Toyota Tows and 5forces Analysis

April 5, 2018 Management

TOWS MATRIX TOWS |Strengths – S |Weaknesses – W | | | | | | |List Strengths |List Weaknesses | |Opportunities – O |SO Strategies |WO Strategies | | | | | |List Opportunities |Use strengths to take advantage of|Overcoming weaknesses by taking | | |opportunities |advantage of opportunities | |Threats – T |ST Strategies |WT Strategies | |List Threats | | | | |Use strengths to avoid threats |Minimize weaknesses and avoid | | | |threats | SO Strategies – To be the Technological Leader By combining the strength of us, that is variety of car model, and the opportunity of innovation on the automobile. Therefore, we can go to be the technology leader in automobile industry. WO Strategies – Increase the sales volume

To solve the weakness of sales declined, we will combine it with the new more flexible regulation in respective countries. We will use this point in order to expand and motivate our sales volume for decrease the problem of sales declined. ST Strategies – High performance and gain even economic slowdown About the threat that concern about the economic slowdown, we will use our strength that is the variety of car models combined with large market share, which means to we can catch many customers and high level of brand awareness. Therefore, we will launch new model and use the point of high brand awareness to gain customers’ attention. So, even economic slowdown, we do not hurt with it. WT Strategies – To be the cost leadership in the industry

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From the sales declined that is our weakness and the price movement in raw material, we will have to make the contract with the supplier that is we could be buy the raw material in cheaper price than competitor could do. After that, we will earn more profit from cost that reduces even that sales volume still low. The gap between cost and selling price will be larger. We can gain from this point. FIVE FORCES MODEL [pic] 1. Current Rivalry among Existing Firms In this industry, there are many competitors. Therefore, we can earn low return because it is high competition. The automobile industry considered as the oligopoly, which helps to reduce the effect of the price-based competition. The producers understand that this price-based competition is not necessary to increase the size of marketplace to be larger.

In the present, the automobile producers prefer the financing support to customers and provide the long-term warranties to help customers, but they also put pressure on the profit margins of their sales. 2. Potential Entrants This industry is hard to enter by one person; we need the big to support it because it needs a large volume of capital and technology requirement. Moreover, management skills are also important along with long-term experiences. 3. Substitute Products We not consider only people buying a different car. We have to look at the substitute that people can take the bus, train, or airplane to their destination. Nowadays, there are many high cost of having vehicle likes high price of gasoline. When we determine the availability of substitutes, we have to consider as times, money, personal preference.

Therefore, there is the big threat of substitute. 4. Bargaining Power of Suppliers Many suppliers rely on one or two automakers to buy a majority of their products. If an automaker decided to switch suppliers, it could be disturbing to the previous supplier’s business. As a result, suppliers are extremely inclined to the demands and requirements of the automobile manufacturer and hold very little power. 5. Bargaining Power of Buyers The customers are very price sensitive. The majority have low buying power that make them cannot buy a lot of car. Before they buy, they have to look for all alternatives that suit for them. It is very challenge to automobile producers.

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