Tp015486 - Isom 2011

TP015486 - ISOM 2011 Introduction: Toyota is the largest manufacturer of cars in the world, with scores of factories in dozens of countries. Its standing in the automotive world as the most successful and most profitable carmaker is unquestioned. In sharp contrast, Australia has one of the smallest car industries in the world and while it is one of the oldest, it has never spread its manufacturing wings across the oceans. And yet Australia has played an important role in the development of the world¶s largest carmaker over a 50 year period, a length of association no other country outside Japan can match. It was Australia where today¶s world car industry leader first tasted success beyond its Japanese domestic market. It was through Toyota Australia that the Japanese company learned many lessons which have underpinned its global success, and it was Toyota Australia that achieved many breakthroughs within the group: first successful LandCruiser exports, first successful production outside Japan, first finance arm to fund dealers¶ inventory and first exporter of the Camry apart from the parent company itself. It is a proud record which has earned Australia a special place in Toyota¶s history. Toyota Australia's origins go back to 1958 when Thiess Brothers began importing the first LandCruiser models for work on the Snowy Mountains Hydro-electric scheme and sold the first Toyota LandCruiser in 1959. Assembly of Toyota cars began in the Melbourne factory of Australian Motor Industries (later AMI-Toyota) in 1963 and within a decade the Corolla and Corona (replaced by Camry in 1987) were well established in the market. The commercial vehicle business became Thiess Toyota in 1971 and achieved commercial leadership in 1979. Meantime AMI Toyota began investing in an engine and stamping plant to consolidate its position as a high local content vehicle manufacturer. In 1988 Toyota's local operations were unified to form Toyota Motor Corporation Australia and work began on restructuring and strengthening the group as a major step towards achieving international competitiveness and building vital export business. Toyota in 1994-95 consolidated vehicle production at its new world-ranking Altona plant in Melbourne. So after 50 years in Australia, Toyota has grown to be one of Australia¶s leading automotive companies. In just five decades, this proud organisation has grown from a patchwork of import, sales, distribution and assembly activities into a major force. In doing so, it has overcome great difficulties, brought forth strong leaders, fostered the talents of many Australians and contributed to the social and economic development of this country. It has been supported by loyal employees, customers, dealers, suppliers and has earned the commitment of governments, and many other organisations and individuals in Australia and throughout the world. (Toyota Motor Corporation Australia, 2005) 1 Mansoor Iqbal Nagori ʹ UC2F1007BIT TP015486 - ISOM 2011 Toyota global production in 2006 was more than nine million vehicles. That͛s the equivalent of one car coming off the production line every 3.5 seconds, every minute, every hour, everyday. (Toyota press UK, 2007) Timeline: 2010 Hybrid Camry, the first Australian built Hybrid is released 2009 3rd generation Prius is launched 2008 Toyota announces Australian hybrid Camry production from 2010 Toyota Australia achieves all-time sales record - 238,983 vehicles 2007 New TRD Aurion launched in Australia Tenth-generation Corolla launched in Australia New export record - 97,688 vehicles 2006 New Generation Camry is launched in Australia Presenting partner 2006 Commonwealth Games Shipped 500,000th export vehicle 2005 Toyota Australia builds the world's 10 millionth Camry The Yaris is launched in Australia, Replacing the Echo 2004 Two millionth locally built Toyota produced New corporate headquarters in Port Melbourne opened 2003 Toyota Australia's 300,000th vehicle exported Toyota overall Australian market leader with industry record sales of 186,370 vehicles 2001 The hybrid petrol/electric Prius launched in Australia 100,000th Camry exported to Saudi Arabia 2 Mansoor Iqbal Nagori ʹ UC2F1007BIT TP015486 - ISOM 2011 2000 Avalon production commences at Altona Toyota Australia appointed as national Daihatsu distributor New National Sales and Marketing headquarters opened in Sydney 1999 Victorian Parts Distribution Centre opened at Altona 1998 Altona plant receives ISO 14001 certification (Environmental Management) 1996 First Camry export shipments to the Middle East 1995 Camry enters production at Altona 1994 Corolla is first car built at the new Altona Assembly Plant Camry is the last car built at Port Melbourne 1992 One millionth locally-built Toyota produced 1991 Toyota becomes Australian overall market leader 1990 Lexus LS 400 launched in Australia 1987 Camry replaces Corona at Port Melbourne Assembly Plant 1981 Altona begins volume production of body panels 1978 First engines built at Altona 1968 Corolla assembly begins at Port Melbourne 1967 Crown assembly starts 1964 Corona assembly begins 1963 Toyota Tiara assembly starts 1959 First Toyota LandCruiser sold in Australia 1958 First 13 LandCruisers imported for use on Snowy Mountains Scheme (Toyota Motor Corporation Australia, 2005) Mansoor Iqbal Nagori ʹ UC2F1007BIT 3 TP015486 - ISOM 2011 SWOT Analysis: Strengths: New investment by Toyota in factories in the US and China saw 2005 profits rise, against the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; £5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because the company has the right mix of products for the markets that it serves. This is an example of much focused segmentation, targeting and positioning in a number of countries. In 2003 Toyota even knocked its rival Ford into third spot, to become the World's second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified product range, highly targeted marketing and a commitment to lean manufacturing and quality. The company uses marketing techniques to identify and satisfy customer needs. Its brand is a household name. The company also maximizes profit through efficient manufacturing approaches. Example: Total Quality Management. (Marketing Teacher Ltd 2000 ± 2011) Weaknesses: Toyota comparatively has less market shared if compared to General Motors. Customers are not segmented properly which makes them to miss out on some potential new customers. The company also needs to keep producing cars in order to retain its operational efficiency as car plants represent a huge investment in expensive fixed costs, as well as the high costs of training and retaining labour. So if the car market experiences a down turn, the company could see over capacity. If on the other hand the car market experiences an upturn, then the company may miss out on potential sales due to under capacity i.e. it takes time to accommodate. This is a typical problem with high volume car manufacturing. (Marketing Teacher Ltd 2000 ± 2011) Mansoor Iqbal Nagori ʹ UC2F1007BIT 4 TP015486 - ISOM 2011 Opportunities: Toyota and Lexus now have a reputation for manufacturing environmentally friendly vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance technologies developed by the organization. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor manufacturers, for example Ford has bought into the technology for its new Explorer SUV Hybrid. Such moves can only firm up Toyota's interest and investment in hybrid research and development. Toyota is also targeting the urban youth; therefore they are coming out with various new models which target the streetwise youth market and capture the nature of dance and DJ culture. (Marketing Teacher Ltd 2000 ± 2011) Threats: Product recalls are always a problem for vehicle manufacturers. In 2005 the company had to recall 880, 00 sports utility vehicles and pickup trucks due to faulty front suspension systems. Toyota did not give details of how much the recall would cost. Toyota also faces tremendous competitive rivalry in the car market. Competition is increasing almost daily, with new entrants coming into the market from China, South Korea and new plants in Eastern Europe. The company is also exposed to any movement in the price of raw materials such as rubber, steel and fuel. The key economies in the Pacific, the US and Europe also experience slowdowns. These economic factors are potential threats for Toyota. (Marketing Teacher Ltd 2000 ± 2011) Mansoor Iqbal Nagori ʹ UC2F1007BIT 5 TP015486 - ISOM 2011 Toyota Five Forces Analysis: 1. Rivalry between existing competitors: With the rise of foreign competitors like Ford, Chevrolet and GMC in the 1970's and 80's, rivalry in the Toyota auto industry has become much more intense. Firms compete on both price and non-price dimensions. The price competition erodes profits by drawing down price- cost margins while non-price competition (e.g., new car rebates and interest free loans) drives up fixed cost (new product development) and marginal cost (adding product features). One of the other reasons there is such high rivalry is that there is a lack of differentiation opportunities. All the companies make cars, trucks or SUVs. The competitors are compared to one another constantly. In recent years there has been significant market share variation, another indication of rivalry and its very strong threat to profits. (Scribd Inc. 2011) 2. Threat of entry by new competitors: The presence of new firms in an industry may force prices down and put pressure on profits. There are, however, barriers to entry that tend to protect established firms. One would expect the production of automobiles to require significant economies of scale, an important barrier to entry. The new entrant would have to achieve substantial market share to reach minimum efficient scale, and if it does not, it may be at a significant cost disadvantage.

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