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Toyota Financial Crisis in 2008-2009

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Started in 1947 in Japan as little-know domestic manufacturer, by the year 2010 Toyota captured 15% of the global automobile market and was the largest car producer in the world ahead of close rivals VW and GM. Toyota has been the quality and efficiency leader of car manufacturers with 48 production facilities in 26 countries across the world.  

Toyota was hit by financial crisis in 2008-2009 along with all car industry due to decrease of cars demand. By 2012 Toyota had regained the mantel of the leading player in the industry.  However, the productivity and quality gap between Toyota and its global competitors has narrowed and Toyota started to face invigorated competitors who were fast growing in profitability and was well positioned to challenge Toyota for global market share.

The problem: to keep the competitive advantage of being the quality leader in the industry and to fend off their global market share from growing competition.  Toyota has reached efficiency and productivity learning curve heights - losing competitive advantage of the most productive automobile company in the world.

The symptoms of the problem:

  • Fall off car sales by 40% due to global financial crisis (2008-2009)
  • China’s market continues to grove despite Toyota’s fell of sales by 17%
  • VW invest heavily in capacity of China – the world largest national automobile market
  • GM successful recovery after crisis being more viable competitor
  • GM well positioned in the rapidly growing Chinas market
  • Toyota struggle due to anti-Japanese sentiment in China
  • Hyundai-Kia strong position in the world car market, more profitable than Toyota
  • Customers switch to low priced small cars due to gasoline prices fell (KIA, Ford)

SWOT analysis



  • Strong brand and culture. Quality leader
  • Wide product offering, including hybrid vehicles
  • Continuous investments in R&D and innovation of products, efficiency of processes
  • Low production and procurement costs, high profitability
  • Regional supply organizations, minimal buffer stocks
  • Strong commitment of employees, sales and service training of dealers

  • Weak presence in emerging markets
  • Centralized structure
  • Loosing younger buyers, less attractive car models
  • Perception that product offerings lack design flair and are not well attuned to consumer taste as might be
  • Obsession with continues improvements in efficiency and effectiveness can overlap attention to consumer’s preferences



  • Move toward globalization of car market
  • Growing emerging markets (China)
  • Change in customer preferences and choices – need for new cars, small cars, hybrid and electro cars
  • Intense global competition
  • Strong competitors position on China
  • New leading motor vehicle brands in top position (Hyundai-Kia)
  • Ford and GM support more dealers relative to their market share than Toyota
  • Need for new investments

To keep Toyota’s competitive advantages - quality leader and industry’s global leader:

  1. To continue focus on old markets by high different ion of the products: luxury line, sports and specialty segment, hybrid vehicles, trying to attract even wider segment of customers by age and preferences


  • Good brand recognition and knowledge of the market
  • Effective assembly plant and dealership chain in EU, North America
  • Possibility to impact the consumer’s preferences, follow consumer’s preferences because of build responsiveness system, and customer relationship


  • Slow old market growth
  • Consumers easily switch to other brands due to economic reasons (fuel price changes) or changes in preferences
  • Even more and stronger global competitors in old markets

  1. To expand into emerging markets and China as world’s largest national automobile market


  • Continue to position Toyota as global market share leader in rapidly growing markets
  • Continue to develop assembly plants in Asia
  • Possibility to create new brand recognition by joint ventures


  • Need for high expenditures to provide high efficiency and quality control in assembly plants to provide high quality standards
  • Hard to find high quality suppliers, higher costs of quality control
  • Anti-Japanese sentiment to get over
  • Looking for new partners for joint ventures in the regions

  1. Focus on R&D and new technologies by cooperation with technological leaders and car manufacturers


  • Access to latest technology and possibility to differentiate the product by new technologies
  • Effective Utilization of in-house know how and previous experience in innovations
  • Possible to ad technological features to existing products, attract younger buyers


  • New technologies require huge investments
  • Hard to control the quality


 I recommend Toyota to focus on new emergent markets and heavily invest in new technologies (Strategy 2 and 3). Toyota has to establish R7D facilities there and build joint-ventures with local manufacturers in order to implement the strategy of expanding in China successfully.  The decision making and more power should be given to local subsidiaries, thus meeting the customer demands for local customization still actual in Asia market. Nevertheless, diversified production facilities globally helps the company to keep the production costs low, this will help the company to further reduce costs and increase margins.



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