Environmental Scanning

Toyota Motor Corporation SWOT ANALYSIS Strengths

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

Weakness
y Japanese car manufacturer - seen as a foreign importer. y Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may be more strategically located worldwide to take advantage of global efficiency gains. y Product recalls are always a problem for vehicle manufacturers. The company had to recall 880,00 sports utility vehicles and pick-up trucks due to faulty front suspension systems. Toyota did not give details of how much the recall would cost. The majority of affected vehicles were sold in the US, while the rest were sold in Japan, Europe and Australia.

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Opportunities
y Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas and electric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at an all-time high - this investment and widening of product portfolio fits consumers looking to alternative sources of fuels away from gas guzzling cars. y To expand more aggressively into new segments of the market. The launch of Aygo model by Toyota is intended to take market share in youth market. y To produce cars which are more fuel efficient, have greater performance and less impact on the environment. y To develop new cars which respond to social and institutional needs and wants. The development of electric cars, hybrid fuels, and components reduces the impact on the environment. Toyota's Eco-Vehicle Assessment System (Eco-VAS) has helped in production, usage, and disposal. y Continued global expansion - especially in the emerging markets e.g. China and India, Russia, where population and demand is accelerating.

Threats
y Saturation and increased competition, intense marketing campaigns increasing competitive pressures. y Shifts in the exchange rates affecting profits and cost of raw materials. y Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially new cars). As household budgets tighten - this could lead a decline in new car sales and possible rationalization of dealerships. y Changing demographics e.g. number of large families is declining. Undermining the demand for large family cars. y Changing usage - families using the car less for taking children to schools. Home deliveries.

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y Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who have chosen not to own a car, or decided to use their car less.

PEST ANALYSIS

Political factors
The automotive industry is subject to various governmental regulations. Toyota has incurred and expects to incur in the future, significant costs in complying with these regulations. New legislation or changes in existing legislation may also subject Toyota to additional expenses in the future. Toyota may become subject to various legal proceedings. Toyota is in fact currently subject to a number of pending legal proceedings. A negative outcome in one or more of these pending legal proceedings could adversely affect Toyota s future financial condition and results of operations. Toyota may be adversely affected by political instabilities, fuel shortages or interruptions in transportation systems, natural calamities, wars, terrorism and labor strikes. Significant or prolonged disruptions and delays in Toyota s business operations may adversely affect Toyota s financial condition and results of operations

Economic factors
y The financial crisis is negatively impacting the real economy worldwide, and the automotive markets, especially in developed countries, are contracting rapidly. They have established an "Emergency Profit Improvement Committee", with President Watanabe as chairman, to secure profits for FY2009 and FY2010. This committee works to reduce total costs and maximize revenues.
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y They are thoroughly reviewing production capabilities by reexamining aspects such as the timing and scale of new projects. They remain committed to their strategies for mid-to-long term growth. They will respond appropriately to the changes in current market conditions. y Toyota s operations are subject to currency and interest rate fluctuations. y High prices of raw materials and strong pressure on Toyota s suppliers could negatively impact Toyota s profitability. y The downturn in the financial markets could adversely affect Toyota s ability to raise capital.

Political factors
y The automotive industry is subject to various governmental regulations. Toyota has incurred and expects to incur in the future, significant costs in complying with these regulations. New legislation or changes in existing legislation may also subject Toyota to additional expenses in the future. y Toyota may become subject to various legal proceedings. Toyota is in fact currently subject to a number of pending legal proceedings. A negative outcome in one or more of these pending legal proceedings could adversely affect Toyota s future financial condition and results of operations. y Toyota may be adversely affected by political instabilities, fuel shortages or interruptions in transportation systems, natural calamities, wars, terrorism and labor strikes. Significant or prolonged disruptions and delays in Toyota s business operations may adversely affect Toyota s financial condition and results of operations

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Industry and Business Risks

y The worldwide automotive market is highly competitive. y The worldwide automotive industry is highly volatile. y Toyota s future success depends on its ability to offer new innovative, price competitive products that meet and satisfy customer demand on a timely basis. y Toyota s ability to market and distribute effectively and maintain its brand image is an integral part of Toyota s successful sales. y The worldwide financial services industry is highly competitive.

Technological Factors
y It has developed the technology for a "revolutionary" diesel emissions purification system which the company says has the potential to reduce noxious diesel particulate matter (PM) by over 80 percent. The new technology utilizes a newly developed filter in a catalytic converter, which could bring cleaner air to polluted cities. The new system is named the "Diesel Particulate-NOx Reduction System (DNPR)". y The Toyota Prius is a full hybrid electric mid-size car developed and manufactured by the Toyota Motor Corporation. The Prius is the most fuel efficient gasoline car. y Toyota Motor Corp. will supply the hybrid technology used in the Prius to Mazda Motor Corp., enabling the Hiroshima-based automaker to produce its first hybrid sedan.

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REFERENCES
y y y y www.marketingteacher.com Wiki.answers.com www.coursework4you.co.uk www.oppapers.com