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Toyota: The Paper Research

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Course: Business
Date: 7 March 2013

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Contents
Introduction.......................................................................................................3
History of Toyota...............................................................................................3
Ethics and Social Responsibility........................................................................4
Background of Global Operations......................................................................5
Marketing Strategy..............................................................................................6
Overview of Finance and Profitability................................................................7
Conclusion...........................................................................................................8
Works Cited.........................................................................................................9

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Introduction
Toyota Motor Corporation is the world's third largest automobile making company in
production, ranking after General Motors and Volkswagen Group. Its headquarter is located in
Toyota, Aichi, Japan. It is reported to be the world's eleventh largest company in terms of
revenue.

History of Toyota
Toyota is one of the widely known and largest vehicle manufacturing company in the
world. The foundations of Toyota Motor Corporation (TMC) was laid in 1937 by Kiichiro
Toyoda, the son of inventor of Japan's first automatic power loom Toyoda Spinning and
Weaving Company, Sakichi Toyoda. Apart from TMC, Kiichiro gave the world a heritage of
Toyota Production System (TPS) which follows the philosophy just-in-time. This
production concept involved manufacturing exact units as per order with minimum wastage of
raw material, time, power and human resource. This strategy of TPS is now followed by most
of the automotive industry worldwide (History of Toyota).
The rise of Toyota began post World War-II resulting in acquiring over 40% market
share and becoming the leading manufacturer of vehicles in Japan. It entered into foreign
markets by late 1950s. In 1957, first prototypes of Crown model were exported to US (United
States). Same year witnessed the establishment of Toyota Motor Sales U.S.A, Inc. By 1965, it
came up with new models such as Corolla and started giving tough competition to domestic
automobile producers in US. In 1966 and 1967, it signed business partnership with Hino
Motors Ltd. And Daihatsu Motor Co., Ltd., respectively. In 1984, it made a joint venture with
General Motors and started production in US. In 1988, Lexux brand was released in US. The
journey of Toyota in European market started in 1963 and continued to grow in its

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competitive and complex environment. In 1992, Toyota Motor Manufacturing (UK) came into
operation. The Prius, world's first bulk-produced hybrid car was launched in 1997. In 2000,
the company sold its ten millionth car in Germany. Toyota Motor Manufacturing France, Inc.
started production in France in 2001. In 2002, Toyota entered into making cars for Formula
One World Championship and production started in Tianjin Toyota Motor Co., Ltd. China. In
2011, Prius sales crossed 3 million mark and production began in Toyota Motor
Manufacturing, Mississippi, US. Toyota is known for meeting customer satisfaction,
reliability and customer service in Europe.

Ethics and Social Responsibility

All companies have some responsibility towards protecting customer, employee,
society in which it operates, and organization itself from encountering adverse conditions. The
ethical values of a company is judged by the actions it takes in case of sudden unanticipated
causalities.
Toyota vision states the development of better communities along with better cars. It is
involved in developing low-carbon mobility keeping environmental load into consideration. It
has adopted the policy of Customer First under which it seeks to build best cars in terms of
quality and affordable price, meeting the requirements of all kind of customers. It ensures the
safety of individual by following an integrated approach of safe vehicle development and
traffic-safety awareness. This approach helps it to achieve the goal of zero traffic fatalities
(Corporation) as cited in Manley, 2011). The motive of CSR (Corporate Social
Responsibility) policy of Toyota is Contribution towards Sustainable Development". The
objective of CSR mission is governed by seven guiding principles viz. respect the language
and law of every country and carry out fair corporate activities, contribute to economic and

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social development of communities in every country wherever the plant operates, providing
clean and safe products, continuous innovation and research to develop advanced
technologies, promoting individual creativity and trust and respect between labor and
management, carrying out corporate activities in harmony with global community by
innovative management and, working with business partners to obtain long term growth and
mutual benefits. Under its CSR policy, Toyota initiated the drive of planting trees around its
manufacturing sites in 2007 (Kaya 321-325). Also, it installed largest solar power system
plant in its Tsutsumi plant generating 2000 kilowatt of solar power. The outer walls of the
factory are painted with a special paint that breaks down nitrogen and sulfur oxide. The result
of these initiatives is that CO2 emission of plant has been reduced by 35 percent (Treece).
Toyota gives significant importance to its Stakeholders.
Toyota has entered into legal issues from time to time for delivering unacceptable
products due to various reasons. However, it has performed its ethical responsibility by
paying penalty in terms of money or by product recalls. In 2010, it recalled about 8 million
vehicles due to manufacturing defect in gas pedals (Manley).

Background of Global Operations

After foundation of Toyota Motor Company, Ltd. In 1937, many related companies
were established such as Toyoda Machine Works, Ltd. in 1941, Toyota Auto Body, Ltd. in
1945. Till 1950s, Toyota was growing in Japan itself. During 1960s and 70s, it started
exporting cars to foreign market in bulk quantities. Later in 1982, it was renamed as Toyota
Motor Corporation because of merging of separate business units in one unified group.
In present scenario, Toyota has 50 manufacturing units in 27 countries and regions.
The vehicles produced in company are marketed in more than 160 countries and regions

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under the brand names of Toyota, Lexus, Hino, and Daihatsu. . The overseas countries in
which it operates include Canada and U.S.A in North America, Argentina, Brazil, Mexico and
Venezuela in Latin America, France, Poland, Portugal, Czech Republic, Turkey, U.K, and
Russia in Europe, Kenya, South Africa, and Egypt in Africa, China, Taiwan, India, Indonesia,
Malaysia, Pakistan, Phillippines, Thailand, and Vietnam in Asia, Australia, and Bangladesh in
Middle East. The company has assembly plants and distribution centers in many foreign
countries. It manufactures a wide range of vehicles from small cars to luxury sedans, fullsized pickup trucks, and crossover vehicles. Toyota has 9 R&D locations in North America,
Japan, and Europe.
Ford and General Motors are the two strongest competitor of Toyota in terms of net
sale and unit sale in world's automobile market. However, in some regional markets such as
Asia, Toyota ranks higher because its cars are more affordable than American and European
cars. As per current report, Toyota is expanding aggressively in overseas market to leave
behind General Motors in ranking of volume of production. Out of 7.3 million global
production, 1.3 million vehicles in Toyota are alone produced in North America (Manley).

Marketing Strategy
Toyota follows the strategy of right car in the right place. Segmentation, targeting,
and positioning are the key activities comprising marketing strategy of Toyota. It has
segmented its target market on the basis of demographic and psychographic (interests,
attitudes, personalities) characteristics of the customers. For example, it has divided all the
countries where it markets into different marketing zones such as Asia, Europe, North
America etc. However, seeing the market potential, it has developed large units in focused
market such as India, US, Canada, China, Australia, and Indonesia. Among these, US holds

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the first position in its market because it alone sells about 30% of the Toyota's products
(Bhandari).
Toyota manufacture cars with wide price range, starting from US $ 10,000 to more
than 30,000. The economy class cars are targeted for customers in developing countries such
as India, China, generally preferred by lower and middle income group people. Luxury cars
are targeted for higher middle and higher income group people. These are mainly sold in
Developed countries such as US, Canada, UK etc. It also targets customer on the basis of age,
profession and interest. It has developed sports car for sports person, 100% bio-ethanol fuel
based car in Brazil due to the potential of bio-ethanol generation in Brazil. Also, it changes its
marketing strategy at global, national and regional level based on the market condition,
economy, customer purchasing ability and preferences. Toyota blog is another highly
successful advertising and marketing tool. Toyota's human system model has proved
efficient in recruiting skilled and committed people, leading to the growth of the company
(Liker 25)

Overview of Finance and Profitability

The 2011 financial report of TMC indicates that 29% of total automobile sales is
conducted in North America, followed by Japan (27%), Asia (17%) and Europe (11%). In
automotive production, Japan is the leading producer, producing 52% of the total produce,
followed by North America, Asia, and Europe (Toyota Global Operations). The net revenue
earned by company is maximum from Japan (47%) followed by North America, Asia and
Europe. According to recent reports from Forbes, the Gross Profit Margin for Toyota Motor
Corporation is 19.1%. The net sales of the company in Fiscal year 2012 was 18,583.6 billion
yen and net income was 283.5 billion yen.

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Conclusion
Toyota Motor Corporation (TMC), founded in 1937, head quartered in Aichi, Japan,
with a net capital of 397 billion yen, is the world's third largest vehicle manufacturing
company. Ford and General Motors are the major competitors of Toyota in world in terms of
production quantity. From late 1950s, it entered into foreign market and currently serves 160
countries across globe by operating 50 manufacturing units in 27 countries and regions. Its
brand include Toyota, Lexus, Hino, and Daihatsu. Its main markets are concentrated in India,
US, Canada, China, Australia, and Indonesia. It follows the policy of right car in right pace
for marketing. Segmentation, targeting, and positioning are the three key aspects that lay the
foundation of Toyota's marketing strategy worldwide. Marketing strategy of the company
varies at global, national and regional level based on the market condition, economy,
customer purchasing ability and preferences. It follows Customer First approach and
contribute towards sustainable development of the community wherever it operates, fulfilling
its social responsibility. In present scenario, it is expanding aggressively in overseas market to
overtake its competitors.

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Works Cited

Bhandari, Surendra. An Analysis of Toyotas Marketing Strategy. 2007. Web. 6 march

2013. <http://ssrn.com>

Corporation, Toyota. "Leading the way to the future of mobility". November 2011. Web. 6
March 2013. <www.toyota-global.com.>

History of Toyota. Web 6 March 2013. < www.toyota-global.com>

Kaya, Nurullah and Ramzan Yanik. Social Responsibility Framework Analysis of an Event.
The Social Sciences 5.4 (2010): 321-325. Web 6 March 2013.
<http://www.medwelljournals.com>

Liker, Jeffrey K. and David P. Miller. Toyota Talent. McGraw-Hill Publication. United
States of America. 2007. ISBN-13: 978-0-07-147745-1. p. 25

Manley, Mike and Cyd Coloma. "Toyota and GM: a Comparison of its Mission, Values,
Social Responsibility and Ethics". 10 November 2011. Web. 6 March 2013. <
sites.google.com>

Treece. Toyota goes green by planting plants at its plants. Automotive News , p. 45. 30 July
2007.

"Toyota's Global Expansion". Dec 2011. Web. 6 March 2013. <http://www.studymode.com>