Toyota: keeping up with the challenge


It is imperative for a company to identify its strengths and weakness in order to facilitate in the process of overcoming threats and provide an avenue through which the firm can capitalize on available opportunities (Borowski, 2010). The underlying objective is to enhance the competitive advantage of the firm. In this context, the paper investigates how Toyota capitalizes on its strengths to counter the threats and maximize on opportunities, and role that threat plays in hindering the success of the company. The strategic plans implemented by Toyota are effective to facilitate the identification of potential strengths and threats in a manner that the company can capitalize on its strengths and reduce its vulnerability to potential threats.

Results of analysis

The global economic crisis witnessed in 2009 did not spare Toyota; this resulted in the company experiencing operational losses in the fiscal year that ended 2009. As a result, the company had to device effective strategies with the aim of restoring the business vitality of the company, and develops strategies that can combat such crises in future. Most importantly, the company had the need to restore its faith in the stakeholders (Toyota Motor Corporation, 2009). On the fiscal year ending March 31st 2009, Toyota incurred low sales, resulting to a decline in the net revenue by 21.9 per cent. The company recorded operating losses that amounted to ¥461 Billion, the fiscal income also decreased significantly in comparison with the fiscal income of 2008, reporting a decrease of ¥2731.3 Billion. According to the annual report of 2009, ineffective marketing strategies and unstable foreign exchange rates played a significant role in resulting to the massive losses by the company. In addition, the global financial crisis of 2009 played a major role in reducing the fiscal income of the company (Toyota Motor Corporation, 2009). Marketing efforts reduced the fiscal income by ¥1480 Billion, while foreign exchange rates affected the same by an amount of ¥760 billion and causing an increase in expenses by ¥760 Billion (Toyota Motor Corporation, 2009).

The establishment of an Emergency Profit Improvement Committee is an effective strategy that Toyota deployed to handle such crises in future. This was potential threat to the company; its effect was significant because the company did not have effective strategic plans to handle such cases. Toyota addressed marketing issues by strengthening their customer relations through production of more effective model cars customized to meet the requirements of the different market segments (Borowski, 2010). Cost reduction is a normal routine, with the company putting emphasis on the reduction of labor costs and expenses associated with administration of the company. With automobile market projected to remain turbulent, Toyota aims at a total cost reduction of ¥460 Billion and maximize on the available idle facilities owned by the company. The financial strategy adopted by the company is also an effective approach to combat future threats associated with global and internal financial crises. The strategy focuses on growth, increasing efficiency and financial stability (Borowski, 2010).

Critical assessment of the major strengths and weakness facing the company


            One of the most important strengths that Toyota Company enjoys is a trusted customer base that is loyal. Loyalty plays a significant role in increasing the market share of the Toyota Company through providing an avenue through which Toyota can increase its automotive sales.  The automotive market is a dynamic one; therefore, having a loyal customer base ensures economic growth for the company. In addition, it strengthens the corporate image of the company. For the company to a build a solid customer foundation, it is imperative for it to not only focus on technological development, but also put into consideration the needs of its customers through making better cars that suit their needs. Therefore, the Toyota Company makes use of this strength through deploying a market-oriented strategy (Ananth et al, 2009).

The second strength that Toyota Company enjoys is an effective management team. An effective management team is a critical success factor for any business enterprise. Toyota relies on its management to offer solutions to crises that the company may face. This entails building a strong organizational culture, which is a significant driving force for the success of the company. In order to realize this, the company has implemented effective communication strategies, both on the side of the company and its customers. A combination of effective management and a loyal customer base enhances the corporate image, which in turn plays a significant role in increasing the market share of the company (Ananth et al, 2009).


A significant weakness of the company is its incapability to lay effective strategic plans aimed at combating potential crises that may hinder the success of the company. For instance, the fiscal losses of the trading period that ended March 2009 is due to improper marketing plans and ineffective crisis management approaches. Another significant weakness that faces Toyota Company is ineffective corporate governance. This plays a significant role in hindering the formulation of corporate policies for the company in order to foster the success of the company. Ineffective corporate governance and lack of strategic planning significantly impairs the ways in which Toyota can formulate and implement policies aimed at managing crises and becoming successful in the competitive market (Ananth et al, 2009).




            It is evident that Toyota adopted effective strategic plans after experiencing the losses of 2009. Strategies such as the establishment of the Emergency Profit Improvement Committee and the market-oriented approach are an effective approach to managing crisis that is unprecedented. Therefore, Toyota capitalizes on its strengths in order to counter the threat that the company may face.




















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