Toyota Indus Motors Science Of Marketing Project.docx

Toyota Indus motors. Group Members: 1. Furqan Tariq.

2. Sayed Arbab Hussain. 3. Salman Hameed.

Table of Contents Automotive Industry: ................................................................................................................................ 2 Globally: ................................................................................................................................................... 2 Automobile Industry in Pakistan: ............................................................................................................. 4 Toyota Indus Motor: ................................................................................................................................. 5 Major Players of automobile industry in Pakistan: ................................................................................... 6 Market Share: ............................................................................................................................................ 9 Model’s Market Share: ........................................................................................................................... 10 Market Size: ............................................................................................................................................ 10 Critical Success factor (CSF): ................................................................................................................. 10 Porter's 5 forces model on Automobile Industry: ................................................................................... 13 PESTEL Analysis of Automobile Industry:............................................................................................ 16 Political: .................................................................................................................................................. 16 Economical: ............................................................................................................................................ 16 Social: ..................................................................................................................................................... 17 Technology: ............................................................................................................................................ 18 Environmental:........................................................................................................................................ 19 Legal: ...................................................................................................................................................... 19 SWOT analysis of Toyota:...................................................................................................................... 20 STRENGTHS: ........................................................................................................................................ 20 WEAKNESSES: ..................................................................................................................................... 22 OPPORTUNITIES:............................................................................................................................. 24 THREATS: ......................................................................................................................................... 24 General Electric (GE) matrix: ................................................................................................................. 26 S/O STRATEGIES: .................................................................................................................................... 27 W/O STRATEGIES: ................................................................................................................................... 27 S/T STRATEGIES: ..................................................................................................................................... 27

W/T STRATEGIES: ................................................................................................................................... 28 Space Matrix: .......................................................................................................................................... 29

Automotive Industry: The Automotive industry that comes up with a good vary of styles, producing, selling and merchandising of cars. “Auto” is driven from the compound word “automobile” which means a rider vehicle and “motive” which means an aim. A number of them are known as automakers. Automotive trade contributes majorly to the worldwide economy. The business of manufacturing and merchandising self-powered vehicles, together with rider cars, trucks, farm instrumentality, and different business vehicles. By permitting customers to commute long distances for work, shopping, and recreation, the machine trade has inspired the event of an intensive road system, created doable the expansion of suburbs and looking centers around major cities, and contend a key role within the growth of adjunct industries, akin to the oil and travel businesses. The machine trade has become one amongst the most important purchasers of the many key industrial product, akin to steel. The massive range of individuals the trade employs has created it a key determinant of economic process.

Globally: The Automotive industry that comes up with a good vary of styles, producing, selling and merchandising of cars. “Auto” is driven from the compound word “automobile” which means a rider vehicle and “motive” which means an aim. A number of them are known as automakers. Automotive trade contributes majorly to the worldwide economy. The business of manufacturing and merchandising self-powered vehicles, together with rider cars, trucks, farm instrumentality, and different business vehicles. Before the good Depression, the globe had (32,028,500) cars in use, and the U.S. industry created over ninetieth of them. At that point the U.S. had one automobile per 4.87 persons. Once war two, the U.S. created concerning seventy fifth of world's machine production. In 1980, the U.S. was overtaken by Japan so became world's leader once more in 1994. In 2006, Japan narrowly passed

the U.S. in production and control this rank till 2009, once China took the highest spot with 13.8 million units. With 19.3 million units factory-made in 2012, China virtually doubled the U.S. production, with 10.3 million units, whereas Japan was in third place with 9.9 million units. From 1970 (140 models) over 1998 (260 models) to 2012 (684 models).

Number of car sold worldwide from (1990-2018).

Global car sale by manufacturer in 2016.

Automobile Industry in Pakistan: The automobile trade in Pakistan includes firms concerned the production/assembling of rider cars, lightweight industrial vehicles, trucks, buses, tractors and motorcycles. The automobile spare elements trade is associate allied of the automobile trade. The automobile & allied trade type a serious sector in Pakistan. The market structure of the car trade in Pakistan is focused. In economic science term, we have a tendency to might say its associate market that is characterized by imperfect competition within which the trade is dominated by little variety of suppliers. This is often as a result of the automobile trade is extremely capital-intensive requiring high investments and also the product are overpriced. Therefore the barriers to entry are high leading to the presence of restricted variety of suppliers. The market is dominated by Toyota, Honda and Suzuki in Pakistan whose market share are as follow: (Imported vehicle also include in this figure). Moreover, the market also can be categorized as price-oriented. As cars are luxury things, particularly in developing countries (Pakistan being one in all them), the demand for them is elastic. Any costs amendment affects the sales of the corporate to a good extent.

Market Share of Models. 15% 39% 19%

6%

Corolla

Civic

City

11%

10%

Mehran

Cultus

Others

Toyota Indus Motor:

Indus Motor is a joint venture between the House of Habib, Toyota Motor Corporation, Japan (TMC), and Toyota Tsusho Corporation, Japan (TTC) for assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 1, 1990. Indus Motor Company are Manufacturers, assemblers, distributors and importers of Toyota and Daihatsu vehicles, spare parts and accessories in Pakistan. Models produced include: 

Corolla.



Hilux.



Vigo Champ.



Fortuner.

Indus Motor also retails the following models imported from Japan: 

Camry.



Land Cruiser.



Prado.



RAV4.



Avanza.



Hiace.



Coaster.



Terios.



Prius.

Major Players of automobile industry in Pakistan: Pak Suzuki Motors:

The firm was founded in September 1982 as a joint venture between the government of Pakistan and Suzuki motor company Japan, formalizing the arrangement by which Awami Auto Ltd. had produced the Suzuki SS80 from 1982. Suzuki originally owned 25% of the stock and have gradually increased their holding; they now own 73.09%. Pak-Suzuki was a joint venture between the state-owned Pakistan Automobile Corporation (PACO), who had earlier overseen local assembly from kits. All vehicles produced and sold by Pak Suzuki are globally retired models sourced from Suzuki Japan that do not meet any consumer safety standards or modern emission standards.

Pak Suzuki motors was once the market leader in Pakistan, with over 60% of market share and complete dominance of the small car sector however this figure has dropped considerably and JDM vehicles have overtaken Pak Suzuki owing to the fact of selling third rate vehicles with zero safety and minimal comfort features at very high prices since the past 30+ years. Models produced include: 

FX.



Mehran (very basic version of the globally retired Second generation Suzuki Alto 1984– 1988)



Suzuki Alto (Suzuki Alto HA12 chassis fitted with a 1982-1984 Suzuki F10A 970 cc engine. Discontinued in 2012)



Baleno.



Cultus (basic version of the globally retired Suzuki Cultus Generation 2)



Liana.



Suzuki Swift (trimmed down version of the international 2004-2010 Suzuki Swift 1.3 without safety features introduced in Pakistan after it was phased out elsewhere)



Suzuki Wagon R.



Suzuki Carry (basic version of the Seventh generation (ST30/40/90) 1979–1985 Suzuki Carry)



Suzuki Kizashi (Imported)



Suzuki APV (Imported)

Honda Atlas:

Honda Atlas Cars is a joint venture between Honda Motor Company Limited, Japan and the Atlas Group, Pakistan. The company was incorporated on November 4, 1992 and a joint venture agreement was signed on August 5, 1993. The company is listed on Karachi, Lahore and Islamabad Stock Exchanges. On July 14, 1994, booking of Honda cars started at six dealerships in Karachi, Lahore and Islamabad. Since then, the company has developed twenty one 3S dealers (Sales, Service and Spare Parts) twenty 2S dealers (Service and Spare Parts) and six 1S dealers (Spare Parts) network in all major cities of Pakistan. Models produced include: 

Honda Accord.



Honda City.



Honda Civic.



Honda CR-V.



Honda CR-Z.



Honda HR-V.

Competative Profile Matrix:

CSF Price Millage Safety Profit Sales Re-sale Total

Weight Rating (0-1) (1-4) 0.3 4 0.15 3.5 0.12 3 0.2 2.5 0.1 2 0.13 3 1

Honda Toyota Suzuki Weighted score Rating Weighted score Rating Weighted score (W*R) (1-4) (W*R) (1-4) (W*R) 1.2 4 1.2 4 1.2 0.525 4 0.6 2 0.3 0.36 3 0.36 2 0.24 0.5 3 0.6 3 0.6 0.2 3 0.3 3.5 0.35 0.39 4 0.52 3 0.39 3.175 3.58 3.08

Positioning Map:

Positioning Map 5 4.5 4

Honda, 4

Suzuki, 4

Toyota, 4

3.5 3

Toyota, 3

2.5 0

0.5

1

1.5

2 2

Honda, 2

2.5

Suzuki, 2

1.5 1 0.5 0 Price

Safety

Sales

Market Share: Market share is the percentage of a market accounted for by a specific entity.

Market share of brands. 13% 26%

33% 28%

Honda

Toyota

Suzuki

Others

3

3.5

Because we only have the “Big Three” companies with dealerships Suzuki being the cheapest covers 33%, Toyota 28% and Honda has a market share of 25%. The remaining 14% cover all other brands. The order makes sense when you get to see people’s perception of overpriced brands, which puts Honda to the most overpriced brand, Toyota after that, and Suzuki at the third, exactly the reverse order.

Model’s Market Share: A bit surprising but most of the cars out there are Corolla 13%, while its rival Civic has 12% share. Now that may sound good to Toyota people but only for a while, because that 13% consists the 1.3, 1.6 and 1.8 Liter variants, and a general perception is that 80-90% of Corollas out there are 1.3s so in this regard, people should be worried about what they’re doing wrong. More surprising facts, Suzuki Mehran and Honda City have same market share, 10%, which again is a very, very good news for Honda people because Mehran comes in different price ranges, some of them making less than one-third of what you would pay for a City. Other car models cover 47% of the market. Uniqueness: Once again Honda takes it. The results show that Honda makes the most unique car Toyota, the second most, and Suzuki, again comes at the third rank.

Market Size: Pakistan Automobile Market continues to show growth in 2016-17 in comparison to 2015-16. In data released by the Pakistan Automotive Manufacturers Association (PAMA) it has been shared that the total car sales by the local manufacturers and assemblers, have reached at a 155,960 units mark. This sales count is 2.39% more in the current fiscal year as compared to 152,229 units sold in the same period last year.

Critical Success factor (CSF): CSFs are the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department or organization. CSFs are the few key

areas where "things must go right" for the business to flourish and for the manager's goals to be attained. By (John F. Rock art) CSF Consumer’s: Consumer's

C-1

C-2

C-3

C-4

C-5

Average

Millage

5

4

4

5

4.5

4.5

Comfort

3

4

3

4.4

4.2

3.72

Price

5

5

4

4.6

4.8

4.68

ABS

3

2

3.3

3.9

4

3.24

Speed

4

3

4.6

4

4

3.92

Maintenance

4

5

4

4.6

4

4.32

Safety

4

5

4

4.6

4.8

4.48

Price (1): Middle category customers are terribly acutely aware concerning the value of vehicles however elite class simply concern with comfort and magnificence. Mileage (2): Design such ECO and Hybrid system that are terribly economical to save lots of fuel. This is often the approach within which industry save the fuel and will increase the mileage. Like in ECO system once automotive stop on traffic light or anyplace then press the break. All running instrumentality like AC, lights and different things are shifted on battery. During this approach we will save the fuel and will increase the mileage. Comfort (3): Seats are vital in any vehicle. Such a big amount of customers avoid getting such vehicles that have less comfy seats. Breaking system and road grip are connected with comfort. Such a big amount of customers are terribly acutely aware concerning breaking and road grip of a vehicle.

Multimedia, automatic moving facet mirrors and appearance of a vehicle are connected with comfort of auto. CSF Customer's: Customer's

C-1

C-2

C-3

C-4

C-5

Average

Profit

5

5

5

5

5

5

Millage

4

4

5

3

4

4

Sales

4.4

5

4.8

4.6

5

4.76

Body

4.2

3

3.8

4.4

4

3.88

Suspension

3

2

2.8

3.1

2.5

2.68

Braking

3

4

2

3.4

4

3.28

Re-Sale

4

4.5

5

3.5

4

4.2

Multi Media

3.9

2

3

4

4.1

3.4

Profit (1): Profit is that the primary issue for client in industry. Sales (2): In industry costume designer is generally automotive salesroom vendors, for them sales square measure most vital. Re-Sale (3): In industry the customer prefer to buy a car whose give benefit to him at the time of sale it doesn’t mean that it give profit or loss but in return specific amount that suit according to car condition and satisfy customer easily.

Overall CSF: Scale: (1-4). Brand

Price

Mileage

Safety

Profit

Sales

Re-Sale

Honda

4

3

4

3

2

3

Suzuki

4

4

2

3

4

3.5

Toyota

4

3

4

3.5

3

4

Porter's 5 forces model on Automobile Industry: 1-Bargaining Power of Buyers: The bartering energy of automakers is unquestionable. Customers might find yourself plainly foiled with an oversized variety of the things being offered by specific automakers and commenced finding out choices, especially remote autos. Then again, whereas shoppers are exceptionally price delicate, they do not have a lot of getting power as they ne'er get large volumes of autos. 2-Bargaining Power of Suppliers: Therefore, suppliers are astonishingly helpless to the requests and conditions of the vehicle producer and hold next to no power. For elements suppliers, the life of a automotive is important. The additional extended associate automobile remains operational, the additional distinguished the need for brand spanking new elements. Then again, new elements are enduring longer, that is awing for patrons, but is not such rising news for elements creators. At the purpose once, maybe, most automobile producers moved from utilizing moved steel to chrome steel, the amendment broadened the lifetime of elements by quite an whereas. 3-Barriers to Entry: The development of remote contenders with the capital, needed advances and administration talents began to undermine the piece of the trade of various vehicle organizations. Economic process the propensity of world speculation associated organizations to maneuver from national and residential markets to an overall domain is large factors influencing the automobile advertises. Like ne'er before, it's progressing to be perceptibly less strict for out of doors automakers to enter the Domestic market. they need created monopoly within the trade for pretty much twenty years & have higher profit margins however once the new automobile policy 2017-2021 the new entrants are currently progressing to play their half within the industry. 4-Threat of Substitutes: Some folks getting associate alternate automobile, there's likewise got to likewise take a goose at the likelihood of people taking the transport, prepare or plane to their goal. The upper the value of operating a vehicle, the additional probable people can hunt for elective transportation decisions. The value of fuel for the most part affects buyers' decisions to get vehicles. Trucks and game utility

vehicles have higher overall revenues, nonetheless they likewise chug gas contrasted with littler cars and light-weight trucks. Whereas deciding the accessibility of substitutes you have to be compelled to likewise rely on time, cash, individual inclination and accommodation within the automobile travel trade. 5-Competitive Rivalry: Automobile industry square measure terribly aggressive enterprises for the foremost half gain low returns in lightweight of the actual fact that the value of competition is high. The automakers comprehend that value based mostly competition doesn't extremely prompt increments within the span of the industrial center, actually they need tried to stay far from value based mostly competition. Systematically, automobile organizations refresh their autos. This is often a bit of typical operations, nonetheless there will be a difficulty once a corporation chooses to altogether amendment of associate automobile. Whereas another define might pay off basically over the long run, it's faithfully a dangerous suggestion.

Porter's Five Forces. 1-Barriers to entry: Imp to

Imp to

Industry(1-5)

company(1-5)

Foreign Competitor

3

5

15

Technology Required

5

5

25

5

5

25

Financial strength

4

4

16

Environmental stability

3

4

12

Imp to

Imp to

Industry(1-5)

company(1-5)

3

3

Factor

Consumer & business confidence into Account

Score

Max

Min

125

5

Average Score 18.6

2-Threat of Substitutes: Factor Bus Train Airplane

Score

Average Score

9

17.4

Higher cost of operating vehicle

5

5

25

Fuel Charges

3

4

12

Customer behavior

4

4

16

Duties and Taxes

5

5

25

Important to

Important for

Industry

your company

3

4

12

4

4

16

5

5

25

Important to

Important for

Industry

your company

Number and Size of Suppliers

4

5

20

Unique Service / Product

5

5

25

Ability to substitute

3

4

12

R&D

5

4

20

Low cost of change

4

3

12

3-Barganing Power of Buyer Factors Switching Costs Number of customers/ Volume of sales Brand Image

Score

Average Score 17.66667

4-Barganing power of Supplier Factors

Score

Average Score 17.8

Total A/S:

71.4

Conclusion: According to porter’s analysis automobile industry is attractive in Pakistan. The total A/V score shows that it has low barriers to entry as new auto policy (2016-2021) had make it much easier for the new entrants. The market structure followed by automobile industry till 2018 is oligopoly and we further see it converting into perfect competition in the near future.

PESTEL Analysis of Automobile Industry: Political: This specific business in developing countries typically suffers pressure by the govt... It edges the govt. success because it could be a massive supply of revenue on macro scale of consumption. Round the world that has created it tough for automobile manufacturer to stay competitive globally. Briefly explaining, following matters of Political nature have a control on the scope of this Industry’s future. Due emergence of middle and higher middle categories of the society, the demand of vehicles is visible, still factors like political instability, law order situation and corruption result in unstrengthening of the actual market. Economical: With mercantilism spare components, rate of exchange gets affected reciprocally. There are variety of things triggering changes within the rates. To say a few; Increase within the costs of fuel (Oil/Gas), Interest leasing by the banks and clearly the overall rise in imports. For increase the fare division and accomplishing the on top of focuses on, some key empowering agents are basic to expand potency and aggressiveness and resultantly upgrade trades. The key empowering influences are ordered into four groupings i.e. Aggressiveness, Compliance to Standards, Policy surroundings and Market Access. 

Of engine vehicles noncommissioned four.278million



Of engine vehicles on street three.381 million



The overall range of soul autos on street 638million.



Total advertise live for soul autos 40,000units



Demand of vehicles at CAGR 6-8%



Average capability usage of autos business is forty seven



Capability use in 1998-99 fifty three



Persons per car in Pakistan a hundred and twenty



Irregular imports of autos 75000 units



Import of autos below exchange of home 4000 units

Statistics have shown that the cars that were foreign resulted in less or generally even no convenience of spare components. shoppers either have to be compelled to await long periods of your time for a few component offered somewhere within the world that too needs a protracted procedure to succeed in the patron or, the vehicle is currently only for showcasing and of fully no use in any respect unless the patron wishes merchandising away alternative spare components. We will get pleasure from newer technologies by reducing tariffs on the import of latest cars. It had been declared before; the demand for cars is price-elastic. The most important determinant for the demand for cars is so worth. If the getting power of the folks is reduced thanks to either worth will increase or income decreases, the demand for vehicles are powerfully affected. The market structure of the vehicle business in Pakistan is targeted. In monetary aspects term, we tend to might state it's a marketplace that is delineated by flawed competition during which the business is dominated by few suppliers. This can be on account of the car business is passing capital-escalated requiring high ventures and therefore the things are costly. Henceforward the obstructions to passage are high conveyance regarding the closeness of set range of suppliers. Besides, the market will likewise be organized as price located. As autos are extravagance things, significantly in making nations (Pakistan being one in every of them), the interest for them is flexible. Any prices amendment influences the offers of the organization all things thought of. Distributing business could be a part of the vehicle business. The vehicle components involve 750 totally different measured ventures; expansive, medium and small. It provides occupations to an oversized portion of 1,000,000 folks, of that one hundred and thousands, are immediate employees and 400,000 by implication with a close-by speculation of Rs.20 billion. The business works ninety fifth on self-reformation premise. The units are in 3 types that incorporate the primary gear manufacturers (OEM's), free manufacturers and subordinate business making very little components. The OEM's offer their things for amassing functions to the neighborhood business, instead of giving within the retail advertise. 1.

Employment Creation

2.

Taxes to Government

3.

Customers are the Sufferers

4.

Increase in importing

Social:

One in 205 persons own an automotive in Pakistan as compared to forty persons in Asia, four persons in Europe and three persons in North America. The magnitude relation of these UN agency will afford to shop for an automotive is way lower one person in 2900. The analysis relies on a population of 131.4 million, automotive population of 638,800. Pakistan incorporates a high rate. Street crime like mobile/car snatching could be a common follow in massive cities like urban center, Lahore, and alternative provincial capitals and cities of political/historical marking. Statistics have shown through numerous surveys that rate is additionally an element within the approach of decisive client behavior. 1.

Automotive Culture

2.

Fashions and style

3.

Augmented desirability of custom cars

4.

Client perspective

5.

Standing image

6.

Security

Technology: Talking of technology, Pakistan is amongst the quickest rising countries within the fields of technology. Pakistan incorporates a smart future for the car business and therefore the industries regarding it. Countries with more practical technological knowhow are a lot of possible to possess a prosperous business and such countries are in high demand of creating an area business. The import of German technology, coaching and talent upgrading programs will be of huge importance, because it would supply opportunities to profit from the German ability further their technology in terms of up the productivity, quality and for the selling and development of added merchandise. Also, the new car Development Policy that is below preparation aims to extend client selection therefore, once more signifying the importance of investment and diversification within the sector. Market growth is to be achieved by lowering entry thresholds making AN investment conductive surroundings for additionally foreign corporations to enter the market. Here are some points that are important just in case of technology: 1. Market being User friendly with IT. 2. Web convenience & shopping for magnitude relation

3. Debit & MasterCard Users 4. IT Infrastructure Environmental: Pollution: In a country like Pakistan pollution could be a matter of pressing attention. Pollution is one in every of the most important sorts of pollution sweet-faced by folks. This can be a reason folks are inspired to use transport to decrease the utilization of a lot of and a lot of cars. The smoke emitting vehicles have reborn city into a contaminated town within the country. In keeping with a survey, each cubic decimeter of crude oil consumed by an automobile releases two.2 grams of dioxide into the air threatening numerous health problems. Responsibility for pollution to a serious extent involves the material possession of the vehicle fitness department that is permitting unusual person vehicles people at a lower price with injurious and health venturous things to be used once more. Congestion and Traffic Jams: Pakistan has weak infrastructure as compared to the primary world countries. There’s inconvenience sweet-faced by folks thanks to broken roads, college timings, security for celebrity movement or any kind of social or political event. For instance allow us to herald thought of city. The govt. has created efforts to mend this issue of inconvenience sweet-faced by folks thanks to road diversions created at such a large amount of places undergoing mass transit comes. There are constructions of signal free corridors, overhead bridges and underpasses however the matter still persists. Poor/Low Quality Infrastructure: Traffic in most of the cities and even on high suffers thanks to another issue which is that the poor or caliber maintenance of roads buildings etc. folks avoid conveyance their vehicle to such sites and even the general public transports won't need to risk the lives of such a large amount of folks over that route. Lanes don't seem to be properly white on roads for vehicles. Multiple sized vehicles are victimization lanes at a time inflicting severe traffic nuisance. Legal:

Legally speaking, Pakistan incorporates a range of problems. Law/Order/legal certification/ license grant/ownership all come back below this sector. One in every of the core legal problems industry is facing in is that the restricted makes/brands offered in Pakistan. There are simply a couple of brands approved for collection their makes at intervals the territory of Pakistan. This can be triggered by Political and Economic reasons. Massive brands don't get this market thanks to low rate of consumers, unhealthy law order and political situation of the country. Rivalry within the automotive market will be increased essentially by allowing import of latest autos at bring down prices. This got to be asked for with this speculation strategy of drawing in alternative car manufacturers within the nation. Gap up imports can provides an opportunity to planned future monetary specialists to understand the market and nature of the interest for his or her things antecedently they create ventures. 1. Restricted Production capability. 2. Appreciation of remote financial standards. 3. Rise in Demand and Premium.

SWOT analysis of Toyota: STRENGTHS: 1.

State of the art research and development (R&D)

2.

Quality with long lasting results. Vehicles assembled 20 years ago are still in use today.

3.

Wider range of vehicles.

4.

Competence in hybrid vehicle production.

5.

Strong brand image.

6.

Strong CSR (Corporate Social Responsibility). Environmentally friendly approach.

7.

Globally Available everywhere.

8.

Rapid innovation capabilities.

1-Strong focus on research and development (R&D):

A strong brand has a powerful R&D team. Toyota is a powerful brand which knows the art of localizing global range of its products. This can only be done with an effective study of consumer behavior and innovation strategies. The company operates 17 research facilities in 8 different countries. The brand’s research division studies 3 different areas: 

Basic research;



Technology development;



Product development.

Company

R&D Spending

Toyota Motor Corporation

9.37

Volkswagen Group

14

General Motors

7.5

2-The most valuable/Durable automotive brand in the world: According to Inter brand and Forbes, “Toyota’s brand is the world’s 5th and 6th most valuable brand worth, US$53.6 billion and US$42.1 billion, accordingly. In both lists, it is the No 1 Automotive brand in terms of value”. Ranking(automotive)

BRAND

BRAND VALUE

OVERALL

(In US $ billions)

RANKING IN 2016

1

TOYOTA

53.6

5

2

MERCEDES-BENZ

43.5

9

3

BMW

41.5

11

4

HONDA

22.1

21

5

FORD

13

31

6

HYUNDIA

12.5

35

7

AUDI

11.8

38

3. Effective CSR/Toyota Production System:

Toyota aims at producing vehicles that help in sustainability of the society and environment. All of the company’s activities revolve around the objective. Toyota Production system or TPS is a manufacturing system developed by Toyota. The system’s mission is to ‘eliminate all waste from manufacturing processes. The system was based on Just-in Time concept. TPS has become very successful in allowing the company to increase production efficiency, decrease manufacturing time and simplify its processes. All of which resulted in lower costs and better quality vehicles. 4. Competence in hybrid vehicle production: Toyota has worked hard on the development of its Hybrid segment. The first Hybrid was brought to market in 1997. Toyota Prius, the first Hybrid to be introduced is to date very successful. As of May 2016, the company has sold over 5.7 million Prius models and in totals 9 million other hybrid vehicles, more than any other automotive company in the world. Currently, Toyota offers over 30 usual hybrid vehicles and plug-in hybrid vehicles under its four brands. Prius was introduced to Pakistan in 2009.

WEAKNESSES: 1-Lack of innovation in heavy vehicle: Toyota no doubt has a very good technological research and development however; the brand still needs to make innovatory developments such as launching autonomous heavy vehicles (driven with remote controlled devices) for helping commute heavy bulk of material goods as well as public transportation.

2-Weak eminence in the biggest global market: Toyota has managed making only 4.5% share in the market of China. China could be the best market for any Automobile brand since there is a huge population as well as buying power.

3-Poor Brand range of articles: Toyota’s Competitors in the market have produced a wide series of brands. Toyota has currently only four brands Hino, Daihatsu, Lexus and Toyota. Only Toyota and Lexus have made their brand recognition, that too specifically because of the luxury cars range.

Internal Factor Evaluation Factors

Rate

Wt(0-1)

Score

and 4

0.207

0.828

The most valuable automotive brand 4

0.187

0.748

0.13

0.52

0.136

0.544

0.129

0.387

3

0.076

0.228

Lack of competence in autonomous 2

0.032

0.064

0.03

0.06

strong

focus

on

research

development (R&D)

Major Strength

in the world. Competence

in

hybrid

vehicle 4

production. Global supply chain rapid innovation 4 capabilities The most valuable automotive brand 3 Minor

in the world.

Strength

Rapid innovation capabilities.

Major

vehicles

Weakness Negative publicity due to large 2 vehicle recalls

Minor

Weak presence in China

2

0.023

0.046

Poor brand portfolio

1

0.022

0.022

Hierarchical organizational structure

1

0.016

0.016

1

0.009

0.009

Effects of product recalls in recent 1

0.003

0.003

Weakness Secrecy in organizational culture

years

∑Wt(0-1)=1

∑Score=3.475

OPPORTUNITIES: 1. Rise in petroleum (fossil fuel) prices Toyota could further work on its monopoly of hybrid vehicle market because of the change in fuel demand and supply ration change expected in future. The brand can easily benefit on concentrating on its hybrid segment. 2. Demand for Autonomous Vehicles Once again it is an opportunity for a brand like Toyota that has established itself well in the market to come up easily with a unique selling preposition before anyone else. It is reported that there are currently more than 33 companies working on bringing autonomous technology to the market but no one has openly marketed this type of a machine because of huge budgets. Toyota can avail this opportunity since it has comparatively bigger financial reserves. THREATS: 1-Rising Japanese Yen Exchange Rate Toyota has a number of countries that are assembling Toyota vehicles in their country, because of which there is a variation in the company’s revenue. “More than 48% of Toyota’s revenue comes from international markets, which means that the company has to convert foreign currencies to Japanese yen in order to calculate its revenues and send the profits back to Japan. Currency rates are volatile and the company’s profits and revenue highly depend on the fluctuating exchange rates. The company cannot control the currency exchange rates, therefore it is at risk, if Japanese yen exchange rates would start to rise. In such case, the company’s profits would decrease significantly. The company itself identifies this as a key threat that will negatively affect the company over the next few years.” (Jurevicius, 2016)

2-Security reasons in autonomous technology There are a number of factors involved in security hazards that might come up with the introduction of this technology. There can be strict laws and licencing for this kind of vehicle which may result in limiting the buying power. 3-Rise of competition in global Automotive Market There is a big competition in automotive industry and bringing in Toyota specifically, the brand is facing big competition in the biggest global market China. Chinese manufacturers are offering vehicles close enough to Toyota vehicles but at comparatively lower prices. 4-Natural Disasters Natural disasters have a great impact in this Zone of the world. Countries such as Thailand, Malaysia, China, Indonesia and above all Japan are at high risk of natural disasters such as Earth Quakes, Tsunamis and floods etc. This may have an impact in the post-production as well as preproduction (natural resources) for production.

External Factor Evaluation Factors

Rate Fuel prices are expected to rise in the 4

Wt.(0-1)

Score

0.19

0.76

0.175

0.7

0.13

0.52

0.12

0.48

0.074

0.296

0.1

0.3

near future. Demand for autonomous vehicles.

4

Timing and frequency of new model 4 releases. Major opportunities

Growing interest in advanced electronics 4 in vehicles.

Weak Japanese Yen vs. U.S. Dollar. 1. Growing countries.

markets

in

4

developing 3

Minor

Rising

fuel-efficient 3

0.076

0.228

opportunities

automobiles.

1. Growing market presence of low-cost 2

0.031

0.062

Major threats

demand

for

competitors

2. Rapid innovation of competitors

2

0.03

0.06

3. Rising Japanese yen exchange rate

1

0.02

0.02

0.019

0.019

0.032

0.032

0.003

0.003

∑Wt.(0-1)=1

∑Score=3.48

4. The automotive industry is subject to 1 various governmental regulations 5. Increasing competition in the worldwide 1 Minor threats

automotive market

6. Toyota may be adversely affected by 1 natural disasters

General Electric (GE) matrix:

S/O STRATEGIES: 1- Toyota with a solid worldwide nearness over the world can utilize its capability to put resources into the developing economies like Brazil, China to misuse more advantages these nations have (S1, O1). 2- By introducing additional new product range (O3, S3) 3- To infiltrate current markets by proposing advanced techniques and customer oriented products. (O3, S4) (O4, S4) 4- Being a robust market leader presently, Toyota has the advantage of rise in demand in the automotive sector in order to achieve more profit in sales (O4, S2).

W/O STRATEGIES: 1- Posing innovative/improved products in order to overwhelmed the forfeiture in sales and negative effect on its brand image. (W1, O3) (W3, O3) 2- By reducing the overall cost. (W1, O3). 3- As the call for Toyota vehicles is growing presently can give some provision to Toyota, if the assets are being circulated equally and thus will give less amount of time to work on manufacturing facilities especially in those countries where they are considered to be costly (W2, O4).

S/T STRATEGIES: 1- Through market growth in the new markets can reduce the impact of Yen on Toyota who’s already known as the world’s market leader and so in this case, the business can shift its some setups to other countries. (S2, T1) (S2, T2). 2- Present modernism in products can avoid Toyota from increase in fuel prices and customers also will have some choices. (S4, T4) 3- Toyota’s most products are best known for its excellence and innovation that can lessen any loss in prices against its competitors in the manufacturing sector. (S3, T3) (S4, T5).

W/T STRATEGIES: 1- The best substitute is to shift some of the manufacturing operations in other countries that is less inclined by the Yen variation and can improve its financial disorders affected by economical/political unpredictability at the same time. (W1, T1) (W2, T2). 2- The outcome of market saturation can be concentrated by concentrating on some sections that is able to afford costly manufacturing facilities and high standard products which will help Toyota to produce cars of its best quality. (W2, T4) (W3, T4). Toyota has made a very eminent place in the market. Over the past few years, there have been a number of factors that have resulted in challenges for the company. Factors such as the globally changing climate, environmental and economic issues have influenced the consumer behavior. People prefer more environmentally friendly and less fuel consuming cars for all purposes. This has led to more demand of small vehicle as compared to the heavy ones. Thembani Nkomo considers US financial crisis responsible for the fall in fuel prices in the middle of 2008. Industry revenue fell about 15.4% in 2009. Pent-up demands will aid industry revenue growth, estimated at 2.1% in 2013, thus bringing overall revenue to an estimated $2.3 trillion. Overall, the large declines followed by recovery are expected to lend the industry average growth of 2.2% per year during the five years to 2013. Throughout the past five years, growth in the BRIC countries supported production. Rising income in these countries led to an increase in the demand for motor vehicles. Also, Western automakers moved production facilities to BRIC countries to tap into these markets and benefit from low-cost production. Over the next five years, the emerging economies will continue their growth, and demand for motor vehicles in the Western world will recover. Industry revenue is forecast to grow an annualized 2.5% to total an estimated $2.6 trillion over the five years to 2018”.

BCG Matrix: BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the business brand portfolio and it’s potential. It classifies business portfolio into four categories based on industry attractiveness (growth rate of that industry) and competitive position (relative market share).

Explanation of BCG Matrix:

Toyota Grande,Altis Xli,GLI Total Sale Hilux 4x4,4x2 Fortuner

Honda Civic City, BRV Total Sale

Sales 2017 Sales 2016 Market Share Market growth 14088 15367 47% -8.323029869 38588 42085 66% -8.309373886 52676 57452 5860 1375

5923 602

100% 100%

-1.063650177 128.4053156

Sales 2017 Sales 2016 Market Share Market Growth 15592 12594 53% 23.8049865 19789 19496 34% 1.502872384 35381 32090

Relative market share -0.06 -0.08

-0.94 0.01 Relative market share 0.02 0.23

Space Matrix: Scale: (+1 Worst, +6 best) for FS & IS. Scale: (-6 Worst, -1 best) for ES & CA. Internal Strategic Position (ISP)

External Strategic Position (ESP)

Industry Strength:

Environmental Stability:

Growth Potential

+(5)

Technological Changes

-(2)

Resource Utilization

+(4)

Taxation

-(3)

Profit Potential

+(4)

Demand

-(2)

Joint Venture

+(1)

Barriers to entry

-(3)

Ease of entry into market

+(3)

Inflation

-(4)

Average= + 3.4

Average= - 2.8

Total X- Axis =0.6 Competitive Advantage:

Financial Strength:

Market Share

-(1)

Earning per Unit

+(4)

Innovations

-(1)

Revenues

+(5)

Product Quality

-(3)

Cash Flow

+(3)

Control over Supply

-(3)

Capital

+(4)

Customer Loyalty

-(4)

Return on investment

+(3)

Average = - 2.4

Average = + 3.8

Total Y- Axis =1.4

Graph:

Explanation: Space matrix includes four positions which are Aggressive position, conservative position, defensive position, conservative position. Horizontal axis in space graph shows FS (Financial Strength) and CA (Competitive Advantage); vertical axis shows ES (Environmental Stability) and IS (Industrial Strength) Horizontal axis in space graph shows FS (Financial Strength) and CA (Competitive Advantage); vertical axis shows ES (Environmental Stability) and IS (Industrial Strength). After assessing the business across four dimensions mentioned above SPACE matrix can recommend four different strategies the company is using: Aggressive strategy, competitive strategy, conservative strategy and defensive strategy. By computing above data Toyota Indus Motors should adopt aggressive position and try to improve upon on its weaknesses, minimize external threats and take advantage of its external opportunities.

Research: The purpose of this research is to determine Market position of Toyota Indus. Who’s a major player of Automobile Industry of Pakistan? This study will help determine the strategies which need to be put in motion, in order for Toyota Indus to thrive in the newly unregulated and high competitive Environment. To evaluate the market position of Toyota Indus, relevant data is collected from numerous secondary sources such as Pak wheel and PAMA, Business records Blogs and its website. The data regarding financial strength has been gathered from financial reports on Toyota Indus website.

Unit of Analysis: Market position of Toyota Indus. Type of Investigation: Secondary Data. Re-search Type: Descriptive. Conclusion: 

Local auto industry stands behind the auto industries of neighboring countries.



Imports of automobiles is effecting local auto industry.



The auto industry has experienced decline in its production and sale values.



Car price are relatively high.



Low production capacity



Insufficient export of automobiles.



Un-organized Industry.

Recommendation: 

Market expansion measures should be taken.



Volume of production should be increase.



Localization should be increased and investment should be made to increase localization.



Control the imports of cars.



Government give relief in tax or duties whose manufacture or Import Eco-friendly or electric vehicles.

Bibliography: https://fp.brecorder.com/2004/04/20040402141630/

https://www.pakwheels.com/blog/a-view-on-pakistans-auto https://www.strategicmanagementinsight.com/swot-analyses/toyota-swot-analysis.html https://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf

http://panmore.com/toyota-pestel-pestle-analysis-recommendations http://interbrand.com/best-brands/best-global-brands/2016/ranking/\ Honda Annual report 2016-2017 Toyota Indus annual report 2016-2017