Founded - 1937Founder - Kiichiro ToyodaHeadquarters - Aichi, Nagoya and Tokyo, JapanIndustry - Automotive Robotics Financial services Biotechnology.Products - Economy/mainstream/luxury vehicles

Toyota was started as a automaking fast follower industry but it’s now an INNOVATOR.

First passenger car - Toyota AA was introduced in 1936.

Toyota Motor Co. was established as an independent and separate company in 1937.

The first Toyota built outside Japan was in April 1963, at Port Melbourne in Australia.

PRIUS : A hybrid Electric-Gasoline car in 2000 made Toyota the LEADER.

In 2002 , dealers received 10,000 orders even before the release of 2nd generation PRIUS.

Manufacturing products with speed and flexibility.

Continuous improvement.

Relentlessly innovates.

In 2006, Toyota earned over $11 billion more than all other major automakers combined.

In the first quarter of 2007, it edged past General Motors to become the world’s largest carmaker, and its market cap of $110 billion is more than that of GM, Ford, and DaimlerChrysler combined.

Toyota has only one luxury brand- Lexus but history shows that leadership needs more than one bit.

Car plants represent a huge investment in expensive fixed costs, as well as the high costs of training and retaining labor.

Under capacity i.e. it takes time to accommodate.

Toyota plant can make as many eight different models at the same time, which brings Toyota huge increases in productivity and market responsiveness.

Toyota can build a wide variety of models much more inexpensively.

Toyota faces tremendous competitive rivalry in the car market. GM followed with announcement that it would enter the hybrid market with models of its own.

Michael Porter’s book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” says that there are 5 forces operating to determine the level of competitive rivalry:

Supplier power Barriers to entry Buyer power Threat of substitute products Degree of rivalry

The five forces exist in a kind of equilibrium, according to Porter. But the forces can suddenly shift competitive balance, rapidly changing market share – similar to the evolutionary theory of punctuated equilibrium. This is what happened with the major Japanese auto manufacturers. It took 15 years for the Toyota, Nissan and Honda MotorsToyota, Nissan and Honda Motors to get 5%of the U.S. market. Eight years later they held a 30% share.

SUPPLIER POWER: Suppliers are weak if products are standardized; there are many suppliers; purchasers can integrate backwards; and the end customers are weak or diffuse. These characteristics describe the automotive assembly industry of TOYOTA- where auto manufacturers of Japanese companies had worked hard to rationalize the component businesses.

BARRIERS TO ENTRY: Barriers to entry are high for a car company. But U.S. markets had virtually low barriers to entry, a surprise to the Toyota employees researching exporting.

BUYER POWER: TOYOTA enjoyed power by being concentrated; purchasing large volumes from parts companies; and being able to vertically integrate.

THREAT OF SUBSTITUTE PRODUCTS: Though public transportation represented a margin threat in all countries, cars were (and remain) the dominant transportation.

DEGREE OF RIVALRY: In entering the U.S. market, Toyota faced three U.S. firms – and a fourth competitor in Volkswagen. None regarded strategic stakes to be high; Japanese cars were not viewed to be comparable replacements for American cars with larger V-6 and V-8 engines; and the market leaders did not expect Toyota’s entry to upset competitive dynamics.

The Toyota Production SystemToyota Production System (TPS) organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers.

The Toyota lean manufacturing system lays out a plan to increase the profitability of companies by reducing the costs that can be incurred. This is done by knowing and by tagging what the customers identify and value.

Cars - Yaris, Matrix, Prius, Venza. Trucks - Tacoma, Tundra. SUVs & Van - RAV4, Land Cruiser, Highlander. Hybrids - Camry Hybrid, Highlander Hybrid.

Toyota believes the role of purchasing is through long term and stable production of quality products at the lowest price in a fast and timely manner.

The traditional pricing strategy is formulated into the cost + profit = selling price. Toyota takes on slightly different approach with a sales - oriented objective. Although the variables are the same, the formula is adjusted strategically into the selling price - cost = profit.

Toyota also has product for different price points, from low cost SCIONS to mid priced CAMRYS to the luxury LEXUS.

Car's : Yaris-$12,205, Matrix-$16,290, Prius-$22,000, Venza-$25,975Trucks : Tacoma-$15,170, Tundra-$22,390 .SUVs & Van : RAV4-$21,500, Land Cruiser-$64,755, Highlander-$27,600.Hybrids : Camry Hybrid-$26,150, Highlander Hybrid-$34,700.

Toyota is integrating its assembly plans around the world into a single giant network.

The plants will customize cars for local markets and be able to shift production quickly to satisfy and surges in demand from markets world wide.

With a manufacturing network, Toyota can build a wide variety of models much more inexpensively.

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