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 Toyota Motor Introduction

Toyota Motor Corporation is one of the world‘s leading automakers, offering a

full range of models, from mini vehicles to large trucks. Global sales of its Toyota
and Lexus brands, combined with those of Daihatsu and Hino, totaled 6.78 million
units in CY2003*. Besides its own 12 plants and 11 manufacturing subsidiaries
and affiliates in Japan, Toyota has 45 manufacturing companies in 26
countries/locations, which produce Lexus- and Toyota-brand vehicles and
components. As of March 2003, Toyota employs 264,000 people worldwide (on a
consolidated basis), and markets vehicles in more than 140 countries. Automotive
business, including sales finance, accounts for more than 90% of the company's
total sales, which came to a consolidated ¥16.05 trillion in the fiscal year to March
2003. Diversified operations include telecommunications, prefabricated housing
and leisure boats.

America Europe Africa Asia

American Samoa India Saipan
Australia Indonesia Samoa
Bahrain Israel Saudi Arabia
Brunei Darussalam Singapore
China Kiribati Solomon Islands
Fiji Kuwait Sri Lanka
Guam Malaysia Tahiti
Hong Kong, China Nepal Taiwan
New Caledonia Thailand
New Zealand Tonga
Oman United Arab Emirates
Pakistan Vanuatu
Papua New Guinea Viet Nam
Philippines

Toyota International Portfolio

Passenger
Avalon Camry Corolla Avensis

Tarago Prius Echo

Sports
MR2 Camry Sportivo Corolla Sportivo Celica

4 W/D
Rav 4 LandCruiser Prado LandCruiser 100 Kluger

Commercial
LandCruiser 78 Hiace Coaster Hilux

Town Ace

Toyota In Pakistan
Indus Motors
Indus Motor Company (IMC) is a joint venture between the House of Habib , Toyota
Motor Corporation Japan (TMC) , and Toyota Tsusho Corporation Japan (TTC) for
assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan
since July 01, 1990. IMC is engaged in sole distributorship of Toyota and Daihatsu Motor
Company Ltd. vehicles in Pakistan through its dealership network.

The company was incorporated in Pakistan as a public limited company in December

1989 and started commercial production in May 1993. The shares of company are quoted
on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho
Corporation have 25 % stake in the company equity. The majority shareholder is the
House of Habib with 50 % of the equity.
IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in
an area measuring over 105 acres.
Indus Motor company's plant is the only manufacturing site in the world where both
Toyota and Daihatsu brands are being manufactured.
Heavy investment was made to build its production facilities based on state of art
technologies. To ensure highest level of productivity world-renowned Toyota Production
Systems are implemented.

IMC's Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota
Hilux Single Cabin 4x2 and 2 versions of Daihatsu Cuore.

Quality Policy

WE AS A TEAM AT INDUS MOTOR ARE COMMITTED TO FOCUS ALL OUR

ACTIVITIES LEADING TO:
• MANUFACTURING HIGH QUALITY PRODUCTS.
• CUSTOMER SATISFACTION.
• SERVICE TO SOCIETY.
• MAINTAIN MARKET LEADERSHIP.

Environmental Policy

WE AS A TEAM AT INDUS MOTOR ARE COMMITTED TO CONTINUOUSLY

IMPROVE OUR ENVIRONMENTAL MANAGEMENT SYSTEM TO:
• IDENTIFY AND AVOID/MITIGATE THOSE ENVIRONMENTAL ASPECTS
WHICH HAVE NEGATIVE ENVIRONMENTAL IMPACTS.
• COMPLY WITH ALL APPLICABLE LEGAL, REGULATORY AND OTHER
REQUIREMENTS.
• ASSIST SOCIETY BY MAKING THE ENVIRONMENT MORE FRIENDLY.
Marketing
A social and managerial process whereby individual and groups
obtain what they need and want through creating and exchanging
products and values with others. Marketing starts long before the
company had a product. Marketing continues throughout the
product life trying to find new customers and satisfying the
current customers by improving products appeal and
performance, learning from product sales results, and managing
repeat performance.

In case of Toyota producing the automobile industry

manufacturing the cars for the Pakistan market for the last many
years, with the consideration of needs, wants and demands from
the customers.

Today every human being need a car in order to fulfill the need
of transportation. But this need varies in different terms. Some of
the customers buy a car in order to fulfill the basic need of
traveling while some customers buy a car in order to fulfill the
social need, or may be some other buy a new car for the status
symbol. So this different types of buying of consumers reflects
what customer actual needs, and what he want and what he
demands.

Toyota in Pakistan study the customer need in depth to actually

understand what the majority of customers demands. Toyota
according to the different segments manufacture the different
products
OBJECTIVES OF THE COMPANY

To be the market leader and satisfy the requirements of its customers, the company
has set certain objectives. These are:

1. Improve Quality
2. Enhance Efficiency
3. Minimize Cost
4. Increase Productivity

Over the previous years, the company has put in its best efforts to manufacture
quality cars designed for its customers. To improve their efficiency, the company
gives great importance to its human resource as the company believes that satisfied
and quality conscious team can produced quality products.

The company is using the philosophy of Kaizen for continuous improvement. It has
become a way of life for the management of the company by doing these efforts
towards their objectives.

Indus Motor Business Portfolio

BUSINESS PORTFOLIO:

“The collection of businesses and products that makeup the company. “

Business portfolio of Indus motors includes

• Corolla

• HiLux

• Cuore

• CBU Unit (completely built up unit)

Corolla, HiLux and cuore are manufacturing in Pakistan, 65% of the car manufactured in
Pakistan which includes body and other parts except the engine which is being imported
from Japan Known as CKD (completely knocked down) Engine.
Portfolio Analysis:
“A tool by which management identifies and evaluates the various businesses that
makes up the company.”

Techniques or Tools for the Portfolio Analysis:

There are two different techniques used for the portfolio analysis:

• Boston Consulting Group Matrix BCG Approach

• General Electric Matrix GE Approach

The Boston Consulting Group Matrix (BCG Matrix) is the best-known portfolio planning
framework. The GE / McKinsey Matrix is a later and more advanced form of the BCG. Matrix
BCG matrix is a tool that can be used to determine what priorities should be given in the product
portfolio of a business unit.

The GE / General Electric / McKinsey matrix is a model to perform a business portfolio

analysis on the Strategic Business Units of a corporation.
TOYOTA COROLLA BCG MATRIX

STAR CASH COWS

2.0D SE Saloon
2.0D Saloon GLi

QUESTION MARK DOGS

Xli 1.3

The McKinsey / General Electric Matrix

The GE / McKinsey Matrix is more sophisticated than the BCG Matrix in three aspects:

1. Market (Industry) attractiveness replaces market growth as the dimension of industry

attractiveness. Market Attractiveness includes a broader range of factors other than just the market growth
rate that can determine the attractiveness of an industry / market. Compare also: Porter's Five Competitive
Forces model

2. Competitive strength replaces market share as the dimension by which the competitive
position of each SBU is assessed. Competitive strength likewise includes a broader range of factors other
than just the market share that can determine the competitive strength of a Strategic Business Unit.

3. Finally the GE / McKinsey Matrix works with a 3*3 grid, while the BCG Matrix has only
2*2. This also allows for more sophistication.
 Typical factors that affect Competitive Strength of a
Typical factors that affect Market Attractiveness: Strategic Business Unit:

- Market size- Strength of assets and competencies

- Market growth rate- Relative brand strength
- Market profitability - Market share
- Pricing trends - Market share growth
- Competitive intensity / rivalry - Customer loyalty
- Overall risk of returns in the industry - Relative cost position (cost structure compared with
- Opportunity to differentiate products and services competitors)
- Demand variability- Relative profit margins (compared to competitors)
- Segmentation - Distribution strength and production capacity
- Distribution structure - Record of technological or other innovation
- Access to financial and other investment resources

GROWTH STRATEGIES
 MARKET PENETRATION

PRODUCT DEVELOPMENT

MICRO AND MACRO ENVIRONMENTS

Macro Environment
The larger societal forces that affect the microenvironment- demographic, economic,
natural, technological, political, and cultural forces. These factors represent constraints
within which all organizations including the automobile industry must function. The
various components of general environment are:
1. Political
2. Economic
3. Demographics
4. Cultural
5. Technological

1. Political Factors
Government at all levels is an important component of the general environment no
organization or industry is immune from the various decisions made by the
government. The Pakistan, Government’s in consistent policies, frequent change in
duty tariff and smuggling are main reasons of unstable market conduction. Like other
motor companies Toyota is also affected by the current changing policies of the
government.

Previously the automobile industry had to cope with more than 77000 yellow cabs
that were imported during the yellow cabs scheme and was later turned lose to the
market after a change of government and the policy scrapped.

In 1995, all the previous taxes and duties were rolled into one import duty of 30
percent on CKD kits as well as CBU vehicles. In 1996 the sales tax on CBU was
increased cost to 18 percent. In 1997 the ministry of industries and production
recommended that duty on CKD be reduced form 40 percent to 35 percent while the
car sales should be exempted from CVT and the deletion programme should be
accelerated.

Just a few days back the general sales tax has been increased to 15 percent
promoting more price like. So there is going to be a Rs.20000 increase in
vehicles.

2. Economic Forces
Government economic policies at the federal level clearly influence the ability of the
industries to survive and progress. Inflation is a major economic factor which has
affected the Pakistan. Automobile industry including Toyota. The current inflation
rate is 21% to 23% annually prices in the auto market were deregulated in 2000 and
 grew almost 20 percent to 30 percent per annum to allow Toyota to bring their prices
to profitable levels. After three years of “Still Market”, the market picked up.
The recent increase of 15 percent sale tax is however, going to result in a price
increase.

3. Demographics Forces
Society holds a global or summary belief that an organization is proper and worthy of
support. Toyota takes pride in being the most trusted name all over Pakistan. Its
vehicles are regarded as a status symbol. It is the guiding principles of Toyota which
has strongly developed trust in the people.
4. Cultural Factors
Toyota respects the culture and customs of every nation and community and
contributes to the economic and social development through corporate activities in
the communities. Toyota believes in honouring the language and spirit of the law of
every nation and undertake open and fair corporate activities to be a good corporate
citizen of the world. This is the reason that Toyota is proud of the fact that Pakistani
society considers Toyota vehicles to be a symbol of reliability, comfort, luxury and a
have to be trusted.

5. Technological Forces
Technology is of particular importance because it has been and continues to be the
main source of increases in productivity. Despite changes in the means used to
motivate people and the variety of incentives that have been offered to stimulated
production, the resulting increase has been negligible when compared to that of
created by technology.

The locally produced Toyota Corolla introduced in May 1993 is now in its 11 th
year. Its excellent quality, low maintenance cost and high resale value has won it
the support and loyalty of its customers. Product diversification and a wide range
of colours has allowed customers to exercise greater options and has sustained
this threat. The total company’s product range comprises of 8 variants of Corolla
and 5 variants Hilux. As a result of the “Safety First” commitment; for the first
time in Pakistan SRS “Secondary Restrain System” Airbags have been
introduced in the GLI Automatic and GLI manual models, side impact bars
which protect vehicles for side collisions have however been routinely fitted in
all Corolla variants since inception. The process of making a car more durable
includes “Pitospaate Primer”, total immersion in a catholic Electro-deposit
primer, which assures long term anti corrosion and an extra thick colour coat
that is better than all others, ensuring that “New Car” look “New” for years to
come.

MICRO ENVIRONMENT
The Micro environment consists of those components of the macro environment
which are directly relevant to an individual’s organization. An organization’s micro
environment includes
1. Customers
2. Suppliers
3. Internal Public
4. Competitors
5. Intermediaries

The boundary between an organization’s Macro and Micro environment should not
be viewed as static. Changes in the former will inevitably redefine the latter.

The various components of micro environment for Toyota have direct influence on
its performance. Moreover components of Toyota’s micro environment are also
related to its macro environment.

1. CUSTOMERS
Toyota aims at developing loyal customers relationship. For this reappoint tries its
best to understand who its buyers are and what are their needs. It tries to listen to its
customers, realizing that they may be their best collaborators. Customers feedback
drive their product development.

To be the market leader and satisfy the requirements of its customers, the
company has set certain objectives. These are
a) Improve Quality
b) Enhance Efficiency
c) Minimize Cost
d) Increase Productivity

Over the previous years the company has put in its best efforts to manufacture quality
cars designed for its customers. In Pakistan, more and more people want to
experience the unique pleasure of motoring. Exhaustive, in-depth research and
consumer surveys conducted over the past years revealed trends of customers and the
environmental factors relating to use.

Toyota’s Marketing Policy

Toyota’s slogan “Reliability n Motion” represents its emphasis son strong trustworthy
and life-long automobiles. It has many brand loyal customers and is considered as
market leader. In Pakistan, it has aimed at various segments with their variety of
models in Toyota Corolla, so customers in every segments can be satisfied.

Different classes of Toyota Corolla introduced in Pakistan are;

Model Description Segments

SE Saloon 1600 cc Industrialists, Well established Businessman,
Professionals.
GLi 1300cc Businessman, Top Level Mgt. of multinationals,
Professionals, Government High Officials.
Xli 1300cc Middle-level Executives, Government Departments &
Organizations, Professionals, Armed Forces.
2.0D / 2.0D Saloon Professionals, Business Executives who are fuel cost
conscious.

Toyota has got an effective Nationwide dealer network comprising of 25 dealers at

Karachi, Lahore, Faisalabad, Mirpur, Islamabad, Peshawar, Sialkot, DI Khan, Multan,
Quetta and Larkana. This spread of network shows not how Toyota is sincerely busy
in developing a company’s customer relationship and winning the hearts of brand
loyal as well as attracting potential customers.

2. SUPPLIERS
Suppliers constitute a second component in a typical organization’s micro
environment. Toyota has to respond not only to the customers they supply, but also to
the sources from which they receive supplies. Suppliers are given importance and
respect by Toyota. It continuously aims at developing a strong relationship with its
suppliers. This is done to ensure that Toyota suppliers provide quality materials
which is the most important factor for Toyota vehicles.

Japan, is the major supplier of CBU or completely built up vehicles. Also

CKD kits or completely Knocked down Kits are supplied from Japan. CKD
kits mainly comprise of the engine of vehicles. The vehicles which are
assembled in Pakistan comprise of 65% locally manufactured parts.

Toyota Indus aims for good relations with both the local and foreign
suppliers. “To achieve maximum level of customer’s satisfaction” is
Toyota’s mission. This can be proved by the fact that dealership is authorized
to these selective people who offer 3 S’s. That is sales, services, spare parts.
This is done to ensure convenience for its customers. They are offering the
following services to cater to the needs of their customers:
a) One year free servicing from any Toyota service center all over
Pakistan.
b) Free checkup camps are set annually.
c) Spare parts easily available all over Pakistan.
d) The dealership network comprises of seventeen dealerships all
offering sales, services and spares.
e) The customer retention department at the dealerships is also improved
and consolidated periodically.

The company believes on the fact that favorable supplier relations lead to improve
quality, better shipping arrangements early warming of major price changes and
 advance information about technological or marketplace developments. So, the aim is
to develop friendly, professional relations with suppliers in which both will profit.

3. Internal Public
It is the action, of employees by which a company’s objectives are accomplished. In
order to achieve its goals and objectives Toyota makes sure that highly competent and
skilled people are employed. Emphases is laid to ensure that the person being hired
meet the criterion for the respective departments.

Training is an integral part in Toyota’s various departments. Training was

intensified and various courses were conducted through the previous year.
Technicians at the dealers’ service departments underwent extensive by IMC
service departments to improve their skills. Moreover, periodic training of
managers is also conducted. This include training camps, short course
conducted in various well-known universities, training programs conducted
abroad and lectures of foreign exports.

4. COMPETITORS
Market competition is the cornerstone of managerial capitalism. The five forces that
shape the degree of market competition operating within an organization’s micro
environment are
a) Rivalry among existing organization.
b) Relative power of customers.
c) Relative power of suppliers.
d) Threat of new entrants.
e) Threat of new substitutes.

Presently Toyota is proud to have the most market share. Honda stands
second followed by Suzuki and Nissan. Since its start it was only in 95-96
that Honda managed to sale 200 more units of vehicles than Toyota. Still,
Toyota is proud to be in a strong position. However to the spirit of
competition is strong and this has lead Toyota to continuously try to improve
itself, at all levels. Continuous emphasis is laid on to attract more customers,
maintains healthy relations with its suppliers and makes efforts to improve
technology. Careful strategic planning at al levels has enabled Toyota to
achieve the highest market share and have an edge over other automobile
companies.

5. Intermediaries

Banks, Leasing companies and car agents are some of the intermediaries for
Toyota. These intermediaries basically giving the boost to the sales of Toyota, by
offering the cars to the consumers, in easy installments and making the cars affordable
for the customers to the higher extent.
Marketing Research
 • Primary research
Survey Research
SACB (Sales Activity Control Board)
Experimental Research
Experimental Drive of HiLux
Experiments on SRS Bag for safety purposes

Research Instruments
Questionnaires

• Secondary Research

SWOT ANALYSIS
In formulating sound strategic plans, an organization must assess its internal
strengths and weaknesses in relation to the external opportunities and threats it
faces. An effective strategy will take advantage of an organizations strengths and
opportunities at the same time it minimizes or overcomes weaknesses and threats.
Regular assessment and SWOT analysis is thus given importance.

STRENGTHS
1. Toyota has become the generic name in the Pakistan market. Whenever the
company launches the new car in the market it has always the great support
of the already market orientation so the car introduced by it easily covers the
introduction stage. People have a lot of trust for their name and this is why
Toyota is the leader in automobile industry.
2. Toyota has a great strength for its 2.OD car, Toyota is the hot selling diesel
engine car in Pakistan and is the only company offering the diesel engine in
this category of cars.

3. The important edge over the company editors are the ample availability of
the spare parts in the markets. The price of spare parts is comparatively low
and availability all over the country has proved to be beneficial for the
company.

4. Toyota is a financially strong company. This can be seen by analysis of the

financial reports of the previous years.

5. Toyota vehicles have got a much stronger resale value than other car in
Pakistan. This is why people prefer to buy a Toyota.

6. Toyota vehicles are made according to the Pakistani environment. No doubt

the other cars are available but Toyota has an edge because it has learnt
 various conditions of the Pakistan environment and people. So new additions
and changes are proving to be successful.

7. Toyota has an edge over others because it is the only automobile company in
Pakistan, while offers many variants of its vehicles. Also Toyota offered
many variants of colors.

8. Toyota is proud to have a successful team of competent managers and skilled

workers. Extensive training have enabled the employees to perform
outstandingly.

9. Toyota is the only company having the most sophisticated network of

dealerships where customers are treated by professional dealers. There are
seventeen dealers in Pakistan where sales, service and spare parts are offered,
leading to convenience for the customers.

WEAKNESSES
1. There is some weakness in the case of ergonomic interior of Toyota corolla
as well. The power steering is not speed sensitive and the air conditioning
system in severe heat is in-effective. Interior dimensions are less and heavy
body and small engine sometimes create problems in hilly areas.

2. There are some weaknesses in the dealership network. The dealers sometimes
tend to deviate from the recommended course of action and principles of
Toyota. This results in customers complaints sometimes.

3. The company is besieged with internal operating problems which are not
very serious. Because of dependency on Toyota’s principles delivery of cars
is done after 4-6 months. This is because CKD kits are ordered four months
before and once they arrive from Japan, assembly and delivery takes some
more time.

4. A lot of effort is pull into the sales forecasting because of the changing
political and economic scenarios. For this reasons inventory has to be kept
low.

5. The company feels that one weakness is the changing policies of the
government and also the 30% cash L/c margin. This has lead to an adverse
environment.

OPPORTUNITIES
1. Export is a major opportunity for Toyota Indus Motors. Vehicles were
exported to Bangladesh just once in order to prove the plant capacity and
efficiency of the company. This should be started again.
2. The contract with the government departments e.g. Motorway Police,
Shaheen Force and the digniteries where corolla has an opportunity to deal
with the business markets along with dealing in consumer markets.

3. Toyota can do better by focusing on segments much more than presently

being done.

4. Toyota should also try to lower its price of Corolla in the segment where
Honda city has penetrated.

5. It can offer discounts to Government departments and large organizations on

purchase of its vehicles in more quantities.

6. Success of the manufacturing of Daihatsu coure is a major opportunity for

Toyota to excel further careful planning and the right time to launch the new
car can prove to be a success.

THREATS
1. Even though Toyota enjoys the position of being the no.1 automobile
company, still it faces some threat from competitors especially Honda.
Honda has adopted aggressive strategies for capturing the market.

2. Even though Toyota keeps a careful eye on the changing trends, still the
changing customer needs and trends can prove to be a threat.

3. A major threat is the changing political and economic scenarios of Pakistan.

Changing government policies affect the company’s performance.
Devaluation of rupee adverse shifts in foreign exchange rates, trade policies
of government’s is a threat. Moreover the company is threatened by the
ongoing rate of 30% cash L/c margin.

4. Import of re-conditioned cars is also considered as a threat for the company.

5. The planned car manufacturing plants of Hyundai and Daewoo can prove to
be tough competition for Toyota if they are successful.