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Toyota is the largest manufacturer of cars in the world, with scores of factories in dozens of
countries. Its standing in the automotive world as the most successful and most profitable
carmaker is unquestioned.

In sharp contrast, Australia has one of the smallest car industries in the world and while it is
one of the oldest, it has never spread its manufacturing wings across the oceans.
And yet Australia has played an important role in the development of the world¶s largest
carmaker over a 50 year period, a length of association no other country outside Japan can
match.

It was Australia where today¶s world car industry leader first tasted success beyond its
Japanese domestic market. It was through Toyota Australia that the Japanese company
learned many lessons which have underpinned its global success, and it was Toyota Australia
that achieved many breakthroughs within the group: first successful LandCruiser exports,
first successful production outside Japan, first finance arm to fund dealers¶ inventory and first
exporter of the Camry apart from the parent company itself. It is a proud record which has
earned Australia a special place in Toyota¶s history.

Toyota Australia's origins go back to 1958 when Thiess Brothers began importing the first
LandCruiser models for work on the Snowy Mountains Hydro-electric scheme and sold the
first Toyota LandCruiser in 1959. Assembly of Toyota cars began in the Melbourne factory
of Australian Motor Industries (later AMI-Toyota) in 1963 and within a decade the Corolla
and Corona (replaced by Camry in 1987) were well established in the market.
The commercial vehicle business became Thiess Toyota in 1971 and achieved commercial
leadership in 1979. Meantime AMI Toyota began investing in an engine and stamping plant
to consolidate its position as a high local content vehicle manufacturer.

In 1988 Toyota's local operations were unified to form Toyota Motor Corporation Australia
and work began on restructuring and strengthening the group as a major step towards
achieving international competitiveness and building vital export business. Toyota in 1994-95
consolidated vehicle production at its new world-ranking Altona plant in Melbourne.
So after 50 years in Australia, Toyota has grown to be one of Australia¶s leading automotive
companies. In just five decades, this proud organisation has grown from a patchwork of
import, sales, distribution and assembly activities into a major force. In doing so, it has
overcome great difficulties, brought forth strong leaders, fostered the talents of many
Australians and contributed to the social and economic development of this country. It has
been supported by loyal employees, customers, dealers, suppliers and has earned the
commitment of governments, and many other organisations and individuals in Australia and
throughout the world.


 
 
 
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a010 Hybrid Camry, the first Australian built Hybrid is released

a009 3rd generation Prius is launched
a008 Toyota announces Australian hybrid Camry production from a010
Toyota Australia achieves all-time sales record - a38,983 vehicles
a007 New TRD Aurion launched in Australia
Tenth-generation Corolla launched in Australia
New export record - 97,688 vehicles
a006 New Generation Camry is launched in Australia
Presenting partner a006 Commonwealth Games
Shipped 500,000th export vehicle
a005 Toyota Australia builds the world's 10 millionth Camry
The Yaris is launched in Australia, Replacing the Echo
a004 Two millionth locally built Toyota produced
New corporate headquarters in Port Melbourne opened
a003 Toyota Australia's 300,000th vehicle exported
Toyota overall Australian market leader with industry record sales of 186,370
vehicles
a001 The hybrid petrol/electric Prius launched in Australia
100,000th Camry exported to Saudi Arabia


  
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a000 Avalon production commences at Altona
Toyota Australia appointed as national Daihatsu distributor
New National Sales and Marketing headquarters opened in Sydney
1999 Victorian Parts Distribution Centre opened at Altona
1998 Altona plant receives ISO 14001 certification (Environmental Management)
1996 First Camry export shipments to the Middle East
1995 Camry enters production at Altona
1994 Corolla is first car built at the new Altona Assembly Plant
Camry is the last car built at Port Melbourne
199a One millionth locally-built Toyota produced
1991 Toyota becomes Australian overall market leader
1990 Lexus LS 400 launched in Australia
1987 Camry replaces Corona at Port Melbourne Assembly Plant
1981 Altona begins volume production of body panels
1978 First engines built at Altona
1968 Corolla assembly begins at Port Melbourne
1967 Crown assembly starts
1964 Corona assembly begins
1963 Toyota Tiara assembly starts
1959 First Toyota LandCruiser sold in Australia
1958 First 13 LandCruisers imported for use on Snowy Mountains Scheme ?
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New investment by Toyota in factories in the US and China saw a005 profits rise, against the
worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn; £5.85bn),
while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that this is because
the company has the right mix of products for the markets that it serves. This is an example
of much focused segmentation, targeting and positioning in a number of countries. In a003
Toyota even knocked its rival Ford into third spot, to become the World's second largest
carmaker with 6.78 million units. The company is still behind rivals General Motors with
8.59 million units in the same period. Its strong industry position is based upon a number of
factors including a diversified product range, highly targeted marketing and a commitment to
lean manufacturing and quality. The company uses marketing techniques to identify and
satisfy customer needs. Its brand is a household name. The company also maximizes profit
through efficient manufacturing approaches. Example: Total Quality Management.

 
 
    

 

Toyota comparatively has less market shared if compared to General Motors. Customers are
not segmented properly which makes them to miss out on some potential new customers.
The company also needs to keep producing cars in order to retain its operational efficiency as
car plants represent a huge investment in expensive fixed costs, as well as the high costs of
training and retaining labour. So if the car market experiences a down turn, the company
could see over capacity. If on the other hand the car market experiences an upturn, then the
company may miss out on potential sales due to under capacity i.e. it takes time to
accommodate. This is a typical problem with high volume car manufacturing. 
 

 
    

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Toyota and Lexus now have a reputation for manufacturing environmentally friendly
vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon advance
technologies developed by the organization. Rocketing oil prices have seen sales of the new
hybrid vehicles increase. Toyota has also sold on its technology to other motor
manufacturers, for example Ford has bought into the technology for its new Explorer SUV
Hybrid. Such moves can only firm up Toyota's interest and investment in hybrid research and
development. Toyota is also targeting the urban youth; therefore they are coming out with
various new models which target the streetwise youth market and capture the nature of dance
and DJ culture. 
 
 
    




Product recalls are always a problem for vehicle manufacturers. In a005 the company had to
recall 880, 00 sports utility vehicles and pickup trucks due to faulty front suspension systems.
Toyota did not give details of how much the recall would cost.

Toyota also faces tremendous competitive rivalry in the car market. Competition is increasing
almost daily, with new entrants coming into the market from China, South Korea and new
plants in Eastern Europe. The company is also exposed to any movement in the price of raw
materials such as rubber, steel and fuel. The key economies in the Pacific, the US and Europe
also experience slowdowns. These economic factors are potential threats for Toyota.

 
 
    


  
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With the rise of foreign competitors like Ford, Chevrolet and GMC in the 1970's and 80's,
rivalry in the Toyota auto industry has become much more intense. Firms compete on both
price and non-price dimensions. The price competition erodes profits by drawing down price-
cost margins while non-price competition (e.g., new car rebates and interest free loans) drives
up fixed cost (new product development) and marginal cost (adding product features). One of
the other reasons there is such high rivalry is that there is a lack of differentiation
opportunities. All the companies make cars, trucks or SUVs. The competitors are compared
to one another constantly. In recent years there has been significant market share variation,
another indication of rivalry and its very strong threat to profits. „% m #  

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The presence of new firms in an industry may force prices down and put pressure on profits.
There are, however, barriers to entry that tend to protect established firms. One would expect
the production of automobiles to require significant economies of scale, an important barrier
to entry. The new entrant would have to achieve substantial market share to reach minimum
efficient scale, and if it does not, it may be at a significant cost disadvantage. While the
evidence suggests that economies of scale in the auto industry are substantial, there are also
indications that large size may not be as important as commonly assumed. Nevertheless,
entry would represent a large capital investment to any new firm and the body of research
still indicates that economies of scale represent a substantial barrier to entry. Consequently,
entry is currently a weak threat to profitability. „% m #  

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While five-forces do not directly consider demand, it does consider two factors that
influences demand ʊ substitutes and complements. Although new cars generally are slightly
price elastic, suggesting few real substitutes (e.g., bus and rapid transit), the demand for a
particular model is highly sensitive to price because of the availability of close substitutes for
a given model. A change in the price of a complementary product (e.g., gasoline, batteries,
and tires) could have a significant impact on the demand for automobiles. The rising price of
gas, an important complementary product, is likely to affect some firms more than others
depending upon the vehicle composition. Recent rising fuel prices are likely to have a more
impact on the firms (GM, Ford Motor and Daimler-Chrysler) whose most profitable models
are energy inefficient pick-up trucks and sports utility vehicles. While Toyota has their hybrid
series of cars which are efficiently using green energy (electricity). On balance, the overall
impact on Toyota profitability from substitutes and complements is weak to moderate.
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Buyer power refers to the ability of individual customers to negotiate prices that extract
profit from the seller. Individual consumers have some influence over price within a given
dealership, but little power over manufacturers. Customers can easily, and with little cost,
switch to other auto dealers. Furthermore, customers now have access to market information
(prices and costs) from the Internet that enhances their negotiating power. But when you have
many individual customers, each representing a small proportion of total sales, they will have
little bargaining power with manufacturers and therefore pose a weak threat to Toyotas
industry profit. „% m #  


  
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Auto manufacturers require labour, parts, raw materials and services. The cost of these inputs
can have a significant effect on profitability. Whether the strength of suppliers is weak,
moderate or strong depends on how much bargaining power they can exert. The auto
manufacturers have large supplier networks that appear to exert little bargaining power.
Nevertheless, the United Auto Workers (UAW), the only supplier of labour, has historically
exerted a great deal of leverage over the benefits and wages provided by Toyota. Because of
this historical dominance by the UAW and the uncertain results of their current negotiations
with Toyota, one has to characterize supplier power, at least in this segment of the Australian
market, as a strong threat to profits. „% m #  

The following table summarizes the results of a five-forces analysis of Toyota:

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Toyota Australia exports a total of 50,000 automobile, representing 55% of total Australian
vehicle exports for the year. This has made Toyota Australia¶s largest vehicle exporter,
shipping to 33 countries worldwide and ensuring high quality standards in their products. In
terms of supply chain, Toyota has long been recognized as one of the most efficient
manufacturers in the world. It has been proactive in working partnerships with its suppliers to
improve capabilities and increase local part sourcing. In addition, Toyota and its first tier
suppliers also have benefits on the introduction of lean manufacturing into their operation.
With a dedicated supplier development team in place since 1989, Toyota has successfully
implemented lean manufacturing, benchmarking their Toyota Production System process.
Toyota is a leader in the industry in terms of supplier capability development initiatives and a
major contributor to building skills.

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The key to Toyota¶s success would appear to be their highly effective supplier integration
process that over the past 50 years has enabled the excellence of their internal hoshin kanri
strategic management, cross functional process based management and Toyota Production
System to be shared directly with their direct suppliers. In addition, over time, as the supplier
integration system has been taught to their suppliers the excellence in performance was then
outsourced to second and over time lower tier firms. The primary method to do this has been
the kyoryoku kai or Supplier Association.   .# /

Toyota has a system to increase its online supplier¶s involvement, share valuable knowledge
and prevent free riders in its supply chain. It was found that in the Toyota system, the
suppliers were developing a ³dynamic learning capability´ that improved their competitive
capabilities. In this type of network where manufacturers and suppliers are highly involved in
the interactions and learning is known to as ³knowledge sharing network.´ The effects of
knowledge sharing network on the coordination of supply chain and product customization
forms the basis of Toyota Production System (TPS). Toyota believes it has much to gain from
developing strong ties amongst its suppliers and creating and sharing new knowledge to
increase the efficiency of the entire TPS. The aim is to have members identify themselves as
part of an interdependent economic network. 0 1# 2   3# 4% 

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The automotive industry is geared towards Just-in-time (JIT) manufacturing. JIT in short
deals intimately with all areas of supply chain to reduce inefficiencies in transportation,
processing, inventory and other business processes. In order to facilitate JIT, the automotive
industry developed a fast and reliable communication network for all the key stakeholders
involved, manufacturers, suppliers, importers and dealers, to share information. This industry
driven initiative is called the Australian Automotive Network exchange (AANX). The four
major car manufacturers in Australia are involved in the project. AANX provides IP based
Extranets for the automotive industry in Australia. AANX Operates as a virtual point network
(VPN), an internet-based infrastructure that allows users to send date to each other in a
reliable and secure manner. It is a platform for conducting domestic and international
business-to-business (BaB) e-commerce activities. The main component of the project
consists of:
‡ A network that is based on available Internet technology
‡ Operated by agreed and standardized service levels.
‡ Demonstrating proactive management of trading partner connections
‡ Practice the best standard of security and privacy for transactions and interoperability
between service providers
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By connecting to AANX, the benefits reach beyond tangible gains such as cost savings. Some
of the benefits include:
‡ Pervasive supply chain communications
‡ Rapid application deployment across the supply chain
‡ Lower cost of EDI
‡ Faster Business Cycles
‡ Simpler integration into trading partners' and customers' online e-business systems and
strategies

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AANX is a multi-provider, virtual private network where service providers compete for
customers and at the same time conform to standard service quality requirements such as
security. Every trading partners share a similar physical infrastructure of the AANX. Within
the framework, all electronic conversations traverse a secure and private connection between
two trading partners. 1 +6 46 % 66
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As for every computing network, AANX holds the risk of getting hacked for various reasons.
There are two extremes: absolute security and absolute access. The closest we can get to an
absolutely secure machine is one unplugged from the network, power supply, locked in a safe
and thrown at the bottom of the ocean but that cannot be the case for AANX as multiple
numbers of transactions keep happening all day long so it has to stay connected with millions
of other networks. Even a secured internet is a bad neighbourhood now, and it isn't long
before some hacker will tell the computer to do things like self-destruct, after which, it can
give an overall bad reputation.
Like for example in Japan, Sony Corp's handling of a massive Internet security breach is
becoming a public relations nightmare reminiscent for Toyota Motor's as there is high
security breach threat on Toyota Japans network. !
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Security:

As shown in the diagram, Equant and Connect Internet Solutions provide communication
services for the network. Key trust is the certificate authority and vendor for providing IPSec
security services. 1 +6 46 % 66
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# Secured Data Transmission - IPSec protocol is used to provide secure communication over
public and private data networks. It is implemented through encryptions for permanent and
dialup connections.
# PKI Digital Certificates - The use of Public Key Infrastructure (PKI) certificated within the
AANX network enables all participants to achieve a high level of confidence when making
transactions on the network;
·#KeyTrust Professional Managed Services - Defines and verify network service levels and
certification criteria;
*#AANX Community Directory - Central policy repository used by security gateways when
sessions between trading partners are established.
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Australia's car manufacturers have started to implement major improvements to their

production management systems in order to deliver real-time communications across the
entire supply chain. With the introduction of AANX, key stakeholders are able to link the
company's critical business systems that will in turn increase efficiencies and cost savings
across all business divisions. Moreover, managers will have real-time visibility into different
aspects of the organization. Commerce Plus is the central trading solution for AANX. It can
significantly streamline the supply chain by allowing companies to collaborate and trade via
the Internet. 1 +6 46 % 66
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A backup system ready for use at any time of the year would be the best recovery I can
suggest for the AANX network. Although natural hazards are unpredictable, this can cause a
lot of problem for AANX network.

Like for example Toyota Motor Corp Japan said it could take until the end of the year before
production has fully recovered to levels before the massive earthquake and tsunami on March
11 devastated Japan, disrupting the supply of key parts.
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With the arrival of the technology and development of Information Technology, computer
mediated processes have undoubtedly changed the traditional supply chain management
through the Toyota Australia to carry out their supply chain operations in the automotive
industry. The analysis of the supply chain has improved significantly over the period of time,
within the operation of IT. But still the use of IT on supply chain, results in weakness even
after having benefits. The technology keeps changing year by year which is why supply chain
will always need improvement to technologies current formation.

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