Toyota Motor Corporation

Toyota Motor Corporation is a company located in Japan that designs, manufactures, assembles, and sells commercial vehicles, minivans, passenger cars and related parts and accessories. Chiefly, the company serves the Japanese, North American, European and Asian markets. Its current brands are Toyota, Hino, Daihatsu and Lexus (Uk.reuters.com, 2014). Currently, it is the largest motor manufacturing company and the 8^th leading company overall in the world. The company has been swift in providing customer with vehicles that serve various needs while at the same time ensuring that services are the environment is conserved.

Toyota’s main market is adults in the emerging countries. It interests its target market through the production of high quality products at very low prices. Each of Toyota’s items is intended to focus on a particular business sector. The outline criteria range from top velocity, limit and outside appearance like color and shape (Reuters.com, 2014). There is a fast, little, two-seat model for the more youthful and single individuals who are adventurous to the enormous five-seat models for the family set up. Demographically, they likewise target circumstances on the smooth tarmacked street roads and the harsh and tough rough terrain landscape.

Toyota has been formerly faulted by the American Markets that their items need style and configuration due to their difference from those of GM and Ford (Toyota-industries.com, 2014). This has headed the organization to be more mindful to its American fashioners to verify this needs are met (Npi.gov.au, 2014). The V8 pickup which was dispatched recently was as a consequence of this aspiration. The hybrid model, Primus, has likewise been changed since its creation; it didn’t hit the American market. When they made it look more advanced, it brought about huge volumes of offers.

Excessively, the Toyota Company is providing for its rivals some major snags. Despite the fact that it has encountered difficulties like the late reviews, it is still striking in business sector initiative position. On the off chance that the current great results and worldwide situating of the organization is anything to pass by, then this is a position Toyota is not liable to lose at whatever time soon (Sugimori, Kusunoki, Cho & Uchikawa, 1977). The company’s major competitors are General Motors Company, Daimler AG, Ford Motor Company, Volkswagen AG, Nissan Motor Company, Honda Motor Company, Peugeot, Fiat, and Renault. Most of the motor companies are located in India, U.S.A, Germany, Japan and China. The location of the manufacturing industries is mainly based on the availability of raw materials. The Toyota Motor company, General motors, Volkswagen, Hyundai and Nissan had a market share of 11.8%, 11.5%, 11.4%, 8.8% and 8.6% respectively. This accounts for over 50% of the total market share. The rest of the competitors command the rest of the market share.

The automotive industry mainly experiences perfect competition. This arises when competition is at the highest level possible (Toyota Australia, 2014). In the automobile industry, the market has a large number of producers and consumers, there is free entry and exit of companies, the cost of advertisement is relatively equal for all companies, consumers have a relatively good understanding of their products, and the cost of products is relatively standardized. The competition in this industry is majorly dependent on the effort of the manufacturers (Ng, Vail, Thomas, Schmidt & others, 2010). The better the level of marketing, the level of technology or the safety, the more likely the product is going to get a good reception in the market.

Generally, the market share of each of the large competitors is about 12%. The companies all experience normal profits and with small exceptions the cost of production is relatively close. To compete each of the companies specializes in multiple products to serve more consumer segments (Ng, Vail, Thomas, Schmidt & others, 2010). The companies also attempt to increase their market share through advertisement and creation of more superior products. Products are not generally accepted for their brand but on the basis of their quality and customer preference.

Variable costs

Raw materials

The company sources its raw materials from various suppliers from different locations. According to Toyota’s policy, with the exception of Denso Corporation an affiliate of Toyota, no company supplies the company with more than 5 % of its raw materials (Adler, Goldoftas & Levine, 1999). The company believes that the adoption of this policy encourages innovation, reduction of costs and other measures of competition. The company does not foresee any difficulty in obtaining its raw materials in the near future and plans to continue using the same policy. The primary raw materials used at Toyota are steel and aluminum. Other raw materials include copper, magnesium, rubber and plastic resin. The company has often been seen as one of the friendliest buyers of raw materials while dealing with its suppliers. The company’s raw materials are likely to increase with higher production.

Production

The cost of production is highly dependent on various factors. The process of manufacturing should be highly efficient to reduce cost (Ward, Liker, Cristiano & Sobek II, 2012). The company’s production process is highly efficient. It strives to minimize the time wastage by employees during production. This way, the cost of production has largely contributed to the lower cost and the low prices for its products.

Fixed costs

Labor

The company employs over 300,000 employees in its subsidiaries worldwide (Morgan & Liker, 2006). With this number of employees, labor costs the company a lot of money. Labor is mainly stable for the company. The number of employees to be paid and the amount of money is determined at the beginning of every financial year. The company’s labor force is highly trained and highly experienced to promote prompt growth production.

The costs of production of the company are largely variable. The company can however use the constant costs to its advantage and make higher profits with higher production. The costs of production will most likely be negligible compared to the savings.

Macro-business environment

• Overall political Stability of Japan

Japan is among the top performing countries in the world. It has support industrialization for a long time hence making it a viable business destination for manufacturers. The company provided subsidies to encourage production. While the Japanese economy had stagnated for over two centuries, the election of Abe into power gave the country a new light. Currently, the political stability of the country has improved substantially hence allowing the company to grow substantially.

Japan has experienced most of its difficulty in leadership by the failure of the lower and the upper house to agree. In July 2013, the country’s upper house elected Abe as the leader thereby agreeing with the lower house’s decision. The election by the two houses gave the government a higher capacity to perform. The country is likely to improve largely in the near future. Industrial giants of the country like Toyota will be the first to benefit from those developments.

• Economic factors of Japan

The unemployment rate in Japan is 4.0%. The company also benefits from a low interest rate of 0.84 % and an inflation rate of 3.4 % (OECD, 2014). The low unemployment is as a result of the high industrialization of the country. A sharp downturn in business and worldwide interest for Japan’s exports in 2008 forced Japan into recession. Government boost helped the economy recoup in late 2009 and 2010, however the economy contracted again in 2011 as the gigantic 9.0 extent seismic tremor and the resulting wave in March upset manufacturing (BBC News, 2014). The economy has generally recuperated in the two years since the debacle; however recreation in the Tohoku locale has been uneven. Head administrator Shinzo Abe has announced the economy his administration’s top priority; he has upset his forerunner’s plan to close nuclear plants permanently and is seeking after a financial revitalization motivation of monetary easing, fiscal maneuvering, and structural change. Japan joined the Trans Pacific Partnership transactions in 2013, an agreement that would open Japan’s economy to expanded outside rivalry and make new fare open doors for Japanese organizations. Weighed on a purchasing power parity (PPP) premise that conforms for value contrasts, Japan in 2013 remained as the fourth-biggest economy on the planet after second-put China, which surpassed Japan in 2001, and third-put India, which pushed out Japan in 2012. The new government will proceed with a longstanding civil argument on rebuilding the economy and controlling Japan’s tremendous government obligation, which is surpassing 230% of GDP. To help raise government income and lessen open obligation, Japan chose in 2013 to steadily expand the utilization expense to an aggregate of 10% by the year 2015. Japan is making advancement on ending deflation because of a weaker yen and higher power costs, yet dependence on fares to drive development and a maturing, decreasing population poses another major long haul challenge for the economy.

For this reason, the major factors have not been steady since 2008. The cost of employment is likely to start increasing in the short term. The low population increases will possibly influence the supply of labor. The country has had low inflation in the recent past. A low inflation rate is good for the company.

The Japanese Yen has not been stable recently. It has caused losses to some countries after the yen declined. The Yen has done well in the past two months. The country has seen a sharp rise in the value of the yen. This has been of positive impact to the productivity of the company.

The company has invested in various products that have been in sharp demand recently. The vehicles produced by the company are low fuel consuming. The company is likely to make high sales in the near future. The company is also creating hybrid vehicles. Hybrid vehicles have been in demand due to the rise in fuel prices. The company’s products are also likely to increase in demand with the recovery of the economies from the global recession (Business Recorder, 2014). As people are able to get access to more funds, they are likely to purchase new vehicles to replace their worn out ones.

The company purchases some of its products internationally. The improved exchange rates are likely to work against their favor. The company however makes more exporting and would therefore be more favored by better export rates.

The company is likely to face a shortage in labor supply.

• Negative impacts of production and the company’s solution

Toyota’s manufacturing plants usually lead to pollution. The manufacturing plants lead to environmental pollution through emission of greenhouse gases, noise pollution, and waste management. The company has created measures to deal with the situation. The company has in the past experienced noise pollution from boilers, cooling and heating units from the company (Chambers, 2008). At the Kyowa plant, the areas that contained these structures got partitioned to avoid exposure of the noise to people. In return, the company has repositioned residential houses to other areas. However, it was discovered that the noise level in parts of the residential areas was still above accepted levels. To further resolve the situation, insulating walls were installed around the structures. The plant has since been found to be within acceptable noise levels.

One of the substances that are emitted to the environment is the total volatile organic compounds. The introduction of cartridge based robots has helped to reduce the exposure of personnel to the substance. The move has also reduced the amount of cleaning solvent used in the paint shop. In the process, the company has also improved the finish on its vehicles.

To reduce the fuel consumed in the engine manufacturing plants, the company has installed new holding furnaces for the high pressure. This has enabled for the transportation of the molten ingots so as to eliminate the need to remelt the ingots. The move has resulted in significant savings in energy.

The company has also created a chemical substance management system to manage the usage and disposal of harmful substances. Every chemical that is used in the company is checked against a list of over 700 substances to give an idea as to whether they should be managed. Substances found to contain the chemicals are tracked from their entry to their entry to their exit to ensure that their usage is reported during the annual reporting process (Furman & Caplan, 2007).

The company has also committed to use leading technology in most of its operations. A new bumper bar was commissioned in 2006 that uses water based painting hence reducing environmental pollution (Mehri, 2006). The company also continues to set strict and tight targets to meet better waste management and energy consumption standards.

• Negative impacts of consumption

Consumers also have a challenge in using vehicles some of which belong to Toyota. One such challenge is the cause of accidents. Vehicle accidents cause a large share of deaths. Vehicles are also found to use high amounts of fuel, cause environmental pollution, and noise pollution. The company has been prompt to deal with each one of these issues in at least one way.

The production of hybrid vehicles has been one of those measures (Lander & Liker, 2007). While hybrid vehicles have not been able to completely eliminate the use of fossil fuels, measures have been put into place to reduce the amount of fossil fuels used and instead complement this form of fuel with other fuels. The company is also investigating for the improvement of these vehicles to ensure that the vehicles produces meet superior environmental sustainability standards.

To deal with motor vehicle accidents, the company has introduced accident warning systems to warn the driver every time a collision is possible (Lee & Jo, 2007). To prevent rear-end collisions; the Toyota company has integrated a simulator into the car to warn the driver before an accident happened. To further improve on this problem, the cars have a break assist that helps to stop the cars hence preventing collision. Toyota is also working to introduce a simulation system that will help to eliminate pedestrian accidents. The company also creates vehicles that have protection mechanisms both for the passengers and the vehicle. First, all vehicles are installed with air bags to protect the passenger upon impact. The vehicles also come with safety belts and other safety measures.

The company has also set up other measures to enhance the relationship between the company and its communities. This is to complement for the losses the company causes to the society in the form of car accidents and environmental pollution among others. First, the company operates the global vision to assist improvement of local communities. The company has been especially intent with issues of local concern like discrimination, poverty, elimination of accidents through driver draining and provision of education programs. This way, the company has become a shareholder into local communities.

• Viability of the Company

Toyota Company has been very effective in managing its production process to produce superior products without compromising on the environment. It has clearly been effective in managing the products it produces to ensure that all customers are served effectively and safely. Many governments have been prompt to sign into law strict measures to govern the production process and ensure that all producers work at a sustainable level and account for their activities (Liker, 2004). Toyota Company has been fast in implementing measures as they arise. It has put plans underway to create sustainable products whose quality falls way above the required standards. This way, the company is prepared to serve, not only today’s market, but also the market of the future. It has enabled to set the target for itself as well as for other companies of its kind.

In conclusion, the Toyota Company is a Japanese company that has been able to command the largest automobile market share through the creation of superior products at low affordable rates (Magee, 2007). The company has also benefited from good industrial conditions that from its host country, Japan. The company has been very proactive in ensuring that its products are safe for its clients and that all consumers are satisfied with the superior products.

While the company felt the impact of political factors as well as the recent economic crisis, the company has maintained its position above its competitors strongly.  The company has also been swift in offering products that are environment friendly without compromising the environment. This has been done by adopting measures to improve the production process as well as adopting more innovative procedures.

References

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