It does not want to be left out of a potential boom entirely, even if it is skeptical.
Opportunities
As well as the opportunity to become a part of the online marketplace, Toyota also has an opportunity to cut costs in one of its weaker markets where it still wishes to retain a visible presence. Toyota is in negotiations with the German automaker Volkswagen so it can standardize more components and cut operating costs in Europe. But there is a problem of defining what constitutes a standardized product.
VW thinks that 20-30 parts may be standardized, but unsurprisingly Toyota considers a wider range of parts competitive, such as steering wheels and wire connectors.
Threats
Steering wheels and wire connectors on the surface do not seem to be competitive components, although Toyota sees competition as taking place on a part-by-part basis, as well as on a holistic basis. Every crucial aspect of design at Toyota is given consideration and attention. Yet without some compromise it could lose its ability to cut costs and remain competitive in Europe, and also lose out in the potential cost-savings of participating on the Internet marketplace.
Best Option
The best option seems to allow for more standardization in Europe, but to hold fast to the negotiating position in the U.S.
Defend the option or recommendation selected
Toyota is currently at the top of the market in the U.S. so it might be best not to concede too much to rivals, given that it has more to lose from the Internet site (such as its good relations with suppliers) than either Ford or GM. The American...
Some agreement on standardization might be wise in the European market, where it has less dominance. But regarding its negotiations with GM, since it is operating from a position of strength, conceding too much to the American auto manufacturer would be unwise and unnecessary, given the quality relationship Toyota has with its major suppliers.
Summary comments
Although a cost savings through competition would be nice, Toyota ultimately has more to lose than to gain by alienating itself from its currently strong relationships with suppliers. Its component parts in Europe may be less unique that it might believe, but this attentiveness to detail is part of its company philosophy.
Conclusion
Toyota has been a mold-breaker since its inception, and has won market dominance by thinking outside of the American box, using the Japanese strategy of cultivating relationships rather than conventional competition to gain its current market dominance. Suppliers cut costs out of a desire to maintain contracts with this number one company, rather than fear of competition. Instead of trying to follow an older American model of competition at all costs, Toyota should continue to do what it does best, and perhaps consider reducing its focus on Europe, or totally rethink its marketing approach in other areas, than accept its rival's conceptions of quality, supplier relationships, and the unique nature of its car components. Some agreement with VW would be nice, but there are other ways it might consider exploring to cut costs before even making a few concessions.
