Running Header: EXTERNAL ANALYSIS OF AUTOMOTIVE INDUSTRY

External Analysis of Automotive Industry

External Analysis of Automotive Industry

Introduction

Toyota is one of the leading auto manufacturers in the world. The company also conducts business in the finance and other industries. Similar to the other companies, Toyota operates in a complex global industry. This paper aims to discuss strengths of Toyota for moving forward in the competitive industry and sales environment and the paper will also address the weakness of Toyota Motors.

Discussion

Strengths

Strong market position and brand recognition

Toyota has a strong market position in different geographies in the world. The company's market share for Toyota and Lexus brands in Japan was 47.3% in FY2011. (Annual report, 2011) Similarly, Toyota has a market share of 14.3% in North America, 13.7% market share in Asia (excluding Japan and China), and 4.4% market share in Europe. Such strong market position would allow the company to gain competitive advantage and also expand into international markets.

In addition, Toyota holds a portfolio of strong brands in the automotive industry. Its brands include Toyota, Lexus, Prius, Innova, Corolla, Yaris, Etios, Camry, Sequoia, 4Runner, Scion tC, Highlander, Fortuner, Land Cruiser, Vellfire, Sienna, Hilux, and other brands. These brands are among the strongest, most desirable premium brands in the world. For instance, the annual BrandZ Top 100 mMost Valuable Global Brands 2011 ranked Toyota brand first in the automotive brands with a value of $24.2 billion and an overall ranking of 27 on the top 100 list. The company's strong brand image gives it significant competitive advantage and helps it to register higher sales growth in domestic, as well as in international markets. Strong brand recognition allows Toyota to charge premium prices than its competitors and thus register relatively higher margins.

Strong focus on R&D

Toyota has a strong focus on research and development (R&D) to expand its product portfolio and to improve the functionality, quality, safety and environmental compatibility of its products. The Company conducts its R&D operations at 11 facilities worldwide. The company's R&D division focuses on various fields: environmental technology, safety technology, intelligent transport systems, personal mobility and robot technology. In the environmental technology field, Toyota is focused on improving the fuel economy of cars using conventional engines and hybrid technology for next-generation environment-friendly cars.

Strong focus on R&D has helped the company in incorporating newer features to its existing range of products and also in bringing out latest technologies in the varied areas. For instance, in June 2011, the company developed a charger for electric vehicles and plug-in hybrid vehicles (PHVs). In the same month, Toyota developed a deodorizer specifically for use on composting swine manure. The company's strong focus on R&D allows it to uphold the technological leadership in most of its product segments. It has also enabled Toyota to develop innovative products, leading to strong sales. (Annual report, 2011)

Extensive production and distribution network

The company has an extensive production and distribution network.. During FY2011, the company produced 7,169,000 vehicles, including 3,721,000 vehicles in Japan, 1,344,000 vehicles in Asia (excluding Japan), ...