Toyota Motor Corporation’s Business Strategy

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Page count 11
Word count 2519
Read time 10 min
Subject Business
Type Essay
Language 🇺🇸 US


Today, it seems rational to state that the market economy should be perceived as a diversified and advanced framework with closely interacting actors. A firm is among these crucial actors of the system. Companies – throughout their whole range of activities – are being constantly impacted by a plethora of aspects of the market economy. To an exact extent, it makes it difficult for firms to manage their operations appropriately. Currently, there is a necessity for a foundation that will allow an enterprise to deal with internal and external factors so that it could remain competitive. This foundation might be a strategy that is to be developed by applying various theoretical concepts that contribute to the understanding of contemporary business conditions. This paper aims to investigate the policy of Toyota Motor Corporation in the context given. Applying appropriate marketing theory and concepts, this corporation’s business strategy will be discussed, as well as recommendations on its development will be provided.

Toyota’s Current Position

Plenty of companies with significant potential become unsuccessful due to the fact that they do not aspire to adhere to an expansion approach. A great number of risks related to this expansion in new regions for these firms justify this dread. Among them are the absence of an adequate understanding of consumers’ preferences, the essence of competitiveness, and undiscovered distribution approaches. However, there may be a situation in which the mentioned expansion should be considered a necessity but not a possibility. Such an assumption refers mostly to the markets that involve transnational companies. A good example of the depicted case is Toyota’s solution to launch and expand its operations in Europe (Singh, 2018).

Nowadays, Toyota operates in more than 150 countries around the world and is among the world’s largest automakers (, 2020). In total, the company owns more than 50 manufacturing units outside of Japan. The firm always tries to do its best to adhere to its core motto – the right car in the right place – in the framework of market segmentation and targeting. This corporation considers markets of countries separately; however, it tends to concentrate on several centers of its affairs. It should be claimed that Toyota perceives the United States as a primary priority. Such an approach is justified because the US consumes about a fourth of all products and services provided – similar rates are in Japan.

The company has developed its marketing policy at various scales – starting from global and ending with local levels, taking into account core clients’ interests and requirements (Business Strategy Hub, 2019). One of the critical aspects of Toyota’s strategies and tactics is a comprehensive investigation of business conditions, from economic to cultural perspectives.

The essential elements that should be considered as a benchmark of the firm’s marketing affairs that result in the company’s ability to get clients’ trust are as follows. First, it is the environmental friendliness of products and services given. Second, it is product safety, which contributes to the establishment of Toyota’s robust brand. Third, it is low operating expenses that imply long-term profitability and success. Fourth, it is service quality that takes place after a consumer’s product purchase. (Simao and Lisboa, 2017; Thompson, 2017).

At this point, it seems rational to appeal to Porter’s five forces model so that Toyota’s current position could be clear and precise, which will serve as a foundation for further analysis (Appendix 1).

Porter’s Five Forces Analysis

The emergence of new competitors

Within the scope of Toyota’s target markets, new entrants do not tend to occur easily, without any obstacles due to the following. The primary reason here might be that competition with such a giant requires considerable investments. Then, it takes a long time to develop at least a similar brand and reputation to lure a consumer. Finally, the strategy of the economy of scale is substantially difficult for small enterprises (McFarlane, 2019).

Competitive rivarly

There are many competitors’ strategies and policies of which are required to be monitored. Volkswagen is among the primary rivals of Toyota as there is always competition for the leading role in global markets between them. Toyota’s crucial strength is that it creates vehicles that demonstrate lower rates of emissions than the rival. From this perspective, it is important to maintain such a policy that pollutes the environment to a fewer extent than Volkswagen (, 2020). However, the latter aims to expand its crossover ranges to overtake its competitors. In order not to allow such an advantage, Toyota is to increase its production capacities and capabilities, as well as provide as many new offers as possible.

Then, General Motors has a number of notable advantages compared to rivals due to progressive technology and plenty of startups. Moreover, this firm has been focusing on the market of the US significantly (Pratap, 2018). After the corporation changed its focus from Europe to the US, it strengthened its position as a leader in the global automotive industry. Hence, it seems reasonable to state that Toyota should develop its affairs in the European segment so that its international leadership could be gained.

Buyer power

It seems apparent that the company deals with a significant number of buyers. Mostly, these are consumers who purchase a single car, but several firms may order vast fleets and can buy at lower prices. It is not difficult for these buyers to turn to other brands or other kinds of transport. Consumers are substantially price-sensitive, and their solutions usually rely on the quality of vehicles.

Supplier power

Along with its factories, the firm possesses a great number of suppliers. The company does not depend on them to a significant extent. There are some big ones; however, most of them are moderate (Chivaka, 2018).

Substitute products

Usually, a consumer tends to choose rail transport since it is reasonably considered cheaper and faster. The essential aspects here are that customers do not purchase fuel and that this kind of transport is not impacted by traffic jams and operates in accordance with a set schedule. From a different perspective, a comfortable railway trip cannot be as convenient as the one undertaken by the car (McFarlane, 2019). Then, by using the car, one is able to get to his or her destination point directly, without time spending on the way from railway stations. It should also be noted that consumers tend to decrease fuel consumption by using economic engines, and Toyota provides such an opportunity.

It might be assumed that the only product that is able to substitute cars is electric cars. The latter may be defined as a vehicle that functions due to an electric motor that takes power from autonomous power sources. These vehicles do not harm the environment; however, consumers still mostly purchase standard ones; this is justified by the expensiveness.

Summarizing the aspects that press on Toyota, it seems apparent that the firm does not face a vast number of obstacles and challenges, with an exception for competitive rivalry. Through this lens, it is vital to continuously monitor business conditions so that rivals could not inevitably take leading positions.

Toyota’s Strategy Evaluation

It might be suggested that a SWOT analysis is a proper tool for discussing Toyota’s strategy sustainability. This tool is among the critical steps of providing a marketing plan and is aimed at determining strengths, weaknesses, opportunities, and threats of the firm that is being explored. The SWOT provides one with the possibility to define the peculiarities of significant or insignificant operations. It serves as a great foundation for an appropriate analysis of the obtained data that results in justified predictions regarding the enterprise’s future direction of development. This development is to contribute to maximizing Toyota’s strengths and competitive advantages.

Some of the characteristics highlighted in Appendix 2 require clarification (Appendix 2). In addition to the brand impact and strong financial performance needed to succeed in new markets, Toyota has the most advanced Toyota Production System (TPS) to date, enabling it not only to differentiate itself from rivals but also to synchronize its operations in the framework of the crucial segment of TPS – the just in time system (JIT) (McMillan, 2018). This legendary system is based on the full exclusion of production losses. Among these are losses from overproduction, losses from waiting/equipment downtime, losses from the transport of work in progress, losses of over-processing, losses from excess inventory, losses from possible defects in production, losses from the incomplete realization of the creative potential of employees (Anoop, Muhammed, and Gogi, 2020).

The JIT system makes it possible for Toyota to reduce the rates of overproduction substantially (Toyota Motor Corporation, 2019; Bhasin, 2018). However, the pivotal element of such a state of affairs is respectful relationships among the staff. It contributes to the fact that employees themselves aspire to advance the production processes and demonstrate significant performance (Li, 2018). Plenty of scholars claim that the success of Toyota worldwide took place because of its production policy that is really tough to copy.

Toyota aims to sustain its business expansion through numerous collaborations around the globe (Dudovski, 2016). The Toyota-PSA cooperation may be perceived as proof that the firm genuinely aspires to expand its production in Europe and is primed at undertaking transitions from the established international standardization policy to a local and focused approach.

A joint venture may be determined as a formal agreement between two or more firms in order to join capital and resources so that a new jointly governed entity could be created. The start of such an entity between Toyota and PSA took place in 2005 and caused many contradictions among experts. The most common one was that these two firms are competitors. Nevertheless, with the flow of time, it became clear that such a decision was economically efficient for Toyota (Sigal, 2018). It allowed this corporation to enter the European market without enormous expenses. This undertaking protected Toyota from many political hazards and the oligopoly of the European automotive industry, as well.

Nevertheless, it should be admitted that the joint venture caused a number of challenges for Toyota. For instance, the mini-car segment is substantially price-sensitive – due to this, production expenses were thoroughly monitored. Such an approach reveals that Toyota conducts its business carefully, and all the decisions tend to be justified from various perspectives. Given the SWOT analysis, it seems reasonable to state that the company’s strategy has more positive aspects than negative ones. Hence, Toyota’s business policy might be considered significant and appropriate for adaptation by other firms. Nevertheless, the weaknesses and threats also imply some important actions to take so that Toyota could remain sustainable in the long run. Here, the investigation will turn to recommendations on how Toyota can improve its strategy.

Recommendations for Future Development

The above research allows providing several recommendations on the firm’s future strategy that may be developed to an exact extent. The conditions in which Toyota exists give a number of possible directions. From the perspective of harsh competitive circumstances that are present in the industry of almost all the developed economies, the company may get additional profits by constructing new production premises, as well as supporting current distribution channels in developing countries. What is more, the international crisis is considerably acute today, and countries such as Greece or Spain demonstrate decreased demand for the corporation’s offers.

If Toyota strengths the mentioned distribution channels, it will considerably get away from tough competition that is not that harsh in developing regions. The firm will also be provided with the possibility to become a traditional brand. What is meant here is that Toyota’s cars will be bought over many generations of one family.

Nevertheless, such distribution channels will not be sufficient to remain really profitable and successful in the long run. In order to lure clients, the firm is to show a significant extent of social responsibility. Many scholarly investigations reveal that young people tend to prefer the set of international brands that are ready to invest in various relevant and modern undertakings – starting from charity and ending with startups. For instance, it might be suggested that Toyota will obtain many benefits from sponsoring universities’ academic projects in order to advance its own technologies. Moreover, the corporation can maintain scholarship funding so that promising students could be given more educational possibilities. Such a policy will both give the company a significant workforce in the long perspective and improve Toyota’s reputation around the globe.

The next recommendation for the firm might be formulated as follows. It may adhere to a technology differentiation policy, or, more precisely, to the provision of engineering consulting. In the current conditions of the worldwide crisis, the company’s managers were forces to dismiss a considerable number of employees. Unfortunately, this trend harmed the corporation’s brand to an exact extent. The mass dismissing does not stay in line with the particular JIT production approach, according to which the respecting of people’s interests is a vital principle (Pratap, 2020; Mainwaring, 2018; Lawaspect, no date). Nevertheless, such a tough situation may be perceived as an opportunity (Bhasin, 2020). The firm may utilize its workforce in order to start consulting affairs that will teach many manufacturing and engineering enterprises how to get benefits and profits from a specific JIT system.

Another area on which Toyota may concentrate its attention refers to advertising. It seems important to launch a significant and appropriate advertisement campaign. A number of investigations show that customers’ dedication to the firm is poorer if to compare with its primary rivals’ advertising approaches’ impact. The company’s advertising policy puts an emphasis on computerized effects. Meanwhile, the competitors tend to turn to the feelings and moods of consumers, as well as to invite celebrities to take part in products’ promotion.

Finally, taking into account customers’ sensitivity to pay for parking, it might be rational for the corporation to take action in this regard. For example, the firm may aspire to sales promotion policy by making contracts with parking owners in targeted cities. The essence of these contracts may be formulated as follows. Toyota can offer a client a vehicle with a discount on parking. Consumers will consider this offer as quite beneficial and assess the value and price of the mentioned vehicle from this perspective.


Given the investigation above, it may be claimed that Toyota does its best to implement all the essential aspects so that it could remain profitable and successful in the long term. Nevertheless, it should be noted that the firm is to be cautious about the harsh competitive conditions in which it operates. Toyota should not stop conducting its strategy of adapting to occurring industry trends. Then, the crisis in plenty of crucial markets will make the company invest in developing economies. Moreover, dismisses because of the mentioned conditions may be considered as an advantage, utilizing an exact number of Toyota’s staff in the framework of consulting engineering. It should also be noted that the corporation’s performance depended mostly on its capability to be long-term orientated. Despite the fact that the firm faces extreme competition, it is capable of capitalizing on its potential through a smart marketing strategy..

Reference List

Anoop, G., Muhammed and Gogi, V. (2020) ‘A brief overview on toyota production system (TPS)’, International Journal for Research in Applied Science & Engineering Technology (IJRASET), 8(5), pp. 2205–2209.

Bhasin, H. (2018) Marketing strategy of Toyota – Toyota marketing strategy. Web.

Bhasin, K. (2020) Opinion | Toyota needs a revisit of its business model. Web.

Business Strategy Hub (2019) Toyota: Vision | Mission | Values | Philosophy | 2019. Web.

Chivaka, R. (2018) Global corporate strategy – Toyota case study. Web. (2020) Toyota Motor Corporation competitors. Web. (2020) Toyota Motor Corporation. Web.

Dudovski, J. (2016) Toyota marketing strategy. Web.

Lawaspect (no date) Toyota corporate strategy. Web.

Li, Z. (2018) ‘Business network positioning analysis of Toyota’, American Journal of Industrial and Business Management, 8(7). Web.

Mainwaring, S. (2018) ‘Purpose at work: How Toyota is driving growth, innovation and impact’, Forbes, Web.

McFarlane, G. (2019) How Toyota makes money. Web.

McMillan, C. (2018) Organizational identity, corporate strategy, and habits of attention: A case study of Toyota. Web.

Pratap, A. (2018) Competitors of Toyota. Web.

Pratap, A. (2020) Toyota generic and intensive growth strategies. Web.

Sigal, P. (2018) Toyota will buy out PSA stake in Czech minicar plant. Web.

Simao, L. and Lisboa, A. (2017) ‘Green marketing and green brand – The Toyota case’, Procedia Manufacturing, 12(1), pp. 183–194.

Singh, P. (2018) Toyota business model – Managing business operations. Web.

Thompson, A. (2017) Toyota’s generic strategy & intensive growth strategies. Web.

Toyota Motor Corporation (2019) Annual report 2019. Web.

Appendix 1. Porter’s Five Forces Analysis

Porter’s Five Forces Analysis

Appendix 2. SWOT Analysis

SWOT Analysis

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EduRaven. (2022, June 15). Toyota Motor Corporation's Business Strategy. Retrieved from


EduRaven. (2022, June 15). Toyota Motor Corporation's Business Strategy.

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"Toyota Motor Corporation's Business Strategy." EduRaven, 15 June 2022,


EduRaven. (2022) 'Toyota Motor Corporation's Business Strategy'. 15 June.


EduRaven. 2022. "Toyota Motor Corporation's Business Strategy." June 15, 2022.

1. EduRaven. "Toyota Motor Corporation's Business Strategy." June 15, 2022.


EduRaven. "Toyota Motor Corporation's Business Strategy." June 15, 2022.


EduRaven. 2022. "Toyota Motor Corporation's Business Strategy." June 15, 2022.

1. EduRaven. "Toyota Motor Corporation's Business Strategy." June 15, 2022.


EduRaven. "Toyota Motor Corporation's Business Strategy." June 15, 2022.