STRATEGIC MANAGEMENT

Module 2-Strategic Management: External Analysis

Module 2-Strategic Management: External Analysis

Introduction

The automotive industry is one of US's key industrial sectors that account for almost 8 percent in the total manufacturing value addition. The industry derives its importance from the link that it has established with the national and international economy and its supply chain involving different suppliers, distributors, manufacturers, importers, authorized and non-authorized dealers. It is responsible of employing billions of employees within the US and hence plays a key role in the society as well as in the economy. The automotive industry realizes that its contributions towards environmental up gradation can improve the overall sustainability level of the world towards environmental pressures and challenges and can improve the immunity of the environment in resisting drastic climatic depletion (Hitokoto, 2010).

Thesis Statement

Influence and articulation of external factors (opportunities and threats) affecting Toyota operations in the global automobile manufacturing industry.

External Analysis

Toyota industries operate through five business segments: automobiles; logistics; materials handling equipment; textile machinery; and others.Opportunities

Growing demand for hybrid electric vehicles:

The global demands for light Hybrid Electric-Vehicles (HEV) are anticipated to raise up to 4,000,000 units by 2015. Increasing prices of energy costs and augmented regulations for carbon emissions expected to boost the Hybrid Electric Vehicles demand, as the engines of HEV's have better fuel efficiency and they have less carbon emissions as compared to traditional diesel and gasoline engines. Toyota Industries has a strong focus on devices for plug-in hybrid vehicles (Thompson & Thompson, 2010).

The company also develops the core parts for electronic components and devices for hybrid vehicles. For instance, Toyota Industries engaged in the development and production of DC-DC converters for hybrid vehicles. The company provided these DC-DC converters to the Prius (first hybrid vehicle by TMC), the Harrier Hybrid, the Camry Hybrid, and the Lexus LS600h (hybrid vehicle models produced by TMC). Furthermore, the company launched the world's first internal combustion (IC) hybrid lift truck named GENEO-HYBRID in the Japanese market in FY2010. The company's competency on hybrid technology is likely to drive growth in the medium term (Mi, Masrur & Gao, 2011).

Growing opportunities in emerging automotive markets:

The company is increasing its focus in the emerging markets such as Russia, China, and India. These markets expected to witness strong growth in the coming future. For instance, the total automobile sales in the Russian market expected to reach 5.9 million units by 2012. The automobile business segment of the company manufactures vehicles, and engines, and car air-conditioning compressors for various automobile manufacturers, whose businesses concentrated in these emerging markets. Further, the company also provides automotive logistics services. The company, with strong automotive business operations, would be benefited by the growing vehicle demand in these emerging markets.

Establishment of new material handling company in North America:

Toyota Industries is planning to grow its material handling equipment products market in North America. In this regard, in March 2010, the company decided to establish a new wholly owned sub-subsidiary, Toyota Material Handling North America (TMHNA). The sub-subsidiary would be engaged in the industrial vehicle business in ...