VIETNAM NATIONAL UNIVERSITY, HANOI

INTERNATIONAL SCHOOL

INTERNATIONAL STRATEGIC MANAGEMENT

GROUP 5

TOYOTA MOTOR IN VIETNAM MARKET

Lecturer: Dr Doan Thu Trang

Module Title: International Strategic Management
Module Code:INS4003

Hanoi, December 27th,2020

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GROUP’S CONTRIBUTION TABLE

No. Name ID student Participation Signatures

1 Nguyễn Tùng Linh 17071111 100%

2 Nguyễn Gia Phong 16071092 100%

3 Vũ My Trang 17071202 100%

4 Nguyễn Mạnh Dũng 17071043 100%

5 Đinh Hoàng Khánh 17071090 100%

6 Lã Hải Ánh 17071027 100%

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 TABLE OF CONTENTS

GROUP’S CONTRIBUTION TABLE.....................................................................................2

LIST OF FIGURES..............................................................................................................4

CHAPTER II: PORTER’S DIAMOND ANALYSIS...............................................................7

1. Strategy, structure and competitive factors in the industry.........................................7

2. Country factor endowment/factor conditions:...............................................................8

3. Demand conditions:........................................................................................................10

4. Related & Supporting industries:..................................................................................11

5. Extension:........................................................................................................................12

CHAPTER III: ENTRY MODE.............................................................................................14

1. Choice of entry mode:.....................................................................................................14

2. Advantages of entry mode..............................................................................................14

3. Disadvantages of entry mode.........................................................................................15

CHAPTER IV: STRATEGIES OF TOYOTA IN..................................................................17

VIETNAM MARKET..............................................................................................................17

1. Cost Leadership..............................................................................................................17

2. Differentiation strategy..................................................................................................20

CHAPTER V: MOTIVATIONS AND HINDERS.................................................................22

1. Motivations...................................................................................................................22

2. Hinders..........................................................................................................................22

CONCLUSION AND RECOMMENDATION................................................................23

REFERENCES:..................................................................................................................25

LIST OF FIGURES

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Figure 1 Conventional production............................................................................................18
Figure 2 Toyota lean production system...................................................................................19
Figure 3 Toyota production line...............................................................................................20
Figure 4 The extent of Vietnam's participation in the global value chain................................24

CHAPTER I: INTRODUCTION

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Toyota Motor Corporation, founded by Kiichiro Toyoda in 1937 (commonly
referred to simply as Toyota and abbreviated as TMC) is a multinational car
manufacturing corporation, headquartered in Japan. Toyota is known as the seventh
largest company in the world and the second largest automaker, with production
facilities in 28 countries around the world.

Officially established on September 5, 1995 and operating in October 1996, Toyota

Motor Vietnam (TMV) is a joint venture between Toyota Motor Corporation - Japan
(TMC) 70%, Corporation Engineers and Agricultural Machinery Vietnam (VEAM)
20% and Kuo Company (Singapore) 10% with a network of 22 agents and branch
branches nationwide. Toyota Vietnam holds its position as a pioneer in automobile
production in Vietnam with a total investment of 89.6 million USD, legal capital of
44.2 million USD and implemented investment capital of 68.6 million USD. TMV's
main fields of activity include manufacturing, assembling and trading Toyota cars of
all kinds; repairing, maintaining and selling Toyota genuine parts in Vietnam; Export
of components and spare parts for Toyota cars made in Vietnam. With a human
resource of nearly 1,600 people (including seasonal staff) and a factory capacity of
36,500 vehicles / year / 2 shifts, TMV's main products are Hiace, Camry, Corolla
Altis, Innova, Vios and Fortuner. Manufacturing and assembling in Vietnam and Land
Cruiser and Hilux trading imported vehicles.

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

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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.

Throughout the history of establishment and development, with all efforts from
TMV’s employees, dealers and suppliers, TMV has made great achievements and
continuously improved itself to fulfill the mission of our customers and contribute
significantly to Vietnam automobile market and society. With these achievements,
TMV has been honored with the second lever Labor Medal by the Government and
seems to be one of the most successful FDI companies in Vietnam.

6
 CHAPTER II: PORTER’S DIAMOND ANALYSIS

1. Strategy, structure and competitive factors in the industry

Development Strategy of Vietnam Automotive Industry:

Car: focus on developing car products suitable for Vietnamese people and the world's
car development trends (environmentally friendly cars: eco car, hybrid, electric car ...)
including: private car, jack Small size, low energy consumption, environmentally
friendly and affordable for consumers.

Trucks and passenger cars: focus on developing types of products produced

domestically with advantages and products serving agriculture and rural areas; special-
use vehicles, including: small multi-purpose trucks for agriculture and rural areas;
medium and short-range passenger cars; concrete trucks, tanks and special security and
defense vehicles; Multifunctional agricultural vehicle.

Structure: Stable market structure with the domination of the first 5 manufacturers (>
70% market share): THACO, Hyundai, Toyota Vietnam, Honda Vietnam, Ford
Vietnam

Competitive factors:

Brand image: National brands have a very strong influence on a customer's

willingness to buy a product and the price at which they are willing to pay for an
automotive product. It is undeniable that foreign car brands have a deep imprint on the
Auto Industry, but Vietnamese brands are also increasingly gaining a foothold. .

Technology: Technology is the biggest source of competitive advantage of automobile

manufacturing companies today. Big names have a leading position in the industry
thanks to the world's most modern automotive technology, for domestic
manufacturers, technology backward pressure and R&D are permanent in the context
of Automakers are moving towards AI to make vehicles safe and provide higher levels
of connectivity.

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Supply and distribution system: In the current situation, when supply is greater than
demand in the automotive industry, the distribution network is a competitive
advantage for companies in the industry to maintain market share in Vietnam.

New products: The ability to supply new product lines is essential to maintaining the
manufacturer's position in the Vietnamese Automotive Industry. In 2019,
manufacturers continuously introduce new models such as Mitsubishi Triton 2019
(Mitsubishi Motors Vietnam - MMV), Hyundai Santa Fe 2019 (TC Motor), MINI
Convertible 2019 (Thaco), Honda Brio (Honda Vietnam), Vinfast Fadil, Sedan Lux
and SUV Lux (Vinfast), …

2. Country factor endowment/factor conditions:

Host country: (Vietnam)

Human resources (HR): Labor force in the Vietnamese automobile industry is young
and dynamic but high-quality human resources are weak and lacking, especially in the
field of research and development. To supplement human resources for this industry,
there are currently 6 universities that have developed training programs in automotive
engineering, 31 universities, more than 30 colleges with Bachelor of Technology
Automotive engineering or Engineer practice. Statistics and forecasts about human
resources of the industry are still lacking.

Materials: Some types of vehicles have achieved a relatively high domestic rate such
as trucks with 7 tons reaching 55%, passenger cars with 24 seats or more reaching 45 -
55%. However, most of the localization targets for cars with 9 seats, localization rate
below 15% (planned to be 50%), passenger cars with more than 10 seats, trucks,
special-use vehicles have localization rate only 40% (60% planned). While the
localization rate of passenger cars in Thailand is 85%, in Indonesia is 80%, in
Malaysia is 75%, every year the Automotive industry has to import nearly $ 2 billion
of components and spare parts, lack of raw materials has a significant impact on the
capacity of the Vietnamese Automotive Industry.     

Equipment: Currently, there are production facilities with modern equipment,

machinery and technology such as Thaco Bus Factory which is the largest bus

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manufacturing and assembly plant in Vietnam and Southeast Asia is equipped with
automatic assembly and production systems with the localization rate of over 40%;
The most modern Mazda car factory in Southeast Asia with a capacity of 50,000
vehicles / year; Vinfast car factory of Vingroup in Dinh Vu Industrial Park, Cat Hai,
Hai Phong has a complete product production cycle, which is continuously connected
and self-contained. automation with thousands of ABB robots, manufacturing
operating systems from Siemens and SAP.

TMV (Toyota Vietnam's manufacturing facility) is the first automobile factory

in Vietnam to complete the automobile production and assembly process in
Vietnam with all 5 processes: Stamping - Welding - Painting - Assembly - Test.

The number of stamping and stamping machines, W1 and W2 production lines,

anti-rust paint, ... of Toyota Vietnam's modern production line

Capital resources: For the automobile industry, which is a prerequisite factor,

currently only a few leading corporations have the ability to invest a strong capital
source in the development of the industry such as THACO "poured" more than VND
20,000 billion to expand Chu Lai automobile mechanical industrial park since 2016. In
2019, Vingroup has invested nearly 31,000 billion VND in the Vinfast project
complex; many foreign capital sources also invested heavily in the automobile
industry such as Ton Poh Thai Lan Fund which bought 5.9 million shares (nearly 130
billion VND) of Hoang Huy Investment Services Company in 2015; Ford Vietnam
announced an investment of 82 million USD (more than 1,900 billion VND) to
upgrade and expand the Hai Duong assembly plant by the end of 2019; Toyota’s total
investment in Vietnam is about 236 million USD up to 2020

Infrastructure: Vietnam does not have the necessary infrastructure to develop the
automotive supporting industry, thereby hindering global manufacturers of supporting
products who want to invest or link investment. Traffic systems such as roads,
railways and waterways are also developing compared to other countries in the region.
Infrastructure does not meet the demand for cars. In Hanoi and Ho Chi Minh City,
land for traffic only accounts for 6-8% while the standard must reach 20%. The width
of the traffic lines is not enough to escape the increasing traffic and people, leading to
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heavy congestion in large city areas. There is no separation and investment in
specialized transport infrastructure for vehicles, because currently the main means of
transport is still motorcycles.

→ The competitive advantage factor of the Vietnam automotive industry has mainly
been abundant, young and cheap labor. However, wage costs are rising, this factor will
be not sustainable in the future.

 Home country (Japan):

Supporting job creation for more than 55,600 officers and employees; Contribution to
the state budget since its establishment reached 8.2 billion USD, accounting for the
majority of the total taxes paid to the state budget of Vinh Phuc province.

Supporting staff and management staff at Toyota Vietnam when Covid-19 occurs

3. Demand conditions:

Size of the market: According to Business Monitor International (BMI), Vietnam is the
country with the lowest car ownership rate in the region with only 4-5% of families
owning a car, only 23 cars per 1,000 people, while in Thailand is 204 cars and the
minimum is 400 cars / 1,000 people in developed countries, the US is 790 cars / 1,000
people.

Payment capacity: For cars of individuals and organizations constantly increasing,

according to VAMA (2020), the total sales of the whole market as of the end of
December 2019 increased by 12% compared to the same period in 2018.

Population and development rate: According to the General Statistics Office of

Vietnam data, Vietnam’s population is currently among the largest in the region with
79 million people under 65 years of age. This has the effect of making it easier for
people to access information about new technologies, new products that tend to
develop like current automotive technology. Average income of people is increasing,
in that group has the fastest growth in income in the range of 500-1000 USD / month.
Besides, the ratio of consumption to income of Vietnamese people is among the
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highest in SouthEast Asia. Vietnamese people consume about 70% of monthly income
on average. This has a great impact on the product consumption of high-end products
such as cars in Vietnam.

Market complexity: Vietnamese consumers are those who prefer foreign goods and are
highly price sensitive.
→ Although the automotive market has not yet developed strongly compared to other
countries in the area: only equal to 10% of Thailand in car ownership rate. However,
with the low car ownership rate and income of people is increasing, the automotive
industry still has growth potential in the future.

4. Related & Supporting industries:

-         Back-end:

The production capacity of Vietnam's auto supporting industry remains low. At

present, only a few suppliers in the country can participate, joining the supply chain of
automobile manufacturers and assemblers in Vietnam. Compared with Thailand, the
number of Vietnamese suppliers in the automotive industry is still very little. Thailand
has nearly 700 tier 1 suppliers, but Vietnam has less than 100. Thailand has about
1,700 homes. supplying level 2, 3, while Vietnam has only less than 150. Auto spare
parts currently produced in Vietnam are mainly spare parts. labor intensive, simple
technology, such as glass, tubes, etc.

Thus, the Import rate of spare parts and components for Toyota Vietnam's automobile
production has increased rapidly, mainly from Japan (23%), China (23%), Korea
(16%) and Thailand (16%).

Expressing the underdevelopment of Vietnam's auto parts and components industries

In recent times, the auto parts and components manufacturing industries have been
paid more attention and invested more, especially 2016 - 2018, so this industry has
developed significantly.

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-         Front-end:

In domestics: Thaco currently has the largest auto distribution system in the industry
with 106 agents, TC Motor with 72 dealers, followed by Toyota Vietnam with 53
dealers, Ford Vietnam has 39 dealers, Honda Vietnam has 32 dealers and although
newly born, there are 22 dealers across the country supplying Vinfast car products.

Exporting: Although not yet developed, Vietnam's export of auto parts achieved an
average growth rate of 18% in the 2010-2016 period. The main export spare parts are
wire assemblies, accounting for over 50% and the main markets are Japan (50%) and
the United States (13%). The second largest export spare part is gearbox
components, which accounts for 10% of the total export turnover of auto parts and
components, and the main destinations are Japan, Mexico, and China. In 2019, the
total export turnover of Vietnam's auto components and spare parts group reached a
record of 5.645 billion USD, making this group ranked 8th in the top 10 categories
with the largest turnover. Meanwhile, the import value of auto components and spare
parts was 4.16 billion USD. Although the exported products are mainly components
with low value, this shows that the auto supporting industry is developing and will
create favorable conditions for domestic manufacturers in the coming time.

5. Extension:

Chances:

From the above analysis, a number of favorable opportunities for the development of
the Vietnamese Automotive Industry can be mentioned as: Large population size,
increasing living standards and income; The demand for motor vehicles for production
is high and the demand for passenger cars has increased sharply; The domestic
Automotive Industry is still young and growing; Many supportive policies from home
and abroad are aimed at helping to reduce car prices in the future ...

Government: 

The State always imposes high taxes on cars, and at the same time is classified into the
list of goods subject to special consumption tax. Now, Cars incur up to 15 taxes and

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fees. The superposition of tax on cars makes the price of cars sold to consumers in
Vietnam is among the top in the world.

Development policies: Encourage large enterprises to invest in the development of the

Automotive Industry, regardless of whether domestic enterprises and foreign-invested
enterprises are aimed at developing Vietnam Automotive Industry.

CONCLUSION

Through the analysis of the Vietnam Automotive Industry, provided that production
factors are lacking and weak (human resources, materials and machinery), mainly
focus on leading corporations (capital and technological machinery), in the context of
relatively high demand (promising market, high affordability in the segment of mid-
priced cars and growing sales), related and supporting industries are weak, imports are
key ,and strategic, structure and industry competitive factors are average, with the
chance of being a fledgling and growing industry, well-recognized. With strong
support from the development policy and many preferential policies, tax policies of the
Government, we think that in the coming time, Vietnam's Auto Industry will have a
positive development. However, the industry is still only in average competitive
capacity, it is necessary to have breakthrough efforts to make a strong transformation
in the future.

Apply this analysis in the case of Toyota Vietnam:

Firstly, the support from actors in the industry is more difficult and threatening. But
TMV's resources are strong enough to be able to compete and maintain its position in
the marketplace.

Besides, Vietnam is also a developing country, with the promise of more

opportunities, but in order to reach out further in the future, TMV also needs to have
short and long term development strategies. more innovative term, bringing more
value to the company in the new era.

In general, we can conclude: a large company like TMV is developing very well in the
Vietnamese auto market
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 CHAPTER III: ENTRY MODE

1. Choice of entry mode:

Entry mode: JOINT VENTURE

Toyota Motor Vietnam (TMV) is an automobile Joint Venture founded in September,

1995. The total initial investment capital was 89.6 million USD, from Toyota Motor
Corporation (70%), Vietnam Engine & Agriculture Machinery Corporation - VEAM
(20%) and KUO Singapore Pte. Ltd (10%).

Main areas of activity:

Producing, assembling and trading in Toyota cars of all kinds

Repair, maintenance and sales of Toyota genuine parts in Vietnam
Exporting Toyota auto parts and spare parts manufactured in Vietnam
2. Advantages of entry mode

Sharing costs, risks, and profit:

With the great economic backing from Toyota Japan (20% stake), the loss costs and
risks of VEAM are negligible.  According to statistics, despite a loss of more than 100
billion VND in 2017 due to the company's factory unable to operate at full capacity
due to the consumption of cars (7-seater cars, pickup trucks) from other large firms
such as Honda, Ford,…facing many difficulties, but the loss was quickly offset thanks
to the profit of Toyota car consumption, in 2017, VEAM earned more than 700 billion
dong from a joint venture with Toyota. The joint venture companies operate
effectively, the greater profit VEAM can earn. According to BSC Securities Company,
Toyota's 2019 profit is 3. 938 billion Dong, contributing to the drinking profit of 1.109
billion dong of VEAM. 

Thus, we can conclude that the joint venture not only brings great profits for both
sides, but also helps to reduce risks from both sides, achieve high business efficiency.

Access to partner’s knowledge and assets: 

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VEAM is the largest enterprise in size and has a long tradition of manufacturing
agricultural machinery in Vietnam. They have been established since 1990 and have
extensive experience in the mechanical engineering and manufacturing of machinery
and parts. That allows Toyota to take advantage of Veam's experience in the
manufacturing sector to penetrate faster in the Vietnamese market.

Preferential policies for FDI enterprises in Vietnam:

Firstly, creating a legal framework to ensure foreign direct investment: Policies related
to FDI enterprises all create favorable conditions for foreign investors, there is no
discrimination between domestic investment with foreign investors. 

At the same time, ensure the foreign investors' right to transfer assets after fulfilling
their financial obligations toward the Vietnamese State in accordance with law. This
provision makes foreign investors more confident when participating in investing in
Vietnam. Regarding the process and procedures for registration and investment
certificates, due to efforts in administrative reform, time and costs for FDI enterprises
have been significantly reduced …

Second, Tax incentives for businesses: Law on Corporate Income Tax and guiding
documents specifying the uniform tax exemption and reduction incentives for all types
of businesses; abolishing the regulations on additional corporate income tax;
abolishing the regulations on tax on profit remittance abroad. The annual tariff
reduction according to regional and international commitments on raw materials also
helps enterprises, including FDI enterprises to significantly reduce input costs and
improve their competitiveness. about the price for the product.

3. Disadvantages of entry mode

Divergent goals and interests of partners:

The joint venture companies have different goals and interests. VEAM plans to receive
6,648 billion VND dividend from the joint venture (up 22.9%). Meanwhile, Toyota's
sales were affected by the sluggish import of Fortuner models, so VEAM's high
expectations put a lot of pressure on Toyota.

15
Limited equity and operational control:

The percentage capital spent will be equivalent to percentage ownership and control
over the company's operations the degree of control of the company is only part of
joint venture, not to be spread out.

Although the capital contribution to this joint venture of the Toyota Japan Automobile
Corporation is 70%, but still does not enjoy full control and ownership of the
company, but still has to rely on the remaining 30% from Vietnam Engine and
Agricultural Machinery Corporation (20%) and KUO Singapore Company Limited
(10%).

It can be said that this is a disadvantage for TOYOTA VIETNAM but the level of
disadvantage is not too high.

Difficult to coordinate globally:

The important issue is that it is difficult for joint ventures to integrate into a global
strategy that is cross-border trade in nature. The nature of the JV does not give an
MNE the tight control over a foreign subsidiary that it may need for global
coordination. Toyota's import rate of spare parts is about 70% (mainly from Japan,
China, Korea and Thailand). In such cases, there will be unavoidable problems related
to the transfer of prices and sources of exports inside and out, especially to support
wholly owned company-owned branches in other countries. In such circumstances,
there are almost inevitably problems concerning inward and outward transfer pricing
and the sourcing of exports, in particular, in favor of wholly owned subsidiaries in
other countries.

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 CHAPTER IV: STRATEGIES OF TOYOTA IN

VIETNAM MARKET

Firms can be successful in the marketplace with outstanding features including image,
customization, technical superiority, price, quality, and reliability. Japanese
automakers Toyota has done very well by providing effective combinations of
differentiators. They sell both inexpensive cars and high-end cars with high-quality
features, and many consumers find the value that it provides hard to match.
1. Cost Leadership

TMV utilizes the corporation's efficient manufacturing process and localization to

build a low-cost structure. 

How Toyota implements cost-leadership strategy?

Answer: Maximum savings on production costs: raw materials, shipping costs,

intermediate costs, inventory.

Toyota uses 3 production methods:

1. Just-in-time production (JIT production) is a tactic manufacturer use to increase

efficiency and reduce waste by only accepting goods when they are needed in the
production process. Toyota doesn't hold any “extra” parts inventory at the factory,
which reduces factory size and cost.

For ex: When Toyota builds a new car, the parts arrive at the specific time they’re
needed

First of all, Toyota uses the production method. The production method is Heijunka
(Smoothing or leveling production).  Toyota uses Heijunka to ensure that there is
an inventory of products that is proportional to changing demand. As a result, the
cost of raw materials will be minimized resulting in as little inventory as possible.

Furthermore, Toyota uses the Information system: Kanban (Signage). A system

that passes information between processes and automatically orders parts when
they are used up. Kanban removes items that have already been used or shipped
and goes back to previous processes like ordering additional items. As a result,
17
 Toyota will not incur costs for intermediaries to place orders, the process will
become automated, suitable for the amount of raw materials needed to produce and
Toyota doesn't hold any “extra” parts inventory at the factory, which reduces
factory size and cost.

Figure 1 Conventional production

In addition, Toyota has six rules to effectively apply Kanban: Never ignore defective
products, Take only what is needed, Produce the required quantity, Production norms,
Refine production. Export, Stabilize and streamline the process.

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 Input Phase 2 Phase n
1

Final
Phase 1 ....
product

Input 2 Input n Sales

Figure 2 Toyota lean production system

As can be seen from the graph, JIT eliminates the need for each stage in the production
process to hold buffer stocks, which resulted in huge savings.

2. Jidoka (automation) is the principle of automatic stop device design and detects and
calls attention to problems immediately whenever they occur. Controlled by teamwork
instead of manual assembly and direct production methods, Jidoka helps Toyota's
production system become automatic, saves labor and improves management skills.
Jidoka requires operators to be equipped with the means to stop production whenever
they notice anything suspicious. It also prevents waste that leads to the production of a
wide range of defective items.

3. Localization

Toyota believes that cost reduction can be achieved through localization, which leads
to further progress in regional and global exports. The corporation therefore
maximizes local R&D functions and capital expenditure to achieve local procurement
rate of 100% at the earliest possible stage.

With the investment capital of over US$ 89 million, TMV has completed the car
production process with four lines including Stamping, Welding, Painting and

19
Assembly. A frame shop has also been put into operation with the purpose to enhance
localization ratio and the cost competitiveness with auto welding and painting lines.

Figure 3 Toyota production line

TMV has made great efforts to call for the spare parts suppliers under Toyota Group
investing in Vietnam such as Denso, Toyota Boshoku Ha Noi, Toyota Boshoku Hai
Phong, Toyota Gosei Hai Phong to produce and export auto parts to the world. TMV
unceasingly studies and looks for domestic suppliers to increase localization ratio. 

2. Differentiation strategy

Entering the Vietnam market since the beginning, Toyota Motor Vietnam has grown
strongly in both scale and quality. With the philosophy of "Customer First", Toyota
Vietnam has been consistent to provide our customers with quality products and
excellent services through dealer networks nationwide. Those efforts have been
rewarded with trust and satisfaction of customers for Toyota.

- Corporate strong brand

In Vietnam, TMV has been the leader in market share (30-40%) and top car sales since
its advent in 1996. It proves that TMV has a strong corporate brand. Customers often
associate this brand with durability, reliable operation, efficiency and fashionable look.

Toyota cars are praised for both their external modern look and their interior, which
benefits from roomy seats, admirable outward visibility and well-placed controls. On
the road, they provide the comfort and the quiet and smooth ride that should please a

20
wide swath of midsize sedan shoppers. Power and fuel economy are excellent with
either engine as well. 

- Innovation

An automobile expert has said that: “You can't wait five years to introduce new
technology to a vehicle, major changes to the vehicle will keep them fresh in the eyes
of the consumer.”

TMV continuously reviews, updates the old and introduces new products to the
Vietnam market. It now offers a wide range of products: compact car Yaris, sedan
Vios, Altis and Vios, SUVs like Innova, Fortuner and even truck Hilux. Each type is
regularly enhanced to give the users the best comfort.

- Wide dealer network and Customer service/After-sale service

Toyota always regards its service supply chain as the key to sustained success. This
chain is accountable for the supply of spare parts and accessories, car maintenance and
repair, and also other value-added services to customers.

Based on the research of Vietnam condition, TMV designates the standard of periodic
maintenance for each Toyota model. In an authorized Toyota repair center, genuine
body parts should be fitted and cars should be examined carefully. Toyota technicians
receive extensive, specialized collision repair training, and have access to the latest
high technology repair equipment which enables them to restore vehicles to their
original beauty.   

TMV saves time for customers by implementing Express Maintenance, Express body
and paint service and 4hours Scratch Repair service. The service is available at many
car dealers from North to South

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 CHAPTER V: MOTIVATIONS AND HINDERS
1. Motivations
Take advantages of a leading company
Toyota is a big brand with extensive experiences and resources (knowledge,
technology, business model, etc) in the automotive manufacturing industry. The
company can use this advantage to achieve low-cost and product differentiation
strategy.

International economic integration will bring Vietnam opportunities to cooperate in

the division of labor, to co-manufacture auto parts and components, to access new
technologies in automobile production and assembly, and to lift high skilled workers
as well as management qualifications of businesses.

2. Hinders
Cost reduction pressure

Vietnam's economy is on the rise and people's incomes are also increasing. Therefore,
the Vietnamese market has a lot of potential so many of the world's leading car
manufacturers are present in Vietnam, even when the current market is still small.

Currently, Vietnam auto market has many famous manufacturers with high quality
cars such as Mazda, Hyundai, Ford, Honda, Chevrolet, Mercedes, BMW, Volvo,
Cadillac, Lexus, Tesla, etc. The company is significantly affected by the global
economic crisis, but with the stimulus packages of the government and the attractive
policies of the manufacturer, the auto market is no less exciting and attractive.

Pressure to meet customer needs

Each region, each country has a different identity, culture ... so their needs are also
different. Especially for the automobile market, the needs of customers are even more
diverse. It is determined by many factors such as preferences, personality, habits …
Customers have more and more choices in buying cars, therefore companies need to
have competitive products and services to survive in the market.

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 CONCLUSION AND RECOMMENDATION

1. Conclusion

With the background of a leading company in the automotive industry, Toyota

Vietnam has many changes to develop in Vietnam. They have applied business
strategies flexibly and achieved efficiency to lead the market in Vietnam.

About the company’s strategy in Vietnam, we assess that Toyota has achieved best-
cost providers strategy. Toyota is researching to increase domestic rates. This strategy
needs low cost because domestic rate rise, input cost decrease so cost decrease, suit
with Vietnamese ‘s demand on money, compete with medium-class cars. They also
increase the quality of their products and services to meet the ever-increasing needs of
their customers.

Regarding the entry mode of Toyota in Vietnam. The company has taken advantage of
the benefits of a joint venture such as reducing risks and costs; make use of resources
from partners to make the business process in Vietnam more efficient; and receive
incentives from the government for FDI enterprises. Although there are some
limitations like the difficulty to coordinate with global strategy but Toyota Vietnam is
still doing well and maintaining its position.

2. Recommendation

According to the World Bank, Vietnam's participation in the global value chain is the
final assembly stage, and is the stage with the lowest value added in the Value Chain.
Not only that, when the global value chain moves up to the 4.0 value chain, the value
added in the assembly stage is narrower.

Main activity of TMV is assembling. Toyota VN should focus more on other stages
especially Marketing, Selling and Distribution to create the highest for the company in
the current era.

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 Figure 4 The extent of Vietnam's participation in the global value chain

Source: World Bank

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doi-voi-doanh-nghiep-fdi-tai-viet-nam-318288.html> [Accessed 14 December
2020].
 Veamcorp.com. 2020. CÔNG TY TOYOTA VIỆT NAM. [online] avaliabe at:
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[Accessed 5 December 2020].
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