Strategic Management: Internal Analysis and SWOT

Introduction

The Toyota Motor Corporation commonly referred to as the TMC is considered one of the most successful companies worldwide. This is mainly attributed to the fact that their production levels are very high and the products that they make are sold in most parts of the world. TMC deals with the manufacture of cars. The mother company is based in Japan, but several subsidiary companies exist in other countries. TMC’s brand name is Toyota, but it also owns some other brands like the Daihatsu and Lexus brands. In order to investigate the corporation more effectively, a SWOT analysis should be performed. A SWOT analysis is an investigation of the strengths, weaknesses, opportunities and threats that are face a particular company. This kind of analysis is very important since it enables the company in question to remedy their areas of weakness. In this case, a SWOT analysis of the auto industry giant Toyota will be conducted using their 2011 annual report.

Strengths of the company

This section will address the strengths that TMC has and the advantages that are affiliated to them especially in terms of their competition. The main strength that TMC has over all the other companies in this field is the cost of the units that it produces. The cars produced by this company are comparatively cheaper that its counterparts all over the world (N.a, 2010). For this reason, TMC has been able to obtain a large and loyal customer base not only in their home country, Japan but also in other countries. Another strength the company has is that it has subsidiary companies in several parts of the world. This has enabled them to penetrate diverse markets. For this reason, their production levels are high as well as their sales. TMC manufactures a huge variety of cars for different situations and countries. That is, it creates cars suitable for mountainous areas as well as deserts, for example (Toyota, 2012).

Evidence of this is the creation of the RAV4 series that was especially designed for the customers in need of a recreational car with increased engine power and a full time four-wheel drive system. This aspect of the corporation has been one of the major reasons behind the success of the brand. Another example of this is the Lexus brand, which is comprised of various luxury vehicles that are aimed at the higher earning people. TMC is quite focused on the level of security offered in the cars that they manufacture. Several studies have been conducted buy the company with regard to accidents. These studies have been very fundamental in the development of better cars with more effective safety technologies. For this reason, people all over the world trust the brand, and this had increased their sales significantly. In addition to this, Toyota has held several seminars where they educated their customers on issues concerning road safety especially when driving.

TMC is in the course of creating of a line of environmentally friendly cars. The line will be unveiled in 2015. Carbon dioxide emission and fuel consumption levels of this line are expected to be very low. TMC made this decision in a bid to contribute to the fight against global warming. This action has increased the popularity of the company as several people who are environmentally conscious intend to purchase the ‘green cars’ as they are popularly called. Strength of the company is evidenced by the infusion of IT into their creations. Since technology has become a necessity, TMC has created cars with certain elements like GPRS tracking and inbuilt computers. This has made it obtain an edge while compared to other manufacturing companies. Some companies have also taken up this development in a bid to compete more favorably with TMC. The company has invested in other sectors of the economy in order to diversify their source of income. This has enabled them to obtain more revenue from the other businesses that they own. Such an action is very important since it protects the company from any instability that may occur in the motor industry (Toyota 2012).

Weaknesses of the company

The greatest challenge that the corporation faced in the just concluded year was the Great East Japan Earthquake. The disaster resulted in the death of several people as well as the destruction of property worth a lot of money. Among the destroyed property was one of TMC’s main manufacturing plants. This resulted in the loss of important equipment, which led to a drop in the number of units produced in the said period. Sales consequently reduced as well causing the company to encounter losses. However, the company has already revived the plant and things are eventually regaining normalcy. Another weakness that the company has had is the effect of the fluctuations of the currencies. Apart from the Japanese yen, TMC is also affected by the value of the U.S. dollar and the Euro. Changes in the values of these currencies influence the profit margin of the corporation greatly. Strengthening of the Yen against the other currencies leads to a decrease in the revenues obtained by Toyota. The reverse situation is true, in which a weakening of the yen will be beneficial to the company. The cost of production material increased in the past year. This has had a considerable effect on the company since the cost of production had to increase, as well. For this reason, the cost per unit sold had to increase. This resulted in a considerable decrease in sales especially in Japan, which is Toyota’s largest market. Subsequently, the profits for the 2011 reduced (Investopedia.com, 2011).

III. Actions they are taking to capitalize on strengths and address weaknesses

The cost of the production materials has reduced slightly; TMC intends to reduce the cost of their cars especially in Japan in order to increase the level of sales (Sang, 2011). With regard to the earthquake, the company has already revived the manufacturing plant that was affected. They have also acquired all the equipment that they had before and even some, which are more, developed. This will enable them to increase the number of units that they produced. By the end of 2013, the plant is anticipated to almost double its production capabilities. The company does not control currency fluctuations, so it intends to make the best out of any situations that may arise. Nevertheless, with the present state of the economy, fluctuations are not expected to be as severe as they were in the previous year. Since the company is widespread, it intends to capitalize on this in order to increase its sales. It may achieve this by offering competitive prices for its products while compared to the competitors. In addition to this, the company has embarked on a large advertisement campaign that will boost its sales in several countries. The company also intends to penetrate new markets especially in Asia. This will be important since the company will be able pt provide its products to a new market. Consequently, the sales of the corporations will increase leading to more profits (Hitokoto, 2010).

General progress of the company

Based on the information that has been obtained in the course of this analysis, I think TMC is proceeding in a fashion that is likely to be successful. This is because it is effectively maximizing its strengths t benefit the company. In the case of the weaknesses, they have set up measures that will rectify them and avoid them if they recur in the future. Because of this, Toyota is expected to progress even more in the coming years in the field of auto manufacture. In addition, the quality and the cost of the cars made by the company far outdo their competitors. For this reason, Toyota is expected to keep being the best motor producing country in the world for several years to come in my opinion.

References

Hitokoto, T. (2010, May 13). Big carmakers back on the road. Yomiuri Shimbun (Japan). Retrieved: 16 November 2012, from library portal via course net.

Investopedia.com (2011). The industry handbook: Automobiles. Investopedia. Retrieved 16 November, 2012, from http://www.investopedia.com/features/industryhandbook/automobile.asp

N.a (2010). True Car forecasts April auto sales and incentives spending; Industry sales up 23%; Toyota incentives reach record highs. PR Newswire. Retrieved 16 November 2012, from library portal via course net.

Sang Min Lee, (2011). A Comparative Study of the Automobile Industry in Japan and Korea, Asian Survey 51, (5) pg. 876-898 Retrieved on 16 November 2012 from: http://www.jstor.org/stable/10.1525/as.2011.51.5.876.

Toyota. (2012) Annual Report 2011. Retrieved 16 November, 2012 from http://www.toyota-global.com/investors/ir_library/annual/pdf/2011/

Toyota. (2012). Vision and Philosophy. Retrieved 16 November, 2012, from http://www.toyota-global.com/company/vision_philosophy/

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