Toyota SWOT Analysis Essay

by Simon White Free SWOT Analysis

Last modified on May 6th, 2022

This is a free Toyota SWOT analysis available for all students. You should use it only as a reference.

Company Details

Founder:Kiichiro Toyoda
Founded:August 28, 1937, Japan
Headquarters:Toyota, Aichi, Japan
Subsidiaries:Lexus, Daihatsu, Subaru Corporation, MORE
Parent organizations:Mazda Motor Corporation, Suzuki, Subaru Corporation, Denso, Toyota Industries, Toyota Group
Record label founded:Scion Audio/Visual
Executives:Shigeru Hayakawa, Koji Kobayashi, Taro Kubo, Yoji Matsuyama

Founded almost 90 years ago, Toyota did not take up much time to become one of the best and most influential companies in the automotive industry. The Japan-based auto giant has never ceased to forego its pursuit of technological prowess and innovation for profits.

Now the brand is synonymous with high-quality vehicles that can retain their value for a long time. That’s why people always have the safest bet in purchasing Toyota vehicles.

With nine decades of production and identity on the line, Toyota Motor Corporation is facing many opportunities and challenges in the industry. Let us conduct a SWOT Analysis to get a vivid picture.

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SWOT Analysis of Toyota

By going through four major elements to gauge the health and position of Toyota, we will be able to better understand its current situation as well as the future outlook. All of these elements are categorized into two distinct categories. Internal strategic factors and external strategic factors.

We will also present a SWOT Table at the end of the analysis for a quick view of the most important aspects of the relevant elements.

Toyota Internal Factors

The internal factors involve the strengths and weaknesses of Toyota that are in much control of the company itself. Before exploring the external factors, let us take a hard look at them.

💪 Strengths

Toyota has many competitive advantages over its direct and indirect competitors which are called its strong points.

Global brand recognition, impressive R&D, and a lion’s market share in the industry are some of the strong points of Toyota company in its SWOT Analysis.

Global Brand Recognition

When it comes to sheer brand recognition, Toyota has never had to be shy about it. From its classic product lines to its iconic logo, everything about Toyota is recognizable even from a distance. In many vehicle classes, the brand has even been used as a noun.

Impressive Development & Production Methods

Toyota production system achieved this success by adhering to impressive development and production methods coupled with an industrious mindset. The company believes in respecting its customers and employees while innovating on all fronts.

Business Philosophy

Toyota’s business philosophy is about constant development and innovation. The company ensures that it always follows this philosophy to stay relevant. This is one of the biggest strengths of Toyota.

String of Patents

Although EV vehicles are on the rise in terms of popularity and footprint in the worldwide automotive market, Hydrogen fuel cells are also catching up with the rising demand. Toyota Motors owns around 6,000 patents related to this alternative technology.

Solid Stocks Performance

Due to the recent pandemic, other companies were met with a spiraling meltdown, with stocks dropping to their all-time lows. When compared to one of its competitors, General Motors, with a total of 64% plunge in the stock price, Toyota fairly weathered the crisis with only a 15% plummet.

Ranges of Vehicles

Although Toyota was widely known for its fossil fuels-based vehicles, now the company has successfully refocused its product lines with differentiated vehicles, including hybrid electric vehicles. Toyota now offers conventional models along with experimental, bleeding-edge automobiles.

Research & Development

Toyota allocated a large percentage of its revenue to research and development in the automobile industry. This expense pays off in developing and designing new vehicle models as well as streamlining the production. It is because of solid R&D spending that Toyota has refined its Solid-State battery technology ahead of schedule.

Consumer Trust

There is not even a competition between Toyota Motor Corporation and its competitors when it comes to consumer goodwill and trust. The brand is synonymous with reliable vehicles that can retain their value for decades.

Lion’s Market Share

Compared to other leading automotive brands at both home and abroad, Toyota enjoys a lion’s market share with over 38% in terms of car sales.

🤒 Weaknesses

The inherent problems or flaws in the business model or operations of Toyota are known as its weaknesses in the SWOT Analysis.

Labor discontent, vehicle recalls, and uneven global footprint are some of the weaknesses that stop Toyota Motor Corporation from working up to its full potential.

Vehicle Recalls

Toyota has set the highest standards in quality and production in the industry. Still, it has to recall batches of its vehicles often. This results in mounting costs as well as the devaluation of trust.

Labor Discontent

Labor strikes and issues can lead to poor production rates and unnecessary delays. Toyota recently had to put up with a situation like this in India resulting in a poor company image.

Taut Management Hierarchy

The taut and unyielding management has led the company through all these years. While this is great for strict controls and quality, it suffocates creativity and innovative ideas among the ranks.

Skewed Global Footprint

Although it is a global brand, Toyota is very much popular in the US, Europe, South East Asia, and Asia at large. Still, the company has yet to find a home in Africa, the Middle East, and even South America.

Technology Gap

Toyota is truly a company that not only follows and adapts innovation but also leads it in the automobile industry. With the rise of new and unconventional car companies, such as Tesla, it seems Toyota is facing a technology gap.

Toyota External Factors

The external factors in a SWOT Analysis

🤑 Opportunities

The market potential or a vacuum in the industry that Toyota can fill to solidify its gains are known as opportunities.

Through SkyDrive ventures, smart future investments, and strategic use of AI and big data are some of the opportunities that can help Toyota pick up the pace against its competitors.

SkyDrive Ventures 

Toyota is one of the major investors in the flying car start-up in Japan – SkyDrive. The company is still far away from getting its fleet of flying cars in the air, Toyota believes it to be a worthy investment.

Smart Future Investments 

Just like other innovative automotive manufacturers around the globe, Toyota is working on its self-driving cars, along with improving hybrid technology. The venture is named Guardian and Chauffeur which will help people with poor experience in driving as well as people with old age, respectively.

Development of Nanotechnology

The company has recently diversified its investment portfolio by joining hands with Carbice – a nanotechnology company in Atlanta. This will help Toyota Motor Corporation in making its vehicles lighter, quieter, safer, and cooler, making them the best in class in the automotive industry.

Utilization of AI & Cloud-Based Technology

By investing big in AI and other cloud-based technologies, Toyota can not only improve its designing and development process but also enhance the consumer experience by providing world-class vehicles.

Strategic Big Data Processing

Toyota can take advantage of big data to further streamline the car-owning and driving experience. The application of big data includes predictive maintenance, autonomous driving, and use-based insurance for conventional and hybrid electric vehicles.

Pronounced R&D Spending

The R&D budget of Toyota is still spectacular when compared to other companies. The company is still planning to increase it to match the demands and competition. This will also help the company in bridging the technology gap.

😨 Threats

Threats are some of the crucial disadvantages that Toyota is at which can potentially lead the company to complete downfall. They are known as threats in the SWOT Analysis:

Political uncertainty, stiff competition, and economic recession due to the pandemic are some of the dire threats that can put the sustainability and survival of Toyota Motor Corporation at risk.

Political Uncertainty

Large corporations like Toyota, suffer immense losses in both the short and long term during political upheaval and unrest. With developments like Brexit and others, Toyota could suffer heavy losses due to affected cash flow.

Catching Up with Tesla

Even though Toyota is one of the largest and most influential car manufacturers in the automobile business, it is still far behind in terms of value when compared to Tesla, a comparatively new entrant. Toyota needs to catch up with Tesla to improve its future outlook and growth.

Economic Recession

Economic recession as the result of the pandemic, Toyota company has incurred immense losses. Estimates put the number around 74% which the company expects to continue until the cloud of uncertainty dissipates.

Pandemic Restrictions

During quarantine and lockdown regimes during the COVID-19 restrictions, both the production and sales of the company vehicles have declined, along with that of other auto industry players. After rigorous testing and vaccination drive, the economy is recovering which will in turn recover the company.

Stiff Competition 

There is no rest for automotive makers in this day and age. The arch-rival duo of Toyota – Volkswagen, and Tesla is hitting the company pound for pound. If this trend continues and the value of competitors continues to soar, Toyota will have a hard time dealing with the repercussions.

Toyota SWOT Table

Toyota SWOT Table

Strengths

  • 💪 Global Brand Recognition
  • 💪 Impressive Development & Production Methods
  • 💪 Business Philosophy
  • 💪 String of Patents
  • 💪 Solid Stocks Performance
  • 💪 Ranges of Vehicles
  • 💪 Research & Development
  • 💪 Consumer Trust
  • 💪 Lion’s Market Share

Weaknesses

  • 🤒 Vehicle Recalls
  • 🤒 Labor Discontent
  • 🤒 Taut Management Hierarchy
  • 🤒 Skewed Global Footprint
  • 🤒 Technology Gap

Opportunities

  • 🤑 SkyDrive Ventures
  • 🤑 Smart Future Investments
  • 🤑 Development of Nanotechnology
  • 🤑 Utilization of AI & Cloud-Based Technology
  • 🤑 Strategic Big Data Processing
  • 🤑 Pronounced R&D Spending

Threats

  • 😨 Political Uncertainty
  • 😨 Catching Up with Tesla
  • 😨 Economic Recession
  • 😨 Pandemic Restrictions
  • 😨 Stiff Competition

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