toyota swot analysis essay

SWOT Analysis of Toyota (6 Key Strengths in 2023)

This Toyota SWOT analysis reveals how one of the most innovative automotive companies used its competitive advantages to become the dominant player in the automotive industry.

It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. If you want to find out more about the SWOT of Toyota, you’re in the right place.

For more information on how to do a SWOT analysis please refer to our article.

Keep reading.

Company Overview

Toyota Motor Corporation (further Toyota) is the world’s leading automaker (often tied with Volkswagen for 1st-2nd place) based in Toyota City, Japan. In 2012, the company was the first automotive company to produce over 10 million vehicles in a single year.

The company operates 4 different brands: Daihatsu, Hino, Lexus and Toyota. Toyota’s brand is the world’s 7th most valuable brand in the world and the most valuable automotive brand, worth US$50.291 billion.

The main Toyota’s markets are Japan, United States and China, where the company sells over 50% of its vehicles. The company produces the best-selling hybrid vehicle Prius.

You can find more information about the business in Toyota’s official website or Wikipedia’s article .

Toyota SWOT analysis

1. strong focus on research and development (r&d) leading to some of the most innovative vehicles in the world.

Toyota is famous for its innovative culture. The company’s goal on being ahead of its competition by introducing some of the most innovative vehicles in the market has proven to be a successful strategy.

Toyota’s R&D initiatives, especially in producing environmentally friendly vehicle technologies, vehicle safety and information technology, provide it with some of the best strategic advantages.

The company operates one of the largest research facility network among the automotive companies to achieve the best possible results from its R&D expenditure. In total, 15 research facilities in 8 different countries, including Japan, United States, China, Thailand, Australia, Germany, France and Belgium, focus on 3 key R&D areas: [1]

Basic research. This area researches basic vehicle technology.
Forward-looking and leading-edge technology development. Development of newest technology and components that surpasses rivals’ technologies.
Product development. New model development and upgrades for existing ones.

Toyota’s focus on innovation has resulted in one of the highest automotive R&D spending. Toyota’s R&D expenditures were approximately JP¥1.064.2 billion (US$9.613 billion) in fiscal 2018, ¥1,037.5 billion (US$9.579 billion) in fiscal 2017, and ¥1,055.6 billion (US$8.787 billion) in fiscal 2016. [1]

Figure 1. Toyota’s and its competitors R&D spending (US$ billions)

Among the automotive companies, only Volkswagen spends more on R&D than Toyota. Nonetheless, Toyota uses its R&D budget the most effectively, spending just 3.6% of its total revenue on R&D, while Volkswagen spends 6.7%.

This means that Toyota needs to spend less on R&D to generate the same amount of revenue than its key rivals.

Huge, efficient R&D spending has allowed Toyota to gain a competitive advantage over its competitors and to become one of the largest automotive manufacturers in the world by researching and introducing the leading-edge technology and vehicles to the consumers.

2. The most valuable and one of the most recognizable automotive brands in the world

Toyota Motor Corporation was incorporated in 1937 and since then, has become one of the most recognizable brands in the world.

According to Interbrand [5] and Forbes [6] , Toyota’s brand is the world’s 7th and 9th most valuable brand worth US$50.291 billion and US$44.7 billion, accordingly. In both lists, it is the most valuable brand out of all automotive companies.

Figure 2. Automotive brand ranking by Interbrand

Brand value is closely related to brand reputation and recognition. Toyota, which produced and sold 8.964 million vehicles in 190 countries in 2018 alone, has one of the widest consumer reach in the world.

Manufacturing, research and sales operations worldwide, combined with a huge number or vehicles sold, as well as advertising spending has helped the company to create one of the most recognizable brands in the world. Brand recognition helps the company to introduce new products to the market more easily and with fewer costs.

Toyota brand is also one of the most reputable brands in the automotive industry. Over its 75 years’ history, the company received hundreds of awards accolades in vehicle design, safety, environment-friendliness and manufacturing operations. [7]

In 2018 alone, the company has received 7 IIHS (Insurance Institute for Highway Safety) Top Safety Picks 2018 awards (more than any other automotive company) for its Toyota Corolla, Prius, Camry, Avalon, Highlander and RAV4 vehicle models as well as 4 other Top Safety awards for Lexus models. [8]

The company received more 2017 J.D. Power Vehicle Dependability Awards than any other brand. [9] In addition to the awards for its vehicles, the company ranks the 2nd on the Carbon Clean 200 List, which ranks the companies according to their efforts to transition to clean energy. [10]

Toyota’s brand and recognition provides the company with a competitive edge over competitors as few other automotive brands are so well-known and reputable.

3. Toyota Production System

Toyota production system or TPS is a manufacturing system developed by Toyota. The system’s philosophy is to ‘eliminate all waste from manufacturing process’. The system was based on Just-in-Time concept. TPS has become very successful in allowing the company to increase production efficiency, decrease manufacturing time and simplify its processes. All of which resulted in lower costs and better quality vehicles.

Figure 3. Toyota Production System

Due to the TPS, Toyota’s operating profit margin of 8.2% is the highest when compared to its largest competitors Volkswagen’s operating profit margin of 6% or General Motors’ operating profit margin of 6.2% (in 2016).

Figure 4. Toyota and its largest competitors’ operating profit margin comparison (in percentages)

The graph shows that Toyota constantly enjoys higher operating profit margins than Volkswagen or General Motors. This means that costs of running the business are much lower for Toyota, which is most likely the result of the company’s production system.

Toyota’s production system is unique and is very hard to replicate. It is a strength few rivals can match.

4. Competence in electrified vehicle production

Toyota is heavily invested in its hybrid vehicle (HV) lineup and is betting its long-term future on HVs and electric HVs.

The company has introduced its first hybrid vehicle Toyota Prius in 1997. Prius became the first mass-produced hybrid vehicle and the most successful to date. By the end of 2017, the company has sold over 6.5 million Prius models, of which 457.4 thousand were sold in 2017 alone. Toyota’s total sales of electrified (mostly hybrid) vehicles were 1.521 million in 2017. Since 1997, the company has sold 11.471 million electrified vehicles, more than any other automotive company in the world. [12] The sales of Toyota’s electrified vehicles are growing faster every year.

Figure 5. Toyota’s sales of electrified vehicles in 2010-2017 (in thousands)

Currently, Toyota offers over 30 hybrid vehicles and plug-in hybrid vehicles under its four brands. Toyota’s HV technology is probably the best-in-class. It is proven by a 2017 Prius Eco model, which is the most fuel efficient car that doesn’t have a plug-in capability.

Figure 6. Toyota’s sales of electrified (mostly hybrid) vehicles by model in 2017

Toyota’s competence in hybrid vehicles is a long-term competitive advantage that its competitors will not be able to match in a near future.

5. Toyota environmental challenge 2050

In 2015, Toyota announced six environmental challenges that it hopes to achieve until 2050. Covering issues such as climate change and resource and water recycling, the challenges all involve formidable difficulties, but Toyota is committed to continuing with steady initiatives to achieve sustained development together with society. [1]

In its New Vehicle Zero CO2 Emissions Challenge, Toyota has set itself the target of achieving by 2050 a 90％ reduction in new vehicle CO2 emissions compared to 2010. Towards this goal, Toyota will roll out the technology it has built up in the hybrid vehicle sector, adapting it to plug-in hybrid vehicles and to fuel cell and electric vehicles, which generate no CO2 emissions whatsoever. Toyota is committed to further accelerating its initiatives toward the development and widespread adoption of hybrid vehicles and other eco-cars.

The company’s clear strategy and past successes in achieving environmental challenges before the deadlines will help the company to strengthen its brand reputation, lower the environmental costs and will help to achieve compliance for government regulations earlier, which will ultimately result in more sales and higher profits.

6. Production of the most dependable cars in the industry

In 2018, a U.S. Vehicles Dependability Study (VDS) done by J.D. Power revealed that Toyota has some of the best industry’s ratings for vehicle dependability. The VDS measures the number of problems experienced per 100 vehicles during the past 12 months by original owners of 2015 model-year vehicles. The lower the score the better vehicle dependability.

Toyota’s Lexus was ranked as the most dependable brand among all automotive brands with only 99 problems per 100 vehicles. Toyota’s own brand ranked 9 th with only 127 problems per 100 vehicles. Toyota Motor Corporation also won 6 out of 19 category awards, two for Toyota Tacoma and Toyota Prius and four for Lexus various models, more than any other automotive company.

Figure 7. J.D. Power 2018 Vehicles Dependability Study (problems per 100 vehicles)

1. Lack of competence in autonomous vehicles

Toyota has long been reluctant to invest in autonomous vehicle technology. The company has been engaged in R&D aimed at contributing to the complete elimination of traffic casualties, but the company had no plans to introduce completely autonomous vehicles in the near-future. [1]

The company’s first attempt to developing such technology was in 2015, through the Team Mobility concept, which aims to facilitate the connection between the car and its surroundings and between the car and the driver to assure safe and efficient driving. These initiatives were far behind rivals’ efforts on autonomous vehicles and Toyota had to step up.

In 2017, Toyota Research Institute introduced the first Toyota autonomous vehicle trials on roads. [14] In 2018, the company announced that it will invest US$2.8 billion into the new Toyota Research Institute-Advanced development company. The company will focus on developing software for artificial intelligence, which will be used for autonomous vehicles. [15]

Nonetheless, Toyota still lags behind its main competitors like General Motors, Volkswagen and Ford. Ford and General Motors were testing their first autonomous cars back in 2013. [16] In 2018, these companies have made more progress and have better technologies in developing fully autonomous cars. According to the research done by Navigant Research, Toyota’s strategy and execution in developing autonomous vehicles is worse than most of its rivals. [17]

Figure 8. Assessment of Strategy and Execution for 19 Companies Developing Automated Driving Systems

The company’s lack of technology and experience in building autonomous vehicles puts it at disadvantage against such competitors as General Motors, Ford and Volkswagen Group.

2. Negative publicity due to large vehicle recalls damages company’s brand and sales

Vehicle recalls affect every automaker. Toyota is no exception. While some automakers experience fewer recalls, other have to recall millions of vehicles each year. Toyota’s recall rates are very high and this draws more negative publicity than usual. In 2017 and 2018 (July) alone, the company has issued the following recalls:

2.9 million vehicles recalled in China, Japan and Oceania, due to faulty Takata airbags;
228,000 Tacoma vehicles recalled over an issue that could cause drivers to lose control of their cars;
300,000 Sienna vehicles sold in the U.S. were recalled because of safety concerns;
700,000 vehicles recalled in South Africa over faulty airbags;
74,000 pickups and SUVs were recalled over safety issues;
600,000 additional vehicles recalled in the U.S. over airbag issues;
115,000 Lexus cars recalled due to possible fuel leaks in engines.

These are only some of the biggest recalls issued by Toyota in 2017 and 2018. Large and frequent recalls negatively affect the company’s brand reputation and result in disappointed customers as well as fewer sales.

3. Weak presence in China lowers company’s future growth potential

China is the world’s largest automotive market and Toyota’s third largest market in terms of volume. The company currently sells 14.5% of its vehicles there. It isn’t the most profitable market for car manufacturers, but with 28.2 million vehicles sold in 2017, it dwarfs any other vehicle market, including the U.S. [1]

Toyota sold 1.3 million vehicles in China in 2017. The company sold 6% more units in 2017 when compared to 2016 (1.23 million units sold) and 16% more units when compared to 2015 (1.12 million units sold), but its market share increased only slightly from 4.5% in 2015 to 4.6% in 2017. [1]

Figure 9. Automotive companies’ market share in China

China is the largest vehicle market for the two main Toyota’s competitors, General Motors and Volkswagen where both companies sold 4.041 million vehicles and 4.020 million vehicles, and held 14.3% market share, respectively.

For any automotive company, China is a crucial market, if the company wants to succeed in the future. Toyota, which has a weak market share in China will find it hard to compete with General Motors and Volkswagen in the long run.

4. Poor brand portfolio

Toyota sells its vehicles under 4 different brands: Hino, Daihatsu, Lexus and Toyota. Toyota currently sells the majority of its vehicles under its own ‘Toyota’ brand, with top-end luxury cars being sold under its Lexus brand. [1] By comparison, some of its major competitors have a much larger brand portfolio, as illustrated below.

Figure 10. Brand portfolio of selected major Ford competitors

While Toyota’s branding strategy assists with brand awareness and recognition (Toyota is the most valuable automotive brand in the world), there are several potential disadvantages to this approach. Toyota’s competitors with brand diversification (i.e. multiple brands) can more easily create a hierarchy for their vehicles in consumers’ minds, facilitating product differentiation. A brand diversification strategy can also minimize the fallout from any controversies that a vehicle manufacturer may experience.

A company like Toyota with their minimalist branding strategy is unlikely to be able to negate the negative publicity associated with product recalls, advertising scandals or vehicle failures.

With only a few brands, Toyota cannot target many different consumer segments and satisfy their various needs as well as Volkswagen or General Motors with their many brands.

Opportunities

1. future markets for self-driving vehicles.

The global demand for autonomous vehicles is growing fast, mainly due to the need to improve road safety, ease the driving experience and minimize traffic congestion in big cities. There are five main levels of vehicle automation:

Figure 11. Levels of automation in vehicles

At the moment, companies offer only level 2 automation vehicles for general consumers. According to Markets & Markets research [19] , auto manufacturers produced only 2.73 million of these vehicles in 2016. Other research from Grand View Research reports that fully autonomous vehicles will be introduced to the market at a significant scale only in 2021-2022. [20]

In 2017, there were 44 companies working on autonomous vehicles, including Toyota. [21] While Toyota is one of the latest major automotive companies to start working on autonomous vehicles, the company expects to introduce vehicles with automated driving on highways by 2020 and vehicles with automated driving in urban areas in early 2020s. [1]

Even though the potential opportunity for autonomous vehicles is huge, there are still many challenges. It is yet to be determined what the potential market size would be, how effective the vehicles are, costs, and how they will be regulated in terms of safety concerns. For example, currently only 33 states in America permit driverless cars on the roads. [22] However, in terms of innovation and potential, the market for self-driving cars could potentially be very lucrative. It is an opportunity that automotive companies have no choice but to explore in the current competitive technological environment.

2. Significant untapped potential of Chinese, Indian and other Asian international markets

Along with many global automotive companies, Toyota has been capitalizing on China’s double digit economic growth for much of the past decade. Although this economic growth is slowing [23] , China still represents a country of tremendous opportunity for automotive manufacturers, including Toyota. China’s middle class is growing on the back of its economic growth, and demand for motor vehicles is increasing accordingly. [24] The Chinese motor vehicle industry is currently the largest in the world. Toyota however only has a 4.6% market share in it. [1]

Toyota’s strategy to increase market share in China is to focus on introducing more hybrid and electric vehicles to comply with strict Chinese quotas over production and sales for new energy vehicles. With its strong brand reputation and increasing focus on research and development, Toyota is well-positioned to capitalize on this opportunity.

In India, Toyota similarly has a minimal market share of just 5%. [25] However the market is forecast to be the world’s third largest by 2020 behind China and the United States, on the back of a rising middle class population, many of whom will be able to afford cars for the first time. [26]

By 2030, Asia’s share of the world’s middle class population is predicted to double, from 30% to 60%. Much of this growth will be in China and India, but also in Indonesia, Vietnam, Thailand and Malaysia. In many of these countries, the average number of cars per household is well below the levels in Western countries. [27] These countries represent a significant opportunity for all automotive companies, including Toyota.

3. Improving U.S. economic conditions

North America is the largest Toyota’s geographic segment by vehicle unit sales. The company sells 31.3% of its vehicles in Mexico, Canada and the United States, combined. The company reveals that the U.S. accounts for 87% of the North America’s sales, which makes it the second most important Toyota’s market in terms of revenue, after Japan.

The outlook for the U.S. economy is positive [28] , which is an opportunity for Toyota to consolidate and increase its already significant market share. Toyota currently has the 3 rd largest market share in the U.S.

Figure 12. Market share of major competitors in the U.S. market

Unlike Ford or General Motors, Toyota does not rely as heavily on pickup trucks to generate the majority of its sales in the U.S., so the company has better opportunities grow its sales by offering smaller electrified passenger cars for the market.

4. Timing and frequency of new model releases

The market share of automotive companies is significantly impacted by the timing and frequency of new model releases, a fact that Toyota itself acknowledges. [1] Historically, new models have tended to have major upgrades every 4 or 5 years, with only minor modifications in between.

However, due to rising consumer expectations in relation to in-car technology and the competitive nature of the industry, there is an argument to release upgraded models more frequently. Toyota is well-positioned to be able to do this, with its current focus on R&D. The key will be its ability to cost effectively implement technology initiatives in order to maximize competitive advantage.

1. Increasing competition in the worldwide automotive market

The automotive industry is highly competitive, both in the Japan’s automotive market and in international markets around the world. Toyota’s international rivals such as Volkswagen and General Motors have aggressively taken market share from Toyota. Despite the fact that the worldwide automotive market is already highly competitive, the competition is further increasing due to the excess of vehicle production, rapid technological changes, new entrants and saturation of the largest markets. This competition may further increase with the potential future entry of Chinese and Indian rivals.

In international markets, particularly in growth regions such as China, there is a similar intensity of competition. This competition is fueled by the fact that global automotive production capacity far exceeds demand. In 2017, there was an estimated global excess production capacity of 35 million units. [2]

In addition to traditional automotive competitors, technology companies such as Google and Apple are showing interest in the automotive market, through initiatives such as the development of driverless vehicles and sophisticated in-car technology that is compatible with their devices and operating platforms. [30] This may give these organizations technological influence over future vehicle development, which automotive companies may not be able to control.

2. The automotive industry is subject to various governmental regulations

Increasing government regulations is one of the key threats affecting Toyota. The company has emphasized this issue in its financial report:

“The worldwide automotive industry is subject to various laws and governmental regulations including those related to environmental matters such as emission levels, fuel economy, noise and pollution. Toyota has incurred, and expects to incur in the future, significant costs in complying with these regulations.

Furthermore, new legislation or changes in existing legislation may also subject Toyota to additional expenses in the future. If Toyota incurs significant costs related to meeting laws and governmental regulations, Toyota’s financial condition and results of operations may be adversely affected.” [1]

3. Potential economic and political volatility in international markets

With Toyota currently generating 68.4% of its total revenue from outside of its home Japan market, the company is vulnerable to international economic and political conditions. Stricter local government regulations and/or import controls, rising interest rates as well as the outbreak of hostilities or acts of terrorism could all adversely affect Toyota’s operations internationally. Toyota acknowledges this risk in its most recent financial report:

“Each of the markets in which Toyota competes has been subject to considerable volatility in demand. Demand for vehicles depends to a large extent on economic, social and political conditions in a given market. As Toyota’s revenues are derived from sales in markets worldwide, economic conditions in such markets are particularly important to Toyota.”

“Toyota is subject to various risks associated with conducting business worldwide. These risks include natural calamities; political and economic instability. Should the major markets in which Toyota purchases materials, parts and components be affected by any of these events, it may result in disruptions and delays in the operations of Toyota’s business. Should significant or prolonged disruptions or delays related to Toyota’s business operations occur, it may adversely affect Toyota’s financial condition and results of operations.”[1]

4. Toyota may be adversely affected by natural disasters

Toyota and its suppliers have many manufacturing facilities in Japan, Thailand, China and Indonesia. These countries, are often affected by natural disasters, such as earthquakes, tsunamis and flooding. Every occurrence of such calamity may disrupt the manufacturing processes and result in supply shortages or an overall halt of the production.

In the past, Toyota’s operations have been significantly impacted by such disasters and resulted in huge losses. For as long as the company or its suppliers will continue to run their manufacturing in these or similarly affected countries, Toyota will be subject to further occurrences of natural disasters and huge losses.

Toyota has become one of the world’s largest automotive companies because of its innovative and quality vehicles that are also resonably priced. The company should further rely on its R&D capabilities, Toyota Production System and competence in electrified vehicles. These are the key Toyota’s strengths that should drive company’s growth in the future.

As for the weaknesses, Toyota has to really push forward on autonomous vehicles and increase its market share in China. Both weaknesses can significantly harm the company over the next 5-10 years.

Out of all the opportunities, future market growth of self-driving vehicles is the most significant one. Nonetheless, Toyota is behind its rivals in developing autonomous vehicles and the company may find it hard to get the most of this opportunity.

None of the threats immediatelly pose any danger for Toyota and the company is capable to prepare for them in the future or mitigate their potential damage.

Toyota will continue to successfully compete in the automotive market in the future.

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Toyota SWOT Analysis 2021: Quick Reference Guide

Last Updated: Dec 1, 2022 by Amrith Sudhakaran Filed Under: SWOT Analysis , SWOT Examples

In this Toyota SWOT analysis, you will learn about the triumphs and struggles of Toyota, one of the top 10 largest companies in the world. Specifically, we will use the SWOT analysis tool to dive into the following:

Toyota’s Strengths
Toyota’s Weaknesses
Toyota’s Opportunities
Toyota’s Threats

If you’re new to SWOT analysis, the way we look at strengths, weaknesses, opportunities, and threats while performing a SWOT analysis is different from the way we traditionally view these words. But don’t worry, each section explains what these words mean in the context of SWOT analysis. Now, before we dive in, let’s look at three main ways the article will help you:

Improve Critical Thinking : Learning to use the SWOT analysis framework through this example will help you develop your critical thinking and problem-solving abilities.
Develop Business Knowledge : A business operates in a complex environment of many parts that interact and integrate in subtle and obvious ways. SWOT analysis helps you understand these intricacies; thus, developing your business knowledge.
Decision Making : Making decisions is a core skill people in management must possess. However, personal bias influences decision making. A tool like SWOT analysis, which forces you to look at all dimensions, negates this bias and leads to better decisions.

So, if you’re interested in honing your critical thinking, business knowledge, and decision-making skills, you’ll want to read our SWOT analysis for Toyota. Let’s get started.

What are Toyota’s major strengths?

In the SWOT analysis scheme, Toyota’s strengths are internal factors that help Toyota maintain its success in the auto industry. These are the reasons why Toyota is so successful today:

The Toyota Way : Toyota’s operations follow the principles of continuous improvement and respect for people. These principles boost productivity and foster innovation . They also inspired the concept of lean management. For many decades, these principles have formed the core strength of Toyota.
Fuel Cell Patents : Automobile companies are pursuing the vision of zero-emission vehicles through two main technologies – hydrogen fuel cells and electric vehicles. Toyota owns around 5,680 global patents related to hydrogen fuel cells. These patents put Toyota in a strong position in the zero-emission vehicles market.
Solid-State Battery Pack : In addition to fuel cells, Toyota is also actively researching and developing technology for electric vehicles. Toyota is unveiling its revolutionary solid-state battery in 2021 . The company claims the new battery pack will extend the maximum EV range to 500 km on a single charge. Plus, it charges from 0 to 100% in 10 minutes. What’s even more impressive – Toyota developed the technology four years ahead of schedule.
Hybrids : While Toyota develops competencies in clean energy vehicles, it’s consolidating its position in hybrid vehicles. Toyota makes some of the most reliable green cars in the market. Until the reliance on fossil fuels can be eliminated, Toyota’s hybrids will be an attractive option for environmentally conscious buyers.
Strong Stock Performance : The pandemic-triggered economic slowdown hit automakers hard. Despite this, Toyota’s stocks fared better than most car manufacturers. While General Motors ’ stocks fell 64% from peak to trough, Toyota’s stocks showed only a 15% fall. This shows the company’s resilience.

Among these strengths, the prime reason why Toyota is so successful is the company’s commitment to continuous improvement. All the other strengths stem from this core strength.

What are some of Toyota’s weaknesses?

As a tool, SWOT analysis looks at weaknesses as internal factors that prevent or slow down growth. Here are some of Toyota’s weaknesses:

Recalls : Although Toyota sets the standards for quality control, its design and production aren’t flawless. For instance, early this year, Toyota recalled 700,000 vehicles because of a faulty fuel pump. Such situations devalue the people’s trust in the brand and can undo decades of goodwill.
Strikes : Adhering to strict quality control standards while maintaining high productivity and profitability at times puts the management at odds with the labor. Recently, the workers at a Toyota manufacturing plant in India went on strike due to labor problems . Such issues debilitate the company’s ability to meet market demands.
Rigid Hierarchy : Toyota follows a rigid hierarchy where the orders flow in one direction – top to bottom. The rigid hierarchy allows better control, it does stifle creativity and flexibility .
Partial Global Presence : Toyota has strong sales in the US, Europe, and Japan . However, it doesn’t boast similar sales figures in Africa, South America, and the Middle East. For Toyota to be a truly global company, it cannot leave these regions unexplored.
Technology Gap : As far as future-tech goes, Toyota is playing catch up with Tesla. In a teardown of the Tesla Model 3, engineers found Tesla’s technology 6 years ahead of Toyota and Volkswagen .

What’s unique about Toyota is its ability to learn from weaknesses and become stronger than ever. In that regard, the weaknesses presented above could give Toyota a great edge if they’re able to overcome them.

What are some opportunities for Toyota?

When conducting a SWOT analysis, all external factors enabling Toyota’s growth are considered Toyota’s opportunities. Some of these opportunities are:

Flying Car Project : Japanese startup SkyDrive successfully conducted the first manned test flight of its flying car. Toyota is one of the companies backing SkyDrive. Although SkyDrive has to overcome many technological and regulatory hurdles, Toyota believes its investment in the company would pay off.
Smart Cars : Toyota is working on self-driving systems such as the Guardian and the Chauffeur . These systems aim to make driving safe and convenient for people not experienced enough to drive (Guardian) or able to drive due to old age (Chauffeur). Toyota is still unsure how the markets would react to its self-driving options. But, with technology in every area moving towards enabling convenience and ease, Toyota’s plan for autonomous vehicles is a smart one.
Nanomaterials : Toyota AI ventures recently invested in Carbice, an Atlanta-based nanotech developer . Nanomaterials have a wide range of applications ranging from making vehicles lighter, stronger, more durable, quieter, cooler, and safer. For example, Toyota has invested in Carbice to help solve issues that high temperatures cause in the car’s electronics. Toyota should continue making such investments.
Cloud and AI Technology : Many sectors are leveraging the combination of cloud-based and AI technology to improve ways in which it serves its customers. Automotive-based cloud technology is growing at 19.88% and is projected to touch nearly $70 billion by 2022 . So, cloud and AI are important opportunities Toyota should seek to leverage.
Big Data : Automakers are using vehicle-generated data in interesting ways such as predictive maintenance, use-based insurance , and autonomous driving. As one of the largest car manufacturers in the world, Toyota is sitting on a goldmine of data.

Toyota’s biggest advantage is its budget for research and development. This year, Toyota plans to spend $13 billion on R&D . This budget allows for Toyota to invest in future technologies that will give the company an edge in the world of clean technology.

What are the biggest threats to Toyota?

Although a threat can mean many things, in SWOT analysis a threat is an external circumstance that stops progress. Some of Toyota’s threats are as follows:

Brexit : With just days for the UK to negotiate a trade deal with the EU, a no-deal Brexit would add 10% to the cost of imported cars. Also, increased tariffs will negatively impact Toyota’s car factories in the UK.
Trailing Tesla : Toyota may be one of the largest car manufacturers in the world. But, it isn’t the most valued; Tesla is the most valued automaker . At the time of this writing, Tesla’s market cap is 175% higher than Toyota’s. Although the President of Toyota dismissed Tesla for not being a “real” car company , Tesla sure is giving Toyota stiff competition in the post-fossil fuel tech.
COVID-19 Restrictions : Japan, the USA, and Europe account for 66% of Toyota’s sales . The pandemic has severely impacted these regions. Measures to prevent the spread of the virus have caused economic recession and unemployment. Until the governments administer the vaccine on a large scale, COVID-19 would continue to threaten Toyota’s growth.
Economic Crisis : In the second quarter, Toyota’s profits dropped by 74% . In a statement Toyota issued, the company expects the weakness to continue impacting performance in the foreseeable future.
Competition : Toyota’s rivals Tesla and Volkswagen are matching Toyota’s stride for stride. Toyota can’t afford to slip. Falling back now would be a critical hit. For instance, a venture capitalist investor says Tesla’s evaluation could soar to $2 trillion in the next three years. What would Toyota do to match this growth?

Among these threats, the most significant one is the threat the competitors pose. Issues arising from the pandemic will resolve in a couple of years. But Toyota’s biggest competitors – Tesla and Volkswagen – are here to stay. If anything, the competition will intensify.

Toyota SWOT Analysis: Conclusion

90 years of dedicated pursuit of excellence has propelled Toyota to the forefront of the auto industry. A leader in production, sales, and research, Toyota plays a vital role in bridging the gap between the fossil-fuel era and the clean-energy era.

The company’s operation philosophy – The Toyota Way – is its biggest strength. And the promise of a cleaner future is its biggest opportunity.

However, a traditional organization at its core, will Toyota’s rigid hierarchy enable it to adapt to a new future? Also, how will Toyota handle the rapid rise of Tesla ? Time will tell whether Toyota overcomes these weaknesses and threats.

If you would like to improve your business knowledge and sharpen your problem-solving skills, look at other SWOT analysis examples . And if you would like to learn what is a SWOT analysis , check out our SWOT analysis templates and how-to guide .

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Toyota SWOT Analysis (2024)

Company: Toyota Motor Corporation President: Akio Toyoda Founder: Kiichiro Toyoda Year founded: 1937 Headquarter: Aichi, Japan Employees (2022): 372,817 Type: Public Ticker Symbol: TM Annual Revenue (FY 2022): JPY 31,379.5 billion Profit | Net income (FY 2022): JPY 2,850.1 billion

Did you know ? Toyota was first founded in 1933 as an automated loom business . Founded from humble beginnings, Toyota grew gradually into a multinational automotive company and one of the world’s most profitable and valuable companies.

With a presence in over 170 countries , Toyota is a force to reckon with. We can learn a lot by assessing Toyota’s strengths, weaknesses, opportunities, and threats.

Table of Contents

Toyota’s Strengths

1. Global Dominance

Companies that dominate the market have leverage over competitors. From Asia to Europe, Africa, and America, Toyota cars are sold in over 170 countries in different regions and 10.5% of the global market .

2. Diversified Variety

Toyota offers a wide variety of vehicles , from Corolla to Prius, Camry, Land Cruiser, Scion, Hilux, Supra, and many more.

The cars are of different models , including sedans, pickup trucks, and off-road vehicles. They are powered by electric, hybrid, petrol, or diesel, allowing the company to cater to consumers across the entire auto market.

3. Effective Leadership

Toyota’s strong leadership and organizational structure have enabled the company to avoid friction and turmoil witnessed in other auto companies like Nissan.

Leadership and structure have enhanced the stability of the company.

4. Strong Brand

Having strong brand recognition and awareness enhances the value of the brand and contributes to the bottom line with higher sales.

Toyota is regarded as one of the most recognized brands globally and, according to reports , has continued to be the world’s most valuable car brand , with a brand value of $75.5 billion .

5. Technological Leadership

Apart from its title as one of the biggest automakers in the world, Toyota is an innovator , disruptor, and leader in technology.

From hybrid Prius to RAV4 and Corolla, Toyota has manufactured and sold over 20 million hybrids since 1997, with some competitors relying on its cutting-edge hybrid technology.

6. Extensive Supply Chain

Toyota has built an extensive and one of the best global supply chains in the industry.

From manufacturing factories to assembly plants, outlets, branches, and auto parts vendors, the company’s global supply enables resilience and minimizes market-based risk.

7. High Production Capability

With higher production capacity comes stability and flexibility in sales leading to higher profits. Toyota is giving serious competition to the competitors with its high production capacity of almost 10 million cars per year .

8. Strong Financial Position

Toyota has extra cash saved away compared to its competitors, offering it flexibility and long-term stability. In 2022, Toyota’s Issuer Default Ratings (IDR) rating by Fitch Ratings International was A+.

Toyota’s Weaknesses

1. Overdependence on Suppliers

To succeed, global auto manufacturers must rely on suppliers of cheaper raw materials like aluminum worldwide.

Toyota’s overdependence on suppliers exposes the company to a wide range of risks, including a shutdown of production in case suppliers declare a strike or fail to deliver vital materials in time.

2. Poor Marketing of Eco-friendly Cars

Although Toyota manufactures eco-friendly vehicles using advanced green vehicle technology, the company has failed to advertise and grab meaningful market share for these highly demanded technologies.

3. Manufacturing Defects

A high vehicle recall rate can immensely destroy an automaker’s reputation, forcing customers to mass-migrate to its competitors.

Toyota has a high recall rate and recalled about 3.9 million vehicles in 2020 due to fuel pump defects that can lead to stalling.

4. Ineffective Marketing

Apart from Toyota and Lexus cars, the company also owns Hino and Daihatsu car brands that are unrecognized by consumers due to Toyota’s ineffective marketing strategies .

Toyota’s Opportunities

1. Focus on Emerging Economies

The financial situation in developing countries has improved immensely over the past few decades.

Toyota can increase investment in emerging economies like China and take advantage of the ever-increasing demand for cars by the growing middle class.

2. Expand into Autonomous Vehicles

The demand for safe but cheaper self-driving vehicles is increasing astoundingly. Toyota can expand into this growing market and exploit readily available opportunities.

3. Expand into Medical Device Sector

The coronavirus pandemic has highlighted the importance of automakers engaging in other unrelated industries .

Toyota contributed to global efforts to combat COVID-19 by switching its factories to manufacture medical face shields . The company can expand further by manufacturing other medical devices, such as ventilators.

4. Increase Focus on Eco-friendly Vehicles

The number of eco-conscious consumers has increased over the past few years.

Toyota can exploit this opportunity by increasing its investment in and focusing on manufacturing eco-friendly vehicles, such as hybrid and electric cars. Toyota has set an internal goal to sell about 5.5 million electric vehicles by 2030.

5. Invest in Related Fields

Toyota has the expertise and resources to engage in other fields within the auto industry like motorcycle production or related to the industry, such as ridesharing apps and multi-modal mobility services .

Toyota’s Threats

1. Global Pandemic

Automotive is a capital-intensive industry that cannot operate effectively without stockpiles of parts and raw materials.

The coronavirus pandemic has revealed that Toyota and other automakers are highly vulnerable in case of worse global pandemics in the future.

2. Cut-throat Competition

Toyota faces increased global competition from ridesharing apps and traditional competitors like Nissan, Ford , Volkswagen, BMW, Mitsubishi, Hyundai, and many new entrants.

With increased competition comes slower growth in profitability and market share .

3. Negative Publicity

Consumers are constantly exposed to images of terror groups, rebels, and armies of rogue regimes riding Toyota’s off-road trucks .

Although it is a testament to effectiveness in all terrains, the association with terror, bloodshed, and war zones can affect sales. Also, car names like Toyota ISIS and Corona do not help.

4. Global Economic Turmoil

From the global recession due to the pandemic to Trump’s tariffs and isolationism, partaking in the global arena profitably will increasingly become a challenge for Toyota if these threats persist.

5. Technology Race

With the race to deliver electric and autonomous vehicles, auto manufacturers, including Toyota, are pushed to invest billions in partnerships and upcoming technologies to keep up with competitors .

Over-investing can undermine stability and even lead to bankruptcy.

6. Scarce and Expensive Raw Materials

For centuries, global consumption has diminished resources worldwide, leading to an increase in the prices of inputs.

Toyota’s operations, profitability, and sustainability can be negatively affected if the trend continues.

References & more information

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Toyota SWOT Analysis

Before we dive deep into the SWOT analysis, let us get the business overview of Toyota. Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan.

It was founded by Kiichiro Toyoda in 1937 as a spinoff from his father’s company, Toyota Industries, to create automobiles. Over the years, Toyota has become one of the world’s largest automakers, renowned for its reliability, quality, and innovation.

Key aspects of Toyota’s business overview include:

Product Portfolio: Toyota has a diverse product lineup, ranging from compact cars to luxury vehicles, trucks, and buses. The company also offers hybrid, electric, and fuel-cell vehicles. Some of the popular Toyota brands include Toyota, Lexus, Hino, and Daihatsu.
Global Presence: Toyota has a strong international presence, with manufacturing facilities and distribution networks in multiple countries. The company operates in North America, Europe, Asia, and Oceania. Toyota’s global strategy allows it to benefit from economies of scale and adapt to local market needs.
Research & Development: Toyota invests heavily in research and development (R&D) to maintain its competitive edge. The company focuses on fuel-efficient technologies, alternative energy vehicles, autonomous driving, and artificial intelligence. Toyota’s commitment to innovation has led to the development of pioneering technologies such as the Toyota Hybrid System and the fuel cell-powered Mirai.
Environmental Initiatives: Toyota is dedicated to reducing its environmental footprint and promoting sustainable mobility solutions. The company has set ambitious targets to reduce CO2 emissions from its vehicles and manufacturing processes. Toyota is a leader in developing hybrid and electric vehicles and is actively working on fuel cell technology.
Partnerships and Collaborations: Toyota has forged strategic partnerships and collaborations with various companies, suppliers, and governments to further its goals. These collaborations help Toyota develop new technologies, expand its product lineup, and enter new markets. Notable partnerships include those with Mazda, Subaru, and Suzuki and technology companies such as Panasonic and NVIDIA.
Financial Performance: Toyota has consistently demonstrated strong financial performance, with stable revenue growth and profitability. The company’s financial strength enables it to invest in R&D, expand its global footprint, and withstand economic downturns.

Financial Performance : In FY22, Toyota generated 31.4 Trillion Yen (~$23.7 billion) with an operating income of ~3 trillion Yen ($2.2 billion).

Here is a SWOT analysis for Toyota :

A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of Toyota.

SWOT Analysis: Meaning, Importance, and Examples

Brand Reputation : Toyota is known for its reliability, quality, and durability. This strong brand reputation has helped the company establish customer loyalty and attract new buyers. Toyota had a brand value of $33 bn in 2022 .
Diverse Product Portfolio : Toyota offers a wide range of vehicles catering to different customer segments, including sedans, hatchbacks, SUVs, trucks, and luxury vehicles under brands like Toyota, Lexus, Hino, and Daihatsu. This diverse product lineup helps Toyota reach a broader customer base and adapt to changing market trends.
Technological Innovation : Toyota’s commitment to research and development has resulted in groundbreaking technologies, such as the Toyota Hybrid System, fuel cell vehicles, and advanced safety features. This focus on innovation helps the company maintain a competitive edge and meet evolving customer needs.
Strong Global Presence : Toyota has an extensive global presence, with manufacturing facilities and distribution networks in multiple countries. This enables the company to benefit from economies of scale, adapt to local market needs, and manage risks associated with fluctuations in currency and regional demand.
Environmental Leadership : Toyota is a pioneer in developing hybrid, electric, and fuel cell vehicles, essential for reducing greenhouse gas emissions and promoting sustainable mobility. The company’s environmental initiatives demonstrate its commitment to social responsibility and long-term sustainability.
Efficient Production System : The Toyota Production System (TPS) is a renowned management philosophy emphasizing continuous improvement, waste reduction, and just-in-time inventory management. The TPS has enabled Toyota to achieve operational efficiency and maintain high-quality standards across its production facilities.
Strategic Partnerships and Collaborations : Toyota has formed numerous strategic alliances with other automakers, technology companies, and governments. These partnerships help Toyota access new markets, share resources and knowledge, and accelerate the development of new technologies.
Financial Stability : Toyota’s strong financial performance, marked by consistent revenue growth and profitability, allows it to invest in research and development, expand its global footprint, and withstand economic downturns.

Dependence on Certain Markets : Toyota relies heavily on specific markets like North America and Japan, which account for a significant portion of its sales. This dependence can expose the company to regional economic fluctuations, changes in consumer preferences, and potential geopolitical risks.
Slow Adaptation to Electric Vehicles (EVs) : Although Toyota has pioneered hybrid technology, it has been relatively slow in embracing fully electric vehicles compared to competitors like Tesla and Nissan. This delay in EV development may limit Toyota’s ability to capitalize on the growing demand for electric vehicles and meet increasingly stringent emissions regulations.
Product Recalls : Toyota has faced several high-profile product recalls over the years due to safety concerns and manufacturing defects. These recalls can harm the company’s brand reputation, lead to financial losses, and erode customer trust.
Intense Competition : The automotive industry is highly competitive, with numerous well-established players such as General Motors, Volkswagen, Ford, and Honda. This fierce competition can pressure Toyota’s market share, pricing power, and profit margins.
Supply Chain Disruptions : Toyota’s global supply chain is susceptible to disruptions caused by natural disasters, geopolitical tensions, and other unforeseen events. For instance, the COVID-19 pandemic and semiconductor shortages have highlighted the vulnerability of the automotive industry’s supply chain, impacting production and sales for several manufacturers, including Toyota.
Currency Fluctuations : As a global company, Toyota is exposed to fluctuations in foreign exchange rates. Changes in currency values can impact the company’s financial performance, mainly when revenues generated in foreign markets are converted back to the Japanese yen.

Opportunities

Electric Vehicle (EV) Market : The global demand for electric vehicles is growing rapidly, driven by environmental concerns, government incentives, and advancements in battery technology. Toyota can leverage its expertise in hybrid technology and invest in developing a more comprehensive range of EV models to capture a larger share of this growing market.
Autonomous Driving Technology : The development of autonomous vehicles is accelerating, with potential benefits such as increased safety, reduced traffic congestion, and enhanced mobility for the elderly and disabled. Toyota can invest in research and development of autonomous driving technologies and forge partnerships with technology companies to stay ahead in this emerging market.
Expanding in Emerging Markets : Developing economies, such as India, Brazil, and Southeast Asia, offer significant growth potential due to increasing disposable income and automobile demand. Toyota can focus on expanding its presence in these markets by offering affordable and locally tailored vehicle models.
Shared Mobility and Ride-Hailing Services : The rise of shared mobility and ride-hailing services like Uber and Lyft is changing how people use and own vehicles. Toyota can explore opportunities in this space by partnering with ride-hailing companies, offering vehicle leasing options, or developing purpose-built vehicles for shared mobility services.
Enhancing Connectivity and Digital Services : As vehicles become more connected, there is a growing demand for advanced infotainment systems, vehicle-to-vehicle communication, and over-the-air software updates. Toyota can invest in developing innovative connected car technologies and digital services to enhance the driving experience and generate new revenue streams.
Sustainable Manufacturing and Supply Chain : Consumers and governments are increasingly concerned about the environmental impact of manufacturing processes. Toyota can strengthen its commitment to sustainability by implementing more environmentally friendly production methods, sourcing materials responsibly, and working to reduce its carbon footprint further.
Strategic Partnerships and Mergers : Toyota can continue to forge strategic partnerships, collaborations, and mergers with other automakers, technology companies, and suppliers to share resources, reduce costs, and accelerate the development of new technologies and products.

Threats

Intense Competition : The automotive industry is highly competitive, with established players such as General Motors, Volkswagen, Ford, and Honda, as well as emerging companies like Tesla and Chinese automakers. Increased competition can impact Toyota’s market share, pricing power, and profitability.
Rapid Technological Changes : The automotive industry is transforming rapidly with the development of electric vehicles, autonomous driving technology, and connected car services. If Toyota fails to keep pace with these technological advancements, it risks losing its competitive edge and market share.
Regulatory and Emissions Standards : Governments worldwide are imposing stricter emissions standards and regulations to combat climate change and promote sustainable mobility. Toyota must continue to invest in the development of fuel-efficient and zero-emission vehicles to comply with these regulations and maintain its market position.
Global Economic Fluctuations : Economic downturns or slowdowns in key markets can lead to reduced consumer spending and lower automobile demand. Toyota’s reliance on certain markets, such as North America and Japan, makes it vulnerable to regional economic fluctuations.
Supply Chain Disruptions : Toyota’s global supply chain is susceptible to disruptions caused by natural disasters, geopolitical tensions, and other unforeseen events, impacting production and sales. Examples include the COVID-19 pandemic, semiconductor shortages, and Japan’s 2011 earthquake and tsunami.
Currency Fluctuations : As a global company, Toyota is exposed to fluctuations in foreign exchange rates, which can impact its financial performance and competitiveness when revenues generated in foreign markets are converted back to the Japanese yen.
Cybersecurity and Data Privacy : As vehicles become more connected and reliant on software, the risk of cyberattacks and data breaches increases. Toyota must invest in robust cybersecurity measures and ensure data privacy to protect its customers and maintain trust in its brand.
Shifting Consumer Preferences : Changes in consumer preferences, such as a growing demand for SUVs or a decline in sedan sales, can impact Toyota’s product lineup and sales performance. The company must continuously monitor market trends and adapt its product offerings to meet evolving customer needs.

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The Toyota Motor Company: SWOT Analysis

Introduction.

The Toyota Motor Company has its headquarters in Japan and is one of the world’s largest automobile manufacturers; the company was officially founded in 1937 with automobile manufacturing being its core business. Today Toyota owns many brands of cars and is a major shareholder in many motor companies. Toyota’s headquarters are in Aichi and Tokyo where the company not only manufactures automobiles but also provides financial services and manufactures robots main competitors are General Motors (GM), Honda, Mazda and other automobile companies.

Toyota’s history

Kiichiro Toyoda in 1933 directed the production of automobiles with his company being a partition of the Toyoda Automatic Loom Works Company. Toyoda’s motivation to develop automobiles came from a trip he had made to Europe and the United States in 1929, his aim for the visit was to learn more about auto mobiles. In the year 1934 Toyoda’s division manufactured Type A engine which was used to model the A1 passenger car and the G1 truck. Many models were developed later which included AA passenger, dodge power wagon, Chevrolet and many more.

Toyota Motor Company was recognized as a self-governing company in 1937 with the name ‘Toyota’ originating from the founder family’s name ‘Toyoda’. During World War II the company was dedicated to manufacturing trucks for the Japanese army. After the war was over the company embarked on the manufacturing of commercial passenger motor vehicles.

During the 1960s the company expanded widely and it established dealer chains and exported cars to the United States and Brazil. Toyota founded a new research centre and development plant in Thailand and continued with the production of better new models. During the 1960s Toyota established a partnership with Hino Motors and Daihatsu. In April 1963 the Toyota built its first model outside Japan in Australia and by the end of the decade it had exported its automobile models throughout the world.

SWOT Analysis

A company’s SWOT analysis mainly entails looking at the strengths, weaknesses, opportunities and threats of the company. One of Toyota’s strengths is its global network which spreads across about one hundred and seventy countries. The Company is financially stable with an annual sales turnover of more than a hundred and thirty million pounds. Toyota’s brand name is a very strong selling brand that reflects strength, resilience and durability. Quality products are another plus for the company which it is able to deliver efficiently. Another great strength that the company possesses is its state of the art research and development department that churns out newer car models daily. The company also has easy access to the major world markets because of its extensive global network.

Just like any other company, Toyota has its own share of weaknesses which include the perception as a foreign importer because it’s a Japanese manufacturer. Also Toyota manufactures most of its models in the United States and Japan while its competitors are located globally to take advantage of the automobile market. Quality has been a thorny issue for the company especially during the 2005 large scale production.

Opportunities that exist for Toyota Company include; Toyota’s innovation of gas and electric vehicles may give it a competitive advantage over other manufacturers considering the increasing cost of oil products. The company has also introduced the Aygo model which is intended to capture the youth market which is said to have a major influence. Toyota has embarked on the development of cars which use little fuel yet have greater performance and friendly to the environment. Lastly Toyota has continued in its global expansion trend especially where there’s and upward increase in the demand for its products.

The various threats that face Toyota as a company are; the increased competitive nature of other automobile manufacturers, alterations of exchange rates in the global market which affect its profit margin and raw material cost, alterations of demographics, alterations in car usage example companies restricting traveling due too use of tele-conferencing, and lastly the increase in oil prices and the increase in cost of car maintenance that decreases use or purchase.

Toyota has continued to be a trendsetter in the motor vehicle manufacturing industry. The company grew from its humble beginnings to become one of the most renowned world companies. In the third world countries especially in Africa its presence has spurred the growth of the economies; the transport sectors in these economies heavily rely on the cheap and durable second hand vehicles from the UAE and Japan.

Works cited

www.businessteacher.org.uk

www.toyota.com

www.news.bbc.co.uk

www.japacorp.net

www.calcars.org

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Toyota Motor Corporation

Global organization, with a strong international position in 170 countries worldwide.
High financial strength (1997, sales turnover, £131,511 million), sales growth of 29.3%[1]
Strong brand image based on quality, environmental friendly (greener), customized range.
Industry leader in manufacturing and production. Maximizes profit through efficient lean manufacturing approaches (e.g. Total Quality Management) and JIT (Just in Time) manufacturing and first mover in car research and development[2].
Excellent penetration in key markets (US, China, EMEA) and now the second largest car manufacturer in the world, surpassing Ford.
Japanese car manufacturer – seen as a foreign importer.
Production capacity. Toyota produces most of its cars in US and Japan whereas competitors may be more strategically located worldwide to take advantage of global efficiency gains.
Some criticism has been made due to large-scale re-call made in 2005, quality issues.

Opportunities

Innovation -first to develop commercial mass-produced hybrid gas-electric vehicles (gas and electric), e.g. Prius model. Based on advanced technologies and R&D activity. With oil prices at an all time high – this investment and widening of product portfolio fits consumers looking to alternative sources of fuels away from gas guzzling cars[3].
To expand more aggressively into new segments of the market. The launch of Aygo model by Toyota is intended to take market share in youth market.
To produce cars which are more fuel efficient, have greater performance and less impact on the environment.
To develop new cars which respond to social and institutional needs and wants. The development of electric cars, hybrid fuels, and components reduces the impact on the environment. Toyota’s Eco-Vehicle Assessment System (Eco-VAS) has helped in production, usage, and disposal[4].
Continued global expansion – especially in the emerging markets e.g. China and India, Russia, where population and demand is accelerating.
Saturation and increased competition, intense marketing campaigns increasing competitive pressures[5].
Shifts in the exchange rates affecting profits and cost of raw materials.
Predictions of a downturn in the economy e.g. recession, will affect car purchases (especially new cars). As household budgets tighten – this could lead a decline in new car sales and possible rationalization of dealerships.
Changing demographics e.g. number of large families is declining. Undermining the demand for large family cars[6].
Changing usage – families using the car less for taking children to schools. Home deliveries. Businesses – restricting business travel (tele-conferencing). Governments encouraging alternative forms of transport – cycling and incentives to use public transport across Europe.
Rising oil prices (fuel costs) and the costs of maintaining cars. Increase in families who have chosen not to own a car, or decided to use their car less.[7]

[1] Hoovers & Toyota Corporation, 2007, Annual Report [2] International Business 6e by Charles W. L. Hill, Mcgraw Hill [3] Toyota Corporation, 2007, Annual Report [4] www.toyota.com [5] http://news.bbc.co.uk/2/hi/business/6346325.stm [6] CD Rom, Census Data 1990 (Age Structure and Issues) [7] http://www.marketresearchworld.net/index.php?option=content&task=view&id=1263&Itemid

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Toyota Company’s SWOT Analysis and Trends

Toyota is the leading distributor, assembler and manufacturer of automobiles in the world. It has an efficient management team that allows the company to achieve high performance. The company is regarded as a monopoly because it is the dominant market player with regard to the exportation of cars. It adopts a differentiation strategy that allows it to enjoy monopolistic presence in developing countries. The market structure of Toyota is also regarded as monopolistic because other key market players such as GM have attained a significant market share in the automobile market (Pride 12). However, Toyota is reacting to the actions that its competitors are adopting in order to ensure that it remains the market leader with regard to exportation of cars (Griffin 23). Therefore, the purpose of this paper is to discuss the SWOT analysis of Toyota in order to demonstrate the factors that have helped the company to emerge successful in the automobile industry. It will also discuss the challenges that the company faces while trying to maintain its market leadership position in the automobile industry.

SWOT Analysis

SWOT analysis comprises of internal and external factors. Internal factors originate from within a company whereas external factors are those factors that originate from outside a company. Internal factors include strengths and weaknesses whereas external factors include threats and opportunities.

Internal Factors

External factors.

Toyota is embracing innovation in order to allow it to remain as the dominant market player in the automobile industry. However, most of the innovations that Toyota is embracing are costly to implement. The innovations that the company is embracing are outlined below.

Works Cited

Afuah, Allan. Strategic Innovation: New Game Strategies for Competitive Advantage . New York: Taylor & Francis, 2009. Print.

Griffin, Ricky. Management . New York: Cengage Learning, 2010. Print.

Klein, Guenther. Strategic Marketing . London: GRIN Verlag, 2007. Print.

Pride, William. Marketing . New York: Cengage Learning, 2011. Print.

Rao , Appa and Parvathiswara Rao. Strategic Management and Business Policy . Mumbai: Excel Books India, 2009. Print.

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Toyota: SWOT Analysis, BCG Matrix and Porter's Five

Published Date: 23 Mar 2015 Last Modified: 16 Jan 2018

Disclaimer: This essay has been written and submitted by students and is not an example of our work. Please click this link to view samples of our professional work witten by our professional essay writers . Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of EssayCompany.

Toyota is a Japan based company which was established in 1937 by Sakichi Toyoda and is the world biggest automobile manufacturers, Toyota has achieved a record sale of 9 million cars in five continents. Toyota is also ranked in the top ten 500Â² companies. Toyota is one the world's most renowned auto manufacturers and they are proud of this accomplishment and they believe it is only because that their customers are satisfied by them.

http://www.toyota.com.cy/experience/the_company/index.aspx

Strategy of Toyota

Different strategies of Toyota are explained as under

Growth Strategy

In order to achieve an outstanding growth strategy, company must find, evaluate and select a strategy to enter and to capture a market. Toyota entered in American market in 1967 along with a range of cars and after that Toyota launched other brands such as lexus and scion. Toyota became a successful car manufacturer company mainly because of an effective and diverse marketing process which has enabled them to attract customers and enlarge its product range to other market segments.

One of the other main reason why Toyota managed to do very well in America is because of 1973 oil crisis. When Toyota entered in American market it was not considered a threat because everyone use to say that Toyota cars do not appeal American people. But due to the oil crisis people realized that Toyota cars are highly fuel efficient and much more reliable.

Marketing Strategy of Toyota

Toyota is a global brand and the economic crisis which started in 2009 has hit Toyota. Therefore, Toyota is now marketing and making fuel efficient cars such as the new Auris hybrid and others. On top of that Toyota is very heavily marketing there 1 litre cars such as Toyota iq and aygo and this happened due to the the economic crunch that now people don't have much spending power.

http://ayushveda.com/blogs/business/toyotas-marketing-strategy/

Environmental strategy

In modern era, all the developed and under developed countries are more concern with the environment and are trying their best to promote cars which are more environment friendly and throw less co2 emission out. As a global car manufacturer Toyota is playing its role in minimising the co2 effect on the environment of the world. This is the reason Toyota has launched hybrid cars, the ultimate eco car, electric vehicles, plug in hybrid, fuel cell vehicle cars which consume less fuel and also discharge less co2 emission. So basically, Toyota is making cars which are user friendly and also environment friendly.www.toyota.com

To critically evaluate the strategy of Toyota, some analysis of internal and external analysis required to be done and they are explained as under.

SWOT analysis

This analysis is a great tool for doing an audit of an organisation and its environment. It is the first step for marketers to take to focus on key issues. Swot stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses examine the internal factors of a company whereas the opportunities and threats are the analysis of external factors.

SWOT analysis of Toyota

Strengths of toyota.

Toyota is global organisation, which enjoys great repute among its customers and possesses a very strong international position in 170 countries.
Financial side of this company is extremely strong in 1997 company managed a sales turnover of £131,511 million and growth of the company was 29.3%.
Due to its high quality, an environment friendly product Toyota has a very strong brand recognition.
Toyota has managed successfully penetrate into the main markets of the world which includes USA, China and Middle east countries.

http://wiki.answers.com/Q/What_is_the_swot_analysis_of_Toyota

Weakness of Toyota

The production plants of Toyota are located in US and Japan due to which they are not in a very favourable position to take advantage from global efficiency gains.
The company has suffered a lot of criticism due to the re-call made in 2005 and 2010.

Opportunities for Toyota

Toyota was the first company to develop a hybrid car (hybrid- vehicle runs on gas and electric) which was the Prius model. At that time oil prices were at their extreme so at that time Toyota has given something to the market.
Toyota is looking forward to expand belligerently into new segments of existing markets for example by the launch of Toyota Aygo the company is targeting the youth of the world.
Another opportunity for Toyota is to produce small city cars which will be more fuel efficient and also easy to drive plus will produce less c02 emission because now a day governments of all under developed and developed countries are showing great concern about the environment.
Toyota enjoys good market share in Europe, UK and America the company should target developing countries such as Pakistan, India and Srilanka where demand is very high for great fuel efficient cars.

Threats to Toyota

Toyota faces very high competition by Honda and by other German car manufacturers. Especially in today's global market the trend of intense marketing campaign is increasing which will simply increase pressure on Toyota.
The position of US dollar is very consistent so the exchange rates are playing a major role in the profit and loss of the company.
The recession that has hit the world almost a couple of years ago have caused major issues for Toyota because car sales have declined rapidly ever since the recession started.
Market trend is changing for example the trend of large families coming to an end and with it the need of large cars.
Consistent increase in fuel prices has also bought a significant decline the car sales of Toyota Company.

The Boston consultancy group matrix is a chat which was created by Peter Henderson in 1970. The purpose of this design is to help companies with the manufacturing units and product lines. The base of this tool in the product life cycle theory and it helps companies to decide on which areas they should prioritize.

BCG Matrix for Toyota Prius

This tool can also be used to analyze the launch of a product in the market. In this matrix two factors determine the success of a product. Market share and market growth are explained individually in the diagram. With the help of this tool an outstanding marketing strategy can easily be determined.

Market Growth of Prius

The Toyota prius was launched in Japan in 1997 and it was made available to the world in 2001. By the end of 2003, a new model of the car was launched and due to its modern hybrid technology it was sold 160,000 times throughout the world. It was mainly because at that time the prius was the only hybrid car and Toyota made maximum profit out of that. Up till now Toyota has managed to sell around 1 million hybrid cars and most of them are prius.

To analyze the market growth of this product, given below is the monthly sales figure of U.S from 2000 to 2007.

From the table above, we can clearly see that prius sales have increased dramatically over thye years. In 2000 number of cars sold was just 5,562 whereas the cars sold in 2007 excluding the month of December were 167,010 which is almost 30 times more the number of cars sold in 2000.

The table given above, we can clearly view that Toyota prius was the best selling car in US with a great margin. Toyota has just 5.3% more sales than September 2007 but it has overall 50.7% more sales then the last year October. We can also see an outstanding growth in the market of hybrid cars which is almost 30% which means that it is a very fast growing market.

Market Share of Toyota Prius

If we look at the market share of Prius, it comes on top of the hybrid car market share. The prius has a massive 53.7% market share and this is because Toyota has sold three times more cars than the runner up. This is the reason why prius was the market leader in 2007. The prius has sold approximately 190,000 cars which comes up to a market share of 57% and this is a clear proof that prius is a market leader even on yearly basis.

After this detailed bcg analysis it is concluded that prius is a star product. It has a booming market share in the high demand market of hybrid cars. All this makes prius a star product and a product which has a lot of potential in the future years. In the BCG matrix chart the prius have its position in the top left because it has an outstanding market share in a dynamic and fast growing market. Therefore, prius is a star product.

This information can be used by Toyota to set up a plan for business and thus the investment the company make in the product can also turn into a cash cow.

Porter's five forces analysis

This is the most successful tool in analyzing the strategy of an industry. According to wiki

'' this is a framework for the industry analysis and business strategy development developed by Michael E Porter of Harvard business school in 1979.it uses concepts developing industrial organisations economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.

http://www.themarketers.in/?p=446

Porter's five forces analysis includes critical analysis of five aspects which are as follows

Threat of new entrants.

Bargaining power of customers/ buyers.

Threat of substitute products.

Bargaining power of suppliers.

The amount of rivalry between competitors.

Five forces analysis on Toyota

Detailed analysis of porter's five forces.

Threat of new entrants

In auto industry all the big companies face threat of new entrants who enter into market to take their place. Toyota also faces same problems and the recent launch of TATA nano is a big threat for Toyota and for other auto companies. Because TATA nano is the cheapest car in the world which will definitely dominate in the under developed countries of the world and also TATA nanao and Peugeot has worked together to make that car so Toyota needs to come up with a strategy which will help them target the medium to lower medium class of the world. (Jhonson,s scholes and wittington.2008)

Bargaining power of customers

Bargaining power of customers vary from place to place. In European countries customers have outstanding bargaining power which is mainly due to the competition and because of their purchasing power. On the other hand in countries like Pakistan people don't have much choice and manufacturers charge reasonably high prices. (Jhonson,s scholes and wittington.2008)

Threat of Substitute product

In developed countries such as America or other European countries this threat is high for Toyota because there are a lot of other car manufacturers in these countries who sell their products with different deals such as now a day Citroen is selling most of their cars with 0 deposit and on no interest basis for up to three years which is a big threat for Toyota in UK. Because due to the economic crisis the world is facing people are more interested in saving money. (Jhonson,s scholes and wittington.2008)

Bargaining power of suppliers

Because Toyota is a strong brand therefore, this threat is comparatively low to them in comparison with other manufacturers because brand confirms suppliers a higher value to their product. (Jhonson,s scholes and wittington.2008)

Rivalry among competitors

This element also varies for area to area. As mentioned earlier in European countries there are a lot of manufacturers available so the rivalry among competitors is very high. For example in Pakistan Toyota has one main rival which is Honda but in UK Toyota has Honda, Peugeot, Nissan, ford, rover and also other companies which makes rivalry extremely intense. (Jhonson,s scholes and wittington.2008)

Problems with Toyota

Even though Toyota is one of the best car manufacturer company in the world but they have faced many problems over the years in different parts of the world. Some of them are related with products and some are even with the brand itself. A few of these problems are summarised in detail

Toyota brand problem

Toyota is a major brand and its sub-brands are Lexus and Scion but Toyota sells and manufacture most of its cars under the name of Toyota which is not a very healthy marketing strategy. For example, the problem Audi had in 1990 with its 5000 range (problem was acceleration which resulted in fatal acceleration accidents) which resulted a significant decline not just in the sale figure of Audi 5000 but due to that problem sales figure of Audi 4000 and Quattro were also declined to a great extent just because these too vehicles were manufactured by the same company. Despite of all the promotional and marketing activities held by Audi in between 1990-2000 the company has still not fully recovered and has not find its proper place in the market.

Unfortunately, Toyota has not learned anything from this mistake and they keep on launching all cars under the same brand without paying much attention to sub-brands. Due to the recent problem of rapid acceleration in Toyota cars customers are beginning to show less interest in the brand and now it is believed that nest decade will be very tough for Toyota. So, Toyota really needs to promote its sub brands and to pump marketing investments in them.

http://www.brandingstrategyinsider.com/2010/03/toyotas-brand-problems-begin-at-its-core.html

Brake problems in Toyota Prius

In 2010, braking problems were reported with Toyota prius in America by manay customers, four of them were involved in crash. The problem was that customers were finding it difficult to brake on un even surface. Which resulted in major accidents and as a result Toyota had to do a major recall in America which resulted in a significant decline in sale and due to which Toyota has launched its market share throughout the world.

http://news.bbc.co.uk/1/hi/8497471.stm

Rapid acceleration problem of Toyota

Toyota had to do a major recall in 2004 which was basically companies biggest in which company had to recall 3.8 million vehicles. In the beginning Toyota said that the problem is with the floor matt but after few crashes the company actually decided to go for the recall decision.

http://www.leftlanenews.com/a-closer-look-at-toyotas-sudden-acceleration-problem.html

Acceleration stuck

In the last decade Toyota has given us quality products such as Camry, corolla and Tercel. But then in 2010 a problem came in Toyota a vehicle which was reported as the acceleration gets stuck which is causing difficulty in stopping the vehicle and could result in major accidents. As a result, Toyota has not just recall the selected models on a national model but also stopped production for these vehicles. This decision of Toyota is really admired by Dr. Edward Deming who is called the undisputed father of quality management and he said that quality is better than quantity and by doing a recall national level Toyota has proved that they care about their customers and are willing to give them something extra. Some say that this incident will hurt Toyota and result in a decline of sales Toyota over the years but some say that this will benefit Toyota in coming years because once the problem is rectified than people will be more eager in buying Toyota vehicles especially over American cars because they know that they will be getting quality.

http://www.associatedcontent.com/article/2656835/toyota_is_facing_a_major_problem.html?cat=27

Recommendations

By looking at the problems Toyota had over the years it is concluded that Toyota should take its business more seriously as they are the market leaders. The company should properly test every product several times before launching it in the market.

Invest in sub brands

Toyota should now invest heavily in its sub brands. This will bring stability in the sales of Toyota as if anything goes wrong with Toyota car customers will not stop buying the sub brands products and this will result in keeping the market share stable.

Make hybrid technology cheaper

Toyota is investing in hybrid vehicles which cause less co2 emission and also environment friendly but these vehicles are extremely expensive and not in the range of majority of people. The future main threat for auto mobile manufacturer is TATA nano which is the world's cheapest car so if Toyota does not want to lose its market share than Toyota really needs to look ahead and come up with something which is a lot better than quality than TATA nano and the best way to beat nano is to come up with cheap and small hybrid car.

Identify market trends and target markets

The market trend is changing very quickly, now people don't travel in groups everyone prefer to keep their own cars so Toyota needs to make more small cars. At the moment there are just three small cars from Toyota which are Toyota aygo, iq and yaris which is a pretty small number from the world's biggest auto manufacturer. On top of that these cars are not fun to drive they don't offer good road grip and comfort and on top of that they are pretty expensive. So, if Toyota wants to do well in future they really need to re think their strategy and they should make hybrid cars much cheaper and make small cars more reliable and fun to drive. Toyota is very well located it has plants in Japan, Europe and America so they can manage to produce cheap quality cars. From Japan, they can target asian countries which include Pakistan, India and Sri lanka because these countries are showing rapid growth and people has high purchasing power. From European production plant, Toyota can target European countries which are a very big market and Toyota enjoys great market share in these countries. American production plant can be used to target America and Canada and other small countries in that region. In this way Toyota can easily produce cheap quality cars and supply them to these countries as they are very well located.

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SWOT Analysis of Toyota (6 Key Strengths in 2023)

Company Overview

Toyota SWOT analysis

2. The most valuable and one of the most recognizable automotive brands in the world

3. Toyota Production System

4. Competence in electrified vehicle production

5. Toyota environmental challenge 2050

6. Production of the most dependable cars in the industry

1. Lack of competence in autonomous vehicles

2. Negative publicity due to large vehicle recalls damages company’s brand and sales

3. Weak presence in China lowers company’s future growth potential

4. Poor brand portfolio

Opportunities

2. Significant untapped potential of Chinese, Indian and other Asian international markets

3. Improving U.S. economic conditions

4. Timing and frequency of new model releases

1. Increasing competition in the worldwide automotive market

2. The automotive industry is subject to various governmental regulations

3. Potential economic and political volatility in international markets

4. Toyota may be adversely affected by natural disasters

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Toyota SWOT Analysis 2021: Quick Reference Guide

What are Toyota’s major strengths?

What are some of Toyota’s weaknesses?

What are some opportunities for Toyota?

What are the biggest threats to Toyota?

Toyota SWOT Analysis: Conclusion

Toyota SWOT Analysis (2024)

Toyota’s Strengths

Toyota’s Weaknesses

Toyota’s Opportunities

Toyota’s Threats

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Toyota SWOT Analysis

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Essay: Toyota SWOT analysis

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Toyota: SWOT Analysis, BCG Matrix and Porter's Five

Strategy of Toyota

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