Toyota SWOT Analysis Strengths: Strategic Advantages Kanban System- Toyotas strategic aspect that differienates them from

other auto manufacturers is their production process. The just in time method has proven to be effective and efficient at saving costs for Toyota, therefore can charge less for their products. This gives them a competitive advantage over other auto manufacturers. Only when the parts are needed, do the suppliers provide the parts due to an integrated supply chain system. Lean manufacturing also cuts down on storage costs and increases inventory turnover and speeds up production. Toyota is about effectively using resources to maximize their production and maximize elimination of unwanted costs. This lean manufacturing system has distinguished Toyota from any other organization and has greatly decreased costs and increase product production efficiency (Teresko, John). Organizing Suppliers - Toyota believes that to have an efficient manufacturing system, there needs to be strong relationships with suppliers. Suppliers are a key component of the Kanban System, so it is vital to have close relationships with them to keep them up to date on new changes. They have a strong horizon integration verses most automotive companys vertical integration. Horizontal integration merges competitors to gain a competitive advantage with large organizations. Toyota found that horizontal merge proves to be cost effective, risk reducing, and increase benefits (Hill, Charles W. L.). Understanding the importance of good relationships with suppliers, Toyota sought out to assist with management, help engineering expertise, and even offered to finance potential investments (Hill, Charles W. L.). Toyota strives for the best and only goes after the best suppliers of Japan and now the United States (Vaghefi, M. Reza). Strengths: Cultural Advantages Loyalty - One of the major advantages in working with Toyota is their cultural advantages. One of the cultural advantages is respect for hierarchy authority. Japan is much more devoted to groups then to individuals. Toyota reflects this in their employees devotion to the company and the constant desire to improve it. One of their fundamental beliefs is that every employee deserves respect (The Toyota vision). Japanese value work differently then how Americans value work and it reflects in the quality of the product. When Toyota designs their automobiles, each Japanese employee had a part and they take pride in whatever part they have. Since there is this sense of respect for authority instilled in the Japanese employees mind, the top management makes the decisions. The decision making process is much quicker and implemented quicker due to this respect for hierarchy authority. This is one of Toyotas strongest competitive advantages; they believe in empowering every employee to be innovative (Vaghefi, M. Reza). Continuous Improvement - Coming from a culture that highly values pride in products, Toyota continues to work for improving the quality of the product, the manufacturing system, or relationships between suppliers. Toyota was built on the belief of continuous learning therefore this inspires continuous improvement. Specifically, Toyota makes their employee teams figure out what the problem is when one has occurred and traces the problem back to its origin. The employees are more educated on the product now and can be more attentive to look for similar defects (Hill, Charles W. L.). Another way Toyota is improving their internal structure was through organization. By organizing workforce into teams that perform similar tasks and grouping those teams into areas with similar tasks teams, Toyotas manufacturing system can be more efficient.

Weakness Just-in-time system - Even though the Kanban or the JIT system has proven to be a competitive advantage for Toyota, it can be a weakness as well. The JIT system is so interdependent on one another that no supplier is allowed to mess up even for a moment. The one supplier that does not provide the quality supplies to Toyota will halt the rest of production till the issue has been resolved. Between unions, strikes, and product quality malfunction, Toyota is relying on every supplier to be on time with the best quality of products. Too much dependency can trickle down to parts of the manufacturing lines if the suppliers do not provide. Opportunities and Threats: Porters Five Forces Risk of Entry by Potential Competitor Entering the automobile market is expensive and risky. Some automobile companies constantly battle against bankruptcy. Car companies are expensive to establish and expensive to maintain. Companies like Toyota, Honda, and Ford discourage new competition because of their well established presence in the market. Economics of Scale Toyota has worked on improving their lean manufacturing system to spread fixed costs more over production. They have surpass Ford and GM in production and costs. They can produce 15 cars per worker which is far more then the 4.7 vehicles per employee Ford can produce. By creating more cars to sell, Toyota has effectively spread their fixed costs over more production (Hill, Charles W. L.). Brand Loyalty Over the years, Toyota has proven to be a more reliable, dependable vehicle the American made cars. Toyota builds cars for safety as well. In 2010, the Toyota Camry received the highest possible grade for safety according to the National Highway Safety Administration. They design cars to appeal to all types of social demographics and are now selling hybrids to accommodate the high petrol prices. Absolute Cost Advantages Because of their just in time system, Toyota has been able to significantly reduce costs and therefore have increase their profits more. Customer Switching costs Cars are liquidity assets and switching from one company to another can be easy. All customers have the opportunity to but whatever brand they desire, but once stuck with that vehicle, they are not as easy to dispose of. Rivalry among Establish Companies During the present times, competition between major automobile companies is intense. Between the large automobile companies in the States, competition continues to increase especially in tough economic times. Toyota has succeeded in narrowing the sales gap between Ford and GM. Now Toyota holds 18.4% of the market share of passenger cars while Ford holds to 15.4% and GM is 19.3%. Industry Competitive Structure Toyota competes in a consolidated industry in that there are few but powerful companies competing with them. Consolidated companies are interwoven in their market because what one company does can have direct impact on a competitor. For Toyota, bringing in the just-in-time method has transformed how Ford and GM assemble their products. Toyota is the leader in cutting costs and continuous improvements which have brought new challenges to Ford and GM. Cost Conditions What makes Toyota different from rivalries is their strict cost cutting techniques. This along with lean manufacturing and continuous improvement go together to produce a strong business model. Since Toyota highly depends on lower fixed costs, they counted on strong sales to increase profits and continuous grow which creates intense rivalry. Exit Barriers Automobile industries create high exit barriers since so much investment is needed to get an automobile organization started and maintained.

Bargaining power of Buyers Buyers can negotiate prices down since cars are plentiful. When there are plenty of product out in the market, buyers can afford to be more precise and have higher standards for product quality. In the case of vehicles, buyers can have some negotiating power over the vehicles price. Ultimately, automotive companies need to learn how to enhance their profits while keeping prices down. This is where Toyotas technique of cost cutting is a competitive advantage. Bargaining power of Suppliers Suppliers do not have much power in the automotive market. There are other means of automotive companies to get the parts then need if the suppliers charge too much. A competitive advantage that Toyota has is their strong relationships with their suppliers. Substitute Products As the customers are becoming more environmentally conscience, more people are riding their bikes or taking the bus to work. For personal reliable transportation, there are no substitute products for vehicles. People will always need a personal, safe, dependable way of transportation.

Works Cited

Hill, Charles W. L., and Gareth R. Jones. "Toyota in 2009." Strategic management cases: an integrated approach. 9th ed. Mason, OH: South-Western/Cengage Learning, 2010. C238-C250. Print. Teresko, John. "IndustryWeek : Toyota's Real Secret: Hint, It's Not TPS." IndustryWeek - Connecting Manufacturing's Leaders. Penton Media, 1 Feb. 2007. Web. 10 Mar. 2011. <http://www.industryweek.com/articles/toyotas_real_secret_hint_its_not "The Toyota vision - The Manufacturer.com - Promoting best practice in Manufacturing." The Manufacturer.com : Promoting best practice in Manufacturing. N.p., n.d. Web. 10 Mar. 2011. <http://www.themanufacturer.com/us/detail.html?contents_id=4010 Treece, James B.. "The Roots of Toyota's Strength." AUTOMOTIVE NEWS. Crain Communications, 18 Aug. 2006. Web. 11 Mar. 2011. <www.autoweek.com/article/20060818/FREE/60816004 >. Vaghefi, M. Reza . "Creating Sustainable Competitive Advantage: The Toyota Philosohpy and its Effects." In the Press: Toyota. N.p., n.d. Web. 11 Mar. 2011. <sysdoc.doors.ch/TOYOTA/toyotaphilosohy.pdf>.