TOYOTA

Toyota a Multinational Company

Origins of Toyota

Toyota’s history of operation (in selected market).

How the company was formed and how it operates today

Toyota a Multinational Company

Toyota’s growth in the marketplace responding to the following:

Maintaining current markets N. America/Europe/China/Middle East/Africa Latin America/Asia/Oceania/Japan

Specific markets the company is targeting today

Toyota a Multinational Company

Toyota’s growth in the marketplace responding to the following: The reporting structure needed for operating in

that marketplace, regulatory requirements, and so on Federal Regulators/Regulatory Agencies Safety Regulators such as NHTSA

The company’s major competitors Ford/General Motors/Honda/Volkswagen

Toyota a Multinational Company

Toyota’s growth in the marketplace responding to the following: The unique competitive advantage of the

company Improvement of quality/reduction of inventory

cost Improvement of efficiency Customer service

Trade pact associated with the marketplace Political Action Committee (PAC

International Market Entry Strategies

Companies such as Toyota are expanding into new markets, and are facing risks and challenges. Toyota Motor Corporation must not only be able to minimize these risks, but they must also ensure regulatory compliance, if they want to thrive in these markets. It is also imperative that research be conducted on political and economic challenges of market entry.

Toyota’s capitalization in the foreign market Current capitalization

Operating Income/Marketing Activities & Cost Reduction Increased sales of vehicles in North America & Asia Reforming Manufacturing Technologies & Vehicle Development Processes

Opportunities to tap into new capital in the markets where it operates Technologically Advanced, high-value-added products Optimize Manufacturing Investments Responding to Growth in Markets & Sales

International Market Entry Strategies

Major challenges Toyota is facing or can anticipate Labor market

TMC’s 2011 Executive Structural Change Competition

Future Efforts in Emerging Markets Calling for New Strategies

Legal Issues Trade Pacts/Tariffs/Risks

International Market Exit Strategies

Multinational companies often research both entry and exit strategies, but most do not put much emphasis on the impact that their departure may have on surrounding communities, or worse, how to manage that impact (Collaborative for Development Action Inc, 2003). Corporations should look at both community needs and government capacity in order to avoid the following pitfalls; that of not sufficiently preparing communities for what to expect when the company leaves; that of depending on governments to take over to ensure sustainability of social programs; that of decreasing community relations budgets as the time for closure approaches, but the need in those services does not decline; and that of companies leaving behind infrastructure that is unsuited to community needs (Collaborative for Development Action Inc, 2003).

Some political and economic issues Toyota may face when exiting a specific market? Tax Benefits/ Facility & Real Estate Incentives/ Financial Incentives –(Loss Of) Decrease in Economic Status, Decreased Social Status & Decrease in Company

Provided Services

How does the cost to move a company out of a country differ from the cost of continuing operations in that market? Example? Taxation Toyota Experiencing Taxation Issues Domestically

International Market Exit Strategies

At least 5 different local regulators a company would need to satisfy prior to exiting a country. Legal Issues Raised at Home & Host Country laws/

Regional Regulations or Directives/ Bilateral & Multilateral Treaties/ International Standards/ Certifications

Example?

Some countries regulate exiting firms more than other countries. What can companies do to anticipate these regulations? Exit Strategies/ Engaging Communities/ Soliciting a Range

of Perspectives

Legal & Economic Risks of Expansion

Taxation issues Inbound/Outbound

Distinguish U.S. GAAP versus IFRS Generally Accepted Accounting Principles International Financial Reporting Standards (IFRS) Differences

Political Laws & Governmental Regulations Related to Vehicle Safety

Foreign exchange Local Currencies & Foreign Currency Exposures

Legal & Economic Risks of Expansion

Economic. The automotive industry continues to face a number of issues that threatens its growth potential, such as the earthquake and tsunami that hindered Japan’s supply chain, the ongoing debt crisis in the European Union that created massive production cuts and accelerated the need to right size operations, and of course the effects of Hurricane Sandy in the Us, which destroyed 250,000 vehicles (PWC, 2013). From a regulatory standpoint, meeting global emission standards has become a daunting

task for the automotive industry (PWC, 2013). The World Resources Institute claims that motor vehicles are responsible for 15% of global CO2 emissions, which gives reason as to why companies are investing into research and development of new innovations and development of next-gen technologies (PWC, 2013). The following interests will meet various global regulations; improvements in aerodynamics, the introduction of lightweight materials, low rolling resistance tires, various efficiency gains in internal combustion engines, advanced transmissions, and a broader rollout of various hybrid, plug-in, and pure electric applications (PWC, 2013). “By 2020 the development and production of EVs [electric vehicles] and supporting technologies will shift to more of a global collaboration model (PWC, 2013, p.3).”

Pricing Product Regulations

Legal & Economic Risks of Expansion

Corporate governance Toyota Motor Corporation (TMC) believes in positioning itself in

order to stabilize long-term growth of corporate value and TMC believes that by achieving this long-term and stable growth requires building positive relationships with the following: stakeholders, shareholders, customers, business partners, local communities and employees, and by supplying products that will satisfy their customers (Toyoda, 2013).

Organizational Structure Policies

TNGA & International Advisory Board Issues

Labor-Management Council/ Joint Labor-Management Round Table Conference/ Toyota Environment Committee / CSR Committee

Risks of Unstable Economic Conditions

Issues operating locally. Toyota’s headquarters and domestic production plants are located in the Nagoya region, specifically in the city of Toyota (Japan-guide.com, 2013). Since the devastating earthquake and tsunami that disrupted the car industry output in Japan, Toyota has had to close down about 18 factories (Euronews, 2011). The cost of closing down these factories really negatively impacted Toyota, setting them back, but they were lucky enough to resume production of three hybrid cars, the Prius and two Lexus models (Euronews, 2011). In 2011 Toyota opened two factories, but they only functioned at half their normal capacity because the carmaker’s suppliers were still not operating (Euronews, 2011). This situation resulted in Toyota having to reduce the number of vehicles being made at North American plants because of the disruptions of the production of parts in Japan, due to the earthquake and tsunami, but the worst, was knowing that the total estimated lost production by all manufacturers worldwide was 6000,000 vehicles, an estimate made by Industry analysts at IHS Automotive (Euronews, 2011). Customers Legal & Economic Capital

Risks of Unstable Economic Conditions

Issues operating in multinational marketplaces Governmental Regulations From Home Country

Japan has three pillars of interest when it comes to major corporations such as Toyota; lifetime employment, seniority-based pay and promotion, and company trade unions in order to improve the firm’s systems and performance (Aoki, Delbridge, & Endo, 2011).

Sourcing products Import export restrictions Capital

Current Financial Status and Future

Growth The automotive market environment is highly competitive and volatile

with many factors affecting it, such as social, political and general economic conditions and of course the introduction of new vehicles and technologies as well as costs incurred by customers to purchase and operate vehicles (Annual Report, 2008). Based on vehicle unit sales Toyota’s primary markets for fiscal 2012 were: Japan (28%), North America (25%), Europe (11%), and Asia (18%), but during fiscal 2011unit sales decreased due to market conditions in Japan deteriorating (Annual Report, 2012). However in 2012 unit sales in Japan increased, mostly because of the introduction of new products and sales efforts of domestic dealers (Annual Report, 2012).

Comparable Financial Statements (balance sheet and income statements) Versus Competitors Last three years Noticeable trends

Current Financial Status and Future

Growth Investments in The Specific Country or

Regional Area Past

Recall Issues Present

Targeting New Emerging Markets Future

Technological Advances

Current Financial Status and Future

Growth Recommendations and insights on the

company Toyota must be able to understand several

cultures, be able to design a new goal-oriented corporate culture strategy depending on global environmental changes in order to create competitive advantage (Moran, Palmer, & Borstorff, 2007).

Reference

Akio Toyoda. (2011). Toyota Global Vision: Rewarded with a smile by exceeding your expectations [PDF Document]. Retrieved from http://www.toyota-global.com/company/message_from_president/president110309.pdf

Forbes.com Staff. (2005). Twenty Most Influential Businessmen: Sakichi Toyoda (1867-1930). Retrieved from http://www.forbes.com/2005/07/13/toyoda-toyota-automation-cx_0713bizmantoyoda.html

NHTSA. (2013). Who we are and what we do. Retrieved from http://www.nhtsa.gov/About+NHTSA/Who+We+Are+and+What+We+Do

Pressroom.toyota.com. (n.d.). LA Times questions and Toyota answers [PDF]. Retrieved from http://pressroom.toyota.com/images/document/LA_Times_questions_and_Toyota_answers.pdf

Richard Schaffer, Filiberto Agusti, Lucien J. Dhooge, & Beverly Earle. (2009). International Business Law and Its Environment, 8th ed. South-Western College. Mason, OH.

Rawal, S. (n.d.) Toyota and its competitors (Slideshow). Retrieved from http://www.slideshare.net/sunilrawal/toyota-5128057