TOYOTA Motors SWOT Analysis (2016)

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TOYOTA Motors SWOT Analysis (2016).

CEO: Akio Toyoda

– Number of Employees: 348,000

– Competitors: Ford, Nissan, Hyundai, GMC, Maruti, Chevrolet, Honda, Volkswagen

 Japanese motor giant Toyota was not off to a very god start in 2016.  Faulty airbags and product recalls hurt it deeply. Its US revenues fell during the first half of the year. However, the brand’s spirit is not hurt. Apart from these fluctuations, Toyota has remained strong. It is because of its brand size, global presence and heavy focus on R&D. The brand has gained a unique identity and position in the industry. Toyota Prius’ sales were mainly hit by the falling gas prices. Simultaneously, Tesla motors is set to release its own affordable version of electric cars. This can be expected to increase the competition for Toyota Prius.
The good news is that Toyota is making heavy investments in self-driving technology like some of its rivals. It wants its driverless cars to be on the roads by 2020. So, overall Toyota seems to be in a  mood to aggressively chase the number 1 manufacturer’s position. A SWOT of Toyota reveals a strong brand with an established brand image. Toyota is a strong brand. For years, customers have loved its style and technology. However, there have been small setbacks down the course of time.

[Toyota rose this year from its previous Fortune 500 rank of 9 to 8 ].
What is SWOT?
‘SWOT’ is an acronym for Strengths, Weaknesses, Opportunities and Threats. It is a powerful strategic management tool to help businesses identify their strengths and weaknesses. Businesses can plan to exploit the opportunities and counter the threats. Strengths and weaknesses are internal factors while the opportunities and threats external. SWOT is a tool designed to help a business reduce its weaknesses. The tool can improve a business’ chances of success by helping  identify opportunities. Companies conduct a SWOT as a part of strategy formulation.
Below is a swot Analysis of Toyota:

Strengths:

  • – Strong brand presence globally.
  • – Technological innovation
  • – A strong brand portfolio.
  • – Leadership in green vehicles category.

Toyota has a strong brand presence globally. Its  brand image is its most important strength. It is well known for its style and technological innovation. The brand has more than 70 different models in its brand portfolio. Toyota Corolla and Prius are its leading brands. Brand awareness of Toyota is also very high globally. Apart from it all, Toyota is a leader in the green vehicles category. It makes major investments in its R&D processes. So, technological capabilities and innovation provide it some competitive edge. The brand also enjoys high popularity and loyalty globally.

 Weaknesses:

  • Recalls due to faulty airbags
  • Weaker position compared to rivals in the emerging markets.

Faulty airbags and product recalls affected the brand’s reputation negatively. Moreover, its position in the emerging markets like China or India is weaker than rival brands. Time to time, big and small jolts have affected its business and revenue. Like all the other brands, Toyota is not immune to competition either. Competition against it has increased. Toyota had to exert significant efforts to fight the rising competition globally. Particularly, Ford and Hyundai have emerged as formidable competitors in the  growing markets.

Opportunities:

  • Market growth in the emerging countries.
  • Growth in demand for fuel efficient vehicles.
  • Green technology
  • Self driving technology.
Opportunities for Toyota exist in the emerging markets. It can further grow its brand presence in markets like China and India. Moreover, the demand for fuel efficient vehicles has kept rising. This rising demand can be a positive factor for Toyota.
The demand for and acceptance of green technology has increased. This provides Toyota with an additional opportunity. Self-driving technology is another area where Toyota’s opportunities lie. However, it is already investing heavily in this area. It hopes to bring its driver-less cars on the roads by 2020.

Threats:

  • Increased competition in low cost vehicle segment.
  • Increasing manufacturing costs.
  • Fluctuation in oil prices.

The competition in the small vehicle segment has grown intense. Particularly, in the low cost vehicles area, the competition has risen. Toyota’s rivals have brought better cars at lower prices to the market. It has increased the competitive pressure on the Japanese automotive company. Manufacturing costs including labor costs and the costs of raw materials have also gone up. Fluctuating gas prices also pose a major threat.  The low gas prices affected the sales of Prius this year negatively.

Recommendations:

Toyota must focus on the new markets where its opportunities lie. Even in the developed markets introducing new and innovative product variants can be profitable. The threat of competition from Ford and Hyundai is growing. However, technological innovation can help it reduce some of the competitive pressure. Fuel efficiency and green technology can also help Toyota gain a larger market share globally.

Other SWOTs, you may also check, COSTCO,  Apple, Nike, Walmart, Microsoft, Ford, Coca Cola.