MGT330 Business Strategy (8)

While working on this task, assume that your report will be presented to senior management to inform the strategy team of the key strategic issues facing the company.

Requirements

To complete your report for Senior Management you will need to include the following sections:

1. Executive Summary
2. Background - Give a brief account of the background of the company/organisation
3. External Analysis – Conduct an analysis of the organisation’s external environment and competitive landscape
4. Internal Analysis – Conduct an analysis of the organization’s internal environment including its resources/capabilities identify the company’s core competencies and resulting ability to outperform competitors
5. Identify and analyse the issues in the internal and external environments and prioritize them in the order you feel are most critical

Answer:

Background

Toyota Motor Corporation is the parent company of Toyota Motors Australia. Toyota Motors is based in Japan. Toyota Australia manages and operates the business of Toyota Motors in Australia. Lexus Vehicles in Australia is also a project by Toyota Australia (toyota.com, 2018). Founded in the year 1963, the company manufactures cars all over Australia. The headquarter of this company is situated in Port Melbourne, Victoria. Mr Max Yasuda is the chairman of the company, and Matthew Callachor is the CEO of the company. There is a significant list of Toyota Vehicles built in Australia such as Toyota Tiara, Toyota Crown, Toyota Camry, Toyota Avalon Toyota Aurion and many others (toyota.com, 2018). The company holds the largest car market share in Australia. It sold 218,738 vehicles in the year 2017 which includes 9027 Lexus also. They maintain the brand quality and production rates equal because they believe that every product is made by ‘Toyota', and it does not matter where they are manufactured(toyota.com, 2018).

Macro –Environment Analysis

Toyota Company’s business strategies show the challenges the company faces which will be identified in this PESTEL analysis. A PESTEL analysis is a tool to find out the threats and opportunities in the company based on the macro environmental factors.

Political

Technological innovations are increasingly supported by the government to elevate the economic status of the country (Barnes, 2017). Toyota can expand its business with the help of national trade agreements. The development in technology has given rise to the demand for vehicle in this country. The Toyota company is making the best use of these opportunities to develop internationally.

Economic

 Toyota can enjoy the opportunity to grow in the budding financial position of Australia, which is Toyota Motor ‘one of the biggest markets. The dominant U. S dollar is a threatening factor for Toyota because it is reducing the benefit margins and the attractiveness of Toyota products. Such macro environmental factors show that Toyota must enhance its business efficiencies to enlarge the opportunities in the international markets (Soo, Compston & Doolan, 2016).

Social

  Toyota can grow fast satisfying more the public demand for electric and hybrid vehicles though it already has launched a hybrid car (Wen, 2016). The threat coming from the current wealth gap in the society is also considerable. Therefore, Toyota’s intensive growth strategies are supposed to focus on product innovation to parallel with the changing customer choices and address the socio-cultural external factors in the business.

Technological

The immense growth in the use of and dependency on mobile services is creating enormous opportunities for the Toyota Company to expand its market via mobile marketing. The company's alternative-fuel vehicles services might suffer because of the less number of the alternative –fuel stations. Thus the company needs to concentrate on service improvement and enhancement in technology to compete successfully in the challenging macro environment (Dechezleprêtre, Neumayer & Perkins, 2015).

Ecological / Environmental

It can utilise the low-carbon movement and design its products accordingly. Toyota can launch new products with new features such as alternative fuel running cars, electricity-driven car to save the declining petroleum reserve. Therefore, Toyota must focus on its innovation projects to become eco-friendlier and attractive to the customers.

Legal Factors

Toyota can enjoy the legal opportunity by abiding by the environment safety regulations. It can also modify the engines to avail the safety regulation opportunities. Moreover, the increasing effect of the intellectual property rights has enabled them to avail more protection on their intellectual property.  

Therefore, from the PESTEL analysis of Toyota Company, it is apparent that the company can grow and expand itself by adopting new ideas and innovation in its products. It can utilise the political, legal, environmental, social, technological and economic benefits that Australia offers.

Micro- environment Analysis

 Porter five force comes under the micro-environment analysis of an organisation. There is high competition in the automotive industry. Though Toyota has served in this industry for a century, the task is not that easy for it to retain the market position. This tool provides a better insight into the company's micro environment, who the competitors are, what are the bargaining powers and many other aspects.

Competitive Rivalry (strong force)

In the growing competitive automotive industry, firms prefer to compete rather than exist. The number of rivals has grown with the passage of time and Ford, Suzuki, Mercedes, BMW are the toughest ones. In order to sustain in this highly competitive market, technological innovation and high-quality marketing strategy are mandatory. Therefore, the company must take its competitors seriously.

Bargaining Power of Suppliers (Weak force)

The suppliers in any industry aim at influencing the firm to advance their business. It is the case with almost all brands, but the situation with Toyota is different. There are plenty of good suppliers in the market which supports the availability of the products reducing the bargaining power of the suppliers. The Company, therefore, should utilise the availability of the suppliers.

Bargaining Power of the Customers (Strong force)

Since there are so many competitors and substitute products are available in the market, the bargaining power of the customers are high and considered to be a potent force for Toyota(toyota.com, 2018). However, the quality of the products manufactured by Toyota Company cannot be questioned, but the switching costs are low means the customers can switch from this brand to another bearing no costs. Toyota needs to observe that the products quality is satisfying the different tastes of the customers.

The threat of Substitutes (moderate force)

  In most of the cases, the customers can quickly shift to substitute products such as bicycles, public bus and trains, taxis. Only one part that keeps the business in the track is that these substitutes cannot excel Toyota regarding service. Toyota is always one step ahead of these products. Though the threat concerning replacement by alternatives is moderate, Toyota should make its products more affordable, accessible and convenient.

The threat of New Entrants (Weak Force)

 The risk of new entrants is comparatively weak because the market is already occupied by giant companies and to compete with them, first of all, one has to have a considerable capital. Secondly, it takes years to grow, develop and get established in the highly competitive market. Such barriers make the threat of new entrants weak. This analysis shows that Toyota can retain its position in the market without any fear of new entrants.  

Therefore, it is apparent that the case is not that easy for Toyota to retain its position in the market share. There are so many threats as well as opportunities, and Toyota makes the best use of the opportunities to eradicate the threats and stay firm in the industry.

Internal Environment Analysis 

The purpose of this section is to analyse the resources and competencies of Toyota Australia that has supported it to stay associated with one of the best automotive manufacturers that is Toyota Motors. It is necessary to know about the company's resources and competencies because these factors determine its business strategy and performances (Caruso et al., 2015). Market strategy and resources are dependent on each other. One needs resources to build a stable marker strategy, and when all the resources are available, a robust market strategy is needed to use the resources systematically (Dombrowski & Engel,2014). Resources can be classified into types, and each one is equally essential. These are; technological, physical, human capital, intellectual capital and financial strength. Resources can be defined as a company's perceptible or imperceptible assets of a company such as people, buildings and reputation (Roos & O'Connor, 2015). Over the years, Toyota Australia has established competencies in the inventory management, supply chain management and ‘lean' manufacturing (Malihi & Shee, 2017). It has enabled them to spread their business on a global scale and react instantly and flexibly to the fast-changing customer preferences (Olivetti et al., 2017). In 2018 the company earned the total revenue of $8,930,798,000 covering sales and other revenue. The company has invested a lot of money in human, technological and physical resources. The company focuses on producing cheap and trustworthy cars in the market to attract the customers.

 It can be seen from Toyota’s reputation in the ‘lean production', inventory management and supply chain management that they are extremely skilled in these areas (Stewart et al., 2016). Toyota also has the automated plants and in-built control systems which are quite rare in other Australian car companies. They have the extremely advanced soft wares well-trained workers who operate them properly (Rodgers, 2015). They apply the online video conferencing strengthening the communication and association with the parent company Toyota Motors A company gets better with experience and solving a huge range of problems. Toyota Australia has acquired that competency and experience through these years. Their experience is their one of the most effective competencies. Toyota has established an organic business structure and web links to instantly transfer all the important information, verdicts and materials through each link(toyota.com, 2018). Toyota interacts with the customers more aptly and speeds up their communications to respond quickly to the changing demands of the customers in a far better way than its competitors. It has been surveyed that Toyota takes only five days to model and make a car. The company give value to the needs and affordability of the customers and produces all types of cars using the cheap-and –best policy(toyota.com, 2018).  Toyota believes in building long-term strategic relationships with the buyers and the suppliers. Toyota ‘s strong supplier and buyer relationship have enabled it to increase the competitive status in the worldwide automotive industry. Their bonding trust relationship with the customers and the –in – time parts and products delivery is another powerful reason behind their fast development. Toyota’s products are valuable, rare, inimitable that are keeping the organisation running through the years efficiently (referred to picture 1 in the appendix).

Findings and Recommendation

The findings from the entire report suggest that Toyota Company based in Australia is one of the largest expanding companies all over Australia. There are a lot of giant market players in the competitive automotive industry, and remarkably Toyota is one of them. The company faces specific external and internal issues regarding political, economic and other factors as well as the expense issues in manufacturing the products. On the whole Toyota Australia is a reliable company backed by Toyota Motor Corporation (Japan) holding the potential to improve and fight all the shortcomings.

  Toyota Company (Australia) is recommended to stay attached with the TPS (Toyota Production System) which is an internationally accepted system giving more value to the Cars produced by Toyota (Doshi et al., 2017). The company should incorporate more rained staffs to spread the business more. The concentration should be on the customers (as always it does) and not the number of cars sold because customers are the foundation of a business (Lansbury, Wright & Clibborn, 2017). Keeping in view the growing craze for hybrid vehicles the company should manufacture latest designed hybrid cares (Leng et al., 2015). Advancement and innovation in the technology can also be recommended. The company should stay updated with the feedbacks from the customers to avoid customer dissatisfaction.

Conclusion

  Therefore, from the above report, it can be concluded that the cars and products of Toyota area better for the environment and society. Since there is a lot of demand for the Toyota products all over Australia and the world, the company earns greater revenues every year. The innovative hybrid cars have become the signature product of Toyota for its global appeal. The company is expected to incorporate advanced technologies to favour the taste of the customers and retain its vast market position. It can be hoped that within the next two years the company will see greater success and become more firm in its place in the world.

References

Barnes, J. (2017). The Automotive GVC: Policy Implications for Developing Economies. Future Fragmentation Processes, 133.

Caruso, D., Fabretto, M., Field, S., Evans, D., Murphy, P., & Hall, C. (2015). Market evaluation, performance modelling and materials solution addressing short wavelength discomfort glare in rear view automotive mirrors. Translational Materials Research, 2(3), 035002.

Dechezleprêtre, A., Neumayer, E., & Perkins, R. (2015). Environmental regulation and the cross-border diffusion of new technology: Evidence from automobile patents. Research Policy, 44(1), 244-257.

Dombrowski, U., & Engel, C. (2014). Impact of electric mobility on the after sales service in the automotive industry. Procedia CIRP, 16, 152-157.

Doshi, A., Smith, R. T., Thomas, B. H., & Bouras, C. (2017). Use of projector based augmented reality to improve manual spot-welding precision and accuracy for automotive manufacturing. The International Journal of Advanced Manufacturing Technology, 89(5-8), 1279-1293.

Lansbury, R. D., Wright, C. F., & Clibborn, S. (2017). Who Will Make Our Cars: Global Lessons from the Demise of Australia's Auto Industry. Members-only Library, 21.

Leng, K. C., Hamid, A. B. A., Chin, T. A., & Dawei, Z. (2015). Understanding Generation Y Buying Intention Toward Hybrid Car in Johor Bahru. Sains Humanika, 5(2).

Malihi, K., & Shee, H. (2017). STRATEGIC VEHICLES IMPORT SUPPLY CHAIN: A PARADIGM SHIFT IN AUSTRALIAN AUTOMOTIVE INDUSTRY. Asian Academy of Management Journal, 22(1).

Olivetti, E. A., Ceder, G., Gaustad, G. G., & Fu, X. (2017). Lithium-ion battery supply chain considerations: analysis of potential bottlenecks in critical metals. Joule, 1(2), 229-243.

Rodgers, J. (2015). Jobs for creatives outside the creative industries: a study of creatives working in the Australian manufacturing industry. Creative Industries Journal, 8(1), 3-23.

Roos, G., & O'Connor, A. (2015). Government policy implications of intellectual capital: an Australian manufacturing case study. Journal of Intellectual Capital, 16(2), 364-389.

Soo, V. K., Compston, P., & Doolan, M. (2016). Is the Australian Automotive Recycling Industry Heading towards a Global Circular Economy?–A Case Study on Vehicle Doors. Procedia CIRP, 48, 10-15.

Soosay, C., Nunes, B., Bennett, D. J., Sohal, A., Jabar, J., & Winroth, M. (2016). Strategies for sustaining manufacturing competitiveness: Comparative case studies in Australia and Sweden. Journal of Manufacturing Technology Management, 27(1), 6-37.

Stewart, P., Mrozowicki, A., Danford, A., & Murphy, K. (2016). Lean as ideology and practice: A comparative study of the impact of lean production on working life in automotive manufacturing in the United Kingdom and Poland. Competition & Change, 20(3), 147-165.

toyota.com. (2018). New Cars Toyota Australia: Prices, Service Centres, Dealers, Test Drives. Retrieved from https://www.toyota.com.au/

Wen, W. (2016). Automation of electric vehicle and development prospects.