GLOBALIZATION STRATEGIES

COMPANY HISTORY
Established in 1918 out of Sakichi Toyodas weaving machine company(1897). Entered Automobile Segment in 1937. Launched first car (SA Model) in 1947 Toyota Motors Sales company Ltd. was formed in 1950 & by 1957 it entered into U.S.A. Toyota Production System formed in 1937 based on Just-In-Time principle.

HEADLINE FACTS: TOYOTA

Annual sales: $114 Billion Production : ~5.8 million Units/Yr. Employees : ~210,000 people 56 manufacturing plants in 6 continents 2nd largest automotive manufacturer in the global market.

STRONG INTERNATIONAL PRESENCE AND DOMINANT POSITION IN THE DOMESTIC MARKET

Intl Market (2000)
9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 T O Y O T A Ford Daimler VW Chrysler Fiat Nissan Honda Renault GM

Japan Market (2000)

PSA

In 1,000 Units

THE TOYOTA WAY

Toyota developed and followed some of the innovative strategies to enhance growth.

TPS :-Toyota Production System helped

company to rule out the three Ms URI (overburden) URA (inconsistency) UDA (eliminate waste)

While shopping in a supermarket they observed the simple idea of an automatic drink resupplier; when the customer wants a drink, he takes one, and another replaces it. The principles underlying the TPS are embodied in THE TOYOTA WAY.

JIT :-Just In Time compassed system wherein

each process in the assembly line produce only the number of parts needed at the next step on the production line.

MARKETING STRATEGIES
Besides manufacturing, company started global network of design and R&D covering three major markets of JAPAN,AMERICA,EUROPE. By 1970 Toyotas sales exceeded Chrysler and Volkswagen. COROLLA EFFECT:-by 1974 Corolla became 2nd largest selling car in the world. Basic theme was refined engineering and flexible and efficient manufacturing and production system. Short term problems:-encountered economic slowdown which affected sales and profit margins. Company handled same through cost cutting tools. Sound company-dealer relationship:- used dealer network, offered charming incentives to dealers, more test drives for customer with ascent towards increased sales.Toyota is known for their best dealer-network.

Targeted young customers to increase the market share by restructuring outlets. Cannibalization check:- dealers outlet close to each other were offering price competition and selling same models, the same was avoided at initial stages by fairly distributing the car models. Advertisement :-invested a lot in advertisements($20 million in 1995) which gave performance pick-up.

THE ALL EARLY GLOBALIZATION EFFORTS

In 1995 came new global business plan for -advancing localization. -increasing imports. Objective was to increase offshore production capacity to 2 million units by 1998. Toyota focused on increasing overseas production by establishing new plants.

COUNTRY North America

STEPS TAKEN Toyota Motor Manufacturing Kentuckly,Inc(TMMK) Toyota Manufacturing Canada Inc.(TMMC) New plants were installed as Toyota Motor Manufacturing Indiana Inc.(TMMI) and Toyota Motor Manufacturing West Virginia Inc.(TMMWV)

EXPANSION Expanded from 400,000units/annum to 500,000 units/annum Expanded from 100,000units/annum to 200,000 units/annum

Canada

Indiana and West Virginia

Europe

Toyota Motor Manufacturing France S.A.S(TMMF)

Production target of 150,000units/annum of Yaris

Expanded imports of Included Duo stores for selling completely build Avalon cars.

INNOVATION: PRIUS AND YARIS

PRIUS:- launched in 1997,a gasoline-electric which was worlds first ever mass-produced hybrid car. The car was rated high on energy conservation and environment friendly aspects. YARIS:-was a small car launched in 1998 specially for European market. The car was designed to appeal and quality demanded. It improved companys brand image in minds of European customers. Companys overseas production increased from 1.22 million units per year in 1994 to 1.54 million units per year in 1998(expected was 2 million).

DESCENT IN MARKET SHARE

By late 1990 Toyotas market share (in Japan) decline from 52% to 38% and young buyers accounted for 30% as compared to 45% in late 1980s. As per report rival companies like Honda and BMW were eating-up their market share and failure to provide young customers with zippy compact minivans and SUV.

CUSTOMIZED SOLUTION
Toyota started a new company Virtual Venture Co.(VVC) to design and sell cars which were appealing to young customers. They offered test-drives of various models In 1999 Toyota rolled many new cars(Vitz compact, FunCargo compact, MRS sports car) with distinctive looks and attitude. They also came-up with upgraded versions of its existing model Windom(Lexus ES 300), Verossa and Brevis. To attract young buyers it rolled new car bB and WiLL VS with no visible sign of Toyota except for a symbol on steering wheel. Renamed its one dealership Netz and targeted entry-level buyers. Also equipped outlets with pizza parlors and playgrounds. Hired contract employees and reduced its workforce (against its policy of lifetime employment) to cut down cost.

STAGES OF TOYOTAS GLOBAL PRODUCTION

SECOND PHASE OF GLOBALIZATION

Second Phase was Termed as Global Localization. Toyota focused on localizing design development & purchasing in every region & country. Developed a management hybrid consisting of people from both Japan & North America.

GLOBALIZATION IN NORTH AMERICA

Increased engine production capacity across US & Canada. Calculated the average age of its customers(47yrs) as against HONDA (44ys)& Volkswagen(40 yrs). Created new models targeted at budget minded young buyers in age group of 25yrs. Launched Corolla saloon & Matrix which was priced at low budget Korean models.

Maintained close relationships with its dealers which helped them identify market changes early on & take necessary actions.

GLOBALIZATION IN EUROPE
Launched YARIS to cater European market & the car became an instant success. Toyota established its organization & its systems to avoid external currency risks thus increasing local procuring of units. Introduced Corolla 3-door Hatchback for U.K which lead to increase in output by 30%.

To survive competition in Europe, Toyota entered into partnerships with other automobiles like PSA Peugeot Citroen to increase capacity The two companies jointly working in Czech Republic making about 300,000 units a year.

3 Door Hatchback

GLOBALIZATION IN CHINA
Toyota made a late entry into this vast untapped market in 1989. It lost no time in establishing itself by entering into strategic alliance with China FAW group Corporation to manufacture automobiles for Chinese market. Built new plant & manufactured compact cars based on YARIS platform.

To catch up with rivals like Volkswagen (35% market) & GM (10% market), Toyota introduced VIOS , its first passenger car in CHINA. To strengthen itself Toyota also launched Corolla & Crown brands.

2010 GLOBAL VISION

Theme for Global vision is INNOVATION FOR FUTURE Key points of Global vision : Recycling Based Society Age of Information technology Development of Motorization on Global Scale Diverse Society

To achieve these objectives, Toyota had some plans: Focus on its core technology like Engines & platforms. To gain 15% market share which was their prime idea. Started targeting new segments like truck . Minivans etc by looking for new emerging markets like INDIA & African Countries. Due to demand in Diesel engines Toyota launched diesel powered versions of YARIS & AVENSIS.

In September 2003, Toyota unveiled new Hybrid gasoline PRIUS SEDAN. PRIUS :The Worlds First vehicle that could Park itself It had an electronically operated steering wheel that guided the car when reversing into parking spaces