Toyota Motor Corporation addresses the internal and external strategic factors in the
business, as identified in this SWOT analysis. The SWOT framework pinpoints the
most significant opportunities, threats, and organizational weaknesses that Toyota
must address using its strengths. As a global leader in the automotive industry,
Toyota effectively addresses such factors. This SWOT analysis provides insights
about the possible influences on the company’s business. Toyota’s high
performance serves as an indicator of its ability to address the issues enumerated in
this SWOT analysis.
Toyota’s SWOT analysis shows that the company remains strong in the global
automobile market, although issues related to competition, organizational structure,
and corporate culture must be addressed.
Toyota’s Strengths (Internal Strategic Factors)
Toyota’s strengths indicate that the firm is capable of keeping its position as one of
the top auto manufacturers in the world. This element of the SWOT analysis model
identifies the internal strategic factors that serve as capabilities of the firm. Toyota’s
main strengths are as follows:
1. Strong brand image
2. Global supply chain
3. Rapid innovation capabilities
Toyota has one of the strongest brands in the global automotive industry. The
company’s global supply chain is also a strength that enables resilience and marketbased risk minimization. Furthermore, Toyota has an organizational culture that
facilitates rapid innovation, which is crucial for long-term competitive advantage. This
part of the SWOT analysis shows that Toyota’s strengths support its position as one
of the biggest automobile manufacturers in the world.
Toyota’s Weaknesses (Internal Strategic Factors)
Toyota’s weaknesses point to possible inefficiencies in the organization. This
element of the SWOT analysis model determines the internal strategic factors that
serve as obstacles to business growth. Toyota’s main weaknesses are as follows:
1. Hierarchical organizational structure
2. Secrecy in organizational culture
3. Effects of product recalls in recent years
Toyota’s global hierarchical organizational structure prevents maximum flexibility of
regional operations. Also, the company’s culture of secrecy is a weakness that
reduces response times in addressing emerging problems. In addition, Toyota
implemented massive product recalls starting in 2009. These recalls weaken the firm
because the recall processes consume business capacity that could be used for
product distribution instead. This part of the SWOT analysis shows that Toyota could
improve its performance through adjustments to reduce the weaknesses based on
its organizational structure and culture.
Opportunities for Toyota (External Strategic Factors)
Toyota’s opportunities are mainly based on technological and economic trends. This
element of the SWOT analysis model identifies the external strategic factors that the
firm could use to improve its business. Toyota’s most significant opportunities are as
follows:
1.
2.
3.
4.
Growing markets in developing countries
Rising demand for fuel-efficient automobiles
Growing interest in advanced electronics in vehicles
Weak Japanese Yen vs. U.S. Dollar
Developing markets present the opportunity for Toyota to increase revenues by
further penetrating these markets. Also, the current trends of increasing demand and
interest for higher fuel efficiency and advanced electronics present the opportunity
for Toyota to focus its innovation on these directions. In addition, the weaker
Japanese Yen versus the U.S. Dollar means higher competitiveness of products and
components exported from Japan to the U.S. This part of the SWOT analysis shows
that Toyota must emphasize market penetration and innovation to exploit its
opportunities.
Threats Facing Toyota (External Strategic Factors)
The threats to Toyota’s business are based mainly on the competitive landscape.
This element of the SWOT analysis model determines the external strategic factors
that could reduce the firm’s performance. In Toyota’s case, the main threats are as
follows:
1. Growing market presence of low-cost competitors
2. Rapid innovation of competitors
Toyota faces the threat of competition with low-cost automobiles from Korean,
Chinese and Indian manufacturers, which have been increasing their presence in
foreign markets. Toyota also experiences the threat of rapid innovation of
competitors like GM, Honda, and Ford. This part of the SWOT analysis shows that
Toyota must ensure competitive advantage, such as through innovation.
Recommendations based on Toyota’s SWOT
Analysis
Toyota’s SWOT analysis identifies key issues, such as the effects of competition and
the company’s weaknesses based on its organizational structure and culture. To
address the threats based on competition, Toyota needs to maximize its competitive
advantage based on its innovative capabilities. The company can also further adjust
its culture and structure to optimize its flexibility in decision-making and problem
solving.
Strengths in the SWOT analysis of Toyota
The strength of a business refers to the area which keeps it far ahead than its
competitors. The strong points of Toyota in the automotive market are as follows





Strong Human Resource– A Company needs skilled and professional human resource to grow
bigger. Toyota is blessed with huge human power throughout the world. They have invested in
getting resources, and the return they get is big. As of December 2015, they have 348,877
skilled human resources around the world.
Innovative Organizational Culture– While it comes to advanced operating system and
functional strategies, Toyota will always be on the top. From widely practiced management
system to lean manufacturing details, Toyota has set examples for the fellow companies.
Strong Brand Image– This is obviously one of the most important strong points of Toyota.
Whenever people look for cars, they search for the brand name ‘Toyota,’ and that has kept
them far ahead of their competitors.
Strong Diversified Portfolio– Cars means Toyota. They have a large number of varieties of
their product. From electric cars to hybrid cars, Toyota has spread its wings to all types of cars
in this market.
Advanced Technology– Toyota is not only a car manufacturing company, but they are also
considered as an innovator. Their hi-fi technology has introduced hybrid cars in the market. The
green vehicle technology of Toyota has been adorned by customers in large scale when they
consider the environmental concern and price of petrol.
Global Supply Chain– They has outlets, branch companies, manufacturing factories around the
world. The strong and global supply chain of Toyota is really one of the greatest strength of this
company.

High Production Capability– Toyota is giving serious competition to its contemporaries on this
point as they have a high production capacity of producing cars, almost 10 million per year.
Weaknesses in the SWOT analysis of Toyota
Talking about the weaknesses of a business means the areas where it can improve a
lot. These are the areas where the business has much to do with further improvement.
The weak pointers of Toyota are as follows



Dependence on Suppliers– as Toyota has suppliers around the world; they have to depend on
them. It makes the production a bit sloth.
Not Grabbing Markets– Toyota has developed green vehicle technology, but it has been failed
in grabbing the actual market where it would be implemented accurately. The market
of China and India can be the best for launching these vehicles, but there is still time.
Negative Publicity– This happens due to large vehicle recalls. Any type of vehicle recalls
affecting the automaker, and Toyota is no exception. Also, the recall rates are higher in Toyota,
and that can cause more negative publicity.
Poor Brand Recognition– There are 4 different flagships of Toyota- Hino, Lexus, Daihatsu, and
Among these, Lexus and Toyota have been successful in making the brand recognition.
Opportunities in the SWOT analysis of Toyota
Opportunities for a business refer to the areas which can be used to gain more
revenues. The vital opportunities of Toyota are as follows


The growth of Developing Nations– Perspectives is changing, and now, people are more
inclined to buy cars. In the developing nations, the demand for cars is exuberating.
Green Vehicle Technology– Maybe slower, but the green vehicle technology is gaining
popularity around the world. If Toyota focuses on this area, they will get much revenue from
this innovation.
Growing Concern for Environmental Pollution– People, around the world, is getting more
concerned about the environmental degradation and are also willing to do their bit. This is the
high
time
to
popularize
Toyota’s environment-friendly.
Threats in the SWOT analysis of Toyota
These are the factors that can make a business face downturn if not taken care early.
So, the potential threats of Toyota are as follows


Number of Competitors– Toyota is competing with huge names in the market,
like Volkswagen, Ford, Mitsubishi, and Hyundai. It makes quite hard to make strong feet in the
market.
High-priced Raw Materials– As the cost of raw materials is increasing, that is also increasing
the cost of the end product.
Lower Profits– The continuous threat of exchange rates is always there. When the revenues
are sent back to Japan in the Yen that becomes quite lower profit in comparison to other
currencies.
Related posts:
1.
SWOT analysis of Toyota Prius
2.
SWOT analysis of Toyota Corolla
3.
SWOT analysis of Lexus
4.
SWOT analysis of Proton Cars
5.
SWOT Analysis of Airbnb
6.
SWOT analysis of Volkswagen
7.
SWOT analysis of Lamborghini
8.
SWOT Analysis of Chanel
9.
SWOT analysis of Rolls-Royce
10. SWOT
Analysis of Bajaj Auto
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Strengths
1. Strong focus on research and development (R&D) leading to some of the
most innovative vehicles in the world
Toyota is famous for its innovative culture. The company’s goal on being ahead of its
competition by introducing some of the most innovative vehicles in the market has
proven to be a successful strategy.
Toyota’s R&D initiatives, especially in producing environmentally friendly vehicle
technologies, vehicle safety and information technology, provide it with some of the
best strategic advantages.
The company operates one of the largest research facility network among the
automotive companies to achieve the best possible results from its R&D expenditure.
In total, 15 research facilities in 8 different countries, including Japan, United States,
China, Thailand, Australia, Germany, France and Belgium, focus on 3 key R&D
areas:[1]

Basic research. This area researches basic vehicle technology.

Forward-looking and leading-edge technology
development. Development of newest technology and components that
surpasses rivals’ technologies.

Product development. New model development and upgrades for existing
ones.
Toyota’s focus on innovation has resulted in one of the highest automotive R&D
spending. Toyota’s R&D expenditures were approximately JP¥1.064.2 billion
(US$9.613 billion) in fiscal 2018, ¥1,037.5 billion (US$9.579 billion) in fiscal 2017,
and ¥1,055.6 billion (US$8.787 billion) in fiscal 2016. [1]
Figure 1. Toyota’s and its competitors R&D spending (US$ billions)
Company
Toyota*
2017 R&D
As a % of revenues
2016 R&D
As a % of revenues
9.613
3.6
9.579
3.8
8
5.1
7.3
4.8
Volkswagen
15.8
6.7
14.4
7.3
General Motors
7.3
5
8.1
4.9
Ford
Source: The respective companies’ financial reports[1][2][3][4] (Toyota’s latest fiscal year only runs for
3 months in 2018. Most of the company’s financial year is in 2017, so we compare fiscal 2018
with other companies’ 2017 financial year as it is more accurate.)
Among the automotive companies, only Volkswagen spends more on R&D than
Toyota. Nonetheless, Toyota uses its R&D budget the most effectively, spending just
3.6% of its total revenue on R&D, while Volkswagen spends 6.7%.
This means that Toyota needs to spend less on R&D to generate the same amount
of revenue than its key rivals.
Huge, efficient R&D spending has allowed Toyota to gain a competitive
advantage over its competitors and to become one of the largest automotive
manufacturers in the world by researching and introducing the leading-edge
technology and vehicles to the consumers.
2. The most valuable and one of the most recognizable automotive brands in
the world
Toyota Motor Corporation was incorporated in 1937 and since then, has become one
of the most recognizable brands in the world.
According to Interbrand[5] and Forbes[6], Toyota’s brand is the world’s 7th and 9th
most valuable brand worth US$50.291 billion and US$44.7 billion, accordingly. In
both lists, it is the most valuable brand out of all automotive companies.
Figure 2. Automotive brand ranking by Interbrand
Ranking (Automotive)
Brand
Brand Value (in US$ billions)
Overall brand ranking in 2017
1
Toyota
50.291
7
2
Mercedes-Benz
47.829
9
3
BMW
41.521
13
4
Honda
22.696
20
5
Ford
13.643
33
6
Hyundai
13.193
35
7
Audi
12.023
38
8
Nissan
11.534
39
9
Volkswagen
11.525
40
10
Porsche
10.129
48
Source: Interbrand[5]
Brand value is closely related to brand reputation and recognition. Toyota, which
produced and sold 8.964 million vehicles in 190 countries in 2018 alone, has one of
the widest consumer reach in the world.
Manufacturing, research and sales operations worldwide, combined with a huge
number or vehicles sold, as well as advertising spending has helped the company to
create one of the most recognizable brands in the world. Brand recognition helps the
company to introduce new products to the market more easily and with fewer costs.
Toyota brand is also one of the most reputable brands in the automotive industry.
Over its 75 years’ history, the company received hundreds of awards accolades in
vehicle design, safety, environment-friendliness and manufacturing operations.[7]
In 2018 alone, the company has received 7 IIHS (Insurance Institute for Highway
Safety) Top Safety Picks 2018 awards (more than any other automotive company)
for its Toyota Corolla, Prius, Camry, Avalon, Highlander and RAV4 vehicle models
as well as 4 other Top Safety awards for Lexus models.[8]
The company received more 2017 J.D. Power Vehicle Dependability Awards than
any other brand.[9] In addition to the awards for its vehicles, the company ranks the
2nd on the Carbon Clean 200 List, which ranks the companies according to their
efforts to transition to clean energy.[10]
Toyota’s brand and recognition provides the company with a competitive edge over
competitors as few other automotive brands are so well-known and reputable.
Strengths in the SWOT Analysis of Toyota

Brand Equity – The main strength of the company is the brand equity. Over the
years, Toyota has been able to develop strong brand equity. Being a top vehicle
brand, Toyota’s focus has always remained to win customer’s trust. An automobile
industry needs to establish trust with the customers to retain a good brand image.
Toyota is the most trusted brand in the world. This brand is mostly preferred by many
people across the world and is considered as an innovative brand. Its success is
seen from its product quality, customer service, and driver safety parameters
included in the vehicle. Having high brand equity indicates higher customer loyalty






and having a better reputation. Due to these positive facts, it shows a strong financial
performance for the brand.
Great Use of Technology – With regard to technology, Toyota is considered one of
the leading players in the automotive industry. The company has about 69
manufacturing facilities out of which Japan has about 16 facilities and 40 in Asia. It
has about 16 Research and Development centers across the world. With the great
use of technology, Toyota has managed to set up and an effective production
system and is considered the best in the world. Toyota’s production system is called
TPS or lean production system. Over the years, Toyota has worked effectively to get
the highest production efficiency.
Research and Development – Toyota has invested a good amount in research and
development and innovation has been its focus. It is the main source of its
competition. The brand’s focus is to bring better vehicles. Toyota also invests in
producing human-centric and safe automated driving technology. Having entered
various innovation techniques is the main strength of the brand. The company has
involved in partnering with the University of Michigan, MIT, and Stanford University
to carry additional research on robotics and automated driving. These steps are
taken by the company to make it beneficial for the future of the drivers. Every year,
the company invests a huge amount in the research and development area.
Supply Chain Network and Distribution – Toyota have effectively managed the
supply chain and distribution network. Each vehicle that the company produces is
made from many parts sourced from suppliers that are situated across the world.
Toyota maintains an excellent supply chain network and works in close collaboration
with its suppliers. It has also maintained a strong and long-term relationships with the
suppliers, and this helps to control the production costs. The company has about 167
overseas distributors to distribute its products across the world. Toyota has a large
and global distribution chain that requires to cooperate closely with distributors and
dealers. Toyota has managed its supply chain well and its distribution network.
Toyota’s distribution network is divided into eight main regions like Latin America,
North America, Europe, Asia, China, Africa, and the Middle East. This distribution
network is also the main sales channel for the company.
Large Product Portfolio – Toyota is the topmost producer of vehicles and produces
a large range of vehicles. The product portfolio is huge and varied. The company
produces SUVs, sedan vehicles, sports vehicles, minivans, hatchbacks, trucks,
station wagon, and buses. It has also ventured into producing marine vehicles like
boats and sports cruisers. The company also owns the premium brand vehicles,
Lexus. This brand has a wide range of popular premium cars. Also, Toyota has
bought a wide range of hybrid cars.
Global Presence – The company is essentially a global brand. Toyota’s products
sell their automobile to almost 170 countries. Having a strong global presence is
indeed a big strength of the company and has led to higher sales and revenue. Also,
to maintain a global business, Toyota has maintained its manufacturing facilities in
many countries worldwide. Also, it has many research and development sites across
the world.
Most Valuable Brand – Ever since its formation, Toyota has become the most
valuable and recognizable brand in the world. As per the Forbes, Toyota brand is
seventh and ninth in the world having the brand worth of about $50.291 and $44.7
billion. As per the list of both, it is the most valuable in all the automotive companies.
Brand value is related to brand recognition and reputation. The brand has sold about
8.964 million vehicles in about 190 countries. Toyota has the largest customer reach

in the world. Having researched, produced, and sold many vehicles across the world
together with the amount spend for advertising has helped the company to create a
recognizable and reputed brand in the world. When a company is recognized well
with its brand, it helps the company to release new products to the market more
easily and with less cost.
Awards and Recognition – Toyota brand is the most reputed brand in the world’s
automotive industry. Having been in the industry for about 75 years, the brand is
quite proud of its achievements and has received many awards for its vehicle design,
environment friendliness, safety, and manufacturing operations. During the year
2018, the company has received about 7 Insurance Institute for Highway Safety
(IIHS) Top Safety Picks awards for its vehicles Toyota Corolla, Avalon, Prius, RAV4,
and Camry. It also received the Top Safety awards for its Lexus models.
Weaknesses in the SWOT Analysis of
Toyota





Product Recalls – Over the past years, Toyota had to produce much products
recalls. While the main concern for Toyota is a driver safety and quality, it does hurt
the brand’s image. During the year 2017, the brand was compelled to recall about
2.9 million vehicles due to airbags fault. Also, it has faced many such recalls over the
past. This is indeed a big weakness for the brand because as it deals with the
automobile, the customer would be at risk for such faults.
Weak Position in Asian Markets – Toyota has not expanded in the Asian markets
as related to the competitors. This is also a weakness for the brand because the
Asian markets are the most up-to-date market for various automotive brands. Toyota
should focus to set up its brand and increase its brand value in markets like India
and China.
Dropping RoA and RoE – During the year 2017, Toyota had a drop in RoA and
RoE as compared to the previous year. The consistent drop in this would impact the
company’s performance.
Hierarchy Organizational Structure – The global hierarchical organizational
structure prevents a lot of flexibility of the regional operations. The hierarchy that is
maintained at the global level is quite tough to handle when there is an issue to
solve.
Organization Culture’s Secrecy – The company’s secrecy culture is also a great
weakness for the company as it reduces the response time to address any emerging
issues.
Opportunities in the SWOT Analysis of
Toyota

AI and Digital Technology – As Toyota is venturing into new technologies, it should
also include AI and digital technologies to get more opportunities with regards to
supply chain management and marketing. The company can make use of these to



engage its customers and suppliers. Toyota can make use of digital technology and
AI to create a great customer experience. Also, these technologies can be used for
customer engagement and to get higher retention rates.
Autonomous Vehicle Technology – The vehicle brands excel in autonomous
vehicle technology. Among the world’s brands, they are in an aggressive race to get
autonomous vehicle on the roads. Investing in this area would bring more
opportunities for the brand. Hence, Toyota should be able to make this a priority and
venture into this. Most of its competitors are already into this.
Entering into Asian Markets – The most up to date for vehicle brands is the Asian
markets. While India and China have grown to be the leading vehicle market in the
world. Toyota sees many opportunities for growth and does see a potential of growth
in these markets. Both these markets are quire attractive for their brand and are
currently being dominated by its competitors. So, investing in these markets for
marketing and customer engagement would bring a lot of opportunities for the brand.
Diversification – Toyota is basically a big brand of automobiles and marine
products as well. Apart from entering excellent technologies, the brand is strong in its
finance. It finds new opportunities in investing in new areas and create more varied
products and services. The company would see more opportunities and new sales
channels on diversifying its products. This would also help them to increase their
customer base and grow more.
Threats in the SWOT Analysis of Toyota

Regulatory Threats – The automobile industry sees a major challenge with the
various laws and regulations. They have a huge pressure from law and regulatory


agencies that they must adhere to. When there is a rise in regulatory pressure, it has
led to an increase in operational costs. Also, having high legal pressures would
create things more difficult for any business. Moreover, brands need to be more
cautious on the compliance and laws. So, the company sees more threats in these
areas.
Competitive Pressures – The automotive industry has an intense competition. The
market has many automobile brands and all brands are innovative with their
products, look for more market share and growth. This has led to a huge
competition. When there are more and more competitive pressures, this would lead
to more operational costs and an increase in expenditure on marketing.
Increase Cost of Raw Materials – While the cost of raw materials and labor
increases, there is a threat to the brand. This would affect the profit of the company.
Conclusion
The SWOT analysis of Toyota mentioned in this article has highlighted the main
strengths of the brand that comes up from its brand value, including of technology in
its products, focus on its research and innovation, supply chain management,
distribution network, huge product portfolio, and its international presence.
The company’s weaknesses are seen in its product recalls, having a weak market in
the Asian markets, and dipping in the RoE and RoA. The company sees a huge
opportunity in venturing in new technologies related to AI, autonomous vehicle
technology, entering into Asian markets, and diversification. Toyota sees a threat
from the various regulatory norms, competitors, and the rising cost in raw materials
and labor.