Toyota Motor Corp.

Launching Prius
By:
Ahmad Helmi, Alexander Aditya, and Rosihan Anwar
Case Background
Automobile Department
established by Kiichiro Passenger car production
Toyoda within the Toyoda started
Automatic Loom Works

1933 1947 1995

1926 1937 Strategic Decision for Prius,

Toyota’s Hybrid Car
Textile company by Sakichi Toyota Motor Company Concept, is discussed.
Toyoda (Toyoda Automatic established as an Should Toyota accelerate
Loom Works) Independent Company the product launching?

COMPETITORS:
Problem / Issues

Prius means clear statement on Toyota’s commitment to environmental protection

and generate excitement about the company's products and innovative capabilities
that had been missing for many years  These benefits would be maximized if
Toyota was first to the market. The decision on Prius could be a turning point at
Toyota.

Engineers' recommendation to launch the car in late 1998. The decision, made in
June 1995, was already aggressive relative to the engineers' preferred 1999 launch.
There was much more work left to improve the performance of batteries and to
get ready for mass production  Accelerate even further to December 1997, 30
months development period? To ensure that Toyota would be the first to
introduce hybrid cars,

Pricing and production volume? Estimating demand? Demand linked to the

pricing decision. Too expensive, the market might not take off at all. Company had
to make money. The new vehicle position and market? Once it launched, then
what?
Customer Analysis
Geographic Demographic Behavioral Psychographic

Global market Mass market. High expectation for Asian.

customer. car efficiency.
Age 18-55 Young family.
Most of customer Low fuel consumption
based in Asia. Low Medium Income and low price are First car.
expectation.
Medium High Income
Eco-friendly vehicle
expectation.

Faster product
development
expectation.
 Toyota
SMC Indonesia Corporate ‐
current

1. Productions 1. Local customer 
1. Component Suppliers 2. Research and 1. Young people
1. Eco friendly cars service
2. Dealers or Car Distrib Developments 2. Medium and high 
‐tors 3. Sales and Marketing 2. Reliable hybrid  2. Websites 
3. Regulators cars customer service income level
3. Suitbale for the 
various of local 
temperature 
condition

1. Design Engineer
1. Dealers
2. Raw Material
3. Manufacturer 
plant

1. Production cost 1. Selling cars
2. Overhead cost 2. Selling spare part component
3. Promotion cost 3. Franchise for maintenance workshop
4. Sales and marketing cost
 Porter 5 Forces Analysis
Threat of New Entry : Low

High investment requirement.

Long term investment.
Long term commitment requirement.
High R&D cost.

Supplier Power : Moderate Competitive Rivalry: High Buyer Power : High

Long Term Relationship. Experienced competitors. Substitute product availability.

Asian Supplier – Low Cost
New Technology – Supplier’s
reliability?
Loyal consumer based. Price sensitive buyer.
Government support. Fuel consumption vs car
performance.
Buyer’s high expectation on
product quality.

Threat of Substitution : High

Gasoline Vehicle, LPG Vehicle, Natural Gas

Vehicle, Diesel Vehicle, Diesel Hybrid Vehicle
and Fuel Cell Vehicle.
Public Transportation
Product Lifecycle Analysis

Shakeout
 Opportunities Threats

Politics No embargo policy for the vehicle industry

Economy Seasonal economic cycle Seasonal economic cycle

People become more aware to the emission Purchasing decision based on styling, color, a
Social Trend
reduction dditional function and price

Automaker have not yet produced hybrid Automaker have already research hybrid
Technology
vehicle technology vehicle technology

Advanced country develop policy for the air The state of the California adopted a Zero
Legal
pollution regulation Emission Vehicle (ZEV) program

Global climate change caused by the carbon di

Environment
oxide that resulted from the combustion of fuels

Customer
Public concern about air pollution from cars
Analysis

Automaker have already research hybrid

Industry Automaker have not yet produced hybrid
vehicle technology
Attractiveness vehicle technology
VRIO Model

V R I O Competitive
Advantage
Valuable Rarity Imitable Organized
Strong Operation System & Process Yes Yes Yes Yes Long-Term
Technology innovation Yes Yes Yes Yes Long-Term
Market Leader & Strong Portfolio Yes Yes Yes Yes Long-Term

High brand popularity Yes Yes Yes Yes Long-Term

Customer Data & Network Yes Yes Yes No Competitive Equality
Cost Efficiency Yes Yes Yes No Competitive Equality
 Strength and Weakness
• Strong Operational S
ystem & Process whi
ch create Capacity to
compete based on co
st and price
• Technology innovatio
S W
n using more sustain
able technology
• Market Leader in Jap
an and have strong p
roduct portfolio in vari
ous segment
• High brand popularity
• High Cost & Time-consumin
g for Hybrid/electric car R&
D
• Cost and Reliabilities issues
at New Brake Innovation
• High cost and effort to devel
op Prius brand Image
• Needs strategy improvemen
t for market expansion and i
nnovation to reduce carbon
emission.
 Opportunity and Threat

• Vehicle emissions regulation issu

es
• Untapped market up to 80% of th

O
e world population (outside OECD
Countries)
• No yet available automaker produ
• Zero emission vehicle program

T
ces eco friendly vehicle
in California
• Unobvious market for eco frien
dly vehicle
• Consumers purchaing decision
based on style, color, additional
function and pricing
• Competitors started to develop
their eco friendly vehicle
Grand Strategy

Diversification
Current Condition
Ansoff Matrix
Recommendation
• Toyota should Run the Test regarding the prototype that the company already did through
their customer, production, marketing and C-Level in order and improve in very short
time based on the feedback.
• Toyota should create Agile team for lead this project which is consist of cross functional
member in organization (Lightweight Teams).
• Based on the Grand Strategy and Ansoff Matrix, Toyota should expand to new market
with their existing product by consistent innovation for tackle the emission issues while in
parallel they also developed and launch Prius on the existing market.
• Launching Prius  Pushed forward and more aggressive in order to be the trend setter,
the first to introduce hybrid cars. Creating disruptive changes that other producer cannot
create.
• Batteries performance issues and other left work left  Expand their project even further.
Adding new capabilities for the project team, coming from internally, spin-out organization
or even acquisition.
• Pricing, demand, positioning issue  Further market assessment. Likely between the
conventional product under the Toyota’s brand and Lexus brand.
Recommendation
• Based on the Digital Mastery Quadrant, we
could know that Toyota is considered as
conservatives.
• Toyota need to increase their digital
capabilities in order to become digital
masters.
• Toyota shall also giving opportunity for
youngsters to take leadership role, or at
least participate in the innovation process.
Recommendation
• Based on the Digital Transformation block by Vanaya
Digital, we could know that People is very important
aspect in change.
• When an organization implement digital capabilities
and digital leadership then it will create strong digital
culture where people be able to always do the
innovation and improve the process through
technology and digital approach which create
efficient and responsive as customer want
• However in implementing change the company
should consider the change management to have
successful digital culture implementation.
Recommendation
• Envision the future. Do not feel asleep by the existing standard. Toyota strategy for
not only focusing on the current business (conventional car), but focus on the long
term research and investment (i.e hybrid car) shall also help the company to maintain
its superiority upon competitor.
• Self disrupt. Toyota’s approach for keep maintaining innovative culture within the
organization shall also help help the company to maintain its superiority upon
competitor. Continue disrupt it self before the other competitor disrupt us.
• Offer a unique perspective. As one of the market leader, Toyota shall continue offer
unique perspective to the market. It will be easier for Toyota to do it because Toyota
already have a loyal customer and the customer already trust the Toyota’s brand.
• Better Before Cheaper and Revenue Before Cost. Toyota shall keep continue imple-
menting those two basic rules within its strategy, short term and long term.
• By continuing doing the above mention actions, Toyota shall be able to sustain, or even
better, expand its business and creates another disruptive change to its competitors.
 Current Situation
Market Share Sales
Current Condition
THANK YOU