Essay About Toyota Financial Crisis And Global Automobile Market

Toyota Financial Crisis in 2008-2009
Essay Preview: Toyota Financial Crisis in 2008-2009
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Started in 1947 in Japan as little-know domestic manufacturer, by the year 2010 Toyota captured 15% of the global automobile market and was the largest car producer in the world ahead of close rivals VW and GM. Toyota has been the quality and efficiency leader of car manufacturers with 48 production facilities in 26 countries across the world.  Toyota was hit by financial crisis in 2008-2009 along with all car industry due to decrease of cars demand. By 2012 Toyota had regained the mantel of the leading player in the industry.  However, the productivity and quality gap between Toyota and its global competitors has narrowed and Toyota started to face invigorated competitors who were fast growing in profitability and was well positioned to challenge Toyota for global market share. The problem: to keep the competitive advantage of being the quality leader in the industry and to fend off their global market share from growing competition.  Toyota has reached efficiency and productivity learning curve heights – losing competitive advantage of the most productive automobile company in the world. The symptoms of the problem:Fall off car sales by 40% due to global financial crisis (2008-2009)China’s market continues to grove despite Toyota’s fell of sales by 17%VW invest heavily in capacity of China – the world largest national automobile marketGM successful recovery after crisis being more viable competitorGM well positioned in the rapidly growing Chinas marketToyota struggle due to anti-Japanese sentiment in China Hyundai-Kia strong position in the world car market, more profitable than ToyotaCustomers switch to low priced small cars due to gasoline prices fell (KIA, Ford)SWOT analysisStrengthsWeaknessesStrong brand and culture. Quality leaderWide product offering, including hybrid vehiclesContinuous investments in R&D and innovation of products, efficiency of processesLow production and procurement costs, high profitabilityRegional supply organizations, minimal buffer stocksStrong commitment of employees, sales and service training of dealersWeak presence in emerging marketsCentralized structureLoosing younger buyers, less attractive car modelsPerception that product offerings lack design flair and are not well attuned to consumer taste as might be Obsession with continues improvements in efficiency and effectiveness can overlap attention to consumer’s preferencesOpportunitiesThreatsMove toward globalization of car marketGrowing emerging markets (China)Change in customer preferences and choices – need for new cars, small cars, hybrid and electro carsIntense global competitionStrong competitors position on ChinaNew leading motor vehicle brands in top position (Hyundai-Kia)Ford and GM support more dealers relative to their market share than ToyotaNeed for new investmentsTo keep Toyota’s competitive advantages – quality leader and industry’s global leader:To continue focus on old markets by high different ion of the products: luxury line, sports and specialty segment, hybrid vehicles, trying to attract even wider segment of customers by age and preferences Pros: Good brand recognition and knowledge of the marketEffective assembly plant and dealership chain in EU, North AmericaPossibility to impact the consumer’s preferences, follow consumer’s preferences because of build responsiveness system, and customer relationshipCons: Slow old market growthConsumers easily switch to other brands due to economic reasons (fuel price changes) or changes in preferencesEven more and stronger global competitors in old marketsTo expand into emerging markets and China as world’s largest national automobile marketPros: Continue to position Toyota as global market share leader in rapidly growing marketsContinue to develop assembly plants in AsiaPossibility to create new brand recognition by joint ventures Cons: Need for high expenditures to provide high efficiency and quality control in assembly plants to provide high quality standardsHard to find high quality suppliers, higher costs of quality controlAnti-Japanese sentiment to get overLooking for new partners for joint ventures in the regionsFocus on R&D and new technologies by cooperation with technological leaders and car manufacturersPros: Access to latest technology and possibility to differentiate the product by new technologiesEffective Utilization of in-house know how and previous experience in innovationsPossible to ad technological features to existing products, attract younger buyersCons: New technologies require huge investmentsHard to control the qualityRecommendations I recommend Toyota to focus on new emergent markets and heavily invest in new technologies (Strategy 2 and 3). Toyota has to establish R7D facilities there and build joint-ventures with local manufacturers in order to implement the strategy of expanding in China successfully.  The decision making and more power should be given to local subsidiaries, thus meeting the customer demands for local customization still actual in Asia market. Nevertheless, diversified production facilities globally helps the company to keep the production costs low, this will help the company to further reduce costs and increase margins.