WRITTEN STRATEGIC MANAGEMENT CASE

I. CASE TITLE

“2020: Toyota’s Year Round Journey Through Pandemic”

II. DISCLOSURE STATEMENTS

“Become stronger together with our partners throughout the world”

- President Akio Toyoda

“People who possess these two strengths―competitiveness unique to Toyota and compassion―are best
developed in front-line operations. To equip ourselves for the transformational period in which we find
ourselves, we will therefore return to "prioritizing real-world" experiences at the genba (on the front
lines), and putting our fullest efforts into developing the people who will build the future.”

- President Akio Toyoda

III. INTRODUCTORY STATEMENTS AND TIME CONTEXT

Toyota is a well-known car company cultivated through high quality design, unyielding
innovation and bold moves. It has an excellent global standing that reaches even in the most remote
regions. Toyota vehicles are known for durability and impressive resale value. It has been recognized as
No.1 Motor Vehicle company last year for the fifth consecutive year by Fortune Magazine.

The year 2020 has been full of challenges that have been experienced not only by individuals but
also the economy. The impact of pandemic was particularly acute during Toyota’s most recent fiscal
fourth quarter. In terms of global sales, the company profit plunged 98% to 13.9 billion yen ($131.73
million) for three months ended June. It has been its smallest quarterly profit in nine years a s coronavirus
pandemic halved its car sales and nearly wiped out its bottom line. Even with these series of unfortunate
events, Toyota is on the path to recovery. Christopher Richter says it won’t take too long for the global
auto giant to return to pre-pandemic levels in terms of profit.
IV. COMPANY BACKGROUND

History

Toyota Motor Corporation (TMC) began in 1924 when Sakichi Toyoda invented an automatic
textile loom known as the Toyoda Model G. This later became a signature of the Toyota Company and
one of the cornerstones of its impressive success. In 1933, Sakichi’s son, Kiichiro Toyoda began
designing the A1 and G1 model passenger cars through a division of his father’s enterprise, and by 1937,
the automobile production division had become an independent company. Toyoda symbols were changed
to Toyota for the sake of visual and auditory simplicity. The new name had a crisper, clearer sound and a
more elegant appearance in written form, and it also stepped away from the agricultural associations of its
literal translation, “fertile rice paddies.”  And so from that day forward, the company had a new logo and
the name that it retains today. By 1982, the company had long since established North American plants
and had opened its business to US and Canadian markets. That year, the Toyota Motor Company and
Toyota Motor Sales merged into a single entity known as the Toyota Motor Corporation. By the end of
the 1980s, the company had branched out from its signature compact models and had launched into a host
of new markets. These included forklifts and other manufacturing equipment.

Milestone/Timeliness

Toyota was ranked the No. 1 motor vehicle company for the sixth consecutive year
on Fortune Magazine’s 2020 “World’s Most Admired Companies” annual ranking. Fortune also
recognized Toyota as No. 30 among the Top 50 “All-Star” companies surveyed, which included
companies from various industries. Fortune’s “World’s Most Admired Companies” list is widely
acknowledged as the definitive report card on corporate reputation and is based on company surveys and
industry peer ratings from senior executives, directors and industry analysts from around the world. For
each company, the survey measures nine attributes considered critical to a company’s global success,
including quality of products and services, social and environmental responsibility, global
competitiveness, and value as an investment, among others.

Current Company Situation

Toyota Motor Corporation eked out its smallest quarterly profit in nine years as the coronavirus
pandemic halved its car sales and nearly wiped out its bottom line. The sharply lower earnings underline
the challenges the auto industry is facing because of the pandemic that has shuttered factories and kept
customers out of dealerships. But Toyota is weathering the virus outbreak better than many of its rivals.
Most global automakers fell into the red in the latest quarter, and many, including Ford Motor Co., Nissan
Motor Co., and Mitsubishi Motors Corp., are bracing for full-year operating losses. The pace of recovery
in a number of regions has been faster than TMC had initially forecast. But the virus situation continues
to place many uncertainties on the business outlook and they see a possibility that their forecast could
change.

Company Strategic Posture

COVID-19 transformed Toyota. So, they strategize on strengthening survivability of the auto
industry and contribution to societies and industries. The pandemic has accelerated the culture of kaizen,
or continuous improvement. The basic output of office work can be ambiguous, but with the current
situation, they are reconsidering everything to increase efficiency. This means reviewing the processes
from the ground up within a simple framework: “discard, replace, or continue”. TMC is also applying
their expertise in the manufacturing industry to support society in this difficult time. For example, the
manufacture of face shields and emergency vehicles for medical facilities in need and expanded support
for suppliers to improve productivity. Cooperating with suppliers and dealers ensures a future for the
industry. Toyota has not changed its longstanding philosophy of creating better cars based on shared
values, contributing to the creation of prosperous communities, and promoting a new ‘mobility society’.

Vision

“Toyota will lead the future mobility society, enriching lives around the world with the safest and
most responsible ways of moving people.
Through our commitment to quality, ceaseless innovation, and respect for the planet, we strive to
exceed expectations and be rewarded with a smile.
We will meet challenging goals by engaging the talent and passion of people who believe there is
always a better way.”

Mission

“To attract and attain customers with high-valued products and services and the most satisfying
ownership experience in America.”

Goals and Objectives

The adoption and revision of the business objectives specified in the company's Articles of
Incorporation are described in order.

Revised June 23, 2009

 The manufacture, sale, leasing and repair of motor vehicles, industrial vehicles, ships, aircraft,
other transportation machinery and apparatus, space machinery and apparatus, and parts thereof;
 The manufacture, sale, leasing and repair of industrial machinery and apparatus and other general
machinery and apparatus, and parts thereof;
 The manufacture, sale, leasing and repair of electrical machinery and apparatus, and parts thereof;
 The manufacture, sale, leasing and repair of measuring machinery and apparatus, and medical
machinery and apparatus, and parts thereof;
 The manufacture and sale of ceramics and products of synthetic resins, and materials thereof;
 The manufacture, sale and repair of construction materials and equipment, furnishings and
fixtures for residential buildings;
 The planning, designing, supervision, execution and undertaking of construction works, civil
engineering works, land development, urban development and regional development;
 The sale, purchase, leasing, brokerage and management of real estate;
 The service of information processing, information communications and information supply, and
the development, sale and leasing of software;
 The design and development of product sales systems that utilize networks such as the Internet;
sales, leasing, maintenance of computers included within such systems, and sales of products by
utilizing such systems;
 The inland transportation, marine transportation, air transportation, stevedoring, warehousing and
tourism businesses;
 The printing, publishing, advertising and publicity, general leasing, security and workers dispatch
businesses;
 The credit card operations, purchase and sale of securities, investment consulting, investment
trust operation, and other financial services;
 The operation and management of such facilities as parking lots, showrooms, educational
facilities, medical care facilities, sports facilities, marinas, airfields, food and drink stands and
restaurants, lodging facilities, retail stores and others;
  The non-life insurance agency business and life insurance agency business;
 The production and processing by using biotechnology of agricultural products including trees,
and the sale of such products;
 The sale of goods related to each of the preceding items and mineral oil;
 The conducting of engineering, consulting, invention and research relating to each of the
preceding items and the utilization of such invention and research; and
 Any businesses incidental to or related to any of the preceding items.
Values

Strategy

The strategy that generally based both Toyota Company and most Japanese companies is
KAIZEN strategy which means “continuous improvement” and the impact that it has on the level of
product quality. ”KAIZEN” is an integrative strategy, which means a cross-functional strategy that
appoints the gradual improvement, management and continuous business activities and the parameters of
quality, productivity and competitiveness, with direct involvement of all staff. The product strategy of
Toyota is based on high quality, on developing new innovative technologies, focusing on further research,
creativity, but also hard work. Toyota is a world leader in research and development of advanced
automotive technologies. Toyota develops intelligent responses to the challenges of the automotive
industry today, while assuming responsibility for future generations. Also, a major component in
Toyota’s strategy is to build more research and design centers in the proximity of production facilities.
These bring specific items of the areas regarding the design and amenities. Unexpected success of the
Japanese led to the exportation of vehicles produced in Europe to other markets of the world. This is the
strategy that Toyota has adopted to penetrate foreign markets worldwide. ”Think global, act local” is the
slogan that guides the company on the global market. Toyota has adopted the strategy of direct
investments on the growing and stable markets, as we have demonstrated, and it fully managed.
Strategic Directions

Toyota Motor Corporation uses Corporate Level Strategy as their Strategic Direction.  In this
level, the corporation is greatly concerned with the totality scope and direction of the organization. The
growth aspect of the organization is vital and guides which objectives need to be alerted to achieve the
desired objective. Corporate level strategy therefore includes consideration of three components which
are not only crucial but also important in the achievement of corporate goals. First the directional and
growth strategy should be enhanced, second portfolio strategy if paramount in achievement of corporate
level strategy and lastly the parenting strategy which involves allocation of resources and achievement of
balance between all the portfolios in the organization. Corporate level strategy forms the overall and the
grand foundation of the organization in achievement of the organizational structures and objectives. For
the achievement of this strategy, four kinds of initiatives should be instituted to ensure its efficiency and
effectiveness.

V. EXTERNAL SITUATION

Social Environment

Natural

Through its corporate activities, TMC works to contribute to regional living conditions and also
strives to offer products and services that are clean, safe, and of high quality. They help curb global
warming by conserving energy during operation, prevent air pollution by reducing emission of exhaust
gases, dispose of hydraulic oils and spent batteries properly, and develop and supply products that comply
with the safety and environmental standards of each region in which their products are sold.

Demographic

TMC uses age, gender and income as their demographic factors of new car buyers. Average age
of a new car or truck buyer has grown older over the past decade. It is now around 53 years old. They also
note that among new vehicles buyers, the 55+ age group has a 15 percentage point increase since 2000. In
2020, when it comes to car ownership by age, buyers that are ages 25 to 54 purchase most new vehicles.
New vehicle by gender varies a lot. But in general, 43% of new car buyers are female and 57% are male.
Two household income groups account for most new vehicle purchases: Under $50,000 per year (mostly
single-person households) and $100,000 per year and up (mostly families).

Political-Legal

TMC is based in Japan which is generally very stable politically. The company’s sales in Japan
have remained high and apart from that in US too. Political stability in a region affects the market’s
economic stability. Political instability and chaos can disrupt the supply chain and sales network. This can
affect sales and revenue. Political relationships between two nations also affect their trade relationships
and in turn their businesses. This is evident in the case of US and China. So, overall the role of political
forces in the business industry is somewhere very big. Law has grown one of the most important factors
affecting businesses worldwide. Globally, law has grown stricter with regard to control of businesses. The
level of pressure that automobile businesses are facing from law can be understood from the severe fines
that VW was forced to pay for trying to escape emission standards a year ago. It was made to pay billions
for non-compliance. While this has come as a warning for the automobile businesses, it also shows that
law has become more of a barrier in the 21st century.  Apart from emission standards, product quality,
passenger safety, environmental standards and labor area also some areas that require being careful about.
Otherwise government agencies are hungrily looking for noncomplying businesses. It is why the
international brands like Toyota or VW have dedicated compliance teams that take care of compliance
everywhere in the local markets.

Economic

Economic factors have always played a central role in business.  The world economy has been
through a recession some years ago. This was the most turbulent period for the automotive industry when
several automotive brands were on the verge of bankruptcy. During that period millions of people lost
their jobs around the globe which led to lower income and less expenditure on lifestyle items.   Now that
the recession has passed, the level of employment around the globe has gone up and it has led to people
having higher disposable income. This has also led to higher demand of vehicles all around the globe.
This demand is expected to rise further in future which is good news for brands like Toyota. Their sales
and revenue will keep growing due to rising demand. The global economy is stable now apart from a few
jolts here and there in a few regions.

Social-Cultural

Social-Cultural factors affect demand and sales as well as marketing. Brands now use different
sales and marketing strategies for different markets. It is because socio-cultural differences affect
people’s shopping choices and buying decisions. Not just this, but buying patterns too differ from market
to market and region to region because of the differences in culture, language and other factors.
Moreover, a good social image has become very important for businesses in the twenty first century. A
good social image means higher popularity and better sales. Social changes affect taste and purchasing
habits of people. Now, the sales of SUVs and electric vehicles have grown which is because of the rise of
middle class and the millennial generation. It is why Toyota is investing more in these areas. In terms of
marketing, the same strategy does not affect all the societies and cultures. Due to this, large businesses are
addressing marketing concerns for various markets and regions using different strategies.

Technology

In the automobile industry particularly, there is a large investment in technology. From

manufacturing to supply chain as well as distribution and sales everywhere brands have to invest a lot in
technology and maintenance of technological infrastructure. The demand for technologically advanced
cars has grown faster. It is why Toyota is investing in areas like Artificial Intelligence, IoT and Robotics.
Technology is a source of competitive advantage and also a major differentiator. The more advanced
technology a brand has, the larger is its reach and the higher its customer loyalty.  Technology like social
media and other forms of digital technology is also affecting how brands market themselves.

Task Environment

Competitors

Toyota is a major global vehicle brand and a tough competitor for Ford, Hyundai & Volkswagen.
It is a globally well-known maker of cars, SUVs and electrical vehicles. Toyota has focused now on
sustainable growth and the production of electrical vehicles that have a very low impact on the
environment. North America is the largest market for Toyota, followed by Japan and Asia. In 2017, North
America accounted for the highest sales of Toyota vehicles at 32% of the total 8,970,860 total sales.
Toyota has 364,445 employees. Its number of manufacturing plants and companies around the world was
69 in 2017. In 2017, its net revenue was 27,597.1 Billion Japanese yen which was 2.8% lower than the
previous year. The brand’s net income in 2017 equaled 1831.1 Billion Japanese yen. The brand brought
the world’s first mass produced hybrid vehicle Toyota Prius in 1997. It plans to invest more in the
production of electrical vehicles and bring new and improved versions of Prius. It has brought some
luxury models to the market too including Camry which is now available in a hybrid version.

Suppliers

Toyota has a wide range of suppliers that also include the likes of Tesla Motors, which previously
signed a $100 million agreement to supply the power train for RAV4 EVs (electric vehicles); Samsung
Electronics, which created a Car Mode App connecting Samsung smartphones to Toyota radios;
Bridgestone Americas to supply tires for the Toyota FJ Cruiser model; and Cypress Semiconductor to
provide the touchscreen for the Toyota Avalon.4567
In Toyota’s Detroit plant, the Camry model alone has suppliers such as Magnuson Products, IPT
Performance Transmission, Goodridge Fluid Transfer Systems, MagnaFlow, Autometer, Impact Racing,
Goodyear, Nitrous Supply, and Optima Batteries. The finishing touches before the Camrys are delivered
to dealers are provided by Fast Ed's Interiors and the Polishing Shop 8. In some instances, Toyota has
created downstream industries that were formerly integral parts of the company. The likes of Nippon
Denso Co., which manufactures air conditioners, and Aisin Seiki Co., which produces components and
systems for automobiles, started out as part of Toyota but later became independent corporate entities.
Nippon and Aisin continue to be principal suppliers for Toyota but also manufacture products for other
car manufacturers.

Distributors

Toyota has managed a large supply chain and distribution network efficiently. Each of the
vehicles Toyota produces is made up of thousands of parts that  it sources from suppliers located around
the globe. Toyota works in close collaboration with its suppliers and has formed strong and long term
relationships with these suppliers to control the costs of production. It has 167 main overseas distributors
that distribute its products around the globe. The brand achieved total sales of 8.9 Million vehicles in
2017. Managing a large and global distribution chain requires close collaboration with dealers and
distributors. Toyota has managed this very well with the help of its global manufacturing and distribution
network. Its distribution network is divided into eight regions that include North America, Latin America,
Asia, Europe, Africa, China, Middle East and Oceania and also acts as the main sales channel for the
brand.

Creditors

TMC enters into securitization transactions using special-purpose entities that are considered
variable interest entities (“VIEs”). Although the finance receivables and vehicles on operating leases
related to securitization transactions have been legally sold to the VIEs, TMC has both the power to direct
the activities of the VIEs that most significantly impact the VIEs’ economic performance and the
obligation to absorb losses of the VIEs or the right to receive benefits from the VIEs that could potentially
be significant to the VIEs. As a result, TMC is considered the primary beneficiary of the VIEs and
therefore consolidates the VIEs. The creditors of the VIEs do not have recourse to TMC’s general credit
with the exception of debts guaranteed by TMC. Risks to which TMC is exposed including credit, interest
rate, and/or prepayment risks are not incremental compared with the situation before TMC enters into
securitization transactions.

Customers

Improving product and work quality by listening to "Voice of the customer" is the fundamental
concept behind Toyota's activities. When Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. were
merged in 1982 to form the new Toyota Motor Corporation, the customer assistance operations that had
been carried out by various departments were unified to establish the Customer Relations Division. The
entire company strives to ensure enhanced satisfaction by delivering "Voice of the customer" to the
relevant departments and utilizing it to improve both customer support and the quality of our work and
products.

Employees

Toyota's employees form the bedrock of stable business. Our philosophy toward our employees is
institutionalized as The Toyota Way in Human Resources Management. The aim of the Toyota Way in
Human Resources Management is to realize management with respect for people, namely, providing all
employees with opportunities to achieve social contribution and self-realization through their work, and
enabling them to exercise their abilities to think, to be creative, and to perform. To achieve this, a
relationship of mutual trust and mutual responsibility between labor and management is essential. The
company gives the highest priority to ensuring stable employment and strives to improve labor
conditions, while all employees execute their duties and responsibilities for the prosperity of the
company. This philosophy is shared by all Toyota affiliates around the world. Each region's unique
characteristics are reflected and implemented in management and other policies. Toyota believes that
these initiatives enable management with respect for people, while also garnering customer satisfaction
and social contribution, enabling sustainable growth of both the company and society.

Communities
While many know Toyota as a car company, they are more than that. They are a mobility
company, creating better ways to move people. Their education community partnerships help them
develop programs that empower students to learn, achieve and succeed. Through green mobility, their
community efforts aim to reduce environmental impact, implement clean energy projects, and improve
quality of life by improving the environment for future generations. Toyota helps those recovering from
disasters by partnering with response agencies to help those affected in both the short-and long-term.
From teaching proper installation of car seats and a comprehensive teen program for that scary first year
of driving to refresher courses for mature drivers, Toyota supports a variety of safety programs along the
continuum of life –for infants, teens and the elderly. Through Toyota Financial Services, they provide
support and resources for financial education to communities around the country. Toyota, through Toyota
Financial Services, aims to provide extraordinary experiences for under-served youth with the goal of
“Making Life Easier.” They have developed a robust platform of giving that supports organizations that
are working to build the next generation of leaders

Managers

Management and Leadership at Toyota Motor Corporation Nancy Mitchell-Edwards MGT/330

January 17, 2010 Walter Goodwyn Management and Leadership at Toyota Motor Corporation Toyota
Motor Corporation (TMC) is one of the leading automobile manufacturers in the world. The name itself
inspires trust in the brand and for many people around the world, purchasing a vehicle manufactured by
Toyota is also a sound investment. In 1933 Toyoda Automatic Loom Works, Ltd established the
Automobile Department. In 1935 the first A1 prototype passenger car and the G1 truck were made at
Hinode Motors and in 1937 Toyota Motor Co. Toyota is a people-based management system; Taiichi
Ohno was the person who realized “production depended on people, not just machines” and with that
concept in mind Toyota allows its workforce to stop the production line if one sees a problem.This
perception is alien to American culture whether it is in manufacturing or banking because business in
America is still primarily top-down. Many businesses follow Toyota’s management model (de Bono &
Heller, 2006).
Stockholders

Major Stockholders of Toyota Motor Corporation

Number of shares
Names
(1,000 shares)

Japan Trustee Services Bank, Ltd. 357,634

Toyota Industries Corporation 238,466

The Master Trust Bank of Japan, Ltd. 201,990

Nippon Life Insurance Company 127,332

JPMorgan Chase Bank, N.A.

(standing proxy: Settlement & Clearing Services Division, 101,530
Mizuho Bank, Ltd.)

DENSO CORPORATION 89,915

State Street Bank and Trust Company

(standing proxy: Settlement & Clearing Services Division, 78,582
Mizuho Bank, Ltd.)

Mitsui Sumitomo Insurance Company, Limited. 56,814

Trust & Custody Services Bank, Ltd. 51,089

Tokio Marine & Nichido Fire Insurance Co., Ltd. 51,064

Labor Unions

Toyota Motor Workers' Union, with a membership of 63,000 workers, is one of the main labor

unions of the company. Around 3,000 members usually participate in the union's annual rally in spring,
when most Japanese companies hold labor negotiations.

Governments
 The Japanese government supported the company by preventing foreign
competitors Ford and General Motors from importing automobiles into Japan.

Trade Association

An association of twelve vehicle manufacturers that includes BMW Group, Chrysler Group LLC,
Ford Motor Company, General Motors Company, Jaguar Land Rover, Mazda, Mercedes-Benz USA,
Mitsubishi Motors, Porsche, Volkswagen Group of America, and Volvo Cars North America. Vision and
goals are to develop and implement policies that enable the introduction of new technologies needed to
support sustainable mobility; to be the trusted source of proactive and positive innovation and public
policy benefiting society in areas of environment, energy and motor vehicle safety; to be the credible
resource for technical and science-based analysis enhancing motor vehicle safety, environment and
energy issues with a global perspective.

Special Interest Groups

Based on “Respect for Others” as described in our Basic Philosophy, TMC strive to fulfill their
role as a good corporate citizen in every region where they do business and actively engage in social
contribution activities to realize an enriched and healthy society. In their activities that emphasize social
welfare, youth development, environmental protection and community contribution, they not only provide
cooperation and support through personnel, facilities, funds and know-how but also strive to closely
connect with participants. To foster employees’ awareness of their ties to society and raise their interest in
contributing to society, they make enlightenment efforts such as sharing information on volunteer
activities and providing venues for volunteer activities that encourage the participation of all employees.
Employee associations are actively undertaking various activities to contribute to local communities,
mainly in the areas of supporting welfare facilities and protecting the natural environment.

Product

Toyota Industries Corporation engages in a wide variety of businesses including automobile

(vehicles, engines, car air-conditioning compressors, and car electronics), materials handling equipment,
and textile machinery.

Service

Toyota offers many services classified as Body or Structure (Headlamp Restoration Service,
Broken Power Window Repair, Vehicle Door Handle Replacement/Repair, Windshield Wiper Repair,
Windshield Wiper Replacement), Engine (Toyota Check Engine Light Service Information, Toyota Drive
Belt Replacement Service Information, Head Gasket Replacement, Overheating Engine Service, Radiator
Replacement/Repair, Spark Plug Replacement, Timing Belt Replacement) Exhaust or Emissions, Fuel
Injector Cleaning, Electrical Lights, Drivetrain, Brakes, Suspension or Steering and General Maintenance.

Markets

Toyota is a global brand and is facing stiff competition in the 21st century from the other vehicle
brands. To retain its market share and customer base, the brand has to make major investments in
marketing and promotions. Toyota uses a mix of traditional and modern advertising mediums to promote
its brand and products. Apart from its own website and social media, the brand also uses its sales and
distribution channel for marketing. Events like races and motor shows are also an important channel of
promotion for Toyota. 
Industry Analysis

Nature of Industry

Toyota Motor Corporation is a Japan-based company engaged in the automobile business, finance
business and other businesses. The Automobile segment is engaged in the design, manufacture and sale of
sedans, minivans, 2box, sports utility vehicles, trucks and related vehicles, as well as related parts and
products. The Finance segment is engaged in finance and vehicle leasing business. The other segment is
engaged in the design, manufacture and sale of houses, as well as conduct information communication
business. The company is also engaged in the control of manufacturing and sales companies, as well as
public relations and research activities business in North American and Europe by subsidiaries.

Competitive forces

Toyota Motors is among the world’s biggest vehicle makers even if not the biggest one after
being toppled by Volkswagen.  However, that has diluted Toyota’s spirit because it is an aggressive brand
and in a mood to grab its position back. It is a global company known for technological innovation and
excellent models of cars. Known for its technological leadership the brand is also investing heavily in
automated driving to be the first. Toyota has also released Toyota Prius, the world’s bestselling hybrid
car. However, while Toyota is one of the best known brands of vehicles in the world, there are several
forces in the environment that affect its business. The Porter’s Five Forces model is an analytical tool that
helps analyze the attractiveness of any industry.  These forces affect the state of competition and
competitive strength of any brand and are important for strategy formulation. Check out this Porter’s five
forces analysis of Toyota Motors:

 Bargaining power of suppliers: Weak

The bargaining power of suppliers is a weak force in the case of Toyota. There are several reasons
behind it.  Apart from the large number of suppliers, their moderate size is also a reason that they cannot
influence Toyota. Generally these suppliers are small or moderate in size and that reduces their ability to
integrate forwards. Thus, the chances of any competition from the suppliers for Toyota are nil. Moreover,
due to the high number of suppliers, there are a large number of options before Toyota. It can always
switch to a new supplier without any trouble. However, for any of its suppliers, it can mean a major loss
of business.  All these factors give Toyota better control over the suppliers and their bargaining strength
remains low.

 Bargaining strength of customers: Strong

The bargaining strength of the customers in the vehicles industry is high. The customers have several
options before them and switching costs are also low. There are competing firms that offer similar
products at similar prices. Every customer is a highly informed customer and free to make his own
choice.  Hey can easily find information and select the most suitable option for them.  All these factors
increase the bargaining strength of the customers of the buyers of Toyota. Whatever bargaining strength
Toyota holds is because of technological and design innovation. Based on these things, it has acquired an
impressive level of customer loyalty. However, this force gets countered by the formidable level of
competition in the industry.

 Threat of substitutes: Moderate

 The threat of substitutes before Toyota is moderate. From vehicles made by other brands to public
modes of transportation, there are several substitutes for the Toyota products. The switching costs are also
quite low and in several areas people may find it more convenient to use the substitutes. Moreover, for the
middle class and lower middle class consumers often the public mode of transport proves less costly. To
moderate this threat, Toyota has released models that are low on fuel consumption, good for the
environment and the smaller family cars are also less costly. All these factors counter the threat of
substitutes but only to a little extent. Overall, the threat of substitutes is moderate.

 Threat of new entrants: Weak

The threat of new entrants is a very weak force in the automotive industry. First of all there is a very
large capital investment involved in the foundation and management of an automotive brand. Any new
brand trying to enter the automotive industry would need to spend a lot on supply chain, distribution
system, marketing and hiring skilled human resources. Without differentiation and innovation it would be
difficult to grab a market share. Both the entry and exit barriers are big. The incumbent firms can exploit
economies of scale and are in a position to create immense pressure on new entrants based on their
competitive advantages. Moreover, for any new entrant to grow its market share, it would have to spend a
lot on marketing and promotions. All of these factors create major obstacles in the path of any new brand
trying to find foothold in the automotive industry.

 Competitive Rivalry in the Industry: High

While the number of major global players in the automotive industry may be small, still the level of
competition among them is high.  The firms are highly aggressive in terms of business and marketing.
Apart from technological innovation, these brands also compete in terms of design innovation and other
features like passenger safety and fuel efficiency. The competition has kept growing intense as most
rivals operate in the same markets. This also increases the cost of R&D and marketing.  Some of the
competitors of Toyota include Ford, Hyundai, and Honda among others. All these forms focus heavily on
passenger convenience and innovation. Overall, eh level of competitive rivalry in the automotive industry
is very high.

VI. INTERNAL SITUATION

Review of Company Posture

Toyota Motors is a globally renowned brand of cars based in Japan. Apart from making excellent
vehicles, it is famous for its use of great production methods and excellent supply chain management. The
vehicle industry has been through a tumultuous phase during the recession. This period saw the sales and
revenue of brands fall dismally. Toyota has also learnt a tough lesson. After several recalls in US, it has
pledged to make its cars only better and better. The brand has got excellent technological capabilities and
is focusing on growing its line of electrical vehicles. After the success of Toyota Prius, the world’s first
mass produced Hybrid Vehicle, Toyota is targeting a larger line of electrified vehicles. The automotive
industry is facing several challenges including higher regulation and increased costs of raw materials.  
Technology is also changing the world of automobiles like never before.

Review of Company Culture

The foundation of Toyota’s principles of management is based on the three levels of culture of Shein’s
pyramid: artefacts and behavior, norms and values, and underlying assumptions. It is characterized that
Japanese culture is as the Family culture type and Japanese culture is a collectivistic society with male
domination, strict rules and laws at work, and long-term orientation; moreover, Toyota culture is a perfect
reflection of Japanese culture. Their values, Toyota way are based on continuous improvement and
learning, respect for people and mutual trust, teamwork and long-term thinking. These principles help the
strategic development of the company, which is penetrating various international markets and the
production of quality vehicles at low costs. Most people have worked for more than 10 years in the
company, and they like what they do and they are proud of what they do. Finally, there are two main
factors that lead the Toyota Company to success: technological innovations and qualified human
resources.

Review of Company Resources

Marketing

Toyota is a global brand and is facing stiff competition in the 21st century from the other vehicle brands.
To retain its market share and customer base, the brand has to make major investments in marketing and
promotions. Toyota uses a mix of traditional and modern advertising mediums to promote its brand and
products. Apart from its own website and social media, the brand also uses its sales and distribution
channel for marketing. Events like races and motor shows are also an important channel of promotion for
Toyota. In the past 5 years, the brand invested more than 4 Billion US dollars in advertising.

Finance
 Reviewing the general economic environment for FY2020, the world economy changed from a
trend of moderate expansion to a sharp slowdown due to the effects of trade frictions and the impact of
COVID-19 spreading from China to North America, Europe and Asia. Automotive markets slumped in
China and some emerging countries, but remained stable in developed countries and declined only
slightly in the world as a whole. However, COVID-19 has begun to have a major impact, leading to the
suspension of operations at factories and the suspension of business at dealers worldwide. Under these
conditions, consolidated vehicle unit sales in Japan and overseas decreased by 19 thousand units, or 0.2%,
to 8,958 thousand units in FY2020 compared with FY2019 (April 1, 2018 through March 31, 2019).
Vehicle unit sales in Japan increased by 14 thousand units, or 0.6%, to 2,240 thousand units in FY2020
compared with FY2019, primarily as a result of the active introduction of new products and the efforts of
dealers nationwide. Toyota and Lexus brands' market share excluding mini-vehicles was 48.8%,
representing a record high, and market share (including Daihatsu and Hino brands) including mini-
vehicles was 45.5%, representing a record high. Each has a remaining at as high level as in FY2019.
Meanwhile, overseas vehicle unit sales decreased by 32 thousand units, or 0.5%, to 6,719 thousand units
in FY2020 compared with FY2019, because of a decline in sales in Asia and North America.

Operations

Toyota is a global brand with global operations. With its headquarters in Japan, the brand serves
customers across the globe through a large and global distribution network. Apart from several
manufacturing and R&D sites, the brand also has several parts distribution centers located globally.

Research and Development

Toyota coordinates and integrates all development phases, from basic research to forward-
looking technology development and product development to ensure that Toyota rapidly and continuously
develops cutting-edge, high-quality, and appealing vehicles.

Human Resource Management

 Toyota had over 365,000 employees. The brand believes in a human-centric approach to value
creation and therefore focuses on the development of its human resources. It follows the philosophy of
human centered Monozukuri. In the automotive industry, smart and able human capital can be a major
source of competitive advantage.

Information System

Toyota has actively propelled growth and innovation in its information systems by incorporating
new information processing technologies while responding to various changes in the external
environment, including rapid globalization of development, manufacturing, and sales operations;
advancements in car electronics technologies; compliance with global environmental standards; and
changes in the Japanese and global economy. In the engineering systems of business application systems,
Toyota applied in-house-developed CAD/CAM systems to broader areas of activity and also extended
them to supplier operations. Advancements in administrative systems made information systems more
globally adaptable and also brought about reform of Toyota's overall management structure. Innovations
in engineering system made engineering data more integrated and more useable on a global basis. Toyota
sought to globally standardize all business application systems and make better use of information. Even
such IT infrastructure as IC network systems were globally standardized and shifted to TCP/IP-based
systems in Japan and overseas. The economic crisis that shook the world from 2008 to 2009 also had a
major impact on Toyota's information divisions. Since then, Toyota has sought to improve the efficiency
of system development and maintenance and has instituted structural reform of its system development
and maintenance organization.

Others

Infrastructure
Toyota has maintained a large infrastructure globally. From its headquarters in Japan to North
and South Americas as well as Asia and Europe, it has maintained an extensive presence throughout the
globe. Currently led by Akio Toyoda, the brand has an impressive presence in most of the major markets
of the world.

VII. CONCLUDING STATEMENTS

Toyota strives to be a strong corporate citizen, engaging with and earning the trust of its
stakeholders, and to contribute to the creation of a prosperous society through all its business operations.
Their corporate principles form the basis of our initiatives, reflect values that enable action, and drive
their mindset. Toyota will continue to enjoy the success that they have ridden in the last decade.
Dividends, retained earnings, and investments will have continued success, as Toyota plans to devote its
efforts to sustain growth. Sustaining growth will require Toyota to stay on top of the market amidst
pandemic. They plan on manufacturing all of their makes and models with hybrid technologies in the near
future. In this time of crisis, they are mindful of the feelings of those in the midst of it. They reach
conclusions more swiftly, make prompt decisions, and take immediate action faster than ever focusing on
safety and security as the highest priorities. Toyota will do what it can to help efforts on the front lines of
treatment which has become the biggest priority. Some ways that Toyota will help is by considering
support measures from various angles by utilizing its global supply chain and utilizing its know-how of
manufacturing and logistics in the fight against the crisis. As such, the company and group companies
will implement the following primary measures while being challenged with a different style of working
due to measures being taken.