Introduction
Hitokoto (2010) argues that the automobile industry is one of the industries that have witnessed rapid growth over the last few decades with new cars emerging in the market yearly. Hitokoto notes that the advancement of technology has made manufacturing processes easier than they were two decades ago.
The automobile industry is one of the most competitive industries. As a result, all car manufacturers are struggling to remain relevant in the market. Research indicates that a majority of car customers emphasize quality, efficiency, and customer service as the key determinants when choosing the company from which to purchase (Hitokoto, 2010). As such, many companies are becoming more customer-focused in their manufacturing process. Increasing the ability to fulfill market needs is a way of attracting customers towards the company and gaining a competitive advantage over other firms in the automobile industry. Toyota, which is one of the major players in the industry, is fully aware of the dynamics of the market. This has allowed it to command a large section of the global market share since its incorporation in 1937.
Toyota Motor Corporation
Toyota Motor Corporation (TMC) is a Japanese automobile manufacturer of vehicles. The company was incorporated in 1937 and its headquarters are in Toyota, Aichi, Japan. Toyota has since then, emerged as the leading maker of automobiles in the world according to its annual report in 2010. The company also ranks seventh globally by revenue. Since its incorporation over twelve decades ago, the company has expanded its brunches in several countries around the world in order to increase its customer base globally. The company currently commands the largest customer share globally. Some of the common brands of Toyota cars include Toyota Corolla, Toyota Land cruiser and Toyota Prado, just to name but a few (Toyota, 2012).
Toyota’s strengths in manufacturing and sales
Toyota is determined to maintain it competitive advantage over automobile industries through a number of strategic plans announced by its chief executive officer in March 2011 (Toyota Motor Corporation, 2012). Toyota’s greatest strength that has enabled it to keep up with the competition is its ability to build high quality cars based on the latest technology. The company is focused on manufacturing cars of high quality that satisfy the needs of its customers (Toyota Motor Corporation, 2012). To ensure this, Toyota has a team of experts who carry out research and development to identify the needs and trends of their customers, globally (Toyota Motor Corporation, 2012).
Customers have become increasingly sensitive with regard to vehicular fuel consumption. Toyota is well aware of its customers’ preference for cars with low fuel consumption. Hence, the company ensures that all its cars consume lower amounts of fuel compared to similar types of cars from competing brands. This has enabled the company to attract and retain more customers than other brands. Research conducted on customers revealed that fuel-efficiency was a key determinant in purchasing Toyota cars. The low fuel-consumption level for Toyota cars has allowed the users to save a lot of money that would otherwise, have been spent in fuel consumption with other brands. This has enabled the company to stay ahead of its competitors in the automobile industry (Toyota Motor Corporation, 2012).
Toyota has also ensured that its cars are designed in accordance with the purpose for which the car is meant. The company has divided its vehicle manufacturing sector into four zones namely fleet and personal transport cars; sport cars; buses and trucks; and green cars. The company endeavors to use the latest technology in designing the cars to meet the demands of its customers. Manufacturing cars, based on the purposes for which they are meant, has increased the market segment of Toyota beyond just specializing on one category of cars, as has been the case with some of its competitors. The ability of Toyota to manufacture and provide a variety of cars to the market has enhanced its competitive advantage over its competitors. The numerous Toyota car models provide customers with a variety of cars to choose from, depending on taste, preference, and purpose (Rapp, 2000).
Price is also a key determinant of success in the automobile industry. As such, Toyota is ensuring that all its cars are affordable and easy to maintain. During the March 2011 Company briefing, Toyota revealed that it would continue with its plans of manufacturing affordably priced vehicles as a way of enhancing its competitive advantage over other firms. This is beneficial for Toyota since few customers are willing to purchase expensive cars (Rapp, 2000).
Toyota’s strengths are manifested through its focus on expanding into the emerging markets. The company has been able to penetrate into the emerging markets globally by increasing its subsidiaries and sales branches all over the world. This has enabled customers to get the cars of their choice locally. The availability of Japan cars in local branches saves the consumers from the trouble and cost of searching, investigating and importing vehicles directly from Japan. In addition, the company has a team of marketing and sales experts who ensure that customers are handled with courtesy and respect. This has enabled the company to build a close relationship with its customers; thus, building loyalty between the company and its customers. Investing in the distribution network through local dealerships and efficient sales and marketing personnel has enabled Toyota to gain a competitive advantage over its competitors in the automobile industry (Toyota Motor Corporation, 2012).
Toyota’s Weaknesses
Toyota has various weaknesses that it must address in order to stay ahead of other popular brands like General Motors, Ford and Nissan. The most notable weakness of Toyota is its inability to understand what the customers need. The company has, for a long time, been manufacturing many cars that end up idle and unsold in the market. This inability to identify market needs has allowed companies like Ford to make inroads in the U.S. market, taking up some of Toyota’s customers (Leikanger, 2006). Some customers have also cited quality as a serious concern with Toyota brands. In this regard, the customers argue that the lifespan of Toyota cars is unusually short since they wear out easily (Leikanger, 2006). This has posed a significant challenge to the Toyota brand, calling for the company to make improvements in terms of quality so as to satisfy the customers.
Hitokoto (2010) states that Toyota has suffered negative publicity due to the high number of recalls. For instance, Toyota recalled over 8 million vehicles globally between the last and first quarter of 2009 and 2010 respectively. The company also has a weak risk assessment and management team, as seen from its first annual loss in its history after it lost over $4 billion during the 2008 financial crisis. The primary markets for Toyota are Japan and the United States. The huge loss during the financial crisis was partly due to reduced sales in US. Hence, the heavy reliance on the US market is a significant weakness for Toyota,
Capitalizing on strengths and addressing weaknesses
Toyota has strong strategic plans aimed at capitalizing on its strengths and eliminating the weaknesses that exist in the company. For instance, the company has introduced the ‘Toyota New Global Architecture’ (TNGA) program. TNGA seeks to optimize design freedom and ergonomics, which will ensure that cars manufactured are of high quality, and that they meet the requirements of customers. The company also notes that TNGA will help to improve the vehicles’ road performance.
In addition, Toyota employs new technologies in its manufacturing processes to enhance standardization of parts and improve development efficiency. Toyota has also introduced the monozukuri structure reform in its manufacturing technology to improve the quality of cars being manufactured (Toyota Motor Corporation, 2012). The company has also introduced research initiatives aimed at analyzing what the customers want. This will ensure that all its subsequent cars are in accordance with the demands of their customers (Toyota Motor Corporation, 2012).
Conclusion
The future of the automobile industry is uncertain due to the changing energy trends. Toyota recognizes the challenges posed by various energy needs such carbon capture, storage of electricity in batteries, future oil production costs, and environmental concerns. Part of the research and development team in Toyota is involved in finding alternative sources of power for its future cars. The company is investing in alternative-energy vehicles such as the Prius hybrid and other vehicles that utilize battery power and hydrogen fuel-cells for energy. This will ensure that it remains competitive in the future.
References
Hitokoto, T. (2010). Big carmakers back on the road. Yomiuri Shimbun, Japan. Web.
Leikanger, S.X. (2006). Toyota: The weakness. Web.
Rapp, W.V. (2000). Automobiles: Toyota Motor Corporation. New York: Center on Japanese Economy and Business, Columbia Business School.
Toyota. (2012) Annual Report 2011. Web.
Toyota Motor Corporation (2012). Annual report 2012: Toyota’s medium-to long-term growth initiatives. Web..