Free Business Dissertations - In Considering The Industrial Five Forces Framework Identified By Johnson
In considering the industrial five forces framework identified by Johnson and Scholes (2002) the most import factor faced by Toyota was the increasing price of oil and gas, (Manufacturers' Monthly, 2005). The increasing power of one of the most import suppliers for car makers’ generated pressure on Toyota’s operation which caused them to use fewer parts for their vehicles to reduce costs elsewhere. Additionally customer power has increased due to economic prosperity in many of Toyota’s markets as well as for other industries generally meaning customers are at the core of modern business operations. As a result it is essential Toyota to position themselves in the right place for the right targeted customers through differentiation and branding strategies. Unsurprisingly competition in the car industry is highly intense. This is in particular due to the globalisation of major car companies which means Toyota must compete not only with local competitors but also with multinational operators. However recent terrorist attacks means there are more concerns expressed by people over certain modes of transport which means alternative subsidiary products such as public transport have begun to lose competitive advantage over cars which creates opportunities for Toyota. Last but not least the possibility of new entrants in this market is unclear since small businesses along with bigger companies could enter the market despite significant barriers such as capital investment. Also due to the levels of competition some existent operations may exit in the future.
The internal strengths and weakness of Toyota play a vital role in determining competitive positions for the company in response to external and internal opportunities and threats. One of the most important strengths for Toyota can be seen as the superior customer service it delivers based on cost-effectiveness and technological development in relation to its products. It is essential for Toyota to differentiate itself from competitors as well as avoid a pure price war, (Fackler, 2005). In addition the strong brand name and image associated with the company gave it a significant strength and advantage in competing in the global market in particular as it possesses high recognition among consumers. It is fair to say that the well-established brand name of Toyota relied on the strong corporate culture and leadership style which were internal strengths of Toyota. However due to the strict organisational structure and power distances within the organisation there are also weaknesses for Toyota, (Fuss & Waverman, 1992). As an example this less flexible structure to some extent reduced innovation in the company through the creation of structural barriers to inter-organisational communication, especially between different business units in different countries.
The emphasis placed on team work while a strength in one place can also be viewed as a weakness in some aspects for Toyota.
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