TOYOTA Project report of STRATEGIC MANAGEMENT

Submitted To

Mr. SAEED AHMED

M.B.A (H.R.M)4th Semester (2012-2015)

(Alfalah Institute Of Banking and Finance)

Bahauddin Zakariya University, Multan, Pakistan

2014

GROUP MEMBERS

M.B.A (H.R.M) 4th Semester (2012-2016)

(Alfalah Institute Of Banking and Finance)

Bahauddin Zakariya University, Multan, Pakistan

SYED RAZA ABBAS 8

MOHAMMAD ALI 41

FAHAD MANAN 40

ANAM ARIF 7

DANIYAL IQBAL 51

TOYOTA MOTORS Over View and Product and size:

Toyota Motor Corporation is one of the worlds leading automakers, offering a full range

of models from mini vehicles to large trucks. Global sales of its T o yo t a and

Lex u s b r an ds , co mb in ed wi t h th os e o f Daihatsu and Hino, totaled 6.78 million

Its own 12 plants and 11 manufacturing subsidiaries and affiliates inJapan, Toyota

has 45 manufacturing companies in 26 countries/locations, which produce Lexus -

and Toyota-brand vehicles and component Market shares (2012) vs Competitors

TOYOTA 14.1%

NISAN 8.1%

CHRYSLER 9.8%

HONDA 11.0%

GENERAL MOTORS 16.2%

TOYOTA CARS BRANDS

TOYOTA LOCATIONS IN THE WORLD

INDUS TOYOTA MOTORS In PAKISTAN

Indus Toyota Industries has serving its customers since long time. Indus Toyota

motor d ev e l op s and m an u f ac tu r es au t om obi l es and au to mo bi l e - r e l a t ed

p r od u c t s , s u ch a s vehicles, engines, car air-conditioning compressors, car

electronics components and devices, and stamping dies.

Indus motors (Pakistan) started its business in Pakistan as a public limited company in

December 1989. The shares of the company are quoted on the stock exchanges of Pakistan.

IMCs production facilities are located at Port Bin Qasim Industrial Zone near Karachi

measuring over 105 acresPlant (Indus Motor Company Limited)

Plot No. N.W.Z/1/P-1, Port Qasim Authority, Karachi, Pakistan

REGIONS

Karachi Quetta

Larkana Lahore

Faisalabad Sargodha

Multan Sialkot

Islamabad Rawalpindi

Peshawar Azad Kashmir

Dera Ismail Khan Mardan

Currently the company is performing well in automobile sector of country. Its sales for the year

2003-2004 is 29,565 units. It has captured the largest automobile market share in the country.

It is greatly contributing in human resource development by training and other such activities.

The demand for its products is more than the companys capacity. It has certain advantages

upon its competitors like largest market share, customers liking of its products more than its

competitors. The company is continues to maintain a strong commitment towards its Human

Resource. To enhance Consumer Satisfaction, extensive training programs were held during

the year. Company continuously arrange service campaigns in the cities where its dealerships

are present to provide quality service to customers and collect their complaints, suggestions

and comments about company. The company also checks its dealerships continuously for not

only maintaining but enhances its standards to give to customers maximum satisfaction.

VISION, MISSION and OBJECTIVES

VISION STATEMENT:

To be the most respected and successful enterprise, delighting customers with a wide

range of products and solutions in the automobile industry with the best people and

the best technology.

IMCs Mission is reflected in their Companys Slogan.

Action, Commitment and Teamwork to become # 1 in Pakistan.

Respect & Corporate Image

Quality & Safety

Customer Satisfaction

Production & Sales

Profitability

Best Employer

BUSINESS OBJECTIVES:

Achieving Market Leadership by Delivering Value to Customers

Following our Customer First philosophy in manufacturing and providing high quality vehicles and services that meet the needs of Pakistani customers.

Enhancing the quality and reach of our 3S Dealership Network

Employing customer insight and feedback for continuous corporate renewal, including

product development, improving service and customer care.

Bringing Toyota Quality to Pakistan

Maximizing QRD (Quality, Reliability and Durability) by built-in engineering. Transferring technology and promoting indigenization at IMC and its Vendors. Raising the bar in all

support functions to meet Toyota Global Standards.

Optimizing Cost by Kaizen

Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors. Implementing Toyota Production System. Removing waste in all areas and operating in the lowest cost

quartile of the industry.

TOYOTA CULTURE:

However, Toyotas main resource is the Toyota Way, the 14 principles behind the Toyota

Production System (Combe, 2011). These originated in the post 1945 environment, when it

was imperative to make the maximum use of scarce resources. Challenges, improvement,

Kaisen, go and see (genchi genbutsu); respect and teamwork are the main tenets of these

principles, which can be outlines as follows.

Management decisions should be long term, as opposed to short term, although they should be

arrived at consensually. Problems should be highlighted by continuous process, not hidden and

resolved immediately so that a quality product is produced immediately. Only existing and

trustworthy technology should be used and tasks need to be standardized so that the workload

is leveled out and the workers are continually improving. Management should understand all

aspects of the companys operations, and pass on their dedication to the companys goals to

others.

INDUS TOYOTA Environmental Factors

1-Political Factor:

Government at all levels is an important component of the general environment no

organization or industry is immune from the various decisions made by the government. The

Pakistan, Governments in consistent policies, frequent change industry tariff and smuggling

are main reasons of unstable market conduction. Like other motor companies Toyota is also

affected by the current changing policies of the PML (N) government to buy yellow cab from

the SUZUKI company and a huge revenue transferred to the SUZUKI company.

2-Economical Factor:

Government economic policies at the federal level clearly influence the ability of the

industries to survive and progress. Inflation is a major economic factor which

has affected the purchase power of the people of Pakistan. Automobile industry

including ToyotaThe inflation rate in Pakistan was recorded at 8.53 percent in March of

2014. Inflation Rate in Pakistan is reported by the Pakistan Bureau of Statistics

3-Demograpic Factor:

Society holds a global or summary belief that an organization is proper and worthy

of support. Toyota takes pride in being the most trusted name all over Pakistan. Its vehicles

are regarded as a status symbol. It is the guiding principles of Toyota which has strongly

developed trust in the people.

4- Cultural Factor:

Toyota respects the culture and customs of every nation and community and contributes to

the economic and social development through corporate activities in the communities. Toyota

believes in honoring the language and spirit of the law of every nation and undertake open

and fair corporate activities to be a good corporate citizen of the world. This is the reason that

Toyota is proud of the fact that Pakistani society considers Toyota vehicles to be a symbol of

reliability, comfort, luxury and ahave to be trusted.

5-Technological Factor:

Technology is of particular importance because it has been and continues to be the main

source of increases in productivity. Now Toyota has also Hybrid technology that provide 20

km in 1litre petrol and others motor companies mileage is less than Toyota Prius. A wide

Range of colors in cars are also attract the customers.

STAGES

1. INPUT STAGE

SWOT ANALYSIS of TOYOTA

EFE MATRIX of TOYOTA

IFE MATRIX of TOYOTA

2. MATCHING STAGE

TOWS MATRIX of TOYOTA

SPACE MATRIX of TOYOTA

BCG MATRIX of TOYOTA

GRAND MATRIX of TOYOTA

3. DECISION STAGE

QSP MATRIX of TOYOTA

SWOT ANALYSIS

Strengths:

1. A strong brand name A strong brand name and Large market share 2. Innovation is the key success factor through massive production in hybrid vehicles all

over the world that has been increasing Toyotas sales. 3. Toyotas investment in R &D Department is the reason for the recent improvement in

the design and research centers in the whole world.

4. Competitive pricing 5. Strong understanding of individual customer segment needs 6. High market share in PAKISTAN. 7. High quality and durability 8. Easy availability of spare parts in PAKISTAN. 9. Elegant body features 10. Comfortable ride 11. Good resale value 12. Low fuel consumption.

Weaknesses:

1. TOYOTA Should owned the manufacturing of Cars in PAKISTAN to overcome the complaints of local customers.

2. Due to unstable political situation in some countries, Toyota has to face through financial crisis and a decline in sales as well.

3. Ineffective vehicles and braking can make Toyota lose its brand image and a potential loss in incomes in the long term.

4. Toyota is often being criticized as the foreign importer to provide vehicles to customers.

5. Recycle Iron is used in cars body material.

Opportunities:

1. Toyota should make Sporty version in cars like Honda CIVIC in PAKISTAN to increase sales.

2. Due to rise in fuel prices will benefit Toyota to produce cars that are more fuel efficient and is less harmful to the environment like HYBRID type technology.

3. Toyota can capture the global market by expanding Plants in other countries.

4. The demand to buy luxurious cars has more increased recently in countries like India and Pakistan.

5. Extra market can be captured by introducing Company fitted CNG Kitts in the car and provide them full workshop facilities as well

Threats:

1. Increase in demand of technology other cars may result in downward trend of the brands goodwill.

2. Currently PakSuzuki is posing a threat asPak Suzuki is producing cheap cars and istargeting the lower-middle and middle income group consumers

3. Global inflation due to increase in population and high oil prices may result in decrease in demand of cars

4. Those car manufacturers who sell cars in cheaper rate has forced Toyota to put it prices down which can be a risk to its organizations financial position.

5. Strong Fluctuation in prices.

6. Permission given by the Government to the overseas Pakistanis to import used cars in Pakistan

EFE MATRIX FOR TOYOTA

Key External Factors

Opportunities Weight Rating Weighted

Score

1 Toyota should make Sporty version in cars like Honda

CIVIC in PAKISTAN to

increase sales

0.20 4 0.8

2 Extra market can be captured by introducing Company fitted CNG

Kitts in the car and provide them

full workshop facilities as well

0.10 3 0.3

3 Toyota can capture the global market by expanding Plants in

other countries.

0.05 4 0.2

4 The demand to buy luxurious cars has more increased recently

in countries like India and

Pakistan

0.10 2 0.2

5 Due to rise in fuel prices will benefit Toyota to produce cars

that are more fuel efficient and is

less harmful to the environment

like HYBRID type technology.

0.10 4 0.4

THREATS

1 Global inflation due to increase in population and high oil prices may

result in decrease in demand of cars

0.15 1 0.15

2 Currently Pak Suzuki is posing a threat as Pak Suzuki is producing

cheap cars and istargeting the lower-

middle and middle income group

consumers.

0.10 4 0.4

3 Permission given by the Government to the overseas Pakistanis to import

used cars in Pakistan

0.05 2 .1

4 Those car manufacturers who sell cars in cheaper rate has

forced Toyota to put it prices

down which can be a risk to its

organizations financial position.

0.10 1 .1

5 Increase in demand of technology other cars may result in downward

trend of the brands goodwill

0.05 3 0.15

Total 1.00 2.8

IFE MATRIX FOR TOYOTA Key External Factors

Strengths Weight Rating Weighted

Score

1 A strong brand name and Large market share

0.18 4 .72

2 High quality and durability

0.11 3 .33

3 Innovation is the key success factor through massive

production in hybrid vehicles all

over the world that has been

increasing Toyotas sales

0.5 1 .5

4 Toyotas investment in R &D Department is the reason for the

recent improvement in the

design and research centers in

the whole world

0.08 2 .16

5 High market share in PAKISTAN.

0.12 3 .36

weaknesses

1 Due to unstable political situation in some countries, Toyota has to

face through financial crisis and a

decline in sales as well.

0.15 4 .6

2 Toyota is often being criticized as the foreign importer to provide

vehicles to customers.

0.11 1 .11

3 Ineffective vehicles and braking can make Toyota lose its brand

image and a potential loss in

incomes in the long term

0.07 3 .21

4 Recycle Iron is used in cars body material.

0.10 3 .3

5 TOYOTA Should owned the manufacturing of Cars in

PAKISTAN to overcome the

complaints of local customers.

0.03 2 .06

Total 1.00 3.35

TOWS MATRIX

SO

By introducing more new product range .To penetrate existing markets by offering innovative techniques and customer oriented products.

Toyota should expand its product line to capture the market with luxuries cars as well.

WO

As the demand for Toyota vehicles is increasing currently can give some support to Toyota and manufacturing facilities specifically in those countries where they are

considered to be expensive should be started.

Offering innovative/improved products in order to overcome the loss in sales and negative impact on its brand image.

ST

Toyotas most products are best known for its quality and innovation that can minimize any loss in prices against its competitors in the manufacturing sector.

Offering innovation in products can prevent Toyota from increase in fuel prices and customers are also provide several alternatives in cars if fuel prices are high.

WT

The best choiceis to shift some of the manufacturing operations in other countries That is less influenced by political instability at the same time.

Toyota should minimize to use recycle iron in cars to maintain the customer loyalty.

SPACE MATRIX FOR TOYOTA The Strategic Position and Action Evaluation Matrix Analysis is most frequently in use during

professional industry or market analysis of a company. The SPACE Matrix axis signify the 2 external

proportions which are industry Position (IP), Stability Position (SP) and two internal dimensions of a

competitive company which are Competitive Position (CP) and Financial Position (FP). These 4

dimensions are the most significant determinants of a company's overall strategic position in the

industry or marketplace

Steps essential to construct a SPACE Matrix are described below:

Choose a combination of factors that best characterize Competitive Position (CP),

Stability Position (SP), Financial Position (FP) and Industry Position (IS).

To the CP and SP dimensions allot a numerical value ranging from 4 (excellent) to 1

(poor) and the factors that constitute the IP and FP dimensions also.

Calculate an average score for IP, SP, CP and FP by summing the numbers allotted to

the factors of the entire dimension separately and dividing by the set of factors

included in the particular dimension.

Plot the average scores for each dimensions such as SP, CP, IP and FP on the proper

axis in the matrix.

Add or combine the scores of two dimensions that lay in the x-axis and design the

resultant point on X, in the same way add scores of dimensions that lay in the y-axis

and plot the consequential point on Y. Then, plot the intersection of the both new XY

points.

Sketch a directional vector from the basis of the Strategic Position and Action

Evaluation (SPACE) matrix throughout the new intersection points. This vector

discloses the kind of strategies suggested for the firm such as aggressive, defensive,

conservative or competitive.

SPACE MATRIX FOR TOYOTA

First of all we will rate FP,SP,CP and IP by 4 to 1.

We will rate the FP through Financial statements of Toyota and some the

ratings 4+2+4+3=13 then we will calculate the average 13/4= and get

FP=3.25.we will also find the sum of CP -2-1-1-3=-7 and calculate the average

-7/4= -1.75.Then we will rate the stability position SP and sum the rate numbers

-2-1-3-2= -8 and calculate the average 14/4= 3.2. and at the last we calculate the

average of (IP) 14/4=3.5

Now we get average of

FP= 3.25, CP= -1.75 , SP=-2 and IP=3.5

On X=axis = IP + CP

3.5 + -1.75=1.75

And on Y-axis= FP+SP

3.25+ -2=1.25

Now make a diagram to show the TOYOTA SPACE MATRIX and suggest which strategy

suitable for TOYOTA INDUS Motors.

As a result, market development, market penetration, product development, forward,

backward and horizontal integration or a mix of strategies can be chosen, depending on the

particular environment that the Toyota Motors should practice at that time.

BCG MATRIX Toyota Authorities provide us the information of their brands of vehicles about their Cars

market share and Growth rate in PAKISTAN market. Which brand has more market share

and growth rate is high among different vehicles of Toyota.

Corolla remains the best selling sedan in Pakistan and now the customers have the pleasure to

enjoy convenience of the navigation system which was introduced recently in all high end

variants. In March, 2012 the Company introduced much awaited Hilux Vigo Champ with an

automatic transmission on strong customer demand. The launch of Vigo Champ along with

the new model change in the Hilux line with stronger, bolder fascia and vibrant interior has

fascinated and captured the market attention. Going forward, we expect the demand for our

products to remain robust as the Company continues to respond to market needs and

customer voices.

Recently a new 3S dealership was launched in Bahawalpur which now takes the total of

IMC authorized 3S dealerships to 35. The new dealership will enable us to be closer to our

rural customers in the Southern Punjab.

Stars. TOYOTA COROLLA operate in high growth industries and maintain high market share. Stars are both cash generators and cash users. They are the primary units in which the company

should invest its money, because stars COROLLA are expected to become cash cows and

generate positive cash flows.

Cash cows. HILUS vigo are the most profitable brands and should be milked to provide as much cash as possible. The cash gained from cows should be invested into stars to support

their further growth.

Question marks. CUORE Question marks are the brands that require much closer consideration.. Question marks do not always succeed and even after large amount of

investments they struggle to gain market share and eventually become dogs. Therefore, they

require very close consideration to decide if they are worth investing in or not.

Dogs. SE SALOON Dogs hold low market share compared to other Toyota Brands and operate in a slowly growing market. In general, they are not worth investing in because they

generate low or negative cash returns.

.

INTERNAL EXTERNAL MATRIX

From our observation and analysis of EFE and IFE .we have drawn the internal and external

matrix. Which strategy is best for the TOYOTA motors Pakistan.

TOYOTA INTERNAL EXTERNAL EVALUATION

STRONG AVERAGE WEAK

(3 4) (2 2.99) (1 1.99)

The weighted score of EFE matrix is 2.8 and weighted score of IFE is 3.35 . So the IFE

score exist in 1st division and EFE weighted score match in division 4th and Toyota

now in growth and

TOYOTA GRAND STRATEGY MATRIX

Grand strategy matrix is a last matrix of matching strategy formulation framework. It same as important

as BCG, IE and other matrices.

Grand Strategy Selection Matrix (GSSM)

Grand Strategy Selection Matrix has become an effective tool in devising alternative

strategies. The matrix is based on the following four important elements.

Rapid market growth

Slow market growth

Strong competitive position

Weak competitive position.

From our observation we have made grnad strategy matrix for Toyota.

Rapid Market Growth

QUADRANT 2 QUADRANT 1

TOYOTA

Market Development Market Development

Market Penetration Market Penetration

Product Development Product Development

Horizontal Integration Forward Integration

Divestiture Backward Integration

Liquidation Related Diversification

Weak Strong

Competitive Position Competitive Position

QUADRANT 3 QUADRANT 4

Retrenchment Related Diversification

Related and unrelated Diversification unrelated Diversification

Divestiture Joint Venture

Liquidation

Slow Market Growth

QSPM

The Quantitative Strategic Planning Matrix First it contains key internal and external factors. An internal factor contains (strength and

weakness) and external factor include (opportunities and threats). It relates to previously IFE

and EFE in which weight to all factors. Weight means importance to internal and external

factor. The sum of weight must be equal to one. After assigning the weights examine stage-2

matrices and identify alternatives strategies that the organization should consider

implementing. The top row of a QSPM consists of alternative strategies derived from the

TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix. These

matching tools usually generate similar feasible alternatives. However, not every strategy

suggested by the

matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive

judgment in selecting strategies to include in a QSPM. After assigning the weight to strategy,

determine the attractiveness score of each and afterwards total attractiveness score. The highest

total attractiveness score strategy is most feasible

Steps in preparation of QSPM

1. List of the TOYOTA key external opportunities/threats and internal strengths/weaknesses in

the left

column of the QSPM.

2. Assign weights to each key external and internal factor of TOYOTA

3. Examine the Stage 2 (matching) matrices and identify alternative strategies that Toyota

motors want to expand manufacturing and consider to implementing

4. Determine the Attractiveness Scores (AS) of TOYOTA

5. Compute the Total Attractiveness Scores of TOYOTA

6. Compute the Sum Total Attractiveness Score of TOYOTA

A QSPM For TOYOTA MOTORS

Key Factors. TO EXPAND their Manufacturing

Opportunities Weight AS TAS

1 Toyota should make Sporty version in cars like Honda

CIVIC in PAKISTAN to

increase sales

0.20 4 0.8

2 Extra market can be captured by introducing Company fitted CNG

Kitts in the car.

0.10 3 0.3

3 Changing consumers preference through adapting

related/unrelated diversification

strategy.

0.05

4 The demand to buy luxurious cars has more increased recently

in countries like India and

Pakistan

0.10 2 0.2

5 Due to rise in fuel prices will benefit Toyota to produce cars

that are more fuel efficient and is

less harmful to the environment

like HYBRID type technology.

0.10 4 0.4

THREATS

1 Global inflation due to increase in population and high oil prices may

result in decrease in demand of cars

0.15 -

2 Currently Pak Suzuki is posing a threat as Pak Suzuki is producing

cheap cars and istargeting the lower-

middle and middle income group

consumers.

0.10 4 0.4

3 Permission given by the Government to the overseas Pakistanis to import

used cars in Pakistan

0.05 2 .1

4 Those car manufacturers who sell cars in cheaper rate has

forced Toyota to put it prices

down which can be a risk to its

organizations financial position.

0.10 -

5 Increase in demand of technology other cars may result in downward

trend of the brands goodwill

0.05 3 0.15

1.00

Strengths

1 A strong brand name, Toyota is considered to be the worlds largest automobile producer.

0.18 4 .72

2 High quality and durability

0.11 3 .33

3 Innovation is the key success factor through massive

production in hybrid vehicles all

over the world that has been

increasing Toyotas sales

0.5 -

4 Toyotas investment in R &D Department is the reason for the

recent improvement in the

design and research centers in

the whole world

0.08 2 .16

5 High market share in PAKISTAN.

0.12 3 .36

weaknesses

1 Due to unstable political situation in some countries, Toyota has to

face through financial crisis and a

decline in sales as well.

0.15 4 .6

2 Toyota is often being criticized as the foreign importer

0.11 -

3 Ineffective vehicles and braking can make Toyota lose its brand

image and a potential loss in

incomes in the long term

0.07 3 .21

4 Recycle Iron is used in cars body material.

0.10 3 .3

5 TOYOTA Should owned the manufacturing of Cars in

PAKISTAN to overcome the

complaints of local customers.

0.03 -

Total 1.00 6.13

Recommendations

Management needs to make sure that their projects and their goals are aligned with

organizational values and core competencies. Understanding the importance of competencies

and core values. Toyota must focus on sporty style cars to capture the customers more and try

to create more and more corporate social responsibilities in PAKISTAN. Provide 3s dealership

in every division of Pakistan .To defeat their competitor Suzuki in small cars with new cars

introduced. Proper teams are made to check the Toyota services in different city dealers of

Toyota to overcome the complaints of customers. Provide training schools to the local public

and offer different courses to minimize the dependence on foreign skilled workers .Toyota

should also launch its new model as per the date on the other countries as well. Toyota should

d3crease the trend to import the Land cruiser from foreign country and make the luxury cars in

local location to minimize the cost.