Toyota's Business Environment

Introduction

Toyota created and revolutionised by Sakichi Toyoda the inventor of the world’s first automated loom in 1918. Sakichi sold his patent for the automatic loom for the sum of Ð'Ј100,000 in 1929 and then donated the proceeds to his son to develop automotive technology at Toyota. Production of the first prototype known as the Toyoda AA passenger vehicle begins in 1936, the Toyoda motor corporation began. The Toyoda family were superstitious and changed the letter вЂ?d’ to a вЂ?t’ as the letter вЂ?t’ only requires 8 strokes and 8 is a lucky number in Japan.

Toyota Motor Corporation was formally founded on 28th August 1937 with a total investment of 12 million yen (approx. Ð'Ј300,000).

Toyota is at the heart of global manufacturing, a company that has grown within 70 years to become the leading far eastern and world’s 2nd largest car manufacturer.

Toyota a global business, building vehicles in factories on six continents around the world and employing more than a quarter of a million people.

The United Kingdom is a key market for Toyota both in terms of sales and manufacturing, building two production centres.

Toyota’s automotive business, including sales finance, accounts for more than 90% of the company’s total sales. Toyota totalled 8.81 million units from January 1, 2006 to December 31, 2006 making a new record. The unit sales consolidated to Ð'Ґ21.03 trillion yen in the fiscal year to March 2006. Toyota is hoping for a 6% increase in the next financial year to over take General Motors and make Toyota the biggest car manufacturer in the world.

Toyota is split up into two sectors:

1. Automotive sector- Lexus is Toyota's brand name for its luxury vehicle division. Group companies owned by Toyota include, Daihatsu and HINO brand vehicles.

2. Non-Automotive - At present, Toyota is active in a number of areas in addition to its core business of automobile manufacturing-Areas including housing, financial services, communications, GAZOO, marine vehicles, biotechnology and afforestation.

This table indicates Toyota sales by destination (units)

Toyota’s goal is to be a "good corporate citizen," constantly winning the trust and respect of the international community. Continuing in the 21st century, we aim for stable long-term growth, while striving for harmony with people, society and the environment.

The main competitors and relative size of market share

The world's most profitable automaker - and soon to be its biggest -has a near 15% global market share and a substantial market share in the U.S, where it sold 2.5 million cars and trucks last year.

Many analysts believe Toyota will become the world's largest auto maker in the 2007 or 2008 calendar-year by overtaking current leader General Motors Corporation, with a stated goal of producing 9.4 million vehicles in 2007. GM vehicle production increased by 1.7 million in 2006 from 7.3 to 9 million total vehicle production.

Toyota have a 45% domestic market share in small and standard car segments higher than any other manufacturer in Japan making them unstoppable and very difficult to compete. This is due to a halt in Honda’s growth and companies such as Mitsubishi and Mazda who continue to struggle.

The overall car market and competition is colossal and trying to dominate the entire market is extraordinarily difficult; however Toyota are doing an exceptional job, dominating Japan, America and parts of Europe. Toyota’s main competitors are General Motors, Ford, Volkswagen, Honda, Peugeot and Nissan.

The market can be segmented in three regions;

European Car Market вЂ" Volkswagen are the far leaders within the European market standing at an impressive 18%, followed PSA Peugeot and Citroen with14%.

Toyota has only 5% of the European market at present, less than half of its US position.

(http://www.prnewswire.co.uk/cgi/news/release?id=98786)

Asian Car Market- Asian automakers have grabbed more than 30% of the world's most lucrative car market. An important advantage for Asian carmakers is the greater freedom to build new plants in lower-cost countries rather than in high-cost Germany, France and Italy, where incumbents face pressures to preserve jobs. By 2011 Toyota and Honda will both expand there car building capacity by 20 percent in central and eastern Europe. This poses a massive threat for the European market; however Toyota need to gain traction in Europe to reach its global 15% stake and overtake GM motors.

(news.bbc.co.uk/2/hi/business/3116180.stm)

American Car Market- the United states are finding difficult to grow as there car sales are beginning to flatten out. They are now concentrating on Europe sharpening appeal with cost-conscious and green minded consumers. Sales of General Motors in North America have fallen so the company has cut production by 10%. There are many