TOYOTA: GLOBAL

EXPANSION STRATEGIES

Presented by:
Aditya Agarwal
Aditya P.S.Jadon
Avdesh Singh
Dewesh Thakur
Manish Vijay
 INTRODUCTION
• Founded in 1937

• Headquarters: Toyota City, Tokyo, Japan.

• Toyota has annual sales of $120 Billion

• Produces : 5.8 million vehicles per year

• Has 53 overseas manufacturing companies, in 27 countries/regions

• Employees :3,16,000 people

• 3rd largest automobile manufacturer

 TOYOTA - INDIA
• In India, Toyota Motor Corporation
entered in a joint venture with Kirloskar
Group.
• Toyota Kirloskar Motor Private Limited
(TKM) aims to play a major role in the
development of the automotive industry
and the creation of employment
opportunities.

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 Vision and Mission
• Vision is to be the most respected and successful
enterprise, delighting customers with a wide range of
products and solutions in the automobile industry with
the best people and the best technology.

• Mission of Toyota is to provide safe & sound journey.

• Toyota is developing various new technologies from the
perspective of energy saving and diversifying energy
sources. Environment has been first and most important
issue in priorities of Toyota and working toward creating
a prosperous society and clean world.

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 Core Values
– World class product quality.
– Achieving the ultimate goal of complete
customer satisfaction.
– Fostering the spirit of Teamwork.
– Inculcating ethical and honest practices.

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 PRODUCT LIFE CYCLE
TKM IS IN BETWEEN THE GROWTH AND
MATURITY STAGE .
Toyota decided to replace Qualis because
of two reasons.

Qualis was a major success among the tour

operator segment but was not popular at
the individual/home segment.

Second reason was the increased

competition from Chevrolet Tavera which
was perceived to be a more refined
upmarket SUV.

Toyota also wanted to bring in the latest

products in the Indian market.
Qualis was only a test product.

Further, Toyota wanted to appeal to the

individual/home users rather than the
commercial segment.

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 Why to choose Globalization ?
• Firms engage in international activities for
two primary reasons.

1)Transferring competencies/resources in a
search for new customers.
2)Attempting to gain some type of location
economies.

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 WORLD WIDE OPERATIONS
• In the beginning of 2007, Toyota has grown to a large multinational corporation
from where it started and expanded to different worldwide markets and countries by
becoming the largest seller of cars.
• As of the end of March 2008, Toyota conducts its business worldwide with 56
overseas manufacturing companies in 27 countries and regions. Toyota's vehicles
are sold in more than 170 countries and regions.
• Toyota has a balanced scorecard which notes specific outcomes and measures of
environmental action, and uses a plan-do-check-act cycle to carry them out.

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 Four key components for Toyota
These are linked to the pursuit of a new global image with :
• being kind to the earth,
• providing comfort of life,
• excitement for the world,
• and respect for all people.

The encompassing motto of Toyota

"innovation into the future" is "working with passion and
dedication to create a prosperous society."

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 SWOT Analysis
Strengths: Weaknesses:
•Diversified product range, highly •Manufacturers need to make sure
targeted marketing and a commitment that it is their models that consumers
to lean manufacturing and quality. want versus competitor's.

•#1 carmaker in 2007 •Company needs to cautiously keep

producing cars in order to retain its
operational efficiency
Opportunities: Threats:
•Toyota has also sold on its technology •Toyota faces tremendous
to other motor manufacturers, for competitive rivalry in the car market.
example Ford has bought into the
technology for its new Explorer SUV •Economic instability
Hybrid

•Toyota is to target the 'urban youth'

market.

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 LABELLING
• The label may be a simple tag /logo attached to
the product . Might carry a brand name or a
great deal of information.
In Toyota , the label is
the mark which consist
of 3 ovals :
2 perpendicular ovals
represent a relationship
of mutual trust between
customer and the
company . The bigger
oval implies global
expansion of Toyota’s
technology and
unlimited potential for
future.
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 Pricing Strategy
• Optional-Feature Pricing : e.g. an Innova
customer can order mud flaps, side steppers or
other accessories.
• Promotional Pricing :
Low Interest financing : This technique is for
short period and is mainly used in festive
seasons.
Longer Payment Terms : The company
stretches loans over longer periods and thus
lowers the monthly payments.
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• Warranties and Service contracts : The
company provides 3 year or 1 lakh Km
(whichever earlier) warranty on all repairs
using Toyota genuine parts.

• Differentiated Pricing :
Location Pricing : Toyota cars are
priced differently in different states. Car
cost remains the same across the country
but the road tax and insurance rates differ
in different states.

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 Innovation

• Toyota has introduced new ideas & technologies which

enable them to lead the innovation among others
competitors.
Example
1. Hybrid gas-electric vehicles.
2. Advanced Parking Guidance System.
3. Eight-speed automatic transmission.
4. Four-speed electronically controlled automatic with buttons
for power and economy shifting.

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 -Promotion –
INNOVA" All you desire "
• Very few actors in Bollywood
possess the international
standards of expertise that Aamir
Khan does. Aamir managed to
carve out a niche for himself
among the superstars as well as
changed his persona in tune with
the character he was playing in
case of “Toyota Innova”.

• It is precisely this characteristic

of this talented actor that is
sought to be celebrated in the
Toyota Innova advertisement.

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 CSR Strategy
Toyota company contributed to public relation’s in
the following manner :

1. It contributed to Tsunami.

2. Toyota Kirloskar signs MOU with Bangalore

University for promotion of Japanese language.

3. Toyota observes earth day by supporting local

schools.
Q2FY2010 (July-Sep 2009) and Q3FY2010 (Oct-Dec 2009)

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 Casting a Global Spell:
• Jan 2004 Toyota replaced Ford Motors as
the world’s second largest automobile
manufacturer.
• Ford was in that spot for 7 decades
• In 2003 Toyota sold 6.78 million vehicles
world wide
• Ford – 6.72million
• GM – 8.60 million
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 Contd…
• Toyota aided by its new product offerings &
strong financial muscle had successfully used
this to surpass Ford.
• Toyota had emerged as a strong foreign player
in :
• Europe
• China
• South America
• South West Asia
• South East Asia
• Africa
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 Globalization Efforts:
• Aggressive Globalization efforts that
began in mid 1990s
• 3 Globalization programs
• New Global business plan (1955-1998)
• Global vision 2005 (1996 –2005)
• Global vision 2010 (2002 – 2010)

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 Global Vision 2005
• 1995 Hiroshi Okuda became President
• To improve domestic sales – focus on
dealer network
• Incentives to increase sales to dealers
• Aggressive means to attract youngsters to
its products
• Functional discrepancies among the
dealers
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• Heavy investments in advertising
• Okuda decided to focus on improving
global sales performance

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 Early Globalization Efforts:
• June 1995 Toyota announced “New
Global Business Plan” aimed at
localization of production and increasing
imports over a 3 yr period
• Localization was the focus
• Apart from this short –term global
business plan Toyota also came up with a
long-term global vision in June 1996

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 Global Vision 2005:
• Asserting a competitive edge in
technology
• Accelerating globalization

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 Globalization Efforts:
Increasing production of automobiles by
improvement in three core areas:

• Upgrading its R&D

• Developing new line of products
• Replaced engines of its Lexus range of
cars with stronger models & made design
changes as per customer feedback

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 Customization in Europe
• 1997 launched Prius a gasoline electric
car
• April 1998 new small car in Europe market
– Yaris

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 Domestic Problems:
• Excessive capacity
• Choosy customers
• Surplus workforce
• Intensified competitors
• 1998 Japan sales – 38% of total sales as
compared to 52% in 1990
• US contributed 80% followed by Europe

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 Solutions:
• Upgraded versions of its existing models
• De-emphasizing Toyota brand
• Dealer outlet more appealing
• Netz as dealership chain
• Contract employees
• 1999 Okuda replaced Chairman Shoichiro
Toyoda & Fujiocho became the President
• Company’s shares listing in New York and
London stock exchange

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 Second Phase of Globalization:
• Focus more on localization
• Cho define Globalization as “Global
Localization”
• Localizing design, development and
purchasing
• Kaizen, PDCA, JIT
• Management hybrid

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 Europe
• Yaris launched for targeting European market.
• Engage European designers to design more
cars
• Started the French Riviera Design Center
• Increase manufacturing capacity in Europe
• Local procurement, locally produced units
• Entered into partnerships with other automobile
companies
• Partnered with PSA Peugeot

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 China:
• Late entry in 1989
• 1999 J/V to manufacture Toyota Coaster
bus
• 2002 entered into strategic alliance with
state-owned China FAW group
Corporation to manufacturing automobiles
• 2000 constructed new plant in Tainjin

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 2010 Global Vision:
• Recycling based society
• Age of information technology
• Development of motorization on global
scale
• Diverse society

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 Revolutionary Production System
• Revolutionized manufacturing industry

• At its core is “lean”

– a relentless drive to improve efficiency and
eliminate waste

• Beginnings of TPS were born out of necessity due to

lack of resources in post-war Japan.

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 Toyota Production System
Key Main Concepts
• SMED
– Single Minute Exchange of Dies
– Promoted flexibility of production runs
• JIT
– Just In Time manufacturing
– Small batches which reduced inventory costs, tightened
relationship with suppliers and improved quality control
• “5 Whys” Quality
– Asking “Why?” 5 times to locate source of problems
– Stopping the production line whenever there are quality
problems to ensure they are not repeated
• Low cost supplier
– Long term supplier relationships

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 The Toyota Product Development System's
implementation challenges
• Toyota Product Development System challenges involve :
* A new approach to engineering leadership -- A rethinking of engineering
management roles and skill sets.
* A new approach to knowledge management -- New systems for storing,
accessing and using engineering data.
* A new approach to design variations -- Implementation of set-based
concurrent engineering.
* A new approach to the development process -- Less focus on process
standards and more focus on product standards and design results.
* A new organizational design -- Creation of the "Big Room" and use of
visual management for the development process.

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Market Share worldover