Risk Management Toyota

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					                                     EXECUTIVE SUMMARY

As the world‘s second largest automaker, Toyota has been really successful in terms of their low

cost production and global public acceptance. Toyota currently has operations in more than 140

countries. From 2005 onwards, Toyota focused their growth strategy on its operations in Asia.

China, as the single one economic rising power, will be Toyota‘s main focus; however, Toyota is

required to analyze the overall economic environment, political situation, and cultural differences to

facilitate its strategic planning.

Scope of the report

This report will commence with introducing Toyota‘s current operations. In order to analyze

Toyota‘s competitiveness, this report will cover its strengths in terms of the CSA/FSA Matrix and

Integration /National Responsiveness Matrix. Lastly, this report will examine China‘s country

specific advantages and different strategies to improve Toyota‘s operations in China, as well as

discuss risks.

Recommendation

Based on all the information gathered, the report will recommend the continuation of the joint

venture for the time being to reduce risk of political conflict and economic issues. In addition,

several suggestions will be presented as to how Toyota can strengthen their foothold in the Chinese

market, such as improving productivity, localizing needs based on Chinese consumer wants, and

offering what other foreign automobile companies do not, in order to remain competitive.




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                                        Company Overview

Introduction

Toyota Motor Corporation is one of the world‗s leading automakers, offering a full range of models,

from mini vehicles to large trucks. Global sales of its Toyota and Lexus brands, combined with

those of Daihatsu and Hino, totaled 6.78 million units in 2003 (Toyota‘s DataBank, 2005).

Worldwide Operations

As of December 2005, Toyota had a total of 53 overseas manufacturing companies in 27 countries

and regions. Toyota markets cars worldwide through its overseas network, consisting of more than

160 importers/distributors and numerous dealers (See Exhibit 5). Besides its own 12 plants and 11

manufacturing subsidiaries and affiliates in Japan, Toyota has 51 manufacturing companies in 26

countries/locations, which produce Lexus and Toyota brand vehicles and components (Toyota‘s

Official Website, 2005). As of March 2004, Toyota employed 264,000 people worldwide (on a

consolidated basis), and marketed vehicles in more than 140 countries. Automotive business,

including sales finance, accounts for more than 90% of the company's total sales, which came to a

consolidated ¥17.29 trillion in the fiscal year to March 2004. Diversified operations include

telecommunications, prefabricated housing, and leisure boats (Toyota‘s Official Website, 2005).

Overall Corporate Strategies and Key Initiatives

Toyota‘s management has established the following strategies: localize global operations with

targeted regional strategies; promote key initiatives globally; diversify into automotive-related

business sectors; maintain financial strength; and focus on shareholder value. The key global

initiatives include focusing on research and development, improving efficiency, and expanding

finance operations. R&D efforts have concentrated on the development of automobiles powered by

fuel cells and other non-traditional fuel technologies. As well, they have focused on the reduction




                                                                                                      2
of emissions and improvement of fuel economy in conventional automobiles, and the increase in

recycling of manufacturing materials.

Financial Highlights

Toyota reached all-time highs across the board, with consolidated worldwide vehicle sales of 7.40

million units, net revenues of ¥18.55 trillion, operating income of ¥1.67 trillion, and net income of

¥1.17 trillion. Those results were due to the concerted efforts of the Toyota Group, its suppliers and

sales affiliates, to market attractive vehicles that win the hearts of customers worldwide. In addition,

worldwide sales of hybrid vehicles soared as they became popular numbers with eco-friendly

consumers. In the fiscal year 2005, Toyota shipped approximately 151,000 units -- 2.5 times more

than in the previous fiscal year. Moreover, Toyota began overseas deployment of two SUVs

equipped with the latest hybrid systems, following the vehicles' March 2005 debut in Japan

(Toyota‘s DataBank, 2005).

In the fiscal year 2005, Toyota continually remained the second largest automaker in the world, in

terms of sales volume and market share (exhibit 1). The domestic and North American market

remain the largest markets for Toyota, representing 32.4% and 30.7% of Toyota‘s total sales,

respectively (see exhibit 2). As of 2005, Toyota successfully improved its operations and set new

records for its net operating income, net income, vehicle sales, and vehicle production (see exhibit

4).

Organizational Structure

Toyota‘s organizational structure is very complex because they have eight foreign business offices

and fifty one overseas operating and production bases in 26 countries, including China (Toyota

Corporate Profile: Japanese, 2005). Therefore, they introduced the matrix structure to create the

specific types of design that best meet the needs of the consumers in each region and country in the




                                                                                                        3
world (Japan's Global Companies, 2006). Also, the structure helped Toyota combine the best

features of both functional and divisional organizations (Enterprise Risk Management at Toyota,

2002). Besides this global organizational structure, the headquarter level since the 1990s‘, has been

converting the organizational reformation from a hierarchical structure to a flatter one for more

sophisticated and efficient operations (How Toyota Made Most Powerful Employees, 2002).

Subsidiary

Currently Toyota has 540 subsidiaries in Japan, and 51 foreign subsidiaries and/or operations based

in 26 countries outside Japan. This includes 11 in North America, 4 in Latin America, 6 in Europe,

2 in Africa, 1 in Oceania, 5 in the Middle and Near East, and 22 in Asia (Toyota Corporate Profile:

Japanese, 2005). Among the Asian subsidiaries, 13 of them are operating in China. Toyota‘s CEO,

Cho, mentioned in his speech that the presidents of foreign subsidiaries were chosen from locals,

not sent from headquarters in Japan (Cho, 2005). In addition, Toyota makes an effort to use as much

raw materials and unfinished goods as possible from the local plants, and where they are bought

from is mainly left to the subsidiaries in the regions (Cho, 2005). Due to this, it is safe to say that

Toyota‘s subsidiaries have autonomy in their supply chain.

Company’s Firm Specific Advantages and Country Specific Advantages

Firms Specific Advantages (FSA)

   1. Toyota, not only as a mere automobile company but also as a global company, has strong

       worldwide recognition. For example, in their home country of Japan, Toyota was ranked

       first in 2006 as the most desirable company which students, in science and engineering

       majors, would like to work for (Rankings of the most desirable company, 2006).Globally,

       the company is ranked second as the most admired company overall by business people

       around the world in FORTUNE Magazine in 2006 (CNN Money.com-Fortune, 2006).




                                                                                                          4
2. Toyota has been exhibiting great performance, and is a robust growing company in the

   world. In 2004, Toyota was ranked second, selling 7,500,000 cars and having a market share

   of 15.8%, next to General Motors (See exhibit 1). In December 2006, Toyota‘s president,

   Watanabe, mentioned that they were planning to produce and sell 9,060,000 cars in the

   world, which was comparable to GM‘s 9,080,000 in 2005 (Toyota, Achieving Number one

   in the world, 2005). We can see Toyota views the possibility of becoming number one in the

   world. Also, Toyota is well known for producing very high quality cars. In 2004, Toyota

   was ranked first as the producer of highest quality cars in the United States (Quality

   Investigation, 2005). Due to the these facts, Toyota has been generating a great amount of

   economies of scale, leading to great aggregate market value, ranking highest in Japan and 8th

   in the world in 2005 (Nikkei Business, 2006).

3. Besides these financial aspects, Toyota has many non-financial firm specific advantages. For

   example, Toyota is famous for its innovation in terms of technology. Toyota is the first auto

   company which invented and sold hybrid-cars, such as the Prius, which is eco-friendly.

   Currently in the United States, the Prius has come to be considered the symbol for protection

   of the environment (Yomiuri News Paper, 2005). For example, a major Hollywood celebrity,

   Leonardo DiCaprio, appeared at the Academy Awards with a Prius instead of a limousine,

   showing his concern for the environment. These facts show that Toyota has been making

   strong efforts to protect the environment. This is one of the leading technologies Toyota

   possesses, and other auto companies have been struggling to obtain. In regards to the

   protection of the environment, Toyota has a strong consciousness of having a Corporate

   Social Responsibility (CSR), and participating in global environmental efforts. These

   include the reduction of wastes in the production process, efforts towards recycling of auto-




                                                                                                   5
      parts, the establishments of schools for environmental education, and effort towards

      environmental reconstruction cooperated with civil activities (Toyota Corporate Profile:

      Japanese, 2005).

   4. Toyota is not only a technological innovator, but also an innovator of management systems.

      Two of the most well-known and widely practiced management systems are the Kaizen

      Costing and Just-in Time methods (in Japanese, Kamban methods). By inventing and

      introducing these innovative methods, Toyota successfully achieves efficiency in terms of

      cost and performance. For example, when Toyota initially opened their plant and started to

      produce Lexus in Canada, the efficiency of the automobile produced in Canada was nothing

      compared to what was produced in Japan. In fact, production time took three times longer

      than in Japan! However, after implementing the strict kaizen costing and just-in-time

      systems, they improved their efficiency, as well as quality itself (Ito et al. 34).

Country Specific Advantages (CSA) in Japan

   1. From demographic aspects, the Japanese are one of the highest earning nations in the world.

      In 2004, the Japanese GNI per capita was USD 37,180 and ranked 7th in the world (The

      Ministry of Foreign Affairs of Japan, 2005). Although buying automobiles is not cheap, the

      average Japanese can afford to it. Also, Japan has a relatively large population (128 million)

      and large domestic demand.

   2. Besides the demographic aspects, the government support for the auto industry is another

      CSA. Since the automobile industry is one of the most leading, robust industries, the

      Japanese government focuses its support on it. One good example of support is the

      developed infrastructure for automobiles in Japan.




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   3. Another CSA is the many good competitors in Japan. There are six Japanese auto

       manufactures out of the top thirteen auto manufactures in the world (some of them are under

       the umbrella of other auto manufacturers). Therefore, there is strong domestic competition,

       which benefits all automakers in terms of quality of cars, manufacturing efficiency, and

       customer satisfaction. Research found that vigorous domestic rivalry and competitive

       advantage are related, and nations with leading world positions often have a number of

       strong, local rivals (Rugman et al. 17)

   4. According to Japan Automobile Manufactures Association Inc., Japan‘s upgrade cycle of

       automobiles is one of the most frequent in the world (JAMA, 1999). This means automobile

       firms can expect more sales in Japan than in other countries, which have nearly the same

       population and income as Japan. This fact can be drawn from the tendency that the Japanese

       are neophilia, meaning people who are excited and pleased by novelty and have an

       unquestioning acceptance of anything new. This also results in more automobile companies

       releasing new cars, increasing their sales volume, a good tendency for the automobile

       industry.

These advantages mentioned above can be applied to Porter’s Determinants of National

Competitive Advantage Model (See Figure 8). Factor conditions: demographic aspects and

characteristics of the Japanese; demand conditions: large number of population and its high

demand; supporting industries: government support; rivalry: good competition. Japan‘s CSA meets

all the conditions which help firms be competitive.




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The Competitive Advantages Matrix Analysis

The competitive advantage matrix, which provides a useful framework for discussion of the relative

strengths and weaknesses of the CSA and FSA that a firm possesses, helps formulate the strategic

options of Toyota. There are four sections in the matrix: Quadrant 1 with strong CSA and weak

FSA; Quadrant 2 with weak CSA and FSA; Quadrant 3 with both strong CSA and FSA; and

Quadrant 4 with weak CSA and strong FSA.



Under the analysis of Toyota‘s CSA and FSA above, Toyota definitely has strong FSA in terms of

branding, finance, environmental protection, and innovation. On the other hand, Japan has strong

CSA in all aspects of Porter‘s determinants of the national competitive advantage model, which

helps firms have competitive advantages. Therefore, it is safe to conclude that Toyota has both

strong CSA and FSA, placing Toyota in Quadrant 3. Firms in Quadrant 3 can generally follow any

of the strategies, and can benefit from strategies of both low cost and differentiation using both CSA

and FSA. Toyota has taken many different strategies depending on the time of history and places

they operate. When they focused on the domestic market, they set up strategies for the goal, and

succeeded. As well, when they decided to go abroad, they implemented new organizational

structures and strategies in order to meet the demands and deal with risks the domestic market does

not have. Moreover, in terms of differentiation, this is one of Toyota‘s greatest talents. Unlike many

other foreign auto firms which produce and sell relatively similar cars across the world, Toyota has

produced many different types of cars it does not sell in Japan. For example, Toyota produces cars

with a left-hand steering wheel for export (cars in Japan have a steering wheel on the right side),

and also changed the design of cars for export in the way that consumers in host countries prefer.

For instance, most of the cars sold in North America have bigger fenders compared with the ones




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sold in Japan, because they preferred that (Cho, 2005). Also, Toyota can take advantage of lowering

their costs. As mentioned, Toyota actually invented Kaizen costing and Just-in-time methods for

better efficiency in operations and lower costs. Many firms including their competitors have

followed their methods of lowering costs.

Integration and National Responsiveness Matrix Analysis

By definition, globalization is the production and distribution of products and services of a

homogeneous type and quality on a worldwide basis. National responsiveness is the ability to

understand different tastes, needs, and wants of consumers in different regions and countries, and

respond to different national standards and regulations. In order to permit analysis of regional and

global strategies of Toyota, the integration and national responsiveness matrix was developed and

extended. There are four sections in the matrix: Quadrant 1 with high economic integration (EI) and

low national responsiveness (NR), Quadrant 2 with both low EI and NR, Quadrant 3 with both

strong EI and NR, and Quadrant 4 with weak EI and strong NR.



In terms of both integration and national responsiveness, Toyota has high levels of both. Therefore,

it is concluded that Toyota is located in Quadrant 3. With regard to economic integration, Toyota

has adopted globally optimal production and supply systems to take full advantage of their

economies of scale. The new global production network will bring vehicles to the markets of more

than 140 countries and regions, and the project has begun developing pickup trucks and other

vehicles exclusively for overseas demand. Cars built in four main assembly nations—Thailand,

Indonesia, South Africa, and Argentina—will be shipped to countries in Asia, Europe, Africa,

Oceania, Central and South America, and the Middle East. In addition, such countries as India, the

Philippines, and Malaysia manufacture vehicles for their respective domestic markets (see exhibit 6).




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In terms of national responsiveness, Toyota makes a good example of addressing local demands.

Toyota has spent ¥755.1 billion in the fiscal year 2005 on R&D to come up with a new car and

modify original car production lines to suit local demand (see exhibit 7). For example, in response

to growing regional sales, Toyota upgraded their product development capabilities in Asia and

Oceania in 2005, by establishing new R&D facilities in Australia and Thailand. The new facilities

reflect local demand by tailoring the bodywork and specifications of vehicle platforms and basic

models developed in Japan (Toyota‘s DataBank, 2005). Moreover, Toyota‘s integration strategy is

complemented by national responsiveness, as well as in forms of design, engineering, and

manufacturing changes (Corporate Profile, 2005). As well, the CEO of Toyota, Cho, mentioned in

his speech that the most important thing which can be applied to the corporate strategy in the midst

of globalization is the indigenization policy (Cho, 2005). He also said Toyota set people, goods, and

capital as a basic philosophy of localization (Cho, 2005). In fact, Toyota set up its design

headquarters in the United States, EU, and Japan, to achieve the high quality of localization of

design (Cho, 2005). As a result, Toyota now has a wide variety of Corollas in the world, catering to

regional tastes.

Toyota’s Strategic Orientation and global strategies

Toyota is imposing a Regiocentric Predisposition, which emphasizes both profitability and public

acceptance. Their internal governance mainly concentrates on mutual negotiation between the

region and its subsidiaries (Toyota‘s Official Website, 2005). Toyota‘s regional operation is tied

through a Matrix System, as mentioned in the organization‘s structure. Currently, its main focus is

maintaining its annual growth by bolstering its three major areas of marketing, supply, and

development.




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Marketing

Toyota continues to fortify its sales network in regions worldwide. In Japan, its mainstay market,

Toyota has reorganized sales channels by launching a new Netz channel in the fiscal year 2005

(Toyota‘s Annual Report, 2005). In addition, Toyota is also strengthening sales capabilities through

brand realignment, with the Japanese premier of the Lexus range scheduled for August 2005

(Toyota‘s Official Website, 2005).

Supply Chain Management

Based on a strategy of building vehicles in regions where demand exists, plans call for an

approximate doubling of current local production to about 5 million units. Already, new plants have

either started production, or are being built in North America, Thailand, China, and Russia.

Meanwhile, domestic production will support overseas manufacturing by absorbing fluctuations in

global demand. Therefore, Toyota plans to raise domestic production capacity. The resulting

additional investment will raise capital investment yearly, from ¥1,087.2 billion to ¥1.25 trillion in

the fiscal year 2006 (Toyota‘s DataBank, 2005).

Research and Development

Toyota promotes fast-forward process innovation to shorten the lead times needed to bring

appealing vehicles to the market. Also, Toyota targets competitive advantage by forging ahead even

further in the development of environmental, safety, and other next-generation technologies.

Research and development expenses amounted to ¥755.1 billion in fiscal 2005 (see exhibit 7), and

plan research and development spending of ¥770.0 billion in fiscal 2006.




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Toyota’s Expansion into China

Introduction

In China, Toyota moved operational expansion up a gear, initiating local production of the high-end

Crown sedan, and jointly establishing a vehicle production and sales company with Guangzhou

Automobile Group Co., Ltd. As a result of those bold initiatives to develop global operations,

consolidated overseas vehicle sales cleared the 5 million unit mark for the first time.

Country’s Analysis- China CSA

In November 2002, China agreed to a free trade agreement in Asia with the 10 members of the

Association of South East Asian Nations (ASEAN), signaling a wide trade and investment

agreement for Asia.

As a host country, China has Country Specific Advantages. One fact which should be specifically

mentioned is its huge population. In 2004, the Chinese population was 1.3 billion, which is far and

away the largest in the world (The Ministry of Foreign Affairs of Japan, 2005). In addition, recent

Chinese economic growth has been robust. Its gross domestic product (GDP) has been increasing,

on average, more than 8 percent annually since 1978, and has become a major player in the global

economy (China's Economic Growth Faces Challenges, 2005). Because of this robust economic

growth, the consumers' purchasing power has also been increasing, especially in urban cities on the

coastline. This combination of large population and increasing purchasing power make demand in

China skyrocket, resulting in China being one of the most desirable markets in the world. Also, cost

perspectives cannot be ignored. Although China‘s economy has been growing consistently, the cost

of labour and land are still considered cheap compared to developed countries. The last CSA is that

China has a tax heaven region, Hong Kong. Due to the tax heaven, companies can use Hong Kong




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in conjunction with transfer pricing, involving a subsidiary selling its output at a very low cost to a

subsidiary in a tax heaven.

Culture Dimension

Power distance

China has high power distance, that is, important decisions tend to be made by high power officials.

In terms of negotiation, the Chinese tend to pay attention to the negotiator who has the power of

execute decision. For example, cooperation would be smoother if Toyota assigned its CEO to the

negotiation.

Uncertainty Avoidance

In terms of risk aversion, all the social systems and legal systems in China are relatively unregulated

compared to western countries. As a result, many Chinese tend to do things their way, or use

personal relationship to get things done. This promotes excessive risk taking. Toyota‘s operation

may be compromised due to local management team‘s false judgments.

Individualism

Individualism is the tendency for people to look after themselves and their family first and

foremost. Countries with high individualism tend to value individual initiative and achievement. In

contrast, China is keen on collectivism; decision-making requires group thinking and affiliation

from group members. As a result, lack of individual initiative will lengthen decision making

processes. For Toyota, China‘s operations may not be efficient because of decision making delays.

Masculinity

This is the degree to which the dominant values of a society are ―success, money, and things.‖ In

terms of materialism, the Chinese tend to emphasize personal relationships, and mutual acceptance

from each other. Some workers do not place importance on money. The behaviour of Chinese




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employees can affect Toyota‘s operations in China. For instance, if there is a conflict between the

two governments, the negative feelings the Chinese public may have towards Japan due to previous

events, such as Japan‘s invasion during the second World War, may cause employee and consumer

resistance, leading to protests and strikes.

Current Problems Toyota Faces in China

There are several major dilemma‘s Toyota currently faces in China, which should be addressed and

improved in order to increase their operating efficiency. Firstly, Toyota has many rivals in China

which have gotten a major head start. These include Suzuki, Honda, General Motors, and

Volkswagen, which controls about 40% of the market. In order to succeed, Toyota needs to provide

what others are lacking. For example, many Toyota cars are currently being sold in unbranded

dealerships, which Toyota plans to change in the next year, opening up 100 Toyota branded dealers.

Due to this, customer service can be improved, and knowledge of salespeople on the cars can be

specialized to Toyota cars. In addition, Toyota plans to sell luxury compact cars. Marketing in

China has shown that a vast amount of people prefer compact cars, but there are not many luxury

ones available currently in the market. By catering to the specific needs of the consumer, Toyota

hopes to gain a stronger foothold in China.



In 2003, Toyota saw a drop in their performance due to the raise in the price of their cars because of

an increase in cost of raw materials, and an appreciation of the Japanese yen. It is crucial for

Toyota to keep in mind that although they still sell high quality cars, it is still expected that they be

at a reasonable price. Perhaps one of the greatest obstacles Toyota faces currently, is they have very

little feedback on consumer wants. CEO Cho stated that because of their joint venture with First




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Auto Works, Toyota feels they are getting no feedback on consumer wants and preferences, making

it more difficult to cater to local tastes and aesthetics.



Toyota also faces problems relating to government regulation and policy. The Chinese government

requires that automakers must transfer their technological expertise and capabilities in exchange for

selling cars there. CEO Cho acknowledges that they do want to help increase technological

expertise in China, but are unwilling to share all their knowledge. This of course, can lead to

problems with the government in the future.



Lastly, Toyota faces problems relating to productivity. Although China has a cheap labour market,

Toyota will still need to spend money on materials that cannot be produced locally, and spend time

dealing with government ‗red tape.‘ In addition, Toyota will need to focus some effort on

productivity and training of their employees to optimize their efficiency. Although the Chinese

market currently poses several major problems for Toyota, it is still worth investing there as the

market is one of great opportunity, and has potential to be very profitable for Toyota.

Risks Analysis: Political, Industrial, Currency

Although Toyota can have great success in China, there are still many risk factors that they have to

take into consideration. The first major risk is political. China‘s relationship with Japan is not a

stable one, and so any change in government regulation can have a big impact on how Toyota does

business there, or how much FDI it can have. Also, government regulation states that Toyota must

trade their technological expertise for the right to sell cars there, and Toyota is not willing to

provide all that information. Another important risk is the general problems between the Chinese

and the Japanese. For many years there has been animosity between the two countries, and some




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Chinese consumer‘s may be less willing to buy a Japanese car. In addition, Toyota faces industry

risks. There are already several companies that have been investing in the Chinese automobile

market for quite some time, including Honda, Suzuki, and General Motors. These companies have

a great head start, and already have a foothold in the growing Chinese market, creating a game of

‗catch-up‘ for Toyota. Lastly, Toyota faces currency risks. If the Chinese currency drops suddenly

due to an economic downturn, this will greatly affect Toyota‘s profitability there. One method of

dealing with currency conversion risk is by using currency forward to hedge against Chinese

currency depreciation. By pre-specifying a determined exchange rate in the future, Toyota can

forecast its cash flow coming from China‘s operation.

                                        CONCLUSIONS

        Based on the analysis presented in this report, the following conclusions are drawn:

      Toyota is one of the world‘s leading automakers, with many international divisions and
       manufacturing companies; however, they have yet to create a strong foothold in the
       expanding Chinese market.
      Research and Development efforts have focused on alternative and cost-saving fuel
       technologies, making Toyota one of the most innovative companies globally.
      Utilize matrix structure to create the specific types of design that best meet the needs of the
       consumers in each region and country in the world.
      Subsidiaries have autonomy in supply chain.
      FSA includes global name recognition, reputation for quality, innovation, and specialized
       management systems.
      CSA includes high GNI, government support, domestic competition, and consumers
       willingness to purchase new products.
      Located in Quadrant 3 of the competitive advantages matrix analysis and integration and
       national responsiveness matrix analysis.
      Takes on a Regiocentric Predisposition.
      China has high potential for market expansion based on its large population, but Toyota
       must keep cultural dimensions in mind when operating there.
      Current problems Toyota must overcome in China are lack of productivity, government
       policy and regulation, lack of feedback, and rival foreign firms which have a ‗head-start.‘
      Future risks include those of a political and industrial nature, as well as currency risk.




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                                  RECOMMENDATIONS
The findings and conclusions of this report support the following recommendations.

      Because Toyota is entering the Chinese market late, they should offer what foreign
       competition cannot, such as luxury compact cars at a reasonable price.
      Increase efficiency through training, customer service, and continuing to implement Toyota
       dealerships instead of unbranded dealerships.
      Develop a comprehensive marketing strategy which is culturally sensitive.
      Continue development of automobiles based on Chinese consumer wants and needs through
       market research and focus groups.
      Continue joint-venture to hedge against political risk, as Toyota does not yet have a strong
       foothold. This will reduce risk, increase acceptance by Chinese consumers, and give them
       access to the expanding Chinese market.




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                                                            Exhibit 1

                                                  World Sales Volume

                                  Mazda            1 ,1 3 4 ,4 2 1
                                   BMW              1 ,2 5 0 ,3 4 5
                              Mitsubishi               1 ,4 1 3 ,4 0 3

                                 Suzuki                     1 ,9 8 6 ,7 4 9
                              RENAULT                           2 ,4 7 1 ,6 5 4
       Auto Firms




                                 Honda                                   3 ,1 8 1 ,6 2 4

                                 Nissan                                  3 ,1 9 4 ,1 1 9

                                Hyundai                                   3 ,3 7 5 ,4 2 1
                    PSA・Peugeot・Citroën                                   3 ,4 0 5 ,1 0 0
                         DaimlerChrysler                                              4 ,6 1 7 ,6 9 9
                                    VW                                                      5 ,0 9 3 ,1 8 1
                                 Toyota                                                                       7,547,177
                                    GM                                                                               9 ,0 9 8 ,0 0 0

                                           0   1,000, 2,000, 3,000, 4,000, 5,000, 6,000, 7,000, 8,000, 9,000, 10,00
                                                000    000    000    000    000    000    000    000    000 0,000
                                                                           Sales



                                                  World Market Share


                                                 Mazda, 2.4%
                                               BMW, 2.6%
                                    Mitsubishi, 3.0%
                                                                                           GM, 19.0%
                                  Suzuki, 4.2%
                             RENAULT, 5.2%


                             Honda, 6.7%



                            Nissan, 6.7%                                                                      Toyota, 15.8%


                              Hyundai, 7.1%


                               PSA・Peugeot・Citro                                            VW, 10.7%
                                   ën, 7.1%              DaimlerChrysler,
                                                               9.7%




Source: Toyota Motor Corporation. World 2005 Databook: Japanese. Tokyo, April, 2005.
Retrieved April 1, 2006 from
http://www.toyota.co.jp/jp/about_toyota/gaikyo/pdf2005/databook_2005.pdf


                                                                                                                                       18
                                          Exhibit 2




Source: Toyota Motor Corporation. Annual Report. Retrieved April 1, 2006 from
          http://www.toyota.co.jp/en/ir/library/annual/2005/

Exhibit3




                                                 Source:Toyota Motor Corporation. Annual
                                                           Report. Retrieved April 1, 2006
                                                           from
                                                           http://www.toyota.co.jp/en/ir/library
                                                           /annual/2005/



                                                                                             19
                                         Exhibit 4




Source:Toyota Motor Corporation. Annual Report. Retrieved April 1, 2006 from
          http://www.toyota.co.jp/en/ir/library/annual/2005/

                                         Exhibit 5




Source:Toyota Motor Corporation. Annual Report. Retrieved April 1, 2006 from
          http://www.toyota.co.jp/en/ir/library/annual/2005/


                                                                               20
                                          Exhibit 6




                                      Overview of the IMV Project
Source:Toyota Motor Corporation. Annual Report. Retrieved April 1, 2006 from
          http://www.toyota.co.jp/en/ir/library/annual/2005/

                                          Exhibit 7




                                                     Source:Toyota Motor Corporation. Annual
                                                               Report. Retrieved April 1, 2006
                                                               from
                                                               http://www.toyota.co.jp/en/ir/library
                                                               /annual/2005/



                                                                                                 21
                                         Exhibit 8
               Porter’s Determinants of National Competitive Advantage Model




Source: Porter, E Michael. The Competitive Advantage of Nations. 2001. Retrieved April 4, 2006
from http://www.themanager.org/Models/diamond.htm




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                                           References

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                                                                                             24
                 Bus 346
          International Business

             Group Project


     Toyota’s Investment in China:
An Examination and Analysis of Feasibility




       Takunori Shiomi (200137587)
         Jinqiu Wei (200093064)
        Mahsa Saeedi (200058338)

          Prepared for: Jing Li
              April 5, 2006
         Simon Fraser University




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Description: Risk Management Toyota document sample