Toyota Motors Corporation: An Overview of the Company's Strategic Management - Iloka Benneth Chiemelie

0.1 EXECUTIVE SUMMARY

This research paper is basically divided into two chapters as part of the course requirement.

CHAPTER 1: under this chapter, an overview what strategic management means is presented with eyes pointed on views from different scholars, as the subject is known for its broad meaning. This chapter also analyses the company (Toyota Motor Corporation) in study, by providing details information on their history, business models, visions and philosophy, organisational structure and management system, executives and positions, brand models, subsidiaries, shareholders and current market performance.

CHAPTER 2: Preceding the contents from the chapter 1, the second chapter analyses the internal and external environment of the company in a critical and analytical format. Analyses on the internal environment include the company’s current strategies and value chain analysis (using porter’s value chain model), while analysis on the external environment studied their competitors, suppliers, customers, substitute products and new entrants (using potters five force).

CHAPTER 3: the third chapter discusses the strategic implication of the recent vehicle recall by Toyota, which is a result of faulty acceleration that killed a patrol officer in South California. It was found that although CTS Corporation was suspected for the faulty brake pedal, the problem has already been in Toyota automobiles long before CTS became Toyota’s second-tier supplier. This second also provided recommendations for tackling this problem and avoiding such issue in the future.

CHAPTER 4: this section provides a summary of all the main points analysed in this research paper. Contained in this section also include, bibliography for cited contents, and appendixes for reference.

1.0 STRATEGIC MANAGEMENT – A SUBJECT WITH NUMEROUS MEANINGS

Within the academic specialty of strategy, the corporate and consulting world, theories and practices on strategy has become very fragmented and sophisticated with ideas of what represent strategy often being opposed and strategic thinking being replaced by operational focus. This has led to some highly regarded scholars suggesting that firms should not practice strategy (Pfeffer and Sutton, 2006). In their book titled Hard Facts quoted the CEO of Xerox, saying that she had led her company back from bankruptcy by working hard towards common objectives, especially, pleasing customers, selling products and cutting costs and not by applying any strategic measure (Pfeffer and Sutton, 2006, p. 145). The authors appear to be completely unaware that they have illustrated the strategies Xerox took towards success. It seems they must have confused strategy to be a sort of planning, or positioning process which people general take it to be Pfeffer and Sutton (2006).

The above arguments have made it difficult to expand and develop the scope of strategy specialty without a clear agreement on what the terms such as strategy, planning, management, and thinking mean. They have been increasing opinions in recent years amongst scholars in the field of strategic business management that some of the famous strategic theories as no longer relevant as they used to be (Thompson, 1967).

There is no single universally accepted definition of strategy, indeed, many authors use the term different. Viljoen (1994) viewed it as a statement that is valued to be more important than others.). It is of the view that strategy represents planning activities in other to ensure it yield benefits. One of the most popular management definitions is that given by Fayol (1949) to represent planning, leading, organising and controlling (PLOC). By combing the above theories, it has to be proposed that strategic management is a benefit oriented management style that is built around a carefully organized plan, which when controlled will lead to profit. Thus, strategic management in this paper will represent any form of organisational activity that has been pre-planned, organized and run under certain control measure in other to yield profit Mintzberg et al. (1995.

CHAPTER 1

2.0 COMPANY PROFILE – TOYOTA MOTORS CORPORATION

2.1 BRIEF HISTORY OF TOYOTA: A GIANT OR JUST A KID DOING THINGS DIFFERENTLY?

Source: Toyota’s Virtual Museum (2011)

Toyota’s successful history is built on innovation, both in terms of its products and the processes which these products are made. The history dates back to 1918, when Sakichi Toyoda revolutionized the weaving industry with his invention of automatic loom as he sort to ease his family’s pain of day-in-day-out weaving.  Mr Toyoda gave the proceeds from sale of his patent right (the patent was sold to Platt Brothers of Oldham) to his son Kichiro to start the development of a car industry. The pioneering work done by Sakichi in his automatic loom was adopted into the new automotive operation and in 1936 the first prototype car (Toyoda AA – in picture above) was completed (Toyota GB, 2010). Please refer appendix 1 for year-by-year history of Toyota Motor Corporation.

The Toyota Motor Corporation was formed the following years with and investment of about £300,000. Toyota had tough time establishing itself because the Japanese car market was dominated by importation of American Ford and General Motors. The enterprise was threatened by World War II, but Toyota survived and celebrated building its 100,000^th vehicle in 1947. Toyota laid the foundations for a new system of manufacturing vehicles in the 1950s. This was developed into their production system, and it has been widely used and adapted in within the motor industry and beyond due to its exceptional efficiency (Toyota GB, 2010).  

3.0 TOYOTA’S MANAGEMENT STRUCTURE AND EXECUTIVES

4.0 TOYOTA’S VISION AND MISSION STATEMENT

VISION

"Rewarded with a smile by exceeding your expectations" – Toyota aims to exceed customers’ expectations through their commitment to quality, continuous innovation and respect for the planet (Toyota, 2011).

MISSION

"To sustain profitable growth by providing the best customer experience and dealer support."

4.1 TOYOTA’S CORE VALUES – GUIDING PRINCIPLES

1. Honour the language and spirit of the law of every nation and undertake open and fair business activities to be a good corporate citizen of the world.
2. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in their respective communities.
3. Dedicate our business to providing clean and safe products and to enhancing the quality of life everywhere through all of our activities.
4. Create and develop advanced technologies and provide outstanding products and services that fulfil the needs of customers worldwide.
5. Foster a corporate culture that enhances both individual creativity and the value of teamwork, while honouring mutual trust and respect between labor and management.
6. Pursue growth through harmony with the global community via innovative management.
7. Work with business partners in research and manufacture to achieve stable, long-term growth and mutual benefits, while keeping ourselves open to new partnerships.

5.0 THE PRINCIPLE ELEMENTS OF THE TOYOTA EARTH CHARTER: CSR STATEMENT

1. Contribution toward a prosperous 21st century society: in order to contribute toward a prosperous 21st century society, aim for growth that is in harmony with the environment and challenge achievement of zero emissions throughout all areas of business activities.
2. Pursuit of environmental technologies: pursue all possible environmental technologies, developing and establishing new technologies to enable the environment and economy to co-exist harmoniously.
3. Voluntary actions: develop a voluntary improvement plan that is not only based on thorough preventive measures and compliance to laws, but that also addresses environmental issues on global, national and regional scales.
4. Working in cooperation with society: build close and cooperative relationships with a wide spectrum of individuals and organisations involved in environmental preservation, including governments and local municipalities as well as related companies and industries.

Toyota was recognized in 1999 by the United Nation Environment Programme Global 500 Award for its commitment to environmental issue. The company is the first to be honoured with this kind of award.

6.0 TOYOTA MOTOR CORPORATION PRODUCT RANGE

Table 2: Toyota’s Car Brands

BRAND NAME	PICTURE
Aurion
Avalon
Avanza
Avensis
Aygo
Camry
Corolla
Crown
Prius
Rav4
Vios
Yaris
Yaris Sedan
Zelas

Source: as adapted from Toyota (2011) – refer Appendix 2 for detailed descriptions.  

6.1 TOYOTA’S MAJOR SHAREHOLDER – AS OF MARCH 31, 2011 (TOP 10)

NAMES	NUMBER OF SHARES HELD (THOUSANDS OF SHARES)
Japan Trustee Services Bank, Ltd.	343,704
Toyota Industries Corporation	215,640
The Master Trust Bank of Japan, Ltd.	191,724
Nippon Life Insurance Company	130,057
State Street Bank and Trust Company	110,672
The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders	85,866
Trust & Custody Services Bank, Ltd.	84,184
Tokio Marine & Nichido Fire Insurance Co., Ltd.	67,095
Mitsui Sumitomo Insurance Co, Ltd.	65,166
DENSO CORPORATION	58,678

Source: as adapted from Toyota (2011)

Notes:

1. The Bank of New York Mellon as Depositary Bank for Depositary Receipt Holders is the nominee of the Bank of New York Mellon, which is the Depositary for holders of TMC's American Depositary Receipts (ADRs) Source: as adapted from (Toyota, 2011).
2. The percentage of shareholding is calculated after deducting the number of shares of treasury stock (312,298 thousand shares) from the total number of shares issued Source: as adapted from (Toyota, 2011).

6.2 SUBSIDIARIES

1. 522 (Toyota Group)
2. Hino Motors, Ltd.
3. Daihatsu Motor Co., Ltd.
4. Toyota Financial Services
5. DENSO
6. Toyota Industries

With over 8.5 million automobile units produced in 2010, and over 317, 734 employees globally, there is no doubt the fact that Toyota is a giant who does things differently and this has been proven with their presence in all markets across the globe. Toyota is the largest automaker in the world with 11.0% market share (Toyota GB, 2010).

CHAPTER 2

7.0 INTERNAL ANALYSIS

7.1 CURRENT BUSINESS STRATEGIES ADOPTED BY TOYOTA

7.1.1 MARKET STRATEGY – FULL-FLEDGED MARKET ENTRY IN INDIA AND BRAZIL

Toyota developed a market entry strategy that it will use to penetrate the Indian and Brazilian markets respectively. The strategy is built uponfull-fledged entry by building new plants and newly-developed compact models. Toyota’s president (Mr. Katsuaki Watanabe) believes that full-fledged entry into the compact vehicle markets will attract users that upgrade to higher models reduction that meets local needs – by securing profitability and applying cost-cutting measures to different models (Toyota Global, 2011).

7.1.2 ANALYSES OF THE MARKET STRATEGY

7.1.2.1 ECONOMIC GROWTH

The recent global economic recession of 2008 and 2009 provided a blink on a group of countries that will lead the future. Commonly known as the emerging economies, these countries stood firm while the world bulged into economic ruin. Among China and Russia, India and Brazil have been identified as emerging economies with low inflation rate and high GDPs respectively in comparison to their previous performances.

Figure 2: projected market leaders by 2050

Source as Adapted from: Guardian News UK (2011)

Bloomberg News (2011) went on to support this claims by stating that the emerging economies which include India and Brazil will overtake the G-7 by the year 2032 quoting PricewaterhouseCoopers LLP.  Emerging markets have been leading the world out of the recession caused by the banking crisis in developed nations (G-7), with China haven already overtaken Japan as the world’s second largest economy. The report serves as a support that the emerging economies will propel world economies in coming decades, driven by growth in China, Indian, Russia and Brazil (Bloomberg News, 2011).

Based on the above argument, it could easily be concluded that Toyota have done the right act by deploying full-fledge market entries into the Indian and Brazilian market. There is no doubt that the economic growth of both nations offers high purchasing power to both markets; thus yielding increased sales and profit to Toyota. Nevertheless, the business context is filled with unpredictability and Toyota must also look into the competitive atmosphere as full-fledged entry is not a guarantee of full-fledge profit.

They have been compelling arguments that economic recessions represent the most transformative events faced by organisations across the globe. Extant research has demonstrated that recession dramatically transform industrial landscape and cleanse industries (Caballero and Hammour, 1994; Schumpeter, 1939; Tvede, 1997). Although the present economic growths of India and Brazil presents a profitable atmosphere for full-fledged market entry, any economic recession or market crisis would present a huge threat to Toyota and possibly lead to low return on investment. Other business aspects that Toyota will have to consider include competitors, government policies and environmental issues. Nevertheless, while we wait patiently for recession and order negative business outcomes to occur, it must be said that Toyota has made the best strategic approach by going full-fledged into the Brazilian and Indian markets, as these markets have the potential to yield huge success.

7.2 PRODUCT STRATEGY – INNOVATION AND COST REDUCTION FOR HYBRID VEHICLES

Based on the same presentation by Toyota’s president (Mr. Katsuaki Watanabe) during Toyota’s business strategy meeting in 2008, it was highlighted that Toyota will deploy a product for hybrid vehicles. The hybrid vehicle (HV) strategy is to make Toyota’s smaller and lighter, and low the costs of these vehicles (Toyota Global, 2011). Just like the first strategic analysis, this concept presents the same illusion of probability, thus it will be analysed below to determine is this business strategy is feasible.

7.2.1 ANALYSES OF THE PRODUCT STRATEGY

Source: as adapted from Toyota Global (2011)

Toyota’s ideology of establishing harmony between man, nature and machine is conceived in their hybrid second generation prius because; it is stylish, efficient and environmental friendly, but all these comes at a high price tag for customers that wish to go into the hybrid car division. Environmental friendly products are designed to minimize impact when they are consumed (Jason and Sueng-Hee, 2010). Green products are interesting to firms because of the importance of green issues to customers. Generally, a company’s efforts towards social responsibility and environmental sustainability will result in consumers valuing their products more than the less responsible organisations (Brown and Dacin, 1997).

For manufacturing companies to compete successfully in the increasingly changing global environment, they will need to acquire broad range of capabilities. Competitive capabilities compare a firm’s ability to their competitors’ expectations with their competitor’s ability to do the same (Koufteros et al., 2002; Bendoly et al., 2007). Toyota’s idea of developing a lighter and cheaper hybrid vehicle can be considered as a cumulative competitive capability. Cumulative capabilities as presented by Nakane (1986), and supported by Ferdows and de Meyer (1990) suggest that there is an existing order for the pursuit and attainment of manufacturing capabilities which consist of: quality, deliver, cost efficiency and flexibility.

From the argument above, it is justifiable to conclude that Toyota has adopted the perfect product strategy. This is because; the hybrid system is increasing becoming the new automobile trend with numerous entries and innovators. Considering the fact that Toyota is not alone with in the hybrid auto-division because of new market entries and already existing competitors, it is justifiable to argue that this strategic approach will probably yield profit to the company. This is because, innovating the hybrid vehicles and offering the newly innovated vehicles at a lower price is likely to attract new customers, increase sales and thus, offer Toyota a competitive advantage over their competitors.

7.3 TOYOTA’S HUMAN RESOURCE AND VALUE CHAIN ANALYSIS

Organisation can be seen as bundles of resource which managers combine and organize to create value and yield profit (Bowman and Ambrosini, 2000; Penrose, 1959). In order to provide a firm with competitive advantage, its capabilities and resources must be valuable, rare, inimitable, and non-substitutable (Barney, 1991). Resources was defined by Amit and Schoemaker (1993) as productive factors owned or managed by a firm, which can include physical assets, human and financial capital, while capabilities are abilities to combine these resources in order to create value for the firm. It was also argued that for firm to succeed, they will need to synchronize resources and capabilities with their value creation (Sirmon et al., 2007).

Figure 4: Michael Porter’s value chain analysis model

Source: as adapted from Porter’s (1985)

From figure (4) above, is an illustration of porter’s value chain. This will be used to analyse Toyota’s competitive advantage and forecast future performances based on their current resource, capabilities and value creations models.

7.3.1 TOYOTA’S AUTOMOTIVE LOGISTICS

Bowersox and Closs (1996) described logistics as the element that links subsystems in the supply chain. They are two types of this logistics as highlighted by Porter (1985) and they include inbound and outbound logistics. Inbound logistics or supply chain system exists between Toyota and their corporate supplies, while outbound logistic or the distribution channels exist between Toyota and their dealers. To ensure efficiency, it is expected that Toyota’s plants should be located close to both their inbound and outbound logistical system.

Figure 5: analysis of Toyota’s logistical system

The above illustration in figure (5) is clearly showed what inbound and outbound logistics represents in the automotive industry. The company has 50 manufacturing plants and 173 distributors across the globe (excluding Japan) (Toyota Global, 2011) where it produces nearly 900,000 vehicles on an annual base. Refer Appendix 3 for illustration of Toyota’s plants by country. Toyota has been able to find the logistic bound that is needed in perfection automotive logistical system, and this has helped them in reaping high sales and profits over the years. The company current partners with VASCO Ltd among other in ensuring strategic supply and distribution logistics (Inbounglogistics.com, 2004), and through these approach, the company have been able to gain competitive advantage over their customers by offering just-in time service delivery.  

7.3.2 TOYOTA’S MANUFACTURING AND SALES ANALYSIS

Table 3:  Production by region (1 unit = 1,000 vehicles)

Region	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
North America	1,088.5	1,205.3	1,278.4	1,444.0	1,535.1	1,519.3	1,636.9	1,404.8	1,189.1	1,404.0
Latin America	17.5	27.8	58.1	80.4	138.5	177.9	183.1	194.8	181.5	204.3
Europe	219.5	383.6	466.1	582.5	638.1	808.8	806.5	688.3	507.3	461.7
Africa	77.5	75.5	93.3	108.8	121.1	143.8	145.7	179.2	102.8	123.4
Asia	282.7	371.8	548.4	717.0	1,029.2	1,137.7	1,387.3	1,590.0	1,501.4	2,027.4
Oceania	94.6	86.6	113.6	109.9	109.2	111.6	148.9	141.4	96.8	119.4
Overseas total	1,780.3	2,150.5	2,558.0	3,042.7	3,571.2	3,899.0	4,308.6	4,198.4	3,579.0	4,340.4
Japan	3,354.4	3,485.2	3,520.3	3,680.9	3,789.6	4,194.2	4,226.1	4,012.1	2,792.2	3,282.8
Worldwide total	5,134.7	5,635.7	6,078.3	6,723.7	7,360.9	8,093.2	8,534.7	8,210.5	6,371.3	7,623.3

Source as: Adapted from Toyota Global (2011)

From the above table as adapted it can be seen that Toyota’s production rate has relatively but constantly increased in all their operation units. Based on the previous argument, it can be argued that this constant increase in unit of productions can be attributed to the company’s strategically management inward logistics which ensure that raw materials needed for production are in adequate and constant supply. There are also minor fluctuations in the production rate, but this could easily be linked to demand as these fluctuations are different from regions and followed by subsequent increase in their production units.

Table 4: Sales by region (1 unit = 1,000 vehicles)

Region	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010
North America	1,869.0	1,908.9	2,031.3	2,230.3	2,436.1	2,738.3	2,822.2	2,441.8	1,975.4	1,935.5
Latin America	132.0	128.8	162.1	214.9	270.5	339.4	379.4	370.2	293.6	342.1
Europe	672.3	764.8	851.5	946.9	995.2	1,124.1	1,238.6	1,119.5	886.0	785.8
Africa	126.5	139.8	160.6	206.7	227.2	265.7	313.5	288.1	201.4	197.6
Asia	380.3	493.4	682.4	846.3	1,062.9	1,106.7	1,329.6	1,438.6	1,533.9	1,895.9
Oceania	162.2	182.2	215.1	232.8	236.9	250.3	275.9	277.7	231.2	249.6
Middle East	204.3	220.3	251.4	270.9	325.3	404.8	482.7	590.1	482.5	532.0
Overseas total	3,546.7	3,838.3	4,354.5	4,948.8	5,554.1	6,229.3	6,841.9	6,526.1	5,604.0	5,961.1
Japan	1,715.2	1,680.5	1,715.9	1,758.8	1,713.1	1,692.3	1,587.3	1,470.0	1,375.5	1,566.1
Worldwide total	5,261.9	5,518.8	6,070.4	6,707.6	7,267.3	7,921.6	8,429.3	7,996.1	6,979.6	7,527.3

Source as: Adapted from Toyota Global (2011)

Toyota’s regional sales volume is a reflection of a success story in relation to their production volume per these regions. The figures table (4) illustrates that the company made sales between the regions of 94% to over 100% in these region. These high sales volume is a prove that Toyota has successfully implemented strategic value chain management which in turn as highlighted earlier on is yielding huge sales for the companies. While the regions with less than 100 percent sales are realistically understandable, it will not be a surprise to question the regions with other 100 percent sales in terms of where the extra units (E.g. while production total global production was 5,134.7 units in  2001, the total sales was 5,261.9 in the same year) sold appeared from. But, it is easy to argue that since Toyota is an automobile industry, and business does not guarantee total sales for all produces, then it should be presumed that these extra units are unsold stocks from the previous year ended.

7.4 TOYOTA’S ORGANISATIONAL CULTURE

Toyota’s organisational culture is built around the tree metaphor as illustrated below

7.4.1 Roots: Shared values

The roots of the tree are shared values.  Those are the same basic values that people at Toyota have expressed over the years as the Toyoda Precepts, as the Toyota Guiding Principles, and as The Toyota Way.  They envision the organisational spirit of continuous improvement and manufacturing (Toyota Global, 2011).

7.4.2 Fruit: Making great cars and contributing to host communities

The fruit yielded by the tree symbolize Toyota's progress in creating ever-better vehicles and contributing to economic and social vitality in Toyota's host communities (Toyota Global, 2011). Such an organisational culture will earn Toyota respect and loyalty from their stakeholders across the globe.

7.4.3 Trunk: Solid business

Business vitality is the trunk that supports Toyota's activities toward creating products that will win customer smiles.  In Toyota's tree metaphor, solid business is the trunk of the tree.  Through that trunk flows the nutrition for supple limbs, branches and leaves and for bounteous fruit.

Toyota's vision thus evokes a virtuous circle.  The company will contribute to its host communities by making excellent automobiles, earning a welcome place for Toyota in its host communities will support sound returns and Toyota will reinvest those returns in creating ever-better vehicles for customers and will achieve sustainable growth (Toyota Global, 2011).

8.0 EXTERNAL ANALYSIS

8.1 PORTER’S FIVE FORCES AND TOYOTA’S EXTERNAL ENVIRONMENT

With the global market and new world economy, industries are facing numerous challenges and opportunities which include globalization of markets and production, information and technology advancements, high and sophisticated competition, intellectual capital management, workforce diversity, deregulation, and ethics among others (Hitt et al., 2003; Dess et al., 2007). The automobile industry in particular is facing new global challenges such as, globalization effects, stricter safety requirements, increased competitions, utilization of more advanced technology, increase environmental responsibility, and improved production technologies (Linker, 2004; Gallasch et al., 2004).

All these external issues can determine success and failure of an automobile industry to a large extent due to the environment and market’s sensitive on their produces. Nevertheless, the automobile industries have proven to be one of the strongest drivers of technology, growth, and employment in recent years (Gottschalk and Kalmbach, 2007). Begley and Boyd, (2003) argued that managements today must execute more than simple set long-term strategies and hope for the best. This goes on to prove the statement that present external environment in the automotive industry is both challenging and sophisticated, and in this section, Toyota’s external environment will be analysed to determine how the company is copying with its surroundings. This analysis will be based on porter’s five forces model.

Figure 7: Porter’s 5 forces

8.1.1 TOYOTA IN THE AUTOMOBILE COMPETITIVE RIVALRY

The automobile industry today is characterized by huge competing international firms and a reduction in number of domestic product offering, thus reducing competition scale amongst automakers. Since the 1980s, foreign firms have deployed high degree of innovative strategy to change the industry in order to compete with the American big boys (GM, Ford etc.). Thus, the production shifts in the automobile industry over the last 3 decades have changed the composition of automobile industries, their size and product offering.

Of the top the automakers of 2010, four are Japanese, one is Korean, there are American and two are German. This is different from the 1960s when the top three American automakers dominated over 90 percent of the auto industry. Numerous studies have documented the change in market share and market power of the automobile industry since early 1940s to 2007 (White, 1971; Kwoka, 1984; Train and Clifford, 2007). Toyota has stood out as the dominant movers in increasing market share since 1980. For instance during 1980s, Toyota’s market share was 6.3%, and increased to 7.9% in the 1990s. But over the last two decades, Toyota’s share has increased to 13.38 percent, which represents an annual increase of 2.5 at average over the last 3 decades. Refer appendix 4 for statistical analysis of Toyota’s sales across the globe. Toyota’s success can be attributed to their low price and high quality values which is part of their 14 Toyota ways approach (Liker, 2004).

The Toyota way is the guiding principle of Toyota’s management style (Liker, 2004). It is made of 14 principles, which include long-term relationship (even at the expense of short-term financial goals), continuous improvement, levelled workload, having a culture of fixing problems and getting quality right the first time, using only reliable and tested technology, respecting the extended network of partners, and suppliers, thoroughly understanding every situation by taking themselves into the shoes of the people facing the problem (genchi genbutsu), making decisions based on thorough consideration, implementing rapid decision (nemawashi), and becoming a learning organisation through relentless reflection (hansei) and continuous improvement (kaizen).

The above arguments can be held in terms of justifying Toyota’s success over the last 3 decades. The company have developed a mainstream that is designed to ensure continuous sales through continuous innovation and strategic management. Toyota’s is currently the market leader in the automobile industry and this is an illustration of their competitiveness in the industry over these years. Refer Appendix 5 and 6 for top automaker analysis.

8.1.2 BARGAINING POWER OF TOYOTA’S SUPPLIERS

The supply management of Toyota, which is the foundation of their production system, is a key contributor to Toyota’s success. Toyota is one of the least vertically integrated automakers. Their production is high dependent on autonomous and semi-autonomous suppliers. Since the inception of Toyota’s supply network, interlocking ownership and multi-tier structure makes have made their supply chain a complicated and sophisticated network. Their suppliers can be classified into different tiers. Tier-one suppliers, such as Bosch and Delphi, deliver big integrated system to Toyota. Tier-two suppliers provide individual parts or assembled components to either a tier-one supplier or Toyota. Tier-three suppliers normally make one component for tier-two suppliers. At the ground level lies the tier-four suppliers, that represents over 40,000 entrepreneurs. CTS Corporation, a tier-two supplier is the maker of the throttle-pedal that caused the “faulty acceleration” (Athony et al., 2011).

Toyota has built highly effective supplier integration over the years, and this has been made possibly by their system which is called supplier association. Through this association, Toyota holds regular meeting with their suppliers to work on their strategic and operational alignment. This supplier association encourages knowledge and ideas sharing between both new and old suppliers as part of Toyota’s value and the suppliers have developed a dynamic learning capability through this system, which have helped in improving Toyota’s competitive advantage. The figure (7) below, illustrates Toyota’s suppliers association.

8.1.3 TOYOTA’S CUSTOMERS BARGAINING POWER

In 2000, Toyota launched the Construction of Cost Competitiveness in the 21^st century (CCC21) program, which targeted 180 key main parts of their automobiles for 30 percent across the board price cut in order to maintain their competitive edge. The price cut is an effect of an expected Chinese price reduction which is a result of the company moving orders to Chinese suppliers. Toyota substantially reduced cost with the help of their suppliers by standardizing parts across different models or reducing the number of components needed in making a specific part (Athony et al., 2011).

For instance, the company reduced the number of air conditioning vents from 27 to just 3, which resulted in cost reduction of 28 percent. In another case, 40 percent cost savings were generated by reducing the number of parts needed in automobile horns from 28 to 22. This program achieved success cost wise, and resulted in cost reduction of nearly US$ 10 billion over the next five years. With these cost reduction program, Toyota started growing rapidly, and supposed General Motors as the world’s largest automobile in 2008(Athony et al., 2011).

This cost reduction programs has also given Toyota’s customers bargaining power over their competitors. Through cost reduction, Toyota was able to penetrate new markets, attract new customers and rapidly increased their market share. Toyota’s external environment has been a joy to analyse over the years due to its year-in year-out success, but competition and business failures have also posed a big threat to the giant automaker as they push ahead in sustaining competitive advantage through innovation and price reduction. The figure (8) is an illustration of the above arguments on how Toyota offers their customers bargaining power

8.1.4 THREATS OF NEW ENTRANTS AND SUBSTITUTE PRODUCTS TO TOYOTA’S MARKET LEADERSHIP

The barriers to enter the automotive industry are substantial because, potential new entrants will be waived off by the prohibitive capital required to start-up and establish a manufacturing company capable of achieving minimum efficiency. An automotive manufacturing facility is very specialized and probably can’t be tooled in the event of failure or malfunctioning. Although these barriers are substantial, established companies are entering into the industry through partnership or merger with other companies (Donald et al., 2005). 

Nevertheless, it has been argued that although the barriers to entry exhibit similarities across the globe, a domestic start-up with local knowledge in the undeveloped markets of Asia, Africa, and South America have the potential of competing on a national base against multinational firms who already exist in these markets.  If such operation is successful, it has the possibility of being snatched up by one of the global giants.

The threats of substitute products to Toyota on the other hand are fairly mild. Although they are numerous alternatives to transportation (Such as Air, Rail and Sea), none of these alternatives offer the utility, convenience, independence, and valued the automobile industries like Toyota offer. The cost of switching to another source of transportation such as rail-way (train), maybe high in terms of person time (i.e. independence), convenience (i.e. stoppage at train stations only), and utility (e.g. extra added cost of luggage’s), but not necessary monetarily (e.g. round trip by Train from Tokyo to Hokkaido is less expensive when compare to the same trip by a fuel consumed Toyota Prius) (Donald et al., 2005). 

From the above analyses, it could be conclude that Toyota does not face any potential threat from substitute products as the type of service offered by the automobile industry are different from the type of services offered by other means of transportation. Nevertheless, the potential entrants of new customers is essential a threat to the company. This is because, high entrants on a national level will increase the competitive atmosphere, and if Toyota is to lose high national market shares, it will definitely affect their global standing as a world leader in the automotive industry. Therefore, it is suggested that the company should continue their business model of constant innovation in other to maintain their market leadership and wave off any potential competition from new entrants.

 9.0 PESTLE ANALYSIS OF TOYOTA

9.1 CHOSE COUNTRY OF ANALYSIS: MALAYSIA

9.1.1 POLITICAL ENVIRONMENT

Malaysia is a federal state with 13 states and one federal territory (Wilayah persekutuan) with three components, Kuala Lumpur city, Labuan, and Putrajaya. The chief of state is the King who is chosen among 9 sultans at the Sultan’s conference based on the principle of rotation. The King’s tenure is 5years and his position is ceremonial. The head of government is the Prime Minster who much is a member of the lower house.

The Malaysian system of government is closely modelled after the Westminster parliamentary system, which is a direct influence of British colonization that ended in 1957. The government operates a bicameral system with a nonelected upper house and an elected lower house. In the lower house ever since Malaysia’s independence in 1957, the UMNO (United Malays National Organisation) has been part of the ruling coalition (now called, Barisan Nasional (BN) which has been in power for over 30 years) (Michelle, 2009).

Malay favouritism has been the case over the years as the government granted itself to abolish human rights (Sensitive Matters Amendment in 1971), which makes criticism of the Malay Monarchy, the special position of Malays in the country, or the status of Malay as the national language illegal. A clear example is the arrest and imprisonment of Deputy Prime Minister Irahim Anwar in 1997, for violating peace preservation law by criticizing the Mahathir’s policies. This marked the stake of Malay Authoritarianism in the Malaysian government (Michelle, 2009).

However, Prime Minister Badawi Abdullah who succeeded Mahathir’s regime in 2003 was quick to find solutions to the high corruption by establishing a corruption unit to probe and arrest all top officials who have been involved in bribery and other sorts of corruption. Prime Minister Razak Najib followed the same root when he was elected in April 2009, by removing the ban on opposition newspapers (Suara Keadilan and Herakdaily). Nevertheless, Malaysian government can be concluded to be a pseudo-democracy with a Malay-dominant political regime backed by constitution, enduring suppression of civil rights for government criticism, and de-facto one-party system (Michelle, 2009).

Although it can be fair to say that Malaysia is slowly moving towards democratic system with the policies implemented by Mr Adullah and Mr Razak, it must be understood that on a business phase this pose a big threat to success in Malaysia. Business strategies that could aim the conglomerate profit by competing against big Malay companies could be waved out by the government and any criticism will be deemed illegal. The government also allows indefinite detention without trial and for employees; this could be used against them if the company interferes with the government system in any form. Thus, it must be stated that the political atmosphere is a big challenge and should be critically reviewed before investment.

9.1.2 ECONOMIC ENVIRONMENT

Following the Asian Tigers footstep and coupled with Japan’s economic assistance, Malaysia transformed itself from an exporter of raw materials such as palm oil, natural rubber, and tin into an industrialized country. The country continuously recorded annual economic growth of above 8 percent between 1980s and the Asian economic crisis in 1997. As of 2008, its GDP was expected to be 385.2 billion USD which is the 31^st largest in the world (Michelle, 2009).

The level of GDP per capita of Malaysia is estimated to be US$ 8,118 per year by IMF (2008), US$ 7,221 per year by the World Bank (2008), and US$ 8,800 per year by CIA Factbook (2008). It has been argued that democracy is expected to survive if the level of GDP per capita is over US$ 6,000 per year. Based on the estimated, Malaysia is well above the threshold level for survival of democracy and it can be said that the country has the potential to increase its democracy from its current pseudo-democracy (Michelle, 2009).

The above economic atmosphere provides a good room for investment as the high purchasing power the general Malaysian populace have with their GDP per capita is destined to yield high sales and profit with the implementation of a proper business strategy. This GDP also offers possible change to the government system into full democracy which could provide a much better business atmosphere in the near future. Thus, it can be concluded that the economic environment offers great room for profitable investment.

9.1.3 CULTURAL ENVIRONMENT

Malaysia claimed independence from British colony in 1957 as a multi-racial Federation. The population then included large numbers of the second non-indigenous people, mainly from Southern part of China and India, who were brought to the region as manpower for labor at British owned plantations, mines, mills, and docks. The main languages in Malaysia are English and Malay. The country is dominated by Islam which is compulsory for all Malays, Buddhism, Hinduism and Christianity. The government continues to mark its mark on human right by obligating all Malays by law to be Muslims and practice Islamic religion (Michelle, 2009).

Being Malay, Chinese and Indian dominated nation, Malaysia’s culture can be classified into fatalism, Confucianism and Hindustan believes. The Malays prior the act of saving their face by not doing things that will bring embarrassment to their family, and the Chinese also practices this cultural belief in a Confucian style by believing in business success through long-lasting relationship and treating each other as one. There are also traces of this believe in the Indian Hindustan believe that what goes around comes around (what you to do other will be done to you), which is commonly referred to as karma (Michelle, 2009).  

This cultural environment is favourable for investment in Malaysia as it present an atmosphere where businesses value understanding, dedicated and commitment by believing that the best way is to find a means that favours everybody as they seek to protect their faces (Malays), maintain long-lasting relationship (Chinese), and avoid nemesis that arises from doing wrong to other (Indians). Nevertheless, the Malaysian culture that values protecting personal image (fatalism) could be argued to be of negative influence on business, as the populace could possible undertake negative actions against businesses just to ensure that their image is not dented in the public.

9.1.4 TECHNOLOGICAL FACTORS

Malaysia is an emerging Asian economy with aspirations of moving towards a technological and high-tech production pattern of development. Malaysia has been categorized as one of the countries with the potentials of creating new technologies on their own (Mani, 2000). This development has caught the attention of both developing and developed countries over the decade (Hobday, 1995).

Mainly all companies in Malaysia have some certain level of automated production and this is due to the high availability of technology in the country. This is important for KKB Sauce, as the business objectives involves reduced cost of production which can be achieved by automating the production system to reduce cost associated with staff’s salary and other production overhead.

 9.1.5 LEGAL FACTORS

Malaysia maintains a reliable legal system and all activities are regulated under the Islamic law for Malays and state law for Non-Malays. For instances, all companies intending to do business in Malaysia are required to register within the Companies Commission of Malaysia which is responsible for the administration of the company act and keeping files open for public inspection (Mida, 2011).

They are also reserved laws that protect business properties and acts such as copyright, patent right and trade mark laws. The Malaysian legal system is general described as solid and reliable for businesses. This will influence KKB Sauce positively as the company would look to keep some of its properties and trademarks, in order to enhance their competitiveness in the Malaysian economy.

9.1.6 ENVIRONMENTAL FACTORS

The environmental factors in this case include all other stakeholders not discussed above and the eco-system of a country. Malaysia is a very competitive economy and they are already established and successful success industries in the country, thus competition will always be stiff and high. The country does not face any serious environmental hazard currently, but the country has been struck with series of flooding.

These issues discussed above can influence success or failure of the business to a great extent and must be seriously visualized to understand the best way to tackle issues of this nature. The projected location for the production plant is strategically situated within the safest regions of Kuching in Sarawak Malaysia; to prevent any event of haul on product due to flooding, earth quake or other natural disasters.

CHAPTER 3

10.0 RECENT STRATEGIC ISSUES FACED BY TOYOTA

10.1 VEHICLE RECALL – 2009- 2011

A fatal accident that in south of California in August 2009 let to the beginning of a massive recall by Toyota. Since then, Toyota has recalled over 5 million automobiles in North American market, including many of its popular brands. The company stopped sales and reduced production of its eight top selling brands in the USA and Canada for a brief period of time, and has increasingly been under great pressure to come up with an explanation for the acceleration problem which involves sticky gas pedals and other safety issues.

Internal documents which were submitted to the United States government revealed that Toyota had not acted quickly enough in revealing information about consumer complaints on safety issues. Their failure to respond to this issue in a timely manner led to the a fine of $16 million by the United States government, and they also had to deal with increasing public pressure and legal challenges.

10.2 HOW DID TOYOTA FIND ITSELF IN SUCH STRATEGIC PAIN?

The answer to this question can be traced back to Toyota’s high-speed expansion which made Toyota increasingly dependent on suppliers from outside Japan. Also, Toyota did not have enough senior engineers to properly supervise their new suppliers in order to ensure they meet Toyota standards, and this resulted in deterioration of product quality in key component areas. In general, there were averages of 26 unexpected accelerations reported annually from 1999 to 2001 for Camry and Lexus ES models, and this number soared to 132 from 2002-2004, which is almost 300 percent higher (Anthony et al., 2011).

At this point, Toyota’s executives began to visualize the gravity of the problem and in September 2006, Jim Press, then President of Toyota North American operations, publicly reported that Toyota vehicles has seen a sharp increase from 2003 to 2005. Chris Tinto, then Toyota’s Vice President for Technical and Regulatory Affair warned in January 2008, that “some of the quality issues faced by Toyota are showing up in defect investigations (rear gas struts, ball joints, etc.)” (Anthony et al., 2011).

The quality issues finally exposed itself in the consumer market. In October 2007, the poor predicted quality of its newly released Camry V6 and Tundra pickup, led to Toyota’s lost in automatic recommendation from Consumer Reports when the both models scored below average in the annual reliability. The same report dropped Toyota from first to fifth place in average vehicle reliability. In April 2008, Consumer Reports also dropped Toyota from its 2008 recommended list, which resulted in Toyota’s recommended percentage fall from 85 percent in the previous year to 75 percent in 2008. In 2009, J.D Power Customer Retention Survey, awarded Honda the no.1 sport in place of Toyota as 100 percent of Honda cars made the reliability test in 2008.

All these issues, led to the final blow on Toyota’s fate of correcting their mistakes when on 28 August 2009, an off-duty California Highway Patrol Officer driving a Lexus ES 350 lost control, struck another vehicle, tumbled down an embankment, and caught fire and all passengers on-board died. Nevertheless, a passenger dialled 911 while the vehicle was accelerating unexpectedly to report that the brakes where not working, which led to the presumption that, the gas pedal was stuck in its open throttle position which caused the engine to surge, and pressing the brake pedal did not slow the car down (Vlasic, 2010).

Other complaints of sticky gas pedal soared, even in cars where the floor mats have already been removed. This led to all fingers pointing at the manufacturer of the gas pedal, some of which were made by CTS Corporation at its Elkhart, Indiana plant, a second-tier supplier to Toyota. But, CTS Corporation pointed out that the issues have occurred even in vehicles which they did not supply gas pedals for. In January 2010, Toyota ordered another real of 2.3 million vehicles to correct the “sticky gas pedal” problem, essentially by adding a shim to the pedal (Anthony et al., 2011).

These issues posed numerous strategic pains to Toyota, as they had to find ways to resolve mounting pressures from stakeholders in the markets they maintain existence across the globe. This also resulted in Toyota brands being removed from Consumer Reports and lowly ranked in numerous automobile magazines and surveys across the globe.

11.0 RECOMMENDATION FOR RESOLVING THIS STRATEGIC ISSUE

While Toyota had full control of their supply because all their suppliers originate from Japan, the automobile industry did not face such issues as they do now in terms of product standardization. From the above analysis, it was clearly highlighted that all these issues can be traced back to the company quick expansion, which required them to adopt other suppliers outside Japan and their insufficient engineering team, which meant that they could not fully control all their suppliers to ensure that they meet Toyota’s standards. These two issues lead to the fall of Toyota in their product reliability and dependability ranking and eventually the massive recall from 2009 to 2011.

Thus, based on the above argument, it is recommended that:

11.1 Toyota should adopt standard manufacturing formulae for all their suppliers: this implies that, Toyota will have to develop an operational code of conduct that specifies standards all their suppliers must fully and strictly meet. This formula will also include legal and financial implications for suppliers who do not meet these standards. This will ensure that all their automobile components are manufactured following given specification and this will make it easier for the company to spot any uprising issues and directly trace the issues back to its origination instead of the guess and accusation strategy used on CTS Corporation where they eventually found that the problem has been in the company even before CTS Corporation became Toyota’s supplier.

11.2 Develop standard monitoring team: as a solution to the second issue which states that Toyota lacked sufficient engineering team to fully monitor all their external suppliers, it is recommended that Toyota should develop a strong monitoring team to ensure that the first recommendation is fully achievable; as just developing standard specifications will not guarantee that suppliers will follow these specifications without the watching eyes of an external monitoring team.

These two recommendations are based on strategic assumption that since the root of Toyota’s problem has been found, then solutions should be provided following these root. If fully implemented, it is expected that these issue will be reduced and thus restoring customers trust on Toyota and increasing the company’s sales as well as regaining their lost ranking positions in the automobile industry. In order to ensure that these recommendations are well implemented to achieve the set goals of improved supplier monitoring and product standardization, the strategic model (balanced scorecard) is suggested as the evaluation criterion towards improving Toyota’s weaknesses.

11.3 BALANCED SCORECARD: A NEW STRATEGIC APPROACH FOR MANAGEMNET IN TOYOTA

The balanced scorecard (Kaplan and Norton, 1992) has been widely recognised and used (Marr and Schiuma, 2003). Many years ago, it was reported as being used by 60 percent of Fortune 1000 companies (Silk, 1998). This evaluation plan is based on the four perspectives of balanced scorecard – customer perspective, internal perspective, innovation and learning perspective, and financial perspective. Figure (10) above illustrates the process used to translate business objectives into the balanced scorecard.

Figure 10: balanced scorecard

11.3.1 CUSTOMER PERSPECTIVE

     This measures market shares and customer satisfaction. The main objective is to ensure customer loyalty and lifetime value. To ensure that the said objective is meeting, the customer’s perception of services, appropriateness of target market, and customers purchase pattern will be evaluated virtually. This is to ensure that these strategies are working in accordance with the set objectives and avoid overhead related to wrong deployment of strategy and investment in irrelevant business activities. Thus, Toyota can use this strategy to increase customer trust and loyalty by assuring them that such a traffic situation is a thing of the past and won’t happen anymore through public relationship programs designed to achieve this goal.

11.3.2 INTERNAL PERSPECTIVE

This includes friendly user interfaces, powerful software architecture, and effectiveness of distribution system. This critical analyses the human resources department, information technology and distribution medium. Thus, this perspective evaluates the efficiency and effectiveness of all the business process involved, and enhances them for better customer satisfactions. As highlighted earlier on, Toyota should adopt standardized manufacturing formulae for their entire supplier and close check supplied components for deformities before installation.

11.3.3 INNOVATION AND LEARNING PERSPECTIVE

 This is designed to measure the effectiveness and speed of innovation and creativity in Toyota, compared to that of their competitors, from the above analyses, it was highlighted that Toyota has been tremendously successful due to high innovation within the company’s stream, but innovation is still a necessity to better offer more secured product and services to their customers; whiles increasing sales and market shares.

11.3.4 FINANCIAL PERSPECTIVES

Financial perspective is mainly used to measure the return on all investment. While is adopting the recommended model, it is necessary that they measure the performance of all expenditures while adopting the model; to ensure that the money is spent is yielding the set objectives.

CHAPTER 4

12.0 CONCLUSION

Strategic management is a field of business psychology that has presented many academic and research arguments over the years. These arguments are mainly based on what should be called strategy, and how strategy should be integrated into the business model. Nevertheless, the reality in this context is that businesses cannot survive without frequently deploying strategies, as this is the only way they can increase their market shares by gaining competitive advantage and differentiate themselves from their competitors.

Toyota is good example of what powerful strategic management can yield in the business world. Born in the 1918 when the founder Sakichi Toyoda gave the proceeds from the sale of his invention (automatic loom) to his son Kachiro, the company quickly gained the world stage by competing in the Japanese market dominated by the American big three (Ford, GM and Chrysler). The company quickly gained the world stage when it launched their first prototype (Toyoda AA).

By the late 1980s, Toyota entered the American market and over took General Motors as the world’s largest automaker 2008. This benchmark achieving market is mainly attributed to their constant market growth, which was achieved through continuous improvement (kaizen) and price reduction. These principles still guide the company till date and they continue to search for new ways to reduce cost in other to sustain their market leadership.

Although Toyota has become famous due to its success over the years, their business strategies have presented question and that was the main purpose of this research paper. The internal analysis revealed that their full-fledged market entry is not guaranteed to yield constant profit as shift in business paradigm either due to economic recession or other factors could potentially throttle their success. Nevertheless, their continued innovative approach is destined to yield successful business outcomes as it will over customers more value for less money. The analyses of Toyota’s external environment with Michael Porter’s five forces also presented other interesting issues in relationship to successful past which have given them competitive advantage in the present. Although there is no potential threat from substitute products (other transportation system), Toyota will need to remain alert with their business environment as potential new entrants could pose charge against the company on a national competition base, which could negative affect their market leadership.

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14.0 APPENDIX

14.1 APPENDIX 1: TOYOTA’S HISTORY BY DATE

1867    Birth of Sakichi Toyoda.

1924    Sakichi Toyoda invents Toyoda Model G Automatic Loom.

1929    Automatic-loom patent is sold to a British company.

1930    Kiichiro Toyoda begins research on small gasoline-powered engine.

1933    Automobile Department is established at Toyoda Automatic Loom Works, Ltd.

1935    The Toyoda precepts are compiled.

1936    The AA Sedan is completed.

1937    Toyota Motor Co., Ltd. is established.

1938    Honsha Plant begins production

1950    Company faces a financial crisis; Toyota Motor Sales Co., Ltd. is established.

1951    Suggestion System begins.

1955    The Toyopet Crown, Toyopet Master and Crown Deluxe are launched.

1957    The first prototypes of the Crown are exported to the United States; Toyota Motor    Sales U.S.A., Inc. is established.

1959    Motomachi Plant begins production.

1962    Joint Declaration of Labor and Management is signed.

1965    Toyota wins the Deming Application Prize for quality control.

1966    The Corolla is launched; business partnership with Hino Motors Ltd. begins.

1967    Business partnership with Daihatsu Motor Co., Ltd. begins.

1974    Toyota Foundation is established.

1975    The prefabricated housing business begins.

1982    Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. are merged into Toyota Motor Corporation.

1984    Joint venture with General Motors (New United Motor Manufacturing, Inc.) begins production in the USA.

1988    Toyota Motor Manufacturing, USA, Inc. (present TMMK) begins production.

1989    The Lexus brand is launched in the USA.

1992    Toyota Motor Manufacturing (United Kingdom) Ltd. begins production.

1997    The Prius is launched as the world's first mass-produced hybrid car.

1999    Cumulative domestic production reaches 100 million vehicles.

2000    Sichuan Toyota Motor Co., Ltd. begins production in China.

2001    Toyota Motor Manufacturing France S.A.S. begins production in France.

2002    Toyota enters Formula One World Championship; Tianjin Toyota Motor Co., Ltd. begins production in China.

2004    The Toyota Partner Robot is publicly unveiled.

2005    The Lexus brand is introduced in Japan.

2008    Worldwide Prius sales top 1 million mark.

2010    Worldwide Prius sales top 2 million mark; Toyota and Tesla Motors agree on joint EV development.

14.2 APPENDIX 2: PRODUCT RANGE DESCRIPTION

14.2.1 Toyota Aygo

• City car, launched in summer 2005

• Toyota’s smallest model for the European market

• Available with the world’s lightest and most fuel efficient 1.0-litre petrol engine

• Built in the Czech Republic

14.2.2 Toyota Yaris

• Second-generation model launched January 2006

• Three and five-door hatchbacks

• 1.0, 1.3 and 1.8-litre petrol and 1.4-litre diesel engines

• Built in France

• Toyota’s best-selling model in Europe

14.2.3 Toyota Auris

• Three and five-door hatchbacks

• All-new model launched in February 2007

• Designed from the “inside out” to maximise usable cabin space

• 1.4 and 1.6-litre petrol and 1.4, 2.0 and 2.2-litre diesel engines

• Built in the UK and Turkey

14.2.4 Toyota Verso

• Seven-seat compact MPV

• Toyota Easy Flat system for folding all rear seats into vehicle floor

• 1.6 and 1.8-litre VVT-i petrol and 2.0 and 2.2-litre D-4D diesel engines

• Built in Turkey

14.2.5. Toyota Avensis

• Upper-medium saloon, hatchback and Tourer estate

• Flagship of Toyota’s European model range, designed in Europe and built exclusively in

the UK

• 1.8 and 2.0-litre VVT-i petrol and 2.0 and 2.2-litre D-4D diesel engines.

• Awarded top five-star rating for occupant crash protection in Euro NCAP testing

14.2.6 Toyota Prius

• World’s cleanest family car

• Five-door, five-seat saloon

• Powered by Toyota Hybrid Synergy Drive, a combination of 1.5-litre petrol engine and

500-Volt electric motor

• European Car of the Year 2005

• Built in Japan

14.2.7 Toyota RAV4

• Third-generation RAV4 launched February 2006

• Five-door sports-utility vehicle

• Europe’s best-selling SUV

• 2.0 VVT-i petrol and 2.2-litre D-4D diesel engines

• Built in Japan

14.2.8 Toyota Land Cruiser

• World’s best-selling SUV, with heritage of more than 50 years

• 3.0-litre D-4D and 4.0-litre V6 petrol engines

• Three and five-door body styles with seating for up to eight

• Built in Japan

14.2.9 Toyota Land Cruiser V8

• Toyota’s most advanced 4x4

• New 4.5-litre V8 diesel engine

• World’s first four-wheel Active Height Control and Adaptive Variable Suspension

• UK launch mid-February 2008, replacing Land Cruiser Amazon

• Built in Japan

14.2.10 Toyota Hiace

• Short and long wheelbase vans

• 94 and 115bhp 2.5-litre D-4D diesel engines

• Gross vehicle weights from 2.8 to 3.0 tonnes

• Built in Japan

14.2.11 Toyota Hilux

• Robust pick-up

• More than 12 million sold worldwide

• 118bhp 2.5-litre and 169bhp 3.0-litre D-4D diesel engines

• First car to be driven to the Magnetic North Pole (2007)

• Built in South Africa

14.2.12 Toyota Dyna

• Dropside and chassis cab light commercial vehicles

• 109bhp 3.0-litre D-4D diesel engine

• Payload capacity up to 1.5 tonnes

• Built in Portugal

14.2.13 Lexus IS 250/220d/IS F

• Second generation IS launched December 2005

• Prestige compact sports saloon

• New 2.5-litre V6 VVT-i petrol engine and Lexus’s first diesel – a 2.2-litre 175bhp unit – in

the IS 220d

• Number one-ranked vehicle in 2006 and 2007 J.D. Power and Associates UK customer

satisfaction survey

• High performance IS F due for launch in April 2008

14.2.14 Lexus GS 300/460/450h

• New-generation executive sports saloon, launched spring 2005

• 3.0 V6 and 4.6-litre V8 VVT-i petrol engines

• Hybrid power GS 450h combines 3.5-litre V6 petrol engine with high-output electric motor

• Vehicle Dynamics Integrated Management (VDIM)

• GS 460 equipped with new 342bhp 4.6-litre V8, launched January 2008

14.2.15 Lexus LS 460/600h

• Fourth generation of the Lexus flagship saloon, launched in January 2007

• 4.6-litre V8 Dual-VVT-i petrol engine

• World’s first eight-speed automatic transmission

• World-leading preventive safety systems

• Hybrid power LS 600h limousine, flagship of the Lexus range, launched October 2007

• LS 600h L, the first long-wheelbase Lexus

14.2.16 Lexus SC 430

• Luxury sports coupe convertible

• 4.3-litre V8 VVT-i petrol engine

• Fully retracting aluminium hard top

• Luxury specification includes bespoke Mark Levinson hi-fi system

14.2.17 Lexus RX 350/400h

• Second generation of the original premium SUV

• RX 350 equipped with 3.5-litre V6 VVT-i petrol engine

• Permanent four-wheel drive

• RX 400h powered by Hybrid Synergy Drive, combining 3.3-litre V6 petrol engine and front

and rear electric motors for low emissions and improved efficiency

• Electric motors provide RX 400h with E-Four electric four-wheel drive on demand