Strategic analysis involves analysis of the general environment, the competitive environment and organization's internal environment. I would like to apply PEST analysis and Porter's Five Forces in this report. The following Report concerns global car maker Toyota. My report will focus more on the automobile market of United States and Malaysia. Laws and government regulations have affected automobile industry since the 1960s. Most of the consumers are concerning for the environment and safety of automobiles.
Porter and Van Der Linde (1995) point out that environmental regulation, such as reducing pollution. Japan automotive industry is developing global warming reduction technologies used in design and manufacture of automotives, hydrogen fuel cells, fuel-efficient car and low emission technology (The Star Online). Safety is the vital for automotive industry to reduce the road accident. In Malaysia, the Road Transport Department (JPJ) and police will start issuing summons from Jan 1 to all passengers not wearing their seatbelts under the Road Transport Act 1987 (The Star Online).
The regulation has pushed automotive industry to increase their production cost to develop high quality car to ensure consumer drive safety on road. The automotive industry has a huge impact on every segment of country's economic. Majority layoffs and salary cuts are due to economic downturn of 2008. The changes of income with directly affect the consumer buying behavior. Apparently, many of automotive industry are making loses. Since Toyota founding in 1937, it had never reported a full-year operational loss that is until the downturn of 2008-2009.
The United States Big three automotive company- Daimler Chrysler, Ford Motor and GM suffering the market share losses (The Star Online). The decline in the automotive industry is facing the biggest challenge. The automotive industry needs a restructuring to strengthen its capacity. The social factors influence consumer's buying behavior and lifestyle. Today's realistic society judges people on brand and types of car you drive. Anyone who drives a nice and branded car is consider to wealthy. In order to meet customers' requirement, car manufacturing are focus on design of car.
Nowadays, the number of woman working in the society had increased. Therefore, the need of transportation to them has made the sales of car increasing. (Wilson, R M. S. & Gilligan, C, 2005) Technological factors are the major factors for auto industry as it is highly depending on innovative technology and knowledge-based. As the knowledge base increases, it is easier to create new knowledge or recombine existing knowledge to develop new product (Gomez-Mejia et al. , 2008). In automotive industry, technologies advances include many electronic components.
Organizations must be prepared to innovate and adopt new technologies if they wish to remain competitive. Toyota power-train technology towards achieving "Sustainable Mobility". Toyota is actively developing hybrid technology to serve as a core technology applicable to all powertrains. However, Toyota has been developing human-assisting partner robots in order to improve quality and reduce costs, (Toyota company website). It has created their own company website to provide more detail introduction about their car to customer. Most of the people referred to the company websites before making purchases.
Internet is giving the easier way to customer making comparison, more efficiency and lower cost to advertising to worldwide. For car industry, barrier to entry is low due to huge capital and cutting-edge technology. They need to invest large amounts of money to gain entrance to an industry (Gomez-Mejia et al. , 2008). Even for an existing firm that has made these investments, it still needs to inject a huge amount of resources to research and development (R&D) and marketing to introduce new models, and maintain and raise consumers' loyalty and the firm's market share and profits.
Ford, Chevrolet, Honda, and GM are a few of their major competitors of Toyota. This competition in an industry with high entry and exit costs has led Toyota to seek a competitive advantage in their information systems: new Hybrid Synergy Drive. On the other hand, GM has lost its number one position to Toyota; Chrysler was acquired by Daimler had caused barrier to entry to be very high especially in American auto industry as the intense rivalry (Daily Telegraph, 2007).