Enhancing the competitive strategy Toyota

Toyota’s best competitive strategy

Toyota’s best competitive tool is to use both differentiation and low cost as generic strategies to try and gain a competitive advantage over their competitors in the automotive industry. In order to achieve this, Toyota has to differentiate on several levels form their competitors. First of all, Toyota for long time has been very successful in differentiating on the basis of superior design and quality. This has led to Toyota being able to create a brand image that is very strong and one that brings to mind quality, long lasting cars when a potential customer sees it. The strength of Toyota’s brand image will be seen in few coming years with the recalls and problems Toyota faced in dealing with the recalls. Toyota is able to survive these problems because they had such a long and proven track record of quality and superior.  Another area that Toyota differentiates should be in technology. As mentioned before, Toyota was the first successful mass produce the hybrid car on the market when it released the Prius in 2003. Being the first to get their hybrid on the market allowed Toyota to gain a large portion of the market share in the area of hybrid cars.

Along with differentiation Toyota also needs to use low cost to try and gain a competitive advantage in the automotive industry. Toyota has to be the lowest cost producer in the industry. This will lead Toyota to achieve its cost leadership strategy by adopting lean production, careful choice and control of suppliers, efficient distribution, and low servicing costs from a quality product.

 Supplemental strategies (enhancement of R&D)

As mentioned previously, Toyota is the low cost leader in their industry. It is suggested that Toyota has focused too much on low cost, losing market share and their market positioning of superior design and quality. For Toyota, the biggest thing they need to do is make sure that their low cost strategy does not compromise their superior design and quality.

Due to the recent safety recalls Toyota has been temporarily de-railed from their strategy. It needs to get back on track and re-focused and make sure that they concentrate on what made them unique. In order to make this happen, managers of Toyota should focus on company communication and bringing back its former foundation of making quality cars that are dependable and reliable in addition to modern. The company found its weak spot when it came to the way the company responded to the recalls. In the beginning of the recall era, Toyota was very slow in its response. Finally, Toyota executives made the call to recall more than five million of its own vehicles due to numerous different issues. Therefore it is suggested to halt all sales of Toyota vehicles as well until the problem is addressed. For a car company, this is a huge deal and one that will affect the balance sheets for years to come. However, Toyota seemed slow in finding a solution to its problems. With a huge recall and halt in sales, the management should push for day and night research, product development, and problem solving in order to get their product back on the market.

Strategy for foreign markets

The forward-looking of Toyota expansion plan to foreign market is not guarantees of future performance and involves known and unknown risks, uncertainties and other factors that may cause Toyota’s actual results and performance under risk of revenue lost. These factors include changes in economic conditions affecting, and the competitive environment in, the automotive markets in Japan, North America, Europe and other markets in which Toyota operates and fluctuations in currency exchange rates, particularly with respect to the value of the Japanese yen, the U.S. dollar, the euro and the British pound as well.

The main weapons are low-cost cars for Toyota to make another step towards conquering global automotive market especially in USA, Europe, Russia and China. In this regards, Toyota has to build three new factories that produce over 450,000 units annually in order to meet market demand in India and China. The plans in Japan are to predict the expansion on the emerging markets like Brazil, Russia, India and China. Toyota has to continue on the elasticity of these markets, which is the key to success for increasing their sales significantly. The main objective is the Chinese market. China currently registered the highest rate of economic growth and the automotive segment is a very large expansion, which makes Toyota to hurry to take over the control of this market. The product strategy of Toyota should focus on the high quality, on developing new innovative technologies, focusing on further research and creativity.

Adopting a global strategy based on the product policy, research and continuous quality improvement, technological innovation, but also respect for consumers around the world, all of these will enable Toyota Motors Company to conquer the whole world.