Strategic Management Report on TOYOTA PAKISTAN by Raza Abbas
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Transcript of Strategic Management Report on TOYOTA PAKISTAN by Raza Abbas
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TOYOTA Project report of STRATEGIC MANAGEMENT
Submitted To
Mr. SAEED AHMED
M.B.A (H.R.M)4th Semester (2012-2015)
(Alfalah Institute Of Banking and Finance)
Bahauddin Zakariya University, Multan, Pakistan
2014
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GROUP MEMBERS
M.B.A (H.R.M) 4th Semester (2012-2016)
(Alfalah Institute Of Banking and Finance)
Bahauddin Zakariya University, Multan, Pakistan
SYED RAZA ABBAS 8
MOHAMMAD ALI 41
FAHAD MANAN 40
ANAM ARIF 7
DANIYAL IQBAL 51
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TOYOTA MOTORS Over View and Product and size:
Toyota Motor Corporation is one of the worlds leading automakers, offering a full range
of models from mini vehicles to large trucks. Global sales of its T o yo t a and
Lex u s b r an ds , co mb in ed wi t h th os e o f Daihatsu and Hino, totaled 6.78 million
Its own 12 plants and 11 manufacturing subsidiaries and affiliates inJapan, Toyota
has 45 manufacturing companies in 26 countries/locations, which produce Lexus -
and Toyota-brand vehicles and component Market shares (2012) vs Competitors
TOYOTA 14.1%
NISAN 8.1%
CHRYSLER 9.8%
HONDA 11.0%
GENERAL MOTORS 16.2%
TOYOTA CARS BRANDS
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TOYOTA LOCATIONS IN THE WORLD
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INDUS TOYOTA MOTORS In PAKISTAN
Indus Toyota Industries has serving its customers since long time. Indus Toyota
motor d ev e l op s and m an u f ac tu r es au t om obi l es and au to mo bi l e - r e l a t ed
p r od u c t s , s u ch a s vehicles, engines, car air-conditioning compressors, car
electronics components and devices, and stamping dies.
Indus motors (Pakistan) started its business in Pakistan as a public limited company in
December 1989. The shares of the company are quoted on the stock exchanges of Pakistan.
IMCs production facilities are located at Port Bin Qasim Industrial Zone near Karachi
measuring over 105 acresPlant (Indus Motor Company Limited)
Plot No. N.W.Z/1/P-1, Port Qasim Authority, Karachi, Pakistan
REGIONS
Karachi Quetta
Larkana Lahore
Faisalabad Sargodha
Multan Sialkot
Islamabad Rawalpindi
Peshawar Azad Kashmir
Dera Ismail Khan Mardan
Currently the company is performing well in automobile sector of country. Its sales for the year
2003-2004 is 29,565 units. It has captured the largest automobile market share in the country.
It is greatly contributing in human resource development by training and other such activities.
The demand for its products is more than the companys capacity. It has certain advantages
upon its competitors like largest market share, customers liking of its products more than its
competitors. The company is continues to maintain a strong commitment towards its Human
Resource. To enhance Consumer Satisfaction, extensive training programs were held during
the year. Company continuously arrange service campaigns in the cities where its dealerships
are present to provide quality service to customers and collect their complaints, suggestions
and comments about company. The company also checks its dealerships continuously for not
only maintaining but enhances its standards to give to customers maximum satisfaction.
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VISION, MISSION and OBJECTIVES
VISION STATEMENT:
To be the most respected and successful enterprise, delighting customers with a wide
range of products and solutions in the automobile industry with the best people and
the best technology.
IMCs Mission is reflected in their Companys Slogan.
Action, Commitment and Teamwork to become # 1 in Pakistan.
Respect & Corporate Image
Quality & Safety
Customer Satisfaction
Production & Sales
Profitability
Best Employer
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BUSINESS OBJECTIVES:
Achieving Market Leadership by Delivering Value to Customers
Following our Customer First philosophy in manufacturing and providing high quality vehicles and services that meet the needs of Pakistani customers.
Enhancing the quality and reach of our 3S Dealership Network
Employing customer insight and feedback for continuous corporate renewal, including
product development, improving service and customer care.
Bringing Toyota Quality to Pakistan
Maximizing QRD (Quality, Reliability and Durability) by built-in engineering. Transferring technology and promoting indigenization at IMC and its Vendors. Raising the bar in all
support functions to meet Toyota Global Standards.
Optimizing Cost by Kaizen
Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors. Implementing Toyota Production System. Removing waste in all areas and operating in the lowest cost
quartile of the industry.
TOYOTA CULTURE:
However, Toyotas main resource is the Toyota Way, the 14 principles behind the Toyota
Production System (Combe, 2011). These originated in the post 1945 environment, when it
was imperative to make the maximum use of scarce resources. Challenges, improvement,
Kaisen, go and see (genchi genbutsu); respect and teamwork are the main tenets of these
principles, which can be outlines as follows.
Management decisions should be long term, as opposed to short term, although they should be
arrived at consensually. Problems should be highlighted by continuous process, not hidden and
resolved immediately so that a quality product is produced immediately. Only existing and
trustworthy technology should be used and tasks need to be standardized so that the workload
is leveled out and the workers are continually improving. Management should understand all
aspects of the companys operations, and pass on their dedication to the companys goals to
others.
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INDUS TOYOTA Environmental Factors
1-Political Factor:
Government at all levels is an important component of the general environment no
organization or industry is immune from the various decisions made by the government. The
Pakistan, Governments in consistent policies, frequent change industry tariff and smuggling
are main reasons of unstable market conduction. Like other motor companies Toyota is also
affected by the current changing policies of the PML (N) government to buy yellow cab from
the SUZUKI company and a huge revenue transferred to the SUZUKI company.
2-Economical Factor:
Government economic policies at the federal level clearly influence the ability of the
industries to survive and progress. Inflation is a major economic factor which
has affected the purchase power of the people of Pakistan. Automobile industry
including ToyotaThe inflation rate in Pakistan was recorded at 8.53 percent in March of
2014. Inflation Rate in Pakistan is reported by the Pakistan Bureau of Statistics
3-Demograpic Factor:
Society holds a global or summary belief that an organization is proper and worthy
of support. Toyota takes pride in being the most trusted name all over Pakistan. Its vehicles
are regarded as a status symbol. It is the guiding principles of Toyota which has strongly
developed trust in the people.
4- Cultural Factor:
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Toyota respects the culture and customs of every nation and community and contributes to
the economic and social development through corporate activities in the communities. Toyota
believes in honoring the language and spirit of the law of every nation and undertake open
and fair corporate activities to be a good corporate citizen of the world. This is the reason that
Toyota is proud of the fact that Pakistani society considers Toyota vehicles to be a symbol of
reliability, comfort, luxury and ahave to be trusted.
5-Technological Factor:
Technology is of particular importance because it has been and continues to be the main
source of increases in productivity. Now Toyota has also Hybrid technology that provide 20
km in 1litre petrol and others motor companies mileage is less than Toyota Prius. A wide
Range of colors in cars are also attract the customers.
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STAGES
1. INPUT STAGE
SWOT ANALYSIS of TOYOTA
EFE MATRIX of TOYOTA
IFE MATRIX of TOYOTA
2. MATCHING STAGE
TOWS MATRIX of TOYOTA
SPACE MATRIX of TOYOTA
BCG MATRIX of TOYOTA
GRAND MATRIX of TOYOTA
3. DECISION STAGE
QSP MATRIX of TOYOTA
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SWOT ANALYSIS
Strengths:
1. A strong brand name A strong brand name and Large market share 2. Innovation is the key success factor through massive production in hybrid vehicles all
over the world that has been increasing Toyotas sales. 3. Toyotas investment in R &D Department is the reason for the recent improvement in
the design and research centers in the whole world.
4. Competitive pricing 5. Strong understanding of individual customer segment needs 6. High market share in PAKISTAN. 7. High quality and durability 8. Easy availability of spare parts in PAKISTAN. 9. Elegant body features 10. Comfortable ride 11. Good resale value 12. Low fuel consumption.
Weaknesses:
1. TOYOTA Should owned the manufacturing of Cars in PAKISTAN to overcome the complaints of local customers.
2. Due to unstable political situation in some countries, Toyota has to face through financial crisis and a decline in sales as well.
3. Ineffective vehicles and braking can make Toyota lose its brand image and a potential loss in incomes in the long term.
4. Toyota is often being criticized as the foreign importer to provide vehicles to customers.
5. Recycle Iron is used in cars body material.
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Opportunities:
1. Toyota should make Sporty version in cars like Honda CIVIC in PAKISTAN to increase sales.
2. Due to rise in fuel prices will benefit Toyota to produce cars that are more fuel efficient and is less harmful to the environment like HYBRID type technology.
3. Toyota can capture the global market by expanding Plants in other countries.
4. The demand to buy luxurious cars has more increased recently in countries like India and Pakistan.
5. Extra market can be captured by introducing Company fitted CNG Kitts in the car and provide them full workshop facilities as well
Threats:
1. Increase in demand of technology other cars may result in downward trend of the brands goodwill.
2. Currently PakSuzuki is posing a threat asPak Suzuki is producing cheap cars and istargeting the lower-middle and middle income group consumers
3. Global inflation due to increase in population and high oil prices may result in decrease in demand of cars
4. Those car manufacturers who sell cars in cheaper rate has forced Toyota to put it prices down which can be a risk to its organizations financial position.
5. Strong Fluctuation in prices.
6. Permission given by the Government to the overseas Pakistanis to import used cars in Pakistan
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EFE MATRIX FOR TOYOTA
Key External Factors
Opportunities Weight Rating Weighted
Score
1 Toyota should make Sporty version in cars like Honda
CIVIC in PAKISTAN to
increase sales
0.20 4 0.8
2 Extra market can be captured by introducing Company fitted CNG
Kitts in the car and provide them
full workshop facilities as well
0.10 3 0.3
3 Toyota can capture the global market by expanding Plants in
other countries.
0.05 4 0.2
4 The demand to buy luxurious cars has more increased recently
in countries like India and
Pakistan
0.10 2 0.2
5 Due to rise in fuel prices will benefit Toyota to produce cars
that are more fuel efficient and is
less harmful to the environment
like HYBRID type technology.
0.10 4 0.4
THREATS
1 Global inflation due to increase in population and high oil prices may
result in decrease in demand of cars
0.15 1 0.15
2 Currently Pak Suzuki is posing a threat as Pak Suzuki is producing
cheap cars and istargeting the lower-
middle and middle income group
consumers.
0.10 4 0.4
3 Permission given by the Government to the overseas Pakistanis to import
used cars in Pakistan
0.05 2 .1
4 Those car manufacturers who sell cars in cheaper rate has
forced Toyota to put it prices
down which can be a risk to its
organizations financial position.
0.10 1 .1
5 Increase in demand of technology other cars may result in downward
trend of the brands goodwill
0.05 3 0.15
Total 1.00 2.8
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IFE MATRIX FOR TOYOTA Key External Factors
Strengths Weight Rating Weighted
Score
1 A strong brand name and Large market share
0.18 4 .72
2 High quality and durability
0.11 3 .33
3 Innovation is the key success factor through massive
production in hybrid vehicles all
over the world that has been
increasing Toyotas sales
0.5 1 .5
4 Toyotas investment in R &D Department is the reason for the
recent improvement in the
design and research centers in
the whole world
0.08 2 .16
5 High market share in PAKISTAN.
0.12 3 .36
weaknesses
1 Due to unstable political situation in some countries, Toyota has to
face through financial crisis and a
decline in sales as well.
0.15 4 .6
2 Toyota is often being criticized as the foreign importer to provide
vehicles to customers.
0.11 1 .11
3 Ineffective vehicles and braking can make Toyota lose its brand
image and a potential loss in
incomes in the long term
0.07 3 .21
4 Recycle Iron is used in cars body material.
0.10 3 .3
5 TOYOTA Should owned the manufacturing of Cars in
PAKISTAN to overcome the
complaints of local customers.
0.03 2 .06
Total 1.00 3.35
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TOWS MATRIX
SO
By introducing more new product range .To penetrate existing markets by offering innovative techniques and customer oriented products.
Toyota should expand its product line to capture the market with luxuries cars as well.
WO
As the demand for Toyota vehicles is increasing currently can give some support to Toyota and manufacturing facilities specifically in those countries where they are
considered to be expensive should be started.
Offering innovative/improved products in order to overcome the loss in sales and negative impact on its brand image.
ST
Toyotas most products are best known for its quality and innovation that can minimize any loss in prices against its competitors in the manufacturing sector.
Offering innovation in products can prevent Toyota from increase in fuel prices and customers are also provide several alternatives in cars if fuel prices are high.
WT
The best choiceis to shift some of the manufacturing operations in other countries That is less influenced by political instability at the same time.
Toyota should minimize to use recycle iron in cars to maintain the customer loyalty.
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SPACE MATRIX FOR TOYOTA The Strategic Position and Action Evaluation Matrix Analysis is most frequently in use during
professional industry or market analysis of a company. The SPACE Matrix axis signify the 2 external
proportions which are industry Position (IP), Stability Position (SP) and two internal dimensions of a
competitive company which are Competitive Position (CP) and Financial Position (FP). These 4
dimensions are the most significant determinants of a company's overall strategic position in the
industry or marketplace
Steps essential to construct a SPACE Matrix are described below:
Choose a combination of factors that best characterize Competitive Position (CP),
Stability Position (SP), Financial Position (FP) and Industry Position (IS).
To the CP and SP dimensions allot a numerical value ranging from 4 (excellent) to 1
(poor) and the factors that constitute the IP and FP dimensions also.
Calculate an average score for IP, SP, CP and FP by summing the numbers allotted to
the factors of the entire dimension separately and dividing by the set of factors
included in the particular dimension.
Plot the average scores for each dimensions such as SP, CP, IP and FP on the proper
axis in the matrix.
Add or combine the scores of two dimensions that lay in the x-axis and design the
resultant point on X, in the same way add scores of dimensions that lay in the y-axis
and plot the consequential point on Y. Then, plot the intersection of the both new XY
points.
Sketch a directional vector from the basis of the Strategic Position and Action
Evaluation (SPACE) matrix throughout the new intersection points. This vector
discloses the kind of strategies suggested for the firm such as aggressive, defensive,
conservative or competitive.
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SPACE MATRIX FOR TOYOTA
First of all we will rate FP,SP,CP and IP by 4 to 1.
We will rate the FP through Financial statements of Toyota and some the
ratings 4+2+4+3=13 then we will calculate the average 13/4= and get
FP=3.25.we will also find the sum of CP -2-1-1-3=-7 and calculate the average
-7/4= -1.75.Then we will rate the stability position SP and sum the rate numbers
-2-1-3-2= -8 and calculate the average 14/4= 3.2. and at the last we calculate the
average of (IP) 14/4=3.5
Now we get average of
FP= 3.25, CP= -1.75 , SP=-2 and IP=3.5
On X=axis = IP + CP
3.5 + -1.75=1.75
And on Y-axis= FP+SP
3.25+ -2=1.25
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Now make a diagram to show the TOYOTA SPACE MATRIX and suggest which strategy
suitable for TOYOTA INDUS Motors.
As a result, market development, market penetration, product development, forward,
backward and horizontal integration or a mix of strategies can be chosen, depending on the
particular environment that the Toyota Motors should practice at that time.
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BCG MATRIX Toyota Authorities provide us the information of their brands of vehicles about their Cars
market share and Growth rate in PAKISTAN market. Which brand has more market share
and growth rate is high among different vehicles of Toyota.
Corolla remains the best selling sedan in Pakistan and now the customers have the pleasure to
enjoy convenience of the navigation system which was introduced recently in all high end
variants. In March, 2012 the Company introduced much awaited Hilux Vigo Champ with an
automatic transmission on strong customer demand. The launch of Vigo Champ along with
the new model change in the Hilux line with stronger, bolder fascia and vibrant interior has
fascinated and captured the market attention. Going forward, we expect the demand for our
products to remain robust as the Company continues to respond to market needs and
customer voices.
Recently a new 3S dealership was launched in Bahawalpur which now takes the total of
IMC authorized 3S dealerships to 35. The new dealership will enable us to be closer to our
rural customers in the Southern Punjab.
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Stars. TOYOTA COROLLA operate in high growth industries and maintain high market share. Stars are both cash generators and cash users. They are the primary units in which the company
should invest its money, because stars COROLLA are expected to become cash cows and
generate positive cash flows.
Cash cows. HILUS vigo are the most profitable brands and should be milked to provide as much cash as possible. The cash gained from cows should be invested into stars to support
their further growth.
Question marks. CUORE Question marks are the brands that require much closer consideration.. Question marks do not always succeed and even after large amount of
investments they struggle to gain market share and eventually become dogs. Therefore, they
require very close consideration to decide if they are worth investing in or not.
Dogs. SE SALOON Dogs hold low market share compared to other Toyota Brands and operate in a slowly growing market. In general, they are not worth investing in because they
generate low or negative cash returns.
.
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INTERNAL EXTERNAL MATRIX
From our observation and analysis of EFE and IFE .we have drawn the internal and external
matrix. Which strategy is best for the TOYOTA motors Pakistan.
TOYOTA INTERNAL EXTERNAL EVALUATION
STRONG AVERAGE WEAK
(3 4) (2 2.99) (1 1.99)
The weighted score of EFE matrix is 2.8 and weighted score of IFE is 3.35 . So the IFE
score exist in 1st division and EFE weighted score match in division 4th and Toyota
now in growth and
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TOYOTA GRAND STRATEGY MATRIX
Grand strategy matrix is a last matrix of matching strategy formulation framework. It same as important
as BCG, IE and other matrices.
Grand Strategy Selection Matrix (GSSM)
Grand Strategy Selection Matrix has become an effective tool in devising alternative
strategies. The matrix is based on the following four important elements.
Rapid market growth
Slow market growth
Strong competitive position
Weak competitive position.
From our observation we have made grnad strategy matrix for Toyota.
Rapid Market Growth
QUADRANT 2 QUADRANT 1
TOYOTA
Market Development Market Development
Market Penetration Market Penetration
Product Development Product Development
Horizontal Integration Forward Integration
Divestiture Backward Integration
Liquidation Related Diversification
Weak Strong
Competitive Position Competitive Position
QUADRANT 3 QUADRANT 4
Retrenchment Related Diversification
Related and unrelated Diversification unrelated Diversification
Divestiture Joint Venture
Liquidation
Slow Market Growth
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QSPM
The Quantitative Strategic Planning Matrix First it contains key internal and external factors. An internal factor contains (strength and
weakness) and external factor include (opportunities and threats). It relates to previously IFE
and EFE in which weight to all factors. Weight means importance to internal and external
factor. The sum of weight must be equal to one. After assigning the weights examine stage-2
matrices and identify alternatives strategies that the organization should consider
implementing. The top row of a QSPM consists of alternative strategies derived from the
TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix. These
matching tools usually generate similar feasible alternatives. However, not every strategy
suggested by the
matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive
judgment in selecting strategies to include in a QSPM. After assigning the weight to strategy,
determine the attractiveness score of each and afterwards total attractiveness score. The highest
total attractiveness score strategy is most feasible
Steps in preparation of QSPM
1. List of the TOYOTA key external opportunities/threats and internal strengths/weaknesses in
the left
column of the QSPM.
2. Assign weights to each key external and internal factor of TOYOTA
3. Examine the Stage 2 (matching) matrices and identify alternative strategies that Toyota
motors want to expand manufacturing and consider to implementing
4. Determine the Attractiveness Scores (AS) of TOYOTA
5. Compute the Total Attractiveness Scores of TOYOTA
6. Compute the Sum Total Attractiveness Score of TOYOTA
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A QSPM For TOYOTA MOTORS
Key Factors. TO EXPAND their Manufacturing
Opportunities Weight AS TAS
1 Toyota should make Sporty version in cars like Honda
CIVIC in PAKISTAN to
increase sales
0.20 4 0.8
2 Extra market can be captured by introducing Company fitted CNG
Kitts in the car.
0.10 3 0.3
3 Changing consumers preference through adapting
related/unrelated diversification
strategy.
0.05
4 The demand to buy luxurious cars has more increased recently
in countries like India and
Pakistan
0.10 2 0.2
5 Due to rise in fuel prices will benefit Toyota to produce cars
that are more fuel efficient and is
less harmful to the environment
like HYBRID type technology.
0.10 4 0.4
THREATS
1 Global inflation due to increase in population and high oil prices may
result in decrease in demand of cars
0.15 -
2 Currently Pak Suzuki is posing a threat as Pak Suzuki is producing
cheap cars and istargeting the lower-
middle and middle income group
consumers.
0.10 4 0.4
3 Permission given by the Government to the overseas Pakistanis to import
used cars in Pakistan
0.05 2 .1
4 Those car manufacturers who sell cars in cheaper rate has
forced Toyota to put it prices
down which can be a risk to its
organizations financial position.
0.10 -
5 Increase in demand of technology other cars may result in downward
trend of the brands goodwill
0.05 3 0.15
1.00
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Strengths
1 A strong brand name, Toyota is considered to be the worlds largest automobile producer.
0.18 4 .72
2 High quality and durability
0.11 3 .33
3 Innovation is the key success factor through massive
production in hybrid vehicles all
over the world that has been
increasing Toyotas sales
0.5 -
4 Toyotas investment in R &D Department is the reason for the
recent improvement in the
design and research centers in
the whole world
0.08 2 .16
5 High market share in PAKISTAN.
0.12 3 .36
weaknesses
1 Due to unstable political situation in some countries, Toyota has to
face through financial crisis and a
decline in sales as well.
0.15 4 .6
2 Toyota is often being criticized as the foreign importer
0.11 -
3 Ineffective vehicles and braking can make Toyota lose its brand
image and a potential loss in
incomes in the long term
0.07 3 .21
4 Recycle Iron is used in cars body material.
0.10 3 .3
5 TOYOTA Should owned the manufacturing of Cars in
PAKISTAN to overcome the
complaints of local customers.
0.03 -
Total 1.00 6.13
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Recommendations
Management needs to make sure that their projects and their goals are aligned with
organizational values and core competencies. Understanding the importance of competencies
and core values. Toyota must focus on sporty style cars to capture the customers more and try
to create more and more corporate social responsibilities in PAKISTAN. Provide 3s dealership
in every division of Pakistan .To defeat their competitor Suzuki in small cars with new cars
introduced. Proper teams are made to check the Toyota services in different city dealers of
Toyota to overcome the complaints of customers. Provide training schools to the local public
and offer different courses to minimize the dependence on foreign skilled workers .Toyota
should also launch its new model as per the date on the other countries as well. Toyota should
d3crease the trend to import the Land cruiser from foreign country and make the luxury cars in
local location to minimize the cost.