1.

INTRODUCTION
1.1

Company Background

Toyota Motor Corporation ( ) is a Japanese automotive

manufacturer which headquartered in Toyota, Aichi, Japan. The company was founded by
Kiichiro Toyoda in August 28, 1937 as a spinoff from his fathers company Toyota
Industries to create automobiles. In 2014, the multinational corporation consisted of
30,038,875 employees worldwide. Toyota was the largest automobile manufacturer in
2012 (by production) ahead of the Volkswagen Group and General Motors. Toyota is the
first automobile manufacturer to produce more than 10 million vehicles per year around
the world. In 2014, Toyota was the largest listed company in Japan by market
capitalization and revenue since it worth more than twice as much as SoftBank in Japan
(Ng, 2015).
1.2

Development of the Business

Toyota was founded in August 28, 1937 as a spinoff by the son, Kiichiro Toyoda

from his father, Sakichi Toyodas company Toyota Industries to create automobiles.
Sakichi Toyoda had completed the non-stop shuttle change type Toyoda automatic loom
(Type-G) in years 1924-1929 (as shown in Figure 1, Appendix 1). In year 1940-1949,
many vehicles are produced such as BM truck, SB small truck, and SA compact
passenger car (as shown in Figure 2, 3, & 4, Appendix 1 & 2). They are started to
produce domestically. In 1950, there is an issue regarding financial crisis or labor dispute
or voluntary retirement. Thus, Toyota Motor Sales Co., Ltd. and Minsei Spinning Co.,
Ltd. (currently Toyoda Boshoku Corporation) are established. They begin a Creative Idea
Suggestion System. After establishment of Towa Real Estate Co., Ltd., Corporate slogan
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Good Thinking, Good Products is established. The great achievement in these years
was the first time in the centuries, Japanese passenger car (Crown) was exported to the
United States.
In 1961, first model of Toyota Corolla (as shown in Figure 5, Appendix 3)
dealership started to operate and Total Quality Control (TQC) is adopted throughout the
company. Toyota signed for labor management joint declaration in 1962. Quality business
starts developed and Toyota had won award in Deming Prize (as shown in Figure 6,
Appendix 3) for major advance in quality improvement. Then, Toyota joined business
partnership with Hino Motors, Ltd, Higashifuji Proving Ground, and Daihatsu Motor Co.,
Ltd. Toyota managed to reach cumulative exports of 1 million units, as well as annual
domestic sales with 1 million units. In 1970-1979, the business kept boosting and won the
first Japan Quality Control Award. Toyota vehicles started producing worldwide in 1972.
For this time frame, the cumulative export had increased as compared to previous years.
They reached export cumulative of 5 million units in 1975. The cumulative total of export
production keep inclined steadily to almost 10 million units.
In the early 1980, Toyota started to run Toyota Vista dealership. There was
occurrence of restructuring where Toyota Motor Co., Ltd. and Toyota Motor Sales Co.,
Ltd. was merged and formed Toyota Motor Corporation. Toyota also formed joint venture
with the New United Motor Manufacturing, Inc. (NUMMI) and managed to make 20
million units on cumulative export and produced up to 50 million Toyota vehicles in local
in that year. Several developments like operation of Kasugai Housing Works and Toyota
Memorial Hospital is seen. Toyota Motor Manufacturing had made the total annual
domestic revenue up to 2 million units. The business developed by making duo
dealership with Volkswagen and Audi cars open in early 1990. RAV4L and RAV4J are
introduced and their overseas annual profits more than 1 million units. This time gains
from overseas sales had reached to more than 3 million units.
They started initiating in oversea of Toyota Financial Service Corporation in the
early 19 century. Sichuan Toyota Motor Co., Ltd started to broad the manufacturing
business in China. They started to publish Toyota FCHV (as shown in Figure 7, Appendix
4) in limited editions sales and they managed to achieve 100,000 units of worldwide.
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Their sales had exceeded 10 million on Camry Sedan. In this century also, they started to
move to green vehicles and start Leasing Advanced Fuel Cell Hybrid Vehicle (as shown
in Figure 8, Appendix 4). They also breakthrough their design and come out designs for
F1. From year 2010 till recent years, the business keeps developing by joint venture and
strategic partnership. For example, they make agreement with Mazda on Hybrid System
Technology License, joint EV development with Tesla Motors, form strategic partnership
with Microsoft and partnering with BMW.
1.3

Board of Directors
Chairman
President
Executive Vice
Presidents
Senior Managing
Directors
Directors

1.4

Tetsuro Toyoda
Akira Onishi
Chiaki Yamaguchi
Kazue Sasaki

HirotakaMorishita

Shinya Furukawa
Norio Sasaki

Masaharu Suzuki
Toshifumi Ogawa

ToshifumiOnishi
Kan Otsuka
Keiichi Fukunaga
Shuzo Sumi

Takaki Ogawa
Taku Yamamoto
Fujio Cho

Vision and Mission

1.4.1

Vision
Through improvements of conventional technology, as well as pioneering

efforts in the application of new technologies, Toyota is taking great steps to

develop eco-cars which will help us become a low carbon society.
1.4.2

Mission

Provide world-class safety to protect the lives of customers

Provide optimization of energy / infrastructure to local communities
Putting high priority on safety and promote product development with
the ultimate goal of completely eliminating traffic causalities

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Deliver cars that will stimulate and even inspiring and that will thereby

earns smiles from our customers

Addressing employees education

under

Genchi-genbutsu

philosophy, which is to go to the source to find the facts to make

correct decisions, build consensus, and achieve goals at our best speed
Through true mutual trust with partners, contribute to development of

new technology and improved expertise

Contribute for economic development of local communities with R&D
operations functioning effectively in each region

2.0

SWOT ANALYSIS
SWOT refers to strengths, weaknesses, opportunities and threats. SWOT analysis is a

process where the management team identifies the internal and external factors that will affect
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the companys future performance (Hill, 2015). Strengths and weaknesses are internal factors
that affect a companys capabilities. Strengths can be defined as a companys advantageous
characteristics and main capabilities whereas weaknesses refer to any inner limitations a
company encounters in developing or implementing plans. On the other hand, opportunities and
threats are external factors that occur independently of the company. Opportunities can be
defined as companys advantageous conditions in the environment that could create rewards for
the company while threats refer to conditions or obstacles that may restraint the company from
accomplishing its objectives. Now, we are likely to provide a brief description of Toyotas
SWOT analysis (as shown in Figure 9, Appendix 5).
2.1

STRENGTHS
2.1.1

Strong Market Position and Brand Recognition

Toyota Company has a strong market position in different geographies

across the world. The company has been recognized as the Top 10 of the best
global brands. Toyota is the most valued automotive brand in the world.
According to the Interbrand Rankings (2014), Toyotas brand value has increased
from 35,346$ million in 2013 to 42,392$ million in 2014 with 20%. Its majority
of market share are in Japan with 45.5%. Apart from that, Toyota has market share
in Asia (excluding Japan and China) with 13.4%, North America with 12.2%, and
Europe with 4.3%. Such strong market position allows the company to gain
competitive advantage in domestic markets, as well as to expand into international
markets.
2.1.2

Strong Quality Management

Toyota Company is one of the most innovative automotive companies and

it always focused on constant innovation. It starts with Innovative International

Multipurpose vehicle plan (IMV) and Toyota Production System. Toyota
production system emphasizes in just-in-time (JIT), Jidoka, Kaizen, environment
and health and safety. For JIT, they link all production activity to real marketplace
demand and rely on finely tuned processes in assembly sequence. Jidoka and
Kaizen will be the incorporate quality check into every step of the production and
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team members in all part of organization continually look for ways to improve
operation. This is one of the innovative strength in production systems that
seldom apply in other company (Toyota Production System, 2015).
2.1.3

Extensive Production and Distribution Network

Toyota Company has an extensive production and distribution network.

Toyota and its affiliates produce automobiles and related accessories through
more than 50 manufacturing companies in 27 countries and regions besides Japan.
Toyota is also well-known for its environment friendly, safe and durable cars that
are sold in more than 170 countries. According to Nkomo (2013), the company
has produced 3,940,000 vehicles in Japan and 3,495,000 vehicles across all other
manufacturing locations in 2012. In addition, Toyota has an extensive distribution
network. While the companys geographically well spread production base
diversifies business risks, its extensive distribution network provides a wider
reach, thus boosting revenues.
2.2

WEAKNESSES
2.2.1

Deterioration of Products
The fast expansion of Toyota made it more reliant on suppliers outside

Japan to provide the spare part and more senior engineers to proper supervise the
production. When they do not have enough resources and expertise, it can result
in deterioration of product quality. It is proven when product recalls have
increased in the recent year which can affect the brand image and overall sales of
the company (Andrews et al. 2011). Toyota reputation is built on quality and
safety. When recalls occur too often, it brings the companys image get under
way. For instance, Toyota faces Congressional hearings after recalled about 8.5
million vehicles globally in three separate actions and some models of vehicles
had been halted in United States for its sales and production (Kosdrosky, 2015).
2.2.2

Poor Allocation of Resources

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Toyota has shown a poor profitability of financial services segment. The

poor profitability related to the expenses of post-retirement benefits for senior
employees, as well as the payment of dividend for the shareholders (Yousigma,
2011). Huge investment in scheme of post-retirement by Toyota Company and the
demands of Toyotas shareholders to pay high dividend have led to low of return
in the company. In May 2009, Toyota had reported a record yearly net loss of
US$4.2billion (MBA-Lecturers, 2011). In 2014, Toyotas return on equity (ROE)
and return on assets (ROA) were 5.7% and 2.6% respectively. Low ROE and
ROA are due to the failure of the company in spending the shareholders money
effectively and efficiently. It may result to low returns for its shareholders (Toyota
Industries Report, 2014).
2.3

OPPORTUNITIES
2.3.1

Positive Attitude towards Green Vehicles

Today, consumers are more aware of the negative effects (air pollution)

caused by cars and thus moving their needs to a more environmental friendly
vehicles. With the increase in fuel prices, it opens up larger market for these
hybrid cars. Toyota Company takes alternative to produce Toyota hybrids to
attract customers. Consumers are more likely to buy new hybrid and electric cars
as they emit less carbon dioxide that can harm life on the earth and cause
greenhouse effect. Toyota hybrids are designed to create harmony between man,
nature and machine. By introducing new car models, Toyota satisfy varies
consumers tastes and needs by designing varies new hybrids, including
Highlander Hybrid, Avalon Hybrid, and Prius Family (Jurevicius, 2013).

2.3.2

Growth of Global Automotive Market

The global automotive industry was severely affected by the economic

downturn and declination of revenues occurs. To recover the declination of sales,

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government of China had reduced taxes to attract more customers and the State
Bank of India (SBI) decreased interest rates on automotive loans in year 2009.
This provides opportunities for Toyota to increase revenues and grow (MBALecturers, 2011). According to Pantong (2013), in Thailand, Toyota Motor
Thailand (TMT)s record sale breaks a new record of 500,000-unit mark,
compares to previous high of over 300,000 units in 2010. Toyota has become the
first to achieved record sales of 750,000 units after gone through lots of ups and
downs in the past.
2.3.3

Growth through Acquisitions

Toyota has successfully acquired other car companies in the past to grow

together. One of the acquisitions is between Toyota and BMW. They are
partnering to cooperate on hydrogen fuel cells, vehicle electrification, lightweight
materials and a future sports car (Reed & Bryant, 2012). The growing partnership
between the two companies boosts the technological know-how of the companies
and develops new products to increase revenues. Toyota also benefits in term of
cost-savings and boosting operational margins. For instance, they are
collaborating on lithium-ion batteries and other fuel-saving project which these
technologies are expensive and through the partnering, Toyota can offset costs and
share risks (Tschampa & Rosemain, 2013).
2.4

THREATS
2.4.1

Intense Competition
In the rating of best global brands, Toyota managed to rank in the Top 10

list. However, Mercedes and BMW are closely followed behind and they also
showed great increase in brand value (Interbrand Rankings, 2014). Toyota faces
strong competition from automotive manufacturers in its various markets in the
extension of globalization and consolidation in the worldwide automotive.
According

to

Kallstrom

(2015),

socioeconomic

trends,

infrastructure

development, customer requirements, and government regulations drive the

intense competition. Intense competition can lead to lower vehicle unit sales,
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which may result in downward pricing pressure when there are larger inventory,
thus impacting the financial condition and results of operations of the company.
2.4.2

Natural Disasters
Toyota has several manufacturing services in Japan, Thailand, China and

Indonesia. Some countries located in the Pacific volcanic ring are often subject to
natural disasters like volcanoes and earthquakes that disrupt manufacturing in the
amenities and causing declination in Toyotas production volumes. Indonesia,
especially, sits between the worlds most active seismic regions and meant the
islands experience some of the strongest earthquakes and most powerful volcanic
eruptions known on Earth (Israel, 2010). In Tahara City, Toyota Motor
Corporation signed an agreement to reinforce coordination of disaster aid
activities and create disaster-resilient communities in local stakeholder (Toyota
Global Newsroom, 2015).
2.4.3

Yen Currency Swings

Toyotas revenue comes from the sale in different foreign countries. The

profits earned abroad must be sent back to Japan, headquarter of Toyota and
converted into Japanese Yen. Toyota is sensitive to the fluctuations in foreign
currency exchange rates and is principally exposed to fluctuations in the value of
the Japanese Yen, the US dollar and the Euro. The strengthening of the Japanese
Yen against the US dollar and fluctuations in foreign exchange rates would have a
material adverse effect on Toyotas reported operating results, which in turn
would impact the valuation of the company (Nkomo, 2013). When there is
escalating yen exchange rate against other currencies, the profit rear by Toyota
will be declined. There are always fluctuations in yen exchange and this is a threat
to the earnings of Toyota sales.
3.0

CONCLUSION
Through this assessment, we have learned more on Toyota brand and its SWOT analysis.

We realized that SWOT analysis has assisted Toyota Motor Corporation in evaluating their
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business and support them to take advantage of their strengths and opportunities, as well as to
address weaknesses and threats for improvement. A good action planning can help the company
go through a substantial amount of time without mishap. Hence, we tend to recommend two
strategies in helping Toyota to improve their weakness that mentioned in 2.2.
First and foremost, one of the reasons of deterioration in products is due to the
insufficient of senior expertise in monitoring and supervising the production of automobile. In
this circumstance, HR manager should conduct recruitment and provide better terms and
conditions of employment to attract more expertise to join their company. In addition, training
program should be implemented for employees in order to enhance their knowledge, skills, and
abilities in producing high quality products. The contents of training program should include
quality management in term of ethics of work, continuous improvement, customer focus,
leadership, and teamwork.
On the other hand, Toyota Company should appropriately allocate their companys
resources especially in financial resources in order to prevent the company from poor
profitability. Appropriate investment should be made in scheme of post-retirement. The company
should consider their earnings which can cover the expenses of the company before they make
huge investment in the post-retirement matter. Besides, in term of dividend payment, Toyota
Company should suitably pay dividend to their shareholders. They cannot simply pay high
dividend to their shareholders in an attempt to retain them. In contrast, when the company
encounter financial crisis, the shareholders should consider companys difficulties in producing
high dividend for shareholders.
In a nutshell, Toyota is a great global brand and we believe that they can do their
improvement effectively and efficiently in bringing Toyota onto the top of its game by
addressing its strengths, weaknesses, and opportunities, as well as threats.

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