Strategy synthesis-Toyota

Essay by np4friendsUniversity, Master'sB+, May 2006

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Executive Summary

Nowadays, automobile industry is faster growing industry than other industries. Industry analysis by Porter's five forces can be said that threat of new entrants is low due to huge capital and cutting-edge technology. Suppliers are weak because they are spread all over the world and cannot easily forward integrate. Buyers are weak due to low demand for non-consumer goods (automobile) and high switching costs; moreover, buyers are not able to backward integrate. Substitutes are moderately strong due to different and less-expensive transportation facilities. On the other hand, intensity of rivalry is strong because of major players are dominant in the market by nearly same technology and manufacturing processes, suppliers relationship and distribution systems.

In addition, PEST analysis gives more ideas for industry to focus more on selecting the appropriate market and segments. Through analyzing political factors, company can get idea about political stability and government regulations in taxes and tariffs.

In order to get long-term profit company has to make good relationship with governments. Economical factors are more related with automobile industry because of consumers' purchasing power and per capital income in particular country related with demand and supply. Moreover, the social factors influence consumers buying behavior and lifestyle. Technological factors are the major factors for this industry as it is highly depending on innovative technology and knowledge-based. Technological changes have contributed much more on industry's growth.

Technological innovation and lean manufacturing system is Toyota's core competencies compare to other competitors. Toyota's strengths are its global brand name, economies of scale, and highly skilled engineers. On the other hand, depending on USA market for total sales and less market shares on other market create weaknesses for Toyota. Moreover, currency fluctuations can be a great threat to earnings and revenues for Toyota. Other competitors are also trying to keep...