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Unique Management Philosophy and Corporate Strategy

Question:

Discuss about the Marketing Audit Toyota Company.

Toyota Motors Corporation is Japanese Multinational Corporation and one of the largest companies in all across the globe. The major competitors of the company are General motors, Volkswagen Group and Ford. It is also a pioneer company which sells hybrid electric vehicles and passenger car models. It has adopted a unique management philosophy and corporate strategy which is significant in its corporate growth. The management philosophy of the company encompasses lean manufacturing and just in time production which was essential in the development of the corporate philosophy. The Toyota Way 2001 consists of expression of values and guidelines which should be acknowledged by all the employees of Toyota. These values are mainly based on two principles, namely, respect for people and continuous improvement (Toyota, 2017). The management philosophy of Toyota is based on long term strategy and thinking in all the managerial decisions, creating a holistic approach for problem solving, focusing on the human resource development of the organization and identifying the root problems which drive the organization learning. The company is considered as the industry leader in the manufacturing and the production process. It has adopted new technologies and implemented methods to reduce waste and increase the productivity of the organization. It also actively participates in a number of philanthropic activities in education, conservation, safety, and disaster management. With its cutting-edge technology and the corporate strategy, the company has attained a leading position in the automobile sector (Toyota, 2017). In the present report, the current position of the company in the international automobile industry has been examined. The major target markets of the company are explored. The current place of the organization in the automobile industry is evaluated on the basis of the market competition.

In Australia, the automobile industry is well-developed and with a large number of international automobile manufacturers operating in the country. All the leading car manufacturers like ford, Toyota and Volkswagen have manufacturing facilities in the country making it one of the few countries which can manufacture cars from scratch (IBIS, 2017). In the recent years, the automotive industry in Australia has observed substantial growth with increased with 2% increase in the previous year sales. According to the industry statistics, there is a continuous shift in the consumer preference which in inclining towards the light commercial vehicle. In 2016, the top-selling product in Australia was Hilux followed by incremental sales in SUVs (Legget, 2017). It shows that there has been a dynamic shift in the consumer preference towards light commercial vehicle, SUVs and dual cab facilitates. The customers give emphasis on performance and comfort attributes in their vehicles. The competition in the Australian car manufacturing companies is intense as a number of leading multinational organizations have entered the Australian market and offering more than 400 models adapted according to the taste of the Australian customers.


Although the commodity prices are reducing all across the globe, the Australian automobile industry is observing a substantial growth. In Australia, Toyota is the market leader, followed by Mazda, Hyundai and Holden. In 2016, the market share of Toyota was about 17.8%, market share of Mazda was about 10% and the market share of Hyundai was 8.6%, and the market share of Holden (8%) and Ford (6.9%) (Legget, 2017; Australian Government, 2017).

Current Position in the International Automobile Industry

The PEST analysis is the method of macro environment analysis for an industry. It is used to scrutinize the impact of all the external factors which can impact on the business of an enterprise. In this regard the following section examines the external factors which impacts on the business of the automobile industry.

Political Factors:

The political factors refers to the laws, regulations security measures and the restrictions which an impact on the companies running under the automotive industry. In the automotive industry, a large number of laws and regulations are applied to control the environmental impact of the automobiles. Recently, various governments have formulated laws to promote the use of hybrid vehicles and eco-friendly emissions (Porter, 2016). The government has also establishes laws to reduce the carbon emission of the companies and produce high mileage cars.

Economic Factors:

There are a number of economic factors which can impact the business in the automobile industry. It includes the economic growth of the market, exchange rate and the purchasing power of the companies. The demand of the automobiles is tied with the hikes in the oil prices. Moreover, inflation also affects the sales of the automobile industry (Fifield, 2008).

Social Factors:

The social factors refer to the demographic, geographic and the cultural differences which can impact on the sales of the automobile industry. The changes in the consumer preference and the social trends also impact the sales of the organization. In the automobile industry, the brand image of the company also plays a crucial role in the sales of the organization. As buying cars is a huge investment from the customers, they are concerned about the reputation of the organization and the longevity of the vehicle (Thompson & Martin, 2010).

Technological Factors:

The technological infrastructure and the communication system of a country hugely impacts on the operations and the eventual sales of the organization. The automobile companies are using technology to reduce he carbon emission patterns and reducing the battery life of the automobiles. The technology is also essential for the automobile companies to set up operations plant and managing the supply chain of the companies (Vernon, 2010).

Legal Factors:

In the automobile industry, the laws related to the environment, foreign investment, taxation laws and export and import laws affect the sales of the company. As Toyota is a foreign organization, the laws related to the multinational companies will be applicable on it (Seibert, 2015).

Environmental Factors:

The automobile are the major cause of the environmental pollution. Therefore, the government has developed a number of laws to control the emission by the vehicles (Seibert, 2015).  

Toyota has dominant market share in Australia with about 18% market share. The company has retained its number one position by selling more products than any other brand in the country. The company manufactures different cars or products targeted at different customer segments. In Australia, most of the sales of the company are attained by sales of Toyota Corolla. It is a compact car targeted at the middle size target customers (Weinstein, 2013). The compact cars are larger than the smaller cars; however, they are smaller than the average middle size cars of the company. It includes the customer segment in the age-group 18-39 who are adventurous but also concerned about their safety and safety of their family. The target customers are the millennial generation with high personal and professional ambitions. It includes the first-time car buyers who want to have a unique shopping experience with limited budget (MMA, 2017).

Impact of External Factors on Business

In Australia, the second most selling vehicle is sedan cars. Although the sales of the sedan cars gas reduced over the years, it is still a strong market for the company. With the sedan cars, the company targets the customers who have to travel long distance frequently. In Australia, the distances between places are high and the public transportation system is not developed (McDonald, 2012). Therefore, the Sedan cars are commonly used by the Australians. The target customers use small businessman, farmers and families. The company tailors its advertising efforts to align them with the local culture so that the customer feels familiar and connect with the brand. The commercials of the company are adapted according to the language, culture and the lifestyle of the people (Dibb & Simkin, 2013). 

In the recent years, the primary customer segment of the company has been developed as Toyota Corolla. It is compact car targeted at first time buyers with focus on reliability, durability and quality of the products. According to the target customer base, the company has taken many decisions in the marketing activities (Wedel & Kamakura, 2012). As the targeted customer base include families and the professionals in the millennial generation, the marketing strategy of the company promotes Corolla cars as the next generation hip hop car with emphasis on the comfort and the safety of the passengers.

In comparison to other markets such as Europe and the United States of America, the market of Australia is comparatively smaller. However, most of the leading car manufacturing companies of the world have manufacturing plants in the country. In addition to it, there are a number of local manufacturers and cheap importers which have increased the competition in the Australian automobile industry (Long, 2013). However, with the limited amount of sales in the country, most of the leading car manufacturing organizations such as Ford, Toyota and Holden and decided to close their manufacturing plants in the country and import vehicles from other countries (Dowling, 2015). Moreover, there are also a large number of local or small scale vehicle producers in Australia which have a smaller market segment. However, in spite of the immense competition, Toyota remains the leading automobile organization cross the globe. After Toyota Corolla, SUVs of the company showed spike in their sales ratio. From the last year, SUVs have grown a total of 15.9% in sales and covers a total of 35.4 % market share in the net automobile sector (Dowling, 2015).

Although Toyota has the market leader in the automobile sales, it is closely followed by Mazda. The company is a full-importer and has adopted extensive marketing campaigns to reach this position. The sales of the company have boosted up to 13 % from the last year performance which shows high positivity in the sales of the company. Therefore, Mazda is a strong contender of the market leader position (Federal Chamber of Automotive Industry, 2014). Mitsubishi has secured the third position in the Australian Automobile market, with its cost –effective models and cars. Honda has also launched a very popular model HR-V which has boosted the sales of the organization by around 21.5% (Dowling, 2015).

Political Factors

In this section, an analysis of the organization has been conducted to examine the strengths and weaknesses of the organization.

It can be critiqued that Toyota has utilized its resources effectively and attained the position of market leader. The primary strengths of the company are its strong brand image, global supply chain and the rapid innovation ability. Its stance towards the environment and the society also has been crucial in uplifting the brand image of the organization. It is one of the oldest and the strongest brand in the automobile industry (Ferguson, 2017).  The global supply chain of the company is also critical in creating a competitive advantage for the company. With the global supply chain, the company has also reduced the market based risks. It has organization culture which emphasizes on rapid innovation which increases the customer loyalty and develops long-term competitive advantage (Toyota Tsusho, 2017).


Toyota is one of the leading automobile organizations across the globe. Over the years, the company has established one of the most efficient and proficient manufacturing and production process. However, there are certain weaknesses in the operations of the organization. There are certain internal strategic factors which create hurdles in the strategic growth of the organization. It includes the hierarchal organization structure of Toyota, lack of transparency in the organization culture and weakened brand image due to a number of product recalls over the years (Hierarchy Structure, 2017). The hierarchal structure of the organization reduces the flexibility of the global operations (Jurevicius, 2016). The company follows its long tradition and has not yet adopted the culture of organization transparency which has negatively impacted on the productivity of the organization. It also increases the response time in case of emerging problems. The product recall conducted by the company has also negatively impacted on the brand image of the company. It has also consumed the management capacity of the organization which can be used for the business production.

In the present section, the relative quality and price of Toyota in relation to its competitors has been examined.

                                                  

Figure: Positioning Map of Toyota

(Source: https://forums.swedespeed.com/showthread.php?406377-Is-Volvo-a-Luxury-Car)

The primary customer segment for the organization is the millennial generation who are first time car buyers. The company targets the price-sensitive customers who are want maximum value at reasonable process. Therefore, the prices of the automobile of the company are relatively low. The company is famous for the reliability, quality and the durability of the products. The major competitors of the company are Honda and Ford which are placed under the same quadrant as that of Toyota (Ciferri, 2007). It means that the quality delivered by all these companies is relatively high; however, the prices of the products are low. Toyota does not target the luxury market and the affluent customers. Companies such as Mercedes, BMW and Audi target the luxury market. The prices of the product are relatively high than other companies. The quality delivered is in accordance to the prices charged to the customers (Stewart & Raman, 2007). 

Economic Factors

It could be examined from the above discussion that the quality of the product is essential in driving its sales. The company has also adapted its marketing strategy in accordance to its target customers. It tries to deliver robust and high quality products at low price. Moreover, the organization is also critical in its manufacturing processes. It has implemented a number of technologies to increase the overall productivity and reducing the waste emission of the organization.  

Conclusion

Toyota is one of the oldest and largest automobile business organizations in the world. It is headquartered in Japan and operates all across the globe. It has captured various international markets such as Australia, America and the European market. In the Australian market, the company has achieved the market dominant position. It is followed by Ford, Volkswagen Group, General Motors and Mazda. Toyota has achieved the prime position due to Corolla car sales. It is a compact car and targeted at middle-class millennial population. In the recent years, the sales of the company have increased immensely. It is due to the immense popularity of the specific car model. Followed by the Corolla car, the SUV cars of the company have attained high growth rates. These cars of the company are targeted at small-scale businessman and farmers. The company has adapted its marketing strategy according to the local customers and the target customers. The relative position of the company can be identified as high quality and value-based pricing.   

References

Australian Government. (2017). Automotive: About the automotive industry. Retrieved 3 April 2017 from https://industry.gov.au/industry/IndustrySectors/automotive/Pages/default.aspx

Ciferri, L. (2007). Toyota balances low cost with quality. Retrieved 3 April 2017 from https://europe.autonews.com/article/20070917/ANE/70914046/toyota-balances-low-cost-with-quality

Dibb, S., & Simkin, L. (2013). Market Segmentation Success: Making It Happen. Routledge.

Dowling, J. (2015). Who killed the car industry? The Sydney Morning Herald. Retrieved 2 April 2017 from https://www.smh.com.au/business/the-economy/who-killed-the-car-industry-20151112-gkx1c8.html

Federal Chamber of Automotive Industry. (2014). Consumers benefit from Australia’s competitive car market. Retrieved 3 April 2017 from https://www.fcai.com.au/news/index/index/year/2014/month/all/article/364

Ferguson, E. (2017). Toyota’s SWOT Analysis & Recommendations. Panmore Institute. Retrieved 3 April 2017 from https://panmore.com/toyota-swot-analysis-recommendations

Fifield, P. (2008). Marketing Strategy. Routledge.

Hierarchy Structure. (2017). Toyota Company Hierarchy. Retrieved 3 April 2017 from https://www.hierarchystructure.com/toyota-company-hierarchy/

IBIS. (2017). Automotive Industry in Australia. Retrieved 3 April 2017 from https://www.ibisworld.com.au/industry-trends/market-research-reports/thematic-reports/automotive-industry.html

Jurevicius, O. (2016). SWOT analysis of Toyota. Strategic Management Insight. Retrieved 3 April 2017 from https://www.strategicmanagementinsight.com/swot-analyses/toyota-swot-analysis.html

Legget, D. (2017). Australia car sales hit record in 2016. Just Auto. Retrieved 2 April 2017 from https://www.just-auto.com/news/australia-car-sales-hit-record-in-2016_id174208.aspx

Long, D. (2013). Perfect competition and the Australian car industry. OnLine Opinion. Retrieved 3 April 2017 from https://www.onlineopinion.com.au/view.asp?article=15870

McDonald, M. (2012). Market Segmentation: How to Do It and How to Profit from It. John Wiley & Sons.

MMA. (2017). Toyota Corolla: Corolla Style. Retrieved 2 April 2017 from https://www.mmaglobal.com/case-study-hub/case_studies/view/31757

Porter, I. (2016). The government's car crash of an automotive Policy. The Sydney Morning Herald. Retrieved 3 April 2017 from https://www.smh.com.au/comment/the-governments-car-crash-of-an-automotive-policy-20160110-gm32yn.html

Seibert, J. (2015). How Outside Forces Are Affecting The Automobile Industry. Value Line. Retrieved 3 April 2017 from https://www.valueline.com/Stocks/Commentaries/How_Outside_Forces_Are_Affecting_The_Automobile_Industry.aspx#.WOHBF1WGPIU

Stewart, T.A., & Raman, A.P. (2007). Lessons from Toyota’s Long Drive. Retrieved 3 April 2017 from https://hbr.org/2007/07/lessons-from-toyotas-long-drive

Thompson, J.L., & Martin, F., (2010). Strategic Management: Awareness & Change. Cengage Learning EMEA.

Toyota Tsusho. (2017). For Individual Investors. Retrieved 3 April 2017 from https://www.toyota-tsusho.com/english/ir/individual/adva

Toyota. (2017). The Company. Retrieved 3 April 2017 from https://www.toyota.com.au/toyota/company

Vernon, P. (2010). How Technology Is Changing The Automotive Industry In 2016. Manufacturing Business Technology. Retrieved 3 April 2017 from https://www.mbtmag.com/article/2016/03/how-technology-changing-automotive-industry-2016

Wedel, M., & Kamakura, W.A. (2012). Market Segmentation: Conceptual and Methodological Foundations. Springer Science & Business Media.

Weinstein, A. (2013). Handbook of Market Segmentation: Strategic Targeting for Business and Technology Firms, Third Edition. London: Routledge.

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