1953 to 0.5% in 1983. This model

contributed to widespread inefficiencies and corruption, and it was poorly implemented.

After a fiscal crisis in 1991, India has increasingly adopted free-market principles and liberalized its

economy to international trade. These reforms were started by former Finance minister Manmohan

Singh under the guidance of Prime Minister P.V. Narasimha Rao. They eliminated much of License

Raj, a pre- and post-British era mechanism of strict government controls on setting up new industry.

Following these economic reforms, and a strong focus on developing national infrastructure such as

the Golden Quadrilateral project by former Prime Minister Atal Bihari Vajpayee, the country's

economic growth progressed at a rapid pace, with relatively large increases in per-capita

incomes. The south western state of Maharashtra contributes the highest towards India's GDP among

all states, while Bihar is among its poorest states in terms of GNI per capita. Mumbai, Maharashtra is

known as the trade and financial capital of India.

The Money market in India is the money market for short-term and long-term funds with maturity

ranging from overnight to one year in India including financial instruments that are deemed to be

close substitutes of money. Similar to developed economies the Indian money market is diversified
and has evolved through many stages, from the conventional platform of treasury bills and call

money to commercial paper, certificates of deposit, repos, forward rate agreements and most

recently interest rate swaps

The Indian money market consists of diverse sub-markets, each dealing in a particular type of short-

term credit. The money market fulfills the borrowing and investment requirements of providers and

users of short-term funds, and balances the demand for and supply of short-term funds by providing

an equilibrium mechanism. It also serves as a focal point for the central bank's intervention in the

market.

The automotive industry in India is one of the largest automotive markets in the world. It was

previously one of the fastest growing markets globally, but is currently experiencing flat or negative

growth rates. India's passenger car and commercial vehicle manufacturing industry is the sixth largest

in the world, with an annual production of more than 3.9 million units in 2011. According to recent

reports, India overtook Brazil to become the sixth largest \passenger vehicle producer in the

world (beating such old and new auto makers as Belgium, United Kingdom, Italy, Canada, Mexico,

Russia, Spain, France, Brazil). From 2011 to 2012, the industry grew 16-18%, selling around three

million units. In 2009, India emerged as Asia's fourth largest exporter of passenger cars, behind

Japan, South Korea, and Thailand. In 2010, India beat Thailand to become Asia's third largest

exporter of passenger cars.

As of 2010, India is home to 40 million passenger vehicles. More than 3.7 million automotive

vehicles were produced in India in 2010 (an increase of 33.9%), making the country the second (after

China) fastest growing automobile market in the world the same year. According to the Society of

Indian Automobile Manufacturers, annual vehicle sales are projected to increase to 4 million by

2015, not 5 million as previously projected.

The majority of India's car manufacturing industry is based around three clusters in the south, west

and north. The southern cluster consisting of Chennai is the biggest with 35% of the revenue share.

The western hub near Mumbai and Pune contributes up to 33% of the market and the northern cluster

around the National Capital Region contributes 32%. Chennai, houses the India operations

of Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan Motors,Daimler, Caparo, Mini,

and Datsun. Chennai accounts for 60% of the country's automotive exports. Gurgaon and

Manesar in Haryana form the northern cluster where the country's largest car manufacturer, Maruti

Suzuki, is based.The Chakan corridor near Pune, Maharashtra is the western cluster with companies

like General Motors, Volkswagen,Skoda, Mahindra and Mahindra, Tata Motors, Mercedes

Benz, Land Rover, Jaguar Cars, Fiat and Force Motors having assembly plants in the

area. Nashik has a major base of Mahindra and Mahindra with a SUV assembly unit and an Engine

assembly unit. Aurangabad with Audi, Skoda and Volkswagen also forms part of the western cluster.

Another emerging cluster is in the state of Gujarat with manufacturing facility of General

Motors in Halol and further planned for Tata Nano at their plant in Sanand. Ford, Maruti Suzuki

and Peugeot-Citroen plants are also set to come up in Gujarat. Kolkata with Hindustan

Motors, Noida with Honda and Bangalore with Toyota are some of the other automotive

manufacturing regions around the country.

Toyota Kirloskar Motor Pvt Ltd is a subsidiary of Toyota Motor Corporation of

Japan (with Kirloskar Group as a minority owner), for the manufacture and sales of Toyota cars

in India. It is currently the 4th largest car maker in India after Maruti Suzuki, Hyundai,

and Mahindra.
The company Toyota Kirloskar Motor Pvt Ltd (TKMPL) according to its mission statement aims to

play a major role in the development of the automotive industry and the creation of employment

opportunities, not only through its dealer network, but also through ancillary industries with a

business philosophy of "Putting Customer First".

On June 7, 2012, Vice Chairman of the company revealed that the company is planning to enter the

healthcare sector and its first hospital is will open in Karnataka in May 2013.

TKMPL's current plant at Bidadi, Karnataka is spread across 432 acres and has a capacity of 80,000

vehicles per annum.

TKMPL's second manufacturing plant on the outskirts of Bangalore, Karnataka has a capacity of

70,000 vehicles per annum. Both plants have a combined capacity of 150,000 vehicles per annum.

On 16 March 2011, it announced that it was increasing production to 210,000 vehicles per

annum due to increase in demand for its models especially theEtios and Fortuner.

With effect from June 1, 2012, Toyota Kirloskar Motor will be increasing the prices of Etios diesel

and Innova by 1 per cent and Fortuner and Etios Liva diesel by 0.5 per cent. The price hike is on

account of the weakening of Rupee. Toyota announced that Etios sedan and the Liva hatchback has

posted sales of over one lakh units, hence Toyota is all set for giving its production a big

boost.Toyota Kirloskar Motor (TKM) plans to hike the production capacity of its Etios series models

by 75% by early 2013. Toyota Kirloskar Motors would launch its motor racing series in 3 cities in

India next year.

 CHAPTER 2

LITERATURE REVIEW

 “Toyota is (or was at the time) the low cost producer in the industry. Toyota achieves its

cost leadership strategy by adopting lean production, careful choice and control of

suppliers, efficient distribution, and low servicing costs from a quality product.”(Michael

E. Porter) This quote from Michael Porter sums up how Toyota achieves this low cost
 strategy. Through research, it is evident that Toyota is still the low cost leader in the

automotive industry.

 Hiroshi Nakagawa, Managing Director, Toyota Kirloskar Motor said, “Quality is our top

priority and, at the same time, the Indian customer is very keen on cost and price. We

have taken a lot of initiatives with (component) suppliers for a technical breakthrough,

like how to reduce the weight of iron while maintaining its strength. ”

OBJECTIVES OF STUDY
 To study the marketing strategy of Toyota Motors in India

 To study Toyota motors

 To study the competitors of toyota

 CHAPTER 3

RESEARCH METHODOLOGY

The research methodology used in this project is Secondary Method of collection of data. All the

data has been collected from authentic published data on the internet, magazines, etc.

Secondary data is data that is collected from the primary sources which can be used in the

current research study. Collecting secondary data often takes considerably less time than

collecting primary data where you would have to gather every information from scratch. It is

thus possible to gather more data this way. The following are some ways of collecting secondary

data:

• Books

• Records

• Biographies

• Newspapers

• Published censuses or other statistical data

• Data archives

• Internet articles

• Research articles by other researchers (journals)

• Databases
 SCOPE OF STUDY

This project will provide me with knowledge about many things:

1. The marketing strategies of Toyota Motors in India

2. It will help me understand the working style and techniques of Toyota company and how

it acquires its competitive edge over the other competitors.

3. It will help me understand for future how a company runs.

4. It will help me to get aware of the business environment in the automobile industry.
 CHAPTER 4

CHAPTER 4

COMPANY PROFILE
TOYOTA MOTOR CORPORATION is a Japan-based company mainly engaged in the

automobile business and financial business.The Company operates through three business

segments. The Automobile segment is engaged in the design, manufacture and sale of car

products including passenger cars, minivans and trucks, as well as the related parts and

accessories. The Finance segment is involved in the provision of financial services related to the

sale of the Company's products, as well as the leasing of vehicles and equipment. The Others

segment is involved in the design, manufacture and sale of housings, as well as information and

communication business.

Automotive Operations

Toyota produces and sells passenger cars, minivans and commercial vehicles, such as trucks.

Toyota’s subsidiary, Daihatsu Motor Co., Ltd. (Daihatsu), produces and sells mini-vehicles and

compact cars. Hino Motors, Ltd. (Hino), also a subsidiary of Toyota, produces and sells

commercial vehicles, such as trucks and buses. Toyota also manufactures automotive parts,

components and accessories for its own use and for sale to others. Toyota’s vehicles can be

classified into two categories: conventional engine vehicles and hybrid vehicles. Toyota’s

product line-up includes subcompact and compact cars, mini-vehicles, mid-size, luxury, sports

and specialty cars, recreational and sport-utility vehicles, pickup trucks, minivans, trucks and

buses. The Company’s subcompact and compact cars include the four-door Corolla sedan. The

Yaris, marketed as the Vitz in Japan, is a subcompact car. Toyota introduced the micro premium

car iQ in October 2008.

Mini-vehicles are manufactured and sold by Daihatsu. Daihatsu manufactures mini-vehicles,

passenger vehicles, commercial vehicles and auto parts. Mini-vehicles are passenger cars, vans

or trucks with engine displacements of 660 cubic centimeters or less. Daihatsu sold
approximately 601 thousand mini-vehicles and 182 thousand automobiles on a consolidated

basis during fiscal 2009. Toyota’s mid-size models include the Camry. Camry models include

the Camry Solara sport coupe.

In North America, Europe and Japan, Toyota’s luxury line-up consists primarily of vehicles sold

under the Lexus brand name. Lexus models also include luxury sport-utility vehicles sold in the

United States, such as the GX, the RX, the LX, as well as the SC and the IS F. As of May 31,

2009, the Lexus brand line-up in Japan includes the LS, GS, IS, RX, SC and IS F. Toyota

brand’s full-size luxury car, the Crown, was remodeled in February 2008, and the Crown

Majesta was remodeled in March 2009. Toyota also sells the Century limousine in Japan. In

Japan and other markets, Toyota sells the Lexus SC two-door sports coupe, and in the United

States the Scion tC, a sport car model targeted to young drivers.

Toyota sells a variety of sport-utility vehicles and pickup trucks. Toyota sport-utility vehicles

available in North America include the Sequoia, the 4Runner, the RAV4, the Highlander, the FJ

Cruiser and the Land Cruiser, and pickup trucks available are the Tacoma and Tundra. The

Tacoma, the Tundra and the Sequoia are manufactured in the United States. Toyota’s product

line-up includes trucks (including vans) up to a gross vehicle weight of five tons and micro-

buses, which are sold in Japan and in overseas markets. Trucks and buses are also manufactured

and sold by Hino, a subsidiary of Toyota. Hino’s product line-up includes large trucks with a

gross vehicle weight of over 11 tons, medium trucks with a gross vehicle weight of between five

and 11 tons, and small trucks with a gross vehicle weight of up to five tons.

Financial Services

Toyota Financial Services Corporation is Toyota’s wholly owned subsidiary, which oversees the

management of Toyota’s finance companies worldwide and the expansion into new automobile
related product areas. Toyota Motor Credit Corporation is Toyota’s principal financial services

subsidiary in the United States. Toyota also provides financial services in 32 other countries and

regions through various financial services subsidiaries, including Toyota Finance Corporation in

Japan, Toyota Credit Canada Inc. in Canada, Toyota Finance Australia Ltd. in Australia, Toyota

Kreditbank GmbH in Germany and Toyota Financial Services (UK) PLC in the United

Kingdom.

Toyota Motor Credit Corporation provides a range of financial services, including retail

financing, retail leasing, wholesale financing and insurance. Toyota Finance Corporation also

provides a range of financial services, including retail financing, retail leasing, credit cards and

housing loans. Toyota’s other finance subsidiaries provide retail financing, retail leasing and

wholesale financing. In October 2008, Toyota established Toyota Financial Services Vietnam in

Vietnam. As of March 31, 2009, approximately 63.6% of Toyota’s finance receivables were

derived from financing operations in North America, 14.1% from Japan, 11.0% from Europe,

3.8% from Asia and 7.5% from other areas. Approximately 45% of Toyota’s unit sales in the

United States included a financing or lease arrangement with Toyota during fiscal 2009.

Toyota provides insurance services in the United States through Toyota Motor Credit

Corporation’s wholly owned subsidiary, Toyota Motor Insurance Services, Inc (TMIS) and its

wholly owned insurance company subsidiaries. Their principal activities include marketing,

underwriting and claims administration. TMIS also provides coverage related to vehicle service

agreements and contractual liability agreements through Toyota dealers to customers. In

addition, TMIS also provides coverage and related administrative services to affiliates of Toyota

Motor Credit Corporation. Toyota dealerships in Japan and in other countries and regions also

engage in vehicle insurance sales. As of March 31, 2009, Toyota Finance Corporation has
approximately seven million card holders, of which approximately 43,000 are Lexus credit card

holders.

All Other Operations

Toyota is involved in a number of other non-automotive business activities. Toyota is also

engaged in the manufacture and sale of prefabricated housing. Toyota also operates a Japanese-

language Website, GAZOO.com. Gazoo was established as a membership Internet service

linking Toyota, its national dealer network and Gazoo members, and has provided information

on new and used Toyota automobiles and related services, as well as online shopping

capabilities. Toyota also offers the theft detection service, the vehicle tracking service, the

operator support service and so on as standard to enhance services, which is focused to provide

safety and security for G-BOOK and G-Link users.

The Company competes with General Motors, Ford, Chrysler, Honda, Nissan, Volkswagen,

Opel, Renault and Peugeot.

PRODUCT RANGE

Toyota Kirloskar Motor (TKM) launched its Waku Doki Q Service Campaign from July 16 -

September 15, 2012. The campaign provides free check-ups and custom offers on Toyota cars across

Toyota dealerships in the country.

1.1.1 Manufactured/assembled locally

 1. Toyota Camry (Launched 2002)

2. Toyota Corolla (Launched 2003)

3. Toyota Etios (Launched 2010)

4. Toyota Etios Cross (Launched 2014)

5. Toyota Etios Liva (Launched 2011)

6. Toyota Fortuner (Launched 2009)

7. Toyota Innova (Launched 2005)

1.1.2 Imported

1. Toyota Land Cruiser (Launched 2009)

2. Toyota Land Cruiser Prado (Launched 2004)

3. Toyota Prius (Launched 2010)

1.1.3 Discontinued

 Toyota Qualis (1999–2005)

FINANCIAL PERFORMANCE
COMPETITIVE ADVANTAGE
Toyota’s uses both differentiation and low cost as generic strategies to try and gain a competitive

advantage over their competitors in the automotive industry. The market scope that Toyota uses

is a broad one that encompasses nearly every type of customer that is in the market to purchase

an automobile. Toyota is able to target such a large market because they have something for

everyone. Toyota has four wheel drive trucks and SUVs for the outdoor types or those who live

in areas that face severe weather conditions, hybrid models like the Prius for the eco-friendly

customers that are interested in saving the environment, along with the standard cars for general,

everyday use. Additionally, Toyota provides vehicles for all price ranges. From the low price

Toyota Corolla line of cars to the high priced luxury line of cars and SUVs with Lexus, Toyota

has something for everyone.

Toyota differentiates on several levels form their competitors. First of all, Toyota has been very

successful in differentiating on the basis of superior design and quality. This has led to Toyota

being able to create a brand image that is very strong and one that brings to mind quality, long

lasting cars when a potential customer sees it. The strength of Toyota’s brand image has been

seen in recent years with the recalls and problems Toyota faced in dealing with these recalls.

Toyota was able to survive these problems because they had such a long and proven track record

of quality and superior. Another, area that Toyota differentiates is in technology. Toyota was

the first successful mass produce the hybrid car on the market when it released the Prius in 2003.

Being the first to get their hybrid on the market allowed Toyota to gain a large portion of the

market share in the area of hybrid cars.

Along with differentiation Toyota also uses low cost to try and gain a competitive advantage in

the automotive industry. “Toyota is (or was at the time) the low cost producer in the industry.

Toyota achieves its cost leadership strategy by adopting lean production, careful choice and
control of suppliers, efficient distribution, and low servicing costs from a quality

product.”(Michael E. Porter) This quote from Michael Porter sums up how Toyota achieves this

low cost strategy. Through research, it is evident that Toyota is still the low cost leader in the

automotive industry.

Toyota’s current grand strategies are product development and offensive/strategies for industry

leaders. Product development is very important for Toyota due to the fact that they must come

out with new fresh ideas every year in the automotive industry. If you don’t develop a new

design on your products, you will be left behind very quickly. Also, Toyota is an industry leader

and has a lot of power because of this. Toyota stays on the offensive to keep its market share

and defends against others in the industry from taking their market share. Toyota always stays

on the offensive looking for ways to be better than their competitors. Toyota wants to stay in

front of its competitors and take advantage of any weaknesses they may show and capitalize on

them to gain any advantage they can.

As mentioned previously in the paper Toyota is the low cost leader in their industry. Recent

events have suggested that Toyota has focused too much on low cost, losing market share and

their market positioning of superior design and quality, which historically they have used a

differentiation strategy. For Toyota, the biggest thing they need to do is make sure that their low

cost strategy does not compromise their superior design and quality.

When looking at Toyota’s grand strategy, they have been successful at product development. By

2012 Toyota is planning to have more then 20 models that use batteries to extend fuel economy

just like their Prius (Krolicki). Although they have not been as aggressive in the electric car

market recently, like their competitors, they are planning to release a rechargeable version of

their Prius by June 2012 (Krolicki). This re-chargeable version will position Toyota to attempt to
take over as a low cost leader of hybrid technologies within the market, which supports Toyota’s

overall strategy of low cost (Krolicki).

Due to changes in government policies and the competiveness of the industry, Toyota was forced

to take an offensive strategy. With a series of damaging safety recalls, Toyota has had to evaluate

their current track of superior design which caused them to temporarily loose track of their

former offensive strategy of quality (Krolicki). Recently, they have been had to work extra hard

to get back to their offensive strategy and back to being the industry leader (Krolicki).

Due to the recent safety recalls Toyota has been temporarily de-railed from their strategy. They

need to get back on track and re-focused and make sure that they concentrate on what made them

unique. In order to make this happen, managers of Toyota are going to have to focus on company

communication and bringing back its former foundation of making quality cars that are

dependable and reliable in addition to modern. The company found its weak spot when it came

to the way the company responded to the recalls. In the beginning of the recall era, Toyota was

very slow in its response. Finally, Toyota executives made the call to recall more than five

million of its own vehicles due to numerous different issues. At the same time, it was decided to

halt all sales of Toyota vehicles as well until the problem could be addressed. For a car company,

this is a huge deal and one that will affect the balance sheets for years to come. However, Toyota

seemed slow in finding a solution to its largest problem in company history (and in the industry’s

history). With a huge recall and halt in sales, one would assume that management would be

pushing for day and night research, product development, and problem solving in order to get

their product back on the market. Instead, it took Toyota a little over a week (kbb.com / “Toyota

Recall and Sales Freeze”) to find a fix and even longer to get it out to dealers and Toyota

mechanics. The terrible communication within the company was shown when dealers had no
idea or word from the company as to what the game plans were and when the United States

called in several Toyota executives to congressional hearings where finger pointing began.

The Toyota product development system is known as Lean Manufacturing. Its objective is to

integrate people, process, and technology. Toytoa’s product development procedure is essentially

different from a manufacturing process. Its backbone is not visible, but knowledge and

information which are untouchable. The product development’s cycle time is much longer than

hours. It usually takes weeks or even months. The production chains are non-linear and multi-

directional. Workers are no longer manufacturing workers but specialists with high diverse

technology. This product development strategy is viable for Toyota. This is because this strategy

does help Toyota to prolong the life cycle of current product. For instance, Toyota Camry is a

very successful current product which is prolonged its life. Camry has been made since 1980s.

Camry is set at an middle-high level of family veichle. After 30 years development, Camry is

still very famous all over the world. This cannot be separeted by Toyota’s successful product

development strategy. One of the key features of the Toyota product development system is

functional engineering managers. They are primarily teachers in the Toyota system, who are the

most technically competent engineers, with the highest levels of experience. Toyota’s

management group is consist of high educated experts. They were all engineers and their

technical excellence is very famous. But recently, Toyota’s product development system does

not work very well. In recent years, more and more recall issues happened and that hurt Toyota’s

reputation very much. Most of these recalls are related to Toyota’s technical problem. Gas pedal

is one of the major aspects which leaded to many serious car accidents. This hurts Toyota’s

reputation and brand name very much. However, news from CNN still says that Toyota

announced that they have no responsibility for gas pedal problems and those car accidents. This
is really bad for Toyota. Under product development strategy, what Toyota is supposed to do is

to improve its product quality and technology. Besides, they also need to make sure their

products are safety.

Breaking out of the box seems like a viable way for Toyota nowadays. Since 2003, Toyota

Secondary-generation Prius officially unveiled to the press for the first time. Toyota Prius have

been one of the best sale cars for more than 7 years. Even was the number one selling Hybrid in

America with around 140,000 sold just in 2009 when the auto market with depression. Although,

the performance of Toyota Prius was excellent in the past. Toyota still needs to stronger its

advantage by a innovation to receive a renaissance from all the recall issues. For the 2010 Prius

hybrid automobile, the company redesigned many aspects of the car to stand-out from the fuel

economy. For achieving the best possible fuel economy, the 2010 Prius has extensive

aerodynamic features which includes most parts of the car. They are all designed to minimize

drag-inducing air turbulence. To reduce fuel-guzzling weight, Toyota made the battery an

integral structural part of the car rather than a bolt-on box. Specifically, there are even three

performance modes for the new 2010 Prius, which are EV-Mode, Power Mode and Eco Mode.

By all the changes, Toyota is on his way to receive revive by the innovation strategy.

Furthermore, the innovation of Prius reveals the innovation of using new technology and new

energy.
MANAGEMENT PRACTICES

Toyota‘s management philosophy has evolved from the company‘s origins and has been

reflected in the terms "Lean Manufacturing" and lust ln ‘lime Production which it was

Instrumental in developing. Toyota‘s managerial values and business methods are known

collectively as the Toyota Way.

ln April 2001, Toyota adopted the "Toyota Way ZDOI", an expression of values and conduct

Guidelines that all Toyota employees should embrace. Under the two headings of Respect for

People and Continuous Improvement, Toyota summarizes its values and conduct guidelines

with the following five principles:

 Challenge

 aizen (improvement)

 Ge-nchi ge-nbutsu (go and see)

 Respect

 Teamwork
According to external observers, the Toyota Way has four components:

Long-term thinking as a basis for management decisions

A process for problem-solving

Adding value to the organization by developing its people

Recognizing that continuously solving root problems drives organizational learning

The Toyota Way incorporates the Toyota Production System.

PORTER’S FIVE FORCES OF THE AUTOMOTIVE INDUSTRY

Threat of New Entry (Weak):

 Large amount of capital required

 High retaliation possible from existing companies, if new entrants would bring innovative

products and ideas to the industry

 Few legal barriers protect existing companies from new entrants

  All automotive companies have established brand image and reputation

 Products are mainly differentiated by design and engineering quality

 New entrant could easily access suppliers and distributors

 It is very hard to achieve economies of scale for small companies

 Governments often protect their home markets by introducing high import taxes

Supplier power (Weak):

 Large number of suppliers

 Some suppliers are large but the most of them are pretty small

 Companies use another type of material (use one metal instead of another) but only to

some extent (plastic instead of metal)

 Materials widely accessible

 Suppliers do not pose any threat of forward integration

Buyer power (Strong):

  There are many buyers

 Most of the buyers are individuals that buy one car, but corporates or governments

usually buy large fleets and can bargain for lower prices

 It doesn’t cost much for buyers to switch to another brand of vehicle or to start using

other type of transportation

 Buyers can easily choose alternative car brand

 Buyers are price sensitive and their decision is often based on how much does a vehicle

cost

 Buyers do not threaten backward integration

Threat of Substitutes (Weak):

 There are many alternative types of transportation, such as bicycles, motorcycles, trains,

buses or planes

 Substitutes can rarely offer the same convenience

 Alternative types of transportation almost always cost less and sometimes are more

environment friendly

Competitive Rivalry (Very Strong):

  Moderate number of competitors

 If a firm would decide to leave an industry it would incur huge losses, so most of the

time it either bankrupts or stays in automotive industry for the lifetime

 Industry is very large but matured

 Size of competing firm’s vary but they usually compete for different consumer segments

 Customers are loyal to their brands

 There is moderate threat of being acquired by a competitor

INTERNAL ENVIROMENT OF TOYOTA:

Core Competency

The core competence of Toyota Motor Corporation is its ability to produce automobiles of great

quality at best prices, thereby providing a value for money to the customers. This core

competence of quality can be attributed to its innovative production practices. The quality aspect

of Toyota’s products have revolutionized the automobiles in the past and almost all the

automobile companies had to try and better the quality of their products. It is a cornerstone of the

cost leadership strategy that the company pursues.

Distinctive Competency

Toyota’s distinctive competence is its production system known as the “Toyota Production

System” or TPS. TPS is based on the Lean Manufacturing concept. This concept also includes

innovative practices like Just in Time, Kaizen, and Six Sigma and so on. Toyota has worked

tirelessly over the years to establish this distinctive competence. No other automobile

manufacturer can do it as well as Toyota does. This distinct competence has led to a competitive

advantage that has given Toyota a sustainable brand name and a market leader position.
SWOT ANALYSIS
Strengths:

 Strong market position and brand recognition: Toyota has a strong market position in

different geographies across the world. The company's market share for Toyota and

Lexus brands, (excluding mini vehicles) in Japan was 45.5% in FY2012. Similarly,

Toyota has a market share of 12.2% in North America, 13.4% market share in Asia

(excluding Japan and China), and 4.3% market share in Europe. In addition, the

company holds a 7% share of the Chinese market and a significant market share in South

and Central America, Oceania, Africa and the Middle East regions. Such strong market

position allows the company to gain competitive advantage and also expand into

international markets. In addition, Toyota holds a portfolio of strong brands in the

automotive industry. Thus, the company's strong market position gives it significant

competitive advantage and helps it to register higher sales growth in domestic and

international markets. 8

 Strong focus on R&D: Toyota has a strong focus on R&D to expand its product

portfolio and improve the functionality, quality; safety and environmental compatibility

of its products. The company's R&D efforts are directed at developing new products and

processes and improving the capabilities of existing products. The company conducts its

R&D operations at 14 facilities worldwide. Strong focus on R&D has helped the

company in incorporating newer features to its existing range of products and also in
 bringing out latest technologies in the varied areas. The company's strong focus on R&D

allows it to uphold the technological leadership in most of its product segments. It also

enables Toyota to develop innovative products, leading to strong sales.

 Extensive production and distribution network: Toyota has an extensive production

and distribution network. Toyota and its affiliates produce automobiles and related parts

and components through more than 50 manufacturing companies in 27 countries and

regions besides Japan. During FY2012, the company produced 7,435,781 vehicles,

including 3,940,000 vehicles in Japan and 3,495,000 vehicles across all other

manufacturing locations. In addition, Toyota has an extensive distribution network.

While the company’s geographically well spread production base diversifies business

risks, its extensive distribution network provides a wider reach, thus boosting revenues.

10

Weaknesses:
 Product recalls could affect brand image: Toyota has conducted a number of product

recalls in the recent past, which could affect the brand image and overall sales of the

company. For instance, in 2011, Toyota recalled 111,000 models of Toyota and Lexus

brands’ vehicles due to the damage to elements of the substrate and potential shutdown

of the hybrid system. Further in the year, Toyota recalled 181,000 vehicles in Japan in

relation to abnormal noise and oil leakage that Analysis of Toyota Motor Corporation by

Thembani Nkomo may have resulted from slack of bolts in the sub transmission and the

rear wheel differential. In addition, the company was involved in government

investigations related to product recalls. For instance, in February 2012, the National

Highway Traffic Safety Administration initiated a preliminary investigation of a

potentially faulty power window master switch in the driver-side doors in model year

2007 Camry and RAV4 vehicles. This could also result in significant penalties, which

could affect the operational margins.

 Declining sales in key geographic segments: Toyota witnessed a decline in its sales in

key geographic segments. In FY2012, the company witnessed declining sales across

North America, Asia, Europe and other geographic reasons, which together accounted

for 60.8% of the total revenues of the company. Thus, a continuous decline in the

company's key geographic segments could put pressure on the profit making segments

and the overall revenues of Toyota.

  Poor allocation of resources as compared to peers: Toyota has low return on equity

(ROE) and return on assets (ROA) compared to its peer companies. The company's

competitors such as Honda Motor and Nissan Motor have more ROE when compared to

Toyota. Honda Motor's ROE was 4.8%, while Nissan Motor's ROE was 8% in FY2012.

In contrast, Toyota's ROE was 2.7% in FY2012. Lower ROE and ROA compared to its

peers indicates that the company is not using the shareholders' money efficiently and that

it is not generating high returns for its shareholders. Thus, poor allocation of resources

could hurt shareholder's value and confidence in the long term.

Opportunities:

 Growing global automotive industry: The global automotive industry was severely

affected by the economic downturn, with a decline in revenues being recorded in 2008

and 2009. However, 2011 saw a strong rebound which has continued into 2012.

According to MarketLine, the global automotive manufacturing industry grew by 8.9%

in 2012 to reach a value of $1,563.9 billion. The recovery of global automotive industry

thus provides Toyota an opportunity to gain more customers and increase revenues.

 Toyota poised to benefit from growing partnership with BMW: Toyota is poised to

benefit from the growing partnership with BMW. In June 2012, BMW and Toyota
 signed a memorandum of understanding aimed at long-term strategic collaboration on

technological fields. As part of the agreement, the two companies will partner for the

joint development of a fuel cell system, joint development of architecture and

components for a future sports vehicle, collaboration on power-train electrification and

joint research and development on lightweight technologies. The growing partnership

between the two companies is expected to boost the technological know-how of the

companies and may result in the development of new products thus increasing revenues

in the long run. Also, in the short run, the combined partnership will result in significant

synergies and cost-savings, boosting the operational margins.

 Strong outlook for the global new car market: The global new cars market has

experienced moderate growth during 2008-2012. However, forecasts suggest this will

accelerate to strong double digit growth during the 2012-2016 periods. Thus, the strong

outlook for the global new car market coupled with the company’s new product launches

provides a growth opportunity for the company.

Threats:
 Intense competition: The worldwide automotive market is highly competitive. Toyota

faces strong competition from automotive manufacturers in its various markets. The

competition among various auto players is likely to intensify in light of continuing

globalization and consolidation in the worldwide automotive industry. The factors

impacting competition include product quality and features, the amount of time required

for innovation and development, pricing, reliability, safety, fuel economy, customer

service and financing terms. Increased competition may lead to lower vehicle unit sales

and large inventory, which may result in downward pricing pressure, thus impacting the

financial condition and results of operations of the company. 17

 Appreciating Japanese Yen a major concern: Toyota is sensitive to the fluctuations in

foreign currency exchange rates and is principally exposed to fluctuations in the value of

the Japanese Yen, the US dollar and the Euro. The strengthening of the Japanese Yen

against the US dollar and fluctuations in foreign exchange rates would have a material

adverse effect on Toyota's reported operating results, which in turn would impact the

valuation of the company. 18

 Natural disasters could impact production structure: Toyota is subject to disruption

of production due to natural disasters such as earthquakes, floods, among others. Toyota

primarily operates in Japan which is a highest earthquake prone region in the world. The

country has witnessed many devastating earthquakes in the recent years which seriously
disrupted the economy. In 2011, the country witnessed one of the worst hit earthquakes

in its history in the form of 2011 Tohoku earthquake, which led to a temporary

production halt at its domestic auto manufacturing facilities. In the same year, major

floods occurred in Thailand which halted its operations and production of about 150,000

Toyota automobiles. Such natural calamities, if occur frequently, could severely

influence the production output of the company due to work stoppages and in turn

impact the overall revenue base and profitability.

INDUSTRY BUSINESS LOCATIONS

(PECENTAGE IN INDIA)

MAP OF TOYOTA’S WORLDWIDE OPERATIONS

 CHAPTER 5

CHAPTER 5

CONCLUSION

Toyota Industries has promoted diversification through continuous innovation all through its life

and expanded the scope of its business domains to include textile machinery, automobiles

(vehicles, engines, car air-conditioning compressors, etc.), and materials handling equipment,

electronics, and logistics solutions. All these Expansion Strategies adopted by Toyota has

resulted in making Toyota one of the largest Conglomerates.

Toyota Motors in itself has 522 Subsidiaries some of which are individually present in Forbes

Fortune 500 list.

Figure 3.6: Toyota's challenge to traditional big three 2001-2005

Source: Cygnus Research

Today Toyota is the largest carmaker in the world leading General motors and the top selling

automaker. The Japanese company has sold 9.7million cars and trucks in 2012 leaving GM in

second place with 9.29million cars.

The backbone of their success being their sharp, well thought out and excellently implemented

strategies. It yielded excellent result over the years it brought them to the No. l position and if

maintained, there is no doubt about the fact that they’ll maintain their position for years to come.

BIBLIOGRAPHY

www.google.com

www.slideshare.net
www.wikipedia.org