Introduction
Nowadays, the automotive sector is becoming a more competitive field, with many car manufacturing corporations concentrating on all-electric types of vehicles. However, there are many firms that maintain their popularity despite following quickly-growing trends. For example, Toyota Motor Corporation’s robust competency is its ability to build high-quality vehicles at competitive rates, providing consumers with affordable prices. This fundamental operational capacity may be ascribed to its revolutionary manufacturing techniques. Toyota’s quality of the product has already transformed vehicles, and practically all automotive businesses have had to attempt to improve the quality of goods and services. It can be considered the pillar of the corporation’s competitive strategy. Nevertheless, there are several strategic issues that the corporation needs to resolve in order to grow further.
The Main Strategic Issues
When it comes to the strategic issues of the Toyota Motor Corporation, among the most significant issues are slow customer demographic diversification, dependence on few manufacturing countries, and significant vehicle recalls. As for the former, Toyota has a longstanding experience in operations in developing markets. Nevertheless, the expansion to developing markets occurs, notably in ASEAN member countries. These are regions where the corporation has promoted exports and domestic manufacturing since the 1960s (Itsuki, 2021). What is noteworthy about Toyota’s developing sales volumes is that they increased dramatically from 18.6 percent to 45 percent between 2000 and 2011 (Itsuki, 2021). Additionally, Toyota is expected to increase emerging-market manufacturing by 37% to 4.01 million units by 2023, up from almost 3 million in 2015 (Itsuki, 2021). If current trends persist, Toyota’s sales in developing markets will soon outnumber those in established markets. However, it is of vital importance for Toyota to make further expansions. Considering constant shifts in Asian countries’ policies and pandemics in such densely populated regions, Toyota Motor Corporation might be at risk of slow expansion.
Another strategic issue of Toyota is its dependence on manufacturing in only a few countries. Toyota Motor Corporation relies on manufacturing in such counties as the United States and Japan (Itsuki, 2021). The company does not, though, have any manufacturing statistics in African, South American, or Middle Eastern regions (Itsuki, 2021). As a result, the given corporation cannot be a genuinely global firm if these territories remain untouched.
Lastly, Toyota experienced a series of vehicle recalls owing to quality concerns, which may have an impact on the firm’s corporate image and total sales. For example, in 2011, the company recalled more than 100,000 models of Toyota and Lexus automobiles owing to damages to core parts and the probable failure of the hybrid system (Itsuki, 2021). Later that same year, the firm recalled almost 200,000 cars in Japan due to excessive sounds and oil leaks that might have been caused by loose fasteners in the sub-transmission and rear-wheel differential (Itsuki, 2021). Furthermore, the corporation was implicated in federal inspections involving goods recalls. This might potentially result in significant fines, reducing operational margins.
Strategic Options
Nevertheless, it must be mentioned that Toyota is distinguished by its capacity to learn from mistakes and grow stronger than it used to be. In this respect, if Toyota Motor Corporation can find solutions for its weaknesses that were listed above, the firm will have a significant advantage. For example, among the strategic options might be a further expansion to emerging markets, strong partnerships with original equipment manufacturing businesses, and a reevaluation of resources from a financial perspective.
As for the former, Toyota commands a substantial market share in the United States and spreads worldwide in nations such as India. As a result, Toyota has the chance to grow sales by further entering emerging markets. For example, Toyota Motor Corporation rapidly developed its global commercial activities outside of North America in the 1980s (Itsuki, 2021). The merging of Toyota Motor Corporation and Toyota Motor Sales Corporation in 1982 resulted in the unification of companies and the quickening of decision-making, which accelerated Toyota’s international expansion.
As a result, the organization should expedite its commercial development into exponentially growing developing markets by carefully following market patterns and paying attention to their condition. Consequently, by being aware of the demand in each region, it will be possible for Toyota to introduce its goods tailored to the local markets. The firm should also endeavor to build manufacturing and distribution systems in order to achieve optimal product price and delivery, as well as to improve the value chain in order to provide a wide variety of services within every region and area.
Another strategic option for Toyota Motor Corporation is to seek partnerships with original equipment manufacturing businesses. The latter might be financially efficient for the company if they create electronic parts at a cheaper cost than competitors. For example, in 2021, Hino Motors, Isuzu Motors Limited (Isuzu), Toyota Motor Corporation (Toyota), and Ltd. (Hino) confirmed new cooperation (Vaca, 2021). Several firms wanted to merge Toyota’s CASE technology with Isuzu and Hino’s commercial vehicle platforms (Vaca, 2021). With the help of such an agreement, the companies hope to expedite public adoption and diffusion of CASE systems and technologies, along with the ability to assist in addressing different transportation sector challenges and achieving a carbon-neutral culture. With the ongoing popularity of Toyota and its presence in several regions, it might be possible to establish beneficial partnerships with OEM firms.
Lastly, with the limitation in manufacturing, it is critical for Toyota Motor Corporation to recognize that the assets should be reassessed with financial changes. In this respect, the company should continue and increase the production of environmentally responsible, energy-saving goods while combining customer-demanded features and services and providing them to the worldwide market. Based on these metrics, the firm should seek development in three different business divisions. The first metric involves solutions in mechanized equipment, shipping, and heavy textile equipment. Another metric focuses on critical components in vehicle air conditioning units and electronic vehicle parts. The final crucial metric revolves around mobility in vehicle areas. As a result, by making improvements to such regions and maintaining sustainability, and implementing new renewable energy trends, while encouraging sustainability, the company will gain more recognition.
Conclusion
Hence, Toyota Motor Corporation is among the most influential firms in the automotive sector. While the company has certain strengths, it has several challenging strategic issues. The slow pace of demographic diversification, dependability on only a few manufacturing countries, and extensive vehicle recalls are among the immense issues. As a result, considering the financial stability of the firm, it is vital to recognize the given obstacles and find solutions. For example, the company might conduct expansion to other emerging markets, considering its affordable prices and good quality. Moreover, Toyota should establish more financially efficient partnerships with OEM businesses to receive cheaper parts. Lastly, the company will have to reevaluate its resources from a financial perspective.
References
Itsuki, H. (2021). Evaluation on changes of strategy and strategic direction in Toyota Motor Company, Japan. Journal of Strategic Management, 5(1), 20-29.
Vaca, S. (2021). Isuzu, Hino, Toyota to accelerate CASE response through commercial vehicle partnership. Toyota USA Newsroom.