BCG Matrix (Toyota's products)
The BCG model depicts that how much priority should be given to the particular business unit.
Following is Toyota BCG model:
The BCG Model Of Toyota Company
Business growth Rate
High
Stars
(Corolla)
Question Mark
(Cuore)
Low
Cash Cows
(HiLux)
Dogs
High
Low
Relative Position Market Share
The BCG Model Of Toyota Corolla
Business growth Rate
High
Stars
(2.0 D, 2.0 D Saloon)
Question Mark
(SE Saloon, GLi)
Low
Cash Cows
(Xli 1.3)
Dogs
High
Low
Relative Position Market Share
Toyota Resources School of Strategy:
The Resource strategy is based on the argument that some companies develop a collection of their key
competencies in which they can differentiate themselves from their competitors. The Toyota is known
for its quality which they have developed after the hard work and commitment of decades. They have
invested a lot in their employees, in their structure, in their manufacturing units, and most importantly in
their products in order to reach this skill level.
Porter's 5 Forces and Generic Strategies (on Toyota)
Threat of New Entrants:
In Automobile business the threat of new entrance in the industry are very low because it is a high tech
industry and needs huge amount of capital and innovative technology to establish a manufacturing unit.
Bargaining Power of Suppliers:
Toyota is one of the leading automobile manufacturers and holding a major share in the global market,
so it has dominant role on its suppliers but it does not manipulate the rights of suppliers it take cares
them and their needs as well.
Intensity of Rivalry:
The competition is very high in the Automobile industry the larger Automobile companies are General
Motors, Ford and Honda are its main competitor. They are having large resources and they can any
strategy to have customer without taking care of capital back up.
Bargaining Power of Customers:
As there is a large no. of substitute available in the market and the bargaining power of customer is
high.
Threat of Substitutes:
Due to many substitutes available in the market for Toyota products as other manufacturers are
producing same quality products as well.
7S Model (7s strategies of Toyota)
Strategy
Share Values
System
Style
Structure
Skills
Staff
Western Management of the Toyota is giving more importance to the hard side of the seven S’s model
which includes structure, strategy and system. They give their more intentions towards day to day
activities and daily events and to develop a better organizational structure in order to have and maintain
competitive advantage.
On the other hand Japanese management of Toyota pay more value to soft side of seven S’s model
which includes sills, shared values and staff etc. They pay more intentions to get competitive advantage
through their employees, they provide them training and different skills to enhance their working power
and they have unique leadership style and unique shared values.
DEMAND AND SUPPLY FOR TOYOTA
In the market the price is totally depended on the price which is offered by the seller and the prices on
which the buyer is willing to buy the product that is called market price. Here we will discuss the
Toyota’s demand and supply side factors which are the essential elements of the automobile market.
The Following factors influence the demand and supply of automobile:
1. The price at which seller is ready to sell in the market after bargaining.
2. The price which at which any potential buyer is ready to buy from the market.
In the market the Buyers make an offer for car and the seller has right either to accept it or reject it.
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Analysis of the Factors which affect the demand and
supply of Toyota:
The main factors which affect the demand of the Toyota in the UK are population, Income
POPULATION
The increase in population will result in increase in demand for the products. The increase in the
population will increase the long run demand for Toyota cars. When the population increases the people
will go for new product this will automatically increase the demand for products which are prevailing in
the market.
Following charts will show the rightward shift in the demand of the Toyota products which will cause due
to the increase in the population around the world.
P
S
D1
D
When demand goes up Toyota has to increase its supply to cope with market needs. The New demand
for Toyota products is depicted through D1 curve.
INCOME
Other determinant of demand and supply is the Income of adult. The Toyota Company has to look the
income rate of adults before setting their prices. To increase the market share the Toyota has to look
the right segment for the right products. As income level goes up the demand for the products also
increases.
Following charts will show the rightward shift in the demand of the Toyota products which will cause due
to the increase in the income level of the population.
P
S
D1
D
When demand goes up Toyota has to supply to cope with market needs. The New demand for Toyota
products is depicted through D1 curve.
Why is Toyota leading from others?
The rise of Japanese manufacturers in the positions of global hegemony in the decades after World War
II is well known. In recent years, despite the known problems for Japanese companies like Nissan and
Toyota cars worldwide, including continued and even increased its competitiveness. This is based on
the philosophy of a competitive advantage, such as the Toyota Production System that is well known.
System depends in part on the management of human resources policies, promoting creativity and
loyalty of employees, but also and above all, a very efficient network of suppliers, manufacturers of
components. Toyota is second on the list, which includes fourteen world’s best manufacturers, including
General Motors and Ford. While Honda and Nissan are now also considered high quality cars
manufacturers but they can never defeat the Toyota in advantages of supplier’s networks, Human
resource management and distribution systems in World and in also in the most competitive market
United States.
Critical Analysis of Toyota:
The technology is found all over the world and it is important to experiment for the company is
recognized worldwide. In the world of automotive industry, Toyota is considered is to be a leading
automobile company from Japan. This status they achieved by spending billions of dollars on new
design and innovations in car and mass marketing campaigns. Toyota is in the eyes of consumers has
emerged, many cars in the world. Toyota is enjoying a global reputation by building new, innovative and
best quality products in affordable prices. As compared to its competitor Toyota is offering lower prices.
The quality is the core strategy of the Toyota they do not compromise on it. They believe on a long term
relationship with suppliers and with all other stake holders. Typically, the companies do not want to
reduce their returns and follow the target strategy is for sale at cost price + profit = Sales prices. But
Toyota's is having different approach a bit ', which is devised in the car price - cost = profit.
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Strategic management in all organizations on their activities has a direct impact. "This is the reason due
to which Toyota is the leading car manufacturer’s policy; strategic management is attractive which has
established in the world. It is easy for your new employees and managers, such as design and
installation of the new car, get Training in the Centers which are located near to them. Toyota plans to
build more new plants. Toyota is now one of leading automobile dealers due to its strategic
management.
The result of this strategic architecture, are based on a thorough analysis of corporate resources and
skills, as well as the orchestration of strategic resources and capabilities over time in measures of
productivity.
Product quality of Toyota was compared with five other companies including Nissan, Honda, GM, Ford
and Volkswagen. In vehicles problems that Toyota received are one on per hundred vehicles that make
top ranked company among industry giants. This is harmonized by a recent test conducted on truck
safety, Trucks Insurance Institute of America. In this study, rating of the Toyota Tundra was a “good
one” amongst all its competitors.
Impact of additional Assets
The Following chart shows the data of productivity of the cars over 6 years from 2003 to 2008 amongst
6 giant car producers including, Ford, GM, Honda, Toyota, Nissan and Volkswagen.
Sales Per Employee (Hundred $)
Company
2003
2004
2005
2006
2007
2008
GM
100
103
105
102
104
125
Chrysler
103
120
135
110
156
108
Ford
156
180
175
215
225
250
Toyota
425
385
510
590
610
625
Honda
135
145
163
186
195
230
Nissan
135
156
210
150
186
205
Volk Swagen
80
85
95
105
115
125
Source: Fortune Five hundred various Issues
Above figure shows the employees productivity over 6 the years for different car producing countries.
GM motors show very low productivity in terms of per employee. They start from 10,000 $ per employee
which is very low they improve over the years but not as compared to others. In the end of 2008 they
can just touched the 12500 dollar per employee productivity. The second company is also showing low
results in terms of the productivity for per employee. They have fluctuations over the last 6 years. They
started with 10300 $ and in the 2007 they crossed 15000 for per employee. But they went down in 2008
to 10800 $ productivity for per employee. Next company is Ford they are showing good growth over the
years. The good thing was its having constant growth. They started with 15600 $ and after a constant
growth ended with 25000 $ for per employee at the end of 2008.
The Toyota is leading amongst the all; they are showing very good results over the 6 years from 2003 to
2008. They started good and end is also good. Toyota started with record opening of 42500$ per
employee productivity. They are improved over the years. In the second year they went down little bit
but they recovered from the very next year. They ended with the remarkable ending of 62500 US dollar
per employee productivity. Even the world No. 1 company cannot compete with Toyota in terms of
productivity.
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Honda is also showing very good results like the Ford Motors. They started very low from 13500 $ and
ended with 23000 $ after 6 years. Nissan is also showing fluctuations over the years and the
Volkswagen shown very low results as compared to all.
BCG model Analysis:
According to BCG analysis we can see Corolla line of products of Toyota is falling in stars that show the
high growth rate and high market share as well. In needs a lot of investment because every new cent
invested in this category will result in high returns. When we make further BCG matrix of Corolla line of
product we found that 2.0 D and 2.0 D saloon these two models fall in stars it means these models are
having high growth rate and high market share as well. They can earn much more results. SE saloon
and GLi lies in question marks they need analysis to increase market shares. Xli 1.3 falls in cash cows
and it has slow growth rate and having high market share.
The Cuore Line of products of Toyota are having very high growth rate but very less market share as
compared to Corolla line of products. Hilex line of products lies in Cash Cow category that have high
market share but now low growth rate. It is also about to saturation point.
Conclusions & Recommendations
0
