Mar 6, 2019 in Research Proposal

SWOT Analysis of Toyota Motor Corporation

Toyota Corporation operates in a highly competitive automotive industry. For the past hundred years, this field has experienced a tremendous growth. The automotive industry has the largest economic revenue in the world. Since the first vehicles appeared, automotive companies have competed in the quality, speed and safety of their cars. However, today firms have to compete for their customers considering many factors. In the twenty first century, the automotive industry needs to consider the smallest economic, social and cultural shifts. For companies in this sphere, the external environment is just as important as the internal one. Without one of these aspects, companies cannot operate successfully and reach their goals of holding leading positions. Therefore, a thorough SWOT analysis of Toyota Motor Corporation enables to identify the most important elements of its successful performance.

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Today, Toyota Corporation is an industry leader in terms of sales and vehicle production. Many factors ensure Toyota’s success. SWOT analysis is a great tool to overview the position of the company at the given time. Firstly, the analysis of the external environment of Toyota can help to determine its opportunities and threats. Toyota Corporation is a company looking for opportunities in global social changes. Its mission is to develop new technologies creating hybrid and electric fueled vehicles in order to satisfy high demands of eco-conscious customers who look for eco-friendly cars of tomorrow. These social changes of sustainable living happen in the global market, involving many other industries as well. Therefore, Toyota Corporation seeks opportunities in intelligent transportation, developing smart vehicles, and environment-friendly resources. The global economy and constant fluctuations in fuel prices is another stimulus for developing new technologies in vehicle production. New opportunities for Toyota Corporation make it move away from traditional vehicle production in order to adjust to the latest global trends. Many customers look for driving a vehicle on renewable energy. They expect the progress to happen at the moment. These rapid changes in customer needs make Toyota invest more in research and development and be sure that the company can provide the right car just at the time of social changes. Therefore, the global economy and socio-cultural fluctuations are essential elements of the remote external environment of Toyota Corporation.

For Toyota Corporation, the most important factors of external environment include the global economy and the socio cultural situation. In the twenty-first century, the automotive market has grown largely, offering a great amount of different types of cars to any customer. Vehicle companies require balancing so many factors at the same time to satisfy their customers. However, Toyota Corporation is the company that follows the latest trends and successfully responds to external changes in the environment.

Speaking of factors of the external environment, it is important to emphasize intense industry competition, which is one of the main threats to the Toyota Company. Automotive giants like General Motors and Ford compete in the same markets with Toyota. Toyota’s largest market is Japan, United States and Europe. As an opportunity to differentiate them, Toyota can seek to enter new markets. Like other automotive manufacturers, the company faces threats from increasing raw material prices. This external environment factor is common for the whole automotive industry. Manufacturers often experience dependency on prices of raw materials. Therefore, it is another evidence to consider the influence of the global economy.

To conclude on the overall influence of the external environment, it is important to mention that the most important advantage of car producers and their goal is safety. Therefore, new regulations and safety standards are amongst the highest priorities for automotive producers. These are the most important external threats to Toyota and other manufacturers in the industry. Companies compete in terms of safety standards and quality of their vehicles. Toyota faces this socio cultural influence in the external environment. It takes one accident to change regulations for the whole industry. Often it is the most important characteristic of a car manufacturer to respond to the upcoming changes.

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From the side of the internal environment, several factors play a crucial role in company assessment. Toyota has strengths that differentiate it among other automotive companies. Due to these factors, it is an industry leader. In SWOT analysis, strengths refer to the internal environment. For Toyota, the most valuable strength is its brand recognition. The company made its name with affordable quality cars that are sold all over the world. Now the firm is a leader in the industry in terms of sales and production. Toyota cars are known for excellent quality, customer care, innovative design, fuel efficiency and overall good value and prices.

The advantages of Toyota’s internal environment definitely include its innovative strategy in green car development. It is a core value of its mission to create cars of the future. Therefore, Toyota contributes to the research and development sector in their production segment. These investments give back positive results and many of Toyota’s hybrid cars have already found their target market.

Analyzing Toyota’s weaknesses, one of them is definitely a large rate of recalls. It is usually expectable from automotive companies to have a certain amount of the ones. Basically, most car manufacturers struggle to decrease the rate of recalls, however these are instances when not much can be done. For example, several years ago more than two million Toyota cars were recalled only in America. Of course, the company has to address this problem in order to retain quality reputation. Another weakness of Toyota can be considered the limited presence of the company in smaller markets. Due to political fluctuations and currency exchange rates, Toyota primarily targets more stable markets of Japan and the United States.

As for the competitive position of Toyota, it is the largest car manufacturer in the world. Toyota produces cars with a trendy design and long-lasting quality. Having reached the position of the industry leader, the company can now charge a premium price for a design car of their brand. Toyota is known for fuel-efficiency and durable quality. Considering prices of Toyota cars, the company offers a superior value. Its position in a market is to differentiate the brand. It offers the best price of a quality car. Toyota has already reached production efficiency and can afford to use a low-cost strategy.

In terms of the organizational structure, Toyota has a centralized one, where all divisions report to the main headquarters in Japan that makes all decisions regarding major issues. Toyota Corporation has a hierarchy, whereby other parts of the corporation get the final decision from the head office in Japan. Toyota is also divided into geographic divisions, which are responsible for certain areas. There are eight regional divisions of Toyota, which are dependent. Finally, there is a product-based division where Toyota distinguishes Lexus production, Toyota’s major markets of Japan, United States and Europe, Toyota in different regions, and the division of unit production.

The organizational structure of Toyota is designed to maximize the efficiency of production and sales. Even though, the company is completely centralized, many decisions are still made in Japan’s headquarters, which sometimes takes time to implement them effectively. Toyota’s success speaks for itself, since the company has managed to reach balanced capacity utilization, creating popular cars and getting customer satisfaction. It is important to notice Toyota’s strategy to be just in time with the consumer’s demand. Despite many details that have been discussed above, and unexpected changes that happen every day, Toyota Corporation manages to take them under control with its successful strategy. The last point, but not of less importance, is the fact that Toyota Corporation takes care of their its employees by educating and increasing expertise in new technologies and the latest innovation. A successful brand named Toyota has all the reasons to be called a leader in the automotive industry.

In conclusion, it is no doubt that many factors of external and internal environment directly affect Toyota’s performance nowadays. However, Toyota’s organizational structure and philosophy are the key causes to its success. Since Toyota is on a market for little less than hundred years, the company is known for its dedication to improvement and growth. Toyota’s story of success is the one to inspire businesses all over the world.

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