Presented by:

Muhammad Tayyab
Hassan Durrani
Mubashir Altaf
Najeeb Gulzar

Evolutionary process behind the manufacturing of Hybrid car named
Toyota Prius by the Toyota Motor Corporation.
Mr. Okuda the newly appointed president of the TMC.
The launch of Prius is considers is to be the life line of the TMC.
Concerns are technological advancement, time of launching and
marketing campaigns of the Prius in order to make it successful.
Appreciating Yen is causing a negative impact on export of toyota.
Auto makers are shifting their production facilities to USA in order to
achieve economies of scale.
Moreover USA is also the biggest market for the auto manufacturers with
big 3manufacturers General Motors, Ford and Chrysler leading the
market
The top 12 auto manufacturers constitute almost 80% of the global market
.i.e OECD countries in 1994.
Mr. Okuda is involved in the manufacturing of the car of the 21
st
century
with support of his R&D department.
The focus is to manufacture a fuel efficient and environmental friendly
car and hybrid technology is the best option that they have.


Some other manufacturer that it might manufacture the same hybrid car
for the mass market even before Toyota.
Weak product planning
Decline in market share
Delay in shifting production overseas
To launch car of the 21
st
Century
Very tight timeline of the R&D department for early manufacturing of
the.
concern about the future of Toyota and whether this program is aligned
with the long term vision of the Toyota.
On the other side the Toyota also has to tackle the challenges in the
Macro Environment that includes Government and regulatory challenges,
Global leadership challenges and Market challenges.
One major concern is the change in the exchange rate .i.e Yen has
strengthened as compared to US Dollar, which has reduced the profit
margin in case of export.

Sales of motor vehicles were cyclic and were varying with economy.
Due to Arab Oil embargo and Iranian revolution in 1979, US demand for
vehicles had shifted more towards fuel efficient cars in order to rely on
less oil.
Trend had shifted more towards using new technologies, sophisticated
controls and safety features.
Automakers had started identifying new markets and automobile
industry had gone through extensive segmentation due to sales volume
for a particular brand and model had been decreased,
Consumers had gone more conscious about style and inspirational value.
Most innovations did not provide long term advantage as automakers
were quick to imitate each others products.
Major automobiles sales (nearly 80%) were driven in OECD countries
which accounted for less than 20% of the world population so therefore a
strategy had to be defined to generate and create automobiles demand
from less wealthy consumers in other emerging economies.
In order to cater for oil crises and fuel emissions, government policies
came into play in order to encourage fuel efficient cars.

Entry into foreign markets, particularly in U.S,
had become difficult for Japan due to
appreciation in yen, weak domestic sales and
tough competition in US.
Markets perception about Toyota was that
most of the cars made by Toyota are
monotonous that is they are looked-alike.
Toyota was being perceived as a follower
instead of being a market leader.
Toyota has cut dealers incentives due to which
dealers had become distrustful of TMC.

To develop a new car using new car-development methods and
less experienced project manager.
High pressure from new vice president, Wada, to achieve 100%
improvements fuel economy
All automakers who were working to comply with Zero Emission
vehicles regulations, had stepped back from doing any further
advancements due after CARB(California Air Resources Hoard)
said that hybrid will not be considered as an alternative solution
for ZEV.
Time line for the launch was extremely short.
Difficult to estimate market demand of Toyota Prius when it was
an entirely new product with a new technology
It was not possible to estimate whether after doing all the efforts,
mass production of Toyota Prius would be possible or not.
Toyota Prius had deployed an entirely new technology due to
which overall cost of the car had gone massively high.

The major problem in the short term was the decision of
manufacturing the hybrid car or not keeping in view the
high budgets and technological hurdles faced by the R&D
department
A constant decline in the market share because of the non-
innovative products and fierce competition in the market.
The perception of being the car for the old people and
having minimum attraction to the new generation.
Government regulations and external environment factors
such as emphasis on fuel efficiency and hike in oil prices.
Technological advancement and high cost involved in
adopting this technology. and to achieve economies of scale
in the production process.
Regain dealers trust that was lost by cutting dealer margins.

Plan the long term marketing mix for the Toyota
Prius as it is a new product with distinctive
features and technology.
Build the brand perception of the Toyota Prius and
create brand equity.
Dealing with constantly changing consumer
preferences. i.e. style, shape, color and technology
Changing technologies that require a lot of
investment in R&D process.
Identifying new markets other than OECD
Countries.
Compete with fierce competition of well
established auto manufacturers.

POLITICAL
Government regulations
towards the use of fuel efficient
and zero emission vehicles.
ECONOMICAL
Market share declining.
Yen was appreciating
Increasing labour
Socio-cultural:
Consumer preferences were changing
with time. They had become more
inclined towards Green products with
customized features, unique style and
high level of comfort.
Technology:
Trends were shifting towards new technologies of
fuel efficiency and emission in order to comply with
CARB.
Increasing consumer awareness for the
environmental threats

PEST
Threat of Entry (High)
Bargaining Power of Suppliers (Low)
Bargaining Power of Buyers (Low)
Threat of Substitutes (Moderate)
Degree of Rivalry among competitors (High)



Strengths
Strong position in the industry.
Renowned for R&D and cost reduction
techniques.
Effective productivity enhancement tools
like JIT and TQM.
Highly targeted marketing.
Weakness

Only targeting the markets of US and Japan.
Huge production capacities and high cost of
labor retention without production.
Declining perception of Toyota.
Opportunities
Environmental friendly cars like Prius.
Established dealers network which could
be effective.
Potential in market share with new
technology and economical product.
Threats
Economic slowdown .
Competition in the global automotive market.
Tightening emission standards.
Appreciating Japanese Yen against US Dollar.
Short time line to deliver the product.
.
SWOT
Analysis
Alignment with Long Term vision and mission
Cost of production
Technological advancement
Vendor Development
Competitors analysis
Exchange rate fluctuation
Profit Margin
Time management

To keep the setup in Japan, continue the R&D,
develop the hybrid car Prius, launch it well
before the timeline and develop a strong
marketing plan to achieve the sales target using
the established dealers network. In the long
run a new manufacturing setup should be
launched in US to be more competitive in the
market.

To identify the new emerging market like India
and china, continue with the R&D in Japan,
develop the Hybrid car prius, develop the
production facility in India/China for export to
US and develop a strong marketing plan to
achieve the sales target using the established
dealers network.

Solution 1 is recommended.
This is the most optimal solution for Toyota in the short term plans,
as new product like Prius is the need of the hour for survival of Toyota.
R&D is strength of Toyota so hybrid car technology should be most
advances in all respects and it would difficult to replace Prius.
Cost reduction by effective vendor development and optimum
productivity achievement
Toyota should plan to launch this car as soon as possible to achieve the
first mover advantage.
A strong marketing campaign should be planned to make Prius a big
success.
Regain the trust of dealers as a part of marketing strategy.
In future the laws will defiantly shift to some permissible limits of
emissions .
In the short term Toyota should launch this car while keeping the
manufacturing setup in Japan but in the long run they must launch a
manufacturing setup in US as well to be more competitive in the market.

Hiroshi Okuda was appointed as the president of
Toyota Motor Company and he was the first one to
be appointed for such a position from outside the
family of Kiichiro Toyoda.
Yashiro Kimbara was appointed as the executive
vice president for R&D of The car of the 21
st

century project.
A separate team was selected from ten different
divisions of Toyota to work on Toyota Prius. This
team was named as G21.
The team was headed by Takeshi Uchiyamada as
the leader of this G21 team though he lacked the
experience required.

The existing executive vice president, Yashiro Kimbara
was replaced by a new vice president named Wada
who gave an ultimatum to put all possible efforts in
order to make Prius project successful. This helped in
expediting on all activities and efforts else G21 team
could be disbanded.
The organization structure had changed to autocratic
style. Direct instructions and ultimatum were being
given to focus on 100% improvements in fuel economy.
Hiroshi Okuda was actively participating in Prius
project and all day to day activities were being
reported to Okuda directly from all general managers
who were reporting to R & D vice president, Wada.