Business-Level Strategies for Toyota Motor - Case Study Example

? Business-Level and Corporate-Level Strategies Analyze the business-level strategies for Toyota Motor Corporation that you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. Although Toyota Motor Corporation is a legendary organization, still its image gets faded due to the brand equity of its competitors Ford Motors or General Motors. In order to improve its image and reputation both in domestic and international markets, the management of Toyota Motor Corporation introduced varied types of business-level strategies (Funaru, 2010). Among many of them, one of the most essential business-level strategies is transnational strategy (Funaru, 2010). According to this strategy, the organization desires to sell its products in global markets comprising of all the essential features and specifications of the local customers. It is done to meet the needs and preferences so as to develop a renowned position in the market among other rivals. Not only this, the profit margin and revenues of the organization might also get enhanced due to its global presence among other competitors (Toyota, n.d.). Apart from this, the management of Toyota Motor Corporation also introduced the strategy of KAIZEN, so as to develop a strong global presence. KAIZEN means continuous improvement of the features and specifications of the products as per the requirements of different markets to create a position in that market. So, it might be depicted that the transnational strategy is the extremely essential for an organization operating successfully in automobile sector in long-run (Funaru, 2010). Transnational strategy is the most essential strategy implemented for long-term success as it might facilitate Toyota Motor Corporation to attain a global presence. It might not remain restricted in domestic markets resulting in amplification of the total sale and profit margin of the organization (Toyota, n.d.). Along with this, the corporate image and brand equity of Toyota Motor Corporation might also get enhanced as compared to others in international markets (Funaru, 2010). 2) Analyze the corporate-level strategies for Toyota Motor Corporation that you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. The corporate level strategies of an organization are also essential just as business-level policies (Funaru, 2010). In order to attain a global presence, Toyota Motor Corporation implemented varied types of strategies such as diversification to some other sectors. In order to attain profit margin and brand image, Toyota Motor Corporation decided to get diverted to handloom sector along with automotive segment (Toyota, n.d.). Apart from this, it also decided to go for joint venture and retrenchment. In order to penetrate in various global markets, Toyota Motor Corporation utilized the strategy of joint venture to enter the global markets as its entry is restricted due to trade barriers and presence of varied competitors (Toyota, n.d.). However, diversification is the most essential strategy followed by Toyota Motor Corporation to enhance its brand image and reputation in varied international market among other rivals (Funaru, 2010). It might also prove effective for the organization to improve its profit margin and revenues in long run as compared to others. As a result, the corporative goals might also get fulfilled in an effective way resulting in improvement of the portfolio of the organization (Toyota, n.d.). 3) Analyze the competitive environment to determine Toyota Motor Corporations’ most significant competitor. Compare their strategies at each level and evaluate which company you think is most likely to be successful in the long term. Justify your choice. The competitive environment of the Toyota Motor Corporation is extremely fierce and un-predictable. It may be analyzed with the help of Porter’s five forces model. Competitive rivalry: The competitive rivalry among the existing players is extremely high. It is mainly due to the presence of similar type of products comprising of same features and specifications both in interiors and exteriors of the vehicles (Funaru, 2010). And so, there is no much differentiation in their products. For example: Introduction of Opel by General Motors and Toyota Corola by Toyota Motors Corporations (Toyota, n.d.). In order to maintain the position and portfolio, Toyota introduced the strategy of KAIZEN that means innovation at each level (Funaru, 2010). This helped in producing innovative designed products as per the taste and preference of the customers in long run. On other hand, General Motors used product development strategy to introduce varied types of new products in the market. But the strategy of Toyota Motors Corporation proved more effective than General Motors and would be the most successful one in long run (Toyota, n.d.). Rivalry among the existing competitors: The extent of the rivalry among the existing competitors is high. This is because, every competitors desired to retain their market share and dominance in the market among others. Due to which, they always tried to discover high-end performance products to retain their brand image and equity (Funaru, 2010). It might be clearly viewed in the below figure: The market share of the competitors Source: (Funaru, 2010). The biggest competitors of Toyota motors are GM and Ford. Toyota Motors Corporation used total quality management (TQM) strategy to present innovative products with inventive feature and technologies. On the other hand, General Motors used broad differentiation strategy. So, Toyota Motors Corporation might be the most successful brand in automotive industry in long run as it tries to focus highly on quality of the products (Funaru, 2010). Bargaining power of the suppliers: It is quite low as the market remains dominated mainly by the larger suppliers. Moreover, the switching cost from one supplier to another is also quite low and so no monopoly exists within them. Due to which, they always try to offer best quality of products to retain the manufacturers with them (Funaru, 2010). Toyota Motors Corporation developed Toyota Production System (TPS) to produce the spare parts of the vehicles and PSA is used to maintain a cordial relation with buyers and suppliers. On the other hand, General Motors do not develop any such systems. So, Toyota Motors Corporation might be the most successful brand in long run (Funaru, 2010). Bargaining power of the buyers: it is moderately high. The switching cost of the buyers is also quite low and so monopoly is almost zero extent. The customer buying margins are very low and highly price sensitive and so buyers bargaining power is very low (Toyota, n.d.). General Motors developed high fuel-efficient cars like CADILLAC but Toyota Motor Corporation concentrated over performance and quality of the products. And so, introduced Opel Corsa, Hummer in the market that enhanced its market share and so it is the most successful corporation in long run (Funaru, 2010). Threat of new entrants: the threat of new entrants is quite low as huge capital, technological advancement and capabilities are required (Toyota, n.d.). Apart from this, the economies of scale are also sizeable as well as high extent of resources, capital, competencies and competitive capabilities are required to enter the market (Funaru, 2010). And so, fierce competition may be seen within the existing ones as shown in the figure: Rivalry among the present competitors Source: (Funaru, 2010). New products of the existing competitors like CADILLAC by General Motors and Opel, Hummer by Toyota Motors reduced the entry costs of new entrants (Toyota, n.d.). Threat of substitute products: it is moderately high. As there are numerous substitute products available in the market and also the switching cost from one to another is quite low. The spare parts of the vehicles of Toyota are mainly available in its showrooms but it is not the case with General Motors (Funaru, 2010). Therefore, from the above mentioned points it may be depicted that General Motors is the most significant competitor of Toyota Motors Corporation. And so, Toyota Motors Corporation is the most successful brand in long run in automotive industry (Toyota, n.d.). 4) Determine whether your choice from Question 3 would differ in slow-cycle and fast-cycle markets. Toyota Motor Corporation would not differ in slow or fast-cycle markets, as it uses product differentiation strategy and tries to introduce products according to customer (Evworld, n.d).preferences. It might prove effective for the organization as it always desires to prepare products that are extremely beneficial for the customers in both cost wise and trend wise. Moreover, it also tries to offer more concentration over product features so as to develop trendy ones to retain the dominance in the market. So, it might not be problematic for the organization of Toyota Motors Corporation to maintain its portfolio and market share in both slow and fast-cycle markets (Evworld, n.d). Hence, Toyota Motors Corporation would become the best automotive manufacturer in this segment among many other rivals operating successfully. As a result, it might surely enhance its market value and share to a certain extent as compared to others, so as to maintain a perfect balance among its rivals. Side by side, its revenue and profit margin might also increase to a considerable extent among its rivals (Toyota, n.d.). References Evworld, (No. Date). Toyota Hybrid System THS II. Retrieved from http://www.evworld.com/library/toyotahs2.pdf Funaru, M. (2010). Toyota’s Business Strategies In International Markets. Retrieved from http://feaa.ucv.ro/annals/v3_2010/0038v3-004.pdf Toyota, (No.Date). Toyota’s 21st Century Diversity Strategy. Retrieved from http://www.toyota.com/about/diversity/21stCenturyDivStrategy.pdf Read More