The Global Expansion Of Toyota Marketing Essay

The Global Expansion Of Toyota Marketing EssayUsing bingle specific partnership with which you argon familiar, examine the actual and potential impacts of globalization on that company. Explain the reasoning behind the points you make. Evaluate possible strategies going forward which the company force wasting disease to respond to impacts of globalization you have identified.Globalization can be described as a historical transformation in political, social, economy and heathenish diversity (J.H. Mittelman, 2001). The United Nations on the different hand to describe globalization as a concept that refers both to an increasing f starting time of goods and resources across issue borders and to the emergence of completely set of organizational structures to manage the expanding ne twork of international economic activities and transactions (UNCTAD, 1997a, p. 70).In simple terms it is a process of fundamental interaction and integration among peoples, companies and different countr ies. Which includes the corporate strategies, consumption patterns, regulatory capabilities and governance, technology, the globalization of fiscal securities industrys, and socio-cultural processes. The globalization can be detected from the increase of manufacturing Foreign Direct investment (FDI), and financial capital flows. In todays business surround, most of companys activities are natur wholey become globally. Gradually, organizations have recognized that globalization creates infinite opportunities of worldwide grocery. However at the mean time, its also brings interdict parts such as highly competitive environment and threats.On this paper, the Toyota Motor corporation beingness chosen as reference company, where based on mainland China mart to identify what is exist and potential effect of globalization on business, and provide possible solutions for Toyota sustainable development. While, the pest analysis tool will apply for Toyotas business situation analysing t o explain how Toyota influence by political, social, economic, and technological.The multinational go-ahead (MNE).A multinational corporation (MNC), sometimes called a transnational corporation(TNC). Is a company that has headquarters in home country precisely manages production in other counties.In the past two decade, the multi-national corperation (MNCs) plays a role of monopoly, they were able to get business advantages from drove country by using the colonial power. In other word, they can get concessions from host countries by using home presidential terms influence (Ohmae, 1995). Whereas, since the speedy growth in world trade and investment, this colonial power no longer existed. Instead, the world marketplace becomes to more competitive. Most fundamentally, the rising of global practice and thinking among companies and countries has made business avocations and orientations more necessary than ever (Abbas, J. 2000).Background on ToyotaSince the rapid development of global integration the railway car industry becomes one of the worlds most important economic sectors by revenue. Toyota is one of representative multinational enterprise in the world. Its established in 1937 by Sakichi Toyoda, till present day Toyota was conducts both domestic and global marketing with 52 oversea manufacturing companies in 27 countries. Toyota market and sold the vehicles approximate 7 million in more than 170 countries every year, worldwide employees is 320.808 (Annual report, 2009). As a market leader Toyota holding 15 per cent market share among all the other automobile brands (Business week, 2009).The key success element of Toyota is commitment to designing, engineering and build cars to every target market area. referable to this reason Toyota faced great impact from globalization the impact can be both negative and positive and differs by context such as new markets, cheaper location for investment, multi-choice of suppliers for au naturel(p) material an d services, and cheaper labor cost. However it can also carry the negative parts. First, the world automobile market is transfer in economic conditions affecting, and highly competitive environments in which Toyota ope judge. Second the market highly volatile. Last the global auto crisis was seriously hit down Toyotas market profit.The Global Expansion of ToyotaIn 2008, Toyota to officially become world largest automaker, the rapid expansion is the main reason Toyota able to overtake GM as worlds chair car firm. Toyota operated business across the entire world, which including Sales vehicle in Africa and Russia and sales leader in Australia. Toyota were Launched Lexus and SCION in United States and norther American market. visit Toyota sales by region. (Source Toyota one-year report, 2009)In juvenile years, Toyota has focus on global market expansion, especially, China market. Because the tendency of Chinese consumption pattern is change.Toyota FDI in China.China overtake United States become to new fdi destination by 2004. This is due to the China adoption reform and opening up policy in the late 1970. Toyota believes that Chinas market is potentially as large as the U.S. Market. Toyota aims consistently increase investment in China to grow production capacity and augment to product nervous strainup along with begin to unwrap Camry at Guangzhou Toyota Motor Co., Ltd on May 2006.According to XinHua News report that Toyota intend to invest nearly $700 million in its first fully-fledged research and Development base (RD) in China. Because, Toyota wants to increase the production in China.Since 2005, Toyota through the form of join-venture with Chinese company (FAW assort Corporation) to build first plant in SiChuan province until now, Toyota was invested to build seven plants in China, and a nonher six plants of Toyota also joint-ventures with FAW.Toyota establish oversea plant in response to incentives such as tariffs, reduction of labour cost, andToy ota production systemThe PEST analysis on Toyota governmentalThe auto industry is subject to discordant governmental rules and policies. The political environment of China does favor enterprises with foreign investment. According to Government policy 2009, the Chinese government levies low tax on enterprise with foreign investment, and preferential tax policies are offered to the sectors and regions where investment is encourage by the state. And the low tax policy reflected in three aspects income tax, circulation tax, and import-stage value-added tax. At the same time, the China government announced several(prenominal) preferential policies to encourage auto consumption, which include the people who living countryside can enjoy 10% subsidy of the original vehicle price for their buy it. Second, the tax of purchase small-displacement vehicles was cut from 10% to 5% (Chinavestor, 2010). These preferential policies stimulated auto consumption significantly, and attract more foreign automobile company invest in China.On the other hand, government play the role of savior. For example, the government bailout policy in 2009, Toyota was require for emergency loan from the japan Bank, with the amount of more than 3 billion US dollars. The purpose of the emergency loan is to dealing with cash flow problem or some other cases.EconomicThe Peoples Republic of China is the piece oversizedgest economy in the world (first is United States), and it is worlds fastest-growing economy as well with annual economic growth averaging nearly 9% over the last three decade. The role of China in the world are the factory of the world, because China provides a cheap labour cost, and low cost base for export-oriented production.The major advantage of Toyota is the strong cash position. However, if equalize with GM, Toyota still existed weak credit ratings, rising health-care and pension costs, and losses in its self-propelling division. Toyota expects through use its strong cash posi tion to expanding all over the world increase its commitment to RD. friendlyThe population of China is beyond one billion, it is a largest country in the world by population. The households size 3.1, total households in China were 351,233,698, as we know the Toyota segmenting group is Households, usually, this group of people in China have middle or upper of income level with good education background age around 25 to 65.TechnologicalThe Toyota product line consist of Electric technology, Plug-in hybrids, All-electric vehicles, Cars, Pickup trucks, Luxury-type vehicles. Toyota is one of largest automobile companies to promote hybrid vehicles in the market. Beside the production lineup, there are have one more important factor able to shapes technology adoption at Toyota plants, which are governments foreign investments control power. The business in China, Chinese government controls type of technological standards on firms operating in the country.The impact of globalization on Toy ota.Operating in global market is a challenge for Toyota. Even though the globalization created unlimited opportunities for Toyota, but the adverse affect should not be ignored.The impact of re-sentencing rates on Toyota.The silver exchange rates are very mesomorphic can affect trade investment, finance, tourism, oversea economic transactions, import and export prices of goods and services.Toyota attaches great importance to the fluctuation in foreign currency exchange rates and this is particularly evident in fluctuation between the value of the lacquerese yen, the U.S. dollar, Chinese Yuan, and the euro. The negative impact resulting from fluctuation in foreign currency exchange rates may affect Toyotas global performance.The following table illustrates Japanese yen per $1.00 during the periods displayFiscal Year Ended or Ending meet 31.At End of PeriodAverage(of month-end rates)( per $ 1.00)HighLow2005107.22107.28114.30102.262006117.48113.67120.93104.412007117.56116.55121.81 110.07200899.85113.61124.0996.88200999.15100.85110.4887.802010(through June 19,2009)96.1596.82100.7194.45(Source Toyota annual report 2009)This table shows that, the yen has been strong when translation with US dollars.According to Toyotas annual financial statement, which clearly present a financial situation of Japanese yen are affected by translation risk and foreign currency transaction risk. The fluctuation of foreign currency change rates may affect the price of Toyotas products in worldwide market and use foreign currencies to purchases materials. Since 2009, Japan central bank to show sign of Japanese yen will further appreciates against U.S. dollars. It can cause adverse effect to Toyotas reported operating results and financial condition. Because Japanese yen is rapidly, consistently appreciates against other foreign currencies that will force Toyota to markup the price of all the export products. But the rapid increase value of Japanese yen can have favorable effect on ma terial purchased, but it only inside of Japan. For Toyota oversea operations still suffered with high raw materials, and gasoline, due to the profit margins was fallen, when translated from dollars back to yen.The impact of consumer preferences on Toyota(Source Annual Repot, 2006)This table illustrate that, Toyota has build different product line across the China to perform local anesthetic market demand.The consumer preferences are one of the most important factors shaping international production for Toyota. The trend of distinct national preferences is spread every street corner of the world. The homogeneity of preferences lead to Toyotas product shrivel ups the benefits of manufactory in China, because of complicated relationship between car design and differences in consumer preferences as a typical example, the intersection promote new car Mondeo to the worldwide but the sales was not good as they expected, because Ford neglected focus localizing production.In particular, after the second oil crisis, Toyota was enhance the production aims to provide an effective and creative production design to gain more market share in China (i.e., Toyotas Corolla produce by global platform and modified for different region to match consumers needs). But Toyota has ignored the preferences are not yet homogeneous across all of China, even in the target region, there are have several differences local tastes of demand. In contrast, the Hondas Accord is also use the global platform but modified the cars exterior body to different specific market area, thus, Honda has completely different automobile production line for each target market, i.e., the difference platforms between Japan, Thailand and China. Due to this reason Toyota fall into extremely passive position compare to other competitors.The Impact of United States Financial Crisis on Toyota .The United States financial crisis of 2007 has considered being the worst economic crisis since the 1930s great depression . The main factor trigger of the financial crisis was the United States real estate bubble was busted, caused property price buttoned by the value of securities, then the price of house was decline straightly, not only America this financial tsunami has wave to the entire world. Which contributed consumer lost approximate hundreds of billions of U.S. Dollar, several key businesses have failed, and the stock markets have fallen significantly. Obviously, the financial crisis has been hit down United States economy heavily even the bailout of banks by national government has measured. But the financial markets havent showed the sign of recovery.As biggest auto-maker in north America Toyota was faced an unprecedented situation by the financial recession. The adverse results are largely, the vehicle sale hardest hit in northern America and Europe market with make in sales of 673 thousand vehicles() especially, the sales of Toyotas luxury division Lexus was drop significantly.Moreover, increase price of crude oil and iron and steel raw material impact Toyotas operation, this fiscal year was drop 68 percent of benefits compare with previous fiscal year and according to Toyota annual report, the net profit loss of 4.2 billion U.S dollars (Toyota Annual penning, 2009). Last the financial market recession resulted negative impacts to Toyotas accumulation of capital. Due to the financial downturn, the organizations or financial institutions may unable to provide capital to the market.The impact from competitive environment to Toyota.Figureshare of U.S. railway car market. (Source)According to this pie chart, GM, which is 18.2%, is the biggest automaker in U.S. among all the motor corporations, then is Toyota with 15.8%, followed by Ford, making up 14.3% and the next coming is Chrysler at 12.1%. From the pie chart is obviously shows that the big three automaker are still the largest domestic producers which making up 44.6% market share.The United States market always h as been a prime concern for Toyota.. Due to its trade liberalization, highly developed, market demand(U.S. Auto market is about ten times bigger than the Canadian market). Especially, the demanding of Toyota luxury division Lexus was increased in recent years.However the U.S. automotive market is highly competitive at least fifteen auto company was market their product in U.S. market. Toyota as a foreign brand faces intense competition from other competitors. The highly competitive business environment lead to cause lower vehicle units sales and descent backlog. This caused Toyota downward price pressure. The factors influence competition including quality of product, post-purchase services, and reliability. However, Toyota faced unexpectedly quality problem with sudden unintended acceleration, which caused Toyota economic damages nearly $7 billion, the 94,000 vehicles has been recalled.Sustainability development of ToyotaEstablishment of Global Special Committee for Global Quality controlImplemented approaches to address a deterioration in information meeting place and information sharing practices between headquarters and the regional offices. These problem are seen to be the harmful side effects of the rapid globalization.The function of this committee are restructure the quality management systemStrategies of interest rate swaps and localized in respond to fluctuation of Money exchange rate.In order to reduce the adverse affect of fluctuation foreign currency exchange rates, Toyota use some certain derivative financial tool such as interest rate swaps and increase the target market production of localized. Likewise, increase the investment in target market to increase production capacity and build local raw material supply chain, that can as possible as minizing losses on currency translation. Nonetheless, the adverse affect still existed, Toyota have to nurse a high level of vigilance the dynamics of international exchange market.Product diversificatio n in respond to highly competitive auto market.In the highly competitive global business environment,ConclusionIn todays global business environment multinational enterprise become more important, because countries adoption of opening oriented to promote the economic growth by attract Foreign Direct Investment (FDI). The multinational enterprise plays the role of investor between countries. Whereas, the business environment will become more competitive follow with the increased FDI. As the world forth largest multinational enterprise, Toyota faced several affect from globalization, which can be classified as political, government regulations, economic environment, social lifestyle, and technological factors. Due to those of factor Toyota will continue to seek the way of sustainable development that use some strategy or approach to solve problems, such as, open a new market with innovative product. But there are not ensure Toyota will have a bright future.Car sales around the world i n 2009 mostly down . The Truth About Cars. Retrieved 2010-09-09. cable car Industry Introduction. Plunkett Research. 2008. Retrieved 2010-09-09.World Factbook Japan-Economy. CIA. 2010.09.05 Retrieved 2010.09.05Byars, L., 1991. Strategic Management, Formulation and implementation-Concepts and Cases. New York HarperCollinsJohnson, G., Scholes, K., 1993. Exploring Corporate Strategy-Text and Cases. Hemel Hempstead Prentice-HallToyota, 2006. Geared toward Continuing Growth, Annual report 2005-2006. Japan TyoutaToyota., 2009. The Right Way Forward, Annual Report 2009. Japan ToyotaToyota, 2010. Sustainability Report 2009-2010. Japan ToyotaEcPulse., 2010. Toyota to Invest $700 Million for RD in China. 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