This SWOT analysis reveals how Toyota corporation, which is one of the top ten large companies worldwide, used its competitive advantages to dominate the automotive industry. However, this analysis shows that the company can advance via innovation and deviations in its values, principles, and company’s construction.
This SWOT analysis will explore all key strengths, weaknesses, opportunities, and threats that are prevalent in the organization. The internal and external factors that are affecting the performance of the organization are exposed in detail. Toyota Motor Corporation is the world leading automotive manufacturer which hit records when a company sold more than 10 million vehicles in a year. Toyota’s loyal customers are in US, Japan, and China and generates half of the company’s resources. Sectors in which the company provides services are Automotive, Housing, and Financial Services.
Toyota’s high-performance indicators make it a world leader in the automotive industry. Therefore, it must address the matters numbered in this SWOT analysis. Different segments in this SWOT analysis explore challenges faced in competition in the market, structure of the organization and dominant corporate culture.
Toyota’s Strengths (Internal Strategic Factors)
Toyota’s strengths show the reasons due to which Toyota is capable of retaining the top position in the world automotive industry. The corporation has the strongest brand image around the globe.
Brand’s General Policy
Toyota adheres to the key strengths of dynamic progress through innovation and esteem for the client’s demands. These underlying principles of growth and development through innovation and increased productivity have made the capability of the company to retail its global position.
Zero-Emission Vehicles Market
Toyota aspires to claim its share in environmentally friendly technology in the automotive industry. Zero-emission vehicles are produced by using one of the two technologies, electric vehicles, or hydrogen fuel cells. 5,680 hydrogen fuel technology patents are owned by the organization to further the cause around the world.
Strong Merchandise Standing
Where Covid-19 forced a global shutdown, Toyota’s business was less affected by it. The absolute reason was the availability of stock. Lockdown hit the vehicle manufacturing industries hard. Toyota’s stock fell only by 14% whereas, General Motors suffered 64% overall fall in stock. The organization stands firm in hard times.
Hybrids and Solid-State Battery Pack
Toyota has manufactured the most reliable green cars in a few years. The customers widely utilize its environmentally friendly hybrids. Moreover, Toyota has launched its new solid-state battery which can cover 500 kms in a single charge and would take 10 minutes for recharge.
Toyota derives its successful business from the company’s core strengths.
Toyota’s Weaknesses (Internal Strategic Factors)
This SWOT analysis segment uncovers the weaknesses of the company. These are the internal factors that lead to inefficiencies in the organization.
Defective Products
Toyota’s designs and products are vulnerable to defects and flaws. In the year 2020, Toyota recalled around 700,000 cars due to a fault in fuel pimps. Toyota must ensure the quality of the products before their accessibility in the market.
Rigid Hierarchy
Another weakness in its internal prevailing factors is the organization’s global hierarchical structure. It prevents the company’s lower and regional workforce from carrying out operations. It hinders creativity and flexibility although it provides tight top to bottom control.
Limited Explored Regions
Toyota’s potential customers and half of its resources are located in US, Europe, and Japan. Many third world and developing nations of Africa and Asia are yet to be explored. Toyota must expand itself to other regions to claim the global leading position in future.
Breaches in Technology
New rivals of Toyota in automotive industry have robust technological abilities. For instance, Tesla is supposed to be 6 years ahead of Toyota with their launch of Tesla model 3. Toyota should build this gap to compete with its rivals in the market.
Toyota has been able to learn to from its weaknesses since the beginning. Therefore, Toyota must cure its weaknesses in order to ensure effective performance.
Opportunities for Toyota (External Strategic Factors)
Toyota has the opportunity due to rise in technological and economic trends. This segment of SWOT analysis sheds light on opportunities mainly the external strategic factors which can improve business and efficiency.
Trend of Smart Cars
Toyota has introduced The Guardian and Chauffeur smart cars for the convenience of unexperienced and old aged people, respectively. This leads to safe and easy driving. Toyota aspires to launch smart cars with self-driving capacities. Although this is a newly introduced technology which is yet to show response, the world’s pace is fast in moving towards ease and convenience of innovation and technology.
Divulgence in Nanomaterials
Nanomaterials are highly utilized in automotive industries. They are able to make cars more reliable by making them lighter, stronger, more hard-wearing, cooler, serene, and safer. Toyota AI has recently invested in Carbice to explore it further.
Stakes in Cloud and AI based Technologies
Many industries are instilling cloud and AI based technologies to better serve their customers. This technology is already rising and has grown to 20% with an estimate of $70 billion by 2022. Toyota must undertake this opportunity to further improve its organization.
These opportunities if exploited can take Toyota to the new zenith. Growing market in developing countries, the value difference between Japanese Yen and US dollar, and growing interest in advanced and fuel-efficient cars are the opportunities for Toyota to increase its revenue and business growth.
Threats Facing Toyota (External Strategic Factors)
These threats are external factors that hinder the growth and development of business. Those market and environmental factors that stop progress or hinder performance are exposed below.
Tesla’s Competitive Factor
Tesla has become the most valued car manufacturer in the world with a market cap 175% higher than Toyota. Still, Toyota is the largest car manufacturer in the world. Tesla is giving a hard time in technological advancement to Toyota. It is a way ahead of Toyota in post-fossil fuel technological innovations.
COVID-19 Crises
The pandemic has hit the developed nations hard. Across the state lockdowns were observed in many countries of the world. Toyota’s more than 60% resources are allocated from US, Japan, and Europe. The lockdowns have severed the economic conditions due to unemployment and shutdowns. Toyota has suffered a significant loss.
Increasing Competition
The increase in competition with the arrival of Tesla and Volkswagen is obvious. Toyota must devise a way to remain competitive in the automotive industry. Amplified competition with low-cost industries of Korean, Chinese, and Indian manufacturers is rising. Therefore, it is significant for Toyota to respond to robust competitive market.
Above given SWOT analysis fully exposed the strengths, weaknesses, opportunities, and threats to Toyota corporation. The key strengths lie in the areas of production, sales, and research. The core challenges are related to competition in the market with the new rivals and internal corporate culture. Innovation and technological advancement would play a key role in a company’s progress. Organization should make its culture and structure more flexible so that it can handle decision-making and problem-solving effectively.
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