The Five Keywords of the Toyota Way Are the Core of Future Success

Sir Philip Craven

INTRODUCTION

Toyota Motor Corporation (TM) is a well-known name in the global auto industry. Despite
being founded much later than mainstream US automakers such as General Motors (GM) and
Ford Motor Company (F), Toyota has become the world’s largest automaker.

Toyota Motor Corporation (further Toyota) is the world’s leading automaker (often
tied with Volkswagen for 1st-2nd place) based in Toyota City, Japan. In 2012, the
company was the first automotive company to produce over 10 million vehicles in a
single year.

The company operates 4 different brands: Daihatsu, Hino, Lexus and Toyota.
Toyota’s brand is the world’s 7th most valuable brand in the world and the most
valuable automotive brand, worth US$50.291 billion.

The main Toyota’s markets are Japan, United States and China, where the company
sells over 50% of its vehicles. The company produces the best-selling hybrid vehicle
Prius.

WHY Toyota?
Toyota is a global force in the automobile industry. This success is based on the effective
implementation of Toyota’s generic strategy and intensive growth strategies. This generic
strategy represents the overall approach Toyota uses to compete in the global market. On the
other hand, the intensive growth strategies define the types of actions that Toyota uses to ensure
continued growth. The company’s continued innovation and success is an indication of the
fulfilment of these strategies. Toyota is effective in the simultaneous implementation of its
generic strategy and intensive growth strategies.

TRENDS IN AUTOMOBILE INDUSTRY

The automotive industry is presently confronting what could be its greatest transformation. This
transformation is a crucial aspect of a digitally-enabled merging of social, industry, and
technological forces about to ignite an outburst of innovation in the global transportation arena.
Considering the sheer size of this industry, we can rightly say that it has the power to continue
influencing the direction in which humanity will progress in future.
Technology-driven trends have always been revolutionizing the way in which automotive industry
players react to the changing behavior of consumers, build partnerships, and bring about a
change.

Catering to the ever-changing automobile market, Toyota has focussed to adapt “Toyota’s
Connected Strategy” to cater these changes in the industry. Three faces of Toyota
Connected Strategies are as follows:
The Start of the Full-Scale Connected Car Rollout- Toyota plans to adopt common standards
for its world-wide Data Communication Modules DCMs by 2019, equip virtually all passenger
vehicles it sells in Japan and the United States with DCMs by 2020, and steadily equip more
vehicles with DCMs in other major markets around the world going forward.

Connected Technologies: Creating Services That Offer Safety and Peace of Mind to
Customers and Society- Turning to the second arrow, as the number of connected cars on the
road increases, so does the big data they generate. Toyota is using this data to contribute to the
good of customers and society while revolutionizing its own businesses. Aggregate route history
maps were made publicly available after the Great East Japan Earthquake, and such data has
subsequently been used in evacuation, response, and recovery operations following several
natural disasters.

Accelerating Cross-industry Collaboration as a Mobility Service Platform Provider-Under

the third arrow, Toyota is accelerating cross industry collaboration through the Mobility Service
Platform (MSPF). Using the MSPF, Toyota is taking an open approach, linking with all kinds of
service providers to contribute to the creation of new mobility services.
Based on the strategies that Toyota is trying to implement, SWOT analysis is performed to
understand the strengths, minimize threats and take the greatest advantage of this technological
shift in Automobile Industry.

STRENGTH WEAKNESS
1. Toyota has a wide range of car variants to offer. 1. Immense competition from other automobile
2. One of the oldest and reputed car competitors means.
manufacturers which brings high brand 2. High brand switching due to many options for
awareness. customers.
3. Over 310,000 employees are a part of Toyota's 3. Increased pressure from competitors
workforce.
4. Toyota is a pioneer in hybrid technology and its
production values like kaizen, kanban are
benchmarks in manufacturing.
5. Highly diversified product portfolio.
6. World class R&D and Engineering capabilities
of Toyota.
7. High brand awareness and market presence in
the international market

OPPORTUNITIES
1. Expanding automobile market and
opportunities for launching new products for
Toyota.
2. Concentrated efforts in hybrid segment can
help Toyota become a market leader.
3. Augmenting worldwide distribution and
servicing network to increase market penetration.
4. The company can leverage sale of hybrid cars
since they have been
THREATS
1. Intense competition in the market leading to
saturation.
2. Competition offering innovative features at lower
price car to reduce Toyota's market share.
3. New entrants in the same segment with better
features and lower price.
4. Car manufacturers catering to high ended
customers.
5. Being a global brand, its business is affected by
recession and economic instability.
 OPPURTUNITIES
1.Launching fully fledged Hybris Cars.
2. Using world-wide distribution
TOAS MATRIX network.
3. Launching New Line-up of cars.
INTERNAL STRENGTHS 1.Toyota should capitalize on its
1. Wide Range of Product Hybrid Technology and should focus
portfolio. on changing its entire car line-up.
2. Hybrid Technology. 2. Using world class distribution
3. World Class R&D. network, high operational efficiency
4. High Brand Awareness. and R&D, they could wipe out the
competition with low on cost and
high on technology cars.
3. They could use their reliability
product image and can wipe out new
companies entering Hybrid Cars
market.
WEAKNESS 1.Try to be the pioneer in Hybrid car
1.High Competition in market.
market. 2. Form an alliance with a rental car
2. Low brand switching leader and switch from IC Engines to
cost. Hybrid.
3. Competition working on
new products.
THREATS
1. Intense competition due to
saturation.
2. New entrants bringing new
featured cars at lower price.
3. Business is affected by economic
instability.
1. Combustion engine market is
already saturated, Toyota should
therefore try to diversify into
Hybrid car market and focus on a
new and emerging market.
1. Use your R&D technology to set
up barriers in the market and
implement low cost production
using existing technologies.

TOAS analysis result have provided us with significant evidences that Toyota should
focus on Product Development & Market Entry into new Hybrid car market. To check the
appropriateness of the Product Development & Market Entry strategy and to draw more
strategic options for Toyota the Grand Strategy Matrix is used.
Quadrant 1 of Grand Strategy Matrix suggests Product development as a feasible option.
Results from the above are also in line with the result of TOAS Matrix.

Analysis of current & Proposed Strategy: Using McKinsey’s 7S framework, we can find the
differences between current and new strategy and actions that need to be taken for successful
implementation.
TOYOTA CONNECTED DEFENCE STRATEGY:

Mobility Service Platform”.

As cars rapidly developed and became commonplace in the 20th century, reducing fossil fuel
consumption, cutting CO2 emissions to prevent global warming, and preventing air pollution
gradually became the major social issues demanding global solutions that they are today. In
response, many counties and regions have made plans to shift to electrified vehicles, and auto-
makers are accelerating the development of such vehicles. Indeed, the electrification of cars is
an essential part of solving these challenges. At the same time, new social issues are also
emerging, such as increased traffic congestion due to rising population density in urban centres,
shrinking working populations and increased numbers of mobility-challenged individuals in
developed countries due to demographic greying, and deepening logistics crises due to changes
in consumer behaviour.

In the midst of these social changes, the auto industry is entering a once-in-a-century period of
profound transformation. Toyota hence is providing freedom of movement—a form of social
infrastructure. As such, Toyota is firmly determined to contribute to solving social issues by
changing the very ways that people, things, and information flow through the world. Based on
this commitment, Toyota aims to connect cars, people, and communities and thereby create
a smart mobility society that offers freedom of movement, safety, and excitement for all.
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