Global Business Marketing Why Do You Think

Global Business Marketing

Why do you think Toyota had waited so long to move much of its manufacturing for European sales to Europe?

One possible reason why Toyota was so hesitant is because: the euro was a new currency that had been trading for only two years. This was problematic for the company, as they could not make decisions about production, due to the fact that the euro was untested against the major currencies. At the same time, Toyota wanted to see how any possible EU integration would work. As many of the different economists and proponents claimed how it would create a new trading zone. Yet, a number of the countries were divided and this was the first attempt, to unite all of the European nations. As a result, the company would limit the overall amount of production in the European countries to: only 25% of all vehicle sales. ("Toyota's European Exposure," n.d.)

A second possible reason, is because Toyota was learning the new regulatory structure and how the market was working. This was challenging during the first couple of years, because the company did not know if a free trade zone would actually exist. As there were fears that many countries might not abide by their agreements. This is due to the possible adverse effects that some of the more prosperous nations could face from: liberal immigration and trade policies. At which point, it was possible that the larger countries may have increased pressure, to abandon the principals of the EU. In this case, the company wanted to take a wait and see approach, by watching, how this kind of situation would develop over the course of several years. ("Toyota's European Exposure," n.d.)

When you step back and analyze these two different factors, it is clear that they would force Toyota to maintain the status quo. As they did not want to make a significant amount of investments in: plants and equipment (only to see Europe become divided once again). In this aspect, the company felt that it was prudent to: monitor these events and then determine what would be the best strategy in the future. ("Toyota's European Exposure," n.d.)

If the British pound were to join the European Monetary Union would the problem be resolved? How likely do you think this is?

No. The reason why the problem would not be resolved is because the euro was trading as a new currency. This meant that it would take time, integrating all of the different central banks, in utilizing this form of currency. If the British pound were to join the European Monetary Union, this would create even more challenges (as the Bank of England must follow the same policies and procedures). It is also important to note, that the U.S. dollar was in a significant long-term bull market. This would have an impact upon the euro, with many different investors flocking to dollar denominated assets. As a result, even if the British pound were to be integrated into the European Monetary Union, it would have little effect upon the weakness of euro. This is because these two different factors would have an adverse impact upon the currency (during the first five years that it was trading). ("Toyota's European Exposure," n.d.)

It is unlikely that any kind of integration will take place. The reason why is because any move to integrate the British pound, would create tremendous amounts of political debate. Where, a number of conservative and moderate politicians would call for these kinds of actions to cease (as they feel it interferes with Britain's national sovereignty). A second issue that would be created is the fact the British pound has a history, of playing a role as one of the major currencies of choice. Given the fact that euro is so relatively new, means that this would prevent the pound from being integrated. ("Toyota's European Exposure," n.d.)

What measures would you recommend Toyota Europe take to resolve the continuing operating losses?

The first thing that Toyota Europe should do is: to conduct a survey among consumers, about what kind of vehicles they are most interested in purchasing. This is where they would try to understand: what features, models and types of services are most important to them. At which point, they can begin implementing these different elements into their vehicles. This is important, because it is helping the company, to find out those emerging trends and react to them before competitors. ("Toyota's European Exposure," n.d.)

Next Toyota would need to evaluate how the car can be produced, to generate the greatest profit possible. This means, that a focus will be taken on seeing where production of different parts would be cost efficient. At which point, Toyota can develop a production strategy that will use those elements that can produce the vehicle in expensively. This will make the car more competitively priced, allowing Toyota to compete against domestic competitors. ("Toyota's European Exposure," n.d.)