Porters five model

analysis for TOYOTA

RAJENDRA B DANDGE (marketing B08)

RAHUL J DAWKHAR ( finance 15)

Porters five model

analysis for TOYOTA
1. Threat of new
entrants
Threat of new entrants to the TOYOTA and
the automotive industry is weak.
Toyota is not only a company that
established in japan but has been operating
around the world and standards for cars have
been universally.
It epitomizes the global market and very

 It is almost impossible that a new company would

appear to be a new threat to to toyota and its target
market around the globe according to research
conducted.
Toyota has been around and well established for many
years, strengthen its reputation, experience and
knowledge.
there are many barriers in this industry as
1) large amount of capital required
2) High retaliation possible from existing
companies,
.
if new entrants
would bring innovative products
and ideas to the
industry
3) few legal barriers protect existing companies
from new entrants
4) All automotive companies have established
brand image and reputation.

4) Product are mainly differentiated by desingn

and engineering quality
5) Government often protect their home
markets by
introducing high import taxes.

2. Bargaining power of
suppliers
The bargaining power of Toyotas is week.
Toyota has many suppliers in its automotive
manufacturing sector. Resources like metal, raw
materials, leather, plastic, computers, cooling
system and fuel supply, braking system and fuel
system are all bought from hundreds of different
suppliers and different price distributed across
the globe.
One of the competitive advantages of toyota is
its strong relationship with the supplier and its
efficient manner of monitoring supply chain
places low bargaining power on the suppliers.

 In addition, most vehicle manufactures own

many interchangeable supplier and also have
the ability to produce the components by
their own in the short thus the suppliers do
not own the power to change the price.

3.Bargaining power of
buyers
The bargaining power of Toyota buyers is moderately
strong.
Toyota has fierce competition because there are quite
of few companies that have similar cars that can
target similar market.
(eg.Honda,Nissan,Ford,Volkswagen,etc)
There are many buyers and most of the buyers are
individual that buy one car,but corporates are
governments usually buy large fleets and can bargain
for lower price.
Since the choice in the car market are aboundent, it
does not much for buyers switch to another brand of
vehicle to start using other types of transportation.

 The recent trends indicate that the

customers are from to seek out more
fuel efficient cars due to the rising of
all price. This also result in the
increasing demand for the hybrid
cars that offers cheaper alternatives
for operating the vehicle coupled
with higher expectation of product
quality.
However the cost of cutting practices
implemanted by Toyota in its
operations lower the buyer power
and puts its car I to a more

4.Threat of substitutes
There is a moderate threat of substitute
for Toyota.
cars or automobiles are still the most
convenient way of transport for the
majority of the market who leave in
suburban areas.
Numerous other from of transportation
are available, but none offer the utility,
convenience, flexible, independence
and value afforded by automobiles.
Although the public transport vehicle

substitute like trains, taxi, buses and airoplanes,

these substitutes have disadvantages as they
mostly only practical in cities and have fixed
routes and timetables. The motorbikes and
bicycles are also not relevant substitutes as
they do not assure the comfort of a car.
The switching costs associated with using a
different kinds of transportation may be high
in terms of persnal time and comfort.
High fuel cost may push more people to
public transport but it will not create a real
substitute for cars. To solve this problem
Toyota always being innovation to produce
fuel-efficient cars for their customers.

5.Rivalry among existing

competitors

The rivalry among existing competitors of Toyota

is strong.
There are several competitors of Toyota in the
automotive industry like Honda,Suzuki,Ford,
Nissan,Proton and so on. These majar
competitors are so closely balanced that it
increases the rivalry .
The competition also exist between the gov.
because the gov. will established protection lost
to protect of each own product differentiation .
Constantly increasing competition is powered by
te higher consumer expectation and anticipation
for the lower prices.

 Leak of differentiation opportunities also will

cause high rivalry and the companies will
compare to each other constantly .
however ,Toyota always try to differentiate
their product and services to increase the
customers awairness and loyal to their
brands.