Toyota Motor Corporation - Rising To The Top

TOYOTA MOTOR CORPORATION

Rising to the Top

Prepared by xxxxxx

English Business Writing Student

Report Distributed May 3, 2006

Prepared for Drxxxx

English Department

xxxxx

Since it began as a small business created by Sakichi Toyoda in 1926, Toyota has evolved into one of the top automobile manufacturers in the world. "The name Toyota came about in 1936, when protectionist legislation improved prospects for Japanese automakers and Kiichiro Toyoda changed the name when he split off the car department" (Bryant). The company has been slowly gaining on its main competition since the 1970's, when it was the world's fourth largest car manufacturer and is showing no signs of slowing down. Their upper level management's brilliant usage of cycle time reduction has made their recent moves both strategic and efficient and allowed the company to move ahead of Ford Motor Company in terms of size and prestige. Ultimately, the creation of hybrid vehicles, the ability to build more vehicles in the United States, and the further expansion into China have led to Toyota's recent success.

Moreover, the recent increase in the price of gas has led to consumers to favor smaller vehicles and hybrid vehicles that use a gasoline engine and an electric motor. Smaller vehicles are important in terms of saving money on gas and people living in urban areas favor them largely for the fact that parking is easier to find. This is seen especially in New York City, where people sometimes spend large amounts of time to search for places to park their vehicle. Generally, hybrid automobiles use gasoline to power the internal combustion engine and electric batteries to power the electric motor, which uses less gasoline.

Toyota's sensitivity to consumer demand, demographics, and population growth are the key reasons why so many people are currently buying their automobiles. Although the Toyota Prius and Highlander are doing well, the company is also seeking to build hybrid versions of the Camry and some of their Lexus models. This is a brilliant idea because it offers the consumer a variety of cheap and expensive hybrid vehicles which will cause various social groups to purchase hybrid vehicles over other brand names. The regular Camry and Lexus model automobiles also use more gas than other vehicles of the same size and adding a hybrid version of each type of vehicle will only make them more appealing.

In relation, Toyota's ability to build more Camrys in Indiana will cause a decline in the price of the vehicle since it will eliminate the expensive international transportation costs. On the other hand, if Toyota decides to keep the same price on the vehicle, their profits will grow at a faster rate. The fact that Toyota is also working with Subaru on this task will also increase production, which can also lead to a decline in the price of the vehicle. This is another great idea because poorer consumers will now be able to afford the Camry, which is considered a luxury vehicle and will move away from the more expensive vehicles of Ford and General Motors. "Dennis Cuneo, vice president of Toyota North America, said there were no immediate plans to add a second Toyota model or hybrid vehicle to the plant in Indiana but said the company will produce other vehicles in Georgetown, Kentucky in the future" (Heher). More importantly, the exterior of certain editions of the Camry and Corolla have been reformed so that they can look more like a sports car. These vehicles, which were once sued by mostly older consumers, have become popular among younger drives and are now used by all age groups. This has led to an increase in sales in two vehicles that were widely regarded as "unpopular" among most drivers several years ago.

Toyota's further expansion into China is actually the beginning of a major solution to their biggest weakness. The company's executives are using the control function of management to examine these weaknesses and find out why China is one of the few countries where Toyota is nearly last in sales. "Despite exporting cars to the mainland since the 1960s, Toyota's market share is just 3.5% in China" (Heher). Toyota's lower level employees are becoming more motivated since they see the domination of the international automobile industry in the horizon once success is attainted in China. Toyota's focus on improving their sales in China seems to be the most efficient plan to increase their profits and sales, but the company is treating the country similar to the United States based on their markets. This creates a huge risk factor because there are actually large differences between the American and Chinese cultures, regardless of the market structure. However, "many of the Chinese consumers, about eighty five percent, will be first time buyers whether they are young or old this year" (Heher). The Chinese sense of pride is still very strong in China and the younger consumers are going to seek smaller, more expensive vehicles and this is the main reason why Toyota should have some success. More importantly, Toyota is promoting more customer test driving experiences in China and it seems that this personal experience will also play an integral role in increased sales in China.

Furthermore, Toyota's