Toyota Motor Corporation with a 70 year history has been the dominant name in the global vehicle manufacturer

from many decades after experiencing recessions, automobile trade liberalization, environmental concerns, oil shocks and other major changes in the operating environment. Working in shades of Detroit Big-3 in the fifties Toyota Motors became one of the big names in the leadership of Toyoda family and came out challenging Detroit top 3 by changing American patriotic drive to buy American, continually growing and has become a dominant force in world automobile industry today with some unique strategies in operations which are now globally practised with some of world successful conglomerates. It is not amusing to see Toyota in top-10 largest conglomerates in Fortune list. Toyota has been the technology driver in this fiercely competitive world with business strategy of being distinctive and unique capabilities to gain a competitive advantage via new operating structures drive across the company. In 1924 Sakichi Toyoda (father of Kiichiro Toyoda founder of Toyota Motors who gave birth to production system famously known as Toyota Production System or The Toyota Way as known in the company) invented Model G Automatic Loom. In 1934 Kiichiro made first Toyota passenger car Model A1. In 1947 company started selling small size vehicles under the name Toyopet and entered American markets in 1957 with Crown. In 1982 the two separate wings of Toyota i.e. Toyota Motor Company, Japan and Toyota Motor Sales, USA merged to form todays Toyota Motor Corporation and formed a joint venture with General Motors to form NUMMI New United Motor Manufacturing Inc to establish completely in America and making their own vehicles in country and as a result it came out with Lexus in 1989. From 1990s onward Toyota started making more luxurious and larger cars like Camry and Prius etc. In 2003 Toyota started manufacturing in France and ranked 8 th in 2005 Forbes 2000 list of worlds leading company in 2005. As per OICA reports, in terms of production Toyota manufactures 11% of global automobiles largest in 2010 followed by GM 10.9% and Volkswagen with 9.4% share of global automobile production. Performance o Ethics: Toyota was named one of the world's most ethical multinational corporations in the latest Covalence Ethical Ranking. This is the 4th year the list has been issued and Toyota has made the list each year. Toyota implements tenets of ethical business practice by promoting the Guiding Principles at Toyota, Toyota Code of Conduct and by educating and training employees at all levels and in all areas of operations.

In 2009 Toyota was on radar while recalling millions of vehicles in US itself for not complying with federal safety rules citing apologies to the customers for the compromise they made. o Respect: Toyota ranked 3rd on the Worlds Most Admired Organization list, behind only Apple and Berkshire Hathaway. (Feb. 27, 2009). Toyota ranked 3rd in Business Week/Boston Consulting Groups list of the Worlds 50 Most Innovative Companies. (May 2, 2009). o Quality: 80% of Toyotas sold in the last 20 years are still on the road today. (TMS news release) Toyota has won more Total Quality Awards than any other automaker across globe. Toyota was first in five of the 10 vehicle categories in Consumer Reports annual rankings, the most of any automaker (April 2009). Toyota provides best quality in cars with a philosophy of Customer First by evaluating vehicles under various strenuous conditions and following major safety standards. Toyota various quality systems are: Jidoka, a term loosely translated as "automation with a human touch to monitor processes where in as problem occurs process get halted there and there to stop error flow in the system further. Just-in-Time to manage inventory. In TPS via using Kanban adopted successfully from Wal-Mart to reduce storage cost and allowing workers to practice higher quality control by inspecting smaller batches of material and parts as they use them.

o Customer Satisfaction: Toyota, including its dealers, makes a company-wide effort to build relations with its customers, and all employees keep the "customer first" policy in mind in all aspects of their jobs. Six Toyota Motor Sales vehicles are ranked first in their segments in Auto Pacifics 2009 Vehicle Satisfaction Awards. (May 19, 2009) Toyota has the highest owner loyalty of any automaker. Toyota ranked #1 by having the greatest percentage of households return to purchase or lease another Toyota vehicle. (R.L. Polk & Co., Jan. 13, 2010).

Toyota Motor Corp.s namesake division and luxury Lexus line topped the American Customer Satisfaction Indexs annual ranking of automakers (Bloomberg, August 16, 2011). Toyota was the only nonpremium brand in the top five, tying Cadillac and Lexus with 87 on a scale of 100, followed by Ford Motor Co.s Lincoln and Daimler AGs Mercedes-Benz with 86. Index was based on surveys with 70,000 customers.

o Technology: Through September 2009, Toyotas cumulative global sales of hybrids topped 2 million as Toyota annually spends $9 billion on R&D every year. Toyota Motor Corp. is No. 1 among automakers for patent applications and awards in alternative power technology. In December of 2002, Toyota delivered its first two zero-emission, market-ready hydrogen fuel cell vehicles to customers in California for real-world testing. The next year, Toyotas new, breakthrough hybrid technology, the Hybrid Synergy Drive was introduced for use in the all-new 2004 Prius. Toyota Motor then came out with 100% electric vehicle Toyota FT-EV II. In 2002 Toyota came out with first complete eco-friendly car running on hydrogen Toyota FCHV and now boasts of series of vehicles in this segment from delivery trucks to route bus to hd trucks etc. o Success: (in United States) After introducing Corona in America successfully in 1965 which tripled sales in America for Toyota. Toyota then introduced Corolla in 1968 and has since gone on to become the worlds all-time best-selling passenger car, with 27 million sold in more than 140 countries. By 1975 Toyota surpassed Volkswagen to become the Number One import brand in the U.S. Toyota later took the Import Triple Crown in 1978, leading all import brands in sales of cars, trucks and total vehicles in America. Toyota in 1986, with sales of 1,025,305 vehicles, became the first import automaker to sell more than one million vehicles in America in a single year. By 1991, Lexus became the Number One luxury import in the U.S., surpassing both Mercedes Benz and BMW. Lexus also led three independent J.D. Power and Associates studies in 1991 as the top

nameplate in Customer Satisfaction, Sales Satisfaction and Initial Quality. In December 1997, the Toyota Camry first earned the title of Number One-selling passenger car in America. Camry was to win this distinction in seven of the next eight years. By the end of 2004, Toyotas annual North American production had grown to more than 1.4 million vehicles with Prius selling alone 100.000 units. In 2007, Toyota became America's most prestigious automaker quintessentially means a Japanese company has been better than Detroit at reading the American car psyche. Camry was the #1 selling car while Lexus was #1 luxury brand in America in CY 2009. Toyota does business in more than 170 countries globally; thats more countries than McDonalds with restaurants in over 100 countries. (2009). Toyota Motor Corporation ranked 3rd on Forbes magazines Global 2000 of the worlds largest companies. In 2007 it became leader of global automobile market and had been consistently ranked one for next 3 years consecutively. Toyota has been the world's most profitable automaker, as well as profitability record-holder among Japanese companies. It broke through the $ 200 billion barrier in revenues for the first time in fiscal 2006. Toyota became 3rd most admired American Corporation behind GE and Starbucks in 2011.

Strategic Posture: o Vision: Contributing to the development of a prosperous society through the manufacture of automobiles. o Mission: Develop and provide innovative, safe and outstanding high quality products and services that meet a wide variety of customers demands to enrich the lives of people around the world. For the same in 2001 Toyota Way was published as a way to clarify values and beliefs of employees to follow. o Objectives: The three main corporate goals are the following: To steadily increase corporate value as a top management priority. Continue to introduce and produce products that fully cater to customer needs.

 To become competitive global company. o Strategies: Many strategies like to implement some of above objectives: Unique management system-focused on prompt decision-making and speeding up operations. A range of in-house committees a system that emphasizes problemsolving and preventative measures-done by immediately flagging problems and sharing them with the appropriate individuals/departments.

Environment: (Macro) Political: Various laws and government regulations have affected since the 1960's to the automobiles maker in United States. Almost all of the regulations come from consumers increasing concerns for the environment and the concern for safer automobiles. NTMVS Act, 1966: The first safety act passed by Congress was in 1966 and was called the National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced Toyota and others automakers to improve the safety for the passengers, the driver visibility, and the braking of the car. It also stated that manufacturers had to inform the public when it had a recall on the cars. There was also growing concern for the environment even before the oil crisis. According to the article "Motor Vehicles and Passenger Car Bodies", Congress passed acts in 1965 and in the 1970's. The Vehicles Air Pollution and Control Act was passed in 1965. This was the first act to set standards for automobile pollution. Then in the 1970's, Congress passed the Clean Air Act that demanded a 90% decrease in automobile emission within the next six years (Gale, 2004). The Energy Policy and Conservation Act of 1975 stated that all automobiles must meet a certain mileage per gallon. It was a result of oil crisis. Then in 1992, the Intermodal Surface Transportation Act required the installation of front airbags. (Motor Vehicles and Passenger Car Bodies, 2004)

Economic: The automobile industry has a huge impact on the U.S. economy. The University of Michigan and the Center for Automotive Research stated that this industry is the major user of computer chips, textiles, aluminium, copper, steel, iron, lead, plastics, vinyl, and rubber. (Gale, 2004) The study also showed that for every autoworker there are seven other jobs created in other industries. These industries include anything from the aluminium to lead to vinyl. In 2001, the total sales of automobiles were 3.7% of the nation's gross domestic

product. This percentage works out to be $375 billion dollars in sales. With the increase in sales of vehicles automotive industry in America with GM, Chrysler, and Toyota has been a part of 4 to 10% GDP of various states in 2008 in U.S. Direct Investments of the range of $ 18 billion by Toyota and making purchases worth $ 24 billion and operating with over 1506 dealers and employing 365,000 people in United States directly or indirectly, Toyota Motors become an important part of United States GDP. Social: Toyota Motors actually affects the society as a whole being part of automotive industry. It provides employment to around 365,000 people in United States. Its products have transformed American altogether which is why it is one of the most admired car companies over the Detroit Big-3 by bringing undreamed-of levels of mobility, changing the ways people live. In 2008 Toyota launched a $ 20 billion Together Green five-year alliance with Audubon to fund conservation projects, train environmental leaders, and offer volunteer opportunities to significantly benefit the environment in United States. The Toyota U.S.A Foundation $100 million endowment supports K12 programs in math, science and environmental science. Since 1991, Toyota has committed over $36 million to establish model literacy programs across the U.S. in alliance with National Center for Family Literacy. Since 2004, Toyota have sponsored and created programs that educate drivers and passengers of all ages across the U.S. on critical safety behaviours under a program called Toyota Driving Expectations where by nearly 16,000 teens and parents have completed the TDE program together till date. The Governor's School of Arts offers in-depth instruction in artistic disciplines such as writing, music, art, voice, dance, drama and theatre. Toyota has been a proud supporter since 1991. Toyota has served for 12 consecutive years as the national sponsor of National Public Lands Day, held annually in September in partnership with National Environmental Education and Training Foundation contributing an estimated $15 million in improvements to federal, state and local public lands.

Technological: For more than 25 years, Toyota Technical Center (TTC) has been the driving force behind Toyota's North American Engineering and Research and Development activities, overseeing the design and development of vehicles. TTC is a division of Toyota Motor Engineering & Manufacturing North America, Inc. In 1997, Toyota came out with first hybrid automobile in United States, Toyota Prius and sold its one millionth hybrid car in U.S in 2009.

In alliance with Ford Motor Company Toyota would be developing gas-electric hybrid fuel system for pickup trucks and sport utility vehicles aimed at keeping larger models affordable as the automakers work to meet stricter fuel-economy standards in United States.

Investment worth $12 million in digital information system in collaboration with Microsoft for power-management, multimedia services and GPS in Toyota 2012 hybrid cars will be the first cars to have future mobility and energy management. Toyota joined The Linux Foundation as a Gold member to maximize its own investment in Linux (working on In-Vehicle-Infotainment and communications systems) while fostering open innovation throughout the automotive ecosystem. Some of the major hits from Toyota Corporation in United States are:
o

Plug-in Hybrid Vehicles (people and environmental friendly), efficient use of electricity with a plug-in hybrid vehicle can further reduce CO2 emissions o Hydrogen fuel cell hybrid (with high performance fuel cell stack) to be in market by 2015. o Debuted the concept of FT-EV concept electric vehicles in 2009, Toyota would be launching them in U.S markets by 2012. o Natural gas hybrids are a concept car displayed in 2008 working on natural gas which is a clean and safe gasoline alternative. Legal: Toyota has been subjected to numerous technical directives and regulations in U.S. with major problem in regards to auto safety enforcement where in some lawyers estimates Toyota Motors face potential civil liability of more than $10 billion as it struggles to contain an auto-safety crisis that has tarnished its public image. Other legal litigation that Toyota frequently faces in United States customers are stemming from diminished vehicle values, complaints of Toyota cars racing out of control and failure of electronic throttle control system etc. There has been law suit against the then CEO of Toyota North America in regards to gender biasing. Environmental: Toyota tries seeking Green and meets more than meets the industry standards. Toyota is in constant target of developing wide range of innovative vehicle and fuel technologies and infrastructures converge to create an economically vibrant, mobile society in harmony with the environment i.e. developing and managing vehicles and technologies through their "life-cycle assessment" footprint. Some of the environmental initiative by Toyota focussed on 5 major areas viz. Energy and Climate Change; Recycling and Resource Management; Air Quality; Environmental Management; and Cooperation with Society. Some other steps taken are:

Reduction in energy consumption at Toyota North America assembly plants.

A project to eliminate centralized boiler systems and install equipment closer to the painting processes resulting in significantly less energy use. Decreases in waste to landfill and an emphasis on reducing material use. Additional Leadership in Energy and Environmental Design certifications for buildings and promotion of green building practices with dealers. o Kendall Toyota in Eugene, Oregon, is the only LEED Platinum-certified dealership in the world o Stratford Toyota in Stratford, Ontario, is the first LEED Gold-certified dealership in Canada. Engagement with communities through Toyota's signature environmental philanthropic program, TogetherGreen, in partnership with the National Audubon Society which to date had over 72,400 participants putting over 275,000 hours of habitat, water, and energy conservation efforts across the U.S.

Environment: (Micro i.e. Porter Five Forces Model) Threat of New Entrant New automakers coming to market Low/Moderate It's true that the average person can't come along and start manufacturing automobiles. Historically it was thought that Detroit Big-3 were unchallenging but emergence of Japanese (Toyota, Honda, Nissan etc.) and German (Volkswagen, BMW etc) has rubbished this myth today. But still due to high cost of entering into automobile market threat is still potentially low due to higher barriers of entry which are due to the higher level of capital investments that have to be made and the technological competencies to be developed to sustain in the industry. For company with Toyota Motors Corporation size the threat can be termed a very low (developed) or somewhat moderate (developing) as small car manufacturers in developing nations like India (Tata Motors, Mahindra etc.) , China and others like Italy (Fiat) can cause a impact on sales in these nations. Bargaining Power of Buyers To what level the customers can Push the prices of cars down. Low Historically, the bargaining power of automakers went unchallenged. The American consumer, however, became disenchanted with many of the products being offered by certain automakers and began looking for alternatives. Even though they are price sensitive but again they do not buy in bulk to command any bargaining power. Detroit Big-3 and Japanese Motors (Toyota, Honda) forms

an oligopoly with major sales coming from top 3 including Toyota in United States who caters to zillions of consumers across globe. Customers have very little option but to choose from these big manufacturers. Dealers/Retailers: High: On dealers parts to get more customers attracted against competitive dealers they have no option but to lower the prices of vehicles against competition. So power of customer is higher. High While considering substitutes factors like availability of substitutes, time, money, personal preference and convenience in the auto travel industry are major concerns. Likelihood of people taking the bus, train or airplane to their destination in developed nations like United States and Europe and now in developing nations too with introduction of trams and metros etc. has made challenging environment for automobiles manufacturers giants like Toyota or GM or Ford. The higher the cost of operating a vehicle, the more likely people will seek alternative transportation options. The price of gasoline has a large effect on consumers' decisions to buy vehicles. Trucks and sport utility vehicles have higher profit margins, but they also guzzle gas compared to smaller sedans and light trucks Reasons: Alternative Transport On the heightened environmental awareness relating gases (carbon dioxide and other poisonous gases polluting air) mode: transmission from car engines, oil prices continuously rising fear, increasing traffics on roads and hence more travelling time etc. public transport has been alternatively developed by governments discouraging use of own automobiles instead using public transport like metros, trains, buses, trams etc. Suppliers Bargaining Power Reliability of Suppliers Moderate The automobile supply business is quite fragmented (there are many firms). Many suppliers rely on one or two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it could be devastating to the previous supplier's business. As a result, suppliers are extremely susceptible to the demands and requirements of the automobile manufacturer and hold very little power. Suppliers raw material is commoditized and they can produce the cars from themselves. Now they have other car manufacturers to cater their need to and since there is no cartelization of the manufacturers hence suppliers have some bargaining power.

Threat of Substitute Products Substitutes

Toyota Suppliers

In Toyota all suppliers have to follow standards and thus Toyota cannot tend to change the suppliers very often. But to prevent the larger bargaining power Toyota employs the principle of Kiretsu (minority ownership) with suppliers and hence relatively lowering this threat. High Detroits Big-3 along with other Japanese motors like Honda, Nissan and then German automakers like Volkswagen etc. are major competitors of Toyota. Not much hence all players are already stuck with same size pie which is not growing. So competing to get each other market share as the pie itself is not increasing. Introducing new models with variants in design and technology pushes Toyota above others. But the competitors like GM, Ford etc plays defensively in their arena as well not allowing Toyota to attack their territory easily.

Rivalry among competitors Major Competitors

Industry Growth

Key Success Factor Toyota Production System

Lean Manufacturing, JIT, Kaizen (improvement), Kanban (Scheduling), Pull System (do not let problem to propagate and pull down system as soon as issue is detected) For the failed model, wont go wasted as it would be reengineered and reintroduced. Production line uses mix of people and robot which ensures correct material and parts fitted with accuracy (GM takes 34 hrs against Toyota 27 hrs in making a vehicle) Increase fuel prices, environmental pollution issues handling. Toyota Prius was first mass produced automobile Total cost of making a car for Toyota is $ 201 and for GM ($1500), Ford ($1300). Hence bottomline of Toyota is more strengthened also workforce is quite younger compared to GM and Ford, giving pension to over 800,000 retirees. So employees are better paid and taken care of due to productive bottomline and hence high satisfaction level. GM Ford Chrysler Toyota

Reengineering

Superior Technology & Quality

Hybrid Vehicles

Employee Welfare & Satisfaction

Competitors Analysis Weights

Financial Strength Market Share Price Competiveness Product Quality Management CSR Branding Distribution Network Warranty Customer Loyalty

0.17 0.13 0.12 0.11 0.10 0.10 0.08 0.07 0.07 0.05

0.17 0.39 0.24 0.33 0.20 0.20 0.24 0.28 0.28 0.10 2.43

0.34 0.36 0.36 0.33 0.30 0.20 0.24 0.21 0.21 0.10 2.54

0.17 0.13 0.24 0.33 0.20 0.20 0.24 0.14 0.07 0.10 1.82

0.51 0.52 0.48 0.44 0.40 0.40 0.24 0.21 0.21 0.15 3.42

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