SWOT Analysis of Toyota

Company Overview

Toyota Motor was founded by Kichiro Toyoda in the year of 1937 as a spinoff from his father’s company Toyota Industries to manufacture automobiles.

It is a Japanese automotive company, headquarter is in Toyota, Aichi, Japan. It’s a multinational automotive company, and by March 2014 it consisted more than 338,875 employees worldwide (Wikipedia). It is the first company that manufactured 10 million cars per year from 2012. In that year, Toyota announced it had manufactured its 200 millionth car.

SWOT Analysis of Toyota

SWOT Analysis of Toyota

Strength [Internal Strategic Analysis]

  • Strong Human Resource: for long-term sustainable competitive advantages, a firm must invest in human resource. Toyota exactly did it. It has 348,877 skilled and experienced employees all over the world, as of December 2015. [1]
  • Innovative: Toyota has innovative organizational culture. It facilitates rapid innovation. It has been developing automotive driving system which ensures efficiency, safety, and freedom of mobility to senior citizens. [2]
  • Strong Brand Image: Toyota is one of the oldest automotive brands. From the inception, it has been introducing different types of cars to its buyers which helped it to create a strong brand image. It has always been a family oriented car manufacturer. [3]
  • Strong Diversified Product Portfolio: Toyota has a large number of products to offer which makes it sustainable in the current competitive market. It offers electric cars, full automotive diesel cars, hybrid cars etc.
  • High Production Capability: The Company acquired high capability in producing cars, has been producing 10 million cars per year from 2012.

Weakness [Internal Strategic Analysis]

  • Dependence on Suppliers: Toyota Motor depends on a large extent on its suppliers. This creates a strong dependent relationship with it suppliers (Hino, (2012).
  • Vehicle Recall: Toyota has recalled its cars for last few years. It is making Toyota financially weak which may
    bring negative effect to future investment and the reputation as well.
  • Weak Presence in South Asia: Toyota does not offer hybrid, electric, or fuel efficient cars in South-Asia; as a result, it has no strong presence in South-Asia market.

Opportunities [External Strategic Analysis]

  • Growing Developing Nations: the demand for cars is increasing in developing nations.
  • Growing concern for Environment pollution: people are becoming more concern for the environment; as a result, there is a possible boom in the sale of environment-friendly cars.
  • Rising demand of fuel efficient cars: the demand is always increasing for fuel efficient cars which is Toyota’s
    latest offering.

Threats [External Strategic Analysis]

  • Number of Competitors: Number of competitors are not small in this industry. Toyota has a large number of competitors including Fords, Mitsubishi, Volkswagen, and Honda.
  • Growing Market for Low-Cost Vehicles: Of course there is a huge market in South-Asian countries, and the demand for fuel efficient cars is high, but most of the buyers are interested in low-cost cars.
  • Carbon Emission Standards: If any government introduces new carbon emission standards, it may harm the market share.
  • Rising Raw Material Costs: Rising raw material cost may increase the sale price.
  • Yen Vs. Dollar: there is always a risk associated with an exchange rate as it is a global company.

 

Recommendation

As the Toyota SWOT Analysis discussed, Toyota Motor has great strength internationally. But to address the threats based on competition, it must increase the competitive advantages by offering more environment-friendly cars.


References:

  • http://www.toyota-global.com/company/profile/overview/
  • Toyota Wiki
  • Toyota Body
  • “INSIDE THE MIND OF TOYOTA: MANAGEMENT PRINCIPLES FOR ENDURING GROWTH” by Satoshi Hino

faizul

Sheikh Faizul Haque, the founder of GotAbout, graduated from North South University, Bangladesh. His major was Finance and Accounting. Faizul has been writing in business blogs since 2013, also has a strong interest in Behavioral Finance, Risk Management, and Portfolio Management.