Reasons of Toyota Success in International Markets

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Across the world, Toyota has a strong market position in Central and South America, Africa, Oceania, the Middle East region as well as all around the world. For instance, according to Toyota FY2012 report combined share of Lexus and Toyota was around 45.5% in Japan, Asian market share was around 13.4% (excluding China), 12.2% and 4.3% in North America region and Europe respectively, however Toyota market share in China was around 7%. Nevertheless, Toyota managed to quickly catch up and already became 3rd largest automobile company in China. In the end, Toyota is one the most famous car producer company in the world and in 2018 Toyota had the largest market share in the globe at around 9.5 percent. The competitive advantage and the high economies of scale enable Toyota remain its strong market position and constantly expand in international markets.

  • Strong focus on R&D:

Toyota is well recognized for its productions of high-quality cars with low cost, therefore providing best possible goods at a low price to consumers. This high quality was achieved by constantly improving and innovating production methods. R&D focus allows the company to constantly develop new products and improving the capabilities of already existing one. There are overall 14 R&D facilities worldwide. Moreover, every time entering new national market Toyota always make a deep market research in order to have better understanding of consumer preferences, law and environmental regulations and so on, constantly seeking for better strategies and methods. Toyota implements “right cars for the right markets” policy (Direction, 2008), for instance, hybrid cars were specifically invented for the customers who are concerned with the environmental issues. “Tundra” and “Highlander” were on the other hand targeting American consumers who prefer pickups (Direction, 2007). Overall, Toyota target every time entering new market is to make best possible product based on consumers preferences and low products cost without any decrease in quality.

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  • Extensive production and distribution network:

Toyota's distribution and production networks are extremely wide and spread. Toyota production system (also known as TPS) is based on such innovative practices such as “Just in Time”, “Kaizen”, “Jidoka” and etc. Such production style helped Toyota to get competitive advantage as no other firm is enabled to use the as well as Toyota, which provided Toyota with recognized brand name. Toyota managed to surpass such companies as Ford and GM in production and costs. While Ford and GM can produce around 10 vehicles per employees, Toyota has around 15 vehicles per employee, which means that Toyota has lower fixed cost.

Basically “Just in Time” is a concept, where all raw materials and other equipment are delivered on the same day they are being planned to use. Such system even more underlines for employees the importance of efficiency, forcing them to minimize wasted resources and decreasing the chance of slack resources as well. Moreover, consumers are being more satisfied, because the lead time is reduced and as the result response to customer demands is quicker.

Jidoka is measure to detect any problems that occurs in the assembly line, if detected, the line stops and any problems will be fixed in order to prevail it from occurring again. The target is to make sure that fewer defective goods are produced, as the result, assembly line becomes more reliable, products have higher quality, the chance to receive defective goods by consumers fall and consumer satisfaction increases.

Kaizen method is to generate ideas first, after tests them and if successful to apply ideas to the already existing production process. It allows methods of production constantly improve and for consumers get even higher quality goods.  

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