• Written on 25 Feb 2013

SWOT analysis of Toyota

Toyota logo

This is a Toyota Motor Corporation SWOT analysis for 2013. For more information on how to do SWOT analysis please refer to our article.

Company background

Name Toyota Motor Corporation
Industries served Automotive
Geographic areas served Worldwide
Headquarters Japan
Current CEO Akio Toyoda
Revenue ¥18.583 trillion (2012)
Profit ¥283.55 billion (2012)
Employees 300,747 (2012)
Main Competitors Bayerische Motoren Werke AG, Chrysler Group LLC, Daimler AG, Ford Motor Co., General Motors Company, Honda Motor Company, Nissan Motor, Tata Motors, Ltd., Volkswagen AG and many other automotive companies.

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

SWOT

Toyota SWOT analysis 2013

Strengths

Weaknesses

  1. Innovative culture
  2. Brand reputation valued at $30 billion
  3. Industry leader in production and sales
  4. Strong brand portfolio
  5. The leader in “green” cars development
  1. Large recalls
  2. Weak presence in the emerging markets

Opportunities

Threats

  1. Positive attitude towards “green” vehicles
  2. Increasing fuel prices
  3. Changing customer needs
  4. Growth through acquisitions
  1. Fluctuating fuel prices
  2. New emission standards
  3. Rising raw material prices
  4. Intense competition
  5. Natural disasters
  6. Appreciating yen exchange rate

Strengths

  1. Innovative culture. Toyota is one of the most innovative auto companies and has a strong culture that is focused on constant innovation. The company was the first to introduce Kaizen, Kanban and Total quality Management systems widely in their organization. The company was the first to mass-produce and sell hybrid vehicles too.
  2. Brand reputation valued at $30 billion. Toyota’s brand is the most valued automotive brand in the world. The business is known for its environmentally friendly, safe and durable cars that are sold in more than 170 countries.
  3. Industry leader in production and sales. Toyota was the first company to introduce lean manufacturing and total quality management practices in manufacturing process. For some time, the company was the only practitioner of these practices and had the lowest manufacturing and production costs worldwide. Although many manufacturers were able to replicate Toyota’s lean manufacturing system, the company is still one of the most profitable manufacturers in the world.
  4. Strong brand portfolio. Toyota currently sells about 70 different models of cars under its namesake brand. This does not only increase brands awareness but also satisfies nearly every consumer group needs. Toyota’s flagship models are Corolla and Prius.
  5. The leader in “green” cars development. Toyota understands that environmental friendly cars are the necessity nowadays. Consumers are more selective in terms of CO2 emissions and fuel-efficiency of the cars they buy and Toyota’s early move towards selling hybrid and efficient cars is the strength few competitors can match.

Weaknesses

  1. Large-scale recalls. Toyota had quite a few large-scale vehicle recalls over the past few years. The business recalled 9 million vehicles in 2009-2010 and 7.43 million cars in 2012. Such recalls does not only hurt the firm financially but significantly damages firm’s brand.
  2. Weak presence in the emerging markets. Toyota’s main markets are Japan, US and Europe, while such emerging economies as China or India make only a small percentage of all Toyota’s sales. Due to poor presence in the largest automobile market (China), Toyota will find it hard to compete with GM that has huge market share there.

Opportunities

  1. Positive attitude towards “green” vehicles. Today consumers are more aware of the negative effects (air pollution) caused by cars. Large quantities of CO2 emissions intensify greenhouse effect and negatively impact the life on earth. Thus, consumers are more likely to buy new hybrid and electric cars that emit less CO2.
  2. Increasing fuel prices. Increasing fuel prices open up large markets for Toyota’s hybrid cars as consumers shift towards efficient cars.
  3. Changing customer needs. By introducing new car models, Toyota could satisfy varying consumers’ tastes and needs and access wider customer group.
  4. Growth through acquisitions. Toyota has successfully acquired other car companies in the past and should continue doing so to grow, gain new skills, assets and access to new markets.

Threats

  1. Decreasing fuel prices. There is high possibility that future fuel prices will drop, as more shale gas will be extracted. For this reason, fuel-efficient hybrid and electric cars will become less attractive to cost conscious consumers that are the main customer group for Toyota’s Prius model.
  2. New emission standards. New emission standards introduced by the government would require more investments into producing cleaner engines. More investments mean less profit for Toyota.
  3. Rising raw material prices. Rising raw material prices are especially important to automobiles manufacturers. Higher prices mean higher costs and less profits for Toyota as the raw metals are the main components in car manufacturing.
  4. Intense competition. Toyota faces more intense competition from other auto manufacturers more than ever. Volkswagen group is strongly growing and GM steps up after its reorganization to become more competitive than ever.
  5. Natural disasters. Toyota’s has manufacturing facilities in Japan, Thailand, China and Indonesia. These countries, including others, are often subject to natural disasters that disrupt manufacturing in the facilities and decrease Toyota’s production volumes.
  6. Appreciating yen exchange rate. Most of Toyota’s revenue comes from foreign countries. The profits earned abroad must be sent back to Japan and converted to yen. Appreciating yen exchange rate against other currencies means lower profits for Toyota.

Related topics

Ford SWOT

General Motors SWOT

Honda SWOT

Hyundai SWOT

Nissan SWOT

Volkswagen SWOT

Sources

  1. Toyota (2013). Investors: 2012 Financial Results. Available at: http://www.toyota-global.com/investors/financial_result/2012/
  2. Toyota (2013). Company profile: Overview. Available at: http://www.toyota-global.com/company/profile/overview/
  3. Interbrand (2013). Best Global Brands 2012. Available at: http://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012.aspx
  4. Pantong, K. (2013). Toyota investing on big things in Thailand. Available at: http://www.nationmultimedia.com/business/Toyota-investing-on-big-things-in-Thailand-30198606.html
  5. Wikipedia (2013). Toyota. Available at: http://en.wikipedia.org/wiki/Toyota#Hybrid_electric_vehicles

Written by Ovidijus Jurevicius

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