Toyota International Strategy in Business

The target multinational enterprise is "Toyota", Follow the structure I provide and answering the last three bullet points on International Strategy blow:

Which entry mode(s) does the MNE tend to use?

What kind of synergies exist across products and/or geographic areas? Do you think the company is exploiting these synergies?

Where does the firm see its future growth and expansion coming from?

The MNE profile applies class concepts to the MNE experiencing the crisis to provide adequate background for the crisis analysis. I would like each team member to have a deep understanding of its focal MNE. The MNE profile should be no longer than 6 pages single-spaced (plus appendices and references).

Note that some elements of the profile build on the Shadow Company project from BUS 1000. Other elements are similar to the BPL 5100 project.

Corporate Strategy

●      Company profile. Describe your focal firm briefly. What is the company's mission?

●      What is its grand strategy (eg. concentration, diversification, vertical integration, etc.)

●      What are the key strengths and weaknesses of your firm?

●      What is its core competency? Does it exploit its core competency to its maximum?

●      Which businesses generate substantial portions of the revenues?

●      Who are its main competitors?  Provide comparative data on sales and profitability.

●      How has the firm performed financially in recent years? Use key economic and financial data to support your argument.

International Strategy

●      In which countries does the MNE operate?

●      Which countries are the most important?

●      What is the firm's internationalization strategy [International, Multidomestic, Global or Transnational]? Describe.

●      Is the MNE outsourcing part of its value chain? 

●      Which entry mode(s) does the MNE tend to use?

●      What kind of synergies exist across products and/or geographic areas? Do you think the company is exploiting these synergies?

●      Where does the firm see its future growth and expansion coming from?

There may be some overlap in the responses for the corporate and international strategy.  It is okay to recognize that the company's corporate strategy and its international strategy are (or are almost) the same.

Teams will submit a Word document via Turnitin.com, then post the file on the class Discussion Board. Note that the Turnitin report should be green.

Please also note that you should check for plagiarism at least once before the deadline day because it may take a while for Turnitin to process the document.

Hint: Use tables and charts to present longitudinal and/or comparative data in a succinct, informative manner.  Just remember to refer to them in the text.  For example:  Chart 1 contains performance data for MNE XYZ and its 3 closest competitors over the last 5 years.  Note that in 2007, the year of the crisis sales for most of the competitors declined.

Corporate Strategy

Toyota was founded in 1937 and is a Japanese company that engages in the manufacture and sale of motor vehicles and related vehicle parts, and accessories.  Some of its most recognizable brands include Toyota and Lexus.  Toyota Motor Corporation is the second­-largest automobile manufacturer in the world and the tenth-largest company in the world by revenue.  As of 2019, “Toyota Motor Corporation’s annual revenue was $272.3 billion and it employed 370,870 people.” Toyota’s Mission Statement: "To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America." Toyota’s mission statement mirrors the organization’s strategies and goals and takes into cooperation innovation and customer needs.

Toyota Motor Corporation’s strategy supports the company’s global development. This achievement depends on the effective implementation of Toyota’s strategy and intensive growth strategies. This strategy is what Toyota uses to compete in the global market which is a combination of its cost leadership strategy, which involves limiting the expense of activities and selling costs, and the broad differentiation strategy, requires creating products that are unique to ensure Toyota’s upper hand. To achieve cost leadership, the organization utilizes the just-in-time (JIT) manufacturing method, which is also known as the Toyota Production System (TPS). JIT limits waste, inventory cost, and response time allowing Toyota to accomplish maximum business efficiency.  The intensive growth strategies are the types of actions that Toyota uses to ensure continued growth which includes market penetration, offering products to every market, SUV, trucks, etc. Second, product development, making vehicles that are attractive and unique and third market development, it continues to grow by entering new markets or selling to new market segments which helps Toyota to maximize its global presence.

The core competence of Toyota Motor Corporation is its capacity to deliver vehicles of extraordinary quality at best prices, thereby giving an incentive of cash to the customers. The quality of Toyota’s products has changed the industry in the past and almost all other automobile companies endeavored to better their vehicles.

Toyota has been able to be successful in many businesses, such as automotive, financial services and others. As you can see in table 1, below the majority of its revenue is generated by automotive. In 2016, automotive alone profited 25.9 million Yen “Toyota sold 8,681 thousand vehicles in fiscal 2016 on a consolidated basis. Toyota had net revenues of ¥28,403.1 billion and net income attributable to Toyota Motor Corporation of ¥2,312.6 billion in fiscal 2016”. The automotive industry includes design,  manufacture, assembly, and sales.  The Financial Services provides “financing to dealers and their customers for the purchase or lease of Toyota vehicles.” The other services are the “design and manufacture of prefabricated housing and information technology-related businesses.”

 The majority of Toyota’s primary markets for its automobiles are Japan, North America, Europe, and Asia. In table 2 below, you can see how Japan has the lead with 8.5 million yen in 2016.  (Toyota Motor Corporation, 2016, p. 9)

Toyota is in a highly competitive environment, facing “intense competition from automotive manufacturers in the markets in which it operates.” Due to Globalization and other factors such as product quality, safety, fuel economy, innovation, and pricing, it has become harder for Toyota within the automotive industry. In order to stay relevant, it has to constantly innovate its technology. “The timely introduction of new vehicle models, at competitive prices, meeting rapidly changing customer preferences and demand is more fundamental to Toyota’s success than ever, as the automotive market is rapidly transforming in light of the changing global economy” (Toyota Motor Corporation, 2016, p. 5). One of Toyota’s main competitors in the USA is General Motors. General Motors has a long line of reputation since it was the first car company in the world. When Toyota first was introduced, it was not taken seriously due to its lack of funding. After a few years, Toyota created a strong supply chain, using Just-In-Time (JIT) and new innovative ideas. With time, Toyota was able to surpass General Motor after it’s bankruptcy but General Motor came back stronger and adjusted its supply chain. General Motors depends on fourth-party logistics. In 2018, the vehicle unit sold was with 9.6 million sales for General Motor while Toyota has 10 million sales. General Motor is right behind Toyota and is catching up fast (Chyue M.).

According to Factiva, in their 2019 annual income statements, both operating income and net sales have increased since 2018 which means Toyota was able to profit in 2019 (Income Statement, 2019).  One of the main reasons for a steady increase might be the replacement of the traditional method of sales through home visits with showroom sales. ‘The percentage of automobile purchases through showrooms has been gradually increasing” (Toyota Motor Corporation, 2016, p. 25).  Financial Services has also improved, it has been increasing each year, “¥1,896.2 billion in fiscal 2016, ¥1,661.1 billion in fiscal 2015 and ¥1,421.0 billion in fiscal 2014.”  Lastly, “the percentage of credit losses remained low, at 0.36% and 0.31% in fiscal years 2016 and 2015.” The sales network has been an important role in order to maintain the Japanese market (Toyota Motor Corporation, 2016, p. 31).

International Strategy

Toyota motor is the leading auto manufacturers around the globe. Toyota operates 67 manufacturing industries in 27 countries. Most of the vehicle production takes place in Japan and the rest takes place in North America, Central, and South America, China, Malaysia, Thailand, Taiwan, United Kingdom, French, Turkey, Poland, Kenya, and few other countries. Toyota sells its vehicles in more than 170 countries. According to Toyota’s consolidated vehicle sales, (the fiscal year 2016) Toyota’s total sales were 33% in North America, 24% in Japan, 15% in Asia, 10% In Europe and 18% in other countries.

The most important countries for Toyota are Japan, United States, United Kingdom, China, Saudi Arabia, Thailand, Australia, Canada, Germany, Taiwan, Kenya, South Africa.

  Toyota's internationalization strategy is known as the “KAIZEN” strategy which means ongoing improvement. Toyota's success comes from its desire to produce high-quality products by continuously improving their products. Japanese are known for their excellence and nearly perfect products. They believe that they can enhance everything because nothing is perfect but it is possible to go close to perfection. Toyota follows the same tactic to dominate the auto industry.

Toyota outsources from other companies when securing parts of its vehicle. Toyota uses suppliers near its assembly plants to minimize shipping costs. Toyota's total quality management (TQM) is responsible for the quality of the products that they outsource.

Sources

(n.d.).  Retrieved from https://www.forbes.com/sites/greatspeculations/2019/05/13/toyota-ends-fy-2019-with-positive-revenue-growth-will-this-continue-in-fy-2020/#133e4fa91f79 

(n.d.)  Retrieved from https://www.statista.com/statistics/294192/number-of-toyota-employees/

(n.d.).  Retrieved fromhttps://mission-statement.com/toyota/

https://www.toyota-europe.com/world-of-toyota/this-is-toyota/toyota-in-the-world

https://mr-uploads.s3.amazonaws.com/uploads/2016/05/334.png https://www.academia.edu/11348085/Toyota_Supply_Chain_Management