STRATEGIC AUDIT

TOYOTA
MOTOR
CORPORATION

Master of Business Administration

Supervised by Prof. Sherif Eid
Class S5

Written by ID Number
Bahaa Mounir 22128095
Eslam Emara 22128694
Yasmin Etman 22126611
Rania Atef 22126532
Maha Zaki 22127168
Mona Abdel Fattah 22125346
Mohamed Muhsen 22127580
PART ONE: CURRENT SITUATION --------------------- 11
1. Company Overview -----------------------------------
2. Vision -----------------------------------------------------
12
13
CONTENTS
3. Mission --------------------------------------------------- 13
4. Value ----------------------------------------------------- 13
5. Toyoda Principles ------------------------------------- 13
6. Objectives ----------------------------------------------- 14
7. Strategies ----------------------------------------------- 15
8. Policies --------------------------------------------------- 16
9. Market Share ------------------------------------------- 17
10. Financials ---------------------------------------------- 17
11. Board of Directors ----------------------------------- 18
12. Operating Officers ----------------------------------- 19
13. Shareholders ----------------------------------------- 10
PART TWO: ENVIRONMENTAL SCANNING ----------- 11
1. External Environment -------------------------------- 12
1.1. Natural Environment ------------------------------ 12
1.2. Societal Environment (STEEP Analysis) ------- 13
1.3. Task Environment ---------------------------------- 14
1.3.1. Competition Analysis (Industry Matrix) ---- 15
1.3.2. Industry Analysis (Porter’s Five Forces) ---- 16
1.4. External Factor Analysis Summary (EFAS) --- 17
2. Internal Environment -------------------------------- 18
2.1. Corporate Structure ------------------------------- 18
2.2. Corporate Culture ---------------------------------- 18
2.3. Corporate Resources ------------------------------- 19
2.3.1. Inbound Logistics -------------------------------- 19
2.3.2. Operations ----------------------------------------- 20
2.3.3. Outbound Logistics ------------------------------ 22
2.3.4. Procurement -------------------------------------- 22
2.3.5. Customer Service -------------------------------- 22
2.3.6. Marketing ------------------------------------------ 23
2.3.7. Sales ------------------------------------------------- 25
2.3.8. Technology Development ---------------------- 25
2.3.9. Finance --------------------------------------------- 26
2.3.10. Human Resource Management -------------- 27
2.3.11. Firm Infrastructure ---------------------------- 27
2.3.12. Worldwide Presence --------------------------- 27
2.4. Competencies ---------------------------------------- 28
2.4.1. Core competencies ------------------------------- 28
2.4.2. Distinctive Competencies ---------------------- 28
2.4.3. VRIO Framework --------------------------------- 30
2.4.4 Sustainability -------------------------------------- 30
2.5. Internal Factor Analysis Summary (IFAS) ----- 31
3. Strategic Factor Analysis Summary (SFAS) ----- 32
4. Situational Analysis (SWOT and TOWS) ---------- 33
PART THREE: STRATEGY FORMULATION ------------ 34
1. Corporate Strategy ----------------------------------- 35
1.1. Directional Strategy ------------------------------- 35
1.2. Portfolio Analysis (BCG Matrix) ----------------- 37
1.3. Parenting Strategy --------------------------------- 38
2. Business Strategy ------------------------------------- 39
3. Functional Strategy ---------------------------------- 40
PART FOUR: STRATEGY IMPLEMENTATION --------- 43
1.1. Change Management ------------------------------- 44
1.2. Crisis Management --------------------------------- 44
1.3. Functional Synergy --------------------------------- 45
PART FIVE: EVALUATION AND CONTROL ------------- 49
PART SIX: RECOMMENDATIONS ----------------------- 52
References ------------------------------------------------- 54
 PART ONE:

CURRENT SITUATION

1
1. Company Overview

Toyota Motor Corporation (TMC) is a Japanese multinational automotive manufacturer headquartered

in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on August 28, 1937.
The company was originally founded as a spinoff of Toyota Industries Corporation (TIC), a machine
maker started by Sakichi Toyoda, Kiichiro's father. Both companies are now part of the Toyota Group,
one of the largest conglomerates in the world. While still a department of TIC, the company developed
its first product, the Type A engine, in 1934 and its first passenger car in 1936, the Toyota AA.

Origin Country Japan

Founder Kiichiro Toyoda
Founded 1937
Headquarters Toyota City, Japan
Employees in 2023 375,235
Annual Revenue in 2023 279.278 billion USD
Net Income in 2023 25.366 billion USD
Market value in 2023 237.73 billion USD
Total Asset Size in 2023 552.46 billion USD
Market Cap in 2023 233.30 billion USD

After World War II, Toyota learned from American automakers and companies, leading
to the development of The Toyota Way and Toyota Production System (TPS). This
transformation transformed Toyota into an industry leader, with Kiichiro Toyoda
playing a crucial role in shaping production methods and business philosophy.
His commitment to quality, efficiency, and continuous improvement laid the
foundation for the Toyota Production System (TPS), which became renowned for its
principles of lean manufacturing and Just-in-Time production.
Kiichiro Toyoda passed away on March 27, 1952, but his legacy continues to influence
Toyota's approach to manufacturing, innovation, and business management.

Toyota capitalized on the growing Japanese economy in the 1960s to sell vehicles to the middle class,
leading to the development of the Toyota Corolla, the world's best-selling automobile. As one of the
largest automakers globally, Toyota produces over 10 million vehicles annually.
Toyota was praised for being a leader in the development and sales of more fuel-efficient hybrid electric
vehicles, starting with the introduction of the Toyota Prius in 1997. Toyota now sells more than 40 hybrid
vehicle models around the world. More recently, Toyota has also been criticized for being slow to
adopt all-electric vehicles and focusing on the development of hydrogen fuel cell vehicles, like
the Toyota Mirai, a technology that is costlier and has fallen far behind electric batteries.

2
2. Vision

Toyota’s vision statement is “Creating Mobility for All”.

To achieve the aims of this corporate vision, the company
states that it strives to raise the quality and availability of
mobility. Toyota’s vision statement has the following
elements: creation as the means, mobility as the output, and
every person as a target customer.

3. Mission

Toyota’s mission statement is “Producing Happiness for All”.

The company states that it aims to achieve the goals of this
corporate mission by addressing the challenges of mobility as
a mobility company. Toyota’s mission statement has the
following elements: production as the means, happiness as
the output, and every person as a target customer.

4. Value

Toyota is committed to fostering imagination and fostering

mobility for all through Monozukuri (manufacturing). This
cycle is driven by both tangible and intangible aspects, with
imagination fueling Monozukuri and sparking new ideas. To advance this cycle, Toyota collaborates with
stakeholders and partners, combining their strengths to create unique value and elevate each other.
This is “The Toyota Way”.

5. Toyoda Principles

The Toyoda Principles, or Five Main Principles of Toyoda, have since been handed
down to every Toyota Group company and serve as guidelines for all employees.

3
6. Objectives

Toyota’s general objectives align with its corporate vision and mission. Toyota is focused on providing
world-class quality and services, reducing costs through waste deduction, maximizing profit, and
improving its products and internal processes to ensure that it fully satisfies its customers.

Current objectives:
• To produce 190,000 battery-powered vehicles in 2024 to carry out its electrification plans. The EV
production target could make Toyota a stronger competitor to global EV segment leaders Tesla and
BYD.
• To triple its electric vehicle production target in 2025 to 600,000 vehicles.
• To launch an electrified version of every Toyota and Lexus model sold globally by 2025.
• To produce battery-powered vehicles (with a range of 1,000 kilometers) in 2026. (The current range is
250–350 km.)
• To introduce solid-state batteries for 2027–2028 model-year electric vehicles (EVs). The batteries
currently in development could offer a driving range that is 50% greater than the battery-electric
vehicles on the road today. Solid-state batteries will have a significantly longer lifespan compared to
current lithium-ion batteries, potentially lasting well beyond 15 years.
• To mass-produce solid-state batteries by 2027 or 2028, in partnership with Energy Group Idemitsu
Kosan to jointly develop and produce the solid-state battery material.
• To invest more than $70 billion in electrification by 2030, with hybrid and fully electric models
• The Toyota Environmental Challenge 2050 aims to reduce the negative impact of manufacturing and
driving vehicles as much as possible.

• To reduce global average GHG emissions from new vehicles by 33.3% by 2030 and by more than 50%
by 2035. In the U.S., Toyota has targeted 70% of electrified new vehicle sales (excluding performance
vehicles) by 2030.
• To achieve carbon neutrality for CO2 emissions at global manufacturing plants by 2035.
Complete set-up of 15 model facilities for appropriate treatment and recycling of end-of-life vehicles by
2025. (Toyota Global 100 Dismantlers Project.)
• To establish a safe and efficient system for battery 3R (rebuilt, reused, and recycled), eyeing the
widespread use of electrified vehicles by 2025. (Toyota Global Car-to-Car Recycle Project.)
• To develop technologies to utilize recycled materials (especially plastics) following the conditions in
each region by 2025.
• To complete the establishment of battery collection and recycling systems globally by 2030.
• To complete water quality impact assessments by 2030 at each of the 22 plants in North America,
Asia, and Europe where water is discharged directly into a river.

4
7. Strategies

Toyota’s competitive strategy is a combination of

the cost leadership strategy for the economy and
mid-range models and the differentiation strategy
for the luxury models. Cost leadership entails
minimizing the cost of operations and maintaining
competitive selling prices that add to competitive
advantages and the business strengths shown in
the SWOT analysis of Toyota. On the other hand,
the differentiation strategy requires developing
business and product uniqueness to ensure the
company’s competitive advantage over other
automakers, such as General Motors, Volkswagen,
Tesla, and Ford. The combination of these
strategies supports Toyota’s corporate strategy
and global reach in all market segments.

Business Model (Quality and Lean Model): 90% of Toyota’s revenue comes from automotive sales, but
the company also generates revenue from other operations, such as financial services, investments, and
machinery.

5
Quality: Toyota invests in development, design, production, and after-sales to maintain top quality. That
has put the brand among the top automotive ones in terms of reliability, quality, and durability.
Speed and Dependability: Toyota has managed to reorganize its production flow by focusing on
simplicity, resulting in timely delivery. Now, the company has a Just-in-Time production system with a
controlled cost structure.
Suppliers: Toyota aims to build a strong foundation at all stages of the supply chain, from development
to after-sales. To achieve that, the company has built close and trustworthy relationships with most of
its suppliers, thus creating a long-term partnership and, in this way, achieving cooperation, cost
reduction, and quick response to fluctuations and innovations.
Wide Range and Cost: Toyota’s business model is not based on just one car; instead, it provides a wide
range of products (Corolla, Camry, Fortuner, Landcruiser, and Prius) to customers since the company
produces different models for different markets in a well-established flexible production system.
Besides, Toyota has managed to manufacture high-quality vehicles at reasonable prices. The company
has tested and implemented several initiatives to reduce its operating costs and focused on local
production capacities to meet the customers’ demands.

8. Policies

The Toyota Corporate Policy was released in January 1963 and included a basic policy, a long-term
policy, and an annual policy. The company's long-term policy outlined the targets for establishing
Toyota as a world leader and the key measures to be taken to achieve these goals, while the annual
policy described goals and the key measures to be taken during the fiscal year in question.
The basic policy expressed the company's fundamental view:
• To develop Toyota into a world leader by gathering resources from within and outside the company.
• To develop Toyota's reputation as a quality leader through an uncompromising focus on "good
thinking, good products.".
• To contribute to the development of Japan's economy by achieving a mass production system and
low prices.
• To honor the language and spirit of the law of every country and region and undertake open and fair
business activities to be a strong corporate citizen of the world.
• To respect the culture and customs of every country and region and contribute to economic and
social development through corporate activities in their respective communities.
• To dedicate their business to providing clean and safe products and to enhancing the quality of life
everywhere through all their activities.
• To create and develop advanced technologies and provide outstanding products and services that
fulfill the needs of customers worldwide.
• To foster a corporate culture that enhances both individual creativity and the value of teamwork
while honoring mutual trust and respect between labor and management.
• To pursue growth through harmony with the global community via innovative management.
• To work with business partners in research and manufacturing to achieve stable, long-term growth
and mutual benefits while remaining open to new partnerships.
• To promote circular economy, through the "establishment of model social systems" to prepare for
the mass generation of end-of-life vehicles. Toyota is also promoting "sustainable recycling and
other businesses" that regard cars as a valuable resource.

6
9. Market Share

In 2022, the ranking of the world’s largest car brands was topped by Toyota with a market share of around
11.5 percent, surpassing the 2020 incumbent, the Volkswagen Group.

10. Financials

Return on Investment (ROI):

Toyota achieved a return on average invested assets (ROI)
of 3.74% in its fourth quarter of 2023. The investments made
during the 12 months ending in the fourth quarter of 2023 are
valued at 456 billion USD. ROI fell compared to the third quarter
of 2023, despite the net income growth of % from the third
quarter of 2023. Within the consumer discretionary sector,
Toyota achieved the highest return on investment.

Financial Profitability:
Financial Indicator
Net
Income
margin
Fiscal before Toyota Motor
from Return on Return on
Year Operating income Corporation (TMC)
income assets Equity
margin taxes to shareholders' equity
before (ROA) (ROE)
total ratio
income
assets
taxes
FY2023 7.3% 9.9% 5.2% 3.5% 9.0% 38.1%
FY2022 9.5% 12.7% 6.1% 4.4% 11.5% 38.8%
FY2021 8.1％ 10.8％ 5.0％ 3.9％ 10.2％ 37.6％
FY2020 8.0％ 9.4％ 5.2％ 3.8％ 10.0％ 38.2％
FY2019 8.2% 7.6% 4.4% 3.7% 9.8% 37.3%

Revenue Sources:
Vehicle Sales: The bulk of Toyota’s revenue (approximately 88%) is derived from the sale of passenger
and commercial vehicles, including automotive parts.
Financial Services: Toyota Financial Services, a subsidiary, generates revenue by financing automotive
loans, credit cards, and vehicle leasing (approximately 7.9%).
Other Services: The company also earns a portion of its revenue (approximately 4%) through
investments in various industries and stakes in other automotive manufacturers.

7
11. Board of Directors

8
12. Operating Officers

9
13. Shareholders

Toyota Motor Corporation (TMC) is a publicly traded company with shares listed on the London Stock
Exchange, the Nagoya Stock Exchange, the New York Stock Exchange, and the Tokyo Stock Exchange,
where its stock is a component of the Nikkei 225 and TOPIX Core30 indices.

As of 2022, Toyota Motor Corporation (TMC) produces vehicles under four

brands: Daihatsu, Hino, Lexus, and the namesake Toyota. The company also holds a 20% stake in Subaru
Corporation, a 5.1% stake in Mazda, a 4.9% stake in Suzuki, a 4.6% stake in Isuzu, a 3.8% stake in Yamaha
Motor Corporation, and a 2.8% stake in Panasonic, as well as stakes in vehicle manufacturing joint
ventures in China (FAW Toyota and GAC Toyota), the Czech Republic (TPCA), India (Toyota Kirloskar), and
the United States (MTMUS).

10
 PART TWO:

ENVIRONMENTAL

SCANNING

11
1. External Environment

Understanding and managing the interaction between the automotive industry and the natural, wildlife,
and physical resources in Japan is essential for sustainable and resilient operations. Additionally, the
focus on environmental sustainability, energy efficiency, and disaster resilience are key considerations
for companies operating in the Japanese automotive sector.

1.1. Natural Environment

Physical Resources: Toyota's strategic external analysis assesses the sustainability and availability of
physical resources like water, energy, and raw materials, considering potential threats and opportunities
for efficient use.
Toyota uses a variety of environmental materials in its manufacturing processes to promote
sustainability and reduce its environmental impact. Some examples of these materials include:
• Recycled Materials: Toyota uses recycled materials in manufacturing, including plastics and metals,
to reduce resource demand and waste, enhancing its vehicle components, interiors, and packaging.
• Bio-based Plastics: Toyota is exploring bio-based plastics as a sustainable alternative to traditional
petroleum-based plastics, derived from renewable sources and featuring lower carbon footprints in
vehicle parts.
• Sustainable Fabrics: Toyota uses recycled polyester in its vehicles, reducing environmental impact
compared to conventional textiles made from plastic bottles or other post-consumer waste
materials.
• Low VOC Materials: Toyota is reducing its environmental impact by using low-VOC materials in its
manufacturing processes, including adhesives, paints, and coatings, to improve indoor air quality
and reduce emissions.
• Lightweight Materials: Toyota prioritizes lightweight materials in vehicle manufacturing to enhance
fuel efficiency and reduce emissions, ensuring safety and performance while reducing overall vehicle
weight.
• Sustainable Packaging: Toyota utilizes sustainable packaging solutions, including recyclable or
biodegradable materials, to minimize waste and contribute to resource conservation and overall
waste reduction in its manufacturing processes and supply chain.
• Eco-Friendly Paints: Toyota utilizes eco-friendly manufacturing processes, coatings,
and advanced technologies to reduce hazardous chemicals, emissions, and waste,
while also investing in advanced painting technologies.

12
Climate: Toyota's strategic external analysis includes consideration of the impact of climate change on
its operations. This includes assessing the potential risks and opportunities associated with extreme
weather events, changing climate patterns, and the need for more sustainable and environmentally
friendly products. Climate and weather conditions influence vehicle design, functionality, and
manufacturing processes.

Wildlife: Toyota is committed to sustainability, assessing the impact of its operations on wildlife and
natural habitats. It uses eco-friendly technologies and reduces carbon emissions. Toyota also adheres to
emissions standards, waste management regulations, and energy efficiency requirements to minimize
its impact on local flora and fauna.

1.2. Societal Environment (STEEP Analysis)

This analysis provides a detailed examination of the various external factors affecting Toyota across
different dimensions.

Sociocultural Factors:
Opportunities: Increasing interest in hybrid and electric cars provides growth opportunities, and Toyota
can cater to changing customer preferences for environmentally friendly vehicles.
Threats: The widening wealth gap poses a potential decline in demand for cars in some market
segments.

Technological Factors:
Opportunities: Increasing e-commerce applications provide opportunities for improved online sales,
and growing use and dependence on mobile technology present opportunities for enhanced customer
engagement.
Threats: Cybercrime poses a threat, requiring suitable technological security measures.

Economic Factors:
Opportunities: The weakness of the yen against the US dollar allows for improved exports from Japan,
the growth of the US economy creates opportunities for business expansion, and rapid growth in
developing countries offers opportunities for increased revenues.

Ecological Factors:
Opportunities: Climate change concerns provide opportunities for more environmentally friendly
products.
Declining global oil reserves create opportunities for innovation in fuel efficiency, and increasing
emphasis on business sustainability offers opportunities for improved brand image.

Political Factors:
Opportunities: Political stability in major markets provides growth opportunities; free-trade agreements
offer improved market penetration prospects; and governmental support for eco-friendly products
presents opportunities for innovation. Improving intellectual property laws offers growth opportunities,
and increasingly complex environmental and consumer laws provide opportunities for higher-quality
products.

This analysis suggests that Toyota's favorable external environment offers opportunities for
technological advancements, business operations, eco-friendly vehicle preferences, and
economic conditions. However, the company must address potential threats like wealth
gaps and cybercrime risks to maintain growth and success in the global automotive
market.

13
1.3. Task Environment

The task environment in the car industry in Japan is influenced by various factors that impact the
operations and strategies of automotive companies in the country. Here are some key aspects of the
task environment in the Japanese car industry:

Competitive Landscape: The Japanese car industry is highly competitive, with major players like
Toyota, Honda, Nissan, and Subaru. Competition among these companies, as well as competition from
international automakers, influences product innovation, pricing strategies, and market share.

Technological Advancements: Japan is known for its innovation in automotive technology. The task
environment is shaped by rapid advancements in areas such as electric vehicles (EVs), autonomous
driving, and connectivity. Companies need to stay at the forefront of these technologies to remain
competitive.

Purchasing Power of Consumers: Different demographic groups have varying levels of purchasing
power. For example, younger consumers are more sensitive to price, while older consumers prioritize
features and comfort over price.

Supplier Relationships: Strong relationships with suppliers are essential for the smooth operation of
automotive companies. Companies need a stable supply chain for components and materials to
maintain production efficiency.

Global Markets: Japanese automakers are global players, and the task environment extends beyond
domestic borders. Changes in global markets, trade policies, and geopolitical factors can impact the
industry.

Labor Relations: The relationship between automotive companies and labor unions can impact
production costs, work conditions, and overall industry stability.

Semiconductor Shortages: The industry has been plagued by shortages of crucial semiconductor chips,
leading to major production cuts. The industry lost around 210 billion USD in revenue in 2021 due to this
issue.

Other Parts Shortages: Apart from chips, the industry is also having trouble getting other parts and raw
materials. This is due to various reasons, including COVID-related plant shutdowns by suppliers,
logistical problems, and difficulty filling jobs.

Skyrocketing Car Prices: Due to product shortages, automakers worldwide produced about 8 million
fewer vehicles than planned last year. This has resulted in limited choices for buyers and record-high car
prices.

Understanding and navigating these factors are essential for companies operating in the Japanese car
industry. Adapting to changes in the task environment is crucial for long-term success in this dynamic
and competitive market.

14
 1.3.1. Competition Analysis (Industry Matrix)

Toyota Volkswagen Honda Hyundai

Key Success Factors
Weighted Weighted Weighted Weighted
Weight Rating Rating Rating Rating
Score Score Score Score
Advertising 0.05 3 0.15 2 0.1 1 0.05 3 0.5
Domestic Market
0.1 3 0.3 1 0.1 2 0.2 1 0.1
Penetration
Customer Service 0.1 4 0.4 2 0.2 3 0.3 2 0.2

Product Variety 0.15 4 0.6 3 0.45 2 0.3 3 0.45

International Market
0.05 4 0.2 2 0.1 3 0.15 1 0.2
Penetration
Employee Dedication 0.1 4 0.4 3 0.3 2 0.2 3 0.3

Financial Profit 0.1 3 0.3 2 0.2 1 0.1 2 0.2

Customer Loyalty 0.1 4 0.4 3 0.3 1 0.1 3 0.3

Market Share 0.05 4 0.2 3 0.15 1 0.05 3 0.2

Product Quality 0.05 4 0.2 3 0.15 2 0.1 3 0.15

Top Management 0.1 4 0.4 3 0.3 2 0.2 2 0.3

Price
0.05 2 0.1 3 0.15 1 0.05 3 0.2
Competitiveness
Total 1 3.65 2.5 1.8 3.03

15
1.3.2. Industry Analysis (Porter’s Five Forces)

Porter’s five forces model has been applied to Toyota to analyze the competitive position of the
company as follows:
Effect
Porter’s Five Force Summarized Review
Low Medium High
Barriers in this industry will not permit new
entrants to enter the sector easily, and it
needs huge capital. Therefore, new
Threat of New Entrants companies are unable to invest a huge
amount of capital. Even the global
presence and brand value of Toyota are
impossible to replace for new companies.
There are some substitutes for Toyota
products that customers can switch to.
Switching costs for cars are less than for
Toyota. Therefore, the risk is medium for
Threat of Substitutes
the company. However, the company has
started producing cars that are fuel-
efficient to reduce customers’ costs and
hold them.
The bargaining power of customers is high
for Toyota. Because of the lower switching
costs of other companies, customers can
switch to other companies’ services.
Bargaining Power of Buyers Customers choose a suitable option for
themselves. To maintain customers’
demand, Toyota delivers the latest cars,
which helps them maintain their customer
base.
The bargaining power of suppliers in front
of Toyota is weak. It has many suppliers
globally and, therefore, can manage
Bargaining Power of mechanisms from any of them. However,
Suppliers the semiconductor shortages have been a
real threat to Toyota’s operations as well
as the whole automotive industry in the
past two years.
Ford, Volkswagen, Suzuki, Nissan, Honda,
General Motors, BMW, and Mercedes are
the key competitors of Toyota. All these
Competitive Rivalry companies are investing more in R&D and
focusing on customers’ convenience.
Therefore, Toyota faces high competition
in the industry.

16
 1.4. External Factor Analysis Summary (EFAS)

Weighted
External Factors Weight Rating Comments
Score
Toyota's extensive vehicle lineup, offering diverse options in size,
Bargaining Power of Toyota
0.1 3 0.3 features, and price, provides buyers with flexibility, as does Toyota’s
as a supplier
commitment to quality and innovation.
Attractive pricing compared to competitors strengthens Toyota's
Competitors Pricing 0.1 4 0.4
position and impacts buyer bargaining power.
Growing environmental awareness influences buyer preferences for
Environmental Concerns 0.075 3 0.225 fuel-efficient or eco-friendly vehicles. So, Toyota's focus is on hybrid
and electric vehicles.
The weakness of the yen against the US dollar allows for improved
Economic Factors 0.075 4 0.3
exports from Japan, which is vital for market flourishing.
Opportunities

Increasing interest in hybrid and electric cars provides growth

Sociocultural Factors 0.05 3 0.15 opportunities, and Toyota can cater to changing customer
preferences for environmentally friendly cars.
Increasing e-commerce applications provide opportunities for
improved online sales, as does the growing use and dependence on
Technological Factors 0.025 4 0.1
mobile technology. The growth in automation manufacturing and
the expansion of autonomous vehicles.
Climate change concerns provide opportunities for more
Ecological Factors 0.025 3 0.075 environmentally friendly products. Declining global oil reserves
create opportunities for innovation in fuel efficiency.
Japanese culture, which respects time, is a great opportunity to
Culture 0.025 5 0.125
support the Just-in-Time operation strategy.
Strategic Alliances and Collaborative efforts through strategic alliances and mergers impact
0.025 4 0.1
Mergers competitive dynamics.
Toyota relies on a limited number of suppliers for critical
Number of Toyota Suppliers 0.05 4 0.2 components; the bargaining power of those suppliers could be
higher.
It is costly or challenging for Toyota to switch from one supplier to
Switching Costs 0.025 3 0.075
another; suppliers may have more bargaining power.
Unique or Differentiated
As suppliers provide unique or specialized components critical to
Inputs from Toyota 0.05 4 0.2
Toyota's products, their bargaining power increases.
Suppliers
While personal vehicles remain a primary mode of transportation for
Threat of Vehicle
0.025 2 0.05 many consumers, various alternative transportation options, such as
Substitutes
ride-sharing services, public transportation, etc.
Economic conditions, like increasing oil costs, including interest
Economic Factors 0.05 4 0.2 rates and disposable income, impact buyers' purchasing power and
Threats

widen the wealth gap.

Substantial capital is needed to start manufacturing and R&D.
Threat of New Entrants in
0.05 1 0.05 Efficient costs require economies of scale. New entrants face
Car Manufacturing
challenges in building an efficient supply chain.
The vehicle market is saturated, featuring a diverse range of car
models and brands that intensify the competitive landscape.
Competitive Rivalry 0.05 4 0.2
Ongoing innovation in automotive technology significantly
contributes to competitive dynamics.
The semiconductor chip shortages caused significant production
Semiconductor Shortages 0.05 3 0.225
cuts, resulting in massive revenue losses.
Due to earthquakes in Japan, there is a high risk of disrupting the JIT
Natural Catastrophes 0.05 4 0.2
operation strategy by delaying spare parts from suppliers in time.
The lack of raw materials in Japan makes importing from other
Physical Resources 0.025 4 0.1
countries mandatory.
Regulatory Challenges 0.025 3 0.075 Labor laws or other regulations related to importing activities.
Cybercrime poses a threat, as does the technology race, which
Technological Factors 0.05 4 0.2
makes the vehicle industry almost a hypercompetitive market.
Total Score 1 3.475

17
2. Internal Environment

2.1. Corporate Structure

The organizational structure of Toyota Motor Corporation (TMC) is designed to empower multinational
business operations, providing competitive advantages in the global automobile market. As a leading
automaker, Toyota strategically utilizes its organizational structure to support business goals and align
with its strategic direction. This structure, linked to traditional Japanese corporate frameworks, has
contributed significantly to Toyota's success.
The divisional organizational structure, implemented in response to safety issues and recalls starting in
2009, replaced the previous centralized global hierarchy resembling a spoke-and-wheel structure. The
key characteristics of Toyota's current organizational structure include:

Global Hierarchy: Toyota maintains its global hierarchy despite reorganization, increasing regional and
business unit heads' decision-making power. All business unit heads report to Japan's global
headquarters, facilitating strategic objectives dissemination.

Geographic Divisions: Toyota's organizational structure consists of eight regional divisions, allowing for
product and service improvement based on regional market conditions. The company's marketing mix
(4P) aligns with local car types, market demand, and customer preferences, ensuring global market
opportunities are met.

Product-based Divisions: Toyota's organizational structure comprises four product-based divisions:

Lexus International, Regional Divisions, and Unit Center. These divisions support brand development
and product line growth, translating Toyota's competitive strategy and growth strategies, and
facilitating business competitiveness and innovation.

Toyota's organizational structure enhances flexibility, regional responsiveness, and efficient decision-
making, contributing to global success. It fosters business resilience, innovation, and growth in the
automotive industry, reducing central control.

2.2. Corporate Culture

Toyota's organizational culture, known as the "Toyota Way," is defined by several key principles and
values that have contributed to the company's success. Toyota's organizational culture can be
summarized as follows:

Continuous Improvement (Kaizen): Toyota's culture emphasizes Kaizen, a commitment to continuous

improvement through small, incremental changes in processes, products, and systems, encouraging
employees to identify and enhance efficiency and quality.

Respect for People (Respect): Toyota values respect for people at all organizational levels, valuing their
expertise, fostering collaboration, and valuing team contributions, extending relationships with
customers, suppliers, and the community.

Teamwork and Collaboration: Toyota's culture emphasizes teamwork, valuing cross-functional teams,
suppliers, and stakeholders for problem-solving and achieving common goals, extending beyond
individual departments.

Long-Term Perspective: Toyota prioritizes sustainable growth and long-term success in

decision-making, focusing on strategic planning, investment, and relationship-building,
rather than short-term financial gains.
18
Customer First (Genchi Genbutsu): Toyota's "Genchi Genbutsu" cultural principle emphasizes
understanding customer needs through direct observation and engagement, resulting in products and
services that truly meet customer expectations.

Decentralized Decision-Making (Nemawashi): Toyota's culture emphasizes decentralized decision-

making through "Nemawashi," involving consensus-building and stakeholder support for smoother
change implementation and aligning with its collaborative nature.

Learning and Adaptation: Toyota fosters a culture of continuous learning and adaptation, recognizing
mistakes as opportunities for improvement and incorporating lessons into future practices for resilience
and competitiveness.

These cultural aspects are interconnected, and they collectively contribute to Toyota's overall approach
to business.

2.3. Corporate Resources

The Toyota value chain is a model

that ideally explains the value
chain analysis. It describes the
flow of activities involved in
creating and delivering a product
or service to the customer. It is
best known as an approach to
understanding how companies
create value for their customers.
It includes two distinct types of
value chain activities:

Primary Activities: These are directly linked to the customer. They include product development,
production, distribution, and sales. Primary activities are often referred to as value chain activities
because they are the most important in a chart.

Support Activities: These are the baseline of Toyota's strategy of vertically integrating its manufacturing
processes. Ultimately, it means that Toyota owns all stages of production, from raw materials to finished
products. It allows them to control costs better and ensure quality control at every stage in their value
chain.

2.3.1. Inbound Logistics

Inbound logistics is receiving and transporting goods to a distribution

center or warehouse. It includes all activities of a product entering a
warehouse and when it is ready for sale or use by employees. Inbound
logistics include:

Receiving: The first step in this process, receiving, involves taking

possession of items from their point of origin. You must have sufficient
space available to store all incoming shipments properly. If not, they
may become damaged or even lost due to insufficient storage space at the corporation.

Inbound Transportation: Moving larger quantities is more complex than moving smaller
products. So, several stages may be involved in processing these shipments,
19 depending on their size.
2.3.2. Operations

Operations are the center of gravity of the Toyota

value chain.
Toyota is a global brand, with its operations spread
throughout the world. It has its headquarters in
Japan. The brand serves its customers across the
globe through a large and global distribution
network. Apart from its several manufacturing sites,
the brand has several distribution centers for spare
parts at various locations throughout the globe. The
company sells its products in 170 countries globally.
Toyota has established 71 manufacturing companies globally and 20 research and development centers.
After World War II, Toyota made significant efforts to meet the advancements required in the Japanese
automobile to compete with its Western rivals, particularly the United States, which used mass
production systems due to their significant market, but in Japan, the market at that time was relatively
small, so mass production was not the appropriate strategy, so they developed production systems to
respond to customer needs in the small lot production of many products at competitive prices.

Toyota pioneered numerous techniques for its well-known Toyota Production System (TPS), which is
built on two pillars: the Just-in-Time System and Jidoka. The main goal was to reduce production costs
and increase productivity by simply eliminating unnecessary functions and practices in factories and
reducing the waste of goods.

Just-in-Time Inventory (JIT): This is a management strategy that directly aligns raw-material orders
from suppliers with production schedules. Companies use this inventory strategy to increase efficiency
and reduce waste by receiving goods only as needed for the manufacturing process, which lowers
inventory costs. This method necessitates that the producer accurately forecast demand.
Therefore, the sequence is from order to assembly to processing to material receiving. As a result, if no
new orders are placed, no new material will be received, resulting in a pull system.

20
Kanban: This is a Japanese term meaning signboard or card, which is used to control the flow of
materials and information in a Just-in-Time system.

Jidoka: This is a principle implemented in lean manufacturing where machines automatically stop
working upon detecting an abnormal condition and operators try fixing the defect to prevent a
recurrence of the issue. The lean jargon originates from Japanese, which translates in English as
“autonomation”, a combination of the words autonomous and automation. Jidoka means automation
with a human touch, a key pillar in the Toyota Production System (TPS), which later inspired the House
of Lean. The concept of integrating intelligence into machinery makes it easier for a single operator to
run multiple machines with minimal effort and for companies to become more profitable as productivity
increases.

Andon: It is a Japanese term meaning light or “lamp.” In lean manufacturing, an Andon refers to a tool
that is used to inform and alarm workers of problems within their production process. It is an integral
part of applying Jidoka in the workplace.

In the Just-in-Time production method, the production lead time can be greatly reduced by making sure
that all processes are producing only the necessary parts at the necessary time and have only the
minimum stock in order.
Therefore, the following points are to be implemented in the production system:
Withdrawal by subsequent processes: Withdraw the required parts from process "inventory” to
subsequent process “production area" once they have been reutilized in the production area. Parts are
being produced as per various processes in the exact required numbers and exact timeline for
completing the assembly of a vehicle.
One Piece Production and Conveyance: only
produces and conveys a single piece of unit for the
final assembly line. Simply put, it meant no-lot
production and no-lot conveyance.
Leveling of Production: All the processes must
have a small amount of production and
conveyance. To ensure Just-in-Time success,
priority should be given to the final assembly line
so that it can level production. The final assembly
lines at Toyota are mixed product lines.
Elimination of waste from overproduction: Toyota
sees this stock on hand, leading to a collection of
troubles and bad causes. Most of the unwanted
stock on hand is caused by overproducing the
item by the required amount, which is considered
the worst waste in the Toyota Production System
(TPS), leading to an overall increase in the
production cost.

21
2.3.3. Outbound Logistics

Outbound logistics is moving raw materials, parts, and subassemblies to the assembly point. Shipping
these to customers is known as "turnaround" or "first mile". It involves taking raw materials from one
location and converting them into finished goods ready for shipment. The outbound logistics of the
Toyota value chain consist of three main functions: supply chain management, logistics services, and
distribution support. Toyota has parts and logistics centers in various nations around the globe. The
company has 14 parts logistics centers and 7 vehicle logistics centers around the globe. It ships
thousands of parts and orders each day from its network of warehouses and distribution centers.

2.3.4. Procurement

Toyota's procurement department works within its Supply Chain Management System (SCMS). It
ensures that suppliers provide quality products at competitive prices while maintaining uniformity
across each stage of their production process. Besides that, it helps to conserve time or materials on
substandard items.
Toyota procures raw materials from thousands of suppliers around the world. In 2009, the brand
formulated a specific Toyota Way of Purchasing that lays down the policies and principles that the
procurement staff must follow. Through its procurement strategy, Toyota has always worked towards
contributing to local economies.

2.3.5. Customer Service

Toyota's core value is customer service. It is not only the responsibility of employees but also customers
to report issues and concerns as soon as possible so that the staff can address them. Toyota expects
customers to provide feedback on their experiences to improve aspects such as service delivery speed
and quality. They also want users to understand how certain services affect other aspects of the vehicle,
such as performance.

22
2.3.6. Marketing

Toyota is a global brand, but the level of competition in the industry is very high. It is facing stiff
competition from other vehicle brands. To retain its market share and customer base, Toyota makes
major investments in marketing and promotions. Toyota uses a mix of traditional and modern
advertising mediums to promote its brand and products. Apart from its website and social media, the
brand also uses its sales and distribution channels for marketing. Events like races and motor shows are
also an important method of promotion for Toyota. In 2015 and 2016, the brand invested more than 4
billion USD in advertising.

Brand and Corporate Reputation: One of the most critical strengths of Toyota is its brand equity. Toyota
is a brand that has always focused on winning consumers' hearts and trust. In the vehicle industry, trust
and a good brand image are more important than everything else.

Marketing Mix (4Ps): The marketing mix (4Ps) of Toyota Motor Corporation (TMC) reflects marketing
strategies for reaching the target market of car buyers. As one of the leading firms in the global
automotive industry, the company deals with diverse customer preferences in regional and local
markets. Toyota’s target customers in the automobile industry range from drivers in their early 20s to
retired people who still love driving. The Toyota brand is highly popular in the worldwide target market,
although the major market is in North America and Japan. Toyota’s marketing mix determines the
strategic implementations for the company’s product mix, place or distribution, marketing
communications or promotion mix, and pricing (4Ps):

• Toyota’s Products (Product Mix): Toyota's marketing mix focuses on targeting car buyers or drivers
through product families and lines that cater to their transportation needs. The product mix includes
automobiles, spare parts, and engines, enhancing innovation and emphasizing fuel efficiency to
attract buyers and gain a larger share of the automotive market.

• Toyota's Pricing (Price Mix): Toyota's pricing strategy varies based on product line and car model,
utilizing a combination of market-oriented and premium pricing. Market-oriented pricing,
particularly for popular products like sedans and trucks, is competitive. On the other hand, premium
pricing considers factors like quality, branding, and perceived value, resulting in higher selling prices
for the company.

• Toyota's Distribution (Place Mix): Dealerships are the main places for distributing the company’s
products. This element of the marketing mix determines the venues where customers can access the
firm’s products. Dealerships and retailers are the main players in Toyota’s distribution strategy.
Toyota dealerships are where most sales transactions occur. Some retailers, like auto supply shops,
also sell the company’s products, such as spare parts and accessories.

• Toyota’s Promotion (Promotion Mix): The automotive company’s promotion strategy involves all
the tactics of marketing communications. This 4P element pertains to how the firm communicates
with the target market. As part of its promotional strategies, the brand has launched a specialized
marketing company with activities like micro-influencer marketing, owned media, and social media
promotions to connect and relay their messages directly to customers.

23
The Ansoff Matrix for Toyota:

Toyota used the Ansoff Matrix as a framework to assess different generic strategies and decide how best to grow
its business in both existing and new markets by utilizing both existing and new products.

Market Penetration Product Development

Toyota pursues product development by
Market penetration involves increasing market
introducing new car models with innovative
share in existing markets by offering promotions,
features and technologies to meet changing
discounts, or expanding the distribution
consumer preferences and demands. Toyota has
channels. Toyota focuses on increasing sales of its
been investing in electric and hybrid vehicles as
popular models, such as the Camry or Corolla, by
part of its product development strategy to cater
targeting specific customer segments or offering
to the growing demand for eco-friendly
incentives to existing customers.
transportation solutions.
Market Development Diversification
While Toyota is primarily known for its
Toyota pursues market development by
automobiles, it has diversified into other areas
expanding into emerging markets where it
such as financial services (Toyota Financial
currently has a limited presence. Toyota has been
Services) and housing-related services (Toyota
focusing on expanding its operations in
Home). These diversification efforts allow Toyota
developing countries such as India and Brazil to
to reduce its reliance on the automotive industry
tap into their growing automotive markets.
and explore new revenue streams.

Push Strategies: Toyota promotes its products to wholesalers, retailers, and other intermediaries in the
distribution channel. Toyota provides incentives and support to encourage these intermediaries to
promote and sell its vehicles.

Pull Strategies: Toyota focuses on creating consumer demand for Toyota vehicles. This is achieved
through advertising, public relations, and other marketing efforts aimed at building brand awareness
and attracting customers to Toyota dealerships.

24
2.3.7. Sales

Toyota sells its vehicles in approximately 200 countries and regions.

Toyota’s primary markets for its automobiles are Japan, North America,
Europe, and Asia. The following table sets forth Toyota’s sales to
external customers in each of its geographical markets for each of the
past three fiscal years.
During fiscal 2023, 23.5% of Toyota’s automobile unit sales on a
consolidated basis were in Japan, 27.3% were in North America, 11.7%
were in Europe, and 19.8% were in Asia. The remaining 17.7% of
consolidated unit sales were in other markets.
Toyota estimates that annual worldwide vehicle sales totaled
approximately 81 million units in 2022.
Automobile sales are affected by several factors, including:
• Social, political, and economic conditions.
• Introduction of new vehicles and technologies.
• Costs incurred by customers to purchase and operate automobiles.
• Availability of parts and components that Toyota needs to manufacture its products.

These factors can cause consumer demand to vary substantially from year to year in different
geographic markets and individual categories of automobiles.

2.3.8. Technology Development

Toyota is a major vehicle brand known worldwide for its

exceptional engineering and technology. Apart from great
production technology, the brand has increased its investment
in technological innovation for growth. It has its research
centers and has entered partnerships with institutes like MIT and
Stanford for faster innovation. Every year, Toyota invests a large
sum in research and development for innovation in AI and robotics.
Toyota has always focused on engineering and innovation. The brand is known for producing perfectly
engineered vehicles. It is focusing on accelerating the development of a nice range of electrified vehicles.
Its eyes are set on the mobility of the future. The brand is also investing in the development of human-
centric and safe automated driving technology. In its 2017 annual report, Toyota notes, “Toyota has
established Toyota Research Institute, Inc., with Dr. Gill Pratt, one of the world’s foremost AI researchers,
as its CEO, and set up a related venture capital fund. Through these efforts, we are accelerating
initiatives in such areas as automated driving, AI, and robotics”. In this regard, Toyota has also partnered
with MIT, the University of Michigan, and Stanford University to carry out further research on automated
driving and robotics. Toyota has taken some smart steps in this area, which will prove beneficial for its
future. In 2023, it invested 1241.6 billion JPY (8.2 billion USD) in research and development.
Toyota has come far from making passenger cars that run on petrol or diesel to electric
vehicles known as hybrid vehicles. Toyota is a global leader in hybrid passenger vehicles
in terms of sales. The Toyota Prius is one of the top-selling hybrid passenger cars in the
world as of April 30, 2016.
25
2.3.9. Finance

Toyota's financial strategy is focused on supporting the company's long-term growth and profitability.
Toyota’s financial strategy has been successful in generating massive cash flow and maintaining a
healthy balance sheet. Toyota has also been able to invest in new growth opportunities, such as the
development of hybrid and electric vehicles.
Toyota Motor Corporation (TMC) reported earnings results for the second quarter
of 2023. For the second quarter, Toyota reported revenue of 11,434,786 million
JPY, compared to 9,218,232 million JPY in 2022.

By March 2024, Toyota is forecasting an 11% increase in operating profit to 3.36

trillion JPY (25.7 billion USD) for the year that started in April 2023.
Toyota's financial strategy is based on the following principles:

Focus on long-term profitability: Toyota is focused on generating sustainable

profits over the long term, rather than maximizing short-term profits. This
allows the company to invest in new technologies and products and weather
economic downturns.

Maintain a strong balance sheet: Toyota maintains a strong balance sheet

with low debt levels. This gives the company financial flexibility and allows it to
invest in new opportunities even during difficult economic times.

Invest in growth: Toyota invests heavily in new growth opportunities, such as

new technologies, products, and markets. This investment is essential for
Toyota to remain competitive in the global automotive industry.

Invest heavily in research and development: Toyota spends more than 10

billion USD on research and development each year. This investment allows
the company to develop new technologies and products that will help it stay
ahead of the competition.

Toyota has a global manufacturing footprint: Toyota manufactures vehicles

in over 28 countries around the world. This global footprint allows the
company to reduce costs and be timely and responsive to customer needs in
different markets.

Cohesive financial services business: Toyota Financial Services provides a

variety of financial services to Toyota customers, such as car loans and leases.
This business helps Toyota generate additional revenue and makes it easier for
customers to purchase Toyota vehicles.

26
2.3.10. Human Resource Management

To develop a strong value chain, Toyota focuses on its human resources department. The company has
excellent employees who can work together as a team and perform their duties effectively. By hiring
people with high moral values, Toyota ensures that all its products are produced to high-quality
standards. Toyota had 370,000 employees in 2021. The brand believes in a human-centric approach to
value creation and therefore focuses on the development of its human resources. It follows the
philosophy of human centered Monozukuri. In the automotive industry, smart and able human capital
can be a major source of competitive advantage.
On February 24, 2010, Akio Toyoda, in his testimony, mentioned, “At Toyota, we believe the key to
making quality products is to develop quality people. Each employee thinks about what he or she should
do, continuously making improvements, and by doing so, makes even better cars”.
In the calendar year 1986, from a labor force of 60,000, Toyota received 2.6 million improvement
proposals, 96 percent of which were implemented either by management or by the employees
themselves.
Nowadays, respecting the humanity of workers in most production shops is gaining international
interest. Toyota believes in creating an environment of the highest order that would be the foundation of
human respect. Toyota has given all its workers the right to stop the line on which they are performing
their work. Regardless of the length of the line, like in a final assembly, they are entitled to stop it if they
find any issues. In addition to issues or errors, if the worker is not able to keep up or finds a defect, he
can stop the entire assembly line by simply clicking on the stop button.

2.3.11. Firm Infrastructure

Firm infrastructure, also called organizational or business infrastructure, refers to a firm's physical and
human resources. It includes things like buildings, facilities, equipment, and vehicles. All the physical
assets that support a company's operations and its internal systems for managing people and
information collectively make up its infrastructure. It consists of financial instruments such as loans and
bonds to finance business operations and equipment such as computers, software licenses, and office
space.
Toyota has maintained a large infrastructure globally. From its headquarters in Japan to the North and
South Americas as well as Asia and Europe, Toyota has maintained an extensive presence throughout
the globe. Currently led by Akio Toyoda, the brand has an impressive presence in most of the major
markets in the world.
A Toyota value chain analysis is an excellent way to understand their business model. Toyota is known
for its quality products and services, which is why it has maintained a reputation for decades. A
company's strategy has always been about marketing and innovation, but it's also about maintaining
control over every aspect of the process. It actively monitors elements from raw materials to
manufacturing processes, all while keeping costs down as much as possible. For that reason, it helps to
keep prices low for consumers.

2.3.12. Worldwide Presence

Outside of Japan, as one of the world's largest automotive manufacturers by production volume, Toyota
has factories in most parts of the world. The company assembles vehicles in Argentina, Belgium, Brazil,
Canada, Colombia, the Czech Republic, France, Indonesia, Mexico, the Philippines, Poland, Russia, South
Africa, Thailand, Turkey, the United Kingdom, the United States, and Venezuela.
Additionally, the company also has joint venture, licensed, or contract factories in China,
France, India, Malaysia, Pakistan, Taiwan, the United States, and Vietnam.

27
2.4. Competencies

2.4.1. Core Competencies

The core competency of Toyota is its ability to produce automobiles of great quality at the best prices,
thereby providing value for money to its customers. This core competency of quality can be attributed to
its innovative production practices. The quality aspect of Toyota’s products has revolutionized
automobiles in the past, and almost all automobile companies have had to improve the quality of their
products. It is a cornerstone of the cost leadership strategy that the company pursues.

Technological capabilities: Toyota far outperforms most of its competitors in terms of technological
capabilities. The brand has excellent technological capabilities in manufacturing, supply chain, sales,
and service. It is also because of its technology that the brand is so popular in the most advanced
markets.

Customer loyalty: Toyota is a popular brand, with some of its products among the most popular in
advanced and fast-growing markets. It has millions of loyal customers around the world. The brand has
earned high levels of customer loyalty through its focus on quality and passenger safety.

Supply chain network: The brand has managed an excellent supply chain network. It is sourced from
thousands of suppliers all around the globe. Toyota’s focus has remained on forming strong, long-term
relationships with its suppliers. However, it always keeps its doors open for those who can offer better
quality than others.

Global Presence: Toyota is a global brand that has maintained an excellent presence in Europe, Asia,
and the Americas. Its products are sold in more than 170 countries. Apart from that, it has an
international manufacturing, distribution, and sales network.

2.4.2. Distinctive Competencies

Toyota Production System (TPS): Toyota’s distinctive competency is its production system, which is a
management philosophy and manufacturing approach developed by Toyota. It is based on the lean
manufacturing concept, which includes innovative practices like Just-in-Time, continuous improvement
(Kaizen), autonomation (Jidoka), Six Sigma, visual management tools like the Andon and Kanban
systems, production smoothing (Heijunka), single-piece flow, and a strong focus on respecting and
involving employees. TPS is considered a highly efficient production system that targets complete waste
elimination. By reducing waste, Toyota has been able to control production and operational costs,
leading to higher profitability.

Technological Innovation: The focus of Toyota since its foundation has remained on innovation for
making efficient cars. It is why the brand has been able to establish itself as an innovative brand in
several areas. When it comes to making hybrids, the Toyota Prius is ahead of all its competitors. In other
areas, Toyota has used technology to distinguish itself from the others. It is investing in growing its line
of electrified vehicles and being a leader in autonomous driving. Technology-based differentiation has
helped Toyota achieve leadership status in the global market.

Environmental Leadership: Toyota has positioned itself as a leader in environmental sustainability

within the automotive industry. The company has made substantial efforts to develop and
promote eco-friendly technologies, such as hybrid and electric vehicles. Toyota's
commitment to sustainability not only aligns with societal expectations but also provides
a competitive advantage by appealing to environmentally conscious consumers.

28
Quality and Reliability at Low Prices: Toyota has built a strong reputation for producing vehicles with
exceptional quality and reliability at low prices. This commitment to quality is deeply ingrained in the
company's culture and is reflected in its production processes and attention to detail. Toyota's emphasis
on quality has led to high customer satisfaction and brand loyalty, giving the company a competitive
advantage in the market.

After-Sales Services: Toyota prioritizes after-sales services to improve customer experience and build
relationships. The company operates a global network of service centers, ensuring the use of genuine
parts and accessories for repairs. Toyota also offers scheduled maintenance programs, extended
warranties, roadside assistance, customer assistance centers, online service booking, customer
education, recall and safety campaigns, customer loyalty programs, mobile service units, and digital
platforms for service information. These initiatives aim to provide customers with the necessary
information, support, and resources to maintain their vehicles in optimal condition. Toyota also
provides roadside assistance, towing, tire changes, and jump-start assistance in many markets. The
company also offers customer loyalty programs to build brand loyalty and reward repeat customers.

Resale Value: Toyota vehicles are known for their strong resale value due to factors such as reliability,
fuel efficiency, brand reputation, strong demand, comprehensive warranty programs, high retained
value awards, quality materials and craftsmanship, consumer confidence, and success in hybrid and
electric vehicles. These factors contribute to the perception of Toyota as a reliable and trustworthy
choice, with higher resale values often attributed to the brand's commitment to innovation and
sustainability. The popularity of Toyota vehicles also contributes to their resale value.

Skilled Workforce: Toyota is a global company that values its skilled workforce. The company invests
heavily in training and development programs, focusing on enhancing employees' knowledge and
expertise. Toyota's Production System (TPS) is a key component of its manufacturing approach,
promoting continuous improvement and employee involvement. Toyota encourages cross-functional
training, fostering a versatile workforce. The company values teamwork, empowerment, decision-
making, Kaizen, safety training, and diversity. The company values a diverse global workforce, fostering
innovation and success. Toyota's focus on employee engagement, career development opportunities,
and employee well-being is evident in its benefits and wellness programs. Toyota also promotes a
continuous learning culture, keeping employees updated on industry trends and best practices. This
commitment to employee well-being ensures Toyota's workforce remains adaptable and informed.

29
 2.4.3. VRIO Framework

Distinctive competency Valuable Rare Imitable Organized

Yes (TPS is well-
Yes (Unique Yes (Rare in the No (Replicating
Toyota Production integrated with
production automotive TPS is
System (TPS) Toyota
methodology) industry) challenging)
resources)
No (Unless there
Yes (It requires
Yes (A major is an obstacle in Yes (Toyota is
Technological massive
reason for Toyota’s the vision or capable of
Innovation investments and
lead) strategy making history)
ventures)
implementation)
Yes (Toyota has
No (Achieving
Yes (Many the resources,
Yes (Toyota is sustainability
manufacturers competencies,
Environmental visionary and pillars means
overlook the and culture
Leadership seeks long-term having the know-
environmental required to
goals) how of the whole
goals) maintain its
business)
lead)
No (Never
witnessed that a
Yes (Toyota owns Yes (Toyota is
Yes (Customers competitor could
Quality and Reliability at the recipe of eager to sustain
pay to own low- reach the recipe,
Low Prices offering low price this competitive
maintenance cars) this is what we
against value) advantage)
call the Toyota
Way)
Yes (Toyota is Yes (Few Yes (Toyota has
everywhere ready competitors could No (It could be global expertise
After-Sales Services
to provide the best provide equivalent imitated) in after-sales
experience) services) services)
Yes (Cost-
Yes (Toyota resale
No (As it takes efficient
Yes (It emphasizes prices are the
Resale Value time to build such systems
customer loyalty) highest in the same
a reputation) maintain this
price range)
advantage)
Yes (Global
workforce is Yes (A skilled Yes (Skills might Yes (Integrated
Skilled workforce valuable for workforce makes a be imitated to into Toyota’s
organizational difference) some extent) structure)
success)

2.4.3. Sustainability

We can easily say that all the stated distinctive competencies are sustainable, creating a competitive
advantage that reduces the inducement for attack by other competitors.

30
 2.5. Internal Factor Analysis Summary (IFAS)

Weighted
Internal Factors Weight Rating Comments
Score
Decision-making processes have become less centralized, which facilitates the
Global Hierarchy 0.025 4 0.1
dissemination of strategic decisions and objectives for realization.
Through these eight regional divisions, the organizational structure enables the
Geographic Divisions 0.025 4 0.1
automaker to improve products and services according to regional market conditions.
Toyota's management philosophy, as reflected in its principles like the Toyota Way,
Management Philosophy 0.05 4 0.2 influences decision-making, organizational culture, and the approach to business
processes.
The skills, knowledge, and dedication of Toyota's workforce are critical internal factors.
Human Resources 0.075 5 0.375 Employee training, development, and engagement contribute to the company's success.
In addition, Toyota has expertise in acquiring sophisticated talent.
Marketing Mix (4Ps) The synergy between a high-quality product, a competitive price, a large-scale
0.05 4 0.2
distribution, and an attractive promotion.
Toyota has a history of innovation in automotive technology, including hybrid vehicles
Technology and
0.075 4 0.3 like the Prius, showcasing a commitment to sustainability and technological
Innovation
advancement.
Toyota is renowned for producing high-quality and reliable vehicles, contributing to a
Quality and Reliability 0.05 5 0.25
Strengths

strong and positive brand image.

Efficient Production The implementation of the Toyota Production System (TPS) enables efficient and lean
0.05 4 0.2
Processes manufacturing, reducing waste and increasing productivity.
Toyota has a reputation for efficient supply chain management, which involves
Supply Chain 0.1 5 0.5 relationships with suppliers, inventory control, and the implementation of Just-in-Time
principles.
Toyota has a strong global presence, with a wide distribution network, manufacturing
Global Presence 0.01 5 0.05 facilities in various countries, and a diverse product portfolio catering to different markets
to offer an outstanding experience to customers.
Toyota has built a strong brand reputation over the years for producing high-quality,
Brand Reputation 0.05 5 0.25
reliable vehicles, and focusing on driver safety and customer service.
Sound financial practices, budgeting, and resource allocation are internal factors that
Financial Stability 0.075 5 0.375
influence Toyota's stability and ability to invest in future growth.
Internal governance structures and practices, including how decisions are made and
Corporate Governance 0.01 5 0.05
leadership roles are defined, influence the overall direction and strategy of the company.
Toyota offers a wide range of vehicles, from compact cars to trucks and SUVs, catering to
Diverse Product Portfolio 0.025 3 0.075
various customer preferences and market demands.
The company has 14 parts logistics centers and 7 vehicle logistics centers around the
Outbound Logistics 0.025 4 0.1
globe.
Toyota has faced challenges related to product recalls, which can impact consumer
Product Recall Issues 0.01 2 0.02
confidence and trust in the brand.
Dependence on the As a major player in the automotive industry, Toyota is susceptible to economic
0.025 5 0.125
Automotive Industry downturns and fluctuations in the automotive market.
Lack of Emphasis on
Toyota has faced criticism for not prioritizing electric vehicles and autonomous vehicles
Electric Vehicles (EVs) and 0.05 4 0.2
as much as competitors, potentially affecting its position in the growing EV market.
autonomous vehicles
Supply Chain The company's global supply chain may be vulnerable to disruptions, as demonstrated by
0.075 3 0.225
Vulnerabilities challenges faced during events like natural disasters or the COVID-19 pandemic.
Despite efforts to promote sustainability, Toyota has faced criticism for the
Environmental Concerns 0.025 3 0.075 environmental impact of its production processes and the perceived slow adoption of
Weakness

greener technologies.
Overdependence on Toyota's revenue is heavily dependent on certain regions, and economic challenges or
0.01 4 0.04
Certain Markets political instability in these markets can affect the company's financial performance.
The emphasis on consensus and traditional decision-making processes, rooted in the
Slower Decision-Making
0.025 4 0.1 company's culture, may result in slower responses to market changes compared to more
Process
agile competitors.
Dependence on Internal Mass dependency on ICE vehicles is rightfully criticized for increasing air pollution,
Combustion Engine (ICE) 0.01 4 0.04 jeopardizing societal health outcomes, and perpetuating the use of fossil fuels which
Vehicles threaten sustainable development.
Due to complicated industrial processes, hiring focuses mainly on functional specialists,
Skills-Based Hiring 0.05 3 0.15
not management experts.
Poor Marketing of Eco-
0.025 3 0.075 Poor marketing of eco-friendly cars like the Prius.
Friendly Cars

Total Score 1 4.175

31
 3. Strategic Factor Analysis Summary (SFAS)

Strategic Weighted
No. Weight Rating Comments
Factors Score
Toyota has a history of innovation in automotive technology,
Technology and including hybrid vehicles like the Prius, showcasing a
1 0.15 4 0.6
Innovation commitment to sustainability and technological
advancement.
The implementation of the Toyota Production System (TPS)
2 Supply Chain 0.14 5 0.7 enables efficient and lean manufacturing, reducing waste
and increasing productivity.
Toyota has a reputation for efficient supply chain
Product Recall management, which involves relationships with suppliers,
3 0.1 2 0.2
Issue inventory control, and the implementation of Just-in-Time
principles.
Lack of
Emphasis on
Toyota offers a wide range of vehicles, from compact cars to
Electric Vehicles
4 0.12 4 0.48 trucks and SUVs, catering to various customer preferences
(EVs) and
and market demands.
autonomous
vehicles
Bargaining Toyota's extensive vehicle lineup, offering diverse options in
5 power of Toyota 0.11 3 0.33 size, features, and price, provides buyers with flexibility and
as a supplier Toyota’s commitment to quality and innovation.
Growing environmental awareness influences buyer
Competitors
6 0.1 4 0.4 preferences for fuel-efficient or eco-friendly vehicles.
Pricing
Therefore, Toyota's focus is on hybrid and electric vehicles.
Increasing interest in hybrid and electric cars provides
Semiconductor
7 0.15 3 0.45 growth opportunities, and Toyota can cater to changing
Shortages
customer preferences for environmentally friendly cars.
Number of Japanese culture, which respects time, is a great opportunity
8 0.13 4 0.52
Toyota Suppliers to support Just-in-Time's operation strategy.
Total Score 1 3.68

32
 4. Situational Analysis (SWOT and TOWS)

Opportunities Threats
1 Focus on emerging economies 1 Competitive Rivalry
2 Expand into autonomous Vehicles 2 Global pandemic
3 Focus on eco-friendly Vehicles 3 Technology race

TOWS
Remote work and new talent High dependence on third-party
4 4
hiring opportunities suppliers
5 Manufacturing automation 5 Environmental challenges
6 Strategic alliances and mergers 6 Regulatory challenges
Weakness of the yen against US Technology disruption because of
7 7
dollar hacks
Economic conditions, including
8 Competitors Pricing 8
interest rates
Toyota’s bargaining power as a
9 9 Increasing oil costs
supplier
Strengths SO Strategies ST Strategies
Reduce the bargaining power of
A Global dominance A1 Increase presence in China D4
supplier
Provide competitive prices E5
B Diversified variety A7 Manufacture electrical vehicle
worldwide E9
Make it difficult to switch from E1
C Effective leadership D9 Joint venture with Tesla
Toyota E3
D Strong brand EH2 Invest in Autonomous and electric G8 Offering cost-efficient products
E Technological leadership EH3 vehicles
F8
F Extensive supply chain More domination worldwide
G8
G Production capability and flexibility H6 Strategic alliances with huge firms
H Strong financial position J4 Acquire top talented employees
I Superior customer experience
Ability to recruit top talent and highly
J
skilled collaborators
Weaknesses WO Strategies WT Strategies
A Overdependence on Suppliers Strategic alliance with suppliers C8 Offering discounts
A6
B Poor marketing of eco-friendly cars (Panasonic) C9 Offering fuel-efficient products
C Manufacturing defects (Recalling issue) Raise sales in emerging markets G1 Joint venture with a competitor
I1
D Slow decision-making process utilizing their flexible regulations
E Skills-based hiring /functional specialists
Dependence on Internal Combustion
F
Engine (ICE) Vehicles
G Compensation and incentives
H Products dominated business model
I Ability to respond to the competition

33
 PART THREE:

STRATEGY FORMULATION

34
1. Corporate Strategy

1.1. Directional Strategy

Speaking of strategies, Toyota adopts growth strategies focusing on both concentration and
diversification strategies.

Concentration: It is a two-dimensional strategy of vertical and horizontal growth:

A. Vertical Growth: Toyota, for the most part, is concerned with vertical integration, which includes both
backward and forward integration. The production of automobiles includes obtaining components such
as tires and batteries from external producers. Integrating these producers via mergers or acquisitions
could lead to greater efficiency in terms of lower costs and knowledge sharing. It also ensures a stable
and reliable supply of components and eliminates the threat of supplier bargaining power. Vertical
growth is divided into the following:
Forward Integration: At the end of 2009, Toyota developed a plan to become the first vertically
integrated electric vehicle company. The plan involved building solar charging stations for electric
vehicles. Toyota already manufactures electric vehicles.
Backward Integration: An example of Toyota’s backward integration policy includes the Panasonic EV,
which is 60% owned by Toyota and develops car batteries for Toyota’s hybrid automobiles. Toyota's
supply chain is also highly vertically integrated. This means that the company produces many of its
parts rather than relying on suppliers. This gives Toyota greater control over its supply chain and helps
to ensure quality. Woven Planet Holdings, a subsidiary of Toyota, announced the acquisition of Renovo
Motors, a pioneering Silicon Valley-based automotive operating system developer. Renovo develops
specialized automotive software.

B. Horizontal Growth: Toyota has geographically expanded its operations in significant regions that,
together, serve the main purpose of corporate growth:
Expansion to North America: Toyota has been operating in the United States since 1957.
Toyota Motor North America (TMNA) is the operating subsidiary that oversees all operations of
the Toyota Motor Corporation (TMC) in Canada, Mexico, and the United States. Its operations include
research and development, manufacturing, sales, marketing, after-sales, and corporate functions, which
are controlled by TMNA but sometimes executed by other subsidiaries and holding companies.
Expansion to Europe: From Portugal in the west to Russia in the east, there are several Toyota vehicle
plants and powertrain factories in Europe. Toyota’s European manufacturing began in 1971 with the
opening of the Toyota Caetano plant in Portugal, which initially built Corolla models. Forty-three years
later, Toyota has manufacturing centers in seven European countries, the result of more than 8 billion
euros in investment.
• Toyota Motor Europe (TME), a subsidiary of Toyota Motor Corporation, headquartered in Brussels,
Belgium, initiated its operations in 1963. and is responsible for company operations in Europe and
Western Asia, including Turkey, Russia, Palestine, Kazakhstan, and the Caucasus. The company
oversees the wholesale sales and marketing of Toyota, GR (GAZOO Racing), and Lexus vehicles, parts,
and accessories, as well as Toyota’s European manufacturing and engineering operations.
• Toyota Caetano Portugal (TCAP) started production in 1971 and currently produces the Dyna light
commercial vehicle.
• Toyota Manufacturing UK (TMUK) opened in 1992 and today builds the Avensis saloon and tourer, the
Auris hatchback, and Touring Sports, including hybrid models. It also produces 1.6 and 1.8-liter
petrol engines and assembles hybrid engines at Deeside.
• Toyota Motor Manufacturing Turkey (TMMT), established in 1994, currently builds
Verso and Corolla models.

35
• Toyota Motor Manufacturing France (TMMF), based in Valenciennes in northern France, is the center
for the Yaris production in Europe, including the hybrid.
• Toyota Motor Manufacturing Poland (TMMP) produces the 1.0-liter petrol engine for Aygo and Yaris,
together with manual transmissions used in Auris, Avensis, Verso, Corolla, and Aygo. The plant has
been in operation since 2002.
• Toyota Motor Industries Poland (TMIP) is the home to production of 2.0 and 2.2-liter diesel engines
for Avensis, Auris, and RAV4 and the 1.4-liter D-4D unit featured in Yaris, Auris, and Corolla. The
factory has been in operation since 2005. Toyota Peugeot Citroën Automobile Czech (TPCA) is a joint
venture with PSA Peugeot Citroën set up in Kolin in the Czech Republic in 2005 to build Aygo,
alongside the Citroën C1 and Peugeot 108.
• Toyota Motor Russia (TMR) is the Toyota’s newest production center which began operations in St.
Petersburg in 2007, manufacturing Camry saloons. Currently, it is set to add stamping and plastics
production to its business, and it has been preparing to manufacture RAV4 since 2016.
Licensing: Toyota has 172 agents all over the world, as shown in the following list:
North Latin Middle
Total Europe Africa Asia China Oceania
America America East
172 3 43 27 49 17 4 14 15

Diversification: In the United States, automotive records hovered

near record levels in 2018, but industry observers expected the
sales to turn down in the next few years. Their prediction became
true mainly due to semiconductors shortage and COVID-19
pandemic. The other threat facing Toyota and, indeed, all
automakers is the excitement over self-driving cars and
competition from other forms of transportation. In addition, cash-
rich tech companies have thrown their weight behind a plethora
of new transportation concepts, including ride-hailing and apps that allow customers to quickly rent
electric scooters and bicycles. Most of these concepts are still in their infancy, but they are rapidly
attracting investment. Legacy automakers do not want to be left behind. Like its competitors, Toyota is
trying to transition from a traditional automaker into a diverse mobility business.

A. Concentric diversification:
Toyota Research Institute: Toyota has several organizations that are devoted to
researching new technologies and trying to build a car that is incapable of crashing.
Toyota AI Ventures, the venture arm of the institute, manages more than 200 million
USD and invests in an array of mobility technologies in areas such as robotics, artificial
intelligence, and aviation.
Ride-Sharing Services: The company invested 600 million USD in DiDi, a Chinese ride-
sharing app, in early 2019. About a year after making a 500 million USD investment in
Uber.
Financial Services: Toyota Financial Services (TFS) provides financial services, mainly
auto loans and leasing, across over 35 countries and regions. This is an example of the
concentric diversification policy, where Toyota offers services related to its core
business.
JUU (electric wheelchair): Mobility that can go up and down stairs contributes to barrier-
free access with an electric power steering motor, which is used for the drive motor to
achieve both high torque and safety.

36
 B. Conglomerate diversification:

Housing Services (Japanese only): Toyota Home operates a wide range of housing-
related businesses, including detached house construction as well as condominium
development and housing renovations.
Marine Services (Japanese only): Another fun part of driving that Toyota delivers.
Introducing a high-quality private cruiser from Toyota Marine.
Agribio Services (Japanese only): Introducing agricultural support initiatives that
utilize the experience and know-how cultivated in automobile production and
biotechnology development.
Welwalk Business: Site for medical professionals (Japanese only)
Toyota Motor Corporation (TMC) launched the Welwalk business, which has been
delivering assist robots to rehabilitation hospitals in Japan since 2017. Welwalk provides
rehabilitation support for individuals with lower limb paralysis because of stroke and other
causes.
Robotics: Toyota has been developing multitasking robots destined for elderly care,
manufacturing, and entertainment. A specific example of Toyota's involvement in robotics
for the elderly is the Brain Machine Interface. Designed for use with wheelchairs.

1.2. Portfolio Analysis (BCG Matrix)

High Relative Market Share Low Relative Market Share

Star Question
Growth Rate
High Market

Lexus – Luxury Sedan Mirai – FCEV

Prius – Hybrid Camry & Corolla – Hybrid
Land Cruiser – SUV C-HR – SUV
Cash cow Dog
Growth Rate
Low Market

Camry & Corolla – sedan Celica – Sports car

Innova & Venza – MPV Tundra – Pick-up
RAV4 – SUV Crown, Cressida & Corona– Sedan

Star: In the BCG matrix for Toyota, three products are stars: the
Lexus, the Prius, and the Land Cruiser. These vehicles appeal to
different consumers, and each one is showing great results in their
respective markets.

Question Mark: The hybrid versions of the Camry and the Corolla are right in this category. Joining them
is the new electric car, Mirai. The C-HR, although already discontinued in the US and Canada, is still a
question mark in other parts of the world.

Cash Cows: Toyota’s sedans remain the most stable revenue generators for the company. This is why
Camry and Corolla are snugly in this category, as their high sales are not affected by other changes in the
industry. The RAV4 can also be considered a cash cow, as it has brought in consistently impressive
revenue to this day.

Dog: Most car models will eventually fall into this category when demand shifts to newer
models. Today, some of Toyota’s dogs are Cressida, Celica, Corona, Crown, and Tundra.

37
1.3. Parenting Strategy

Within the Toyota Production System (TPS), Toyota encourages a culture of continuous improvement,
where subsidiaries or divisions are empowered to innovate, improve processes, and contribute to the
overall success of the company. Instead of a top-down approach, Toyota emphasizes collaboration and
knowledge sharing among its different arms.
The company often allows its subsidiaries or divisions a degree of autonomy to foster innovation and
responsiveness to local markets. They encourage sharing best practices and lessons learned across
different parts of the organization to improve overall efficiency and quality.
This strategy enables Toyota to maintain consistency in its quality while allowing flexibility for
adaptation to local needs and market demands. The company strives for a cohesive yet adaptable
structure that encourages innovation and efficiency across its various divisions.

Decentralization and Empowerment:

High level of autonomy: Toyota grants its subsidiaries, brands, and divisions a significant degree of
autonomy in decision-making and operations. This allows them to adapt to local market conditions and
respond quickly to opportunities.
Field-oriented management is an approach where decisions are made closest to the customer and based
on real-time information. This empowers local teams to take ownership of their results.
Collaboration and Coordination:
Shared principles: Despite their autonomy, all subsidiaries, brands, and divisions are guided by Toyota's
"Guiding Principles" and "Code of Conduct” to ensure alignment with the overall company vision and
values.
Cross-functional teams: collaboration and knowledge sharing between different subsidiaries, brands,
and divisions through inter-divisional task forces and cross-functional projects.
Personnel exchanges: This takes place between different units to foster understanding and
collaboration.
Performance-Based Management:
Clear goals and objectives: Each subsidiary, brand, and division has specific, measurable, achievable,
relevant, and time-bound (SMART) goals and objectives. These are aligned with Toyota's overall
strategic objectives.
Regular performance reviews: Performance is regularly monitored and evaluated based on agreed-upon
metrics. This helps to ensure accountability and identify areas for improvement.
Continuous improvement: a culture of continuous improvement across all its subsidiaries, brands, and
divisions, promoting innovation and sharing best practices.
Long-Term Perspective:
Focus on long-term growth: Toyota prioritizes long-term sustainable growth over short-term profits. This
allows subsidiaries, brands, and divisions to invest in the future and build strong customer relationships.
Patient capital: Toyota provides its subsidiaries, brands, and divisions with the necessary resources and
support to achieve their long-term goals. This reduces pressure for short-term results and encourages
strategic decision-making.

Examples of Toyota's Parenting:

Toyota Financial Services provides financing and insurance solutions to Toyota customers worldwide,
operating with a high degree of autonomy while adhering to Toyota's overall financial principles.
Lexus operates as a separate luxury brand with its own dedicated management team and marketing
strategy while sharing production platforms and technologies with Toyota.
Hino Motors, a subsidiary specializing in commercial trucks and buses, operates
independently but leverages Toyota's expertise in areas such as quality control and
production efficiency.

38
2. Business Strategy

Toyota is adopting both competitive and cooperative strategies depending on the product line:

Competitive Strategy:
It is a combination of the cost leadership strategy for the economy and mid-range models like Camry
and Corolla and the differentiation strategy for the luxury models like Lexus and Land Cruiser.

A. Cost Leadership: It entails minimizing the cost of operations and maintaining competitive selling
prices using the cost reduction principle, which is used for establishing cost targets based upon the
subtraction of the desired profit from the sales price as determined by the actual market conditions.
According to the principle of cost reduction, the sales price of a product is determined by the customer
and the market. In addition, customers are demanding yearly price reductions. To maintain margins and
profits, Toyota continuously eliminates waste to reduce costs.

B. Differentiation Strategy: The luxury vehicle division of Toyota employs a differentiation strategy as its
primary competitive strategy. The differentiation strategy focuses on offering unique and premium
products that stand out from competitors in the automotive market.

Cooperative Strategy: For Toyota to seize a competitive advantage in certain product lines, it
implements various cooperative strategies to access technology and resources, expand in the market,
and mitigate risks.

A. Joint Venture: Toyota also has joint venture, licensed, or contract factories in China, France, India,
Malaysia, Pakistan, Taiwan, the United States, and Vietnam.
Here are the joint ventures of Toyota:
• Guangzhou Toyota Motor Co., Ltd. In China.
Toyota's 2004 joint venture with Guangzhou Automobile Group in China has helped the company
understand local market preferences and regulations, enhancing its market share in the rapidly
growing Chinese automotive industry.
• Toyota Kirloskar Motor Pvt. Ltd. In India.
Toyota's 1997 joint venture with Kirloskar Group in India introduced popular models like Innova and
Fortuner, enabling cost-effective manufacturing and a deeper understanding of the Indian market.
• NUMMI and Tesla in the United States.
NUMMI, a US joint venture between Toyota and General Motors, facilitated knowledge exchange and
electric vehicle development, showcasing Toyota's commitment to sustainable mobility.
B. Acquisitions: Toyota, a global automotive manufacturer, has factories in various countries, including
Argentina, Belgium, Brazil, Canada, Colombia, France, Indonesia, Mexico, the Philippines, Poland,
Russia, South Africa, Thailand, Turkey, the UK, the United States, and Venezuela. To meet the growing
demand for fuel-efficient vehicles and expand its presence in the US, Toyota is acquiring factories
annually.

39
3. Functional Strategy

Every aspect of business is covered by Toyota's functional departments, and each department's output
is integrated into the company's success.

Production: Toyota's production departments are crucial for efficient vehicle assembly and the
application of principles like the Toyota Production System (TPS). Key components include production
planning, manufacturing engineering, assembly line management, logistics and material flow, Kaizen
and continuous improvement, production control, maintenance and facilities management, training and
skill development, safety and compliance, new model launch teams, and environmental management.
Production planning develops plans aligned with market demand, while engineering teams optimize
manufacturing processes. Assembly line management oversees daily operations, coordinating material
flow and addressing issues. Kaizen teams identify opportunities for process enhancement and
continuous improvement. Maintenance and facilities management ensure equipment is well-maintained
and operational. Training and skill development departments equip workforce with the necessary skills.

Quality: Toyota's quality assurance and control framework is a systematic approach to delivering
vehicles that consistently meet or exceed high-quality standards. It focuses on preventive measures,
stringent standards, supplier quality management, employee training, Kaizen philosophy, quality
control circles, testing and inspection, customer feedback and market research, root cause analysis, and
Total Quality Management (TQM). These measures aim to minimize defects, maintain high product
reliability, and foster a culture of continuous improvement. Toyota's commitment to quality is reflected
in its rigorous testing and inspection protocols, which ensure each vehicle meets the specified criteria
before reaching the customer. The company also actively seeks customer feedback and conducts market
research to understand customer preferences and expectations. The company's approach to quality
issues is rooted in the principles of Total Quality Management (TQM), promoting a collective
commitment to excellence and customer satisfaction.

Supply Chain: Toyota's supply chain departments are crucial for managing the flow of materials,
components, and finished vehicles across a global network. Key aspects include procurement, supplier
relationship management, supply chain planning, logistics and transportation, warehousing and
inventory management, customs and trade compliance, risk management, collaboration with
production, quality control, technology and data analytics, sustainability and environmental
management, and Kaizen. Procurement manages sourcing raw materials, components, and services,
while supplier relationship management maintains positive relationships. Supply chain planning
develops strategies to optimize the supply chain, including demand forecasting, inventory management,
and coordination with production and logistics teams. Warehouse and inventory management oversees
storage and handling, while customs and trade compliance ensures compliance with regulations. Risk
management assesses and mitigates risks, while collaboration with production aligns schedules with
demand forecasts.

40
Marketing: Toyota's marketing departments are responsible for developing and implementing strategies
to promote the company's brand, products, and services. The global marketing division oversees global
marketing strategies, while regional marketing teams in various locations tailor strategies to meet
specific market needs. Product marketing teams focus on promoting specific vehicle models, while
digital marketing teams use online channels to engage consumers and build brand awareness. The
advertising and communications teams execute advertising campaigns across various media channels.
Brand management teams ensure consistency in Toyota's brand image and messaging. Events and
sponsorship teams coordinate Toyota's presence at various events, while customer relationship
management teams focus on building and maintaining relationships with customers. Market research
teams gather data on consumer preferences, market trends, and competitors to inform marketing
strategies. Public relations teams handle external communications and media relations, while social
responsibility and sustainability marketing teams develop campaigns highlighting Toyota's commitment
to environmental sustainability. Dealer marketing support teams provide aid and marketing materials to
Toyota dealerships.

Sales: Toyota's sales strategies focus on direct interactions and tactics employed by the sales team to
drive vehicle sales. Key elements include Customer Relationship Management (CRM), sales training and
development, incentive programs, fleet sales programs, collaboration with dealerships, financing and
leasing options, after-sales services, test drive programs, customer retention programs, competitive
pricing strategies, trade-in programs, and responsive sales support. These strategies help Toyota meet
sales targets, satisfy customer needs, and maintain a competitive edge in the automotive market. Toyota
invests in comprehensive training programs for sales representatives, offering incentives for high
performance, catering to corporate clients and fleet sales, offering attractive financing, and leasing
options, emphasizing after-sales services, facilitating test drive programs, and implementing competitive
pricing strategies to attract a wide range of customers.

Research and Development: Toyota's Research and Development (R&D) departments are crucial for
innovation, technological advancement, and developing cutting-edge automotive solutions. Key Toyota
R&D centers include TEMA in North America, TTC in Michigan, TME in Belgium and Germany, TRI in the US
and Japan, TMEC in China, TMAP-EM in Thailand, Higashi-Fuji in Japan, and Shimoyama in Japan. These
centers focus on various aspects of automotive research and development, including vehicle design,
engineering, artificial intelligence, robotics, materials science, autonomous driving technologies, and
vehicle testing. Toyota's global R&D network is dedicated to sustainability, safety, and innovative
technologies.

Human Resources: Toyota's HR departments are crucial in managing the workforce, fostering a positive
work environment, and supporting the company's objectives. The Global Human Resources Division,
headquartered in Japan, oversees HR policies, strategies, and initiatives globally. The HR Management
Division (Japan) manages domestic workforce functions, including recruitment, talent management,
training, and employee relations. Toyota Motor North America (TMNA) HR handles North American
operations, while Toyota Motor Europe (TME) HR manages European operations. Toyota Motor
Manufacturing Plants HR focuses on workforce management, training, safety, and ensuring a positive
working environment. Toyota Motor Asia Pacific (TMAP) HR caters to the Asia-Pacific region. HR
departments focus on employee development, recruitment, talent acquisition, employee relations,
diversity and inclusion, and compensation and benefits programs.

41
Information Technology: Toyota's IT departments are crucial for supporting business operations,
innovation, and digital transformation. They consist of a Global IT Division overseeing global IT
strategies, regional IT departments for regional business needs, an Information Systems Division
managing IT infrastructure, software development and applications teams, enterprise architecture and
IT strategy, cybersecurity and IT security teams, IT operations and support, digital innovation and
emerging technologies, data management and analytics teams, collaboration with business units, and IT
governance and compliance teams. These departments work together to ensure a cohesive approach to
IT, protect sensitive information, and ensure compliance with regulatory requirements. Toyota's IT
operations teams handle day-to-day management and maintenance of IT infrastructure, while its IT
governance and compliance teams ensure compliance with data protection laws and other relevant
regulations.

Finance: Toyota's finance departments are responsible for managing the company's financial activities,
including budgeting, financial planning, accounting, and ensuring compliance with financial regulations.
Key aspects include corporate finance, financial planning, and analysis (FP&A), accounting and financial
reporting, treasury management, tax management, risk management, financial compliance, investor
relations, credit and financing, mergers and acquisitions (M&A), financial systems and technology, cost
management, and employee benefits and compensation. Corporate finance teams focus on the
company's overall financial strategy, while FP&A teams develop financial forecasts and analysis.
Accounting and financial reporting teams handle day-to-day financial transactions, while risk
management teams identify and manage financial risks. Financial compliance teams ensure Toyota
adheres to international and local regulations. Investor relations teams maintain communication with
investors and analysts, while credit and financing teams manage credit facilities, loans, and financing
arrangements.

42
PART FOUR: STRATEGY

IMPLEMENTATION

43
1.1. Change Management

Change management is built into the Toyota Production System (TPS) through a system called Hoshin
Kanri, which involves a top-down approach to strategic planning and goal setting. In this system, senior
leaders set the direction for the organization and then work with middle managers and front-line
workers to implement changes and improvements that align with the overall strategy. This ensures that
change is managed in a structured and coordinated way across the organization, with everyone working
towards the same goals.
Toyota’s approach to change management is grounded in its core values of respect for people and
continuous improvement. The company has a long history of successful change initiatives that have
allowed it to stay at the forefront of the automotive industry. Here are two examples of successful
change initiatives at Toyota:
• The Prius Hybrid: In 1997, Toyota introduced the world’s first mass-produced hybrid car, the Toyota
Prius. The Prius was a radical departure from conventional gasoline-powered vehicles and
represented a significant technological breakthrough. Toyota invested heavily in the development of
the Prius, taking a long-term view of the potential for hybrid technology. The company faced
numerous challenges in bringing the Prius to market, including concerns about the high cost of the
hybrid system and doubts about consumer demand. However, Toyota remained committed to its
vision of a more sustainable future and persisted in its efforts to improve and refine the Prius. Today,
the Prius is a popular and widely recognized brand, with more than 10 million units sold worldwide.
• Introduction of robots in production: Toyota has been a pioneer in the use of robotics in production,
starting with the introduction of the first industrial robot in 1967. Over the years, the company has
continued to invest in robotics and automation, using these technologies to improve safety, quality,
and efficiency in its production process. One example of a successful change initiative in this area
was the introduction of collaborative robots, or Cobots, on the assembly line. These robots work
alongside human workers to perform repetitive or physically demanding tasks, freeing up workers to
focus on more complex tasks that require human skills and judgment. This change has not only
improved efficiency and safety but has also created a more engaging and satisfying work
environment for employees.
These examples illustrate how Toyota’s commitment to continuous improvement and innovation has
allowed it to successfully manage change and stay ahead of the curve in a rapidly evolving industry. By
investing in new technologies and working collaboratively across the organization, Toyota has been able
to achieve significant breakthroughs and maintain its position as a leader in the automotive industry.

1.2. Crisis Management

Despite its many successes, Toyota has also faced several significant challenges in implementing change
over the years. One of the most notable challenges was the series of recalls that the company
experienced in the late 2000s and early 2010s.
These recalls were related to safety issues and quality problems with several models of Toyota vehicles,
including issues with unintended acceleration and faulty brakes. These recalls had a significant impact
on Toyota’s reputation and credibility, and the company faced intense scrutiny from regulators,
consumers, and the media.
Toyota successfully implemented a crisis management strategy. In response to these challenges, Toyota
implemented several changes to its production and quality control processes. The company established
a new position of Chief Quality Officer and created a new division dedicated to product quality and
safety. Toyota also implemented new measures to improve communication and collaboration across the
organization, including the creation of a global quality task force and the establishment of a
new system for reporting and addressing quality issues.

44
Despite these challenges, Toyota has continued to innovate and improve, staying true to its
commitment to continuous improvement and kaizen. The company has continued to invest in new
technologies and has introduced several new models of hybrid and electric vehicles in recent years,
including the Toyota Mirai hydrogen fuel cell vehicle. Toyota has also continued to refine its production
processes, implementing new systems and tools to improve efficiency and quality.

1.3. Functional Synergy

Toyota is renowned for its successful implementation of the Toyota Production System (TPS), which
emphasizes efficiency, quality, and continuous improvement. This success has been achieved in favor of
the functional synergy that resulted from the sense of coordination between programs and tactics of
different functions:

Production: Equipment reliability is critical to the success of the Toyota Production System (TPS). There
are three critical factors to consider when addressing manufacturing equipment:
• Up-time: If every process can obtain the necessary parts just in time and in the proper quantities,
there will be no need to maintain stocks of extra materials or parts. Schedules of preventive
maintenance are crucial to lessening equipment breakdowns and delaying production.
• Changeover: The changeover capability of equipment is important for production smoothing and
capital savings. The ability to changeover and set up equipment rapidly and accurately will go a long
way in eliminating time delays, overproduction, and inventory costs.
• Procurement: When procuring new equipment, choosing minimum specifications that meet
technical requirements should not be the main priority. Reliability and ease of maintenance should
be considered before the features.

Quality: Toyota Care is a specific program offered by Toyota for scheduled maintenance and service
plans. Toyota Care is designed to provide Toyota owners with complimentary maintenance services for a
certain period after purchasing a new Toyota vehicle. The program typically covers basic maintenance
tasks such as oil changes, tire rotations, and multi-point vehicle inspections.
Toyota Care is part of Toyota's effort to enhance customer satisfaction and retention by offering a worry-
free maintenance experience during the initial period of vehicle ownership. It's worth noting that the
specific details of Toyota Care, including the duration and services covered, may vary by region and
dealership.
Toyota’s engine needs the trusted protection of genuine motor oil to continue performing at its best.
That is why Toyota invented Toyota Genuine Motor Oil (TGMO), which not only provides you with reliable
engine efficiency irrespective of challenging conditions but also acts as the only engine lubricant that
best matches the engine’s needs.
Such programs contribute to Toyota's overall customer service strategy, aiming to build long-term
relationships with customers by providing value and support throughout the ownership experience.

Supply Chain: Toyota's supply chain is a testament to its commitment to innovation and advanced
technology. It uses real-time stock updates and a digital ecosystem to maintain optimal inventory levels.
The company's logistics infrastructure ensures seamless flow of materials and components. Real-time
tracking capabilities enhance operational agility and enable proactive decision-making. Toyota's
commitment to cutting-edge technologies sets benchmarks for the automotive industry and exemplifies
its vision of a future where supply chains are not only efficient but also anticipatory and adaptive.

45
Marketing: Toyota faces competition from various brands within the same price range across different
automotive segments. Key competitors include Honda, Nissan, Ford, Chevrolet, Hyundai, Kia,
Volkswagen, Subaru, Mazda, Chrysler/Dodge/Jeep, Audi/BMW/Mercedes-Benz, and Tesla. Honda offers a
range of cars, SUVs, and trucks within similar price ranges. Nissan competes with Toyota in multiple
segments, while Ford dominates in truck and SUV segments. Chevrolet, part of General Motors,
competes with Toyota in various segments, including compact and midsize cars. Hyundai competes with
Toyota in sedan and SUV markets. Kia, a sister brand to Hyundai, competes in a similar market space as
Toyota. Volkswagen competes globally with compact cars and SUVs. Subaru, Mazda,
Chrysler/Dodge/Jeep, Audi/BMW/Mercedes-Benz, and Tesla compete in the luxury vehicle market.

Sales: Toyota's expansion of its dealership network can significantly boost sales. This expansion offers
broader geographic coverage, improved customer convenience, increased brand visibility, better
customer service, and potential market share expansion. Showrooms and service centers provide
convenient access to vehicles, enhancing customer satisfaction. Localized marketing and promotions
can be tailored to local communities, allowing Toyota to respond quickly to market trends. The network
also supports new model launches, providing customers with access to the latest offerings. After-sales
support is enhanced by quick access to maintenance and repair services, fostering customer loyalty. A
robust dealership network provides a competitive edge over brands with fewer locations, allowing
Toyota to compete effectively in terms of accessibility, customer service, and market presence.
However, effective management and coordination are crucial to ensuring consistent customer
experiences and operational efficiency.

Research and Development: In the meantime, Toyota is trying to make cars that are not just practical,
safe, and reliable. The current president, Akio Toyoda, is known to be passionate about cars in a way
that is distinct from his predecessors. Akio is a driver and is fond of racing cars under a pseudonym.
Notably, he test drove the Supra himself. The Supra is also the first car in the United States to be
released under Toyota's Garza racing sub-brand, a new line of vehicles meant to help fulfill Akio
Toyoda's no-more-boring-cars mantra. Apart from the Supra, Toyota is trying to infuse excitement into
much of its lineup, even in models typically known as family haulers or ride-hailing workhorses. Notably,
Toyota is expanding its Toyota Racing Development (TRD) sub-brand. Historically, Toyota has stuck the
TRD badge mostly on its pickups, such as the Tacoma, the Tundra, and the Forerunner SUV. But in 2018,
Toyota came out with TRD versions of the Avalon and Camry sedans. The move shocked the automotive
press. For now, moves like this may help keep drivers interested in owning a Toyota. Despite fierce
competition from fellow automakers and a bevy of new transportation options, Toyota further made
itself into one of the world's biggest and most respected automakers. Using innovation and discipline to
leapfrog American and European rivals.

Human Resources: The Kaizen philosophy, which is about continuous improvement, is not only applied
to manufacturing processes but also to HR processes. Employees are encouraged to identify areas for
improvement in their work and processes, leading to a culture of ongoing learning and development.
One of the key principles of the Toyota Way is "Respect for People." This extends to HR practices,
emphasizing the importance of treating employees with respect, valuing their contributions, and
creating a positive work environment.
Toyota has a global perspective on talent development. The company often rotates employees through
different departments and locations, providing them with a broader view of the business and promoting
a diverse range of skills.

46
Information Technology: Toyota has a complex and robust IT infrastructure to support its various
business operations, including the following:
• Data Centers: These centers house servers, storage systems, and networking equipment. They are
crucial for hosting applications, databases, and other IT services.
• Cloud Services: Toyota leverages cloud computing services for various purposes, such as hosting
applications, storing data, and scaling computing resources. Toyota has its private cloud
infrastructure.
• Network Infrastructure: Toyota has a sophisticated network infrastructure connecting its various
locations and supporting communication and data transfer. This includes local area networks (LANs),
wide area networks (WANs), and virtual private networks (VPNs) for secure communication.
• Enterprise Software: Toyota uses a variety of enterprise software for different purposes, including
Enterprise Resource Planning (ERP) systems for managing business processes, Customer
Relationship Management (CRM) systems, and other specialized software for different business
functions.
• Cybersecurity Measures: Given the importance of data security, Toyota has implemented various
cybersecurity measures, including firewalls, intrusion detection and prevention systems, encryption,
and regular security audits.
• End-User Computing: The IT infrastructure includes systems to support end-user computing, such as
desktops, laptops, mobile devices, and collaboration tools.
• IoT (Internet of Things): With the increasing integration of technology in vehicles and manufacturing
processes, Toyota has IoT devices and sensors connected to its IT infrastructure for collecting and
analyzing data related to vehicle performance, production processes, and more.
• IT Governance and Management: Toyota implements IT governance frameworks and IT service
management practices (such as ITIL) to ensure the effective and efficient use of IT resources.
• Big Data Analytics: Given the vast amounts of data generated in the automotive industry, Toyota
employs big data analytics tools to derive insights for improving products, services, and operations.
• Mobile Applications: Toyota has a mobile app strategy, providing applications for customers, dealers,
and employees to access information and services on mobile devices.

Finance: After programs and tactical plans have been developed, the budget process begins. Planning a
budget is the last real check a corporation has on the feasibility of its selected strategy. An ideal strategy
might be found to be completely impractical only after specific implementation programs and tactics
are costed in detail.

Cross-Functional Work Teams: After the divisional and corporate budgets are approved, procedures
must be developed. Often called Standard Operating Procedures (SOPs), they typically detail the various
activities that must be carried out to complete a corporation’s programs and tactical plans. Also known
as organizational routines, procedures are the primary means by which organizations accomplish much
of what they do. Once in place, procedures must be updated to reflect any changes in technology as well
as in strategy. SOPs were already developed based on objectives provided to operations, which the
company on a multinational level has; however, the company developed customized procedures based
on the optimum specifications that fulfill the requirements of each geographic region, like the Arab Gulf
and the polar regions.

47
Functional Strategy Program Goal Type of Tactic Tactic Category
Defensive (Raise
Production Equipment Reliability Market Location
structural barriers)
Defensive (Lower
Quality Toyota Care Market Location the inducement
for attack)
Advanced Technology for Real-Time
Stock Updates Defensive (Raise
Supply Chain Market Location
Advanced Logistics Infrastructure structural barriers)
Real-Time Tracking
Competition with Rivals within the Offensive
Market Location
Marketing Same Price Range (Frontal Assault)
Autonomous Cars Timing Late Mover
Defensive (Lower
Increased Dealerships (Service Centers
Sales Market Location the inducement
and Showrooms)
for attack)
Research and Application of TRD designs on Sedans
Timing First Mover
Development and SUVs
Defensive (Lower
Human Resources Global Talent Development Market Location the inducement
for attack)
Cybersecurity Measures Defensive (Lower
Information
Utilizing Internet of Thing Market Location the inducement
Technology
Mobile Applications for attack)
Budget Allocation to Functional Defensive (Raise
Finance Market Location
Programs structural barriers)
Defensive (Lower
Cross-Functional
Geographic-Based SOPs Market Location the inducement
Work Teams
for attack)

48
PART FIVE: EVALUATION

AND CONTROL

49
Toyota, as a global leader in the automotive industry, places a strong emphasis on strategies for
evaluation and control to ensure sustained success. These strategies are deeply ingrained in Toyota’s
corporate philosophy and contribute to the company's commitment to quality, efficiency, and
innovation.

Total Quality Management (TQM):

Definition TQM forms the cornerstone of Toyota's commitment to excellence.

Rigorous Process Continuous assessment of manufacturing processes to identify areas for
Evaluation improvement.
Swift mechanisms for incorporating feedback from production and quality control
Feedback Loops
into the improvement cycle.
Customer-Driven Market research and customer feedback guide product enhancements and
Quality innovations.
Monitoring the number of defects per unit produced, aiming for continuous
KPI: Defect Rate
improvement and adherence to stringent quality standards.

Just-in-Time (JIT) Production System:

Inventory
Minimization of inventory to reduce waste and enhance operational efficiency.
Management
Lean Streamlined production processes to eliminate non-value-adding activities and
Manufacturing maximize resource utilization.
Real-Time Continuous monitoring and control mechanisms to adapt to changes in demand
Production Control and supply.
KPI: Overall
Measuring the efficiency of manufacturing processes by considering factors like
Equipment
availability, performance, and quality.
Effectiveness (OEE)
KPI: Production Minimizing the time required to produce a vehicle will enhance responsiveness to
Cycle Time market demands.

Cost Monitoring and Optimization:

Regular Reviews Systematic reviews of operational costs to identify areas for optimization.
Value Analysis Continuous assessment of value-added processes and cost-reduction opportunities.
KPI: Efficiency
Monitoring and controlling key performance indicators related to cost-effectiveness.
Metrics

Marketing Intelligence:

Market Research Thorough understanding of customer needs, preferences, and market trends.
Competitive Continuous monitoring of competitors to identify market opportunities and
Analysis challenges.
Strategic
Aligning product development and marketing strategies based on market insights.
Positioning

50
Environmental Sustainability:

Eco-Friendly
Integration of environmentally friendly technologies in product development.
Technologies
Sustainable
Commitment to sustainable sourcing, energy efficiency, and waste reduction.
Practices
Carbon Footprint
Implementation of initiatives to minimize the environmental impact of operations.
Reduction

Employee Development and Engagement:

Training Programs Regular training to enhance the skills and knowledge of the workforce.
Performance
Objective assessments to recognize and address employee performance.
Evaluations
Feedback Platforms for employees to provide feedback, fostering a culture of continuous
Mechanisms improvement.

Performance Measurement and Feedback:

Regular Quarter and annual reviews to assess progress against established objectives.
Performance Timely adjustments to strategies are based on performance data and market
Reviews dynamics.
Continuous Kaizen philosophy is embedded in the culture to encourage ongoing improvement.
Improvement Flexibility to adapt to changing market conditions and customer preferences.

Overview of the Balanced Scorecard:

Objective Target Action done

Revenue growth Increasing
• 20.51% in Q4, 2023
Profitability
Financial Increasing • Annual growth
increase by 9.01%
Cost control Increasing
Customer Satisfaction (NPS score) Increasing 9% in 2023
Brand Loyalty Increasing Done
Internal business Lean Manufacturing, TPS,
Applied Done
perspective and six sigma
Training Programs Done
Employee Development Leadership development Done
Innovation and Continuous learning Done
learning Official partner of the
Innovation events Olympic and Paralympic Done
Games

Conclusion:

In conclusion, Toyota's strategies for evaluation and control are multi-faceted, encompassing Total
Quality Management, Just-in-Time production, cost monitoring, market evaluation,
environmental sustainability, and employee development. These strategies collectively
reinforce Toyota's commitment to delivering high-quality products, operational
efficiency, and responsible corporate citizenship.

51
 PART SIX:

RECOMMENDATIONS

52
When contemplating strategic choices, Toyota's optimal course is to engage in product development
within its existing market, thereby ensuring the retention of its market leadership.

Toyota's effective strategies have been evident in its competition across various segments of the
automotive market. We recommend a continued focus on enhancing the brand and developing products
with high demand. Despite increasing consumer environmental awareness, Toyota's exceptional
capacity for researching and implementing new fuel-efficient technologies has been underscored.

Capitalizing on its first-mover advantage in hybrid drive technology and expertise in developing small,
fuel-efficient vehicles, Toyota is well-positioned to meet the rising demand for such cars aimed at
reducing CO2 emissions.

In terms of electric vehicles, strategic investments in infrastructure development and charging networks,
particularly in key markets, will facilitate the widespread adoption of electric vehicles.

In response to the emerging trend of connected car technology, Toyota should apply concentric
diversification strategies by using advanced connectivity features in its vehicles, such as in-car
infotainment systems, Advanced Driver Assistance Systems (ADAS), and vehicle-to-vehicle (V2V)
communication systems. These technologies not only enhance the driving experience but also
contribute to safety and convenience.

Embracing digital transformation is crucial for Toyota, involving investments in initiatives to improve
customer experiences and streamline operations. Utilizing data analytics, artificial intelligence (AI), and
machine learning (ML) can optimize production processes, supply chain management, and customer
relationship management. Additionally, implementing digital marketing strategies can broaden
audience reach and engagement.

Strategic partnerships should be pursued through collaborations with technology startups, universities,
and other industry leaders to access cutting-edge technologies and expertise.

Furthermore, exploring collaborations with competitors can expand the overall market size, benefiting
all participants in the automotive industry.

53
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54
Dear Professor Sherif Eid,

We would like to take a moment to express our deepest gratitude for your
unwavering dedication and guidance throughout our academic journey.
Your passion for teaching and commitment to our learning have
significantly enriched our understanding and growth.

Your patience, understanding, and wisdom have not only inspired us

academically but also motivated us to strive for excellence in all our
endeavors. We are truly grateful for the knowledge and skills we have
acquired under your mentorship.

Thank you once again for your invaluable contribution to our education
and for making a difference in our lives.

Best Regards,