Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Organizational Development
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo
Toyota is one the most successful car companies in the world. The company set the ambitious growth goal of a 15% share of the global markets by 2010 (up from 11% in 2005). For this, the European market is becoming of strategic importance. The case outlines Toyota's global strategy before focusing on the European market in particular. Sales in Europe increased by over 50% between 2000 and 2005. In the process, Toyota's European manufacturing capacities more than tripled to over 600,000 units over the same period. Although Toyota was on the growth path, the launch of the Aygo posed many challenges. The segment was very price-sensitive and production cost had to be tightly controlled. Toyota decided to enter a joint venture with PSA, the maker of Peugeot/ CitroA?n. The case shows how cost reduction was the overriding principle and explains how both companies worked together. But selling a car with 93% parts commonality also posed many challenges on the marketing side: Toyota wanted to target younger customers in order to lower the average age of customers. Toyota had no experience in this segment and hence had to go new ways. The case takes readers through the various steps Toyota took in order to promote the Aygo. Learning objectives: Toyota is a latecomer to the European minicar segment. The case analyzes how Toyota changed the business system in order to deal with the various intricacies of this segment. On the manufacturing side, Toyota entered a joint venture with Peugeot/CitroA?n and built a new plant in the Czech Republic. The cars rolling off this assembly line had a parts commonality of 93%. But the innovations did not stop at the factory gate. Toyota invested in a massive Internet presence, meeting potential customers at locations of their preference and sponsorship of concerts etc. The case is a good platform for discussing Toyota's changes to the existing business system, both upstream and downstream.
Swot Analysis of "Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo" written by Kazuo Ichijo, George Radler includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Toyota Toyota's facing as an external strategic factors. Some of the topics covered in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo case study are - Strategic Management Strategies, Joint ventures and Organizational Development.
Some of the macro environment factors that can be used to understand the Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo casestudy better are - – supply chains are disrupted by pandemic , wage bills are increasing, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, technology disruption,
there is increasing trade war between United States & China, geopolitical disruptions, etc
Introduction to SWOT Analysis of Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Toyota Toyota's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Toyota Toyota's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo can be done for the following purposes –
1. Strategic planning using facts provided in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo case study
2. Improving business portfolio management of Toyota Toyota's
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Toyota Toyota's
Strengths Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Toyota Toyota's in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo Harvard Business Review case study are -
Effective Research and Development (R&D)
– Toyota Toyota's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Successful track record of launching new products
– Toyota Toyota's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Toyota Toyota's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to lead change in Organizational Development field
– Toyota Toyota's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Toyota Toyota's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High brand equity
– Toyota Toyota's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Toyota Toyota's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Toyota Toyota's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Organizational Resilience of Toyota Toyota's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Toyota Toyota's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Toyota Toyota's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Diverse revenue streams
– Toyota Toyota's is present in almost all the verticals within the industry. This has provided firm in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High switching costs
– The high switching costs that Toyota Toyota's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- Toyota Toyota's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Toyota Toyota's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Toyota Toyota's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo are -
High cash cycle compare to competitors
Toyota Toyota's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Toyota Toyota's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Toyota Toyota's supply chain. Even after few cautionary changes mentioned in the HBR case study - Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Toyota Toyota's vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Toyota Toyota's has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Toyota Toyota's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Toyota Toyota's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to strategic competitive environment developments
– As Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo HBR case study mentions - Toyota Toyota's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
No frontier risks strategy
– After analyzing the HBR case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo, it seems that company is thinking about the frontier risks that can impact Organizational Development strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo, in the dynamic environment Toyota Toyota's has struggled to respond to the nimble upstart competition. Toyota Toyota's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Toyota Toyota's is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Toyota Toyota's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Toyota Toyota's to focus more on services rather than just following the product oriented approach.
High operating costs
– Compare to the competitors, firm in the HBR case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Toyota Toyota's 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Toyota Toyota's has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Opportunities Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Toyota Toyota's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Toyota Toyota's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Toyota Toyota's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Toyota Toyota's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Toyota Toyota's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Toyota Toyota's to hire the very best people irrespective of their geographical location.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Toyota Toyota's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Toyota Toyota's in the consumer business. Now Toyota Toyota's can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Toyota Toyota's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Toyota Toyota's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Better consumer reach
– The expansion of the 5G network will help Toyota Toyota's to increase its market reach. Toyota Toyota's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Toyota Toyota's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Manufacturing automation
– Toyota Toyota's can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Toyota Toyota's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Threats Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo are -
Shortening product life cycle
– it is one of the major threat that Toyota Toyota's is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Toyota Toyota's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Toyota Toyota's.
Consumer confidence and its impact on Toyota Toyota's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Toyota Toyota's in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo, Toyota Toyota's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Organizational Development .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Toyota Toyota's needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Toyota Toyota's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Toyota Toyota's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Toyota Toyota's can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
Technology acceleration in Forth Industrial Revolution
– Toyota Toyota's has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Toyota Toyota's needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Toyota Toyota's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Toyota Toyota's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Toyota's Strategy and Initiatives in Europe: The Launch of the Aygo is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Toyota Toyota's needs to make to build a sustainable competitive advantage.
