Free Essay Analyzing Toyota Motor Corporation

Published: 2022-02-17 01:42:17
Free Essay Analyzing Toyota Motor Corporation
Type of paper:  Research paper
Categories: Automotive industry Toyota
Pages: 7
Wordcount: 1841 words
16 min read
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Toyota Motor Corporation is a Japanese automobile manufacturing company founded in 1937 by Kiichiro Toyoda (Obara). The multinational manufacturer has its headquarters in Aichi, Japan (Obara). Toyota employs close to half a million people around the world and is ranked sixth in terms of revenue. It is the world's largest car manufacturing brand having achieved the feat of producing 10 million vehicles in a year since 2012 (Heitmann 125). These achievements have made Toyota a leading company on several fronts, such as being the largest listed by market capitalization in Japan. Although Toyota has faced stiff competition from its rivals, it has been in the front spearheading various innovative initiatives in the automotive industry that have given it a competitive advantage.

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Market Type

The automotive industry is an oligopoly market structure (Falter 2). An oligopoly is a market type where there are a small number of large firms that dominate the market. Toyota and other companies such as General Motors and Volkswagen dominate this industry that is filled with entry barriers such as cost. Additionally, participants in an oligopoly exert control over market prices and supply. In Malaysia, for instance, Toyota, together with Perodua and Proton, control the automobile industry. Although Toyota is not the market leader in the country, it has a significant market share of 15.1%, which is third in rank (Heitmann). In the U.S also a similar market structure is experienced whereby a few large firms control the market in terms of supply and prices. As such, the Herfindahl index for the market is at over 2000 squares (Korus). Other main participants in the industry include BMW, Ford Motor Company, Volkswagen, and Honda Motor.

Ownership

Concerning the ownership of the company, Toyota is a public company that is listed on various stock markets across the world. In Japan, Toyota has been publicly traded since 1949, while the same started in 1999 in other countries (Franks et al. 2580). It has been foreign listed on both the New York Stock Exchange (NYSE) and London Stock Exchange (LSE). Despite having a founder, the company does not have an individual owner, nor does it have a majority owner. The largest shareholder in the company is Toyota Industries, with approximately 6.7% ownership (Franks et al. 2583). Toyota Industries is a member of the Toyota group of companies. Other notable shareholders in the company are DENSO Corporation, Towa Real Estate Company Ltd, Toyota Tsusho Corporation, and The Master Trust Bank of Japan, among others. Public companies are those that have issued securities through an initial public offering and have been traded on at least one stock exchange.

Products

Toyota Motor Corporation deals majorly with the production of automotive. However, the company has ventured into other industries such as robotics and aerospace. In the automotive industry, Toyota produces a wide range of vehicles that are distributed all over the world, making it the world leader. Some of the vehicle types produced by Toyota are; buses, pickup trucks, luxury-type vehicles, crossovers, and electric vehicles. Besides vehicles, Toyota has also been involved in the manufacture of a pleasure boat in a partnership with Yamaha. However, these crafts are only distributed through a small network in Japan. For aerospace, it engages as a minority shareholder of Mitsubishi Aircracraft Corporation, which manufactures Mitsubishi Regional Jets (Obara). Also, Toyota deals in agricultural biotechnology and sewing machine technology.

Type of Products

All the items produced by Toyota are non-excludable goods whereby a consumer can, for instance, purchase another vehicle from a competitor despite having acquired it from Toyota. Further, the products by Toyota can be classified as private goods in that people have to pay for them to consume the benefits. Unlike club goods, Toyota's products are rivalrous, which means that the consumption of a particular production prevents that of another.

Automotive Industry

Toyota Motor Corporation perfectly fits into the automotive industry, where it is a key player, and the majority of its operations are based. The car manufacturer produces a wide range of automobiles that warrant its inclusion in the automotive industry. Toyota has been in the automotive industry for close to a century and has experienced continued growth both in production and in revenue. Companies in the automotive industry engage in the design, manufacture, development, manufacturing, and sales of motor vehicles (Obara). Toyota deals in all these activities throughout its production line and has outlets in various parts of the world that serve as distribution channels for the sale of its products. However, it is important to note that companies that deal with automobile maintenance are not considered to be in the automobile industry. Toyota has several manufacturing plants in selected parts of the world; however, the supply of vehicles is more widespread.

Automotive Industry in the U.S

The approximate number of vehicle manufacturers in the U.S is 16, with Toyota Motor Corporation being one of them (Ingrassia and White ). Other manufacturers include some of Toyota's key competitors, such as Ford Motor Company and General Motors Company. These companies provide Americans and other consumers with a variety of options regarding automobiles. Ford Motor Company, for instance, begun production nearly three decades earlier than Toyota. However, in the 1980s, Japan overtook the U.S company as the leading car manufacturer in the world. This lead was in a big way enabled by Toyota's prowess in the industry. The vast annual production of vehicles from these companies goes to meet both local and global demand for automobiles. Also, the companies engage in other innovative solutions facing the automotive industry, such as that of carbon emissions. One of the ways that these firms use to tackle the problem is by introducing electric-powered vehicles to reduce the number of emissions resulting from gas-powered engines.

Automotive Industry Dollar Value Output

Automobiles are a common mode of transport in most developed economies, with the United States being one of them. The demand for this product varies in various parts of the world, depending on different factors such as the emphasis on public transportation. This initiative has caused a decline in the demand for cars. Another factor that influences the production of vehicles is the state of roads. The United States automotive industry has had an output dollar value of approximately 48 billion USD in 2018 (Heitmann). This figure shows the massive impact that the industry has on the economy of the country. Further, the industry creates numerous jobs of the people, both direct and indirect. In the same section, Toyota has scaled up its investment in the U.S to a tune of 13 billion USD (Heitmann 221). These funds will help to enhance productivity and facilitate the employment of additional staff to contribute to the improvement.

Since Toyota fits in the automotive industry, its overall operations are similar to those entailed in the industry. These are the design, manufacture, production, and sale of automobiles. In manufacturing, the company requires several raw materials and expertise to help develop its products. The production process demands quality and innovation to enable the company to meet consumer expectations. Also, Toyota needs to source raw materials from various suppliers, which are used in the manufacture of automobiles. These materials are then used to create a product based on the design provided by the section of the production team. Also, Toyota designs and manufactures the engines for its vehicles that are incorporated into the various models it produces (Obara). Therefore, the main operations in this process entail; sourcing for materials, creating a vehicle design, and the actual manufacture of the vehicle.

Toyota's Overall Operations

After the manufacturing process is completed, the company engages in marketing activities that help to create awareness for its products in the market. This way, marketing forms another part of the company's general operations across the world. The other operation in Toyota's value chain is the distribution and sale of manufactured vehicles. Toyota has established distribution outlets in various parts of the world from where customers can purchase their vehicles. These activities are part of the sales operations that Toyota conducts. Finally, the company needs to build a good working relationship with its customers. Therefore, it engages in customer service to ensure that it adequately serves its customers to achieve consumer satisfaction.

Production and marketing

Toyota's production process is executed through its production system, which is based on the company's management philosophy and practices. The system, which was developed by Japanese industrial engineers between 1948 and 1975, helps to organize both manufacturing and logistics for the manufacturer (Monden 47). This system strives to eliminate waste and inconsistency in production. Once these objectives have been achieved, the system succeeds in conserving resources. The system thrives on two conceptual pillars, the first one being just-in-time and the second jidoka. The just-in-time concept dictates that the system makes that which is needed and in the amount required. Jidoka refers to automation coupled with a human touch (Obara). After production, the next challenge for Toyota is how to get the product to consumers. On this issue, Toyota banks on a marketing strategy that entails global positioning and media advertising. Toyota has always viewed marketing as a crucial tool for its success in business. The company spends big in advertising as part of the effort to raise brand awareness to consumers. This approach has also been replicated by its competitors in the U.S, such as Ford (Ingrassia and White). However, others like Ferrari do not use traditional advertising and instead use a racing team.

Sales and customer service

In sales, Toyota uses its distribution outlets around the world, and it also partners with dealerships to help increase its capacity to reach out to consumers. This network of dealers is crucial to helping the company distribute its massive production around the world. Toyota produces more than 10 million vehicles in a year; hence, it is important for the company to devise effective distribution strategies to get those units to the market (Ingrassia and White). Among the dealerships, Toyota mainly houses the pricier luxury automobiles. On customer service, Toyota has often been accused of being slow to respond to safety issues. In the U.S, the company was forced to make massive recalls due to various issues such as a glitch in the braking software. These instances led to a 9 percent drop in sales for the company, thus creating the need for its leadership to evaluate its response promptness (Liker and Ogden 61).

Work Cited

Falter, Ricardo. Effects of Oligopoly in the Us Automobile Sector on Pricing and Development. Grin Verlag Ohg, 2011.

Franks, Julian, et al. "The Ownership of Japanese Corporations in the 20th Century." Review of Financial Studies, vol. 27, no. 9, 27 Sept. 2014, pp. 2580-2625, doi:10.1093/rfs/hhu018. Accessed 6 Nov 2019.

Heitmann, John Alfred. The Automobile and American Life. McFarland & Company, Inc., Publishers, 2018.

Ingrassia, Paul, and Joseph B White. Comeback: The Fall & Rise of the American Automobile Industry. Simon and Schuster, 2013.

Korus, Sam. "The Automotive Industry Is On The Threshold of Massive Consolidation." Nasdaq, IRIS - Xyz, 21 Aug. 2016, https://www.nasdaq.com/articles/automotive-industry-threshold-massive-consolidation-2016-08-31. Accessed 6 Nov 2019....

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