TOYOTA Motor Corporation. SWOT Analysis - Essay Example

?INTRODUCTION SWOT analysis means Strengths, weaknesses, opportunities and Threats. It is very important to set up a strategy that helps a manufactory to develop. This essay will focus on the definition of SWOT analysis and its purpose and then witting a SWOT matrix for TOYOTA Motor Corporation. The purpose for conducting a SWOT analysis in any business organization or firm is to find out the goals and objectives of the same. Every business must have a certain aim that it wishes to achieve by the end of every annual year, and thus conducting a SWOT analysis helps the business to grow and develop with respect to overcoming any kind of hurdles that come in between. Strengths refer to the advantages that a firm has over the others in the market. They are the firm’s personal strengths that will help it to bank on, and will help it to get the mover advantage in the presence of the other firms. Most firms and business organizations apply strengths in the form of marketing strategies. In the modern world of globalization, marketing strategies can be made use of in a very innovative manner with the help of electronic means as well as smart advertising and publicity. Weaknesses are the frail aspects of every business; not every businessman knows how to run an organization flawlessly. Thus, they are the demerits that each firm possesses, which gives others in the market and advantage over the firm. Every business firm also has certain opportunities. This is the third aspect of SWOT analysis. Opportunities are the chances that exist in the external environment; every entrepreneur must try and make use of these opportunities. Most of the times they arise out of the problems that different people have in society; solutions to overcoming such problems and helping people out, introduction of new technology, change in the habits of the people, are some of the types of opportunities that exist in the external environment. In order for the firm to get a grasp on the market and potential customers, it must try and exploit these opportunities as an advantage to itself. Threats, on the other hand, exist in the external environment and refer to the trouble that might be brought about in the business if certain aspects are not looked into and fixed. This could arise out of any of the weak elements of the business. They must be overcome by the use of turning them into opportunities so that they can be of an advantage to the business firm. If the threat is not managed properly, it attacks the weak aspects of the firm and may lead to losses or a lower turnover. A SWOT analysis for a business firm should be made once the project or preliminary report has been made. The feasibility plan of the business further helps to look into and measure the strengths, weaknesses, opportunities and threats that the organization might have to face. At this stage, it is imperative to form such an analysis because it helps to give the directors and entrepreneurs of the firm an in depth look into the workings of the business and whether or not it will be able to succeed in the future. This can only be decided once the weaknesses and threats have been laid down because they need to be combated strategically, while causing minimum possible harm to the business. Weaknesses and threats need to be either reduced or mitigated by the business. Yet another option to use these to the firm’s advantage is to convert them into opportunities. As discussed above, many problems can be converted to form opportunities – this can be done if the entrepreneur is dynamic and has excellent knowledge regarding the external business environment as well as the needs of the people and target consumers. Despite this, many management gurus have argued that simply by making use of and implementing a SWOT analysis, a firm cannot succeed. Many firms fail to deliver performance because of not being able to indulge in reporting about the different aspects of the firm with regard to the proper use of financial ratios (to depict the firm’s actual position with respect to its personal past as well as other firms in the market), or proper reports in the form of its annual prospectus for the benefit of the public. Thus, the SWOT analysis itself should not pose as harm to the firm, and instead be used as something of strategic importance in its own self. It should help the firm move forward, and progress towards further development. The entire process of analyzing any company’s opportunities and threats depends on its internal as well as external environment. These are heavily important because all aspects have to be gauged thoroughly before carrying out the analysis of any firm - the strengths and weaknesses in the internal environment of the firm need to be measured and calculated, and the opportunities and threats that persist in the external environment of the firm need to be measured as well. The marketing mix of any firm – product mix, place mix, promotion mix and the price mix are the main factors of the firm’s external and internal environments. Many a times, a SWOT analysis might not even help a company because many businessmen and entrepreneurs forget the final objectives of a firm in the process of making a SWOT analysis. It refers to making lists and or a matrix with respect to the company’s position in the established market, however, does not guarantee any sort of accomplishment and achievement of objectives on the part of the company. Thus, it is a process to be used along the way of reaching the final goals of the organization, and not the final goal in itself, as many seem to think. Despite these limitations, a SWOT analysis is very helpful for companies and firms that are based on making profits. It is useful for those that have an interest solely in providing for themselves and taking their companies on a higher level in the external environment. It can also be used to plan in advance for crises. It is a very important tool of crisis management because it helps to give a clear overview and picture of all the weaknesses of the firm and what could be mitigated. It helps the firm to understand the kind of threats that might arise in its face and how it could go about trying to fight those and establishing itself in the market. For example, a SWOT analysis of a firm X has been presented here; this is n analysis on a general assumption that most firms also follow. Some of the aspects mentioned here refer to the most common of strengths, weaknesses, threats and opportunities that almost every business firm has to encounter: Strengths: 1. Expertise in a certain department, for example, an excellent human resource management set up. 2. Developed repute and goodwill of the firm in the market. Weaknesses: 1. Less number of skilled workers or consultants operating at a higher level of the management leading to flaws and holes in certain areas of management. 2. Lack of ability on part of the management or inability to deal with assignments that require the assistance of different departments within the firm due to the lack of space, size and or proper managerial competencies. Opportunities: 1. Established market with goodwill and reputation in the marketplace. 2. Well known agency or business organization, identified market for consultancy in departments other than the human resource management sector. Threats: 1. Already established bigger industries and firms in the same field that might pose as immense competition. 2. The entry of smaller companies and firms in the same market, leading to a lot of choice for the consumers, and creating immense competition in the market. TOYOTA: SWOT MATRIX AND SOLUTIONS TO PROBLEMS Strengths: 1. It has a well established chain of companies and has created goodwill for itself in over 170 countries around the world. 2. It has excellent strength in terms of finances, with an annual turnover of about 131,511 million lira, and a sales growth of 29.3% estimated per year. 3. It has developed into the taste of the consumers and become a known brand all over the world. 4. It has also contributed a great deal towards social responsibility, making itself one of the best brands in the automobiles industry around the world. 5. It has adopted a number of lean manufacturing approaches like JIT and Total Quality Management. Weaknesses: 1. Since most of the manufacturing of Toyota takes place in Japan and the US, a great amount of political and economical aspects of the external environment matter in these locations and have led to the reduction in manufacturing processes. 2. The operational efficiency of the company can be seen as reducing and thus it has to overcome this barrier by taking steps to retain its sales capacity with respect to other firms in the market. 3. It has been facing a vast amount of competition from automobile industries all over the world which have better positioning in the global market with respect to their goodwill and brand establishment. Companies with more or less the same recognition have a mover advantage over Toyota because they are situated in more lucrative spots over the world, leading to better exports. Opportunities: 1. Environmentally friendly production on a global basis, thus serving social responsibility and appealing to more and more people. 2. Excellent designs and appeal to the younger generations, luring them towards the urban and hip cars of tomorrow. 3. Innovation in terms of using gas and oil within the engines judiciously, thus appealing to more and more people. 4. Fuel efficient car production and manufacturing. 5. Expansion into the market in different countries and diversification in terms of newer cars produced, into the global scene. Threats: 1. Increased competition world over as discussed above. 2. Rise in oil prices leading to a call for better operational efficiency within the firm. 3. More and more families all over the world, reducing their demands for family cars, which are some of the best cars produced by the company, leading to a reduction in the sales, due to changing habits of the consumers. 4. Shifts and downturns in the economy with respect to the financial sector of the business. REFERENCES "ManyWorlds Knowledge Asset - Don’t Do SWOT: A Note on Marketing Planning."ManyWorlds.com - The Knowledge Network for Thought Leaders on Business Strategy, Innovation and Futures. Web. 09 Apr. 2011. . "Free SWOT Analysis Template and Method, Free Swot Analysis Examples." Businessballs Web. 09 Apr. 2011. . "Toyota SWOT." Marketing Teacher. Web. 09 Apr. 2011. . "Toyota SWOT Analysis | Free Example | Business Teacher." Business Teacher: Custom Business Essays, and Resources For Business Students. Web. 09 Apr. 2011. . "MBA Lectures » Blog Archive » SWOT Analysis of Toyota Motor Corporation." MBA Lectures. Web. 09 Apr. 2011. . Read More