International Business Environment and Strategy Cambridge BC430002S C-1 Date of presentation: 29 November 2011 / Time: 10:00 a.m.

Presented By: Globalisation analysis: Sarang Singal The real forces of competition: Khalifa Inuwa Where in the world to locate: Geetika Tyagi Balanced Score Card analysis: Bhaumik Patel Strategic options analysis: Sharat Singal Reasons to Diversify analysis: Lina Cebatoriunaite

Introduction

Inventor Sakichi Toyoda invented the Toyoda automatic loom. Toyota launched the Model AA in 1936. In 1937 constructed a large factory in Koromo-cho (now Toyota City) in Aichi Prefecture, to begin full-scale car production. At the present Toyota is a public company.

Globalisation
It means to shift towards integrated and independent economy. The Globalisation is the combination of technology, economic, socio-cultural and political forces. It is the flow of money, ideas, information and goods/services. A wide deepening of interconnectedness in all aspects of social life from culture to everything. (Wall et al 2010) Worldwide Operations for Toyota Toyota operates worldwide with 50 overseas manufacturing companies in 26 countries and regions. Toyota's vehicles are sold in more than 170 countries and regions.

Global Market Sales

Compa nies Toyota BMW Merced es 2009 2010 2011 5,622,00 5,074,00 5,395,00 0 0 0 1,068,77 0 1,012,30 0 1,224,28 0 1,167,70 0 7,203,90 4 4,185,00 4,750,00 0 0 8,389,76 9 1,092,411

Volkswa 6,336,31 gen 9 Nissan GM Audi 3,515,00 0 7,477,17 8 9,49,72 9

Sources: Companies Websites Annual Report

2010 Global Market Share in %

Nissan market share 5.8%
Volkswagen market share 6.7% Toyota market share 6.8% Ford market share 5.1%
Toyota Nissan Ford Volkswagen

2010

Source: Business Source Premier and Nissan Corporate Website

Source: Google Images

Issues of Automobile in UK
Competitive Pressures: Constant Pressure on suppliers of price and high productivity. Sustainability: Public polls and environment analysis moving suppliers to manufacture different kinds of engine and long life vehicle. Supply Chain Management: In dynamic environment companies have chance to develop but hardly the advantage to modify the business performance. Emerging Market: Developing Economies of Asian Market are offering the advantage to grow sales and reduce cost.

Recovering of USA automobile industry

Employing more workers and by launching of new products Ford earned profit of $2.1 billion in first quarter of 2010 GM announced full loan of government with interest $6.7 billion Chrysler made a petty profit in first quarter after re-establishing again from losses

Results from poll US people prefer 38 percent domestic vehicles and 33 percent Asian

Source: economiccrisis.org

European Automotive Industry

Toyota Motor Europe (TME) has its headquarters in

Brussels, Belgium. TME is responsible for all western, Central and Eastern European countries including Russia as well as Israel and a number of Central Asian car Markets. European Automotive Industry is one of the worlds competitive market. Giving rise to firms struggling for marketshare.

Porters Five Plus four forces

Globalization

Potential Entrants

Reregulati on

Competitive
Suppliers

Buyers

Rivalry

Technology

Substitutes

Euro Crisis

Source: Michael E. Porter (1979). Adopted from Harvard Business Review. Downes etal Unleashing the killer App.

2009 European Market Share in % based on sold cars

15 10 5 0 13.1 9.9 9.5 4.9 2009

2009 European car sales per unit

2,500,000 2,000,000 1,500,000 2009 1,000,000 500,000 847,195 2,263,820 1,697,223

1,627,537

Peugeot

Ford

Renault Toyota

0 Peugeot Ford Reanault Toyota

Source: European Automobile Manufacturers Association: Statistics by manufacturer 2009

2010 European Market Share in %/ Car Sales per unit

2010 European Market Share in % based on registered sold cars

2,500,000

2010 European car sales per unit

2,187,942 1,700,442 1,296,050 2010

16 14 12 10 8 6 4 2 0

14 10.9

2,000,000 1,500,000

8.3 2010 4.1

500,000 0 1,000,000

646,860

Peugeot

Renault

Ford

Toyota

Peugeot

Reanault

Ford

Toyota

Source: European Automobile Manufacturers Association: Statistics by manufacturer 2010

2011 European Market Share in %/ Car Sales per unit

2011 European Market Share in % based on sold cars

15 10 5 0 Peugeot Renault Ford Toyota 13.9 10.1 8.2 3.8 2011

2011 European car sales per unit

1,500,000 1,000,000 500,000 0 Peugeot Renault Ford Toyota 1,416,475 1,060,933

886,345 397,851 2011

Source: European Automobile Manufacturers Association: Statistics by manufacturer 2011

Porters Five Plus four forces

Globalization

Potential Entrants

Reregulati on

Competitive
Suppliers

Buyers

Rivalry

Technology

Substitutes

Euro Crisis

Source: Michael E. Porter (1979). Adopted from Harvard Business Review. Downes etal Unleashing the killer App.

Porter M.E. (1990) - Diamond of Competitive Advantages of Nations

Source : Financial Times, 2011

Demand Conditions in the UK

Toyota UK has flexible plans to meet the demand of customers. Prices are set high because of the high quality standards in the manufacturing. Customers can apply online or at the centre according to the convenience No lengthy paperwork Making cars with no negative impact on the environment and completely eliminating waste is company's main goal.

Source : Toyota , 2011

Factor (Input) Conditions

Commitment to Hybrid Synergy Drive technology . Exs - Auris Hybrid , Pirus Plug in Hybrid.
TM UK has a flat organisation structure which makes the communication between different divisions, several departments really easy. Performance is measured and achieved through on the job training (OJT).

Plans to make UK the sole manufacturing base for hatchback versions of its next C-segment family car. More than 100 million to be invested in the Burnaston plant.
More than 2.1 billion spent since 1989 in TM UK plants.3100 employees already employed and up to 1500 jobs are expected to be created by mid of 2012.
Source : BBC, 2011

Related and Supporting Industries

TM UK is one of the leading European Companies which largely depends on its suppliers. A 'milk-run' service runs in the manufacturing plants of Toyota UK which picks up parts from various suppliers just-in-time to keep the production running effectively. 800 suppliers providing supplies to the UK plant. locally based in areas like Derbyshire and North Wales.

Source : Toyota, 2011

THE BALANCED SCORECARD

1992, Dr. Robert S. Kaplan & David P. Norton
Balanced Scorecard (BSC) A Strategic Performance Management Tool

The Balanced Scorecard Approach

Key Performance Indicators ( KPIS )

The Balanced Scorecard

Financial Perspective
Objectives KPIS Measures

Customer Perspective
Objectives KPIS Measures

Internal Business Process Perspective

VISION & STRATEGY

Learning & Growth Perspective
Objectives KPIS Measures

Objectives

KPIS Measures

Based on Kaplan & Norton 1992.

Financial Perspective- Dashboard

Customer Perspective

Internal Business Perspective- Dashboard

Learning and Growth- Dashboard

01 target base year,0% by FY2012 (landfill waste)

01 target base year,25% by FY2012

Source: Toyota annual report,Environmental report, Sustainablity Report & Forbes

Toyota Motor Company

Financial Perspective
Objectives KPIS Measures

Positive Negative

Customer Perspective
Objectives KPIS Measures

Improve Profitability & benefits to its shareholders

Cost of product sold Returns per share

Internal Business Process Perspective

Objectives KPIS Measures

Gain Complete Customer Satisfaction

New customers Everyday With customers

VISION & STRATEGY

Learning & Growth Perspective
Objectives KPIS Measures

Optimization

of resources and Energy per Vehicle reduce down used

End-To Life Cycle

Volume of waste CO emission

Based on Kaplan & Norton 1992.Data chosen according to Challenge, Kaizen, Genchi Genbutsu

Ansoff Matrix

Source: Google Image

Market Penetration in India

Toyota Innova launched in 2005 The car operates in Petrol and Diesel segment Toyota Innova is a Multi-purpose Vehicle (MPV)

It has 2.5ltr engine.

The Company Used Innova in Taxi advertisement to target customers.

Product Development in India

Toyota Innova developed innovative exterior. The car will be launched in 2012 and Toyota was expecting to raise its more sale in market. The features are low emissions, wooden autographix, 2.5ltr engine and more seating capacity. The car has more fuel efficiency.

Toyota strategy with its new Innova will aim at increasing sales and revenue.

Market Development in India

In India Toyota launched its two new cars Etios sedan and Prius Hybrid. Etios is for middle class segment and Prius hybrid is for upper class segment.

Prius operates in electric, petrol and diesel segment.

Etios operates in petrol and diesel segment. The strategy to launch Etios in India will be based on Companies thinking that India is a key market to grow strategic overall plan, but launching a Etios is the milestone not for India but for globally also. Strategy to launch Prius in India was due to its eco-friendly capability propelled by either petrol or electric power.

Diversification in India
Demand for luxury cars are rising.
Toyota planning to launch its new Lexus in 2012 in India. The car will be able to compete with BMW, Mercedes and Audi.

Toyota Crisis
Toyota is struggling from the combined effects of flooding in Thailand (March to April 2011) and an earthquake and tsunami in Japan Thailands worst floods in almost 70 years have disrupted manufacturing facilities in the southeast Asian nation. The Japan Automobile Manufacturers Association estimates that the companies may lose 6,000 units of production daily. In October 2011 the carmaker was forced to cut production around the world. Factory closures and other disruptions resulting from weeks of flooding . Spokesman Dion Corbett estimates that 150,000 units of production have been lost globally since October due to the floods. .

Reason for Toyota to Diversify into UK

Reduce financial risk. A motivation may be a desire to protect your financial assets by spreading risk among several different investments. The meaning "Don't keep all your eggs in one basket." And sometimes that's a smart idea. But often it's also a smart idea to do as Mark Twain suggested: "Put all your eggs in one basket. And then WATCH that basket." The cars are imported from Japan into EU would have import quotas placed on them. Therefore it would be a limit on how many Toyotas could be sold in the EU. Toyota want to increase their worldwide sales. The UK is the large market for new cars and is the canter of Europe. The UK Government made it clear they are wanted Toyota to build their new factory in the UK and would give any help. ( Lowering the barriers of entry)

The reason for Toyota to investing in UK

Since the early 1960s, Toyotas presence in Europe has grown and changed. Since 1992, when the first European production facilities was opened in the UK, Toyota has invested almost 7 billion throughout Europe. Toyota has a long and successful record of building vehicles and engines in the UK and facilities in UK are among the finest in the world in terms of efficiency and environmental performance. Quality matters to Toyota because Toyota puts the customer first. The investment Toyota will secure a dynamic future for Toyota Manufacturing UK as a leading manufacturing centre for company core models in Europe. The new hatchback will be a classed as small family vehicle similar in size to Toyota's Auris model and cars such as the Ford Focus and Volkswagen Golf. The factory currently produces the Auris and Avensis models and employs more than 3,100 people.

Toyota new investment

Toyota said it would be investing more than 100m at Burnaston to make it the sole European centre for making its next hatchback.

The first 500 workers are to be recruited in the middle of 2012.

Prime Minister David Cameron, who was visiting the factory, said it was - "fantastic news and a massive vote of confidence for UK manufacturing". Production of the hatchback will lead to as many as 1,500 additional jobs being created in the next two years, the company said.

BUSINESS SUMMARY OF CONCLUSION

Toyota Motor Corporation is one of the world's largest automaker by

sales and production. TMC, is a multinational automaker headquartered in Toyota city region of Aichi, Japan. Toyota-shi is also twinned with the county of Derbyshire, England. Toyota is engaged in the development, manufacturing, distribution and sales. Toyota sells its vehicles under mainly three brands: Toyota, Lexus and Scion.

References
Phpkb 2011, New Toyota Innova coming to India in 2012-pictures & information [online] Available at: http://www.knowledgebase-script.com/demo/article-1063.html [Accessed 20 November 2011]
Doval. P 2011 Coming Soon: Lexus' Luxury Sedans in India [Online] Available at: http://luxpresso.com/news-indulge/coming-soon-lexus-luxury-sedans-in-india/5734 [Accessed 21 November 2011] Motor beam 2011 Toyota Prius coming to India [Online] Available at: http://www.motorbeam.com/cars/toyota-prius/toyota-prius-coming-to-india [Accessed: 22 November 2011] Pwc 2011, Industry Issues [Online] Available at: http://www.pwc.co.uk/eng/industries/automotive_industry_issues.html [Accessed 13 November 2011] Toyota global 2011 [Online] Available at: http://www.toyota-global.com/ [Accessed 10 November 2011] Ensinger. D 2010 [online] Available at: http://economyincrisis.org/content/auto-industryrecovering [Accessed 15 November 2011] BBC News (2011, November 24). http://www.bbc.co.uk/news/business-15882974.

References

BBC 2011. Toyota announces 1,500 new jobs at Burnaston Factory. [Online] Available at http://www.bbc.co.uk/news/uk-england-derbyshire-15883061 [Accessed 15 November 2011] Toyota 2011. Supplier relations. [Online] Available at: http://www.toyota.co.uk/cgibin/toyota/bv/generic_editorial.jsp?navRoot=toyota_1024_root&fullwidth=true&noLeftMenu=true&for ceText=X&edname=finance_new_home&zone=Zone+Finance&id=finance_intro [Accessed 15 November 2011] The Financial Times 2011. Stress- testing western theories. [Online] Available at: http://blogs.ft.com/mba-blog/2010/10/01/but-does-it-work-in-china-stress-testing-westerntheories/#axzz1f2e5uOcz [Accessed 15 November 2011] Toyota 2011. Toyota Financial Services[Online] Available at http://www.toyota.co.uk/cgibin/toyota/bv/generic_editorial.jsp?edname=finance_new_home&noLeftMenu=true&forceText=X&id= finance_intro&zone=Zone+Finance&Failed_Reason=Session+not+found&com.broadvision.session. new=Yes&Failed_Page=%2fbv%2fgeneric_editorial.jsp&navRoot=toyota_1024_root&fullwidth=true [Accessed on 15 November 2011] ACEA 2011, Statistics. [Online] Available at: http://www.acea.be/ [Accessed 25 November 2011]. Downes, L. and Mui, C., Unleashing the Killer App: digital Strategies for market dominance. 1998. United States of America. Harvard Business School. Harvard Business Review 2011, The five forces that shape strategy. [Online] Available at: http://hbr.org/2008/01/the-five-competitive-forces-that-shapestrategy/ar/1?referral=00269&cm_sp=endeca-_-spotlight-_-link [Accessed 23 November 2011]

References

ACEA 2011, Statistics. [Online] Available at: http://www.acea.be/ [Accessed 25 November 2011]. Downes, L. and Mui, C., Unleashing the Killer App: digital Strategies for market dominance. 1998. United States of America. Harvard Business School. Harvard Business Review 2011, The five forces that shape strategy. [Online] Available at: http://hbr.org/2008/01/the-five-competitive-forces-that-shapestrategy/ar/1?referral=00269&cm_sp=endeca-_-spotlight-_-link [Accessed 23 November 2011]

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