TOYOTA
Industry Analysis – Assignment One
Fatema Obaid
201101371
Fatema Obaid – 201101371
Contents
Introduction .................................................................................................................................................. 2
Company Overview ....................................................................................................................................... 3
Toyota Vision ............................................................................................................................................ 3
Toyota Mission .......................................................................................................................................... 4
Toyota Logistics Function.......................................................................................................................... 4
Toyota Supply Chain ................................................................................................................................. 5
Industry Analysis ........................................................................................................................................... 8
P.E.S.T.L.E .................................................................................................................................................. 8
Porter’s five forces .................................................................................................................................. 10
Recommendations ...................................................................................................................................... 14
Conclusion ................................................................................................................................................... 16
References .................................................................................................................................................. 17
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Introduction
Purpose
This report has a purpose of analyzing Toyota business industry using P.E.S.T.L.E and Porter’s with some
recommendations that would assist Toyota in competing against current and new competitors locally
and internationally.
Terms of Reference
This report that aims to analyze Toyota business was requested by Mr. Wesley Lee, Logistic Tutor at
Bahrain Polytechnic. It will be submitted to Mr. Lee in 21st of October.
Method
The report will have information gathered from many resources. TLB6002 course modules were the
main source for principal information. General information about the business was collected from many
resources from the internet such as articles and journals.
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Company Overview
Toyota Motor Corporation is international Japanese company that produces and sales motor
vehicles. It was founded in August 28th, 1937 by Toyoda family (“Overview”, 2014). Toyota main
headquarter is located in Aichi, Japan. 52 overseas manufacturing companies are involved in Toyota
business (Figure1); and Toyota sales its vehicles around the world in more than 160 countries
(“Worldwide Operations”, 2013).
Figure 1: Overseas manufacturing companies.
Toyota Vision
Innovation besides high quality products and services are the main principles that Toyota apply in
manufacturing vehicles which has to be reliable and up to society development (“Vision & Philosophy”,
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2014). In addition, Toyota is putting effort to improve vehicle’s technologies and applications to develop
eco-cars (“Vision”, 2014).
Toyota Mission
Toyota’s mission consists of statements that are the key developments to new technologies. The mission
includes providing safety and inspiration to customers; enhancing employee’s knowledge and education
to make the company able to provide energetic infrastructure to local communities (“Mission for
Technologies”, 2014.
Figure 2: Toyota house.
Toyota Logistics Function
As an international organization, Toyota has to transport its vehicles overseas to customers and locally
in Japan. Logistics in Toyota not only includes transporting final products, but also it is about
transportations in the production parts (“Production Parts Logistics”, 2014). Toyota use a logistics
production system which is “lean manufacturing system” that aim to minimize inventory and transport
what is needed to customers in the amount and time it is needed; this system is based on Just-in-Time
principles (“Completed Vehicle Logistics”, 2014). Moreover, communication between all Toyota part and
its supply chain is an essential principle to provide high quality services to customers. Rail, vehicle and
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ship are used as transportation modes in local markets; besides, ships are used in overseas
transportations.
Toyota Supply Chain
Toyota has a complex supply chain but a solid one. It has many suppliers, manufacturers of small parts,
preassembly and car manufactures; that all are linked by transportations and including logistics function.
Figure 3: supply chain complex.
Figure 4: car manufacturing supply chain.
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Figure 5: Toyota supply chain management.
Figure 6: Toyota production and sales companies around the world.
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Toyota has a global structure with many production companies (Figure6) in each region which allow it to
reach international markets quickly and provide what customers want with less waste. Dealerships are
spread in Japan to provide Toyota cars to customers. In addition, Toyota has a wide global sales network
that allows it to reach it customers in every region and in most world countries (“Overseas Distributors”,
2013). 172 distributors are spread in 8 regions as following:
Ebrahim Khalil Kanoo B.S.C. is the main Toyota vehicles distributor in Bahrain which imports Toyota
vehicles and spare parts from Japan.
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Industry Analysis
Companies use industry analysis to identify the environmental factors that effect on business externally
and internally (CILT, 2006 e). This report will discuss the P.E.S.T.L.E and Porter’s five forces by applying
them on Toyota Motor Corporation generally in the region of Middle East and specifically on Bahrain
distributor of Toyota motors which is E.K.Kanoo B.S.C.
P.E.S.T.L.E
Is a tool that is used in analyzing the situation of an organization and identifying the external factors that
have an effect on the organization’s performance (Jurevicius, 2013). P.E.S.T.L.E analysis identifies the
political, economic, social, technological, legal and environmental forces (CILT, 2006 e).
Political factors
Political factors effect on people’s health, workforce’s environment and
technology quality. Toyota is producing environmentally friendly cars that use
less fuel; which is good for E.K.Kanoo and Toyota’s customers as fuel prices in
Bahrain and the region is cheaper than other countries in the world. However,
the political issues in the region “Arab spring” would not allow people to
purchase expensive automobiles as the political situation is not stable.
Economic
Economic factors are affected by the economic cycle which affect directly on the
factors
supply and demand (CILT, 2006 e). Developing the infrastructure after Qatar
announcement of hosting 2022 world cup will change the economy. Toyota is
affected by the economic factors which include insurance tax, inflation and
economic growth. E.K.Kanoo has seen a decline in sales because of political
issues and shortage of stock in 2011; however, sales are starting to grow again
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and Toyota market share is increasing (UK essays, 2014).
Social factors
Social factors include the demographic of country, culture perspectives and
career altitudes. Population is growing in Bahrain the region which will increase
the need for cars; however, the climate issues and GCC standards to save the
environment restrict E.K.Kanoo. Therefore, E.K.Kanoo is importing more
environmentally friendly cars that would not pollute the environment. Besides,
Toyota has to produce more vehicles that adopt with the environment.
Furthermore, as the public transport in Bahrain is not efficient and due to
cultural minds, the need for cars is increasing.
Technological
New technologies effect on the organization and the customer too; as it increase
factors
innovation and improve the product quality. Besides, it can reduce costs; or
example, new hybrid cars made by Toyota can reduce the costs of fuel use by
customer which will benefit customers in having cars with cheaper price on the
long term and it will benefit E.K.Kanoo as sales will increase. In addition, Toyota
plaza is a modern and large service center in Bahrain that provides after selling
car services to Toyota customers.
Legal factors
Legal factors affect directly on the organization, as government is responsible in
setting rules and regulations. In Bahrain, E.K.Kanoo cannot import electric cars
nowadays as there is an economic growth issues in the region and the country.
In addition, government controls the number of cars being imported to Bahrain
in every shipment and during a period of time. E.K.Kanoo has to follow the rules
set by government or it would get into trouble. Moreover, regulations set by
Toyota internationally have to be followed by E.K.Kanoo, as it is a dealer for
Toyota in Bahrain; this includes changes in prices and operations.
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Environmental
Environmental factors are about saving the environment from pollution. As
factors
global warming is becoming greater and it is changing the weather, the weather
in Bahrain would change in the coming future which would effect on the rate of
purchasing cars that harm the environment and operate on fossil fuel. However,
E.K.Kanoo is taking steps to minimize these factors by installing an
environmentally friendly exhaust system to all imported cars; which minimizes
the percentage of polluting air. Furthermore, E.K.Kanoo is dealing with
organizations that recycle wastes and it signed contracts with them to disposal
its wastes which include oil, spark plugs, packaging boxes and tiers (UK essays,
2014).
Porter’s five forces
The Porter’s five forces were set by Michael Porter; it is a tool that identifies the power of each business
party in a commercial situation (CILT, 2006 e). This model is useful for organizations aiming to move
forward against rival firms as it helps in more understanding the organization position and the seeking
to position(Mind tools, 2014). Porter’s five forces consist of:

Supplier Power.

Buyer Power.

Barriers to entry.

Threat of Substitutes.

Degree of Rivalry.
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Figure 7: Porter's five forces.
Supplier Power – Low
to Moderate.
 The supplier power in motor vehicles industry is low; as they consist
of specialist small firms concentrate in one product such as tiers,
cooling system or steel. Toyota buy massive quantities from suppliers
to manufacture cars which gives it the power as being a larger firm
that sell final products. Toyota has the power of substitute its
suppliers and could produce its own parts if any problem occurs;
which make supplier fear from losing a large customer like Toyota.
 In the case of E.K.Kanoo as a dealer and Toyota as a supplier; Toyota
has all the power and control most of the operations because Toyota
manufacture and own cars and it is an international organization that
many wants to deal with. Besides, it is a one supplier which gives it
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the power of being the one and only supplier of Toyota. However,
E.K.Kanoo is a recognized distributer in the region and Bahrain with
having a car warranty and free service packages; this was owned
because of the good services and network provided.
Buyer Power – High.
 The buyer power is high. As living standards in Bahrain is not high and
the market is derived by prices, customers choose the lowest possible
price for good quality products. In addition, customers now can buy
vehicles online which give them the power to access information.
Also, there are many alternatives available in the market that
customer could choose from if the company raises its prices.
 Toyota tries to decrease the buyer power by cutting costs and
providing vehicles that are with high quality and new technologies.
Barriers to entry –Low.
 New firms cannot enter the car manufacturing industry easily because
it cost lot of money and it is risky. High capital requirements are
needed. Besides, car customers intend to by loyal to brands that are
familiar in the market for long time.
 E.K.Kanoo were the first to introduce the vehicles market in Bahrain;
this build a strong fundamental infrastructure on customers mind as
to be a new innovation that is reliable, safe and with good quality.
Threat of Substitutes –
Medium.
 Threat of substitutes is considered low to medium in Bahrain as there
are no sufficient public transports that customers could rely on and
the hot weather does not give people who are living in Bahrain the
option of riding bikes or walk.
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 However, locals are going towards used cars as substitutes especially
that the economy is still recovering. Toyota with its strategy of cutting
costs is trying to minimize the gap between its vehicles and second
hand vehicles.
Degree of Rivalry –
High.
 The degree of rivalry is high internationally, regionally and locally.
Most of the global revenue is occupied by the current vehicle
companies. Korean cars manufacturers are entering the market
strongly with the new car designs and technologies that are suitable
for youth and families at competitive prices. In addition, American
brands have loyal customers and compete strongly with Japanese
brand. Moreover, Chinese brands are entering the international
markets which will increase the number of competitors.
 Nissan is the main competitor for Toyota in Bahrain because of the
pricing strategy that they use which is giving them the opportunity to
lead the market. Also, Toyota is facing strong competition on the
designs of vehicles with Nissan and other Korean brands; the
dominant will be the one who produce more youthful and sporty
designs.
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Recommendations
Based on the industry analysis above using P.E.S.T.L.E and Porter’s five forces; that has analyze Toyota
current position in the market and identified the external factors that Toyota is facing or could face in
the near future and would affect in its performance especially in Bahrain and the Middle East region; the
following recommendations are need to be considered in order for Toyota to exist longer in market
against its competitors.

Toyota has a strong fundamental infrastructure in the region and Bahrain as it is one of the first
motor vehicles companies that have been introduced to the market. Toyota has to maintain its
level in producing cars and concentrate on its system which is Toyota Production System; which
focuses on the quality of cars being manufactured.

In order for Toyota to compete against its competitors and have a step forward, it needs to
maximize the number of skilled labor by providing training courses for staff to ensure the
quality standards.

Also, Toyota has to put priority for customers before the number of cars purchased especially
that the market is getting larger and the competition is increasing.

In order for Toyota to have steps over its competitors, it has to consider the present and future
of hybrid and electric cars as the prices of fuel is increasing; in addition, it needs to develop new
cars with new strategies and technologies that are more environmentally friendly and start
manufacturing them the increase the awareness of customers.

Toyota could introduce more technologies in cars that would ease the driving process such as
new technology that allow the car to park itself; especially that the world now is depending on
technology and it is getting smarter.
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
Taking in consideration most of the customer’s feedback about the car performance will
increase the knowledge about what Toyota’s customers want and will minimize the
dissatisfaction.

Toyota has to produce new cars with new sporty, luxury and youthful designs that is suitable for
both youth and families as most competitors are moving towards this strategy such as Nissan,
Kia and Hyundai.

E.K.Kanoo as a distributor and dealer of Toyota in Bahrain and the Middle East has to compete
with other Toyota dealers in the region by providing higher quality services for customers
especially after selling services for maintenance; besides, training staff to be skilled and
professional in their jobs.
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Conclusion
Toyota is a significant vehicles manufacturer in Japan and the world. It has built a strong fundamental
floor for it brand internationally. New firms entering the cars manufacturing industry will face huge
problems in competing with Toyota. In addition, the competition between the existing car
manufacturers is increasing especially with the emerging of new smart technologies in the world and
changing of customer’s mindsets towards more luxuries and sporty cars. Furthermore, the increasing of
fuel prices will increase the competition and might result in new organization entering the car
manufacturing industry that are specialists in manufacturing environmentally friendly vehicles that
would consume less fuel or operate on electricity using fuel cell technology or lithium-ion batteries.
Toyota has to be aware of its competitors and try to be a step forward than them especially Nissan,
Hyundai and Kia as their market shares is growing quickly.
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