NATIONAL DEFENSE UNIVERSITY

TOYOTA MOTOR CORPORATION

STRATEGIC FORMULATION

HAMNA AHSAN

12-12-2021
Contents
COMPANY OVERVIEW....................................................................................................................3
TOYOTA MOTORS CORPORATION HISTORY................................................................................3
PORTFOLIO:............................................................................................................................5
WORLDWIDE SALES GROWTH:...............................................................................................6
VISION.........................................................................................................................................6
EXISTING TOYOTA’s VISION:...................................................................................................6
PROPOSED TOYOTA’s VISION:.................................................................................................6
MISSION......................................................................................................................................6
TOYOTA’s EXISTING MISSION:................................................................................................7
TOYOTA’s PROPOSED MISSION:..............................................................................................7
VALUE.........................................................................................................................................7
TOYOTA’S EXISTING VALUE:....................................................................................................7
TOYOTA’S PROPOSED VALUE:.................................................................................................7
Ethical Principles.........................................................................................................................7
TOYOTA’S EXISTING PRINCIPLES:............................................................................................7
TOYOTA’S PROPOSED PRINCIPLES:.........................................................................................8
EXTERNAL AUDIT:...........................................................................................................................9
Industry Analysis.......................................................................................................................10
PESTLE Analysis:........................................................................................................................10
Political Factors:....................................................................................................................10
Economic Factors:.................................................................................................................11
Social Factors:.......................................................................................................................11
Technological Factors:..........................................................................................................12
Environmental Factors..........................................................................................................13
Legal Factors.........................................................................................................................13
PORTER’S Five Forces Model:...................................................................................................14
SWOT ANALYSIS (OT)....................................................................................................................16
Opportunities............................................................................................................................16
Threats......................................................................................................................................16
EXTERNAL FACTORS EVALUATION (EFE).......................................................................................17
INTERNAL AUDIT...........................................................................................................................19

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 Strategic Capabilities and Competitive Advantage...................................................................19
Value Chain Analysis:................................................................................................................21
Inbound Logistics:.................................................................................................................21
Operations:...........................................................................................................................21
Outbound Logistics:..............................................................................................................22
Marketing & Sales:................................................................................................................22
Service:.................................................................................................................................22
SWOT ANALYSIS (SW)...............................................................................................................23
Strength................................................................................................................................23
Weakness..............................................................................................................................23
INTERNAL FACTOR EVALUATION (IFE)......................................................................................24
Space Matrix:............................................................................................................................24
QSPM Matrix............................................................................................................................26
Works Cited..................................................................................................................................28

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COMPANY OVERVIEW

TOYOTA AA

TOYOTA MOTORS CORPORATION HISTORY

Toyota an automobile company, was established in 1930s by a Japanese businessman

Kiichiro Toyoda. He established Toyota Motors Corporation from Toyoda Loom works
founded by his father Sakichi Toyoda. (Fujimoto, 1999) Widely known for its
management techniques.

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The Toyota motors has been one of largest production house in automobile industry
keeping eyes contact of its stakeholders on its organizational culture and evolving
strategic response to any crisis crossing their way (Sosnovskikh, 2016) TMC is one
valuable brand of Japan and has been able to protect its image throughout the globe.
The headquarter is in Japan while their business is expanding with every coming
opportunity in other countries of the world.

Toyota motor corporation has 635-billion-yen capital and 74,132 number of staff. There
are around 50 manufacturing plants of Toyota globally and 17 companies under Toyota
umbrella. There are 528 subsidiaries and 72 affiliated companies. As for net revenue
company has generated is around 29,900-billion-yen, operating income is 2,443 billion
yen and net income is 2076 billion yen. (Zalubowski, 2021)

TMC is producing vehicles under five names: Toyota, Lexus, Daihatsu, Hino and Renz
and have 18 subsidiaries working under TMC umbrella. The bestselling model of Toyota
is Corolla, Camry, and Lexus.

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Toyota is regarded and researched on repeat by scholars and researchers to
understand the constant successful growth of Toyota mainly because of its “The Toyota
Way” management in discussion of Likers book (Liker, 2004) Toyota is well known for its
principles and its success is because of two factors; technological innovations and
qualified human resources. Foundation of these principles bases upon shein’s pyramid
(Sosnovskikh, 2016) Toyota Production system was established by TMC to provide best
quality products, based on just in time, jidohka and Kanban concepts (McGinley, 2009).
TPS is widely known as integrated system for management and long-term philosophies.

In 1965 Toyota won Japan’s top-quality award named after Edward Deming, American
management consultant and engineer (Austenfeld Jr) as it began applying ideas and
concepts of Edward. In 1970s these practices led to standardization philosophy every
firm look upon as Toyota Production System (TPS) (Austenfeld Jr). From assembling
five trucks per day to production of trucks and cars domestically, Toyota’s business
expanded in worldwide production by 1990s (Fujimoto, 1999).

PORTFOLIO:

Toyota Motor Corporation is growing businesses from designing to manufacturing and

assembling passenger cars, sports cars, trucks, busses, boats, airplanes, and
accessories parts related in
motherland and foreign countries. They
not only manufacture automobiles but
also repair and leases.

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Toyota Motors corporation is now involved in real estate, insurance, and civil
engineering expanding their business domains (LLC, 2010 2021) It has three major car
label that produce vehicles under strategic management of Toyota Motors corporation.
These include Lexus founded in 1989, Scion founded in 2002 and Toyota itself. The
most prominent cars over the years are its Toyota Camry and Toyota Corolla. Their
oldest versions still can be seen on road especially in third world countries. (TOYOTA
MOTOR CORPORATION, © 1995-2021 )

WORLDWIDE SALES GROWTH:

Toyota’s worldwide growth for 2020 increased by 1.22% of 2019 that was $275.356
billion. (LLC, 2010 2021) For 2021, there was decline by 7.1% from 2020.

VISION
Vision is also seen as strategic intent of any organization. It is one liner statement of
what organization wants to become in longer future run. (Johnson, Scholes, &
Whittington, 2008)

EXISTING TOYOTA’s VISION: “Creating Mobility for All” & “Start Your Impossible”
(TOYOTA MOTOR CORPORATION, © 1995-2021 )

PROPOSED TOYOTA’s VISION: “Innovating Reliable Mobility”

MISSION
Generalized expression and direction of an organizational purpose which clarifies “what
business are we in?’ (Johnson, Scholes, & Whittington, 2008) Mission should clarify few
things that include

1. Customer
2. Product/Service

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 3. Markets
4. Technology
5. Survival
6. Philosophy
7. Self-concept
8. Concern for Public Image
9. Concern for Employee

TOYOTA’s EXISTING MISSION: “Producing Happiness for all” (TOYOTA MOTOR

CORPORATION, © 1995-2021 )

TOYOTA’s PROPOSED MISSION: “Global production (1) (3) of sustainable (5) mobility
(2) for customer’s futuristic (4), functional, economical, modern, sporty and elite needs.

We believe in service for all (6), and our talented hardworking employees (9) put in their
best skills to task to ensure product quality and full fill safety requirements (8) (7).”

VALUE
The guiding belief/principles of an organization that direct its efforts. TMC has guiding
principles under one heading of “the Toyota way” (TOYOTA MOTOR CORPORATION,
© 1995-2021 ) widely known as lean management principles.

TOYOTA’S EXISTING VALUE:

Combining software, Hardware, and partnerships to create unique value that comes
from the Toyota Way” (TOYOTA MOTOR CORPORATION, © 1995-2021 )

TOYOTA’S PROPOSED VALUE:

“Improvising blend of operations in technology.”

Ethical Principles
There are 14 principles of Toyota Motor Corporation which creates effective value chain.

TOYOTA’S EXISTING PRINCIPLES:

1. Long term philosophy
2. Create continuous flow
3. Use pull & Avoid Overproduction
4. Heijunka (Production leveling)
5. Build the right culture

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 6. Standardize Tasks
7. Use Visual Control
8. Use only tested technology
9. Grow leaders who live the philosophy
10. Develop people and teams
11. Respect your outside forces
12. Observe and reflect
13. Decide slowly, implement fast
14. Practice reflection all the time

TOYOTA’S PROPOSED PRINCIPLES:

1. Leadership
2. Innovating value chain
3. Long term Philosophy
4. Sustainability
5. Smart production
6. Respect
7. Flexibility in development strategies
8. Consolidate designs
9. Observe, learn, implement
10. Practice Reflection

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EXTERNAL AUDIT:

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While external analysis is micro and macro level environmental analysis. External
analysis factors are customer, competitors, market, and macro environment (Johnson,
Scholes, & Whittington, 2008) To perform, we have qualitative and quantitative tools.
PESTLE, PORTER’S 5 Forces and Value chain provide qualitative analysis, in
quantitative tools are EFE, IFE, Space Matrix and QSPM. To study Toyota Motor
Corporation, we will perform these analysis tools in further section.

Industry Analysis
PESTLE Analysis:
PESTLE helps in understanding decisions and strategies to maintain and improve
TOYOTA’s position in industry. It focuses on political, economic, social, technological,
legal and environment factors playing role in organization functions in country.

POLITICAL ECONOMIC SOCIAL

TECHNOLOGY LEGAL ENVIRONMENT

Political Factors:
In Japan under covid restrictions 14 plants faced output adjustments and are now
operating after seven months. Reduced demands from government directives, amid
Covid-19, all over world has led to suspending of production of automobiles and
components at some plants locally and in host countries (huaxia, 2021)
Toyota is valuable company in Japan and has been supported by policy makers to lend
its services in different economic, social events. But being in global business requires

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hard core strategies to deal with different policies of different countries especially in shift
of new governments and rulers. In US, Toyota Motors was planning to invest in battery
plant to be built on outskirts of Greensboro, North Carolina to provide electric vehicles.
Japanese company has been under pressure by its competitors. This high pressure led
to decision of expanding production plants on host land backed my government
(Zalubowski, 2021)
Global sales of Toyota Motors corporation fell to 20.1 percent because of postponed
deliveries in covid 19. (huaxia, 2021)
Political factors of TMC are high keeping Covid 19 situation independently different for
all regions.

Economic Factors:
This year has been tough on many governments in terms of decision making and in
pandemic like many other companies, Toyota and its stakeholders, suppliers, dealers
went through fall in business. Covid-9 has affected economy of Japan and dynamics of
business during this phase has been shifted. (Kanno, 2021) All economies are dealing
with worldwide economic crisis and businesses are shutting down. While few business
activities are resuming in slow-paced around Southeast Asia this may increase Toyota’s
automobile and parts production by the end of year, but aftereffects of pandemic will

remain for some time and economies will take time in recovery. World economies are
observing contraction and Japan contracted at annual rate of 3.6% in months July –
September. (Ap, 2021) Economic Factors are High for TMC.

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Social Factors:

The societies are getting better and smarter with growing time in awareness. Toyota
Motors corporation based in Japan have different user requirements since Japanese
follow what is needed not what they want. While in host countries the approach of buying
changes for European nations everyone is in hunt of better option with more incentives
and quality. (Batal, 2014) Same thought is observed in automobile users of Asian
countries like Pakistan who feel safety and comfort comes handy when car
performances is economically remarkable, spare parts availability, resale (under
developing nation). Toyota is more reliable because of its long running and durable cars.
Reachable for all markets through Toyota itself, their subsidiaries and black market for
third world countries. Their product is seen as more of an investment then necessity.
(Austenfeld Jr)

As Toyota believes in building communities through education and human development,

they are actively participants of socially active initiatives like educational sessions, traffic
awareness programs, disaster management and collabs. Apart from products they
provide Toyota is also actively participant in providing support in natural disasters
through meeting needs of transportation. Since Toyota believes in providing mobility for
all, their recent attempt of “Mobile Toilet” in 2020, made headlines appreciating thought
behind breaking stereotypes and providing everyone including with disabilities more
options going out. (toyota, 2021)

Since 1996 Toyota motors corporation Japan has been actively participating educating
new minds and building their concepts regarding sciences and designs, through
conducting a science craft class for elementary students. These sessions are conducted
by their highly competent researcher and developers. (toyota, 2021)

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Technological Factors:

Technological advancements are at peak in every dimension, researchers are actively

participating in building more sustainable, innovative, and quality solutions for
conventional means. These
advances will bring benefits for
future and Toyota being expert of
TPS has challenge of bring
change in their foundation of
managing systems. They are
actively participating in research of
ecofriendly cars using alternative
energy resources. (Morita &
Benders, 2007)

Toyota’s hybrid vehicle Prius was

introduced in 1997 and since then
Toyota has been giving new
direction for hybrid vehicles as
they launched hybrid SUV in 2005
which has new generation hybrid,
high compatible system. Toyota is
thriving for automobile industry shifting towards quality control, electronically compatible
technological advancements in their models. (Elsmar, 2021)

Environmental Factors
Any change in environment effects all industry but not indifferently. For TMC supply
shortage leads to termination of production in two factories in Japan amid Covid-19
situation in country. The ups down have been observed in production due to pandemic
situation worldwide but as per spokesman TMC will keep its financial year production
target 9 million vehicles worldwide. (Reuters, 2021)

Automobile industry must follow the standards from waste gas emission, light weight,
recyclable, economy in consumption, safety standards set by different regions in the

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world especially Europe. With time and
maturity, focus of all companies shift towards
sustainability and eco-friendly.

TMC has been working on hybrid systems

since 1990s to reduce gas emission and less
fuel consumption (Austenfeld Jr) These fuel-
efficient cars have given Toyota competitive
advantage especially in Europe countries
where green and sustainable approach is new
strategy.

Legal Factors
Toyota’s business is expanded globally thus it must work on legal requirements set by
each country. The company was planning on battery plant investment in North Carolina
US and expanding their battery production development globally, due to Covid-19
pandemic South Asian countries limited imports while in US Toyota plans local
production (Kanno, 2021). Automobile industries are bound to legal aspects of
passenger safety code. While Toyota focuses on customer safety and comfort, recent
problem of their airbags sudden explosion on use caused death of 23 people worldwide
and these incidents had repercussion on Toyota’s image and financial stability. In
beginning of 2019, Toyota recalled its 1.7 million cars including Toyota and Lexus.
(Reuters, 2021)

PORTER’S Five Forces Model:

To access the attractiveness of any industry and its structure analysis, Michael Porter
presented five forces framework. These forces are competitive rivalry extends, entry
threats, substitute threats, supplier and distributers bargaining power. If analysis show all
forces high, it suggests industry is not attractive to compete since pressure will be high
with high competition. (Johnson, Scholes, & Whittington, 2008) The model of this
framework is as depicted

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 THREAT OF
ENTRANTS

BARGAINING BARGAINING
COMPETITIVE
POWER OF POWER OF
RIVALRY
SUPPLIERS BUYERS

THREAT OF
SUBSITUTES

Competitive Rivalry – (High)

TMC is directly competing with big names Volkswagen, Hyundai, Nissan, Ford, and
General Motors. Competition among its rivalry is quite high because of operations
advances as Toyota is still working on its conventional workflow. TMC despite being
behind smart work environment remains top industry in Japan and second largest in the
world. (Roberts, 2021)

Threats of Substitute – (Low)

Transportation has many alternative means cars, bike, train, bus and at some level
these alternates provide economical movements such as busses.

The threat of substitute in vehicle industry is quite low since with changing environment
the need of cars is increasing and TMC is working on more prototypes, connected cars
concept is among this innovative design (TOYOTA MOTOR CORPORATION, © 1995-

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2021 ). For TMC, quality and customer satisfaction has created a trust loyalty factor
which is also reason of low substitute possibilities.

Bargaining Power of Buyers – (High)

Buyers of automobile industry are vast in terms of their requirements. With increasing
pressure on TMC of its competitors the bargain of buyers has shifted to high scale as
they have more options and variety available in this industry. Buyer’s interest is in safety,
cost, quality, reliability, economy, and futuristic approach. TMC is realizing changing
need of buyer thus working with other small companies to build economical cars using
sustainable natural energies source to minimize carbon dioxide and harmful emissions
from engines. Brining Artificial intelligence to provide buyer futuristic experience with one
touch gestures and even flying cars to enhance experience of buyer.

Bargaining Power of Suppliers – (Low)

TMC suppliers are around 200 in number, and they have variety of large and small
suppliers. These suppliers have no threat to TMC in terms of integration and business.

Threat of Entrants – (Low)

Threats of entrants are low in automobile industry, but this is large industry with large
capital requirement for raw material, production, manufacturing, and distribution
channels. It requires managerial, technical expertise and require ample time for
marketing, sales, and profit generation. (Fujimoto, 1999) For TMC new entrants are
bringing innovation in operations and low-price strategies which eventually put pressure
on Toyota motors corporation.

At some point legal aspects mature companies are protected from new entrants
especially for global business the import taxes create difficulty from entering.

SWOT ANALYSIS (OT)

Opportunities
1. Environmental policies have created great opportunity for TMC to drive home
its advantage in new technology.

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 2. Dovetailing Online platform to provide great deal of customer help services
by focusing on addressing individual need of customer can TMC to maintain its
loyal customers with great service and lure new customers as well.

3. Recent surge in demand of green drive puts TMC as among top contenders
bringing an opportunity for procurement of Toyota Motor Corporation products by
various country’s federal car contractors.

4. TMC has opportunity to capture more customers by virtue of Economic uptick

and increase in customer spending after slow growth rate during COVID 19
pandemic.

5. Company will be acquiring maximum information regarding the customer

needs through its much-invested online platform.

6. Toyota is backing SkyDrive, which is bringing technological advancements in

mobility as they successfully conducted first flying car test.

7. TMC has been investing lately in new venture such as Carbice, nanomaterials
developer to help resolve temperature issues in Vehicle’s electronics.

Threats
1. Difficulty to maintain the steady growth of profits by TMC due to shortage of
skilled workforce in global market.

2. Advance technologies developed by competing companies present serious

threat to the TMC for medium to long term future.

3. Ever increasing demands of rise in hourly wages would be a serious pressure

on profitability of Toyota Motor Corporation

4. Shifting of consumer buying behavior from online platform could be a threat to

physical infrastructure driven supply chain model.

5. Imitation of the counterfeit and low-quality products attracts low-income

markets posing a threat to TMC.

6. Liability laws in different countries are different and TMC may be exposed to
various liability claims given change in policies in those markets.

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 7. The demand of the highly profitable products is seasonal in nature and any
unlikely event during the peak season may impact the profitability of the company
in short to medium term.

EXTERNAL FACTORS EVALUATION (EFE)

The EFE matrix, external factor evaluation identifies external factors.

Toyota Motor corporation score 2.69 which is more than 2.50 that indicates there are more
opportunities than threats. TMC could do better in coming years as for this year 2021, the
covid 19 has affected all businesses and industries and as for TMC is doing quite well
keeping in current environmental situation.

INTERNAL AUDIT

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Strategic Capabilities and Competitive Advantage
Capabilities of an organization are existing potential that direct efforts in business. These
capabilities are divided into three types: strategic, core and foundational.

Competitive advantage of any company over other its competitors is liked with creating
value in its value chain, using their core competencies affectively to stimulate
sustainable margin over competitive business. Business portfolio and company image in
industry impacts the growth and business. It creates customer base and word of mouth
makes first impression. Thus, image of company provides in competitive advantage, it is
also increased through innovation in goods & products. (Vijaya, Moeljadi, & Rahayu,
2021)

Strategic capabilities set by company provide competitive advantage, similarly Toyota

Motor corporation has strong strategies in competitive advantage. TMC has strong value
chain and strong customer base because of their hard work in building quality, reliable,
sustainable products.

TMC implementations of their mission, values and ethical approach build positive image
not only in Japan but around the globe where they provide quality services. TMC’s
Strategic approach has remain aggressive and company has managed to continue
strategically competitive. There is long-term strategy: through kaizen (improvement) and
Kukushkin (innovation), is production of different models worldwide. (Itsuki, 2021)

 TMC’s competitive advantage will be gained through their sustainable strategy of

energy efficient, low consumption vehicles. (Research, n.d.)
 TMC manufacture are in 27 countries operating efficiently and in 170 countries
their networks are laid commercially with around figure of 600 subsidiaries.
( NASER, 2021)
 TMC in recent years focused on marketing techniques and prioritize
communication through means of social web platforms, Facebook, YouTube,
twitter. They are trying integrated approach of marketing strategy to build strong
customer service platform. ( NASER, 2021)

Value Chain Analysis:

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In depth analysis of business procedures that any company follows from putting input to
receiving output. Value Chain analysis provides information of these procedures to

increase efficiency of product development is done through optimum utilization.

(Johnson, Scholes, & Whittington, 2008)

Inbound Logistics: TMC doesn’t manage small parts, raw material but are obtained
from outsource to ensure quality, machinery is imported from Japan and provided to
these third parties. Outsourcing to third party not only increase time management but
quality control. (Toyota, 2021) Toyota has around 200 suppliers among these, two
pioneers; Nippon Denso Co. ltd & Aisin Seiki Co. Ltd, were developed by TMC and later
these became independent component makers. To improve and control Quality of
suppliers Toyota established Quality Control Reward in year 1969 with need of time
Toyota also provides workshops and training to ensure their goals are achieved.
(Elsmar, 2021)

Operations: Toyota Motor corporation has efficient and most reliable operations
management. TPS is Toyota Production system widely known, studied for its efficient
and effective assembly manufacturing.
This stability by TPS is because of three
pillar concepts, Just in time (JIT),
Continuous improvement, Jidoka. All
three concepts have equal importance
and significance in providing stable
operations. Just in Time refers to
production only when there is

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requirement or demand which increases time of production of single unit, incorporating
maximum customer demand. JIT takes one piece flow and uses pull system which
suggests flow of raw material only as per requirement. Jidoka refers to collab between
machine and human resource (Kulkarni, 2016)

Outbound Logistics: It includes collection, storing of product and distribution through

distribution channel to buyers. TMC takes its vehicles distribution through dealers very
critically as there are two major channels of domestic and overseas. Overseas
distribution is done by air, by sea and by road in containers.

Marketing & Sales: TMC believes in quality for all customers and focus on marketing
and promotions are as important.

Service: TMC provides after sale services to its customer to keep value of their product
and customer loyalty intact. The other services and maintenance to all customers and
keep their products record for R&D. (Kulkarni, 2016)

In value chain these main procedures are directly linked with supporting activities and
how these activities perform efficiently depends upon management strategies. TMC
handles all department of infrastructure quite smartly and values their team. Human
resource has
been increased
in years with
increasing
demand of work.
TMC provides
training
workshops and
development
research to build
innovative and effective Human resource. These changes lead positive impact on
organizational goals of technological advancements and Toyota has been working
aggressively in technological advancements. The value chain analysis shows Toyota
motors corporation is strong company with highly integrated procedures (Kulkarni,
2016).

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SWOT ANALYSIS (SW)

Strength
1. Automation activities brought consistency of quality to Toyota Motor Corporation
products and has enabled the company to scale up and scale down based on the
demand conditions in the market.

2. Dedicated Customer management department allows high level of customer

relationship management in order to achieve customer satisfaction.

3. Strong Brand Portfolio developed by TMC over years has given expansion in
product line.

4. Toyota Motors Corporation has reliable distribution system. (Austenfeld Jr)

5. Toyota Motors has been very successful at execution of new projects allowing
it to generate fair returns on capital expenditure with new revenue streams.

6. Successful track record of developing new products – product innovation.

7. Company has strong line of suppliers allowing it to overcome supply chain

hiccups.

Weakness
1. The company has been struggling in niche market share because new
entrants provided new challenges and TMC has yet to discover the way.

2. Organization structures addresses only present business model of TMC and

limits expansion of products.

3. TMC will have to emphasize more on training and development of employees to

counter High attrition rate in work force.

4. Net Contribution ad profitability ratio is below the overall industry average.

5. Difficulty in integrating firms and companies with diverse work culture.

6. TMC has failed to gain equal success in segments of products outside its core
business.

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 7. Toyota’s competitor Tesla is years ahead in technology and there is
technological gap.

INTERNAL FACTOR EVALUATION (IFE)

IFE Matrix of TMC

WEIGHTED
INTERNAL FACTORS WEIGHT RATING SCORE

STRENGTHS
1 Automation brought consistency in quality 0.09 3 0.27
2 Customer management department 0.05 2 0.1
3 Strong Brand portfolio 0.09 3 0.27
4 Relaible distribution system 0.07 1 0.07
5 Execution of new projects success 0.11 4 0.44
6 Production & development innovation in track recording 0.04 2 0.08
7 Strong line of suppliers 0.11 3 0.33

WEAKNESSES
8 Struggling in niche market 0.1 3 0.3
9 Organization structures addresses only present business model 0.05 3 0.15
10 High attrition rate faced by employees 0.04 1 0.04
11 Profitability ratio is below industry average 0.09 4 0.36
12 Diverse work culture difficulty 0.02 1 0.02
13 Failure in product segments 0.03 2 0.06
14 Technological gap 0.11 4 0.44
1.00 2.93

TMC has more strengths to utilize as internal factor evaluation shows 2.93 score out of 4
more than 2.50 depicts company is strategically in right direction. TMC requires to focus
on these weaknesses in future to achieve maximum strengths.

Space Matrix:
An important strategic management tool used in selection of strategy by the company to
move in industry with respect to its changing external internal dynamics. With help of 4
quadrant matrix, financial position, stability position, competitive position and industry
position of company is analyzed to achieve strategic approach. Each quadrant provides
different strategic approach, conservative, aggressive, defensive, competitive. Through
grading two points are achieved, drawn on x and y axis to form graph. This indicates
which quadrant strategy is appropriate.

For Toyota Motor corporation following results are formed.

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 Financial Position (FP) Stability Position (SP)
Return of investment (9.05%) 6 Technological Changes (high) -2
Leverage (18.7%) 6 Rate of Inflation (4.4%) -1
Liquidity (1.07) 5 Demand Variability (36 %) -2
Price range of competing
Working Capital (-8.8 % ) 3 products (medium) -3
Barriers to entry in market
Net Profit Margin (10.3 %) 7 (high) -1
Inventory Turnover (7.8) 7 Competitive pressure (high) -1
Return on Assets (5.4 %) 5 Ease of exit from market (high) -1
Price Earnings Ratio (9) 5 Price Elasticity of demand (low) -1
Average FP 5.5 Average SP -1.5
Competitive Position (CP) Industry Position (IP)
Market share (6.6 %) -1 Growth potential (high) 6
Product Quality (high) -1 Profit Potential (high) 7
Product Lifecycle (high) -2 Financial Stability (5) 7
Coustomer Loyalty (high) -2 Extent Leveraged (medium) 3
Capacity Utilization (medium) -4 Resource Utilization (high) 6
Ease of entry into market
Technology Know How (high) -2 (High) 7
Control over Supplier & Productivity, Capacity
Distributers (high) -1 Utilization (high) 6
Average CP -1.8571429 Average IP 6

X axis (CP + IP) 4.14285714

Y axis (FP + SP) 4

All data collected from financial statement (Research, n.d.)

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 FP

Conservative Aggressive

CP IP

Defensive Competitive

SP

The results show, Toyota Motors corporation despite pandemic Covid-19 is doing well
than its competitors. From past two years company has been ranked first for its
business around the world. Company needs to take aggressive strategic approach in
future strategic management decisions. Aggressive strategic approach requires
integration, diversification, or intensive strategies.
Each strategy has its own set of actions which Toyota Motors can opt for.
Integration: Vertical, backward, forward, horizontal, fully
Distribution: Related or unrelated
Intensive: Market penetration, product development, market development
The direction of company is strategically right as it is working on product development
through research on sustainable energy utilization in automobile engines. They are
targeting different countries globally through vernacular marketing strategies. Their
product is reliable, efficient, innovative and produce best quality vehicles.

QSPM Matrix
Quantitative strategic planning matrix is last step of strategy formulation. This analysis
provides best strategy suitable for company to adopt through combination of internal
factor and external factor analysis models. Data in these matrixes of TMC, is collected
from the SWOT analysis, PESTLE, Porters 5 forces model and SPACE Matrix. Each
factor is weighted same as in IFE & EFE matrix. As per SPACE matrix result, TMC need

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to have aggressive approach. The analysis and financial study of TMC shows it has
already adopted aggressive approach which is most extensive and involves expansion
of business grabbing most opportunities. It requires complete watch on competitors and
their actions.

Aggressive Strategy further on dissect provides three strategies: integration strategy,

distribution, and intensive strategies. Each factor is graded with best possible strategy,
indicated by attractiveness score (AS). Once scoring is completed from 1 not attractive
to 4 highly attractive, Total attractiveness depicts strategy alternate attractiveness. Sum
of total attractiveness shows which strategy is best and most attractive.

QSPM Matrix of TMC INTEGRATION DISTRIBUTION INTENSIVE

EXTERNAL FACTORS WEIGHT AS TAS AS TAS AS TAS
OPPORTUNITIES
1 Environmental policies advantages in new technology 0.11 3 0.33 1 0.11 3 0.33
2 Online Platform 0.06 1 0.06 3 0.18 2 0.12
3 Green Drive 0.08 1 0.08 2 0.16 1 0.08
4 Economic Uptick after slow rate during Covid-19 0.11 1 0.11 2 0.22 3 0.33
5 Maximun information acquiring through online platform 0.03 2 0.06 2 0.06 1 0.03
6 Successful flying car test opening technological advances 0.06 1 0.06 3 0.18 3 0.18
7 Nanomaterials research and applications in temperature control 0.1 1 0.1 2 0.2 3 0.3

THREATS
8 Shortage of skilled workforce in global market 0.11 3 0.33 1 0.11 1 0.11
9 Competative technological advancements in industry 0.09 1 0.09 2 0.18 2 0.18
10 Wages demand rises pressure to profitability 0.05 1 0.05 2 0.1 1 0.05
11 Physical infrastructure threat due to online consumer behavior 0.05
12 Counterfeit imitation and low quality products 0.06 1 0.06 3 0.18 1 0.06
13 Liabilities Law in different Countries 0.06
14 Demand of highly profitable products 0.03 2 0.06 1 0.03 3 0.09
TOTAL 1.00
INTERNAL FACTORS
STRENGTHS
1 Automation brought consistency in quality 0.09 1 0.09 2 0.18 3 0.27
2 Customer management department 0.05
3 Strong Brand portfolio 0.09 3 0.27 2 0.18 2 0.18
4 Relaible distribution system 0.07 2 0.14
5 Execution of new projects success 0.11 1 0.11 3 0.33 3 0.33
6 Production & development innovation in track recording 0.04 1 0.04 2 0.08 3 0.12
7 Strong line of suppliers 0.11 2 0.22 1 0.11 1 0.11

WEAKNESSES
8 Struggling in niche market 0.1 1 0.1 2 0.2 3 0.3
9 Organization structures addresses only present business model 0.05 3 0.15 2 0.1 1 0.05
10 High attrition rate faced by employees 0.04
11 Profitability ratio is below industry average 0.09 2 0.18 1 0.09 2 0.18
12 Diverse work culture difficulty 0.02
13 Failure in product segments 0.03 2 0.06 2 0.06 2 0.06
14 Technological gap 0.11 1 0.11 1 0.11 3 0.33
1.00 2.72 3.15 3.93

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The QSPM results provided highest score of intensive strategy must be adopted by
Toyota Motor Corporation. Intensive approach refers to market penetration, production
development and market development.

27
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