Case Study Toyota Name- Priyanka Gulati SMS ID- 2221475

Abstract: The case details the globalization strategies adopted by one of the world's leading automobile majors, the Japan-based Toyota Motor Corporation (Toyota). It examines the company's evolution from being Japan's number one automaker to a formidable competitor in the global automobile market by 2003. It examines the rationale behind Toyota's decision to concentrate on global expansion and studies the company's various globalization programs, focusing on the localization efforts. The case also analyzes the problems faced by the company within Japan and discusses the steps taken to overcome them. Finally, it examines the results of Toyota's globalization strategies and discusses its future prospects in the light of intensifying competition and demand saturation in its core markets, Japan and the US.

Background Note Toyota's history dates back to 1897, when Japan's Sakichi Toyoda (Sakichi) diversified from his traditional family business of carpentry into handloom machinery. He founded Toyoda Automatic Loom Works (TALW) 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 company's success. In 1933, Sakichi established an automobile department within TALW and the first passenger car prototype was developed in 1935. Sakichi's son, Kiichiro Toyoda (Kiichiro), convinced him to enter the automobile business, and this led to the establishment of Toyota in 1937. During a visit to Ford to study the US automotive industry, Kiichiro saw that an average US worker's production was nine times that of an

average Japanese worker. He realized that to compete globally, the Japanese automobile industry's productivity had to be increased

Early Globalization Efforts In June 1995, Toyota announced the 'New Global Business Plan,' aimed at advancing localization (of production) and increasing imports (through collaboration with foreign automobile companies) over a three year period. A major objective of this plan was to increase Toyota's offshore production capacity to 2 million units by 1998. As part of the localization efforts, Toyota focused on increasing overseas production significantly by establishing new plants and expanding the capacity of the existing plants Apart from this short-term global business plan, Toyota also came up with a long-term global business vision in June 1996, named the 'Global Vision 2005.' The major components of "Global Vision 2005"were, asserting a competitive edge in technology and accelerating globalization, while sustaining market leadership in Japan, by reclaiming its above 40% market share. As part of its globalization efforts, the company focused more on increasing the production of automobiles in the areas where they were sold.

Casting a Global Spell In January 2004, leading global automobile company and Japan's number one automaker, Toyota Motor Corporation (Toyota), replaced Ford Motors (Ford), as the world's second largest automobile manufacturer; Ford had been in that spot for over seven decades. In 2003, Toyota sold 6.78 million vehicles worldwide while Ford's worldwide sales amounted to 6.72 million vehicles (General Motors, the world's largest car manufacturer sold 8.60 million vehicles). According to reports, while Toyota's market share in the US increased from 10.4% in 2002 to 11.2% in 2003, Ford's declined from 21.5% to 20.8% during the same period. Reaching the No.2 slot was a major achievement for Toyota, which had begun as a spinning and weaving company in 1918. Ford was reportedly plagued by high labor costs, qualitycontrol problems, lack of new designs and innovations, and a weak economy during the early 21st century, which made it vulnerable to competition. Toyota, aided by its new product offerings and strong financial muscle had successfully used this scenario to surpass Ford and affect a dramatic increase in its sales figures. In November 2003, Toyota announced its financial results for the half-year ended September 30, 2003.

The company reported a 23% increase in net income (as compared to the corresponding period of the previous year) to $4.4 billion on revenues of $69.7 billion. This took Toyota way ahead of World's top three automobile makers (at that time) by sales, General Motors (GM), Ford Motors (Ford) and Daimler Chrysler. Its market capitalization of $110 billion (on November 05, 2003) was more than the combined market capitalization of these three players. Given the fact that in 2003, these top three companies were struggling to maintain their sales and profitability targets, Toyota's performance was termed remarkable by industry observers. Toyota had emerged as a formidable player in almost all the major automobile markets in the world. Interestingly, one of its strongest markets was the US, the world's largest automobile market and the home turf of Ford and GM. Toyota had emerged as a strong foreign player in Europe as well, with a 4.4% market share. In China, which the company had identified as a strategic market for growth in the early 21st century, it had a 1.5% market share. The other major markets in which the company was fast strengthening its presence were South America, Southwest Asia, Southeast Asia and Africa.3 Back home in Japan, it enjoyed a market share of over 43%. Analysts attributed Toyota's growing sales across the world to its aggressive globalization efforts that began in the mid-1990s. The company constantly strived to ensure that each of its market segments - Japan, North America, and Europe and other markets - generated one-third of the annual sales This goal was at the heart of Toyota's three globalization programs - New Global Business Plan (1995-1998), Global Vision 2005 (1996-2005) and Global Vision 2010 (2002-2010). In the light of Toyota's intensifying globalization efforts, Toyota's competitors themselves stated that Toyota could not be taken lightly. GM's Chairman, John F. Smith Jr., said, "I would not say they will not make it. Toyota is an excellent company. They are very focused on what they do and they do it well, and that is what makes them great.

Comparative assessment of the different locations under consideration The first stage of Toyotas development strategy is Cross-Nation Space Strategy. It is where Toyota implemented a strategy of marketing its product in Japan and in other nations around the world. It is a strategy of blanketing the nations with all Toyotas product. Manufacturing of product for Toyota started in 1938 where its first plant was built which is the Honsha Plant. It is after 20 years of incorporating that Toyota could construct their second plant which was in the year 1959. Upon incorporating, there were three major strategies being taken to ensure their success. First and foremost was to have high quality auto suppliers. Second, was for Toyota to built affiliates like providing housing and

entertainment facilities for its own employees and families. This was because Toyota is making its employees and families as their crucial factors of Toyotas success. And thirdly was webbing Toyota dealers in which they developed on their channel of distribution. It was up until 1960s that Toyota adopted nation-specific strategies to provide their automobiles throughout the nations outside. Due to that, Toyota Motor Sales (TMS) had set up export department for the main reason to pioneer the overseas market. First exporting activities being done by Toyota was after receiving an order from Brazil for 100 units of Model FXL large trucks. As Brazil was a developing country at the moment, it was a golden opportunity for Toyota to introduce its brand name overseas and highly potential to penetrate the automobiles market in Brazil. But, because Brazil eventually had a poor infrastructure, Toyota grabbed this opportunity and tend to market its Four-wheeled-Drive (4WD) Land Cruiser as this vehicle is able to withstand the poor road conditions of Brazil. Starting from this point, Toyota had Ipiranga, Brazil, and had the first-mover advantage to meet the demand locally. This enabled Toyota the chance to export its product to other Latin America nations like Colombia, Costa Rica, Venezuela, and Puerto Rico. For the South-East Asia, the first export was to Thailand which is in 1950s to 1960s. The action of Toyota Motor Sales to gain market in Thailand has enabled Toyota to receive for the second time the advantage as the first-mover in the Thailands local automobiles industry. And as for the Middle-East, it was in 1947 that the first exporting activity being done by Toyota which was to the King of Egypt. During this period also Toyota had already started exporting its products to gain market on the automobiles industry in China. Toyota hesitated in exporting its products to the Europe at first because Europe is known as the worlds most sophisticated market. So, Toyota had no intention to do any transaction with the Europe during that particular period. But, a European representative had come all the way to Tokyo asking Toyota to exports its automobiles. As a result, Toyota had export its model, Crown and Land Cruisers to Denmark and Ethiopia. After the expansion of products to the Latin America, Toyota had expanded its automobiles to the North America Continent especially the United States of America. This is where the second stage of Toyotas Development Strategies took place. In this stage, Toyota implemented the Cross-Continent Space Strategy by establishing 5 assembly factories. However, due to the weather condition in the USA, it brought some difficulties to Toyota in promoting its vehicles. Thus, Toyota started to export the new Corona and Corolla to Canada. Another core factor that influenced Toyota to expand its cars to United States is due to the existence of large port cities in the West Coast Region that were crucial for Toyota in distributing its products to the USA. Toyota Crown was the first model that arrived in United States, specifically Los Angeles. After a while, Toyotas cars being condemned as it vibrates badly and easily overheated while driving all the way on United States highway. To replace the failure of Toyota Crown, Toyota had produced another improved car, Tiara, to the consumers of the USA. But, the Tiara also had not fulfilled the demand of the consumers and Toyota having serious problems in selling its cars. From this, Toyota had learned its lesson motor vehicles that are not competitive in performance, price, and brand names had no chances at all of being accepted by the markets. Until then, Toyota had been striving eminently to develop its new international product of the new Corona.

As for the development on the automobiles market in Thailand, Toyota had made a jointventure with one of the car manufacturer of Thailand to become Toyota Motor Thailand. This was later enabled Toyota to establish its own assembly plant in Thailand where it provided multiple job opportunities to the locals indirectly. The expansion of Toyotas products continued to the West Region, then to the Central Region and lastly to the East Region of United States especially to New York City. This expansion process was successfully carried out with one of the factor of the establishing of the second wholly-owned subsidiary of Toyota which located in Brazil. The expansion leads to a success when Toyota Do Brazil (TDB) merged with Toyota of Argentina to export Toyotas automobiles to Latin America and Central America. As Toyota was backed with high political influence due to its several contributions to the local politician during the election years, this guaranteed the successfulness of Toyota to world generally. Approaching 1970s, two major developments occurred to the Toyota manufacturer. First is the oil crisis. As the price of oil increased tremendously during the period, Toyotas cars are highly demanded as Toyota promoted a reasonable price on its cars. Another development occurred was the appreciation of Japanese currency. For this reason, Toyota had swift its manufacturing of high grade of small cars to sporty cars. The examples are Celica and multi-use pick-up trucks. Next strategy implemented was the establishment of the product plants. The main factor that leads Toyota to put this strategy into action was due to the oil crisis that eventually increase the number of units sold of Toyotas products. In January 1982, Toyota Motor Company (TMC) and Toyota Motor Sales (TMS) combined to form Toyota Motor Corporation. This restructuring and merger initiative was to grasp the capabilities of Toyota to the fullest. Toyota had been in a joint venture with General Motors (GM) with the reason that a voluntary restriction on Japanese exports to USA was initiated in 1981. This was after an action to joint-venture with Ford Motors failed. As a result, facilities of its own by Toyota being able to set up in the United States of America. The advantages towards this plan were to reduce risks and to accumulate experience in the local production. In this strategy also, Toyota decides to build production plants in developing countries and targeting places in Urban City like the Shenyang and Tianjin in China. In 1998, Toyota acquired Tianjin Motor Group to become Tianjin Toyota Motor Engine where they were in charged in supplying Daihatsu and later exported to Japan. Up until 1995, Toyota implemented its third stage of development strategy which stressed on the globalization strategy. New global business plan being initiated with the efforts to further localize (overseas) and increase imports of automobiles produced overseas (in Japan). One of the strategy made was the New Sienna which was made by the manufacturer of Toyota in Kentucky, USA. Other globalization plan that were made was the published of suppliers guide with the intention to aim at providing the first timer suppliers a greater understanding on Toyotas purchasing activities and giving outlines on how to sell supplies to the Toyota. In 1997, Toyota made another plan which providing internet services where it makes overseas supplier request for auto parts easier. As up to March 1998, Toyota had already had 34 overseas subsidiaries and affiliates throughout the

world, 150 distributors in 5 continents and 25 countries. This indicates that Toyota is successfully entered the foreign market. One key factor that leads Toyota to be able to expand effectively is due to its active played the role of a good corporate citizen. Toyota is actively donating to social and cultural activities, exchange students programs and traffic safety campaign. This global business strategy has being a major plan for Toyota to keep consumers driving its products from generation to generation. In short, all of the above strategies created by Toyota can be explained as; first, Toyota started to target the international market by focusing on the national level, then the global level. Ways of making its products known throughout the world are through exporting at first, joint ventures and later towards the establishing of Toyotas own subsidiaries to manufacture its products in the host country. After creating a potential hopes on the 5 continents market, Toyota began to be part of the local communities choice of automobiles in their own country.

Domestic Problems & Solution According to industry observers, the above scenario was due to a host of reasons such as excessive capacity, choosy customers, surplus workforce and intensified competition within Japan. In 1998, Japan sales accounted for a mere 38% of the company's total sales, as compared to 52% in 1990. Also, Toyota's Japan sales contributed to a very small share of its total profits. US sales contributed to the majority share (80%) of the profits, followed by Europe. 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. Analysts claimed that despite its efforts to cater to the young, the company had failed to give them zippy compact minivans and sports utility vehicles. Toyota Cultural issues and actions taken Culture change is a complex topic in its own right and the subject of many articles. This became most evident to Toyota in its efforts to globalize in the 1980s. To Toyota, globalization did not mean purchasing capacity in other countries. Globalization meant exporting the Toyota culture to build autonomous divisions in other countries that reproduced the DNA of Toyota.

What is culture? There are many definitions, but one thing is for sure: what you see and hear when you walk into a company for the first time are only surface manifestations of culture. Depicts a TPS view of culture as an iceberg. What many visitors to Toyota and its affiliates see when they visit are surface features such as kanban, high employee suggestion rates, clean floors, lots of charts and visuals, cells, and teams. The most common question I have heard when taking groups on tours of Toyota plants is How do you reward your people to get them so involved? A reward system itself is simply a surface manifestation of culture. It is a human resource toolsomething easy to manipulate and only the tip of the iceberg. Below the surface is the Toyota Way culture. In fact, Toyota takes a textarticle approach to developing culture. Edgar Schein, one of the leaders in analyzing and understanding culture, defines culture this way: The pattern of basic assumptions that a given group has invented, discovered, or developed in learning to cope with its problems of external adaptation and internal integration, and that have worked well enough to be considered valid, and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems. This is a remarkably apt description of the Toyota Way culture in a number of ways: 1. The Toyota Way has a depth that goes to the level of basic assumptions of the most effective way to perceive, think, and feel in relation to problems. Things like genchi genbutsu, recognizing waste, thorough consideration in decision making, and the focus of Toyota on long-term survival are the DNA of Toyota. 2. The Toyota Way was invented, discovered, and developed over decades as talented Toyota managers and engineers, like Ohno, learned to cope with its (Toyotas) problems of external adaptation and internal integration. The history of Toyota is very important because we understand the challenges and context that led to active on-the-floor problem solving, not theoretical, top-down exercises. 3. The Toyota Way is explicitly taught to new members. Toyota is, in fact, doing seminars on the Toyota Way, but that is a limited part of the learning process. The Toyota Way is explicitly taught the way you should transmit culturethrough action in day-to-day work where leaders model the way. As Jane Beseda of Toyota Sales explained: The Toyota Way matches everything that they (team members) do every hour of the day. So they are swimming in this culture and this philosophy. Were always doing kaizen projects. Its a part of who we are. Regarding this third point, Toyota in Japan hires almost all of its new employees fresh out of school, in some cases from a Toyota City technical high school, where students begin to learn the Toyota Way while still in school. Toyota is their first job and typically their last. Therefore, they do not have to unlearn past practices from other companies with conflicting approaches. Aspects of the Toyota Way are, in fact, intertwined with Japanese

culture, which is relatively homogenous. For example, hansei, hourenso, kaizen, and nemawashi are characteristics of top Japanese companies and not peculiar to Toyota. We can look to Toyotas globalization as an object lesson in what it takes to build a culture. When Toyota began seriously globalizing in the 1980s, most broadly in the U.S., they quickly realized the challenges of creating the Toyota Way in a culture that was alien to many of their values. Toyotas approach to spreading the culture to global operations has been intensive and very costly. The most intensive effort has been in Toyotas largest market outside JapanNorth America. In this case: 1. All U.S. senior managers were assigned Japanese coordinators. The coordinators had two jobs: coordinating with Japan, where there are continuous technical developments, and teaching U.S. employees the Toyota Way through daily mentorship. Every day is a training day, with immediate feedback shaping the thinking and behavior of the U.S employees. 2. Toyota used trips to Japan, which turned out to be one of the most powerful ways to influence the cultural awareness of U.S. employees. We discussed in Chapter 7 the importance of sending group leaders and union officials from NUMMI to Japan to work in Toyota factories. 3. Toyota used the TPS technical systems, or process layer of the Toyota Way, to help reinforce the culture Toyota sought to build. For example, we discussed how large batch manufacturing with lots of inventory supports the Western culture of short-term firefighting and ignoring systems problems. By creating flow across operations using TPS and lean product development in its overseas operations, Toyota is helping change this behavior and shape the culture it seeks to nurture. 4. Toyota sent over senior executives to engrain the Toyota DNA in new American leaders. This started with managers from Japan and has evolved to homegrown managers in North America like Gary Convis and Jim Press. The journey for Toyota is by no means over. Toyota is continually adapting its culture to local conditions. Here are example adaptations from the Toyota Technical Center (TTC) in Ann Arbor, Michigan: 1. Being more flexible about work hours. In Japan, Toyota engineers historically worked as needed, even if it was 15 hours a day, nights, weekends. TTC has become more flexible, to the point of putting in flex-time systems. 2. Performance-based rewards. Traditionally, Toyota in Japan pays a large portion of salary in semi-annual bonuses, but these are tied to company performance, not individual performance. In TTC they developed an individual bonus system based on performance. 3. Hansei events at TTC have been modified to provide more positive feedback in addition to critiques and opportunities for improvement. Companies moving into lean will not have to take their employees to Japan to learn the culture, but will need to make serious long-term investments to educate and change their culture so employees can adapt to and use many of the Toyota Way principles.

I was personally involved in one encouraging example of true culture change when in January 2000 my colleague Jeff Rivera and I began consulting with Fords Cuautitlan assembly plant, outside Mexico City. The site had four assembly lines in one plant, making four different vehicles, from small cars to full-sized trucks to commercial-grade trucks and about 9000 parts. It was more like a city of auto parts than an assembly plant, with parts streaming in once a week across the border. Our focus was on material flow. We used kaizen workshops to get teams in the plant to reorganize parts and tools for best presentation and efficiency. We then followed up with pull systems to get parts to the line from a supermarket of parts. The operators loved it and in each case there were large gains in efficiency. The internal lean coaches became very committed to the process. But we faced continual resistance from senior management in the plant who did not see any direct labor reduction savings. As a result, once the workshops were completed, there was little follow-up activity. When Ford began struggling financially, it pulled product from the plant. By fall 2001, rumors floated that Ford was going to close it. Eventually, the internal lean coordinators we trained were let go. I feared that was the end of the story. Then I learned in fall 2002 that Ford Production System (FPS) experts were flocking to see the Cuautitlan plant. Miraculously, the plant had become a model for FPS, a version of TPS. Operators were heavily involved in continuous improvement and the plant was performing at one of the highest levels in North America. Because of the high level of quality and efficiency at Cuautitlan, Ford gave the plant new products to build. How did this sudden turnabout to FPS occur? The director of manufacturing for Ford of Mexico, who brought us in and was a believer in TPS, realized he had to get more hands-on when there were rumors of shutting down the plant. He brought in new plant management, including an assistant plant manager from Hermosillo, Mexico, who had an understanding of TPS. (The Hermosillo plant was originally set up by Mazda, using a production system similar to TPS.) The Cuautitlan plant began focusing on cultural change, not simply FPS tools and checklists. This included mandatory training for all managers on the core disciplines of FPS and a test. Managers who failed the test were let go. Managers who passed were required to implement what they had learned. Management effectively used policy deployment (hoshin), including putting it into a Web-based system so everyone knew his or her objectives. Performance was monitored daily, so that every problem that occurred was immediately conveyed to the appropriate level of management for immediate action.

In other words, this was a top-down process with real teeth in it. Management was taking a tougher approach than Toyota has taken in its U.S. operations. But it was necessary in an environment that had grown complacent and needed radical change in the culture. Management was changing the culture by aligning objectives, measurements, and visual systems to reinforce the appropriate behavior every day.

The Second Phase of Globalization 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 The 2010 Global Vision 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 The Globalization Pay-Off By mid-2003, Toyota was present in almost all the major segments of the automobile market that included small cars, luxury sedans, full-sized pickup trucks, SUVs, small trucks and crossover vehicles. According to reports, while global vehicle production increased by 3.3 times since the early 1960s, Toyota's production had increased by 38 times. As a result of its localization initiatives, Toyota had 45 manufacturing plants in 26 countries and regions by this time, and sold vehicles in 160 countries

Which Way to Drive From Here? By the end of 2003, Toyota seemed to be well on its way to achieving its globalization goals - worldwide sales of 6.57 million units in fiscal 2004; sales of 2.12 million units in North America by 2004; a 5% market share (800,000 units sales) in Europe by 2004; a 15% market share in the global market and a 10% market share in China by 2010.

Analysts felt that the above factors were helping the company in its quest to become a truly global automobile major: strong financial condition, globally efficient production system, unique corporate culture, and the ability to develop a product range that met the unique needs and desires of customers in different regions.

Synopsis ( History of Toyota) 1867 1924 1929 1930 1933 1935 1936 1937 1938 1950 1951 1955 1957 1959 1962 1965 1966 1967 1974 1975 1982 1984 1988 1989 1992 1997 1999 2000 Birth of Sakichi Toyoda. Sakichi Toyoda invents Toyoda Model G Automatic Loom. Automatic-loom patent is sold to a British company. Kiichiro Toyoda begins research on small gasoline-powered engine. Automobile Department is established at Toyoda Automatic Loom Works, Ltd. The Toyoda precepts are compiled. The AA Sedan is completed. Toyota Motor Co., Ltd. is established. Honsha Plant begins production Company faces a financial crisis; Toyota Motor Sales Co., Ltd. is established. Suggestion System begins. The Toyopet Crown, Toyopet Master and Crown Deluxe are launched. The first prototypes of the Crown are exported to the United States; Toyota Motor Sales U.S.A., Inc. is established. Motomachi Plant begins production. Joint Declaration of Labor and Management is signed. Toyota wins the Deming Application Prize for quality control. The Corolla is launched; business partnership with Hino Motors Ltd. begins. Business partnership with Daihatsu Motor Co., Ltd. begins. Toyota Foundation is established. The prefabricated housing business begins. Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. are merged into Toyota Motor Corporation. Joint venture with General Motors (New United Motor Manufacturing, Inc.) begins production in the USA. Toyota Motor Manufacturing, USA, Inc. (present TMMK) begins production. The Lexus brand is launched in the USA. Toyota Motor Manufacturing (United Kingdom) Ltd. begins production. The Prius is launched as the world's first mass-produced hybrid car. Cumulative domestic production reaches 100 million vehicles. Sichuan Toyota Motor Co., Ltd. begins production in China.

2001 2002 2004 2005 2008 2010

Toyota Motor Manufacturing France S.A.S. begins production in France. Toyota enters Formula One World Championship; Tianjin Toyota Motor Co., Ltd. begins production in China. The Toyota Partner Robot is publicly unveiled. The Lexus brand is introduced in Japan. Worldwide Prius sales top 1 million mark. Worldwide Prius sales top 2 million mark; Toyota and Tesla Motors agree on joint EV development.

Current situation of Toyota Motor Corporation Strengths Global organization, with a strong international position in 170 countries worldwide. High financial strength (1997, sales turnover, 131,511 million), sales growth of 29.3% Strong brand image based on quality, environmental friendly (greener), customized range. Industry leader in manufacturing and production. Maximizes profit through efficient lean manufacturing approaches (e.g. Total Quality Management) and JIT (Just in Time) manufacturing and first mover in car research and development Excellent penetration in key markets (US, China, EMEA) and now the second largest car manufacturer in the world, surpassing Ford.

Weakness Japanese car manufacturer - seen as a foreign importer. Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may be more strategically located worldwide to take advantage of global efficiency gains. Some criticism has been made due to large-scale re-call made in 2005, quality issues.

Opportunities Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas and electric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at an all time high - this investment and widening of product portfolio fits consumers looking to alternative sources of fuels away from gas guzzling cars

To expand more aggressively into new segments of the market. The launch of Aygo model by Toyota is intended to take market share in youth market. To produce cars which are more fuel efficient, have greater performance and less impact on the environment. To develop new cars which respond to social and institutional needs and wants. The development of electric cars, hybrid fuels, and components reduces the impact on the environment. Toyotas Eco-Vehicle Assessment System (Eco-VAS) has helped in production, usage, and disposal Continued global expansion - especially in the emerging markets e.g. China and India, Russia, where population and demand is accelerating.

Threats Saturation and increased competition, intense marketing campaigns increasing competitive pressures Shifts in the exchange rates affecting profits and cost of raw materials. Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially new cars). As household budgets tighten - this could lead a decline in new car sales and possible rationalization of dealerships. Changing demographics e.g. number of large families is declining. Undermining the demand for large family cars Changing usage - families using the car less for taking children to schools. Home deliveries. Businesses - restricting business travel (tele-conferencing). Governments encouraging alternative forms of transport - cycling and incentives to use public transport across Europe. Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who have chosen not to own a car, or decided to use their car less.