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APPENDIX A: ASSIGNMENT COVER SHEET

ASSIGNMENT COVER SHEET


Surname
Premlal

First Name/s
Ashwin

Student Number
114316

Subject
Business Management 3d
Assignment
Number
6
Tutors Name

Examination
Venue
Durban Beach Campus

Date Submitted
28/8/12 Pages 38

Submission ()

First Submission

.resubmission



Postal Address
P O Box 561483
Chatsworth
Durban
4030

E-Mail
ashpremlal@hotmail.com


Contact Numbers
(Work) 0317659653
(Home)0314019404
(Cell) 0722350165

Course/Intake

January 2012

Declaration: I hereby declare that the assignment submitted is an original piece of work produced by
myself.


Signature:

Date: 27/8/12

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Table of Contents Page


Question 1 3
Based on the information from the extract as well as from your own research, explore South
Africas automobile industry by utilising Michael Porters five forces models and the generic
strategies and comment on Toyotas competitiveness throughout Africa.

Question 2 12
Using information from the extract as the basis for argument; prepare a mission statement for
Toyota and then discuss in detail the strategic management plan that will enable Toyota to
realize its goals.

Question 3 25
Toyotas key projects in the environmental arena include the gradual, but constant, decrease it
the energy consumption of its world class plant in Prospecton, as well as the environmental
education of all its employees, albeit in Sandton, Durban or at the more than 220 dealerships in
Southern Africa. Projects in this arena include the greening of all facilities and recycling, including
the opportunity afforded to all employees to bring waste from home for recycling. All efforts are
evaluated and monitored by dedicated environmental management committees.
In view of the above developments at Toyota, discuss the strategic implications of a decision by
Toyotas top management to invest in projects that focus on promoting sustainable environmental
management practices. How strategic is such a move for Toyota South Africa?

Question 4
Indentify an organisation that you are familiar with and attend to the following:
4.1 Provide a strategic overview of the organisation under study. 29
4.2 Conduct a PEST analysis of the organisation cited above and; 29
4.3 Provide strategic recommendations on the way forward. 31

References 35


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Question 1
In order to understand the model application to the industry, it is important to define the word
industry. An industry is defined as a collection of organisations that offer a product or service
that, are similar and are close substitutes for one another (Kotler, 2003:245). It can be argued
that an industry is formed by organisations that compete for the same customer, income and
preferences.The presence of one organisation can be a threat to other organisations in the
industry since they both look to offer product or service that can fulfil similar customer needs.
Since in an industry organisations offer substitutable products or services, it is important that the
organisation have an understanding of the industry. Industry analysis refers to the organisations
process of understanding the nature of the relationship within its industry in order to allow the
organisation to develop strategies to gain advantage of the current relationships. A useful
framework that can be utilised when undertaking this analysis is Porters Five Forces model of
establishing industry attractiveness (Kotler, 2005:35).


Figure 1.1


Competitive Rivalry
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Porters Five Forces model as presented in Figure 1.1 shows factors that the organisation
considers when analysing its potential to make and sustain profits and when formulating
strategies in order to succeed in the industry. The Five forces can be defined as follows:

Potential entrants: Refers to the threat of potential entrants as determined by a number of
barriers to entry into the industry such as capital investment, well-entrenched competitors,
government legislations and gaining access to appropriate place channels
Bargaining power of suppliers: The power that suppliers can exert on participants in the
industry where control over suppliers is concentrated into the hands of few players, cost of
switching to a new source is higher and where the supplier has a strong brand
Bargaining power of buyers: The ability of buyers to play competitors off against each other
and their power to force prices down and demand for higher quality
Substitute Products: Availability of other products that can fulfil similar needs.
Competitive rivalry: The intensity of rivalry in the industry, this is determined by the number
and size of competitors, fixed costs requirements and barriers to withdraw from the industry
(Drummond and Ensor, 2005:37).

Porters Five Forces model in the South African motor vehicle industry

Potential entrants
The arena in which the vehicle manufacturer in (SA) competes has changed. In the past the
industry was dominated by seven manufacturers and about a dozen brands. Today there are
more than thirty brands and over one thousand model variations (Furlonger, 2006:9). This
reflects that there are potential entrants into the industry. The Japanese and Chinese
manufactured models, which were not in SA in the past, are entering the industry in large
quantity (Cokayne, 2006:4).

Despite the fact that there were seven strong manufacturers in the vehicle industry of SA in the
past and the production and logistics costs are still high as a result of most parts being imported,
it is not difficult to enter the market (Robertson, 2006:3). The ease of entry into the South African
vehicle industry is due to the following factors:
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Easy access to distribution channels, for instance, the Imperial Holdings Vehicle import division
offers place or place element for fully built imported cars such as Kia, Tata and Proton
(Furlonger,2006:52)
High production and logistics costs are a concern for local manufacturers; since most parts are
imported and labour costs in SA are high (Cokayne, 2006:3)
The industry is not strict on quality of product and service. As a result, foreign manufacturers
take advantage of this and bring in low quality product into the market (Droppa, 2006:7).
The above factors show that it is not difficult to enter the industry especially for foreign
manufacturers. High logistics and production costs are a major concern as they result in high
prices of locally manufactured cars. This results in importers of fully built passenger cars taking
advantage of the situation on prices and pricing their vehicle higher despite lower manufacturing
and logistics costs in the countries where they manufacture (Robertson, 2006:3).
Local manufacturers are not able to bargain for better prices on parts because they are controlled
by their parent organisations abroad. Local manufacturers in SA are not originally from SA and
are still controlled in the country of origin when it comes to parts purchases; they work on
contracts as agreed by parent organisations (Cokayne, 2006:3).

Bargaining power of suppliers
In terms of the bargaining power of suppliers, the focus will be on genuine new parts supply and
the place element for the final passenger car to the final customer. Focusing on suppliers of
components has an impact of the logistics performance at the place/ customer service levels
element; it determines the ability to meet customer needs at the right price and time.
Genuine new parts are parts that are sourced from a component supplier who supplies
specialised parts, for example, BMW supplier (Pretorius, 2006:8). The reason for focusing on
genuine new parts and not substitute availability is that substitutes effect will be covered as a
separate force. As already mentioned above, parts supply in SA has a negative influence on the
price of finished locally produced passenger cars. Manufacturers in SA are locked in agreements
that parent organisation abroad have concluded. For instance, BMW (SA) finds most of its parts
from subsidiaries of multinational organisations serving BMW internationally (Furlonger,
2006:33). Toyota (SA) also provides an example of the bargaining power of suppliers since it can
only import its components from Hino Motors Tokyo as per an agreement with Toyota Motor
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Corporation in Japan (Holton, 2006:31).This shows that when it comes to acquiring new parts
suppliers have more powers because of contractual agreements and local manufacturers find it
hard to work around price reduction of the finished product. There is an argument that local
manufacturers are in a position of reducing logistics costs despite the above issues, based on the
availability of support received through the Motor Industry Development Programme (MIDP).
Components importers enjoy rebates and that should translate into lower prices of components,
which can benefit the final consumer (Furlonger, 2006:6).
In SA, manufacturers are found to have more power over dealerships. Dealers are directly
controlled by manufacturers, this result in less reciprocal relationships (Watson, 2006:40). As
suppliers of the final product, manufacturers determine issues such as the show room
appearance, signage, training and aftersale service arrangements. Dealers are expected to
spend on all these aspects with no say regarding how their businesses should operate (Watson,
2006:40). It can be argued that dealers are being coerced into spending but have no control over
their businesses. In order to deal with the issue of less reciprocal relationship, National
Automotive Dealers Association (NADA) conducted a survey on dealer-manufacturer
relationships in order to identify organisations in the vehicle industry that have improved on the
dealer/manufacturer relationship. It was found that, BMW and Hyundai, are the top two
organisations with good and favourable dealer/manufacturer relationship. The survey focuses on
the impact that the relationship between the dealer and manufacturer have on customer
satisfaction and brand value. Improved relationship between dealers and manufactures has a
major impact on the brand and customer satisfaction and is important to the brand profitability
(Pretorius, 2006:5). It is important to have a relationship that is based on win/win situation. This
means that manufacturers should negotiate and reach agreements with the dealers in terms of
how dealers run their businesses. If this result in high levels of customer satisfaction then it is
necessary to have a new approach on how dealers and manufacturers work together.

Bargaining power of buyers
For the purpose of this research, buyers refer to final customers when considering and acquiring
a new passenger car. The two main aspects that will be covered when discussing the bargaining
power of customers in the SA passenger car market are, pricing and customer service. Vehicles
in SA are regarded as being expensive and that improved affordability is the key to unlocking
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sales and profits potential. Compared to twenty-six weeks that it takes an average US citizens to
acquire a passenger car, an average SA citizen takes one hundred and sixty four weeks
earnings to have enough money to buy and finance an average priced new car, (Cokayne,
2006:6). Despite imports coming into the market, prices are still not allowing people to possess
vehicles easily, possession utility is still not easily realised. Buyers are not able to put pressure
on vehicle prices due to the fact that SAs regulatory bodies are not strict on issues of prices
however the competition board is looking into this matter (Pretorius, 2006:14).
Although prices are higher the quality of passenger cars available on the South African market
has declined.Locally produced passenger cars with one hundred and sixty nine problems per
hundred passenger cars,fared worse than imported cars, which had one hundred and forty
problems per hundred vehicles (Cokayne,2006:3). In order to increase customer satisfaction with
the product, it is important to address product quality issues. Quality of service, price of
passenger cars and the price paid for maintenance of passenger cars, are major
issues to customers and manufacturers. Service refers to customer experience while purchasing
the passenger car and the after-sale service when bringing the car in for interval checks and
maintenance (Pretorius, 2006:14). According to the Synovate survey, there has been an
improvement in the overall aspect of service among local and foreign manufacturers, however
local manufacturers are leaders while foreign manufacturers are lacking behind (Droppa,
2006:1).
It can be argued that imported vehicles are lacking on the service aspect due to:

Difficulties in acquiring replacement parts when a car comes in for interval service
Distribution is through contractual agreements with local organisations such as Imperial Motors
(Pretorius, 2006:8).
It can be concluded that buyers do not have bargaining power in the vehicle industry as a result
of non-competitive prices and not much strict regulations on the issue of prices and quality.

Availability of substitutes
In terms of availability of substitute, the focus will be on customer substituting one manufacturer
brand for the other and substituting same manufacturers individual products. Substitution can
also be considered from the point of customers choosing to purchase second hand passenger
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cars instead of a new passenger car or customer substituting the use of public transport for a
new passenger car or vice versa. For the purpose of this research, the focus is on substituting
between new passenger car brands.Substituting between brands and individual products is as a
result of factors such as interest rates,availability of discounts and exchange rate, which have an
impact on the price. For the past three years vehicle prices have barely moved up resulting in
customers ability to upgrade. For instance, switching from economy passenger car to the
expensive sports car, however with interest rates movements towards the end of 2006 and the
weak Rand/Dollar exchange this seem to be something of the past (Robertson,2006:3).
It shows that price has a major influence when it comes to model and brand switching. Other
factors that influence the switching between brands and individual products are, the level of
income growth, economic growth and employment. As the level of income grows, customers
move from other manufacturers believed to offer economy passenger cars to those focusing on
luxurious cars such as Mercedes Benz.Some manufacturers enjoy high levels of loyalty than
others in the passenger car industry. Toyota customers appear to be most loyal to the brand and
as a result switch between Toyota models (Naudi,2006:5). Toyota continues to enjoy best sales
in all categories as a result of repeat buying of Toyota brand by customers. On the other hand
Volkswagen (VW) finds that someone who drove VW Chicco upgrades to other manufacturers
model than to purchase another VW brand (Naudi, 2006:5). Although customers switch between
manufacturers, they seem to later go back to the previous manufacturers brand, so customers
do not permanently move away from the manufacturer brand (Mokopanele, 2006:2).

Competitive Rivalry
As already stated, the nature of competition in the vehicle industry has changed. In the past only
seven local manufacturers dominated the industry, today there is an increase in the imported
vehicles whose manufacturers do not have any assembling plants in SA. To counter the
competition, manufacturers such as Toyota are importing models that are not manufactured in
SA. For instance Toyota manufactures only Corolla models such as Run X and Corolla sedan in
SA while models such as Avanza and Prius are imported from the parent organisation in Japan
(Cokayne, 2006:4). The number of rivals has increased and local manufacturers are also
increasing their models in order to continue to have a higher market share.
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Local manufacturers are taking advantage of the MIDP and are also importing as much of their
fully built vehicles. The MIDP offers rebates on imports and such rebates are converted into
points and used for the exporting of vehicles manufactured in SA. These points allow reduction in
export duties that assist local manufacturers to afford to export (Furlonger, 2006:10). The export
market is important if local manufacturers want to maintain increased sales and maximise profits.
As a result of this intensifying competition, customers have a wider variety to choose from,
however passenger car prices are an issue and turns to limit those choices. It is not easy to gain
market share in the industry as competition intensify, as a result, manufacturers and dealers are
utilising aggressive marketing strategies which focus on price reduction through lower in-house
financing costs, cash-back options, road side assistance, free service plans, additional extras
and reduced instalments (Robertson, 2007:3). Both local and foreign manufacturers as well as
dealers are competing around the price, however they do not necessarily reduce prices directly
but add benefits that will make customers realise that there is value for money.
Other factors that should be considered in terms of competitive rivalry in the industry:
High logistics costs that local manufacturers are faced with. Transportation and security in SA
especially while goods are in transit result in high logistics costs. Although MIDP benefits local
manufacturers when shipping their fully-build models abroad, inland transportation costs are
fuelled by security issues (Robertson, 2006:3)
Quality of some models such as VW City Golf and Mercedes-Benz SLK 360, which are
produced in SA fall behind in product quality as compared to imported passenger cars (Cokayne,
2006:3)
In terms of fixed costs, SA is still lagging behind its foreign counterparts, for instance (SA) has
high labour costs. The emergence of new, low-cost manufacturing bases like China and India are
a long-term threat to SA (Furlonger, 2006:10).
The passenger car industry in SA is continuing to change; competition is rife while prices are
high.Aggressive marketing communication is used to attract customers who appear price
conscious, however there is still a need to improve the product quality and service offered with
the product.



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Customer service levels
Customer service is a major debate in the SA passenger car industry. Various surveys such as
Synovate and NADA show that customer service levels are still an issue. Customers measure
the service based on the number of problems they experience after purchasing a new vehicle
and how after-sale service support as promised in the marketing communication is delivered
(Cokayne, 2006:3). These experiences determine the customer service levels and customer
satisfaction.Toyota has realised the importance of maintaining good relationships with dealers
since customer service levels are measured based on customer experience during the encounter
with the dealer. The organisation now allows their dealership to make decisions on issues such
as product modification and price provided the product changes are in line with the quality
standards of Toyota (Campling, 2006:7). As the relationship between the manufacturer and
dealers improves, customer experience during the purchase and after-sale service improves.
Factors that should be considered by manufacturers and dealers when improving customer
service levels in the industry include:
Improved manufacturer/dealership relationship since this has a major impact on customer first
time experience of acquiring a passenger car (Campling, 2006:17)
Availability of parts through expansion in warehouse and stock since this can lower
transportation costs and lot size quantity costs resulting in better response to received orders
(Robertson, 2007:3)
Improving product quality during the production process and during interval services of the
passenger car (Cokayne, 2006:3).
Improved customer service through the marketing-logistics interface is important to the industry
since it can result in brand loyalty and continuous increase in long-term profitability.

As already discussed there are various factors that local manufacturers should consider in order
to remain competitive especially with the current level of competition by importers. Individual local
manufacturers initiatives will be assessed in order to identify how sustainable competitive
advantage can be created in the industry. Toyota was chosen based on the information
presented in the literature regarding their capabilities to deliver high level of customer service
through marketing and logistics cooperation.

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Toyota
High product quality of both imported and local manufactured Toyota passenger car models.
Customer experiences with Toyota models show that customers are satisfied with Toyota product
quality (Cokayne, 2006:3).
Dealer/manufacturer relationship is key to Toyotas service quality. Dealerships are left to
independently make decisions while maintaining basic guidelines and best practices. This allows
dealers and customers to negotiate prices and upgrades to the interior and exterior features at
prices profitable to the dealer while meeting customer requests (Campling, 2006:17).
The organisation logistics planning result in transportation and stock carrying costs saving, this
has resulted in on-time delivery of passenger car and parts orders to the dealers (Holton,
2006:32)
The organisation prides itself on good manufacturer/dealer relationship, which result in
dealerships providing high levels of customer service. Communication and support throughout
the place element between the manufacturer and the dealer result in dealers being able to keep
to their promises with customers (Pretorius, 2006:4)


Conclusion
This question focused on exploring the vehicle industry through the application of Porters Five
Forces model. It also outlined the impact that the five forces have on the marketing-logistics
interface and customer service. Through the application of the Porters model, it was clear how
organisations in the industry create a sustainable competitive advantage through the interface.
.








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Question 2
The Toyota Company is a leader in the car manufacture, assembly and distribution the world
over. A very efficient management style that the company uses has been one of the reasons for
the firms good performance. There are many other salient factors that have made the company
achieve the niche of market leader. The market structure the company operates in can not be
definitely stated. Some may consider it to be a monopoly. This is due to the fact that the
company is a dominant market player in car exportation. In fact, its differentiation strategy has
made it enjoy an almost monopolistic presence especially in the developing nations of the world.
On the other hand, the market structure can be seen as an oligopoly. This is due to the fact that
there are other key players like GM who are peer competitors. Toyota is keen to see what these
competitors are doing and make sure it reacts to their actions in a way that will guarantee its
market leadership.

Strategic Focus and Plan
There are three aspects of the existing corporate strategy that are developed in relation to their
overall impacts caused to the marketing plan of Toyota Company. These are;

Mission Statement of the Company.
Toyota seeks to create a more prosperous society through automotive manufacturing (Hiroshu,
2003). Therefore, the Company is aimed at achieving a stable and long-term growth in future,
and this is supposed to be in synchronization with a number of factors: the significant
environment, global economy, local communities served, and the Internal Environment of
stakeholders I would suggest the company mission statement to be:

To create exceptional automotive value for our customers by harmoniously merging safety,
outstanding quality, innovative technology and efficiency whilst maintaining after sales support
and service excellence in customer care. With our skilled, diverse team, we will provide
responsible stewardship to our community and environment while achieving stability and security
and growth now and for future generations


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The Companys Goals
The company has committed itself to offering of hybrid alternatives for every model that is sold in
the market. This is aimed at enabling the Company to make a total sale of 1 million hybrid
vehicles within a year, and this goal has been set to have been achieved by the year 2012.
Toyota Company has improved its 2011 Environmental Action Plan and it is committed in six
different key areas, which are: the Environmental Management; changes in Energy and Climate;
the Quality of Air; concerned Substances; the aspects of Recycling and Improved Resource
utilization; and Societal Cooperation. The Company is committed to reduce carbon dioxide
emission and it is believed to take combined actions of ensuring that the environment is kept
clean all the time by observing the stated fuel economy values.

Core Competency and Sustainable Competitive Advantage
Toyota Company is working towards the achievement of a better and more sustainable economy
by having a stable global market. With advancement in new technology and other related
matters, the Company is investing in various strategies that will enable it to realize its set goals
and objectives over a period of time. The Company has a well-developed and equipped network
of expertise that are into research and development over aspects that are to keep the Company
on top in product and service delivery to its global market. Also it has a wide range of distribution
network allover the world and this has enabled it to reach a portion of the market that is seeing it
through to greater levels.

Situation Analysis
Toyotas capacity to stay on top of productivity efficiency and quality rankings can be credited to
its internal environment. This entails the way production process is managed by the top
management who are famous for their competency. The production team has an insatiable
obsession to improve the efficiency and effectiveness of its manufacturing operations. Therefore,
to fully understand the situation analysis of Toyota Company, a SWOT analysis is determined
and it mainly consists of the Companys strength, weaknesses, available opportunities, and
finally the threats that the Company is experiencing or projected to go through.


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SWOT Analysis
Strength and weaknesses are referred to as internal factors of the Company as their impact
starts from within the Company, while opportunities and threats normally originates from outside
of the Company, hence referred to as external factors.

Figure 1: SWOT Analysis of Toyota Company (Internal Factors)

I nternal Factors Strengths Weaknesses
Management Having competent and
experienced management team
and board members
Large size of management
team reduces chances of
moving fast into the targeted
market, because of slow rate
in decision making
Offering Hybrid products that are
customer friendly
Expensive in proofing the
market that are right products
for them
Marketing Distribution of products into
the market through wide range
of identified branches
Expensive in establishing this
distribution network
Personnel Have good skilled workforce
who are relied upon
The gap will be big if the
employees left the Company
Finance Improved revenues from sales
made in the global market
Limited workforce and
material may slow down the
growth of the Company in
relation to competitors
Manufacturing Main supplier of material
ensure fast and quality
material
Different supply interests
among the Company suppliers
and other competitors.
R&D Quality of products delivered
is enhanced through out the
period of doing business






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Figure 2: SWOT Analysis of Toyota Company (External Factors)

External Factors Opportunities Threats
Consumer/social Stability of the upcoming
market is highly projected
Low priced products may
proof that the quality of the
products is quite low
Competitive Differentiated products and
prices make the Company to
be quite distinctive in the
market
Products of high technology
are being introduced into the
market by other competitive
companies
Technological Break-through in
technological standings is a
better course for the Company
to improve on the quality of its
products

Economic Improved consumer income
has made it convenient for the
Company to get deep into the
market
Individuals opting for other
products since they have
enough disposable income
Legal/Regulatory Regulatory measures ensuring
fairness in the market and
avoid over-exploitation by
other competitors













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Figure 3: The SWOT Analysis Matrix

Strengths:

investment in new factories
diverse range of products
improved marketing techniques


Opportunities:

hybrid cars
selling technology
rising urban youth population

Weaknesses:

Maintaining client base
Maintaining production

Threats:

Faulty products
Upcoming manufacturers





Industry Analysis
Toyota Company is able to apply its strengths and opportunities it has to create a competitive
edge in the industry. For instance, the widely differentiated product line is helping the company to
have more global presence. This can also be achieved through entering new markets like China
and Europe. Toyota has previously concentrated on the Japan and American markets and it
needs to setup strategies to penetrate the other markets as well.
Toyota has taken a good position as far as sustainable development is concerned. With the fear
of depletion of the fossil fears coupled with the global warming effects, there is a ready market for
the Toyotas hybrid car. The company can also use this opportunity t sell its technology to other
firms
Company analysis
Toyota Company is one of the worlds leaders in car export and it appears to literally be living its
mission, which is to be the world leader in the creation of automotives that are best in terms of
value. The company is working towards the end of creating a society that is prosperous by
providing their clientele with the best value for their money. They believe in giving the best prices
for the client yet still deliver a vehicle that is at per with those being offered by their other major
competitors. This could be the reason why their products are having a very good market in the
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developing nations. The Company is also conscious about sustainable development, and this
can be clearly seen in its different corporate social responsibilities as well its sustainable
development initiatives aimed at reducing the pollution of the environment.
Customer Analysis
Toyotas customers are very diverse and they range from the low income earners to the very rich.
They are widespread around the world. Toyota has catered for all car needs that may arise for
any individual with their wide range of motor vehicles. They range from small sports cars to big
family vehicles and trucks as well as vans. The customers comprise a varied group of people,
with differing ages, incomes, geographical locations, and social and cultural statuses. Customers
go for Toyota products to satisfy different wants and needs. Low income earners are provided
with a basic mode of transportation that is both within their price range and efficient. Clients going
for class and elegance are also catered for.
Customers purchase Toyota products on individual basis according to their specific needs. In
some cases we have organizations purchasing cars for their firms usage or for their employees.
In such a case, the product buyer and purchaser is not actually the product user. Once
individuals purchase the companys product, there is an increased exposure to its other products.
Product awareness is enhanced through advertisements, newsletters, website information, and
other informational sources. The opportunity for Toyota to generate income from complimentary
products such as books and seminars by members is very big.

Where do they Purchase?
Most of Toyotas products are sold through retail distributors located all over the world. Purchase
can also be made directly from the factories, as is the case with limited edition models. The
increase in the use of electronic commerce, Toyota as well, that is, purchasing products on-line.
Majority of the advertising materials can be obtained in full, on-line view over the Internet. On-line
publications diminish paper waste while giving existing and direct availability of the product to
clients. Customers are able to order a product in stores and with a toll-free number directly from
the company as well (Booz, 2007). This grants customers around the world access to the
companys products.


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When do they Purchase?
Individuals can purchase the companys products anytime that they like, at any time of the year.
This is because Toyota sells its cars all year round, except for the limited editions which are
purchased directly from the factories. New users often purchase cars after acquiring a drivers
licence in the case of some countries when going to high school or to college in others. Other
users usually purchase a new car when the old one breaks or gets too old or when they want to
trade in for a newer car or a different model.
Why do they Purchase?
Customers select Toyota products over other manufacturers primarily because of their
comprehensive, yet specialized, nature. Toyota offers a diverse range of cars that encompass all
needs of the clients. They are focussed on building and maintaining high standards when it
comes to the products. They offer cheaper alternatives to the clients for the same products from
other manufacturers that are quite expensive. Toyota has also invested heavily on safety in their
cars. As the globe goes green and clients call for an appropriate response from their car
manufacturers, Toyota have responded by investing in hybrid cars, the Prius. This may be the
future of the motor industry. The high quality products make it all that easy for a customer to go
back to the shop and purchase another Toyota product (Flanagan, 2007).
Why Potential Customers Dont Purchase
As is the case for many large organizations, Toyotas target market defines a much wider
population than their customer base actually reflects. There are many car manufacturers who
have come up and the motor industry is currently flooded with many products. Many of these
products are similar, often differing due to one or two features that may or may not be significant.
In this case, it comes down to personal like and dislike. The other reason is the issue of class
and social status. Toyota products do not always give the implication of a high social standing. A
customer may choose to buy a car from a competitor and not from Toyota simply because of
that, and yet the car is the same.

Product-Market Focus
In this section, the Company three year development projections is clearly explained in various
categories, which are developing of a strategic focus; marketing goals and objectives; target
market; and the Company position in the market.
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Developing a Strategic Focus
Toyota has already embraced product differentiation as a major strategy in market penetration
and the strategy is working well. It is determined to use a pricing mechanism that will give it a
competitive edge over its main competitors. The cost of production of a unit for Toyota is
projected to be large but due to possible mass production plants, the overall cost will not be a
huge issue in this case. This means the company will be able to sell its products at an even lower
price yet still remain profitable. The company is taking an advantage of this and using it to
penetrate the markets of emerging economies with affordable products.

Marketing Goals and Objectives
Toyotas enormous size and capacity is a great advantage in meeting industry growth. The
number of clients in need of cars is constantly increasing, thus creating a bigger market for
Toyota and requiring more of their products. The perceived importance of owning a car due to
increased travelling needs in todays largely corporate world is constantly increasing as well.
Toyotas great size will enable them to successfully meet the needs of this growing population of
customers in need of cars (Dobni, 2002, p.41).
The company keeps making quality product and make it a rule not compromise on this, and not
to give in to the competitors pressure and rise their prices then clients will remain loyal to the
company (Armstrong & Kotler, 2002). Then, everyone has a chance to know the real values
behind Toyotas past, current, and hopefully future existence (Armstrong & Kotler, 2003).
Toyota is in the process of engineering lesser platforms to be used in the assembly of its different
models. This is as a cost cutting measure; they intended to compress their platforms from 20 to
ten in the ambitious exercise. This is especially important since their chief rivals; GM and Ford
have made notable improvements in their production process. Toyota is also thinking twice about
its bloated assembly points. It is thinking of best ways to reduce them without hindering its
efficiency (Mullins, Walker & Boyd, 2010).
Target Market
Each of Toyotas products is designed to target a specific market. The design criteria range from
top speed, capacity and exterior appearance like color and shape. There is a high speed, small,
two-seat model cars for the relatively younger and single people who are adventurous to the big
20

five-seat models for the family set up. Demographically, they also target situations on the smooth
tarmac road as well as the rough and rugged off road terrain (Thomas, 2001).
Toyota has been previously blamed by the American Markets that their products are lacking in
flair and design unlike those of GM and Ford. This has led the company to be more attentive to
its American designers to make sure this needs are met. The V8 pickup which was launched
recently was as a result of this ambitious. The hybrid model, Primus, has also been transformed
since at its inception, it didnt hit the American market. When they made it look more futuristic, it
resulted in big volumes of sales.
Overly, the Toyota Company is giving its competitors a hard time. Even though it has
experienced challenges like the recent recalls, it is still notable in market leadership position. If
the current impressive results and global positioning of the company is anything to go by, then
this is a position Toyota is not likely to lose any time soon.

Company Position in the Market
Toyota Company has been producing vehicles and significant products that are not expensive
and readily available. This has been a significant factor that has enabled the Company to have a
major cut in the market , and it is projecting to have most of the market by the end of 2013, as it
has put a cross a number of strategies to enable it reach the set target.

Market Program
This consists of the four marketing mix elements that are designed to fit the market in terms of
their needs and ability to access such products and services.

Product Strategy
The Company is believed to be moving with a strategy of mass production of which it has
enabled it to sell widely in the global market. It has also included the strategy of hybrid product,
where it can double the amount of production for the arising needs in the market.
Price Strategy
The reputation of the Company has been developed by producing high quality vehicles that can
be bought at a reasonable price. The Company has also been using tactful pricing strategies
through price differentiation so that they are different from other automobile producers.
21


Location Strategy
Being a global producer and supplier of Toyota automobiles and their components, Toyota
Company has positioned itself all over the world giving it a clear cut within the market. Within
three years to come, it is working towards the achievement of about 35 percent of the market
share, and this will make it to be best and top supplier of automobile products.

Promotion Strategy
The Company is determined to use a pricing mechanism that will give it a competitive edge over
its main competitors. This is a mechanism that it is using to market itself so that it can get hold of
market share that will see it better in achieving the highest level in the market.

Marketing Implementation Analysis
Toyotas main focus will be in reaching the new markets of China and Europe. It will also be
concerned about the competition from other firms like Ford and GM. An advantage the company
has is the widely differentiated product range. Establishing new factories in these new markets as
well as opening up new franchises will help the company in getting an ease of penetrating the
new markets
Human resource is one of the most important aspects in this plan. The company should always
make sure they have highly motivated staff as this is directly proportional to good production both
in the qualitative and quantitative aspects. Toyota can do this by coming up with schemes of
rewarding their employees like helping them own cars subsidized rates. The company should
also make sure the personnel are the best in terms of technical know-how. The company needs
to carry out frequent training towards this end.



Financial data and Projections
The previous years have seen Toyotas profit grows each year with an exception of 2009 due to
the economic downturn as well as the recalls. The figures below illustrate this
Figure1: Toyotas impressive performance in the last four years (Johnson, 2009)
22



With the advent of more efficient production technologies coupled with the entrance into the new
markets, it is expected that the increase in profits will continue for the next five years. Below are
the projections for the next five year period

Figure2: Projected Financial returns for the next five years (Johnson, 2009)

Sales Forecast Millions of Yen
year 2009 2010 2011 2012 2013
Net Sales
Operating income
Ordinary Income
Net Income
Research
Divindends/yen
1,243,445
54,120
70,912
46,123
30,051
32
1,455,650
65,023
80.636
47,999
32,051
44
1,900,340
89,954
108,484
60,231
30,051
50
1,957,879
98,0530
125,444
81,234
20,051
60
2,000,534
99,760
14,343
57,576
30,051
78







23

7.1 Tactical Marketing Activities
Toyota has taken a bold step in being a leader in sustainable development. This position will
need some innovations which translate to expenditure. They are however necessary as a way of
staying ahead of competition. The activities the company will embark on are given in figure 3

Figure 3: Tactical Marketing activities
Specific Tactical Activities
Person/Department
Responsible
Required
Budget millions
of yen
Completion
Date
Product Activities
1.Car air conditioning compressor
2.DC-DC converters for fuel efficiency
3.Low Exhaust Emission Engine
Production
engineers and
Product
management
30.45 2011
Pricing Activities
1.New Technologies
2.Compression of Production platforms
3.Merger of Assembly points
Operations
management
15.25 2012
Distribution Activities
1. Opening up of new factory in America and
china
2. Machine handling
3.Logistical operations
Logistics
management
21.40 2010
IMC (Promotion) Activities
1.Concerts
2.Volunteer
3Youth Invention club
Marketing manager 9.20 2012



8.0 Implementation Plan
There are a number of activities that have been projected within a life span of three years and
the following representation shows the aspects that have been targeted and within what strategic
period of time.


24

Year To be Achieved New Targeted
Markets (millions)
Cumulative Targeted
Markets (millions)
Today (2010) Working towards
hybrid products
250 250
1
st
Year (2011) Introduction of pricing
mechanism and price
differentiation
strategies.
320 600
2
nd
Year (2012) Enhancing hybrid
products by use of new
technologies
370 970
3
rd
Year (2013) Product differentiation
to meet the needs of
the market
420 1320

9.0 Evaluation and Control
There is a monitoring and evaluation team that will be set to watch over the progress of the
company in realizing the strategic goals. The short term goals will be clearly watched and
corrections put in place where targets are missed for they are the keys to fulfilling the long term
goals. Currently, the Company has made a clear step forward in ensuring that hybrid vehicles are
being produced, and so far the market has started improving in terms of overall reception of
these brands of vehicles. Another aspect that is supposed to be considered here is the speed of
the roll-out program of pricing mechanism introduced. Currently, it has taken the market by
surprise as most of Toyota products are found to be customer friendly. The Company has been
able to come up with a differentiation program for its products and this has helped it to have a
huge market share. It is projects to improve and reach the target within three years and this will
be determined by the rate of growth and the total number of market reached.






25

Question 3

Toyota's past through founder Sakichi Toyoda's ideals and its near term future through the Yaris
Hybrid Concept.
The English language version of the Environmental Report 2011 published by Toyota Corporate
in Japan is now available online. The latest report marks the first time, since 1998 when the
Sustainability Report was first published, that TMC has decided to issue an independent report
featuring a focused and more in-depth reporting on environmental activities undertaken by TMC
as well as its overseas subsidiaries between April 2010 and March 2011.

The Environmental Report 2011 is designed to be accessible to as many readers as possible by
being simply divided into two distinct sections: Reading Section and Facts & Figures Section.
The Reading Section presents an outline of Toyotas environmental activities in a narrative while
for more in-depth understanding of environmental activities taken by TMC and its subsidiaries
can be found in the Facts & Figures Sections.

Commenting on the importance of the environment for Toyota, President of TMC and Chairman
of the Toyota Environment Committee, Akio Toyoda ash the following to say:
Quote:
Humankind faces urgent issues concerning both the global environment and energy. In short, if
automobiles are to remain a vital mode of transportation for people and society over the next
century, developing the next generation of environmental vehicles is the most important thing we
can do.
In Europe, Toyota Motor Europe published its own annual Toyota and the Environment brochure
in June 2011 highlighting Toyotas current and future environmental vehicle technologies as well
as outlining case studies of environmental activities undertaken by Toyotas manufacturing and
retailer operations in Europe. This years edition of the TME Sustainability Report was published
in September, providing a more in-depth analysis of Toyotas environmental, social and
economic performances in Europe between April 2010 and March 2011.

Toyota Motor Europe Sustainability Report Highlights:
26


Toyota is striving to reduce all types of emissions from its vehicles as we work towards the
ultimate goal of sustainable mobility.
Carbon dioxide (CO2) is one of the principal emissions from internal combustion engines.
Although the transport industry is only partly responsible (see chart below), urgent action is
needed to reduce CO2 emissions and halt global warming.




CO2 is not the only harmful emission from fossil fuelled transport however. Particulate matter
(PM) and nitrogen oxides (NOx) are also reducing the quality of the air we breathe.

Hybrid is the key
Faced with these challenges, Toyota has been investing for many years in the development of
powertrains that use different energy types including electricity, petrol, diesel and alternative
fuels. Hybrid technology is at the heart of the solution because it can be applied to raise the
efficiency of each of these powertrains.

27

With this multi-source approach underpinned by hybrid technology, Toyota aims to provide
customers with the right vehicle at the right time as low-carbon technology solutions are
developed.
Short Term By increasing the performance and availability of hybrid (gasoline/electric) vehicles,
and continually making gasoline engines more fuel efficient and diesel engines cleaner for
todays cars. Plug-in Hybrid Electric Vehicle (PHEV) will be launched in 2012 and represents the
best of both worlds, combining the benefits of hybrid and electric technology.
Longer Term By developing alternative fuels, such as hydrogen and bio-fuels, and more
efficient battery-powered electric systems.

These are Toyotas real solutions for today and tomorrow.

Three Major Challenges

In the journey towards sustainable mobility, there are three major challenges that have to be
resolved:
Diversify energy sources and reduce dependence on fossil fuels.

Help stop global warming by reducing CO2 emissions.

Improve air quality, reducing PM and NOx emissions in particular. The current generation Prius,
Auris hybrid and CT200h are already > 10 times cleaner than Diesel Euro VI, the next generation
of diesel power train emissions requirements to be instituted in 2014.

PRIUS PHEV
Quote:
During the week I use my Prius Plug-in Hybrid as an electric car, recharging at home in the
evening. On weekends for longer trips, I drive it as a hybrid. Its the best of both worlds!
The next major step in Toyotas efforts to create the eco-car is the PHEV, currently a limited
production derivative of Prius that combines hybrid driving with electric from the grid driving.

28

This car can drive 62 miles on 2.6L of fuel (NEDC figures), generating less than 60 g of CO2 in
the process.The PHEV can be charged either during driving like a regular hybrid or by connection
to a normal household plug.

The latest Toyota trial shows that this Prius PHEV uses up to 49% less gasoline than a
conventional gasoline vehicle of similar size.

The new arrival can travel 15 miles on electricity alone, up to a speed of around 62 mph with no
local emissions.

Driving the PHEV
Road trials have unsurprisingly exceeded driver expectations:
The Prius PHEV could have running costs up to 20% lower than those of the standard Prius
hybrid.
The 15-mile EV range is sufficient for the majority of city-user trips.
The Prius PHEV is easy to use and easy to charge.
The Prius PHEV is fun to drive. Well, its fun to drive on EV but it isnt completely fun to drive.
In a further step towards commercialization, around 200 Prius PHEVs are currently being tested
with selected public and private customers in Europe.

Toyota plans to introduce more than 50,000 Prius PHEVs worldwide in 2012. An optimistic
projection given the upcharge for the additional 3.1 kWh pack









29

Question 4.1

Strategic Overview of Apple Inc
Apple Inc. is a technology company, which designs, produces and sells goods of the Computer,
Music and Mobile-phone Industries. It is differentiated by its brand-perception and identification.
Over the last couple of years, Apple has become a cult-brand, thanking its iLife, iTunes,
QuickTime and iMachines. Apple Inc.s short -term goals is currently increasing the sales of the
just launched iPad (the most innovative web=browser in market). In the long-run, Apple aims for
the top of the market, becoming the number one leader..Apple Inc has incorporated numerous
features that are unique and well known in the market today. Highly advanced technology,
simplicity and design, and the sense of luxury are the main features integrated in these
products. More over the comfort and convenience that these products provide are very crucial.
One of the main reasons which inspired our team to choose Apple Inc. is its unique, simple and
luxurious image that Apple has created in the market over the years. Think differently which is
an inspiring motto, made us believe that simplicity and creativity combined with luxury can lead to
a successful and profitable company, such as Apple. Another component that we found to be
challenging was to understand Apples goals, objectives and their secret of being successful. A
very important fact about Apple products today is that these products are globally spread.
Single most important issue facing the corporation today
As mentioned above, 2010 came with the launching of the iPad, which is a totally differentiated
product in the market. It is a web-browser, which also can be used as laptop, and can be useful
in every aspect of educational and professional areas. Its price, compared to regular Apple
prices, is pretty affordable, which is an incentive for more buyers to purchase. This is the main
goal of Apple in the current day.

Question 4.2

The PEST analysis helps determine the current situation of Apple Inc., identifying potential
influences of the political, economic, social and technological sectors; and have a glimpse into
the future of Apple inc.

30

Political Influences:
It is reported that in 2007 52% of sales of Apple were from outside America. Bad international
relations, wars and terrorism might influence Apple in a huge manner; moreover these are all
factors Apple has no ability to control. Apple Inc. produces many of its parts and products outside
the U.S., like Ireland, Czech Republic, Korea, China, and Cork. Political Conflicts between the
U.S. and any of these states may have awful outcomes for Apple Inc.
Economic Influences:
The global economic depression might have immense impact on Apple Inc. The inflation rate is
high, while consumers incomes didnt have significant changes, moreover the unemployment
rate has increased, leading consumers to spend less, especially on luxury products, as Apple
products might be viewed. Even though the U.S. dollar has lost value, Apple Inc. is not as
endangered economically. The corporation has purchased itself foreign currency, to minimize the
economic effects of inflation on Apple Inc. It needs to be said that the U.S. dollars depreciation
has in fact increased Apples revenue in the international market.
Social Influences:
Globalization includes the interaction of people worldwide, for which technology plays the main
role. Todays World cannot be imagined without technological devices as Computers, mobile
phones etc. Apple is the globally seen as the King of technology, not because of most usage, but
quality and design .Another big social influence is the music industry, which over the last decade
has become virtual and set its market to the cyberspace. Apple having developed the biggest
virtual media store, iTunes, is well ahead any other competition of this direction. Web piracy
might be a threat, but most governments punish those behaviours.
All in all, Apples image also portrays the modern individuals lifestyle, combining functionality
with design, leading to brand identification and loyalty. Therefore social influences have positive
effects on Apple Inc.
Technological Influences:
The technology market for computers and mobile phones has become huge, adding more
competition in the market. Also technology innovations and changes are almost as fast as light,
therefore the products lifecycle is very short. Investing largely in Research and Product
Development, Apple is on top of the market, regarding innovative products. This includes making
31

the work for the competition to follow, but its still better because innovation is a big part of the
brand and has shown to pay out.

Question 4.3
In the past decade Apple, Inc. has gone from being a minor player in the pc industry to a major
player in the consumer electronics industry. Through fearless innovation they have developed
products that have revolutionized the consumer electronics industry. As a result their brand
recognition has increased exponentially and they have added significantly to their legion of
devoted followers. Apple is about design, their electronic products are stylish, their advertising is
stylish, their hardware and software are stylish, and like all things stylish there is a significant
price tag. However also like all things stylish, consumers are fickle and their tastes frequently
change with the next big technology improvement. Additionally, Apple still maintains control over
every aspect of their product lines, this in the past proved to be a mistake that relegated them to
a niche market in the pc industry.

Recommendation 1 Collaboration

Brief Description: In order to avoid Apples mistake of partnering with only one company, that
might in fact be providing an inferior service, partner with several companies for product
distribution and support.

Implementation: Identify companies where partnership opportunities are available by
investigating current product partnerships and companies that might be suitable for our
products distribution and support. Search initially for start-up companies that have strong
financial backing and lack significant partnerships at present or that are maintaining multiple
partnerships. Perform competitive analysis of and competitive intelligence research on
selected company or companies. Approach companies and set up meetings to propose
partnering for new product launch.

Ramification:
Pros:
32

Startups may be eager to partner
Can assist with networking
Better ability to bargain our position
Can assist with training on our product
Increased loyalty from a young company
Defray risk and expense of product launch
Potential for tax advantages

Cons:
Startups may lack fiscal stability
Startups may experience high staff turnover
Lack of experience in distribution and support
Lack of network
Increased expenses for our company
Increased competition if relationship isnt exclusive
Increased legal expenses
Increased liabilities

Evaluation: Gather available secondary research data on prospective companies utilizing
newspapers, trade journals, filings, the Internet, etc. Gather primary research by interviewing
suppliers, distributors, current and past customers, etc. Evaluate gathered company data and
narrow selection to several best options that have significant product launch experience.
Approach these selected companies letting them know you are interested and request
references, marketing materials, ask specifically for description of successes. Approach
companies to set up preliminary discussions and make further evaluations based upon these
meetings. Select best candidates for product launch partnering and have contracts
negotiated. Periodically review success of product partnership by reviewing sales figures,
customer service, marketing strategies, and other pertinent factors.

Recommendation 2 Markets
Brief Description: Concentrate on opening brick and mortar retail stores in foreign markets
33

that Apple has so far neglected by surveying which countries Apple has not entered that are
technologically conducive to our product adapting Apples retail customer service standards.
Entry into these markets can provide eventual access to neighboring markets and direct
competition with Apples products.
Implementation: Compare preliminary country demographics to determine suitability for
marketing our product by researching the World Bank, UN trade and development
documents, the State Department, and other sources in emerging markets that Apple has not
yet entered. Select emerging markets with high-tech capabilities and a culture predisposed to
utilizing our product. Investigate the trade and legal environments in the selected countries.
Determine the advantages of a Greenfield initiative vs. an acquisition in each of the selected
countries. Investigate financing alternatives and secure financing. Retain legal representation
in selected countries. Contact realty agency in selected countries to assist in searching for
retail space in high density population centers. Coordinate minor adaptations of product to
suit market. Tailor marketing and advertising strategies based upon cultural influences.
Lease property, begin marketing, develop retail space, hire and train workforce, schedule
opening, and ship inventory.

Ramification:

Pros:
New product introduction in an emerging market
Limited competition initially
Currency exchanges
Increased global brand awareness

Cons:
Competition in a foreign market
Tax disadvantages
Legislative problems
Trade regulations

34


Evaluation: Periodically review sales figures for product lines. Implement customer service
and product surveys.



Athough Apple is a relative newcomer in the consumer electronics market through innovation
and fearless experimentation they have completely revolutionized the field. They still appear
to be somewhat entrenched in their older strategy as a pc hardware and software
manufacturer and also appear to be somewhat reluctant to change their business practices,
this could be a potential disadvantage. This strategy has so far been successful in the last
decade as their consumer electronics have developed, but as technology continues changing
they could easily be left behind by the next newest thing. Additionally they appear to be
repeating the same mistakes with compatibility in that they are trying to be one company that
does everything and they are reluctant to relinquish control.
Competitors should avoid their mistakes by being open to collaboration and by partnering
with other high tech companies.














35

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