Toyota SWOT Analysis [Update 2022] ❤️

Toyota Motor Corporation addresses the external and internal strategic aspects within the company that is identified by this SWOT assessment. 

The SWOT framework highlights the most important risks, opportunities, and weaknesses in the organization that Toyota should address with its strengths. 

As a leader globally in the field of automotive, Toyota effectively addresses such issues. This SWOT analysis gives insight into the potential influences on the business of the firm. 

toyota swot analysis

Toyota’s impressive performance is an indication of its capacity to deal with the issues mentioned within this SWOT report.

Toyota’s SWOT analysis reveals that the company is still strong in the global automotive market, however, problems related to competition, organizational structure, and corporate culture need to be tackled.

Company Background

Key Facts
Name Toyota Motor Corporation
Founded August 28, 1937
Logo Toyota SWOT analysis logo
Industries served Automotive, Housing, Financial Services, Other
Geographic areas served Worldwide (over 170 countries)
Headquarters Toyota, Aichi, Japan
Current CEO Akio Toyoda
Revenue (JP¥)
(US$)
29.380 trillion (2018) 6.5% increase over 27.597 trillion (2017)
265.398 billion (2018) 4.2% increase over 254.798 billion (2017)
Profit (JP¥)
(US$)
2.494 trillion (2018) 36.2% increase over 1.831 trillion (2017)
22.529 billion (2018) 33.3% increase over 16.906 billion (2017)
Employees 369,124 (2018)
Main Competitors Bayerische Motoren Werke AG, Chrysler Group LLC, Daimler AG, Ford Motor Co., General Motors Company, Honda Motor Company, Nissan Motor, Tata Motors, Ltd., Volkswagen AG, and many other automotive companies.

Introduction to Toyota

To conduct the Toyota SWOT study it is essential to be aware of its current and future plans. It is Toyota Motor Corporation is a multinational automaker that was founded in Toyota, Aichi, Japan. 

It began its journey in 1937. By 2017 it had 364,445 employees across the globe. As of the year 2019, it is the 10th largest corporation globally in terms of revenue. 

Following Volkswagen, Toyota is the second-largest automaker worldwide. It is the biggest listed company in terms of market capitalization and revenue in Japan in 2014.

Development Timeline of Toyota

1953 Small lift trucks are manufactured via Toyota Automatic Loom
1957 The launch of the model towing tractor
1960 Toyota shovel loader model
1987 Equipment for industrial use in Europe was established in France
1988 Industrial equipment is located in Columbus, Indiana, U.S.A.
1993 Export of industrial vehicles in the U.S.A.
1996 Internal combustion engine launches and electronic counterbalanced lift trucks
1999 International prize for industry and trade from the 30th Machine Industry Design Award
2001 Electronic reach truck, Toyoda Automatic Loom Works

SWOT Analysis of Toyota

The Toyota SWOT analysis will reveal strategies that help the firm to enhance its position and increase revenues. 

It can identify the impact of competition and the weaknesses according to the organization’s culture and structure. 

The company is able to take action to improve its performance by analyzing opportunities. While doing so it is possible to look for diversification of its business to gain enduring stability in the market.

Strengths In The SWOT Analysis Of Toyota 

Within the SWOT analysis model, Toyota’s strength lies in internal elements that aid in helping Toyota keep its position in the automotive industry. These are the main reasons Toyota is so profitable currently:

❤️ What is the Toyota Way Toyota’s business practices are based on the guidelines of continuous improvement and respect for individuals? These principles improve productivity and encourage creativity. They also inspired the idea that lean is the new management. For a long time, these ideas have become the foundation of Toyota.

❤️ patents on fuel cells Automobile companies are working towards the goal of zero-emission vehicles using two primary technologies: the hydrogen fuel cell and electric vehicle. Toyota holds more than 5,680 patents globally in connection with hydrogen fuel cell technology. These patents place Toyota in a leading position in the market for zero-emission vehicles.

❤️ Solid-State Batteries Alongside batteries that can be used for fuel, Toyota is also actively studying and developing technology to power electric cars. Toyota will unveil its groundbreaking Solid-State Battery in the year 2021. Toyota claims that it’s brand new pack of batteries will boost the capacity of the EV range up to 500 miles with one charge. It also charges from zero to 100% within just 10 minutes. The best part is that Toyota invented the technology 4 years before the timetable.

❤️ Hybrids Although Toyota has developed expertise in the field of clean energy vehicles, it’s also consolidating the position it holds in hybrid cars. Toyota is the maker of many among the most durable green vehicles available. As long as the dependence on fossil fuels is removed, Toyota’s hybrids will be a desirable option for buyers who are concerned about the environment.

❤️ Strong Performance of Stocks The pandemic-driven recession hit automakers very hard. However, Toyota’s stock did better than those of other automakers. Although General Motors’ stock prices fell by 64 percent from peak to trough however Toyota’s stock showed only a 15% decline. This proves the firm’s resilience.

Of these strengths, the most important reason why Toyota has been so effective is its dedication to continual improvement. All other strengths are derived from this fundamental strength.

Weaknesses In The SWOT Analysis Of Toyota 

As a tool SWOT analysis analyzes weaknesses as internal causes which hinder or slow growth. Here are some of Toyota’s flaws:

❤️ Recalls Though Toyota sets the standard in quality control but its manufacturing and design aren’t perfect. For example, at the beginning of this year, Toyota recalls 700,000 cars due to a malfunctioning fuel pump. This kind of incident can undermine people’s faith in the brand and may cause damage to years of goodwill.

❤️ Strikes: Following strict quality control guidelines while also ensuring high efficiency and profitability can put management in conflict with the workers. Recently, workers at the Toyota manufacturing facility situated in India were on strike over issues with labor. This can affect the ability of the company to meet demand from the market.

❤️ rigid hierarchy: Toyota follows a rigid hierarchy in which the orders are flown in one direction – from top to the bottom. The rigid hierarchy gives better control but does restrict creativity and freedom.

❤️ Partial Global presence: Toyota has strong sales in the US, Europe, and Japan. However, it does not offer comparable sales figures across Africa, South America, and the Middle East. To allow Toyota to be truly a global corporation, it can’t remain in these areas in limbo.

❤️ Technologies Gap: When it comes to future tech, Toyota is playing catch behind Tesla. In a test of Tesla Model 3, Tesla Model 3 engineers discovered Tesla’s technology was six times further ahead in comparison to Toyota or Volkswagen.

What’s distinctive that is unique to Toyota is the ability it has to gain knowledge from weaknesses and improve its performance more than ever. In this regard, the shortcomings mentioned above could give Toyota an advantage when they are able to overtake these weaknesses.

Opportunities In The SWOT Analysis Of Toyota 

When conducting a SWOT study the external factors that support Toyota’s growth are considered as Toyota’s potential. These opportunities include:

  • Flying Car Project: Japanese startup SkyDrive successfully carried out the first test flight by a human with its flying vehicle. Toyota is among the companies that are behind SkyDrive. Even though SkyDrive must overcome a number of technological and regulatory challenges, Toyota believes its investment in the company will make a difference.
  • Smart Cars: Toyota is developing self-driving vehicles like those of the Guardian and Chauffeur. The systems aim to make driving safer and easy for those who aren’t proficient sufficient to be able to operate (Guardian) or who are unable to drive due to their old age (Chauffeur). Toyota isn’t certain what the market will think about the possibility of autonomous vehicles. However, with the advancement of technological advancements in all areas moving toward enabling ease and convenience Toyota’s strategy for autonomous vehicles is a sensible one.
  • Nanomaterials: Toyota AI ventures recently made an investment into Carbide which is an Atlanta-based developer of nanotech. Nanomaterials are used in a range of applications that range from making cars lighter, more durable, stronger, and quieter, to making them cooler and more secure. For instance, Toyota has invested in Carbide to address issues that high temperatures can cause in the vehicle’s electronics. Toyota will continue to make such investments.
  • Cloud as well as AI Technology The majority of industries are benefiting from cloud-based and AI technology to improve the way that it provides services to its clients. The use of cloud-based technology in the automotive industry is increasing at 19.88 percent and is expected to reach nearly 70 billion dollars in 2022. Cloud and AI are significant opportunities Toyota should be looking to capitalize on.
  • Big Data Automakers are using data generated by vehicles in exciting ways, such as predictive maintenance the use of insurance, and autonomous driving. As one of the biggest automakers worldwide, Toyota is sitting on an abundance of data.

Toyota’s main benefit is its funding to fund the development of research. In the coming next year Toyota intends to invest $13 billion in R&D. This budget will enable Toyota to put money into new technologies that will give the firm an advantage in the field of green technology.

Threats In The SWOT Analysis Of Toyota

A threat could refer to different things but in SWOT analysis, threats are an external event that impedes the progress of the organization. Some Toyota’s threats are like this:

  • EU-Brexit: With just a few days to go for the UK to reach an agreement on trade in the EU A no-deal Brexit could increase by 10 percent the price of imported vehicles. Additionally, higher tariffs could adversely affect Toyota’s manufacturing facilities located in the UK.
  • trailing Tesla: Toyota may be among the biggest automakers around the globe. But, it’s not the most valuable; Tesla is the most highly valued automaker. At the time of posting, the market value is 175% more than Toyota’s. While the president of Toyota has dismissed Tesla as not being a “real” car company, Tesla sure is giving Toyota an edge in post-fossil fuel technology.
  • COVID-19 Restrictions: Japan, the USA, and Europe comprise 66 percent of its sales for Toyota. The pandemic has ravaged these areas. The measures taken to stop from spreading of this virus have resulted in economic contraction and joblessness. In the absence of government intervention to apply COVID-19 to a mass size, COVID-19 would remain a threat to Toyota’s expansion.
  • Economic Crisis: The second quarter was the worst for the company. Toyota’s profit dropped by 74 percent. In the statement, Toyota released said that the company anticipates the decline to continue to affect profitability in the near future.
  • Competition Toyota’s competitors Tesla as well as Volkswagen are following Toyota’s stride to stride. Toyota cannot afford to fall. Reversing now could be devastating. For example, an investor in venture capital believes that Tesla’s valuation could rise up to $2 trillion within the coming three years. What could Toyota do to keep up with the growth?

Of these, the most important one is the threat that competition poses. Problems that arise from the pandemic will be resolved within the next few years. However, Toyota’s most formidable rivals such as Tesla as well as Volkswagen Tesla and Volkswagen are in the game for the long haul. In fact, the rivalry will grow.

Recommendations that are based on Toyota’s SWOT Analysis

Toyota’s SWOT analysis pinpoints the most important issues including the impacts of competition as well as the company’s weak points based on its structure and its cultural environment. 

To counter the risks from the competition, Toyota needs to maximize its competitive advantages through its innovative capabilities. 

The company is also able to modify its structure and culture to increase its flexibility in making decisions and problem-solving.

References

  • Hill, T., & Westbrook, R. (1997). SWOT analysis: the right time for a recall on products. Long Range Planning30(1), 46-52.
  • Jackson, S. E., Joshi, A., & Erhardt, N. L. (2003). The latest research in team members and organizational diversity Analysis of SWOT and its implications. Journal of Management29(6), 801-830.
  • Pickton, D. W., & Wright, S. (1998). What’s SWOT when it comes to strategic analysis? Strategic Change7(2), 101-109.
  • Toyota Motor Corporation (2015). Figures.
  • Toyota Motor Corporation Annual Report 2015.

FAQ Toyota SWOT Analysis

What is a SWOT analysis of Toyota?

The Toyota SWOT analysis highlights key issues such as the effect of competition and company weaknesses, based on the company’s organizational structure and culture. Toyota must maximize its competitive advantage through its innovative capabilities to address competition-based threats.

What are some strengths of Toyota?

Toyota’s global supply chain is strong and reliable. This is the company’s greatest strength. Toyota has a high production capability, producing almost 10 million cars per year. This is a serious challenge to its competitors.

What are examples of SWOT opportunities?

Training, internships, and career moves are all examples of SWOT analysis opportunities. Opportunities for businesses could include new technologies, market growth, and new investments.

What is the strategy of Toyota?

The long-term strategy of Toyota is ambitious. It focuses on reducing the environmental impact of its products as well as the way they are manufactured. platform manufacturing and electrification will be the key features of Toyota’s strategy.

What is Toyota’s competitive advantage?

Toyota’s core competency is also the ability to compete on price and cost. This organizational capability meets all four VRIO requirements and creates long-term competitive advantages for global operations in the automotive market.

What makes Toyota stand out?

Toyota’s success is not an accident. It is a result of quality design, unyielding innovations, and bold moves. Some of the most stunning sports cars ever made are theirs. They are also well-known for their reliability and class in economy sedans.

Why is Toyota so good?

Toyota cars are known for their exceptional durability and reliability. This is because of the company’s meticulous approach to design and production. Quality management systems make sure that any defects are identified and corrected before the vehicle leaves the factory.

Toyota SWOT Analysis Conclusion:

In general, Toyota Motor Corporation has been a key participant for a long time in the past, which makes it one of the top auto industries. 

Toyota Motor Corporation has been an international leader for a long time and did better during the pandemic than its rivals. 

It has a strong position in the markets of the UK in addition to Japan. However, its performance in emerging markets like China or India is not as strong. 

The plethora of recalls that have occurred in recent years has also hurt the image of the company and could harm its reputation over the next years. 

However, the company has the potential to profit from opportunities, for instance, making investments in self-driving vehicles, and working with other brands to protect their image and keep their market position active to keep up against Honda, Ford, Tesla, and many others.

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