SWOT Analysis

SWOT Analysis of Toyota

by The TSW Team

Toyota Motor was founded by Kichiro Toyota in the year of 1937 as a spinoff from his father’s company Toyota Industries to manufacture automobiles.

It is a Japanese automotive company, headquarter is in Toyota, Aichi, Japan. It’s a multinational automotive company, and by March 2014 it consisted of more than 338,875 employees worldwide (Wikipedia). It is the first company that manufactured 10 million cars per year from 2012. In that year, Toyota announced it had manufactured its 200 millionth car.

SWOT Analysis of Toyota

The STRENGTHS of Toyota

The strengths of Toyota indicates the internal power of its resources and strategies which are behind the glorified success of this brand.

  • Brand Image: Toyota has a strong and sustainable brand value all over the world. It’s one of the leading companies around the in terms of its sales, profit margin and market share. Over the years, this Japanese automobile manufacturer company has created its distinct identity with world-class designs, product quality and superior customer services.
  • Large Product Portfolio: Toyota has an extended product line for almost all kinds of target market. This brand offers vehicles such as sedans, SUV’s, racing cars, trucks, busses, minivans, station wagons etc. From personal to professional transport needs, all can be met with Toyota. It’s one of the top automobile company in terms of producing hybrid cars. This brand also has a segment or premium cars called Lexus.
  • Kaizen Philosophy: Toyota is known as the pioneer of Kaizen philosophy through which it has been proving itself on the improvement of performance and operations. Through this strategy, Toyota has been successful in beating its competitors as the process concentrates on the higher production speed and decreasing the amount of waste. The process has included the employees as well to make the decision about what will be best for the company.
  • Investment in Research & Development: Every year Toyota invests approximately 9 million dollars on its research and development sector, which is higher than any other company’s R&D cost. And there’s no scope of doubt about the efficiency of the outcomes. The brand is continuously growing in terms of new and innovative products worldwide with massive popularity and acceptance.
  • Green Branding: Toyota is not only known for its quality, innovation and superior designs; it’s also equally recognized for its green branding image. It has the tagline of Leading Global Green Brand. The focus on hybrid car production to reduce pollution has been a massive success for this brand. In the first few years, this brand sold nearly 8.5 million hybrid cars all over the world.

The WEAKNESSES of Toyota

The weaknesses of Toyota indicates the factors that are absent in this company and making it slower than other business.

  • Recalling Products: Since 2016, Toyota has recalled millions of cars because of many technical issues. In 2016, it announced a recalling of 3.37 million vehicles worldwide because of the problems malfunctioning of airbags, fuel control unit etc. Also in 2018, the company again recalled almost 2.4 million hybrid cars that had the potential of crashing due to technical and safety problems. All these things have caused damage to this brand’s image globally.
  • Not All Designs got praised: Although Toyota is famous for its world-class unique designs, some of its new production lines didn’t get the acknowledgement. Automobiles named Master Ace was criticized as the worst looking car. Also, there was Yaris that is considered as the biggest downfall of Toyota’s history. These incidents have caused this company tremendous loss.
  • Weak Position in Asian Market: Toyota has a more vulnerable position and less market share compared to its other competitors in the Asian market. Though this brand is very popular in other parts of the world, still it couldn’t capture a good market in India and China which are the biggest markets in Asia. As a result, this brand is losing its competitive advantages there.

The OPPORTUNITIES for Toyota

The opportunities of Toyota indicates the market situation and analysis that can help it to overcome the weaknesses and become more influential in the upcoming future.

  • Extending Market with Hybrid & Electric cars: The craze of hybrid and electric cars are growing day by day due to the environmental concern and reducing the consumption of fuel resources. As Toyota has already proved itself in terms of superior quality and production of hybrid and electric cars, it can be a good competition in the automobile industry among other brands.
  • Balance the Price & Production to capture the Asian market: The Asian market is growing in terms of standard of living and consumption of luxury items. These countries can be a good target market for Toyota. Its other competitors like Ford, Honda, Volkswagen, Mitsubishi, Maruti Suzuki etc. has already captured the market and growing day by day. Toyota should grab the chance as well.
  • Concentration on Making Autonomous cars: The next step of the automobile car will be autonomous cars, which is being expected by the researchers. And already many automobile brands have started to focus on this sector and working on it. Toyota, with its intense research and development area, can work in this product line as well to tackle the new emerging demands of the market.
  • Growing concern for Environment pollution: people are becoming more concern for the environment; as a result, there is a possible boom in the sale of environment-friendly cars.

The THREATS for Toyota

Threats refers to the facts that can cause issues for Toyota in Near future depending on the market situation,

  • Competitive Pressure: Toyota is facing substantial competitive pressure by both existing competitors and new entrants based on innovation and price. This company is also lagging on the Asian market. As a result, it’s losing its potential there. Also recalling of products has given its competitors to win the market against this company.
  • Effects of Global recession and pandemics: Toyota has already faced massive disruptions and loses due to Japanese tsunamis, earthquake, nuclear crisis etc. And recently this Covid-19 situation has made the things worse for every company especially for automobile industries due to the discouragements of transportation. This pandemic situation has created a challenge for companies like Toyota to come up with new ideas at present and after the pandemic.
  • Increasing Operating Cost: The cost of labor and raw materials are increasing worldwide day by day. And because of Toyota’s broad product range and large productions, it’s becoming challenging to maintain a balance with the production cost and market price. And if this company doesn’t find any solution to solve this problem, it’ll be a huge problem for it.
  • Lower Exchange Rates: Toyota is a Japanese company, and that’s why all of their profit gets exchanged into Japanese Yen. But due to the lower exchanging rate and fluctuations of Yen, this company is facing lower profits, in contrast to other currencies.

Recommendation

As the Toyota SWOT Analysis discussed, Toyota Motor has great strength internationally. But to address the threats based on competition, it must increase the competitive advantages by offering more environment-friendly cars.

Related

References

  • https://www.mbaskool.com/brandguide/automobiles/2261-toyota-motor-corporation.html
  • http://www.marketingteacher.com/toyota-swot/
  • http://study-aids.co.uk/dissertation-blog/swot-analysis-toyota/
  • https://www.cayenneapps.com/blog/2015/11/13/toyota-swot-analysis/
  • http://heartofcodes.com/swot-analysis-of-toyota/
  • http://www.toyota-global.com/company/profile/overview/
  • Toyota Wiki
  • Toyota Body
  • “INSIDE THE MIND OF TOYOTA: MANAGEMENT PRINCIPLES FOR ENDURING GROWTH” by Satoshi Hino