The Performance of Toyota in Qatar - Essay Example

? The success story of Toyota Company in Qatar Table of contents Introduction 3 A brief history of Toyota 3 How it all started in Qatar 5 Brief current situation analysis 5 Company 5 Competitors 6 Climate 6 SWOT Analysis 7 Strengths 7 Opportunities 7 Weaknesses 8 Threats 8 Goals and objectives that the company has set 9 Target market chosen by the company 9 Assessment of the company’s marketing mix in Qatar 10 Price decisions 10 Distribution (place) decisions 10 Promotion decisions 10 Conclusions and recommendations 11 References 12 Introduction The performance of firms in the global market is usually influenced by a series of factors. The level of industry competition, both globally and locally, and the resources available for the realization of organizational goals can affect the performance of organizations either in the short or the long term. Moreover, it seems that firms that are well established in the international market are more capable of facing market challenges and of retrieving solutions in case of severe organizational problems. Current paper focuses on the performance of Toyota in Qatar. Toyota is one of the major competitors in the global automobile industry. The success of the firm has been highly related to its supply chain management system. The relatively low prices of the firm’s products, compared to the products of competitors, is another factor that has highly benefited the performance of Toyota worldwide. In Qatar, Toyota has followed similar goals and strategies. The history of Toyota in Qatar are presented and evaluated. Also, reference is made to the automotive industry of Qatar, at the level that the external environment can highly influence organizational performance. It is revealed that the prospects for Toyota in Qatar are significant. However, it is necessary for the organization to review its strategic framework periodically ensuring that the competitiveness of the firm towards its rivals is kept at high levels. A brief history of Toyota Toyota Motor was established in Japan in 1937 (Toyota Corporation 2012, History). Toyota Motor Corporation has resulted from the merge between Toyota Motor Co and Toyota Motor Sales Co in 1982 (Toyota Corporation 2012, History). Through the decades the firm established production units worldwide; still, the firm’s critical strategic decisions have been traditionally developed in Japan. Of particular importance have been the organization’s production units in USA, established in 1988, in UK, established in 1992 and in China, established in 2000 (Toyota Corporation 2012, History). Toyota Corporation focuses on the ‘Motor Vehicle Production and Sales’ (Toyota Corporation 2012, Overview). In 2011, the firm’s employees worldwide were estimated to 317,716 (Toyota Corporation 2012, Overview). In 2011, the firm’s profits reached the 18,993.6 (in billion yen), slightly increased from 2010, when the firm managed to achieve a profit of 18,950.0 (in billion yen, Toyota Corporation 2012, Overview). In 2009 the firm’s profits were estimated to 20,529.5 (in billion yen, Toyota Corporation 2012, Overview). In other words, the firm faces delays in regard to its profitability. This problem is made clear by reviewing the firm’s performance for the years 2006 to 2010 in US and Europe (Graph 1). Still, the performance of the firm in other markets is quite encouraging. For example, reference can be made to the case of China and Brazil (Graph 2). Graph 1 – Toyota Corporation in USA and Europe, for 2006-2010 (Source: Toyota Corporation 2012, Figures) Graph 2 - Toyota Corporation in China and Brazil, for 2006-2010 (Source: Toyota Corporation 2012, Figures) How it all started in Qatar The presence of Toyota in Qatar is closely related to Abdullah Abdulghani & Bros. Co. (AAB), a firm that was established in 1958 (Qatar 40 Years Organization 2012, Attendees). The firm has been a key competitor in Qatar’s ‘construction and trading industry’ (Qatar 40 Years Organization 2012, Attendees). In 1964 an agreement was signed between Toyota Corporation and AAB; by this agreement, AAB became the exclusive agent of Toyota in Qatar (Qatar 40 Years Organization 2012, Attendees). Thus, the history of Toyota in Qatar started in 1964. Currently, the firm’s employees are estimated to 1,700 indicating the firm’s rapid expansion in the local market. Brief current situation analysis Since its entrance in the market of Qatar, Toyota has faced a series of challenges and delays. The above phenomenon can be made clear by referring to the characteristics of the industry’s environment and the firm’s current performance in the particular market. Company As already noted above, the history of Toyota in Qatar started in 1964. Initially, AAB has been the exclusive agent of Toyota in Qatar. Today, two are the firm’s major associates in Qatar: Al Tariq Automobile Trading Co and Al Tadamon Motors & Trading Co (AAB Newsletter 2010, p.11). In 2010 the firm’s service center in Wakrah ‘became a Kodawari certified center’ (AAB Newsletter 2010, p.3). This means that the above center can support the firm’s operational needs through appropriate kaizen techniques (AAB Newsletter 2010, p.3). Two other centers of the firm are expected to achieve a similar certification; in this way, problems in regard to the firm’s daily operations would be managed easier. Competitors The major competitors of Toyota in the market of Qatar seem to be the following ones: Porsche, Honda and KIA. The major competitors in the automobile industry of Qatar are presented in the Table 1 below. Other important competitors in the particular market are: Volkswagen, a brand promoted in Qatar by Qatar Holding (AME Info 2009) and Mitsubishi, a brand promoted in Qatar exclusively by Qatar Automobiles Company (Qatar Automobiles Company 2012). Al Boraq Automobiles Co. wll Al-Attiya Motors & Trading Company ( AMTC ) Car Maxx International Auto Trading Co. Table 1 – Competitors in the automobile industry of Qatar (Source: Qatar Map, http://qatarmap.mobi/page.php?p=search&s=34) Climate In 2011, the performance of Toyota has been kept at low levels, mostly as a result of the earthquake in Japan and the fluids in Thailand (Gulf Times 2011). In order to cover the damages caused, Toyota has focused on emerging markets (Gulf Times 2011). In fact, the firm’s strategic managers aim to increase their sales in emerging markets at least by 40% within the next 3 years (Gulf Times 2011). In Qatar also similar expectations would exist, taking into consideration the current performance of the country’s automobile industry. SWOT Analysis Strengths Abdullah Abdulghani & Bros. Co. (AAB) is already well established in the market of Qatar. Moreover, the firm is the exclusive agent of Toyota in Qatar. This fact offers to the firm a competitive advantage, enhancing its market image. Moreover, the firm’s customer base is already well developed helping to the standardization of the firm’s performance (AAB, Company Profile 2012). Another important advantage of Toyota, compared to its competitors, is its long-term presence in the market of Qatar. As noted above, Toyota cars have been available in the local market since 1964, a fact that promotes customer loyalty strengthening the relationship between the firm and its customers. Opportunities The status of automobile industry in Qatar can be characterized as quite positive. In fact, it has been proved that the time period between February of 2011 and February of 2012 car sales in Qatar have been increased approximately by 48% (Best Selling cars Blog 2012). For the same period, the sales of Toyota Land Cruiser were increased for about 11% (Best Selling cars Blog 2012). In this way, Toyota has ranked first in terms of annual growth (Best Selling cars Blog 2012). In fact, three models of Toyota occupy the three first positions in the relevant list: the Toyota Land Cruiser, the Toyota Hilux and the Toyota Prado (Best Selling cars Blog 2012). Furthermore, the performance of automotive industry in Qatar seems to be continuously developed, a fact contributing in the increase of the industry’s future potentials (Manjeet 201111). Weaknesses AAB has been the exclusive agent of Toyota since 1964. This means that the firm is able to manage a series of problems related to the delivery of the firm’s products to the clients. However, under the influence of extensive manufacturing failures, Toyota had to recall many of its cars worldwide. For example, in May 2012 the firm’s managers had to order the recall of about 680,000 cars in USA (Valdes-Dapena 2012). In the period 2010-2011 the firm had to recall about ‘10 million cars worldwide’ (Democracy Now 2010). In Qatar, a similar problem would also appear. The staff of AAB has no experience in managing such problems. AAB has made efforts to align its management and decision-making strategies with those of Toyota but there are still many gaps to be covered. Threats As explained earlier, the competition in the automobile industry of Qatar is rather strong. Toyota is the market’s leading competitor, in terms of its sales. However, its position is not standardized. This means that the power of competitors to delay the growth of the firm can be significant. Also, the performance of economy of Qatar could be threatened by the global financial crisis. Such problem would also negatively affect the organization’s performance, either in the long or the short term. The firm Qatar AG plans to establish in Qatar a production unit for the manufacturing of cars’ components (Jayashankar 2011). This unit aims to cover the needs of the country’s car industry in terms of manufacturing (Jayashankar 2011). It is expected that the above initiative will increase the threats for the sector’s profitability; the operational activities of the industry’s firms, including AAB, the exclusive agent of Toyota in Qatar (AAB 2012 Targets). In 2009 the Emir of Qatar decided to invest a high amount of money on the automobile firms of Germany (Espinoza 2009), considering that the above placement is quite safe taking into consideration the stability of the particular industry, as compared to other industries worldwide (Espinoza 2009). Goals and objectives that the company has set The key goal of Toyota in Qatar is ‘to maintain the first position in the country’s automobile industry’ (Toyota Qatar 2012 Our Mission). At the same time, emphasis is made on the quality of customer services so that customer satisfaction is kept at high levels (Toyota Qatar 2012 Our Mission). It is made clear that the brand name that the firm has established during its long presence, about 40 years, in the Qatar market, should be further enhanced (Toyota Qatar 2012 Our Mission). Target market chosen by the company The range of cars manufactured by Toyota is significant. This means that the target market chosen by the company is extended, including people of different financial status. In this way, the chances for the increase of the firm’s performance in Qatar are increased: by lowering price but keeping quality at high levels, the firm aims to respond primarily to the needs of people of average/ middle income. Toyota’s expensive models, could also address the needs of people of high income. Reference can be made, as an example, to the Toyota Land Cruiser, which has been quite popular in Qatar, as explained above. Assessment of the company’s marketing mix in Qatar The performance of the company in Qatar could be also evaluated by reviewing its marketing mix. In this way, the branding and brand positioning of Toyota in Qatar could be fully understood. Price decisions The price of the firm’s cars worldwide can be characterized as average. In Qatar the price of the firm’s products seems to be increased, under the influence of the development of the local economy. In any case, the prices of the firm’s cars can be characterized as high, a fact also related to the firm’s brand name. In other words, in terms of branding, the firm’s prices could remain high. However, for improving the firm’s brand positioning in the particular market it would be preferable for the prices of the firm’s cars to be decreased. Distribution (place) decisions AAB is the exclusive agent of Toyota in Qatar. AAB has developed a network of alliances aiming to ensure that the branding strategy of the firm, as the firm’s strategic managers set this strategy is not negatively affected. The distribution of the firm’s cars to consumers should be re-organized, so that the firm’s brand name to be further expanded. Promotion decisions AAB chooses the promotion strategies that are considered as most critical for promoting the firm’s products in Qatar. In fact, a series of promotion schemes have been developed, ensuring that the consumers are made familiar with the firm’s products in the long term. Reference can be made, for example, to the participation of AAB in the ‘National Road Accident Prevention Campaign’ (AAB Newsletter 2005, p.5). Also, reference could be made to the support that the firm provides to ‘Virginia Commonwealth University’ (AAB Newsletter 2010, p.6). Conclusions and recommendations The performance of Toyota in Qatar can be characterized as quite successful. Still, the potentials for the firm’s growth in Qatar are not standardized. This problem is related to the following fact: the level of sales of Toyota in emerging economies, meaning especially the BRICS countries, is kept at high level, but in developed countries a different aspects of the firm’s performance can be identified. Indeed, as explained in the beginning of the paper, the performance of Toyota in the global market seems to be declined in most countries, apart from Brazil and China, where the trend for the increase of the firm’s performance is clear (see also Graph 1 & Graph 2). The stabilization of organizational performance and the increase of chances for future growth would be related to the following criteria: a) the decrease of prices of the firm’s products, b) the continuous monitoring of customer services, ensuring that are kept at high levels and c) the careful review of the operational status of the firm’s cars; in this way, any potential operational problem would be identified early limiting the risks involved. 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