Strategic alliances and threats facing Toyota in automotive industry

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Opportunities and threats faced by Toyota Module 2-Case Study [Pick the date]

Like any other organization, Toyota has its share of threats and opportunities which can either make or break this organization if not addressed properly. Toyota has been lately addressing environmental issues caused due to emission of harmful gases and also major cost cutting strategies required right after recent wave of recession. Lately, operations of Toyota have been disturbed due to product recalls caused due to compromised product quality and natural disasters, strict environmental policies and also because of increasing value of yen.

Current Opportunities for Toyota and what Toyota is doing to exploit them:

Alliance of Toyota and Ford

Toyota has been known for its light weight, user and environment friendly cars. Using its Hybrid technology, Toyota is providing an answer to user's worries caused by skyrocketing fuel prices. Furthermore, one must not forget the all-time famous strategic alliance between Toyota and Ford for the formation of collaborative RMV Hybrid system. Through this alliance, both companies will bring their in-house technology on board to produce an impeccable version of hybrid systems meant for SUV customers and also for light vehicles. By capitalizing on increasing demand of hybrid vehicles like Prius, Toyota can enjoy extreme advantage.

Global Competition

Automotive industry has proven to be highly volatile in past five years. Major markets e.g. Pacific, Europe have been subjected to a wave of extreme market crunch. Growth has been observed but at a slow pace. This recession of course has left an impact on Toyota. Furthermore, intense global rivalry is a big threat for Toyota. Global competition by strong market players like Fiat, Ford, BMW, General Motors, and Honda can strongly affect Toyota's business.

Natural Calamities

Toyota's major production plants are mainly situated in East Japan and Thailand. Both the regions are located in a hub which is highly prone to natural disasters. In 2011, Japan has sustained intense shocks of earthquakes causing tsunami and also disruption of nuclear reactors. Secondly, Thailand has also been a target of heavy floods. Because of these reasons, Toyota has sustained heavy losses of 800,000 and 150,000 units in Japan and Thailand respectively.

Product Recalls

In past five years, Toyota has been heavily questioned for its product recalls. Due to these, Toyota is hampering its reputation of building safe vehicles itself, something that even its big competitors couldn't do. Only in 2010, Toyota faced safety recalls of 8.5 million units worldwide (DETROIT).This is only benefiting Toyota's rivals who are making most of this situation exhibited by their marketing campaigns. Let's not forget Ford's slogan saying Ford's quality cannot be beaten by Honda or Toyota and GM's "May the best car win"

Increasing Value of Japanese Yen

Appreciation in the value of Japanese Yen against U.S. dollar is turning out to be troublesome for Toyota. Increasing production cost which in turn affects the market price of Toyota products is making business development difficult for Toyota.

Strict Environmental Policies

In last two years, changes in the policies of environmental agencies such EPA and NHTSA are making Toyota develop products not causing green house effects. Furthermore, fuel economy, decrease in noise pollution and product safety are other key areas where Toyota is lacking. Therefore, it now has to focus on products which are addressing all these issues.

Toyota has its share of opportunities and threats. It has recently entered into strategic alliances with various competitors which can act as an opportunity for it which if exploited properly may help it achieve its objectives. These agreements can also enable Toyota adhere to strict environmental policies by making eco-friendly vehicles. However, one must not forget that it is equally threatened by the increasing competition in global market, its product recalls and frequent natural calamities. Furthermore, fluctuating exchange rate are adding more worries in its plate. These issues if not addressed properly can either make or break Toyota. In order to combat these issues, paying strict attention to product quality is mandatory which may compromise cost cutting and a having contingency plan for natural calamities may help it restore it operations as soon as possible.

Module 2 relates to assessment of an organization in the frame of its external environment. What sort of industry it operates in, what are the environmental forces in action and what effect they may on the organization is part of it.

References:

Datamonitor Inc. (17 January 2012), Toyota Profile

Retrieved from www.datamonitor.com

Anonymous (2010). TrueCar forecasts April auto sales and incentives spending; Industry sales up 23%; Toyota incentives reach record highs. PR Newswire.

Retrieved August, 2011, from http://proquest.umi.com/pqdweb?did=2015705341&Fmt=3&clientId=29440&RQT=309&VName=PQD

Investopedia.com (2011). The industry handbook: Automobiles. Investopedia.

Retrieved August, 2011, from http://www.investopedia.com/features/industryhandbook/automobile.asp

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