FAR EASTERN UNIVERSITY – MAKATI

SWOT ANALYSIS OF TOYOTA MOTORS

STRENGTHS WEAKNESSES

 Brand Equity  Large Scale Recalls

OPPORTUNITIES THREATS

 AI & Digital Technology  Competitive Pressure

Brand Equity

Brand equity is a critical strength for any large and global brand. Over time Toyota has been able
to build strong brand equity. As a vehicle brand Toyota’s focus has always remained on winning
consumers’ trust. It is very important in the automotive industry to build trust and retain a good
brand image. Toyota is among one of the most trusted brands in the advanced economies of the
world, it is a trusted brand and hailed as innovative. The reason is, Toyota has always focused
on product quality, driver safety and customer service. High brand equity is also a sign of higher
customer loyalty and better reputation. These things also translate into strong financial
performance for a vehicle brand.

Varied Product Portfolio

Toyota is a leading producer of vehicles with a very large range of vehicles in its portfolio. Its
product portfolio is large and diverse. Toyota makes sedans, SUVs, sports vehicles, hatchbacks,
minivans, station wagon, trucks and buses. Its marine business segment has brought excellent
boats and sports cruisers as well as other marine vehicles and parts. Toyota also owns Lexus
which is a brand of premium vehicles. Lexus has brought a large range of popular premium cars.
Apart from these, Toyota has brought  a nice range of hybrid cars.

Strong Supply Chain And Distribution Channel

Toyota has managed a large and efficient supply chain and distribution network. Each of the
vehicles it makes is made from thousands of parts sourced from suppliers located around the
globe. Toyota works in close collaboration with its suppliers and has formed strong and long
term relationships with these suppliers to control the costs of production. It has 167 main
overseas distributors for the distribution of its products around the globe.
Lower Production Cost Through The Use Of JIT (Just in Time)

JIT (Just in Time) offers advantages such as allowing manufacturers to keep production runs
short and move on to new products quickly and easily if needed. Companies using JIT like
Toyota no longer need to maintain a huge expense of warehouse space to store inventory and
also no longer need to spend large amounts of money on raw materials for production, because it
only orders exactly what it needs, which frees up cash flow for other uses.

Highly Integrated Lean Production System In Order To Keep People

Toyota does a big investment when it comes to the trainings and seminars to improve the
productivity of their people. Also to insure the loyalty, they give reasonable benefits for their
people. Other manufacturing companies in the industry can produce higher quality cars; however
they cannot keep their people just like what Toyota did.

Global Presence

Toyota is a truly Global brand. Its products sell across more than 170 countries. Global presence
is a major strength of Toyota that has led to higher sales and revenue. To maintain its global
business, Toyota has its manufacturing facilities in several countries around the globe. It also has
several R&D sites running around the world.
WEAKNESSES

Large Scale Recalls

In the recent years, Toyota had to make several product recalls. while on the one hand it is a sign
of Toyota’s concern for quality and driver safety, on the other it can have a negative effect on the
brand’s image. In 2017, Toyota was forced to recall around 2.9 Million vehicles due to faulty
airbags. In past, it has made several more recalls.

Weak Position In Asian Markets

In the Asian markets, Toyota’s position compared to its competitors is weaker. The Asian
markets are the hottest markets for automotive brands. Toyota must focus on making its position
stronger in India and China.
OPPORTUNITIES

AI & Digital Technology

AI and Digital technology have brought several new opportunities for the vehicle brands in terms
of marketing and supply chain management. Toyota can use them for engaging its suppliers and
customers. It can use AI and digital technology for creating superior customer experiences. Apart
from that Toyota can use these technologies for customer engagement and to drive retention rates
higher. AI and digital technology have major applications in HR management too.

Diversification

Toyota is a brand of motorcycles and marine products. Apart from having excellent technologies,
the brand is also in a financially strong position. It can invest in new areas and build a more
diversified portfolio of products and services. Diversification can open new channels of sales and
revenue for the brand. It can help it acquire a larger customer base and expand faster.
THREATS

Competitive Pressure

Competition in the automotive industry has grown quite intense. There are several brands in the
market and all of them are aggressive about product innovation, market share and growth. This
has led to an intense battle. Competitive pressures lead to higher operational costs as well as
higher expenditure on marketing and human resource management.

Growing Cost of Raw Materials and Labor

The costs of labor and raw material have kept growing. This has led to high operational costs in
the vehicle industry. It also affects the profitability of the automotive brands.

Substitute Products

Other than private vehicles, customers may choose to transport using grab, angkas and other
public vehicles to avoid traffic and save fuel and the cost of maintenance.

Fuel Price

Increase in fuel price could impact the industry sales as customers may be discouraged to
purchase vehicles given the very flexible price changes of gasoline or diesel. Customers may
perhaps prefer commuting going to the places they want to go, with the thinking that they may
save up more money compared to owning a private vehicle.