Toyotas Strategy and Initiative in Europe Case Study

Toyotas Strategy and Initiative in Europe - Case Study Example However, instead of being engaged in price competition, companies are scaling down their operations. The uniqueness of Toyota's strategy was that it designed and manufactured locally adapted models. This strategy helped the company to increase sales: "by almost 50 percent from 2000 to 2005. The new strategy paid off financially, too. According to Business Week, the operating profit increased ninefold to $654 million in 2003" (Thompson et al 2008, p. C245). Research and innovation are a part of Toyota's success. The company launched its new car Aygo and "challenged many of its traditional views: the car was specifically designed for the European market and exclusively" (Thompson et al 2008, p. C245). For Toyota, this business decision is multi-dimensional and extremely complex. It is impossible to assume that business decisions even approach rationality, let alone perfect rationality. Toyota has to make complex decisions and, because of the multi-dimensionality of their decision conditions, they make many decisions (Annual Report Toyota 2008). Product adaptability and outsources are also key success factors. Today's consumer has a tremendous number of choices. Most of the products are complex and many of them have additives, preservatives, and other chemicals. Some of them are dangerous. Many of them have hazardous long-term effects. It is virtually impossible for the modern consumer to be rational and maximizing. Normal average consumers are typically confused and have difficulty making satisfactory decisions. Even though they may have the capability to evaluate functional product attributes in a rational manner, they lack the time and motivation to do so (Annual Report Toyota 2008). Global expansion and penetration to the North American market improves Toyota's position on the market "For 2006 Toyota was expected to reach 9 million units in production-with luxury brand Lexus reaching the 500,000 units mark for the first time (up from 400,000 units in 2004)" (Thompson et al 2008, p. C246). Toyota follows growth strategies based on the idea that expansion and market development will help it to attract new customers. According to its Annual repot: "Toyota expects to record net sales of 2,000.0 billion ahead of schedule for the fi scal year ending March 31, 2008" (Annual Report 2008, p. 3). The global car market is not only very complex but also not quite open for entry. Investment in research and development improve its position and increase opportunities on the global scale (Financial Results. Presentations 2008). 2. SWOT analysis shows that there is a strong correlation between successful strategies and direction selected by the company and its financial performance. The main strength is stable position on the market and loyal consumers. Financial statements highlight that in 2007 Toyota has increased its sales in 4.7% in comparison with 2006. Its operation income increased in 17.3% and income before income taxes and minority interests increased in 29.2 %. The net income is $40,309 million (2007) in comparison with 30,268 million in 2006 (see Appendix 1, 2). The main opportunity for Toyota is growth. Growth up until the 1990s meant expanding productive capabilities and market opportunities and making sure that this growth would yield better