Overview of the industry TOYOTAYou have probably heard of these brands: Toyota, Honda, Mitsubishi, Subaru and Mazda. Brands that make cars we see on the street everyday here in Singapore. All these cars all come from one efficient well-oiled machine: The Japanese Automobile Industry.The Japanese Automobile Industry is amongst the top 3 in the world, with its name up there amongst the likes of Germany, China and Korea.
Automobile manufacturing is Japan’s largest manufacturing sector and accounts for 89% of its exports. This in turn created jobs for 5.5 million people, or roughly 8.7% of the total Japanese population.Not only are the Japanese pioneers in the automobile industry, they intend to continue to pioneer and excel in the industry. The total amount invested in R by all Japanese Automotive companies amounted to 2 trillion Yen in the year 2016.Local Market size Demographics(Japan,2016): (drnest)Targeted group and number of males and females15-54 years: 47.35% of populationmale 30.
0 millionfemale 29.9 millionSource: https://www.indexmundi.
com/japan/demographics_profile.htmlGeographic : (drnest)Yokohama, Osaka, Nagoya, Sapporo, Kobe, Kyoto, Fukuoka, Kawasaki, SaitamaPsychographics: (drnest)Hunting for value-reducing costSpending more time at homeBuying Product at homeSource:https://www.mckinsey.
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com/industries/consumer-packaged-goods/our-insights/the-new-japanese-consumer Oversea Market size(US)Demographics(US,2016): (drnest)15-54 years:53.08% of populationmale 86.2 millionFemale 85.3 millionSource https://www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/ Geographic : (drnest)New York City, Los Angeles, Chicago, Brooklyn, Borough of Queens, Houston, Philadelphia, Manhattan, Pheonix, The Bronx, San Antonio, San Diego, Sallas, San Jose, Indianapolis, Jacksonville, San Francisco, Austin, Columbus, Fort WorthPsychographics: (drnest)IndividualismEqualityTime and EfficiencyBusiness environment Internal Environments Organisational culture(drnest)-Japanese are very relationship oriented. Employees are often hired for life.
There is a mutual understanding that the employee will likely remain with company for the rest of his or her working life.-Relationships are critical in japanese business etiquette, foreigners who travel to japan are expected to focus on building a relation as much as their business objective. The japanese which are the host will likely to be very positive in making good relationship with them.-Dress codes and appearance is highly valued in the japan society and they frequently dress formally which is often linked to their status.5.Human resource:(drnest)Japan is first world country and is world ranking, 11th most populous country, at the end of 2017(reference at the end of report). Being populous means to have a high population.
Japan has a population of 126,702,133 within a land area of 364,555km2. Hence having a density of 350. Japan have a big amount of population which will brings potential and capable people to join their workforce excluding talents from other countries.Source: (http://www.worldometers.info/world-population/population-by-country/) 6.Organisation structure:(drnest)Organizational structure describes how an organization accomplishes its goals, decides the tasks that need to be performed, and who makes the decisions.Toyota have been following strictly to an organizational structure called, centralized decision making.
. It is an traditional japanese business hierarchy. Most of the senior executives will making the decisions for the entire organization. For example, Toyota plants that are located in the U.
S. are strictly monitored by japanese counterparts so that the americans is following structured protocols.7.Management:(drnest)President of Toyota, Akio Toyoda, since June 23, 2009″If I were to summarize my thoughts about this fiscal year, I would say this year will be a test of whether we can transform our intentions to reality. We have been working to strengthen our management foundation, knowing that there will be more uncertainties which could result in a multitude of changes.
Rather than simply reacting to events as they occur, we must always be ready to overcome any circumstances and face up to the changes ahead without wavering from our main goals.”Source http://www.toyota-global.com/investors/common/pdfviewer/?file=/pages/contents/investors/ir_library/annual/pdf/2016/sustainable_management_report16_fie.pdf External Environments 8.Climate: (Krishaan)Japan has 4 distinct seasons starting with a cold and dry winter. Winter is from December to February. Spring is from March to May.
Summer is from June to August. Autumn is from September to November. Cars that are made for Japan will have features to withstand all four season. For example: Heater for winter.
Due to the large North South extension of the country, the climate varies strongly in different regions. Typhoons hit parts of the country every year during late summer. The climate of the northern island of Hokkaido and the Sea of Japan coast is colder, and snow falls in large amounts. 9.
Economy: (Krishaan)Japan is a highly developed and market-oriented economy(based on supply and demand). They are also the 3rd highest in nominal GDP and 4th in PPP. GDP per capita was $38550 for the year of 2017.
3rd largest automobile manufacturing country. Having a volatile exchange rate causes their GDP which is measured in Dollars to fluctuate.10.
Technology: (Krishaan)Japan seems to be pale in comparison to countries like US when spending on R.Driver inattention warningPark assistAutomatic leveling on headlightsHELPNET™(Emergency Call System)11.Political: (reuben)Japan being a constitutional monarchy, their Emperor power is limited and restricted mainly to ceremonial duties. The Japan government is being divided to three branches, Executive Branch, Legislative Branch and the Judicial Branch.
Between those branches, they hold different power. Executive power is vested by the Prime Minister(Shinzo Abe) as head of government, Legislative power is vested by the bicameral parliament and the Judicial Branch is vested by the Supreme Court and other inferior courts. 12.Legal:(reuben)Toyota like every other companies, are affected by numerous law. In particular, tariffs, pricing regulation, wage legislation, product labelling requirements, taxation, environmental regulations and intellectual property protection, legal obligations for contract and trade regulations.13.Competition: (reuben)There are 20 car manufacturer in Japan, as Toyota being the one dominating the Japan automotive market with a market share of 30.7%.
With Honda being the second dominating the market with a market share of 14.2%.Source: https://www.best-selling-cars.com/japan/2016-full-year-japan-best-selling-car-manufacturers-brands/14.
Media: (reuben)Toyota have their own web where they will update their media on it. Where viewers will be able to see the latest Toyota car designs, news, history, photos and etc.Source: https://newsroom.toyota.co.jp/en/tms2017/15.What is the growth potential? (yong kiat)Growth potential is an organization’s future ability to generate larger profits, expand its workforce and increase production.
For Toyota, its growth potential is high as there are more upcoming developing markets in Southeast Asia and South America. With the low amount of car ownership combined with rising disposable income, makes it the most optimum time for the automobile market to make demands in these countries in the long team. Toyota is known for its no-frills, low-maintenance and good value for money product company works well with the demands of the customers in the emerging economies. The current progress of Toyota is that they opened its fourth auto plant in Indonesia. Using the plant in Indonesia to manufacture Etios Valco, the model that was recently launched in the country. The income segment is expected to grow by 16.
5% by 2020 implying nearly 40 million potential car buyers.16.Who is the most recent player? How did it succeed or failed?(yong kiat)Japan most recent player etc fail succeedSub branches:— Lexus in (1989 – present)Is the luxury vehicle division of japanese automaker Toyota.— Infinity in (1989 – present)Is the luxury vehicle division of japanese automaker Nissan.— Scion in (2003 – 2016)Scion has suffered years of sales declines, but it seemed like Toyota had a plan to turn the brand around. In 2015, the entire Scion brand sold 56,167 cars — less than the number of Toyota Avalons sold.
Its highest sales year was in 2006, when it sold 175,000.Main branches:— Mitsuoka in (1981 – present)noted for building unique cars with unconventional styling, some of which imitate British vehicles of the 1950s and 1960s.17.
How do your competitors market their products? (yongkiat)Identify the different competitive forces( the slide image) to the different competitors we choseHonda Rivalry Among Competitors: Strong ForceCompetition in the automobile industries is very high, as there are many firms in this industry that caters to many varieties of customers, so each firm try to do its best to make more profit than others, making its product more appealing and sellable in the market.Threats of Substitutes: Weak Forcethere is no huge threat of substitute in the automobile industry regarding utility, independence and efficient, even if there is a large variety of transportation, such as bicycles, subways, buses, trains and airplanes. Those could make our life easier, but that can be less convenient than automobiles. The price of fuel affects the consumer’s decision to purchase vehicles, along with the maintenance and the insurance of the car, but automobile will still be important in our personal and daily life.Barriers to Entry: Moderate Forceit is not easy for an entrant to enter into the automobile industry easily, because of the loyalty that the consumer have for the brand. It is important for recognised companies to have barriers to entry to protect themselves, as there are some companies are entering into foreign markets by buying an existing company or merging with it and making a large profit.
Buyers Bargaining Power: Strong Forceconsumers have many choice to choose from with the large amount of brands out there, but the factors that affects the consumer to buy a certain brand from another are: appearance, quality, price, design. Consumers always want something new and nice looking with the latest technologies. The car have to be efficient, fuel-saving, and smooth.Suppliers Bargaining Power: Weak Force there are many suppliers in the automobile industry, and there will be multiple suppliers fighting to be the one that the manufacturer buys their parts in bulk from. If the manufacturer chooses to switch suppliers, it will deal a devastating blow to the suppliers. Thus the manufacturers can switch suppliers freely, the suppliers holds little power.
Toyota Competitive Rivalry: Strong ForceCompetition in the automobile industries is very high, as there are many firms in this industry that caters to many varieties of customers, so each firm try to do its best to make more profit than others, making its product more appealing and sellable in the market.Buyers Bargaining Power: Strong ForceThe low switching costs mean that customers can easily change from Toyota to competing firms at no extra cost. This change typically happens when customers buy a new car. In addition, Toyota’s customers can easily choose their best option because they have access to accurate information, such as product information from companies’ websites. Substitutes are available, although cars from firms like Toyota are still better in terms of convenience. In this part of Toyota’s Five Forces analysis, the combined effect of these external factors is the strong force or bargaining power of customers.
Toyota needs to ensure that its products match the preferences and expectations of its target customers.Suppliers Bargaining Power: Weak ForceThe limited population of suppliers around the world creates a moderate force that influences Toyota. Theoretically, this bargaining power is higher when the suppliers are fewer. However, the high availability of supply used for manufacturing Toyota’s products weakens suppliers’ power. In addition, majority of suppliers in the global automotive industry do not have forward integration or ownership and control of the distribution of materials that reach firms like Toyota. Thus, this part of Toyota’s Five Forces analysis highlights the company’s relative ease in addressing the weak force or bargaining power of suppliers.
Threat of Substitution: Moderate ForceIn most cases, it is relatively easy for customers to shift from Toyota to substitutes. These substitutes to Toyota products include public transportation, bicycles and other modes of transportation. However, these substitutes are only moderately available. In some areas, substitutes to Toyota’s products are absent, such as in some suburban areas where public transportation is not readily available. In addition, these substitutes are usually less convenient than using the products of firms like Toyota.
In this part of Toyota’s Five Forces analysis, the combination of such external factors in the automobile industry creates the moderate threat of substitution that Toyota must address by making its products more accessible, affordable and convenient.Threat of New Entry (Weak Force)Toyota faces the weak threat of new entry. The high costs of establishing, maintaining and growing a new firm in the industry are significant entry barriers. These barriers weaken the effects of new entrants on companies like Toyota. This force is less significant than competition and the bargaining power of customers on Toyota’s business.
Thus, this part of the Five Forces analysis shows that the threat of new entrants is among the least of Toyota’s concerns in growing its business and maintaining its positions as one of the top automobile manufacturers in the world.Nissan Industry rivalry:means the intensity of competition among the existing competitors in the market. Intensity of rivalry depends on the number of competitors and their capabilities. Each company is struggling to maintain their power through competitions. Industry rivalry for Nissan is high where customers have plenty of choices of cars in the market such as luxury cars, sports cars and many more. There are number of equal or small competitors for Nissan such as Honda, Toyota and many more. The customer’s switching costs are also low where the industry is growing.
In the automobile industry, the exit barriers are high so rivals stay and compete. These situations are the reasons for price wars, advertising wars and product differentiation.Threat of new entry: relies on the entry and exit barriers. It is in a company’s interest to create barriers to prevent its competitors to enter to market. They are either new companies, or companies which wish to diversify. The arrival of new entrants also depends on the size of the market. Nissan is having a low threat of new entry where automobile industry has high entry barriers and low exit barriers.
For any Nissan competitor, there are significant barriers to entry such as high capital requirements to start the business, difficulties in finding and sourcing suppliers to build various components, high customer switching cost and various differentiated products.Threat of substitution: means how easily the customers can switch to the competitors product. The substitute products can be considered as an alternative compared to supply on the market. So substitutes are a threat to your company. The threat of substitute products of Nissan is moderate. Nissan certainly works to build brand and there are Nissan loyalists, but there are many substitutes in the market for customers like Toyota, Honda, Hyundai and more as well as other modes of transportation. Customers of Nissan can easily find the product or services at the same or less price but with different technologies, branding and qualities.
Different technologies, branding and quality of Nissan’s products keep the threat of substitute to be moderate.Bargaining Power of supplier:means how strong is the position of a seller and how much the supplier has control over increasing the price of supplies. Nissan has limited bargaining power of supplier. Like all car companies, Nissan has some switching costs and transaction costs to switch suppliers, so the suppliers probably have some negotiating power, but it’s probably limited where Nissan has very small number of suppliers around the world. For example, Nissan is an important customer to SynQuest where contract with SynQuest has made to plan solutions with Penske Logistics providing the logistics design services and IBM, hardware infrastructure which offer integrated software and services for optimizing logistics chain.Bargaining Power of Buyers means how much control the buyers have to drive down the products price.
Nissan’s customers have low buyer power. This is because the shopping cost for the product is high and. Besides, buyers are pretty fragmented around the world, and new cars can only be sold through authorized dealers, so buyers have relatively little power. Buyer’s bargaining power is low when offer differentiated product. Nissan will not face a big crisis because the buyer power is low.
Porter’s 5-forces analysis defines the external environment and forces of Nissan. This will help Nissan in controlling their power and the external power to gain more profits and to stabilize their position in the market place.-Overview of the companies to be analysedDefinition; A company overview (also known as company information or a company summary) is an essential part of a business plan. Your company overview should be exactly what it sounds like: an overview containing all of the most important points about your company. It usually appears after the executive summary.18.Honda’s overview krishHonda Motor Company Ltd. It was established in september 1948.
The current president is Takahiro Hachigo. Honda have highlighted always that their core business is engines. Their main business activities include production and sales of automobiles, motorcycles, and power products.
Honda has a capital of 86 billion Yen as of 31st march 2017. They have 442 affiliated companies in and out of Japan.Their mission statement is as follows “Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction.”19.Toyota’s overview drnestToyota Motor Corporation (™) is the world’s largest automaker by volume.
It is established in 1937 being the industry’s pioneer. Akio Toyoda is the current president of Toyota Motor Corporation, he has been the president since june 23, 2009. Toyota is taking great steps in developing eco-friendly automobiles which helps in achieving low carbon society. Toyota mission is “To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America.
” Toyota Vision is “To be the most successful and respected car company in America.”20.Nissan’s overview reubenNissan Motor Co. Ltd was established in 26 December 1933. The current president is Hiroto Saikawa.
Nissan core vision is ‘Enriching people’s lives’ and they are committed to delivering unique and innovative vehicles and mobility services with value that is recognized by their customers. Nissan mission is to provide unique and innovative automotive products and services that deliver superior measurable values to all stakeholders in alliance with Renault.Nissan continues to optimize product development and deliver high innovative technology.The SWOT of the three companies(Your selected company and the two major competitors) based on the above information.21.
Honda’s SWOT krishStrengthWide variety of productsStrong position in Asia’s motorcycles marketUnique aerodynamic designQuality ISO certification for all 51 honda production facilities around the worldWeaknessHigh cost and pricesLimited car designsOpportunitiesElectrical and alternative fuel vehiclesExpansion in developing countriesDesire for Hybrid and electrical carsThreatFuel pricesCompetition from each country it is present in22.Toyota’s SWOT drnestStrengthInternational position in 170 countriesSecond largest manufacturer in the worldBest known for durability, reliability and value for money and convenientBrand image in market based on quality and environmental friendlyWeaknessWeak Presence in ChinaLack of competence in autonomous vehiclesOpportunitiesIncreasing Demand for autonomous vehicleUpgrade its model with current technology(volkswagen auto parking, BMW remote control)Governmental support for eco-friendly productThreatRising Japanese currency (importer need to pay more)The increase of competitors across the globePotential to have financial crsis (tsunami or earthquake, japan economy will go down, export freezed)Additional notes:Political stability in most major markets (opportunity)Free trade agreements (opportunity)Governmental support for eco-friendly products (opportunity)Autonomous vehicle-An autonomous car and unmanned ground vehicle is a vehicle that is capable of sensing its environment and navigating without human input.23.Nissan’s SWOT reubenStrengthSuccessful Renault-Nissan allianceInvestments in R that result in best-selling electric vehicleLeader in zero emissionsWell-manage company’s operationsWeaknessFalling sales in home marketMassive Product recallsPoor marketing and advertising capabilitiesOpportunitiesMore joint ventures to venture overseasTiming and frequency of new modelsIncreasing demand for zero emission vehicleThreatRising prices of raw materialsRising exchange rates of Japanese YenIntense competition with other automobile brandsChallenges facedA crucial long term challenge for Japan is its rapidly ageing and declining population, projected to drop from 127 million people to below 100 million in 2053 and to 88 million people in 2065.
To help address these issues, drive growth and combat deflation the Japanese government initiated in 2012 an economic policy known as ‘Abenomics’, deploying the 3 ‘arrows’ of monetary easing, a flexible fiscal policy, and structural reforms. These were augmented by additional ‘arrows’ in 2015, which included measures to address population decline.In pursuit of these policies, the central bank has adopted bold and unconventional monetary policy. Japan’s public sector debt, the world’s largest, currently stands at over 245% of GDP. Japan increased its rate of consumption tax (VAT) from 5% to 8% in April 2014. A second proposed rise in VAT (to 10%) has been postponed until October 2019. Some progress has been made with structural reforms, notably energy market liberalisation, agricultural co-operatives, and corporate governance.
Despite US withdrawal, prospects for the Trans-Pacific Partnership (TPP) are being investigated by the remaining members including Japan and this, together with the EU-Japan Economic Partnership Agreement (EPA), still under negotiation, should help raise economic growth.As a country with limited natural resources, Japan is dependent on imports, especially oil and gas, food and raw materials for industrial production. This dependence increased in the aftermath of the 2011 tsunami that resulted in the closure of all nuclear reactors in Japan causing a massive increase in energy imports. Some nuclear reactors resumed operation in 2015.
