Audit

Strategic Audit: Toyota Company

Dr. Mario Hayek

Debo A Ogunseinde

GLB/Strategic Management - 527

June 30, 2019

Table of Contents

I. Introduction 4-5

Toyota Company History 5-9

Toyota Company Worldwide: Acquisition 9

II. Industry Overview 10

Automotive Industry 11

Revenue Streams 12-13

Costs and Expense 13

III. External Environment 14

Political Impacts on Toyota Company 14-23

Economic Environmental Impacts on Toyota Company 24-29

Socio-Cultural Impacts on Toyota Company 30-33

Technology Impacts on Toyota Company 33-35

IV. Porter’s Five Forces 36

Competition in the Automotive Industry 52

The threat of New Entrants into the Automotive Industry 38-41

The threat of Substitute Products 41-44

Bargaining Power of Customers 44-46

Purchasing Power of Consumers 46-50

V. Toyota Company SWOT Analysis 52

VI. Internal Environmental Analysis 52

Strengths of Toyota Company 52-54

Weaknesses of Toyota Company 54-56

VII. Environmental and Industry Analysis 56

Opportunities of Toyota Company 56-57

Threats of Toyota Company 57-58

VIII. Environmental and Industry Conclusion 59

References: 60-64

Toyota Company is a multinational Automotive Corporation with its headquartereds in Toyota City, Aichi Prefecture Japan. Toyota is among the top ten what number are they? automotive companies in the world despite being the biggest what does this mean? car manufacturing company which was founded back in the 1930s. This company besides being the main car producer, it involves itself please make sure to edit this paper; I expect graduate degree work or partners with large industrial groups which involve themselves in electronics, machinery, and finance. In 1933, the founder of Toyota Company named Kiichiro Toyoda begun the automotive division which was a transformation from textile machinery production (Jürgens, 2015). In 1935, Toyota Company made its successful trial on its own produced cars, upon its car launch, the production units increased significantly due to the impacts of World War II.

In around 1970s???, the company had a total production unit of about 10 million and it becomes isn’t this past tense???the main supplier of cars in North America. From the 1960s to 1970s was the self-expansion period for this company before starting to face competition from other car producers in the market and the new entrants. The main competitors of Toyota Company in the Automotive industry include Ford Company, General Motors Company, Volkswagen Company, Suzuki Company, Nissan Company, Honda Company, Fiat Chrysler Automobile Company, BMW and Mercedes Company (Jürgens, 2015).

Toyota Company is majorly a strong competitor for Ford, Hyundai, as well as Volkswagen which are the other well-known makers of cars in the automotive industry according to…?. The main focus of Toyota is on sustainable expansion besides the production of electric powered vehicles which are environmentally friendly and in line with the global target of curbing global warming which has a thread in the globe as far as climate change is a concern (Jürgens, 2015). The greatest market of Toyota Company is North America, followed by Japan and finally, Asia closes the top three best markets for the Toyota products. The Company has an approximate of 364,445 employees globally with 69 manufacturing plants and institutions in the world according to the company's statistics of 2017. In this year, the company registered net revenue of 27,597 billion Japanese Yen. Recently, the President of Toyota Company (Akio Toyoda) announces past tense??that the company’s focus at the moment is its expansion in the world automotive industry through diversification of its services, making more investments in the manufacturing of electric powered vehicles with an aim of conserving the environment through reducing the toxic gases emission rates to the atmosphere, and bringing new as well as enhanced versions of Toyota Prius which was the first in the car selling market in terms of quantity bought back in 1997 (Jussani, Heer, Ibusuki, & de Moura Côrtes, 2015).

In this research paper, the qualitative, as well as quantitative analysis of Toyota's generic as well as intensive growth strategy, will be discussed in depth. The analysis of political, economic, social-cultural, as well as technology impacts on the growth of Toyota Company, will be covered also. Finally, Porter’s Five Forces as they apply to Toyota Company will be discussed alongside the SWOT Analysis of the company, besides a conclusive statement of why we believe Toyota Company implemented the generic and intensive growth strategies (Jussani, Heer, Ibusuki, & de Moura Côrtes, 2015).

Back in please be formal in your writing…1924, the Toyoda Model G Automatic Loom was invented by Sakichi Toyoda, and it worked under the jidoka principle. This principle states that a machine stops itself when a problem occurs. This is the current Toyota production system. The Looms were being built on small scale production line, but in 1992, the Toyoda Model G. Automatic Loom was purchased by the British company called Platt Brothers. This raised revenue which enabled Kiichiro Toyoda to establish Toyota Automobile Company which is the current Toyota Company. The first car that Toyota Company produced in 1936 was called Toyoda Standard Sedan AA. The official production of Toyota automobile kicked off in 1933 (Jussani, Heer, Ibusuki, & de Moura Côrtes, 2015). Among the first vehicles of Toyota Company apart from Toyoda Standard Sedan AA were A1 passenger car and G1 truck which was launched in 1935.

In 1937, Toyota Motor was independently established and its brand name was changed to Toyota Motor from Toyoda which was adopted from the family of the company founder Kiichiro Toyoda. The first car for Toyota Company was sold at 3,350 Japanese Yen which was much cheaper than the cars from Ford which were being sold at 3,750 Japanese Yen. There appeared consultations of the logo and the name under which the company was to be registered towards the end of 1936. In 1937 the Toyota name was agreed and was officially registered as Toyota Motor Company in 1937 August. Its headquarters were set to be in Toyota City, Aichi Prefecture Japan which is also the current headquarters of the company under the current chairman Takeshi Uchiyamada, vice chairman Shigeru Hayakawa, and Akio Toyoda as the company president (Kehr, & Proctor, 2017).

The 1940s to 1950s

In earlier 1947s, the company's small-sized cars were being sold under the name Toyopet which according to Japanese article was the company's nickname as a result of the size of the company. The name originated from the naming competition that was held by the company in the same year 1947. In 1957, the company was forced to drop the name Toyopet when it penetrated into the American market. This was due to the fact that the name was not marketable in the American market more especially the North America section which happens to be the leading market of the Toyota products. The association of this name with the toys as well as pets made the company lost its market for this brand. Other factors which contributed to the poor reception of the Toyopet cars in the United States was because of its high pricing as well as lack of horsepower. It's however important to note that even if the Toyopet name was dropped in the American market, it was still being used in other world markets until the mid of the 1960s when the name officially dropped from all market (Kehr, & Proctor, 2017).

The 1960s to 1970s

Due to the reaction of the United States in the earlier 1960s of placing stiff import tariffs of some vehicles including those from Toyota Company, it forced the Toyota Company to start building its production plants in the United States which was completed by the late 1980s. for instance a tax duty on imports of 25% which was placed by the United States made the management of the company to facilitate the building process of their production plant in the United States bearing in mind that the United States on the northern section was and still is the leading market for the vehicles besides other products from the company. This made the company ensure that it maintains its North American Market in particular. The Toyota Corona marked the company's major sales in the United States market after the Toyopet car had bad reception in the United States market (Kehr, & Proctor, 2017).

During this period of Toyota Company history, the company experienced a faster rate of expansion which made it start exporting automobiles in bulky to foreign markets. In 1966, the company acquired Hino Motors, Limited which meant to produce large trucks as well as buses. It also acquired Nippondenso Company, Limited which was a maker of electrical auto components. Finally, the last company which was acquired by Toyota during this period was Daihatsu motor Company limited. The company's reputation in the United States was also boosted by the Corolla vehicle which it released in 1968, and this was attributed to its low cost as well as its fuel-efficient feature (Kehr, & Proctor, 2017).

The 1980s

In 1982, Toyota Motor Company merged with Toyota Motor Sales Company, limited to form Toyota. In 1984, the Toyota Company partnered with General Motors another automobile Company from the United States which led to the formation of New United Motor Manufacturing, Inc which is a dual brand manufacturing plant in California. By 1986, the company had produced 50 millionth vehicles with its annual domestic sales exceeding two million units. Toyota had a significant expansion on its entry into the 21st century where major innovations like a luxury brand, Lexus of 1989 (Li, 2018).

The 1990s to 2000s+

During this period, the Toyota Company started producing larger as well as more luxurious vehicles into its car production line. Such vehicles included full-sized pickups, the SUVs, and a sport version which was called Camry Solara. The first mass-produced hybrid powered vehicle globally the Prius was produced by Toyota Company in the year 1997 which followed by the listing of the company in both New York Stock Exchange and London Stock Exchange in the year 1999. Its Scion launch during this period was specifically targeting the youths in the market. In 2005, the company released the first world luxury hybrid car which given the brand name Lexus RX 400h (Li, 2018).

However, from early 2006, the company faced financial constraints as a result of dropping sales which resulted from the global financial crisis of 2008 more especially in the Asian market due to the Euro crisis. This was also worsened by the international safety recall of about 8 million vehicles that took place in the year 2010. This international safety recalls momentarily stopped the manufacturing as well as selling of the company’s top model vehicles hence negatively impairing its revenue. The financial constraints also continued in 2014 when the vehicle airbags which were produced by Takata supplier posed some malfunctioning queries to the regulators of the United States. This led to a recall of millions of cars produced by Toyota alongside other Car production companies that used the airbags from Takata suppliers in making the cars (Li, 2018).

This recall was the most complex and the largest in the United States vehicle regulation market. However, due to the diversification of the company’s services globally in vehicle production together with other products like rubber manufacturing, synthetic resins, automatic looms, and more other products made the Company to survive the monetary crisis since it used these other services as an alternative to boost its production as usual. The company has over the last three decades; the company has used over 5000 billion Japanese Yen in the marketing of its products and services according to the company’s statistics released by the Company President in the year 2017. A great percentage of this amount was spent on online marketing mostly on social media platforms. Either information technology took 50% of this capital share which was used for marketing by the company. It's no doubt that marketing significantly increased its sales more especially in the foreign markets. This further acted as a strategy in countering the market competition from other competitors in the market (Li, 2018).

Your history focus should be on the past decade or so; you need to explain the strategies pursued and the outcome of those strategies… also, how those strategies have shaped the firms current competitive position in the market

Automotive Industry

According to the automotive industry overview, in 2013, almost 250 million and above vehicles were officially registered and recognized in the United States why do we care about the United States? This is a multinational company…. . This is as per the automotive registration and regulatory body of the United States. The economic interpretation of these registered vehicles in relation to the population of United States of America shows that it is an era in the United States as well as other parts of the world where owning a vehicle is seen as freedom, for instance, freedom of travel how is this relevant to the analysis in this paper?. As per the statistics, averagely every family in the United States has got one or more private cars. To high-income families, every parent and the elder children have got a private car. The increased demand for vehicles in the world is made possible by the automotive industry where Toyota Company plays a major role (Li et al. 2018).

The automotive industry has greatly advanced due to the changes in technology. This is what is making it possible for this industry to meet the high demand for automotive products and services in the market. This industry comprises of various companies as well as workers who usually manufactures vehicles and deliver them to the selling and distributing companies. There are other companies in this industry which manufactures as well as sell vehicles at the same time. The automotive industry is subdivided into two segments that are car manufactures as well as a car parts manufacturer, and any company in the automotive industry is classified in either of the two segments. There has been an increase in the number of automotive part suppliers in the industry in recent times as compared to vehicle manufacturers. This is due to the fact that the vehicles in the current generation are more complex in relation to the past years' vehicles, more especially when considering the parts as well as the electronics components that are incorporated in the vehicle (Li et al. 2018).it seems tat you are over-relying on this one reference…

What stats do you have in this paragraph??? You might recall from one of the live sessions that I explained that you need to focus on stats, data and analyses….

Considering the fact that car manufacturing is expensive, there has been witnessed a smaller number of manufacturers in the industry with only three leading manufacturers from the United States which include Ford, General Motors and Chrysler Companies. In the world automotive industry, the leading in the industry includes Honda, Toyota, Nissan Motors, Volkswagen, as well as Hyundai Companies respectively. Considering Toyota for instance, it contributes to more than 17% of the Japanese economy. According to the Japanese Budget Control Body, Toyota is one of the key pillars of the Japanese economy right from job creation to government taxation. This industry began with German inventors, Karl Benz and Gottlieb Daimler who developed an internal combustion engine vehicle that was powered by gasoline back in the late 1800s (Li et al. 2018).

Because the vehicle was expensive to own, the industry remained dormant until Henry Ford developed an assembly line mass production which made the vehicles to be less expensive hence people started owning vehicles. This boosted the economy of United States by that time because the industry was contributing almost 35% of the United States economy through taxes and easy movement of workers from one city to another or from one state to another. The industry also contributed to the reduction of unemployment rates (Lo, J. (2016). According to Auto Alliance, the industry has directly employed 1.5 million United States citizens. According to the survey conducted by the World Bank in collaboration with Auto Alliance in 2018, the report indicated that the automotive industry together with its services like transportation stands the third position in terms of world economic support with annual average revenue of $19.5 trillion US dollars globally (Li et al. 2018).

You are over-focused on the US…. What percent of sales are from the US market?

Revenue Streams

The automotive industry manufacturers are subject to market demands of an enormous how many?multinational pool of customers, but the economic situations impact the overall industry sales what exactly does this mean? How large is the impact in dollar amounts?. The car lot jam perks up during the high season periods while during the low seasons, the showrooms are normally empty what is the decrease in numbers? Be specific. The driving habits of customers normally shift according to economic cycle which makes the product line to change more often with the innovations, new models as well as technologies which are evolving to meet the customer requirements besides enhancing their satisfaction (Majid, 2017). Because the driver's tastes and preferences, as well as finances, aren't avoid conjunctions in formal writing constant, the automotive company's showrooms will often be stocked with sports cars, economy vehicles, and family as well as luxury cars always available for the purpose of meeting the needs of the customers (Majid, 2017).

The fuels prices also influence the customers' demand for automobile products. It should be noted that since the late 1970s, the price of fuel started fluctuating with seasons according to the world price market. This particularly contributed to the varying degrees of customer preference according to fuel efficiency, durability, and quality as well as engine power. For instance, customers will prefer to go for crossovers which have got features of SUV, traditional car, hybrids, as well as utilizing the advantages of gasoline and alternative power sources like the electric source. The top manufacturers like Toyota make proper analysis on the customer's demand which helps them to carry out an optimal mix which helps them to keep their profits on top always (Mantovani, Tarola, & Vergari, 2017).

For the purpose of assisting the customer with automotive products purchases as well as support sales, many automotive companies usually give finance programs of low rates as well as attractive enticements, which include cash backs and cash discounts. Other means through which the automotive companies attract the customers into the showrooms include warranties, covering defects as well as repairs. Vehicle hire is another way through which some companies in the automotive industry generate incomes. Finally, automotive companies can generate revenues by selling new as well as used cars to the government and to private institutions like rental corporations (Mantovani, Tarola, & Vergari, 2017).

Cost and Expenses

III. External Environment

Political

In the current business world, there is no multinational organization that is immune to the different decisions made by the various host governments where Toyota is inclusive avoid mentioning obvious statements . The unstable market conduction that Toyota has experienced since it was established as a multinational company is as a result of consistent policies of the host country and the frequent change in duty tariff as well as smuggling. The current shifting in policies of the government is also affecting Toyota Company. For example, the in 2002, it was reported that the governments of Venezuela, as well as Nigeria, were antagonistic to the innovations of hybrid cars since they believed that the hybrid cars were fuel efficient and they were going to reduce their dependence on oil with is their key product in their economies as far as exportation is a concern (Mehri, 2018). This basically prevented Toyota hybrid market from growing in these two countries. In general terms, Toyota Company has been experiencing favorable legal as well as the political environment in the 69 countries where the company's services are offered. However, in 1964, the Company was entangled with the United States tax hike where a duty of 25% of light imported trucks was placed by the United States government. This tax was called a chicken tax, although its alliance with General Motors in 1982 to form New United Manufacturing, Inc made Toyota break up the chicken tax hence making it easy to bear (Monden, 2019).

Taxes

The corporate strategic acquisition of Toyota Auto Body in 1945, Hino Motors in 2001, as well as Toyota systems in 2019 by the Toyota Motor made its taxes to be reduced because it reduced the four publicly traded companies itself inclusive to one public traded company under the name Toyota Motors. According to Auto Alliance data, the acquisition reduced the general tax for the company by 8%, while its revenue increased from an average of 9,071 billion Japanese Yen in 2000 to 27,597 billion Japanese Yen in 2017 (Monden, 2019). The favorable tax conditions contributed to the growth of the automotive industry in a tremendously way. Also, the government of Japan has been greatly encouraging the growth of the automotive industry through the reduced taxes of the automotive parts imports as well as the free trade negotiations with other foreign countries like Canada (Zhang, 2018). The following tabulation shows the changes in revenue of Toyota Company over the last decade.

Fig 1(a) Regression Graph make sure to place the output table in an appendix…

Fig 1(b) Regression Analysis

The above Figures 1(a) and (b), shows the graphical regression analysis with the value of r-squared being 0.9264 correct to four decimal places when comparing the annual Toyota revenue change over the ten years period in relation to tax conditions. This correlation indicates that the general favoring tax environment made the Toyota Company strategic move to be successful and easier. Upon the acquisition and alliance strategic embrace of the Toyota company, its taxes were broken down through sharing among the involved companies like General Motors (Wee, 2017). This significantly increased the company revenue over the years as it can be seen from the above graphical regression analysis correlation. The 35% exemption of the automotive industry in Japan from export duties made Toyota's corporate strategic move more profitable to the shareholders as they enjoyed a home advantage as well as away advantage of the alliance. How does this analysis help uncover opportunities and threats?

Remember that you need 3-7 variables per section of the PEST and of Porter’s 5 forces…

The Social and Political Climate

The social and political climate also impacted on Toyota Company over its strategic move. In the analysis the impact of political instability, the World War II will be considered. In 1945 during World War II, the rate of sales of Toyota Company together with the production units was highly affected negatively as a result of political instability. The table below shows the unit sales of Toyota Company before, during and after War World II, that is from 1940 to 1960. How does this old data help you uncover opportunities and threats to be able to develop strategies for the future???

Fig 2(a)

Fig 2(b)

From the above regression analysis, it's clear that the annual unit of sales negatively correlates over the years. The r-squared value is -0.05 which gives a very weak correlation between the units of sales. The sales units were highest after and before the Second World War II. With a minimum unit of sales occurring from 1950-1952, this marked the climax of the Second World War II. From the regression analysis above, the rate of sales decreased by over 300% from 1940 to 1952 before surging to over 400% when the 1952 and 1960 unit of sales are compared. This indicates the vivid impact of political instability on Toyota Company. But over the years, the company has enjoyed the political stability of the host countries where their services have been diversified to. The other regions where the company experienced difficulty in attaining the sales target is in Yemen and Syria where political instability has been experienced over the years (Wang et al. 2017).

In terms of social-political factors that have to do with the diplomatic relations between two countries, Toyota Company has been a victim of circumstances in many instances when Japan happens to be not in good terms with another country diplomatically. I will consider two instances when Japan was negatively impacted. The first stark which impacted Toyota is on the poor relationships that existed between Japan and China, this made China take any product that is related to China out of favor. This came as a result of the dispute which existed between the two countries over small uninhibited privately owned islands in the East China Sea. This negatively impacted the volume of Toyota in China. Secondly, in 2014, the Toyota Company found itself in a political battle in Australia (Toma, Marinescu, & Grădinaru, 2018). This controversy was in relation to loyal commission policies which were introduced by the Australian prime minister which were targeting big enterprises where Toyota was inclusive which happened to be carrying out manufacturing activities in Australia. This instance made Toyota announce in 2017 that it will stop its manufacturing activities in Australia since the policies were just criticized and they were not in line with the international policies regulating multinational businesses (Toma, Marinescu, & Grădinaru, 2018).

Government Expenditure

As part of encouraging the growth of the automotive industry in Japan, the government has increased its spending on infrastructural development from 20,000 billion Japanese Yen in 2010 to 30,000 billion Japanese Yen in 2018. The table below shows the percentage increase in government expenditure on infrastructure development.

Fig 3(a)

Fig 3 (a)

From the above regression analysis, it's clear that the government expenditure to the infrastructure development over the years exhibits a positive correlation over the years with r-squared being 0.9862. This indicates how committed the government is toward the supporting of the automotive industry in Japan whereby Toyota in one of the companies in the automotive industry which is enjoying the benefits that result from government expenditure in infrastructural development. For easy transportation of parts as well as other materials involved in vehicle manufacturing, the means of accessing the industries is very vital. For this reason, the government is highly supporting this industry hence making it easy for Toyota Company to concentrate on its expansion and innovation plan (Toma, Marinescu, & Grădinaru, 2018).

Again, you need to analyze 3-7 variables….

Economic Environmental Impacts

The economic environment had many factors that impacted Toyota Company in its process of carrying out car manufacturing activities. Some variables which were encouraging from Toyota’s acquisition strategic embrace are the decreasing unemployment rates in Japan and other countries where the Company had its services being carried out. The general increase in the salaries of employees working in the automotive industry under Toyota Company, and both the increasing GDP as well as the continued increasing trend of the living standards of the communities surrounded by Toyota Company indicated a significant economic contribution of Toyota Company to the society (Sölvell, 2015).

Japan Unemployment Rate please check the fint of your titles and sub-titles….they should be different; if you are having trouble please use APA format in order to be consistent and have a logical format for your paper.

From the Japan national Statistics survey that was conducted from 2010 to 2018, it indicated that the unemployment rate has reduced from 15.8% to 7.3% (as of June 2018). From the findings on the report that was generated from the survey linked the decreased rate of unemployment directly to the continued expansion of the automotive industry in Japan where Toyota is the leading Company in the industry. It's important to note that the Toyota company has employed over 11.2% of the total people who are employed in Japan. This illustrates how Toyota is supporting Japan's economy either indirectly by the import duties being received to the government revenue pool via the automotive materials that they normally import from other countries like the United States, or through the direct contribution of taxes it pays to the government of Japan and the labor force which it acquires from the Japanese which reflects on how it helps in reducing the unemployment rates in Japan (Sölvell, 2015). The tabulation below shows the statistics that were retrieved from the Japan National Statistics records on the trend in the unemployment rates in Japan.

Fig 4(a)

Fig 4(b)

The above figures show a regression analysis of the unemployment rates trend in Japan and how the automotive industry more especially Toyota is contributing towards curbing the challenge. From the regression graphical analysis, it's clear that the unemployment trend has a negative correlation from 2010 to 2018. The r-squared is 0.976, which indicates that the unemployment rates in Japan are approaching zero rates which are the desire of every country. According to the Japanese Statistics National report, Toyota contributes up to 53.21% of the unemployment reduction in Japan (Sisson, & Elshennawy, 2015). This increased in the rate of employment depicts the success of the corporate strategy of Toyota of acquisition, the acquisition led to the expansion of the company in the Automotive industry, which further led to the creation of many job opportunities for not only the Japanese citizens but also to the rest of the world (Simão, & Lisboa, 2017).

On the economic benefits to Toyota Company, there are many opportunities which are specifically beneficial to Toyota as a company and over the years, the company has exploited these economic opportunities which have helped it to attain its targets besides being one of the global leading automotive companies in the recent times. Some of these opportunities include weaker Yen when compared to United States Dollar, the rapid expansion of developing nations, as well as the steady expansion of the United States Economy. The company has highly benefited in terms of revenue growth over the years now.

Based on the weakness of Japan’s Yen in relation to the Dollar, Toyota has for decades used the Yen weakness as an opportunity to improve its automotive products exports. The company has also for some time now used the stability and gradual change of the United States economy to grow its businesses in the United States. No wonder the United States is the second largest market of Toyota Products after Japan (Simão, & Lisboa, 2017). Finally, the rapid growth of developing countries around the world more especially in African countries have been used by Toyota company over the decades as an opportunity of improving its revenue. The company increases its revenues through increased supply of its products to these countries as a result of high customers’ needs of their products including the governments of these developing countries. It’s through this exploitation of the opportunities that are present economically that the company has maintained its top position in the Japan automotive industry and the third in the world automotive industry. The table below shows the trend in the company's global exports for the last decade (Rüttimann, & Stöckli, 2016).

Fig 5 (a)

Fig 5(b)

From the above regression analysis if the Toyota Company global exports for the last decade, it's clear from the regression analytical graph that the company's exports are increasing with time. The r-squared value of 0.6555 indicates that the Company’s acquisition corporate strategy is successful since it’s through the acquisition embrace that the company is able to meet the demand of its customers worldwide. It’s important to note that through acquisition, the units of production of the Company increased, hence its ability to meet the world demand (Rüttimann, & Stöckli, 2016).

Social Cultural Impacts

The social-cultural factors in the market environment have got many impacts either positive or negative, as far as Toyota Company development is a concern. Due to the fluctuating prices of fuel in the, more customers of automotive products usually choose small displacement engines because of its high efficiency. From the Toyota sales record, for instance, around 140,000 Chevrolet Cruze which has got small displacement engines were sold for only six months in 2010. This tendency of customers inclining their desire to small displacement engine vehicles usually influences the manufactures to increase their small displacement engine production vehicles. For example, in the current market, General Motors, as well as SAIC, are the producers of the small displacement engines vehicles (Rüttimann, & Stöckli, 2016).

The Toyota Company has got a projection of starting to manufacture the small displacement engine car types in China. This is attributed to the increasing purchasing power of cars from the middle-class category in China. With the current population of middle-class category individuals in China, it's projected that China will be the leading or the expanding car market globally. According to statistics, 23% of China's population represents the middle-class individuals, and with the current 1.386 billion population of China, 23% represents around 318.78 million people. This population is almost equivalent to the United States population, and which is the second largest Toyota products market. Therefore, it shows that if this China market will be efficiently utilized by Toyota Company, China will be the leading market for its automotive products (Prasad, & Warrier, 2016).

Also, considering the wealth of individuals in Beijing only, it clearly indicates that more luxury cars will be needed in China. For instance in Beijing only, there are more than 8,900 billionaires as well as more than 144,000 millionaires. Since this is just a sample of one city in China, it means that there are many more tycoons in China who will be in need of luxury cars, with an assumption that every tycoon will be in need of more than one luxury car, it makes China part of the region which will make the acquisition corporate strategy more successful because of the mass production that will be needed. The table below shows the unit sales of the hybrid cars of Toyota Company globally according to regions (Prasad, & Warrier, 2016). This information was retrieved from the annual reports of the company from 2014 to 2018.

Fig 6

From the regression graphical analysis above, it’s clear that the number of cars sold in every region of the world is different depending on the testes and preferences of the customers. The r-squared = 0.986 which shows the correlation that exists in the selectivity of the customers from various regions of the world depending on the testes as well as the social class of the customers (Prasad, & Warrier, 2016).

Lifestyle Change: Many individuals are changing their status in the recent times due to issues like education and even marriages which forces that they adopt cars of a specific design depending with the lifestyle and status of an individual. The sudden change in the lifestyle of an individual creates new demand for a certain design and class of a car. There has been an increasing trend in the demand for sports cars more especially in the population with age bracket ranging between 20 to 30 years. The below graph depicts the demand rate of sports cars according to the Toyota sales records.

Fig 7

The above graphical analysis shows the effect of the lifestyle changes as it relates to the age range and the car version preference for four years. From the graph, it’s clear that the lifestyle changes between ages 21 to 30. This is also the period during which the needs of car version changing takes place. This is important to especially to Toyota Company in determining the capacity of the type of its products in various parts of the world. In this case, the company needs to study the demographic distribution of a given region before determining the type of cars as well as the quantity to be manufactured (Palmer, Tate, Wadud, & Nellthorp, 2018).

Technological Impacts

Technology is the main factor being embraced by every organization that needs to be competitive in the market besides increasing its revenue, Toyota has not been left behind. The technological environment plays a critical role in the acquisition of the corporate strategy of the company. Some variables like information technology as well as the internet have been greatly used in facilitating the success of the company's corporate strategic move.

Increase in the Internet Use: Toyota is an innovation center, as a result of this, almost every plant of Toyota has got a research center where experts as well as engineers analyses various tests which are aimed at coming up with new versions and models of Toyota hence enhancing expansion and growth. In searching for relevant information, the computers in the research room require to be connected to the internet. In analyzing the research results, the online analyzing software is of great importance in facilitating the process. This makes it mandatory that the internet is used to enhance the connection. Also in making orders or confirming delivery, the internet must be involved (Palmer, Tate, Wadud, & Nellthorp, 2018).

Information Technology: it’s important to note that Toyota was the first company to come up with a hydrogen car. With the help of information technology, the company has directed over 30 billion Japanese Yen annually on research and development, with the aim of looking for a way of offering vehicles with an alternative powering mechanism. The only way an alternative vehicle powering mechanism can be offered in the current times is through the use of electric power (Palmer, Tate, Wadud, & Nellthorp, 2018). With the current hybrid Toyota cars, information technology is playing a major role more especially in the integration of the electronic system more especially on the sensors as well as a remote system of the vehicle. Currently, there are vehicles which make use of GPS trackers which purely uses information technology principles. Below is an analytical and regression analysis of internet use in Toyota Company since 2010.

Fig 8(a)

Fig 8(b)

From the above regression analysis, it's clear that the internet user has a positive correlation with the number of years starting from 2010. The r-squared = 0.9934 which indicates a strong correlation and a sign of the highest degree of the embrace of internet use within the Toyota plants worldwide (Mutingi, Monageng, & Mbohwa, 2015).

The managers of Toyota Company make use of the Porter Five Forces as a strategic management tool in analyzing and understanding how the five competitive forces in the market affect the profitability of the company. Either they use this tool in developing a strategic move like the one being used by Company that is an acquisition to enhance the competitive advantage of Toyota Company besides enhancing its long-term profitability in the automotive industry (Jindal, Sarangee, Echambadi, & Lee, 2016). By making use of the acquisition corporate strategic move, the company has always maintained a healthy competitive advantage in the automotive industry which proves the success of the strategic move of the company. This can be ascertained further via the application of the five forces of Porter as follows. Make sure to first identify all the industries the company competes in…. then, make sure to analyze each of those industries using Porter’s 5 forces model…. Remember that the result of the analysis of each industry should be it’s level of attractiveness so that later you can make strategic suggestions…

With reference to Porter's article in the Harvard Business assessment (2009), Porter indicates that the automotive industry in the current times faces an extensive competition influenced by the five market forces which have contributed to the limiting of attractive returns for the competing companies in the industry (Jindal, Sarangee, Echambadi, & Lee, 2016). This has impaired the entry of new competitors in the market, hence the reason as to why there are few corporations in the automotive industry globally. Porter states that the most benefiting companies in the industry are those which have developed a clear strategic move like Toyota; this is the reason as to why Toyota is in a position acquiring many companies in the industry through its acquisition strategy. With respect to the Japanese National Budget Control Council, the return on invested capital for the automotive industry is averagely 15.5% to 17.5% annually. The analysis that was done on the automotive industry in February 2018, the return on invested capital for the automotive industry has an increasing trend, but only 60% of the companies in this industry contribute to this increasing trend (Jindal, Sarangee, Echambadi, & Lee, 2016).

In consideration of Toyota Company, its 3rd quarter of 2018, it experienced a percentage hike on its return on invested capital of 17.92% which is well above the industry average, and this happened to be the highest return on investment of Toyota Company over the last three years. This was attributed to the embrace of its new acquisition strategy which enabled the company to produce in large units hence meeting the demand of the customers which translated to increased sales for the company (Jindal, Sarangee, Echambadi, & Lee, 2016). This further acted as a confirmatory for the success of its acquisition corporate strategy. As per the United States Bureau of Economic Analysis, it’s projected that for the financial years 2020 to 2025, the automotive industry will contribute between 2% to 4.4% of the total average world gross domestic product.

The five Porter force that will be considered in this discussion includes, the threat of new entrants, bargaining power of suppliers, bargaining power of buyers, the threat from substitute products, and rivalry among the existing players. This model is usually a holistic strategy framework and it took the strategic decision away from just analyzing the present competition. It mainly focuses on the Toyota Company can create a sustainable competitive advantage in the automotive industry. It must be noted apart from the Toyota Company management applying this Porter model in developing strategic position within the automotive industry, it can also apply it in exploring some of the profitable opportunities in the sector as far as the customer goods is a concern (Jindal, Sarangee, Echambadi, & Lee, 2016).

Fig 9

Specifically what are the barriers to entry?

The new entrants in the automotive industry are usually more of innovation that is they come up with new ways of operating in the market. These new entrants also come into the industry with price leading strategies. This means that Toyota Company is put under market challenge by these corporations through the low pricing strategies, reduced costs, as well as the provision of new value schemes to the customers. Examples of these companies include Infiniti, Datsun, Kawasaki, Subaru and many more others who are entering the market. The pressure that they put on Toyota implies that it has to control all these challenges besides creating efficient barriers which can safeguard its competitive advantage in the industry (Irawan et al. 2018). The following table shows the market share of Toyota in comparison to some of these new entrants which are showing a sign of effectively competing with Toyota Company.

Data derived from Toyota, Datsun, Subaru, and Kawasaki 10-K reports (2016 & 2018)

Fig 10

From the above market share analysis, it’s clear that although Toyota Company is the leading in the market share that isn’t relevant…the question is ‘what does the future look like for the automotive industry? what are the more profitable cars or parts?’ you are trying to understand where to invest money in this market…, the new entrants in the market are posing a some challenges to it which have lead to its market share in 2016 to be reduced from 69.15% to 63.81% in 2018 while the rest of the companies which are classified under the new entrants category exhibited a significant increase in the market share percentage over the two considered year. Therefore, this indicates that even if the new entrants into the market may seem to be insignificant, they must not be underrated by Toyota Company, but instead it should look for the way to counter their competition in the market, for instance, applying their acquisition strategy to quench their impacts in the market (Irawan et al. 2018).

Industry Growth Rates

In 2010, the Auto Alliance reported that the automotive industry had an increase of around 2.5% of the world industry sales. Out of this, Toyota contributed 0.8% of this sale increase as a result of new market explore in the developing countries besides using the opportunity of the gradual growth of United States economy and the weakness of the Japanese Yen over the United States dollar. Due to the higher market share that Toyota enjoyed over the periods, the new entrants took it as an opportunity to venture into the automotive industry. As a result of this, the industry was observed to grow at a rate of 2.8% in terms of production units in 2017 with the sales rate increasing by 2.7% which is 0.2% more compared to the growth rate of 2010 (Irawan et al. 2018). You don’t care about Toyota!!! You are interested in analyzing/assessing the industry….

However, in the 2017 sales rate, Toyota contributed only 0.6% of the total of 2.7%. This was a result of new entrants into the automotive industry market hence posing competition pressure to Toyota. Through the application of acquisition strategy, this year 2019 Toyota has acquired Toyota systems which were one of the new entrants into the automotive industry. This acts as a mean of countering the upcoming competition in the industry (Itoh et al. 2018). According to the Auto Alliance sales projection of the top companies in the automotive industry, Toyota is showing a sign of increasing its sales significantly this year as compared to last year. This shows how successful the acquisition strategy of the company is.

The threat of Substitute Products

The automotive industry is one of the industries which don't suffer from the competition of the substitute products in the market. Therefore as far as this Porter force is a concern, it doesn't have much impact on Toyota Company. An individual might wonder why the automotive industry is not facing a challenge from the aviation industry, the answer is simple, and it's that, the aviation industry is an entity of its own as it is the automotive industry. Other products that can offer a substitute threat to the products of this industry are the motorbikes. But again, since the motorbikes are under the automotive industry, each automotive company has got a department that is in charge of motorbikes production. Therefore, motorbikes cannot be used as substitutes of the products of the automotive industry (Itoh et al. 2018).

The use of trains has been a substitute product to the vehicle but it hasn't so far shown any threat to Toyota product. The disadvantages of the train are that, it's slow and not efficient as far as environmental conservation is a concern because its engine is diesel powered which upon combustion, it emits toxic gases to the atmosphere like Carbon dioxide which contributes to ozone layer depletion which further leads to global warming. The fact the train is a public mean of transport, it's not reliable hence not desired by many customers. Also, the fact that a train has got only strategic terminals, it implies that cannot be used for point to point delivery like public transport vehicles and personal cars (Gangidi, 2019).

The electric train, however, posses some little threat as far as substitute products are a concern due to its fast speed, but the only relieve for Toyota on this is that electric trains are very expensive project to be undertaken by the government and that it's not much adopted or embraced by governments more especially on the developing nations (Gangidi, 2019). The table below shows the number of passengers who preferred to use the train for transportation purposes compared to those who preferred private car and the public vehicle in a survey that was carried out in Japan from March 24rd 2018 to April 8th, 2018 by the Japanese Transport Agency Board.

Fig 11

From the figure above, it’s evident that most individuals preferred the use of private cars, which represented 66.89% of the total individuals who were interviewed during the survey. The second category was those who prefer having transportation means using a public vehicle which represented 24.98% of the total individuals who were interviewed. Then the last category was those who preferred to use the train as a means of transportation which represented 8.13% of the total individuals who were interviewed (Futagami, & Helms, 2017). From this analysis, it clearly shows that may it be diesel or electric train; most of the customers prefer automotive products more especially from Toyota Company which makes the threat from the substitute products to be somehow negligible. But with the current strategy of Toyota, these threats from substitute products have not been neglected since the company is always both service and product-oriented which helps it in understanding the core need of its customers more than what the customers are buying which finally enables it to increase the switching cost for their customers (Futagami, & Helms, 2017).

Bargaining Power of Supplier

The higher percentage of companies in the automotive industry Toyota inclusive purchases raw materials like vehicle airbags from many suppliers. This force appreciates the fact that the more powerful the seller becomes in relation to the buyer, the more influence the seller has. Through advantageous pricing, limitations in the products and services quality as well as shifting some costs to the buyer more especially those that are related to transportation, the influence enjoyed by the seller, in this case, can be used to reduce the profits of Toyota Company as a buyer in the market (Pouryeganeh, 2015).

From the market standings of Toyota Company currently, it’s controlling over 50% of the automotive industry in Japan and about 10% of the world market. This means that if the suppliers of Toyota Company try to exercise their influence of bargaining power or advantage pricing in to reduce the profits of Toyota, the Company has the obligation to change the type of supplier who will be favorable in terms of trade between the two parties (Futagami, & Helms, 2017). For this reason, the suppliers tend to stick to the terms of trade according to the agreement that they might have made with Toyota to avoid losing the largest market of their products in the world. For instance, Takata suppliers made a big mistake of supplying the Toyota Company with malfunctioning vehicle airbags which made Toyota and other Companies in the automotive industry lose billions of dollars for such a single mistake. Today, the Takata suppliers are out almost out of the market because most of the automotive companies shifted to other suppliers in the market. The following tabulation shows the selling power of the top automotive parts suppliers in the first quarter of 2019 automotive industry according to global market standings.

From the above statistical data analysis, the following regression can be performed which can be a clear indication of the selling power of the various automotive companies in the world.

Fig 12

From the above statistical regression analysis, it indicates that Robert Bosch GmbH. Postfach 106050 had a higher selling power as compared to its top competitors with a market share of $27.83 billion in the first quarter of 2019. The r-squared is 0.851 which shows a strong correlation between the suppliers and the sales in the market. This selling power of the company to some extent can be attributed to its threatening to forward integrate to the customers where the sellers are left with no option other than to adhere to the terms and conditions of trade between the buyers and them that is the suppliers (Firdaus, Amar, & Nohong, 2019). The Toyota Company has got mechanisms in place which assists in tackling the bargaining power of the suppliers. These include the presence of already created an efficient supply chain with many suppliers, which mean that it doesn’t depend on one supplier. Secondly, through the experimentation with product designs by utilizing various materials which help the company to shift to another material in case the price of one material goes up, and finally, the company has developed dedicated suppliers whose businesses depend upon the firm (Firdaus, Amar, & Nohong, 2019).

This is also another of Porter's force which acknowledges the fact that, if the buyer is more powerful in relation to the seller, and then the buyer will tend to be more influential in the market. And that this influence can reduce the profits of the seller via a reduction in the prices of the seller products and services (Firdaus, Amar, & Nohong, 2019). The profits can be reduced through increased favors to the buyers while trying to entice them to buy the sellers’ products and services, for instance, increased customer services as well as increased order deliveries to the customers. However, Toyota Company has never experienced the challenges of buyer power because of its diversified number of customers all over Japan, North America, Asia and other regions in the world. This allows it to be more leeway, making it possible to ignore customer requests which are impossible to be undertaken (Firdaus, Amar, & Nohong, 2019). For instance, the customer may request the product to a country like Syria which is in war throughout. The Company can look at the quantity of the vehicles requested, their return on investment capital against the risks involved in delivering its products to such a country and deny the other under conditions that if the customers can import the company's products without involving the company in any of the operations, it will be fine with the company. The company takes such measures not because it is satisfied with the customers, but because it just avoids unnecessary risks (Filippini, & Forza, 2016).

Also, due to the diversification of the company's customers, it doesn't depend on one customer to purchase its products; this gives Toyota company the opportunity to refrain from giving favors to the single customer as a strategy of customer retention (Filippini, & Forza, 2016). The fragmented customer base also allows more flexibility for the company to ignore difficult customer requests. The following statistical analysis shows the diversification of Toyota customers in Japan, the United States, Asia and the World which protects it from the buyer bargaining power.

The above information can be plotted in the statistical regression analysis graph below. On average, Japan is the leading in terms of customer distribution of the company with 83.7%, of the Toyota customers, United States is the second with 72% of the Toyota customers index in the US, the third in Asia, then finally the world market (Filippini, & Forza, 2016).

Fig 13

Averagely, from the above regression graphical analysis, Toyota Company has got 54.3% market advantage of the automotive industry a situation which exonerates it from the lowering profits a situation that is forced by buyer power as well as the backward integrate of buyers (Elbert, 2018).

Differences between Competitors make sure to analyze number of competitors over the past decade, their market share, sales, profitability and how these trends have impacted overall industry profitability…. That will allow you to see the attractiveness and where you might suggest they invest money to better position themselves for the future

As a result of low switching overheads between the top automotive industry competitors, the customers tend to exercise a higher amount of bargaining power when it comes to their selection of choices among the potential competitors. The Companies which are in the top competitive position in the automotive industry rely on the pricing power, besides the innovations in the industry in differentiating themselves from their potential competitors in the market (Elbert, 2018).

There are however various ways through which Toyota is tackling the cases of bargaining power of buyers. Some of these ways include building a diversified base of customers which helps in curbing the bargaining power of customers besides providing an opportunity to the company to restructure its total revenue. Secondly, the company is gradually innovating new products which help in limiting the bargaining power of customers and finally, the continuous introduction of new products into the market will help in reducing the defection of existing customers of Toyota competitors (Edeling, & Himme, 2018).

Competitive Rivalry in Automotive Industry

The intensive competition which exists in the automotive industry usually tends to drive down prices besides decreasing the overall profitability of the company. From the Auto Alliance, there are 7 main companies competing with Toyota Company in the automotive industry. These companies include Volkswagen Group, Daimler AG, BMW, Honda, General Motors, Tesla Inc, and Ford Company (Edeling, & Himme, 2018). Although there are other companies approaching 80 in the automotive industry in the world, these 7 are the one offering direct competition to Toyota Company. Together, these companies raise over $300.6 billion annually between there estimated 3,480,700 employees across the world. In terms of employees, Toyota has got over 1,268,000 employees as per the 2018 analysis and it’s ranked at the top of all the competitors with the top 8 average number of employees being 435,088 (Debnath, 2015).

Considering the revenues of the company and its competitors, the following analysis table can be generated.

From the above financial information of the following regression graphical analysis can be done concerning the market competition in terms of revenue of Toyota Company.

Fig 14

Fig 15

It's clear from the above statistical analysis that, the topmost competitors for Toyota Company are Volkswagen Group and Daimler AG automotive companies as per the regression analysis above with annual revenues of $268.6 billion and $190.8 billion respectively with Tesla Inc. being the least competitors among the 8 considered automotive companies with $121.461 billion (Debnath, 2015). Volkswagen Group and Daimler AG automotive companies have been presented as the major competitors due to their time to time innovations on issues to do with automotive services development as well as their relative competitive costs as far as their services in the industry are a concern (Debnath, 2015). Some of the ways through which Toyota tackles the intense rivalry among the existing competitors in the industry include the building of sustainable differentiation, building of scale to enhance better competition, and partnering with the potential competitors to expand the automotive industry market size instead of competing for small markets.

V. SWOT Analysis

Toyota Company is a vital player in the automotive industry; it has got several strengths which directly defines its powers in the industry which includes the diversification of its services around the world (Collins, 2017). Toyota Company has got both tangible and intangible assets. For instance, Toyota has diversified its operations to 69 economically stable countries in the world which appears like the hotspots through which it serves other customers in the world. As a result of Toyota's innovation and self-growth plan, these diversified plans are anticipated to dramatically increase to 80 plants in 80 countries around the world (Collins, 2017). The penetration of Toyota Company into the developing countries as well as developed countries market has greatly contributed to its strength in the industry. It’s also good to note that despite the strengths of Toyota in the market, it has gone some weaknesses, opportunities, as well as threads within the industry as they will be discussed below.

Strengths of Toyota in the Industry

Strong Market Position and Brand Recognition

As stated in the above introduction if it was already stated there is no need to state again…, Toyota Company has got a strong market in terms of sales and competition besides customer satisfaction in various nations in the world. The market share for the company’s products that is Toyota and Lexus brands in Japan was 46.5% in the financial year 2011/2012. In North America, it enjoyed a market share of 15% even to the present times. Its Asian market is 18.9% which excludes Japan and China, and a 12.8% share in Europe. Currently, Toyota Company is the leading in the world automotive industry market followed by Volkswagen from Germany (Collins, Muthusamy, & Carr, 2015). In the Chinese market, Toyota Company has got above 9% market share with more than 14% share in Oceania, Africa, and Middle East markets. In Central and South America, the Company has an 8% and 9.5% market share respectively. This strong market share allows the company to have a significant competitive advantage in the market which further helps it to record higher sales intensification in the local and multinational markets. The below analytical graph illustrates the worldwide automotive companies and their positions in the world markets and sales volumes.

Fig 16

This was retrieved from Auto Alliance Industry Market Analysis Records. It's clear that Toyota brand is the most recognized in the automotive industry market followed by the Volkswagen brand. It must be noted that the success of the Toyota brand in the world is attributed to customer awareness, brand perception, quality research with lots of innovations in the products of Toyota Company, besides overall customer satisfaction besides worldwide Company reputation. This shows the high loyalty to the Toyota Company products (Collins, & Muthusamy, 2015).

Strong Focus on Research and Development

The Toyota Company has got a strong focus how did you measure ‘strong’on research and development in the automotive industry which is directly related to the innovations in the industry. This is aimed at expanding the company’s product portfolio besides improving the functionality, quality, as well as standardization of all its products. The research and development focus of Toyota is also specifically meant to develop new products besides increasing the efficiency of the existing ones. The research and development of Toyota Company are being carried out in 14 designated locations in the world. This strong focus on research and development have greatly assisted the Toyota Company in coming up with newer features which are incorporated to its products already in the market besides bringing the new technologies in varied sections (Chiarini, & Vagnoni, 2015). The innovative products which are made as a result of the company's focus on research and development help the Company to be the leading in terms of sales in the market since the customers always like newly products in the market. I see no analysis in this section…you need to measure R&D, patents, etc relative to others in the industry so that you can determine if this is a strength of the company or now…..

Extensive Production and Distribution Network

Toyota Company has got a large production as well as a distribution network. That is why it's a multinational company. Its production besides its market is distributed globally hence a large network of Toyota. In Japan and the world, the company has got more than 50 manufacturing companies which are tasked with the production of automotive related parts as well as components (Camuffo, & Wilhelm, 2016). There are also distribution hubs of these produced components in various countries worldwide. For instance in financial year 2017/2018, Toyota produced 13,875,398 vehicles cumulatively both in Japan and outside Japan. Of these, 7,789,504 were produced in Japan and 6,085,894 vehicles outside Japan. Despite the fact that there might be diversification risks of the company’s manufacturing plants, its large pool of customers through its larger distribution networks helps the company to boost its incomes.

Weaknesses of Toyota Company in the Automotive Industry

Declining Sales in key Geographic Segments

For the last decade, Toyota Company has witnessed a reduction in its sales in key areas portions. In the financial year 2011/2012 for instance, there was a reduction in the Company’s sale across North America, Asia, and Europe besides other regions in the world which are the key markets of the company’s products in the world (Brunner, 2017). The areas where the declines were experience actually contribute to 60.8% of the total company’s sales. This continuous decrease in the sales of the company's products in its key selling portions puts pressure on the profits of the company which can generally lead to a negative impact on Toyota's Income.

Products Recalls Could Affect Brand Image

In recent times, Toyota Company has conducted a number of product recalls which might negatively impact the company’s products in the market. From the company annual reports of 2011, the company recalled about 111,000 models of Toyota and Lexus brands of cars as a result of damaging elements of the substrate as well as the shutdown of hybrid systems. During the same year, the Toyota Company recalled over 182,000 vehicles in Japan following oil leakage as well as abnormal noise (Bhatia, 2016). This led to the company's entrance into the government records over the investigation of the recall of these vehicles. The investigations were conducted through the National Highways Traffic Safety Administration. The company was subjected to a significant penalty that affected its operational margins besides ruining the reputation of the company on the face of the customer.

Poor Resources Allocation in Relation to Peers

Toyota Company has got a return on assets and return on equity relatively low as compared to other companies in the automotive industry. Companies like Honda as well as Nissan Motors has got a higher return on equity compared to Toyota since Honda has 4.8%, with Nissan Motors registering an ROE of 8% but Toyota registered only 2.7% of ROE (Barron, Pereda, & Stacey, 2017). This indicates that the Toyota Company might not be using the stakeholders’ resources as required which implies that it’s not generating high returns for its stakeholders. This poor allocation of stakeholders’ equity might hurt the stakeholder’s value and confidence in the long term.

Opportunities of Toyota Company in Automotive Industry

Glowing Global Automotive Industry

The economic downturn following the Euro Crisis negatively impacted the automotive industry in the year 2008 and 2009. The strong ricochet however of 2011 which continued to 2012 have highly revived the automotive industry which was in its lowest state economically. As per the MarketLine, the world automotive production industry rose by 9% in the 2012 financial year. This recovery of the automotive industry, therefore, provided Toyota Company since then a great opportunity to acquire more customers which have to lead to and will always ensure that Toyota Company has an increased income (Ariffin, & Sahid, 2018).

Strong Outlook for the Global New Car Market

Although the automotive industry experienced somehow a gradual growth from 2008 to 2012, the automotive market industry experienced an acceleration in 2012 to 2016 periods. From the market projections, the industry acceleration will always continue to increase in the same trend, thus a strong outlook of the global automotive industry market together with the new innovations of Toyota Company and products launches also provides a growth opportunity for the company as far as the market is a concern. There is also opportunity in the continuous growth of automotive products in the developing countries markets.

Threats of Toyota Company in Automotive Industry

Intense Competition

The global automotive industry market is highly competitive; this creates pressure on Toyota Company from various manufacturers in the industry. It’s projected that as a result of continued globalization and consolidation in the global automotive industry, the competition will be intensified further with new entrants into the industry as well as the establishment of new features of the products in the industry. Although Toyota has highly invested in innovation, competition from other automotive companies is also projected to be very high. Some of the features that are the likely key determinants of the tomorrow automotive market include fuel efficiency, pricing, the liability of the products, as well as safety measures. This projected competition may lead to lower vehicle unit sales as well as increased stocks which will negatively impact the Toyota Company financials (Adjei, & Adjei, 2017).

Fig 17

From the above automotive industry market competition analysis, it shows a stiff competition in the market. Although Toyota is the leading in the market share, it must embrace innovations as well as enacting strategic moves which will enable it to maintain its top position in the industry.

Appreciating Japanese Yen is also a Major Concern

The fluctuations in foreign currency exchange rates are one of the sensitive areas of great concern of Toyota Company. This is primarily targeted fluctuations in the value of Japanese Yen, the United States Dollar as well as Euro (Aoki, & Wilhelm, 2017). The continued strengthening of the Japanese Yen against the United States Dollar besides the continuous fluctuations in the foreign currencies is of a great threat to Toyota Company for this will have an adverse impact on the Company’s reported operating results which further impacts the company valuation.

In conclusion, Toyota Company specializes in automotive products starting from parts to the final products which are vehicles of various models. This company enjoys a healthy automotive industry market due to its continuous innovations besides being customer oriented. Their products depict highly advanced use of technology. This has resulted in a preference of customer across the work on Toyota's products. Currently, Toyota is the leading in the automotive industry in the world, with its main market being Japan, North America, and Asia. Like any organization which is in business, Toyota Company faces some environmental forces which impact its operation positively or negatively as discussed above.

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SUMMARY OUTPUT

Regression Statistics

Multiple R 0.638382169

R Square 0.407531794

Adjusted R Square 0.322893479

Standard Error 3400.830789

Observations 9

ANOVA

dfSSMSFSignificance F

Regression 155688373.655688373.64.814979990.064269

Residual 780959550.411565650.06

Total 8136647924

CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%

Intercept -934744.4428509.7777-2.1813840630.06550672-194800978520.21-194800978520.21

1942481.7219.52268352.1943062660.06426892-37.38871000.789-37.38871000.789

RESIDUAL OUTPUT

Observation Predicted 10000Residuals

11680.45319.6

22643.8356.2

33607.2-1151.2

44570.6-2880.6

55534-3967

66497.4-2810.4

77460.8-504.8

88424.21568.8

99387.64069.4

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.993076881

R Square 0.986201692

Adjusted R Square 0.983901974

Standard Error 446.7030902

Observations 8

ANOVA

dfSSMSFSignificance F

Regression 185571488.185571488.1428.8359358.25E-07

Residual 61197261.905199543.6508

Total 786768750

CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%

Intercept -2850146.429138855.1092-20.52604658.6966E-07-3189913-2510380-3189913-2510380

20101427.38095268.9277832620.708354248.2525E-071258.7211596.0411258.7211596.041

RESIDUAL OUTPUT

Observation Predicted 20000Residuals

120316.66667183.3333333

221744.04762-744.047619

323171.4285728.57142857

424598.80952401.1904762

526026.19048273.8095238

627453.57143446.4285714

728880.95238-280.952381

830308.33333-308.3333333

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.983925391

R Square 0.968109174

Adjusted R Square 0.962794037

Standard Error 0.499062216

Observations 8

ANOVA

dfSSMSFSignificance F

Regression 145.3648214345.36482143182.1418841.03E-05

Residual 61.4943785710.249063095

Total 746.8592

CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%

Intercept 2104.181071155.130644913.563929129.963E-061724.592483.7721724.592483.772

2010-1.0392857140.077006972-13.495995111.0259E-05-1.22771-0.85086-1.22771-0.85086

RESIDUAL OUTPUT

Observation Predicted 15.8Residuals

114.17750.7425

213.138214290.061785714

312.09892857-0.448928571

411.05964286-0.699642857

510.02035714-0.210357143

68.981071429-0.051071429

77.9417857140.208214286

86.90250.3975

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.801792978

R Square 0.642871979

Adjusted R Square 0.59185369

Standard Error 6860474.463

Observations 9

ANOVA

dfSSMSFSignificance F

Regression 15.93071E+145.93071E+1412.60081420.009347

Residual 73.29463E+144.70661E+13

Total 89.22534E+14

CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%

Intercept -63093382091783767924-3.5370846870.00950697-1.1E+10-2.1E+09-1.1E+10-2.1E+09

20093143965.932885683.44483.549762560.009346721049657523827410496575238274

RESIDUAL OUTPUT

ObservationPredicted 12476390Residuals

110033315.394750986.615

213177281.324113307.683

316321247.25-16301780.22

419465213.184098572.818

522609179.112295710.886

625753145.05892177.9532

728897110.98-894765.9791

832041076.91446925.0886

935185042.84598865.1562

SUMMARY OUTPUT

Regression Statistics

Multiple R0.996703

R Square0.993417

Adjusted R Square0.99232

Standard Error0.010612

Observations8

ANOVA

dfSSMSFSignificance F

Regression10.1019720.101972905.4458.94E-08

Residual60.0006760.000113

Total70.102648

CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%

Intercept-98.61673.298775-29.8959.29E-08-106.689-90.5449-106.689-90.5449

20100.0492740.00163830.090618.94E-080.0452670.0532810.0452670.053281

RESIDUAL OUTPUT

ObservationPredicted 0.45Residuals

10.4729170.007083

20.522190.00781

30.571464-0.00146

40.620738-0.01074

50.670012-0.01001

60.719286-0.00629

70.76856-0.00356

80.8178330.017167

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.96249655

R Square 0.926399609

Adjusted R Square 0.91719956

Standard Error 1649.746116

Observations 10

ANOVA

dfSSMSFSignificance F

Regression 1274057982.9274057982.9100.69507458.2715E-06

Residual 821773297.992721662.248

Total 9295831280.9

CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Lower 95.0%Upper 95.0%

Intercept -3649758.406365714.5307-9.9798014568.61727E-06-4493097.63-2806419-4493098-2806419

Year 1822.612121181.631069610.034693548.27146E-061403.770122241.4541403.772241.454

RESIDUAL OUTPUT

ObservationPredicted Annual Net Income (billion Japanese Yen) Residuals

111869.345452583.654545

213691.95758871.0424242

315514.5697-538.569697

417337.18182-1447.181818

519159.79394-2203.793939

620982.40606-1339.406061

722805.01818-1049.018182

824627.6303304.369697

926450.242421146.757576

1028272.854551672.145455