Write parts of essay about Financial problem, business and finance homework help

User Generated

jvaxl

Writing

GLOBAL business strategy

Description

I have already done some parts of the Financial worksheet, and please help me to fill other parts!

You only need to write essay about this three questions.

Question 2: How would you describe the firm’s current financial condition? [Use financial ratios and other pertinent income and balance sheet data to support your analysis.]

Question 6 c: Specify the results you can expect, including pro forma financial statements.

Question 7: Recommend procedures for strategy review and evaluation. Include specific measures that you will utilize.

(Toyota case is what my friends have already done. You can follow the way what they do)

Unformatted Attachment Preview

Dr. Eva Dodd-Walker Strategic Management Cash Cash Surplus Accounts Receivable Inventories Current Assets Gross Fixed Assets Accumulated Depreciation Net Fixed Assets Total Assets 2014 $2,078 2015 $7,686 2016 $1,223 $1,214 $110 $4,185,500 $1,299 $100 $9,643,000 $1,474 $59 $4,848,600 ($14,574.8) ($13,185.8) ($14,569) $34,227 $37,939 $31,024 $2,737,900 $2,950,400 $2,696,300 Accounts Payable Accrued Expenses Notes Payable Current Liabilities Long-Term Debt Total Liabilities $2,747,900 $14,935,700 $21,374,000 Common Stock Additional Paid-in-Capital Retained Earnings Equity Total Financing (L+E) $16,600 $16,600 $16,600 6239100 6533400 $6,757,900 $43,294,500 $44,594,500 $46,222,700 $12,853,400 $7,087,900 ($2,204,300) $34,227,400 $37,938,700 $31,023,900 Pro Forma $2,950,400 $3,468,300 $24,122,100 $25,878,500 $30,850,800 $33,228,200 2014 Liquidity Ratios Current Ratio Quick Ratio Sales COGS Gross Profit Operating Expenses Depreciation Operating Income (EBIT) Interest EBT Taxes Net Income 2015 $2,506,500 $2,643,700 $16,986,000 $15,624,000 $10,455,700 $9,789,200 ($800) $48,500 $1,644,500 $1,555,700 $7,949,200 $7,145,500 $0 $0 $7,372,000 $6,555,700 $2,614,200 $2,026,400 $4,757,800 $4,529,300 2016 Pro Forma 2460200 14417000 10204700 6300 1516500 7744500 0 6866000 2179500 4686500 3.27 3.23 Asset Utilization Inventory Turnover 138.98% 139.63% DSI 262.6277 261.4051 AR Turnover 21.66 20.22 DSO 16.85 28.05 FAT 1.09 1.07 TAT 0.77 0.70 Debt Management Debt Ratio TIE Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE Market Ratios P/E Ratio 2014 1.52 1.48 2015 2016 Eval Burger King 216% 169.295 17.76 20.55 1.11 0.71 635.82 834.15 38.00% 29.00% 17.00% 39.00% 28.00% 18.00% 41.00% 31.00% 19.00% 13.43% 32.97% 12.55% 13.59% 45.43% 191.93% 24.56 Pro Forma 1.40 1.38 436.37 19.40 Eval 22.42 Notes 1. Eval: Evaluation or assessment 2. Historical evaluation of financial ratios: Compare Y3 to Y1. 3. Competitor evaluation of financial ratios: Compare top competitor's ratios to Y3. 4. Pro Forma evaluation of financial ratios: Compare pro forma to Y3. 41.45 31.45 Dr. Eva Dodd-Walker Strategic Management Wendys 1.97 1.95 226.86 1.61 24.37 0.36 -2.75 37% 15% 9% 86.60% 3.22% 20.24% 28.17% Eval Dr. Eva Dodd-Walker Business Strategy Business Strategy MBA6611 Case Analysis—Paper Template Instructions: 1. SPACING: The assignment should be double-spaced. The “Reference” section should be single-spaced with double spacing between entries. 2. FONT SIZE: Use Times Roman 12-point font. 3. FORMAT: Number all pages (bottom of page), and indent new paragraphs 5 spaces. Use the APA writing style to properly cite and reference all research material. 4. LENGTH: The body of the paper (Introduction to Conclusion) cannot exceed 30 pages. 5. RESEARCH: Effective research references many sources. (Use sources less than or equal to 10 years old.) Some basic references include the following: a. b. c. d. Your textbook Finance.yahoo.com and MSNmoney.com Hoovers.com Company Profile and Industry Profile: Business Source Premier (Enhanced) Datamonitor reports from Troy’s electronic databases (http://library.troy.edu/databases_business.html) e. The company’s website f. Small Business Administration (www.sba.gov) g. Wikipedia’s references or sources (NOT Wikipedia) 6. INSTRUCTION PAGE: You must delete the instruction page; that is, the title page is the first page of the report. “Company Name” Case Analysis Page 1 of 20 Dr. Eva Dodd-Walker Business Strategy COMPANY NAME (Case Analysis) Group #--Section # Specialist A Specialist B Specialist C Specialist D Specialist E Specialist F Presentation Date “Company Name” Case Analysis Page 2 of 20 Dr. Eva Dodd-Walker Business Strategy SPECIALIST ASSIGNMENT Introduction…………………………………………………………...…………..Specialist #1 Question 1……………………………………………………...………………….Specialist #1 Question 2 (Financial Matrices)……………………………………….………….Specialist #2 Question 3…………………………………………………………...…………….Specialist #3 Question 4…………………………………………………………...…………….Specialist #4 Question 5 (SWOT & GS Matrices)……………………………………..……….Specialist #5 Question 6a&b………………………………………….…………...…………….Specialist #5 Question 6c (Pro forma Statements).…………………………..…...…………….Specialist #6 Question 7…………………………………………………………...…………….Specialist #6 Update & Conclusion…………………………………………….……………….Specialist #6 INTRODUCTION State your intentions/plans for the paper. Give an overview of the paper, and indicate the year of your case. You should provide a brief company history as well as an industry summary. The industry analysis should include a discussion of the industry’s total revenue, compound annual growth rate, major product categories, and competitors. (The CAGR is needed to position the company in the Grand Strategy Matrix.) “Company Name” Case Analysis Page 3 of 20 Dr. Eva Dodd-Walker Business Strategy CASE ANALYSIS Question 1: Identify the firm’s apparent current mission. Then briefly review the firm’s current objectives and strategies. [Please note that you must evaluate the firm’s mission statement.] Mission Statement: Mission Statement Evaluation: Component 1 2 3 4 5 6 Company Company Objectives: Company Strategies: “Company Name” Case Analysis Page 4 of 20 7 8 9 Question 2: Dr. Eva Dodd-Walker Business Strategy How would you describe the firm’s current financial condition? [Use financial ratios and other pertinent income and balance sheet data to support your analysis.] Historical Financial Analysis: [You must explain the trends in each of the five categories—liquidity ratios, asset utilization ratios, leverage ratios, profitability ratios, and market ratios. Use the end points for your assessment of the period.] Competitor Financial Analysis: [You must explain your company’s positioning in each of the five categories—liquidity ratios, asset utilization ratios, leverage ratios, profitability ratios, and market ratios.] Overall Financial Health or Evaluation: “Company Name” Case Analysis Page 5 of 20 Question 3: Dr. Eva Dodd-Walker Business Strategy Outline and discuss the firm’s external opportunities and threats, using any analytical model(s) you believe are relevant. [You must analyze the General Environment, Industry Environment, and the firm’s strategic group to determine this information.] “Company Name” Case Analysis Page 6 of 20 Question 4: Dr. Eva Dodd-Walker Business Strategy Outline and discuss the firm’s internal strengths and weaknesses using any analytical model(s) you believe are relevant. [Strengths and weaknesses will include information from the financial analysis.] “Company Name” Case Analysis Page 7 of 20 Dr. Eva Dodd-Walker Business Strategy Question 5: Based on your analysis: a. Revise the firm’s mission and objectives if necessary. b. Develop and discuss corporate and business strategies that you recommend to achieve the firm’s mission and objectives. Mission and Objective Revisions: Alternative Solutions or Strategies: [Your SWOT Matrix should contain your final selection of strategies; that is, you must integrate the “desired” strategies from the Grand Strategy Matrix. You will discuss in detail the top three strategies in this section.] Strategy 1: [Identify the strategy and discuss how it will solve the company’s problems or help it reach its goals.] Strategy 2: [Identify the strategy and discuss how it will solve the company’s problems or help it reach its goals.] Strategy3: [Identify the strategy and discuss how it will solve the company’s problems or help it reach its goals.] “Company Name” Case Analysis Page 8 of 20 Question 6: Dr. Eva Dodd-Walker Business Strategy Outline and discuss the specific actions needed for implementation of your chosen strategy. This should include the following: a. Specific strategies and long-term objectives in such areas as marketing, human resources, finance, operations, and information systems as appropriate. b. Specify specific annual objectives and the policies for achieving these objectives, in areas such as marketing, human resources, finance, operations, and information systems as appropriate. c. Specify the results you can expect, including pro forma financial statements. Recommended Strategy: [You must choose “one” strategy to implement.] Implementation of Selected Strategy: a. Management: b. Marketing: c. Operations: d. Accounting/Finance: e. Research & Development: Proforma Financial Statements: “Company Name” Case Analysis Page 9 of 20 Question 7: Dr. Eva Dodd-Walker Business Strategy Recommend procedures for strategy review and evaluation. Include specific measures that you will utilize. Projected Financial Ratios: [Discuss the impact of the selected strategy.] Balanced Scorecard: [You must list the important annual objectives necessary to achieve the firm’s long-term goals.] Rumelt’s Criteria: [Evaluate the selected strategy relative to Rumelt’s Criteria.] “Company Name” Case Analysis Page 10 of 20 Dr. Eva Dodd-Walker Business Strategy UPDATE What has happened since the case was written? (Note: If this is a real-time case, this section is omitted.) CONCLUSION Provide a summary. Overall, what do you think about the company? “Company Name” Case Analysis Page 11 of 20 Dr. Eva Dodd-Walker Business Strategy REFERENCES David, F.R. (2005). Strategic management: Concepts and cases (10e). Upper Saddle River, New Jersey: Pearson-Prentice Hall. MBA Comprehensive Questions. (2002). Sorrell College of Business, Troy University. (Add additional research sources to this list, and list the sources in alphabetical and chronological order using the APA format!) “Company Name” Case Analysis Page 12 of 20 Dr. Eva Dodd-Walker Business Strategy APPENDIX A: FINANCIAL RATIOS “Company Name” Case Analysis Page 13 of 20 Dr. Eva Dodd-Walker Business Strategy Financial Ratios: Historical Comparison Case Year-2 Case Year-1 Case Year Assessment Liquidity Ratios Current Ratio Quick Ratio Asset Utilization Ratios Inventory Turnover DSI AR Turnover DSO (ACP) Fixed Asset Turnover Total Asset Turnover Debt Management Ratios Debt Ratio TIE Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE Market Ratios P/E P/CF M/B Assessment Notation: P=Positive Trend, N=Negative Trend, Dash=No Change. “Company Name” Case Analysis Page 14 of 20 Dr. Eva Dodd-Walker Business Strategy Financial Ratios: Competitor Comparison Company Competitor Case Year Competitor Industry Liquidity Ratios Current Ratio Quick Ratio Asset Utilization Ratios Inventory Turnover DSI AR Turnover DSO (ACP) Fixed Asset Turnover Total Asset Turnover Debt Management Ratios Debt Ratio TIE Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE Market Ratios P/E P/CF M/B Assessment Notation: S=Strength, W=Weakness, Dash=Neutral. “Company Name” Case Analysis Page 15 of 20 Assessment Dr. Eva Dodd-Walker Business Strategy APPENDIX B: STRATEGIC MATRICES “Company Name” Case Analysis Page 16 of 20 Dr. Eva Dodd-Walker Business Strategy SWOT MATRIX Strengths SWOT MATRIX Your Company Weaknesses 1 2 3 4 5 1 2 3 4 5 1 2 1 2 1 2 1 2 Opportunities 1 2 3 4 5 Threats 1 2 3 4 5 “Company Name” Case Analysis Page 17 of 20 Dr. Eva Dodd-Walker Business Strategy GRAND STRATEGY MATRIX (David, 2005) RAPID MARKET GROWTH Quadrant II Quadrant I Your Company (Example) WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION Quadrant III Quadrant IV SLOW MARKET GROWTH “Company Name” Case Analysis Page 18 of 20 Dr. Eva Dodd-Walker Business Strategy APPENDIX C: PRO-FORMA STATEMENTS “Company Name” Case Analysis Page 19 of 20 Dr. Eva Dodd-Walker Business Strategy APPENDIX D: EXTRA CREDIT MATRICES EFE Matrix CP Matrix IFE Matrix QSPM Matrix “Company Name” Case Analysis Page 20 of 20 Dr. Dodd-Walker MBA6611 Paper Rubric: ________________________ Introduction Intentions Case Year History Q1: Mission Mission Statement Mission Evaluation Objectives Strategies Q2: Financial Analysis Historical Matrix Calculations Competitor Matrix Calculations Historical Evaluation Competitor Evaluation Overall Assessment Recommendation Q3: External Environmental Analysis Opportunities Threats Industry's Total Revenue Industry's CAGR Industry's Product Categories Key Competitor #1 Key Competitor #2 Q4: Internal Environment Analysis Strengths Weaknesses Q5: Generate Strategies Revised Mission Revised Objectives Strategies Grand Strategy Matrix SWOT Matrix Q6: Implementation Recommended Strategy LT Objectives/Strategies by Function Annual Objectives/Policies by Function Pro Forma Statements Q7: Evaluation Projected Financial Ratio Analysis Balanced Scorecard Rumelt's Criteria Other Update and Conclusion References Extra Credit Penalty Total Point Distribution 1 1 3 Student's Score 2 3 2 2 3 3 3 3 2 2 5 5 1 2 1 2 2 5 5 1 2 6 2 4 2 3 3 3 3 3 3 2 5 0 0 100 0 Notes Business Strategy Business Strategy MBA6611 Case Analysis—Paper Template Instructions: 1. SPACING: The assignment should be double-spaced. The “Reference” section should be single-spaced with double spacing between entries. 2. FONT SIZE: Use Times Roman 12-point font. 3. FORMAT: Number all pages (bottom of page), and indent new paragraphs 5 spaces. Use the APA writing style to properly cite and reference all research material. 4. LENGTH: The body of the paper (Introduction to Conclusion) cannot exceed 30 pages. 5. RESEARCH: Effective research references many sources. (Use sources less than or equal to 10 years old.) Some basic references include the following: a. b. c. d. Your textbook Finance.yahoo.com and MSNmoney.com Hoovers.com Company Profile and Industry Profile: Business Source Premier (Enhanced) Datamonitor reports from Troy’s electronic databases (http://library.troy.edu/databases_business.html) e. The company’s website f. Small Business Administration (www.sba.gov) g. Wikipedia’s references or sources (NOT Wikipedia) 6. INSTRUCTION PAGE: You must delete the instruction page; that is, the title page is the first page of the report. “Company Name” Case Analysis Page 1 of 20 Business Strategy COMPANY NAME (Case Analysis) Group #--Section # Specialist A Specialist B Specialist C Specialist D Specialist E Specialist F Presentation Date “Company Name” Case Analysis Page 2 of 20 Business Strategy SPECIALIST ASSIGNMENT Introduction…………………………………………………………...…………..Specialist #1 Question 1……………………………………………………...………………….Specialist #1 Question 2 (Financial Matrices)……………………………………….………….Specialist #2 Question 3…………………………………………………………...…………….Specialist #3 Question 4…………………………………………………………...…………….Specialist #4 Question 5 (SWOT & GS Matrices)……………………………………..……….Specialist #5 Question 6a&b………………………………………….…………...…………….Specialist #5 Question 6c (Pro forma Statements).…………………………..…...…………….Specialist #6 Question 7…………………………………………………………...…………….Specialist #6 Update & Conclusion…………………………………………….……………….Specialist #6 INTRODUCTION State your intentions/plans for the paper. Give an overview of the paper, and indicate the year of your case. You should provide a brief company history as well as an industry summary. The industry analysis should include a discussion of the industry’s total revenue, compound annual growth rate, major product categories, and competitors. (The CAGR is needed to position the company in the Grand Strategy Matrix.) “Company Name” Case Analysis Page 3 of 20 Business Strategy CASE ANALYSIS Question 1: Identify the firm’s apparent current mission. Then briefly review the firm’s current objectives and strategies. [Please note that you must evaluate the firm’s mission statement.] Mission Statement: Mission Statement Evaluation: Component 1 2 3 4 5 6 Company Company Objectives: Company Strategies: “Company Name” Case Analysis Page 4 of 20 7 8 9 Business Strategy Question 2: How would you describe the firm’s current financial condition? [Use financial ratios and other pertinent income and balance sheet data to support your analysis.] Historical Financial Analysis: [You must explain the trends in each of the five categories—liquidity ratios, asset utilization ratios, leverage ratios, profitability ratios, and market ratios. Use the end points for your assessment of the period.] Competitor Financial Analysis: [You must explain your company’s positioning in each of the five categories—liquidity ratios, asset utilization ratios, leverage ratios, profitability ratios, and market ratios.] Overall Financial Health or Evaluation: “Company Name” Case Analysis Page 5 of 20 Business Strategy Question 3: Outline and discuss the firm’s external opportunities and threats, using any analytical model(s) you believe are relevant. [You must analyze the General Environment, Industry Environment, and the firm’s strategic group to determine this information.] “Company Name” Case Analysis Page 6 of 20 Business Strategy Question 4: Outline and discuss the firm’s internal strengths and weaknesses using any analytical model(s) you believe are relevant. [Strengths and weaknesses will include information from the financial analysis.] “Company Name” Case Analysis Page 7 of 20 Business Strategy Question 5: Based on your analysis: a. Revise the firm’s mission and objectives if necessary. b. Develop and discuss corporate and business strategies that you recommend to achieve the firm’s mission and objectives. Mission and Objective Revisions: Alternative Solutions or Strategies: [Your SWOT Matrix should contain your final selection of strategies; that is, you must integrate the “desired” strategies from the Grand Strategy Matrix. You will discuss in detail the top three strategies in this section.] Strategy 1: [Identify the strategy and discuss how it will solve the company’s problems or help it reach its goals.] Strategy 2: [Identify the strategy and discuss how it will solve the company’s problems or help it reach its goals.] Strategy3: [Identify the strategy and discuss how it will solve the company’s problems or help it reach its goals.] “Company Name” Case Analysis Page 8 of 20 Business Strategy Question 6: Outline and discuss the specific actions needed for implementation of your chosen strategy. This should include the following: a. Specific strategies and long-term objectives in such areas as marketing, human resources, finance, operations, and information systems as appropriate. b. Specify specific annual objectives and the policies for achieving these objectives, in areas such as marketing, human resources, finance, operations, and information systems as appropriate. c. Specify the results you can expect, including pro forma financial statements. Recommended Strategy: [You must choose “one” strategy to implement.] Implementation of Selected Strategy: a. Management: b. Marketing: c. Operations: d. Accounting/Finance: e. Research & Development: Proforma Financial Statements: “Company Name” Case Analysis Page 9 of 20 Business Strategy Question 7: Recommend procedures for strategy review and evaluation. Include specific measures that you will utilize. Projected Financial Ratios: [Discuss the impact of the selected strategy.] Balanced Scorecard: [You must list the important annual objectives necessary to achieve the firm’s long-term goals.] Rumelt’s Criteria: [Evaluate the selected strategy relative to Rumelt’s Criteria.] “Company Name” Case Analysis Page 10 of 20 Business Strategy UPDATE What has happened since the case was written? (Note: If this is a real-time case, this section is omitted.) CONCLUSION Provide a summary. Overall, what do you think about the company? “Company Name” Case Analysis Page 11 of 20 Business Strategy REFERENCES David, F.R. (2005). Strategic management: Concepts and cases (10e). Upper Saddle River, New Jersey: Pearson-Prentice Hall. MBA Comprehensive Questions. (2002). Sorrell College of Business, Troy University. (Add additional research sources to this list, and list the sources in alphabetical and chronological order using the APA format!) “Company Name” Case Analysis Page 12 of 20 Business Strategy APPENDIX A: FINANCIAL RATIOS “Company Name” Case Analysis Page 13 of 20 Business Strategy Financial Ratios: Historical Comparison Case Year-2 Case Year-1 Case Year Assessment Liquidity Ratios Current Ratio Quick Ratio Asset Utilization Ratios Inventory Turnover DSI AR Turnover DSO (ACP) Fixed Asset Turnover Total Asset Turnover Debt Management Ratios Debt Ratio TIE Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE Market Ratios P/E P/CF M/B Assessment Notation: P=Positive Trend, N=Negative Trend, Dash=No Change. “Company Name” Case Analysis Page 14 of 20 Business Strategy Financial Ratios: Competitor Comparison Company Competitor Case Year Competitor Industry Liquidity Ratios Current Ratio Quick Ratio Asset Utilization Ratios Inventory Turnover DSI AR Turnover DSO (ACP) Fixed Asset Turnover Total Asset Turnover Debt Management Ratios Debt Ratio TIE Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE Market Ratios P/E P/CF M/B Assessment Notation: S=Strength, W=Weakness, Dash=Neutral. “Company Name” Case Analysis Page 15 of 20 Assessment Business Strategy APPENDIX B: STRATEGIC MATRICES “Company Name” Case Analysis Page 16 of 20 Business Strategy SWOT MATRIX Strengths SWOT MATRIX Your Company Weaknesses 1 2 3 4 5 1 2 3 4 5 1 2 1 2 1 2 1 2 Opportunities 1 2 3 4 5 Threats 1 2 3 4 5 “Company Name” Case Analysis Page 17 of 20 Business Strategy GRAND STRATEGY MATRIX (David, 2005) RAPID MARKET GROWTH Quadrant II Quadrant I Your Company (Example) WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION Quadrant III Quadrant IV SLOW MARKET GROWTH “Company Name” Case Analysis Page 18 of 20 Business Strategy APPENDIX C: PRO-FORMA STATEMENTS “Company Name” Case Analysis Page 19 of 20 Business Strategy APPENDIX D: EXTRA CREDIT MATRICES EFE Matrix CP Matrix IFE Matrix QSPM Matrix “Company Name” Case Analysis Page 20 of 20 Dr. Dodd-Walker MBA6611 Paper Rubric: ________________________ Introduction Intentions Case Year History Q1: Mission Mission Statement Mission Evaluation Objectives Strategies Q2: Financial Analysis Historical Matrix Calculations Competitor Matrix Calculations Historical Evaluation Competitor Evaluation Overall Assessment Recommendation Q3: External Environmental Analysis Opportunities Threats Industry's Total Revenue Industry's CAGR Industry's Product Categories Key Competitor #1 Key Competitor #2 Q4: Internal Environment Analysis Strengths Weaknesses Q5: Generate Strategies Revised Mission Revised Objectives Strategies Grand Strategy Matrix SWOT Matrix Q6: Implementation Recommended Strategy LT Objectives/Strategies by Function Annual Objectives/Policies by Function Pro Forma Statements Q7: Evaluation Projected Financial Ratio Analysis Balanced Scorecard Rumelt's Criteria Other Update and Conclusion References Extra Credit Penalty Total Point Distribution 1 1 3 Student's Score 2 3 2 2 3 3 3 3 2 2 5 5 1 2 1 2 2 5 5 1 2 6 2 4 2 3 3 3 3 3 3 2 5 0 0 100 0 Notes BUSINESS STRATEGY SPECIALIST ASSIGNMENT Introduction……………………………………………………...Olufunmilayo Oguntoyinbo Question 1………………………………………………………. Devangkumar Tandel Question 2 (Financial Matrices) …………………………………Zhoulingzhi Wang Question 3………………………………………………………. Jungjae Lee Question 4………………………………………………………. Devangkumar Tandel Question 5 (SWOT & GS Matrices) ……………………………. Jungjae Lee Question 6a&b…………………………………………………...Olufunmilayo Oguntoyinbo Question 6c (Pro forma Statements).……………………………. Olufunmilayo Oguntoyinbo Question 7………………………………………………………...Zizhao Jiang Update & Conclusion…………………………………………….………………. “TOYOTA” Case Analysis Page 1 of 54 BUSINESS STRATEGY Table of Contents INTRODUCTION ............................................................................................................................................. 3 CURRENT MISSION, OBJECTIVES, AND STRATEGIES ..................................................................................... 3 FINANCIAL ANALYSIS ..................................................................................................................................... 8 EXTERNAL ENVIRONMENT .......................................................................................................................... 12 INTERNAL ENVIRONMENT .......................................................................................................................... 19 REVISION: MISSION, OBJECTIVES, AND STRATEGIES .................................................................................. 23 RECOMMENDED STRATEGY: PRODUCT DEVELOPMENT ............................................................................ 25 STRATEGY IMPLEMENTATION..................................................................................................................... 25 PROFORMA STATEMENTS........................................................................................................................... 28 PROJECTED FINANCIAL RATIOS ................................................................................................................... 28 UPDATE ON TOYOTA MOTOR CORPORATION ............................................................................................ 34 CONCLUSION............................................................................................................................................... 35 REFERENCES ................................................................................................................................................ 36 “TOYOTA” Case Analysis Page 2 of 54 BUSINESS STRATEGY INTRODUCTION Founded August 27, 1937, Toyota Motor Corporation (TMC) is a Japanese automobile division that was introduced as a sector from the Toyota Industry Corporation which was later separated. TMC engages in the design, manufacture, assembly, and sale of passenger cars, minivans, commercial vehicles, and related parts and accessories primarily in Japan, North America, Europe, and Asia. Toyota sells in approximately 190 countries and regions. Current brands include Toyota, Lexus, Daihatsu and Hino. As of 2016, Toyota Motor Corporation (TMC) is the leading auto manufacturer followed by its competition Volkswagen in second place and General Motors in third place. TMC is the tenth largest public company in the world. As of May 2016, Toyota Motor Corporation’s recorded annual total revenue was $235.83 million, it employed 33,765 people (Forbes, 2016). It’s compound annual growth rate is 40.70% (GuruFocus, 2016). We will analyze the company, its missions, strategies, internal and external factors surrounding the company and financial conditions. We will provide recommended strategies that will aid in the improvement of Toyota Motor Corporation. Our focus will be on the fiscal year 2016. CURRENT MISSION, OBJECTIVES, AND STRATEGIES Mission Statement: “Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded “TOYOTA” Case Analysis Page 3 of 54 BUSINESS STRATEGY with a smile. We will meet challenging goals by engaging the talent and passion of people, who believe there is always a better way.” Mission Statement Evaluation Component 1 2 3 4 5 6 7 Customer Product Market Technology Profitability Philosophy Self- 8 9 Public Employee Concept Image Company Yes Yes Yes Yes Yes Yes Yes Yes Yes Toyota has strong mission statement which contains all the nine components of the mission statement. Its mission statement does not clearly specify about Profitability but it says that Toyota aim to exceed expectations and be rewarded with a smile, which shows Profitability component of mission statement for Toyota. Company Objectives: 1. Safe and responsible way of Transportation. 2. Commitment to quality 3. Constant Innovations. 4. Give more than expectation. 5. Making clean cars 6. Pursuing a multiple approach to safety 7. Bringing Toyota quality to the world 8. Diversifying Toyota “TOYOTA” Case Analysis Page 4 of 54 BUSINESS STRATEGY Company Strategies: Toyota currently engages in a differentiation strategy and related diversification strategy. To gain competitive advantage; 1. Toyota has positioned global environment preservation as a priority management issue, and carries out people- and environment-friendly manufacturing at all stages of the vehicle lifecycle. 2. Toward its vision of “zero traffic casualties”, Toyota is engaging in activities in the three areas: safe vehicle development, creation of safe traffic environments, and driver and pedestrian awareness. 3. Toyota vehicles are trusted and loved in countries around the world for their quality. That is a result of the combined strength of our development, production, sales and servicing operations which are based on the “customer first” principle. 4. Toyota using its technologies and knowledge accumulated through the automotive business is involved in a wide range of businesses that contribute to enhancing the quality of life. 5. Over the years, Toyota has impeccably employed the business-level strategy by investing heavily on hybrid vehicles. The automaker has leveraged the hybrid technology first developed for the car by offering it in more models, including versions of top sellers such as the Toyota Camry and dedicated vehicles like the Lexus CT 200h. Toyota has 14 hybrid models selling in the U.S., including offerings from its Lexus luxury brand. Toyota sold 310,021 hybrids in the U.S. last year with 60% being Prius variants. It is by “TOYOTA” Case Analysis Page 5 of 54 BUSINESS STRATEGY far the biggest seller of hybrids in the U.S. by volume and by the number of different models offered. Hybrid is their core technology. 6. Toyota has the strategic goal of innovation to address the broad differentiation component of its generic strategy. Innovation leads to unique and attractive products for all market segments. Thus, Toyota fulfills its differential strategy (Thompson, 2017). 7. Toyota’s main intensive growth strategy is market penetration. This intensive strategy supports business growth by reaching and attracting more customers in the firm’s current markets. To fulfill this intensive growth strategy, Toyota ensures that it offers products for every market segment. For example, the company has sedans, trucks, SUVs, luxury vehicles, and other product lines for every type of customer (Thompson, 2017). 8. Toyota’s interests of customers are high quality automobiles and service, along with reasonable pricing. Toyota addresses these interests through rapid innovation based on The Toyota Way and the Toyota Production System (TPS), which aim to maximize efficiency, quality and innovation (Rowland, 2017). 9. Toyota gives its customers greater satisfaction by providing more fuel-efficient vehicles and strongly reliant engines. Toyota cars save time and money that would otherwise be spent on filling up the fuel tank. Also, Toyota offers a wide range of vehicles for customers to choose from, ranging from luxury sedans to economically small cars. Also, its hybrid versions satisfy the environmental needs of everyone as well as saving on fuel costs. December 2016 Highlights Per Toyota Motor Sales Reports – December 2016 and Year-End Sales; “TOYOTA” Case Analysis Page 6 of 54 BUSINESS STRATEGY • Toyota is ranked number one retail brand • Camry model achieved sales of 33,412 units in post December and earned number 1 passenger car sales title for 15th consecutive year • TMS light trucks up 17.7 percent; a best-ever month; up 7 percent for the year • Toyota division SUV up 27.6 percent in December • Highlander posts all-time best-ever month up almost 58 percent; posts best-ever year • RAV4 posts all-time best-ever month with sales of 37,214 units, up 16.8 percent; up 20.4 percent for the year; posts record year • 4Runner sales were up 15.4 percent for both the month and the year • Toyota Division pickups up 2.6 percent in December • Tacoma up almost 2 percent for the month; up 6.7 percent for the year • Tundra sales were up 3.6 percent in December • TCUV had a best-ever month and achieved its best-ever annual sales record • Lexus LUVs up 26.3 percent in December; up 12.5 percent for the year; posts best-ever December and year • NX up almost 44 percent; posts best-ever December and year • RX up over 25.1 percent; posts best-ever December and year • GX up 11.4 percent in December “TOYOTA” Case Analysis Page 7 of 54 BUSINESS STRATEGY • L/Certified by Lexus posts best-ever December sales; achieved its best-ever annual sales record FINANCIAL ANALYSIS TOYOTA FINANCIAL RATIO OVERVIEW Financial Ratios Historical Comparison Competitors Comparison Liquidity P S No Change W Asset (Inventory Turnover ratio & AR (Inventory Turn ratio = Positive) Turnover ratio = Positive) Debt P S S Profit P (ROA & ROE = W) Market Ratio No Change W (YAHOO, 2017) I. Historical Financial Analysis Liquidity Ratios: As the current ratio shows the power of company to pay its short-term and long-term obligations and Toyota has been performing an increasing trend in these three years, we know “TOYOTA” Case Analysis Page 8 of 54 BUSINESS STRATEGY that Toyota can pay the creditor back more easily. Toyota’s quick ratio in these three years (March 2014 to March 2016) also displays a positive trend which means that the company’s ability to pay its short-term obligations with its liquid assets has been increasing year by year. Toyota’s ability to pay its debt has been increasing without depending its inventory. Asset Utilization Ratios (asset management): Though the inventory turnover ratio decreased in fiscal year 2015, it increased from 13.56 (fiscal year 2014) to 13.78 (fiscal year 2016). And a positive trend of inventory turnover ratio means that Toyota’s managerial efficiency has been improved during this period. Meanwhile, the AR turnover ratio of Toyota also has experienced a positive trend during these three years, increased from 2.89 (fiscal year 2014) to 3.04 (fiscal year 2016). This increasing trend has displayed the effective work of Toyota in extending credit and in collecting debts on that credit. Though the “Fixed Asset Turnover” ratio declined from fiscal year 2014 to 2016, Total Asset Ratio remain at the same level from FY 2014 TO FY 2016. Leverage Ratios (debt management): Toyota has been improving its debt ratio as it’s decreased from 65.08% (fiscal year 2014) to 63.68% (fiscal year 2014), which means Toyota’s burden of debt has been decreasing. However, the TIE ratio dropped from 125.1 in 2014 to 85.27 in 2016, due to the significant increase of interest expense. And this negative trend indicated that the ability of company to pay its interest expense by EBIT has declined. Profitability Ratios: “TOYOTA” Case Analysis Page 9 of 54 BUSINESS STRATEGY There’s positive trend with all the profitability ratios. From fiscal year 2014 to fiscal year 2016, gross margin increased from 19.04% to 20.41%, while operating margin changed from 8.92% to 10.05% and profit margin went up from 7.1% to 8.14%. The basic earning power ratio, ROA and ROE all demonstrated an increasing view. The financial condition of Toyota in these three year has been increasing stably and performing well. Market Value Ratios: P/E ratio increased from 10.43 (2014) to 11.76 in fiscal year 2015 and dropped to 10.27 in 2016. It dropped a little but not much, the investors’ willing to pay for Toyota maintained a stable level. II. Competitor Financial Analysis Liquidity Ratios: Both current ratio and quick ratio of Toyota are more than GM and less than Ford. Which means Toyota’s ability to pay its obligations are higher than GM, but it has lower safety margin than Ford. Asset Utilization Ratios (asset management): We use these ratios to measures that how well TOYOTA is using its assets more efficiently than the two competitors. Inventory turnover ratio of TOYOTA is better than GM, which means that TOYOTA’s efficiency in sale beat its competitor. Account receivables turnover ratio of TOYOTA is slightly more than FORD but much less than GM, which means TOYOTA’s effort in extending credit and in collecting debts on that credit is far behind GM. And the total asset “TOYOTA” Case Analysis Page 10 of 54 BUSINESS STRATEGY turnover of TOYOTA performed worst in these three. However, TOYOTA did lead a competitive position in utilizing their assets efficiently, compared to GM and FORD. Leverage Ratios (debt management): Debt to equity ratio of TOYOTA (63.88%) is much less than GM (79.48%) and FORD (87.22%), which could be an advantage in attracting investment than GM and FORD. Due to the lowest interest expense, TOYOTA has an overwhelming competence in TIE ratio than the others. Profitability Ratios: Gross profit margin, net profit margin, operating profit margin and BEP of TOYOTA beat GM and FORD in all these ratios, which means TOYOTA running successfully in making profits and covering its expense than the other two. Though the ROE of TOYOTA is lower than both competitors and ROA lower than GM, TOYOTA’s lacking the ability in competing with the efficiency of utilizing assets than GM and FORD, TOYOTA still demonstrates its leading profitability than others. Market Value Ratios: P/E ratio of TOYOTA is lower than GM and FORD, which means investors would pay less for the company. III. Overall Financial Health or Evaluation: The historical and competitor comparisons above demonstrated that TOYOTA is a profitable company with a stably increasing probability which also performs good in debt condition, and it should improve its efficiency of utilizing assets to generate profit and increase market value. “TOYOTA” Case Analysis Page 11 of 54 BUSINESS STRATEGY EXTERNAL ENVIRONMENT I. General Environment Demographic segment a. Hispanic and Asian populations growing. By2050, about one third of American population (Lambing & Kuehl, 2007) b. People under 21 years of age made up over a quarter of the U.S. population (27.1%), and people age 65 and over made up one-seventh (14.5%) as well as the national median age was 37.8 years in 2015 (United States Census Bureau, 2017). c. As of March 16, 2017, the United States has a total resident population of 324,700,000, making it the third most populous country in the world (United States Census Bureau, 2017), also, the Census Bureau projects a U.S. population of 417 million in 2060, which is a 38% increase from 2007 (301.3 million) (United States Census Bureau, 2017). Sociocultural segment a. Increasing single-person household. b. Higher percentage of women in the workforce (Dess & Lumpkin, 2003). c. Dual-income families (Dess & Lumpkin, 2003) d. pursues outdoor leisure activity. Political/Legal segment a. The overall system of taxation in the United States is progressive. b. Standard Industry regulation law by Japanese Government. “TOYOTA” Case Analysis Page 12 of 54 BUSINESS STRATEGY c. Some complicated US regulations and laws. Technological segment a. Technological innovation within the private and educational sector has been increasing, with each sector accounting for 70.0% and 14.0% of innovations, respectively. b. Growing wireless technology (Dess & Lumpkin, 2003). c. Around 80% of internet usage in developed countries. d. A moderate unemployment rate. Economic segment a. The world's largest national economy in nominal terms and second largest according to purchasing power parity (PPP), representing 22% of nominal global GDP and 17% of gross world product (GWP) b. A stable overall GDP growth rate (Benjamin J. Cohen, 2006). US GDP Growth Rate by Year". multpl.com. US Bureau of Economic Analysis. March 31, 2014. Retrieved June 18, 2014. Global segment a. The U.S. dollar is the currency most used in international transactions and is the world's foremost reserve currency (Benjamin J. Cohen, 2006). 348 번 "The Implementation of Monetary Policy – The Federal Reserve in the International Sphere" (PDF). Retrieved April 21, 2012. b. Protective trade by Trump make bad for TTP agreement. “TOYOTA” Case Analysis Page 13 of 54 BUSINESS STRATEGY c. Globalization: the free flow of capital, people, and information (Dess & Lumpkin, 2003). d. Increase in regional trade agreements (Dess & Lumpkin, 2003). II. Industry Environment Five- Forces analysis Five- Forces show that Toyota has strong competition and bargaining power of buyers or customers, which is powerful external factors in automobile industry. Below is how Toyota company engage in external environment: (Ferguon, 2017). 1. Competitive rivalry or competition (strong force) 2. Bargaining power of buyers or customers (strong force) 3. Bargaining power of suppliers (weak force) 4. Threat of substitutes or substitution (moderate force) 5. Threat of new entrants or new entry (weak force) The Threat of New Entrants • High capital costs (weak force) • High cost of brand development (weak force) • High supply chain costs (weak force) Toyota has an overall weak force on the treat of new entrants. New Entrant need to improve capital cost, high cost of brand development, and high supply chain costs, which make low treat of new entrants. “TOYOTA” Case Analysis Page 14 of 54 BUSINESS STRATEGY The Bargaining Power of Buyers • Low switching costs (strong force) • High quality of information (strong force) • Moderate substitute availability (moderate force) 5-forces show overall strong force on the bargaining power of buyers. The buyers can easily change to new products or new substitutes but most suburb of US are not convenient without cars, which make moderate substitute availability. The Bargaining Power of Supplier • Moderate population of suppliers (moderate force) • High overall supply (weak force) • Low forward integration of suppliers (weak force) Five-forces show weak force on the bargaining power of supplier. Toyota is one of the biggest automobile company that have more suppliers relatively than competitors but high overall supply make weak force on the bargaining power of supplier. The Threat of Substitute Products and Services • Low switching costs (strong force) • Moderate availability of substitutes (moderate force) • Low convenience in using substitutes (weak force) “TOYOTA” Case Analysis Page 15 of 54 BUSINESS STRATEGY Five-forces show moderate force on the treat of substitute products and services. People can change easily to other product but most us are countryside make less convenient in taking transportations. The Intensity of Rivalry among Competitors in an industry • High aggressiveness of firms (strong force) • High variety and differentiation of firms (strong force) • Low number of large firms (moderate force) There are high aggressive of firms on automobile industry. But Toyota is the one of the best company that compete a few of large companies, which make Toyota into strong force on the intensity of rivalry among competitors in an industry. Toyota’s Strategic Group: As the largest automobile company in the world, Toyota’s top two competitors in automobile industry are General Motors and Ford. These companies are both strong global name companies. Toyota Industries Corporation (Toyota Industries or ‘the company’) is engaged in the manufacture and sale of textile machinery, automobiles, material handling equipment, electronics, and logistic solutions. The company operates in Japan, North America, Europe, and Asia. It is headquartered in Aichi, Japan and employed 52,523 people as on March 31, 2015 (MarketLine, 2016). Also, this group specialize in broad product lines, heavy advertising, medium integration, extensive distribution, mass-market appeal, and widely-available service (Uhniche, 2009). “TOYOTA” Case Analysis Page 16 of 54 BUSINESS STRATEGY First of Toyota competitors, General Motors Company (sometimes referred to as “we,” “our,” “us,” “ourselves,” the “Company,” “General Motors,” or “GM") was incorporated as a Delaware corporation in 2009. We design, build, and sell cars, trucks, and automobile parts worldwide. We also provide automotive financing services through General Motors Financial Company, Inc (General Motors, 2015). General Motors is strong brand awareness with diverse automobile line. The sales of GM’s trucks are highest in the United States and famous for American. Second of Toyota competitors, Ford Motor Company was incorporated in Delaware in 1919. We acquired the business of a Michigan company, also known as Ford Motor Company, which had been incorporated in 1903 to produce and sell automobiles designed and engineered by Henry Ford (Ford, 2015). Ford is also the same broad automobile line such as Truck, SUV, Compact car, Sedan, Lincoln luxury vehicles line as Toyota has. Ford was the best automobile until 2000 but still strong competitors on automobile industry. The main weakness that Ford have is a decline in Ford’s market share or failure to achieve growth. This factor shows Ford needs to solve the problem. Based on our CP Matrix, Ford shows the strengths of the product quality and customer loyalty but they are weakness on global expansion, price, and advertisement. Opportunities for Toyota • Expanding global automotive manufacturing industry could enhance topline performance Growing global materials handling equipment market could boost product demand (MarketLine, 2016). “TOYOTA” Case Analysis Page 17 of 54 BUSINESS STRATEGY • Strategic consolidation of diesel engine development and production to provide scale efficiencies as well as the outlook for the global materials handling equipment market is robust. • The market will be driven by strong growth in Indian and Chinese markets due to the increased manufacturing and distribution activity in these countries. • In 2014, Toyota Industries and TMC agreed to consolidate their diesel engine development and production under the control of Toyota Industries. • The consolidation of diesel engine development and production coupled with growing end markets will provide significant scale efficiencies to the company. Treats Facing Toyota • Intense competition could distress the business operations and erode the market share. • Toyota Industries faces extremely harsh competition in each of the industries in which it conducts business, including its automobile and materials handling equipment businesses, which are the core of Toyota Industries' earnings foundation. • Stringent environmental regulations increase compliance costs impacting the profitability. • The business of Toyota Industries is subject to various environmental laws and regulations such as those relating to air pollution, water pollution, the use and handling of hazardous substances, waste disposal, product recycling, and soil and groundwater contamination. • Toyota Industries strives to reduce any burden on the environment resulting from its production processes, as well as strictly adheres to applicable environmental laws and regulations. “TOYOTA” Case Analysis Page 18 of 54 BUSINESS STRATEGY • Weak economic outlook for Japan could impact future growth prospects • The global economic recession of 2008 has done a significant damage to most of the industrialized economies, including Japan. INTERNAL ENVIRONMENT Toyota’s Strengths • Strong market position and brand recognition: Toyota has a strong market position in different geographies across the world. The company's market share for Toyota and Lexus brands, (excluding mini vehicles) in Japan was 45.5%. Similarly, Toyota has a market share of 12.2% in North America, 13.4% market share in Asia (excluding Japan and China), and 4.3% market share in Europe. In addition, the company holds a 7% share of the Chinese market and a significant market share in South and Central America, Oceania, Africa and the Middle East regions. Such strong market position allows the company to gain competitive advantage and expand into international markets. In addition, Toyota holds a portfolio of strong brands in the automotive industry. Thus, the company's strong market position gives it significant competitive advantage and helps it to register higher sales growth in domestic and international markets (Nkomo, 2013). • Strong focus on R&D: Toyota has a strong focus on R&D to expand its product portfolio and improve the functionality, quality; safety and environmental compatibility of its products. The company's R&D efforts are directed at developing new products and processes and improving the capabilities of existing products. The company conducts its R&D operations at 14 facilities worldwide. Strong focus on R&D has helped the company in incorporating newer features to its existing range of products and in bringing “TOYOTA” Case Analysis Page 19 of 54 BUSINESS STRATEGY out latest technologies in the varied areas. The company's strong focus on R&D allows it to uphold the technological leadership in most of its product segments. It also enables Toyota to develop innovative products, leading to strong sales (Nkomo, 2013). • Extensive production and distribution network: Toyota has an extensive production and distribution network. Toyota and its affiliates produce automobiles and related parts and components through more than 50 manufacturing companies in 27 countries and regions besides Japan. During FY2012, the company produced 7,435,781 vehicles, including 3,940,000 vehicles in Japan and 3,495,000 vehicles across all other manufacturing locations. In addition, Toyota has an extensive distribution network. While the company’s geographically well spread production base diversifies business risks, its extensive distribution network provides a wider reach, thus boosting revenues (Nkomo, 2013). • Efficient Production System: Toyota Production system or TPS is a manufacturing system developed by Toyota. The system’s aim is to ‘eliminate all waste from manufacturing process’. TPS employed the Just-in Time concept. TPS has become very successful in allowing the company to increase production efficiency, decrease manufacturing time and simplify its processes. All of which resulted in lower costs and better quality vehicles. Due to the TPS, Toyota’s profit margin of 8.1% is the highest when compared to its largest competitors Volkswagen’s profit margin of 0% or General Motors’ profit margin of 6.4% (Jurevicius, 2016). • Competence in hybrid vehicle production: Toyota has invested in its hybrid vehicle (HV) lineup and is expecting a long-lasting future on HVs and electric HVs. The company has introduced its first hybrid vehicle Toyota Prius in 1997. Prius became the first mass“TOYOTA” Case Analysis Page 20 of 54 BUSINESS STRATEGY produced hybrid vehicle and the most successful as of today’s date. As of May 2016, the company has sold over 5.7 million Prius models and in total 9 million other hybrid vehicles, surpassing all the other automotive companies in the world. Currently, Toyota offers over 30 usual hybrid vehicles and plug-in hybrid vehicles under its four brands. Toyota’s HV technology is probably the best-in-class. Toyota’s competence in hybrid vehicles is a long-term competitive advantage that its competitors will find it very hard to build a position in this sector of development (Jurevicius, 2016). Toyota’s Weaknesses • Product recalls could affect brand image: Toyota has conducted numerous product recalls in the recent past, which could affect the brand image and overall sales of the company. For instance, in 2011, Toyota recalled 111,000 models of Toyota and Lexus brands’ vehicles due to the damage to elements of the substrate and potential shutdown of the hybrid system. Further in the year, Toyota recalled 181,000 vehicles in Japan in relation to abnormal noise and oil leakage that may have resulted from slack of bolts in the sub transmission and the rear wheel differential. In addition, the company was involved in government investigations related to product recalls. For instance, in February 2012, the National Highway Traffic Safety Administration initiated a preliminary investigation of a potentially faulty power window master switch in the driver-side doors in model year 2007 Camry and RAV4 vehicles. This could also result in significant penalties, which could affect the operational margins (Nkomo, 2013). • Declining sales in key geographic segments: Toyota witnessed a decline in its sales in key geographic segments. In FY2012, the company witnessed declining sales across North America, Asia, Europe and other geographic reasons, which together accounted “TOYOTA” Case Analysis Page 21 of 54 BUSINESS STRATEGY for 60.8% of the total revenues of the company. Thus, a continuous decline in the company's key geographic segments could put pressure on the profit-making segments and the overall revenues of Toyota (Nkomo, 2013). • Poor allocation of resources as compared to peers: Toyota has low return on equity (ROE) and return on assets (ROA) compared to its peer companies. The company's competitors such as Honda Motor and Nissan Motor have more ROE when compared to Toyota. Honda Motor's ROE was 4.8%, while Nissan Motor's ROE was 8% in FY2012. In contrast, Toyota's ROE was 2.7% in FY2012. Lower ROE and ROA compared to its peers indicates that the company is not using the shareholders' money efficiently and that it is not generating high returns for its shareholders. Thus, poor allocation of resources could hurt shareholder's value and confidence in the long term (Nkomo, 2013). • Poor brand portfolio: Toyota sells its vehicles under 4 different brands: Hino, Daihatsu, Lexus and Toyota. Only Lexus and Toyota brands have considerable brand recognition. The company’s brand portfolio is much slimmer when compared to Volkswagen’s 12 different brands and General Motors’ 10 brands (Jurevicius, 2016). With only a few brands, Toyota cannot target many different consumer segments and satisfy their various needs as well as Volkswagen or General Motors with their many brands. The company’s main brand also suffers significantly because of the negative publicity or consumer backlash focused to a single brand (Jurevicius, 2016). • Lack of competence in autonomous vehicles: Toyota has long been reluctant to invest in autonomous vehicle technology. The company has been engaged in R&D aimed at contributing to the complete elimination of traffic casualties, but the company had no plans to introduce completely autonomous vehicles in the near-future (Jurevicius, 2016). “TOYOTA” Case Analysis Page 22 of 54 BUSINESS STRATEGY The company’s first attempt to developing such technology was in 2015, through the Team Mobility concept, which aims to facilitate the connection between the car and its surroundings and between the car and the driver to assure safe and efficient driving. The company’s lack of technology and experience in building autonomous vehicles puts it at disadvantage against such competitors as Tesla, Ford and General Motors. REVISION: MISSION, OBJECTIVES, AND STRATEGIES After evaluating the mission statement and the company objectives, Toyota fulfills most of the components of a mission statement. Toyota however did not include the component that concerns Survival, Growth, and Profitability. The net profit of the company was JPY115,263 million ($1,048.9 million) in FY2015, an increase of 25.7% over FY2014 (MarketLine, 2016). Toyota earned incredible net sales and net profit. Recommended Corporate and Business Strategies Upon evaluation of the external environment, Toyota’s opportunities and threats, and the internal environment, Toyota’s strengths and weaknesses, our team considers the SO, ST, WO, and WT to generate the recommended strategies for Toyota company. Toyota company is positioned in Quadrant 1 of the Grand Strategy Matrix, which is rapid market growth and a strong competitive position. According to the SWOT matrix analysis, to solve Toyota’s problem or help it reach its goal, we generated three strategies to keep the company’s brand awareness and strong competitive position. First, Toyota needs market penetration strategy in the present U.S. market through greater marketing effort. Second, Toyota needs market development strategy, achievable “TOYOTA” Case Analysis Page 23 of 54 BUSINESS STRATEGY by introducing present products and services into new geographic areas. Lastly, Toyota needs to implement product development strategy by developing new products. Strategy 1: Market penetration Toyota brand awareness is the best in the automobile industry. However, recently, Toyota advertisement expense is declining. Toyota will not advertise in the Super Bowl, ending a fiveyear run of advertising in the big game. The Super Bowl ad is around 20 seconds but the company that post ad pays for 5 million. It cost a lot but majority of Americans and international individuals watch Super Bowl game. Toyota still needs to spend more marketing cost to keep increasing sales in the American market. Putting advertisements at big game on NFL, NBA, and MLB will be profitable to Toyota. Strategy 2: Product development Toyota car produces relative high products car line with high quality products. Because of this, Toyota had a strong brand awareness to customers. But Toyota also needs to launch cheap cars product to sell the lower class and developing countries. For example, more than half of American drives cheap automobile such as SUBARU, MAZDA, and CHRYSLER. Toyota must develop the new cheap product line with Sedan, SUV, and compact car. Strategy 3: Market development Based on Product development to making cheap line car product line, Toyota needs aim to expand into developing countries in South America and Southeast Asia. Most of South America is the developing countries that hard to buy Toyota cars. Even though South America is weak economy, they are one of the big market in the world. The Southeast Asia is most developing “TOYOTA” Case Analysis Page 24 of 54 BUSINESS STRATEGY countries. Toyota needs to expand those market through relatively cheap cars product line than Toyota original cars product line. RECOMMENDED STRATEGY: PRODUCT DEVELOPMENT Toyota Motor Corporation implements differentiation strategy and related diversification strategy to gain competitive advantage. The Grand Strategy Matrix positions Toyota in the rapid market growth with strong competitive position (Quadrant 1). To help further achieve its longterm objectives, we recommend product development strategy. Product development is very crucial for Toyota. To stay ahead in the market, Toyota will have to introduce new products to the market as well as strive to stay ahead of its competition. Market development strategy aids Toyota in its Global Vision of corporate outline for the future, which serves not only to give direction to Toyota employees around the world, but also to convey such direction to customers and to the public at large (Toyota Motor Corporation, 2016). To address the threats based on competition, Toyota needs to maximize its competitive advantage based on its innovative capabilities. The company can also further adjust its culture and structure to optimize its flexibility in decision-making and problem solving. STRATEGY IMPLEMENTATION Toyota will work to achieve sustained growth through the functional realization of the recommended strategy. The primary role of a functional strategy is to support the company's overall business strategy. Functional strategies help in the implementation of the grand strategy by organizing and activating specific subunits of the company to pursue the business strategy in daily activities (Barnat, 2014). We develop functional strategies in the following areas; I. Management: “TOYOTA” Case Analysis Page 25 of 54 BUSINESS STRATEGY To achieve a solid product development strategy for management, it is important that Toyota promotes business and cost structure reforms to understand a solid management platform thereby responding rapidly to the changing market circumstances. Specifically, Toyota should maintain a streamlined structure through the reduction of fixed costs and improve its business in established markets in developed countries. Toyota should continue to undertake concerted efforts to strengthen its management platform and raise corporate value. Toyota deems the benefit of its shareholders as one of its priority management policies, and it continues to work to improve its corporate structure to realize sustainable growth to enhance its corporate value (Toyota Motor Corporation, 2016). To support consolidated management on a global scale, Toyota should enhance the power of the workplace and diversity in the use of human resources, and strive to nurture global human resources. Toyota should thoroughly enforce compliance, including observance of laws and regulations, and actively participate in social contribution activities (Nkomo, 2013). II. Marketing: To further improve it products/services, pricing, channels of distribution/location of outlets, and promotion, Toyota should accelerate its business expansion into rapidly growing emerging countries by monitoring the market conditions meticulously in respective regions and introducing products suited to the characteristics and needs of each market. Toyota should also strive to establish production and supply structures to realize optimum product pricing and delivery, and to enhance the value chain to provide a wide range of customer services in each country and region. III. Operations: “TOYOTA” Case Analysis Page 26 of 54 BUSINESS STRATEGY Toyota already implements the lean manufacturing method of operations in their production of vehicles, this is known as the Toyota method which was pioneered and developed by this company and the company clearly still employs this method for continual improvement and efficiency in their operations sector. However, it will be recommended that to achieve the best possible operations outcomes, the lean manufacturing technique must be employed in conjunction with other techniques to establish the best possible operational efficiency (Teacher, 2013). Toyota should place top priority on safety. IV. Accounting/Finance: By implementing the product development strategy, Toyota can improve on its sales and revenues. To achieve positive financial results from its products, it is of high importance that the performance of the finance and account department be constantly monitored. The department have access to essential data that can show a positive turn for the company. V. Research and Development: Toyota’s research and development activities focus on the environment, vehicle safety, information technology and product development. Product development is an ongoing process in the auto industry, for this purpose, to gain competitive advantage, major automakers allot large portions of their budgets for Research and Development (R&D) (Parker, 2016). Toyota’s research and development is dedicated to capturing the increasingly diverse and sophisticated market through the development of attractive, affordable, high-quality products for customers worldwide. The intellectual property that R&D generates is a vital management resource that Toyota utilizes and protects to maximize its corporate value (Toyota Motor Corporation, 2016). Toyota’s research and development expenditures on its vehicles were approximately $9.7 billion “TOYOTA” Case Analysis Page 27 of 54 BUSINESS STRATEGY in fiscal 2016 approximately 3.7% of its revenue, $9.1 billion in fiscal 2015 and $8.26 billion in fiscal 2014. This R&D budget allocation as a percentage of revenue is lower than those of other legacy automakers, including General Motors (GM) and Ford (F). GM spent about 5% of its revenue on R&D, and Ford’s R&D expenditure accounted for 4.5% of its revenue. Notably, the Italian luxury supercar maker Ferrari (RACE) allocates the highest portion of its budget to R&D. Ferrari’s R&D budget typically ranges from 19%–21% of its revenue (Parker, 2016). PROFORMA STATEMENTS Based on the current trend of financial results, due to changes in foreign currency exchange rates and the upward revision of Toyota’s sales, the financial forecast of the income statement and balance sheet results for FY2017 is set (See Appendix C). This forecast assumes a 5% increase in sales, average exchange rates through the fiscal year of 111.25 yen per U.S. $1. PROJECTED FINANCIAL RATIOS Depending on the product development strategies, Toyota has an increased current ratio. That means Toyota had better financial abilities to react with the change of market environments. During the change of inventory management and the increase of revenue, Toyota would have better inventory turnover. Moreover, a low fixed-asset turnover ratio indicates that Toyota has less effectively utilized investment in fixed assets to generate revenue. As a result, the cash conversion cycle will get undesirable result. Toyota is developing new products, so they need resources to implement the strategy. Therefore, the organization may gain more debt to finance their equity. This is reasonable that they should change as soon as possible because of the positive change on revenue. Besides, it is “TOYOTA” Case Analysis Page 28 of 54 BUSINESS STRATEGY hard to raise a fund in stock market, because of the previous products and issues such as recalls, the decrease of stock price would disappoint investors and hesitate to continue investing. However, Toyota is still standing out of the market, and their debt ratio will take a negative trend which means Toyota did not focus on product development. With the developed strategy, the debt ratio is expected to maintain the same. The raising of debt affects the ROA ratio also, which is decreased. Toyota has provided new products and the products’ improvement; therefore, the revenue is increasing, and the cost to produce these products are decreased with revenue. As a result, in year 2017 they would gain more profit lead the profitable ratios positively increasing. BALANCED SCORECARD The Balanced Scorecard is an important strategy-evaluation tool. It is a process that allows firms to evaluate strategies from four perspectives: financial performance, customer knowledge, internal business processes, and learning and growth (Kaplan, 2010). I. Financial performance Toyota is performing very well at present. Due to the positive trend in sales, the setting goal of sales increased more than 5%. The operating expenses changed without any trends in past three years, so the setting is just the average of the last three years which is 15% reduced. To compare with competitors, GM and Ford, the ROA of Toyota is in a weakness position although it increased annually last three years. However, the devised strategy would make it reach to GM which is 5.5%. In addition, it is confident to ensure the profit margin should continue increasing by 9% because it is a strength to compare with competitors and it is increased positively during last three year. II. Customers knowledge “TOYOTA” Case Analysis Page 29 of 54 BUSINESS STRATEGY As the result of production development, customer would save on gasoline more than 20% than before. Because of the benefit such as guaranteed quality in acceptable price Toyota brought to customers, 50% of them are expected to introduce to their friends or family members. Besides, Toyota also care about the satisfaction of customers which less than 10% customers are desired to complain. III. Internal business As the result of recalling of previous years, Toyota realized that quality of product is one of the most priority factors. During 2017, there is no recalling issues with development of product. The high technological company requires experienced employees and engineers; therefore, the 95% satisfaction of employees is important to achieve long-term goals as well as bringing benefits to development of production. Due to the serious competitive environment, to gain more market share by producing one new kind of hybrid vehicle is important because Toyota focus on this technology for a long time and it is mature enough to avoid a recall. IV. Learn & Growth The human resource management is significant due to the particularity of vehicle manufacturing, loss of the core employees would hurt for the organization. Therefore, to motivate them and build employees’ loyalty would help to maintain talents. With the development of technology, strange market is also necessary to pursue. To grab the new market as soon as possible, research and development in unfamiliar market is an obligation. In the end, due to the unpredictable change in expenses, the recycle of old car would be necessary to reduce the expense effectively. RUMELT’S CRITERIA: “TOYOTA” Case Analysis Page 30 of 54 BUSINESS STRATEGY Rumelt’s Criteria is to evaluate whether the revised strategy can work effectively. That involves four categories which are consistency, consonance, feasibility, and advantage. Consistency means how the strategy consistent with the goals and policies. Consonance focus on the strategy which is align with the trends or goals within the environment. Feasibility is to ensure the strategy neither overtax available resources nor create unsolvable subproblems. The last one, the strategy must provide for the creation and maintenance of a competitive advantage in a selected area of activity (David & David, 2007) I. Consistency Per the mission statement, the primary changes of revised mission statement are as following: 1. Toyota aims to improve the hybrid technologies further. This includes the improvement in performance of hybrid vehicles and efforts to reduce their costs, as well as contribute to the environment through advancements. 2. Toyota intends to improve its gasoline engine’s fuel economy as well as improvement in technology about more stringent emission standards. 3. Toyota aims to promote improvements in functions and fuel economy of clean diesel engines. 4. The company intends to increase the efforts to develop electric vehicles, fuel cell vehicles, and other alternative fuel vehicles. To launch the mission above, Toyota reinforce its technological parts. Due to reasons such as the declined sales in key geographic segments and increased demand in developing countries, product development would be helpful in both parts. With the strategy which is development of “TOYOTA” Case Analysis Page 31 of 54 BUSINESS STRATEGY product, Toyota can meet the mission statement which involved hybrid technologies, engine’s fuel economy and electric vehicles and build competitive advantages in the competitive environment. Therefore, the revised strategy is consistent with the developed mission statement. To review the original mission statement and objective, the developments of product is also helpful especially in making clean cars, bringing Toyota quality to the world and diversifying Toyota. Even though production development would not add any new strength, it changed the weighted score in development and research as well as empowering the strength. II. Consonance When we evaluate an organization, the need of trends examining is significant. The grandest development for human is utilization and development of technologies. Related to the automotive market, the diesel engine is brought into focus and electricity cars also receives attentions. In addition, the increased demand of developing countries such as China and India results in cheaper compact car needed. However, because of the Global economic recession of 2008, the competition changed into more intense. Even though the decline is serious, Toyota has a good market share and brand recognition because of the strong focus on research and development. Toyota also has an extensive production and distribution network, efficient production system. However, product recall is a significant weakness. Recall would make a serious reduce on inventory but it helps to build customer loyalty and development of positive organizational culture (Luthans & Jonathan, 2014). Product development would firstly utilize the opportunities which meets the need with cheap and compact cars of developing countries and expands in to global effectively. Second, new product development may help Toyota to stand out of the intense environment. The “TOYOTA” Case Analysis Page 32 of 54 BUSINESS STRATEGY electricity vehicle would be helpful in avoiding the unexpected exposure on various environmental laws and regulations and building customer loyalty in social responsibilities. In addition, however, both market share and brand recognition are in good position, there is a decline in key geographic segments and sometimes recalled. Therefore, the production development would help to build a better quality and customer loyalty so that more profit could be made. III. Feasibility The financial resources of a business are the easiest to quantify and are normally the first limitation against which strategy is evaluated (David & David, 2007). Related to Toyota, it has a strong financial ability to continue pursuing developing product as well as spending more on research and development with the positive trend of net income which is more than $20 million during year 2016. Depending on the current strategy of past three years, the total assets and revenue tends to be increased even though they are decreased a little bit in year 2014 to 2015 and the profit margin also increased in trend. This means the current strategy is profitable but not steady and guaranteed. Depending on the issues of recall before, the investment of research and development must be enhanced. The recall itself is a positive activity to respond because it represents the good organizational culture. However, the customers are concerned about the quality, the staff need to consider what part in manufacturing process or R&D need to be more focused or investing. If the problems related to employees, these employees could be changed. Therefore, due to the previous prosperity, product development would continue making contribution to achieve the goal and possible to operate. IV. Advantage “TOYOTA” Case Analysis Page 33 of 54 BUSINESS STRATEGY This category is analyzing the advantages of business strategy by evaluating how well the business distinguishes itself from others in the same market (David & David, 2007). Related to Toyota, to stay ahead in the market, Toyota would introduce new products as well as strive to stay ahead of its competition. Due to more people are changed their preferences into cheap and economic car, improvement in performance of hybrid vehicles and engine’s fuel economy would reduce the cost as well as increase the customers perceived value. Moreover, improvement of engine’s fuel economy can also help Toyota to meet social responsibility through technological improvement about more stringent emission standards. The other related to environmental care is paying efforts on developing electric vehicles, fuel cell vehicles, and other alternative fuel vehicles which are now unfamiliar to society. Therefore, In the intense competitive environment, the abilities of innovation are most significant. To sum up, depending on Rumelt’s Criteria, the chosen strategy which is production development would be possible to address. It consistent with the mission statement and objectives, partially utilizing the opportunities and avoiding threats, and reinforce internal strength and fixed the weakness. UPDATE ON TOYOTA MOTOR CORPORATION In 2016, Toyota had continued to make expansion. Toyota Motor Corporation (TMC) spends more than $1.1 million every hour of every day on research and development. Toyota has more 2017 IIHS top safety pick plus winners than any other brand. Besides, there are lots of rewards Toyota got in 2016 which involved the most trusted automobile brand, first no cost maintenance plan and longest-lasting vehicles of any full-line automotive manufacturer. Moreover, Toyota earned the most 2016 best overall value awards of any manufacturer (Toyota Motor Corporation, 2016). Per Toyota’s FY2017 3Q Financial Result, consolidated vehicle sales “TOYOTA” Case Analysis Page 34 of 54 BUSINESS STRATEGY totaled 6,643,386 units, an increase of 150,602 units compared to the same period last fiscal year. On a consolidated basis, net revenues for the period totaled 20.1547 trillion yen, a decrease of 6.0 percent. Operating income decreased from 2.3056 trillion yen to 1.5554 trillion yen, while income before income taxes1 was 1.7640 trillion yen. Net income2 decreased from 1.8860 trillion yen to 1.4327 trillion yen. Operating income decreased by 750.2 billion yen. Major factors affecting to the decrease included currency fluctuations of 770.0 billion yen and an increase in expenses of 405.0 billion yen (Toyota Motor Corporation, 2017). According to the New York Times, Toyota is set to invest $1.3 Billion in its Kentucky plant. CONCLUSION In conclusion, Toyota has a strong position currently. However, organizations are most vulnerable when they are at the peak of their success. After analysis of current position, evaluating the internal and external environments, Toyota develops quality products to provide the best quality product and satisfy customers. After projection of the financial statement, we predict that Toyota will continue making profits rapidly. In addition, Toyota responds to the society and environment very well. Toyota also diversified the product, so that competitors are not able to imitate. We believe that Toyota will continue to stand out and bring benefits to the world. “TOYOTA” Case Analysis Page 35 of 54 BUSINESS STRATEGY REFERENCES Barnat, R. (2014). Strategic Management: Formulation and Implementation. Retrieved from Strategy Implementation: Operationalizing The Strategy: http://www.strategyimplementation.24xls.com/en204 BBC Business. (2017, March 15). US raises benchmark interest rate by 0.25%. Retrieved from BBC Website: http://www.bbc.com/news/business-39286091 David, F. R., & David, F. R. (2007). Strategic Management: Concepts and Cases. Upper Saddle River, New Jersey: Pearson-Prentice Hall. Dess, G. G., & Lumpkin, G. T. (2003). Strategic Managemenent: Creating competitive advantage. Boston Mass: McGraw-Hill Irwin. Ferguon, E. (2017, February 2). Toyota's Five Forces Analysis (Porter's Model). Retrieved from Panmore Institutue Website: http://panmore.com/toyota-five-forces-analysis-portersmodel Forbes. (2016, May). Forbes: The World's Biggest Public Companies. Retrieved from Forbes Website: https://www.forbes.com/companies/toyota-motor/ Gomes, S. (2010). Strategy Evaluation and Control. Retrieved from Wordpress website: https://xisspm.files.wordpress.com/2010/11/ch-7-strategy-evaluation-and-control.pdf GuruFocus. (2016). Toyota Motor Corp (NYSE:TM) 5-Year Dividend Growth Rate. Retrieved from GuruFocus Website: http://www.gurufocus.com/term/dividend_growth_5y/TM/Dividend%2BGrowth%2BRat e%2B5y/Toyota%2BMotor%2BCorp Jurevicius, O. (2016, December 10). SWOT Analysis of Toyota. Retrieved from Strategic Management Insight Wensite : https://www.strategicmanagementinsight.com/swotanalyses/toyota-swot-analysis.html Kaplan, R. S. (2010, March 17). Conceptual Foundations of the Balanced Scorecard. Retrieved from Harvard Business School website: http://hbswk.hbs.edu/item/conceptualfoundations-of-the-balanced-scorecard Lambing, P. A., & Kuehl, C. R. (2007). Entrepreneurship. New Jersey: Pearson-Prentice Hall. Luthans, F., & Jonathan, D. P. (2014). International Management: CUlture, Strategy, and Behaviour. New York: McGraw-Hill. MarketLine. (2016). Company Profile: Toyota Industries Corporation . MarketLine. Nkomo, T. (2013, November). Analysis of Toyota Motor Corporation . Retrieved from Analysis of Toyota Motor Corporation : https://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf “TOYOTA” Case Analysis Page 36 of 54 BUSINESS STRATEGY Parker, J. (2016, May 27). Market Realist: A Must-Read Overview of Toyota Motor Corporation. Retrieved from How Reasearch and Development is Important to Toyota's Business: http://marketrealist.com/2016/05/research-development-important-toyotas-business/ Rowland, C. (2017, February 2). Toyota's Stakeholders: A CSR Analysis. Retrieved from Panmore Institute: http://panmore.com/toyota-stakeholders-csr-analysis Teacher, L. (2013, November). Toyota Operation Management Maintenance Of The Production Of Goods Or Services Business Law Essay. Retrieved from LawTeacher: https://www.lawteacher.net/free-law-essays/business-law/toyota-operations-managementmaintenance-of-the-production-of-goods-or-services-business-law-essay.php?cref=1 Thompson, A. (2017, February 1). Toyota's Generic Strategy & Intensive Growth Strategies. Retrieved from Panmore Institute Website: http://panmore.com/toyota-generic-strategyintensive-growth-strategies Torrance. (2017, January 4). Toyota Motor Sales Reports December 2016 and Year-End Sales. Retrieved from Toyota - USA Newsroom Website: http://corporatenews.pressroom.toyota.com/releases/toyota-lexus-december-2016sales.htm Toyota Motor Corporation. (2016). Toyota Motor Corporation: Comapny Profile. Retrieved from http://www.toyotaglobal.com/pages/contents/company/profile/overview/pdf/companyprofile.pdf Toyota Motor Corporation. (2016, June 24). United States Securities and Exchange Commission. Retrieved from Toyota Moto Corporation 2016 Annual Report: https://www.sec.gov/Archives/edgar/data/1094517/000119312516630645/d19734d20f.ht m Toyota Motor Corporation. (2017, February 6). TMC Financial Results. Retrieved from Toyota Website: http://www.toyotaglobal.com/pages/contents/investors/financial_result/2017/pdf/q3/overview.pdf Uhniche. (2009, November 14). On Strategic Group & the 5-Forces Framework. Retrieved from Box? What Box? Website: https://uhniche.wordpress.com/2009/11/14/on-strategicgroups-the-5-forces-framework/ United States Census Bureau. (2017, March). U.S. and Worls Population Clock. Retrieved from United States Census Bureau Website: https://www.census.gov/popclock/?intcmp=home_pop YAHOO, F. (2017, 4 1). Toyota Motor Corporation (TM) FINANCIA RATIO. Retrieved from YAHOO! FINANCE: https://finance.yahoo.com/quote/TM/financials?p=TM “TOYOTA” Case Analysis Page 37 of 54 BUSINESS STRATEGY APPENDIX A: FINANCIAL RATIOS “TOYOTA” Case Analysis Page 38 of 54 BUSINESS STRATEGY 2014 Liquidity Ratios Current Ratio Quick Ratio 2015 2016 Assessment 1.07 0.94 1.09 0.96 1.13 1 p P 13.56 26.92 2.89 126.2 3.36 0.62 12.74 28.65 2.79 131.04 2.93 0.57 13.78 26.49 3.04 119.92 2.92 0.6 P P P P N - Debt Management Ratios Debt Ratio TIE 65.08% 125.1 64.83% 127.29 63.68% 85.27 P N Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE 19.04% 8.92% 7.10% 5.53% 4.70% 13.70% 19.80% 10.10% 7.98% 5.76% 4.90% 13.90% 20.41% 10.05% 8.14% 6.02% 4.90% 13.80% P P P P P P 10.43 11.76 10.27 - Asset Utilization Ratios Inventory Turnover DSI AR Turnover DSO (ACP) Fixed Asset Turnover Total Asset Turnover Market Ratios P/E Financial Ratios: Historical Comparison Assessment Notation: P=Positive Trend, N=Negative Trend, Dash=No Change. “TOYOTA” Case Analysis Page 39 of 54 BUSINESS STRATEGY Financial Ratios: Competitor Comparison TOYOTA Liquidity Ratios Current Ratio Quick Ratio GM CASE YEAR 2015 FORD Assessment 1.13 1 0.97 0.78 1.25 1.14 S S 13.78 26.49 3.04 119.92 2.92 0.6 11.07 32.97 5.77 63.22 2.96 0.78 17.98 20.3 2.66 137.11 2.61 0.66 S S W W W Debt Management Ratios Debt Ratio TIE 63.68% 85.27 79.48% 18.42 87.22% 14.26 S S Profitability Ratios Gross Margin Operating Margin Profit Margin BEP ROA ROE 20.41% 10.05% 8.14% 6.02% 4.90% 13.80% 12.01% 3.21% 6.36% 2.52% 5.50% 23.80% 12.14% 5.11% 4.93% 3.40% 3.30% 25.70% S S S S W W 10.27 11.76 10.43 W Asset Utilization Ratios Inventory Turnover DSI AR Turnover DSO (ACP) Fixed Asset Turnover Total Asset Turnover Market Ratios P/E Assessment Notation: S=Strength, W=Weakness, Dash=Neutral. “TOYOTA” Case Analysis Page 40 of 54 BUSINESS STRATEGY APPENDIX B: STRATEGIC MATRICES “TOYOTA” Case Analysis Page 41 of 54 BUSINESS STRATEGY SWOT MATRIX Strengths Weaknesses 1. Strong Market Position 1. Product Recall 2. Brand Recognition 2. Declining sales in key geographic segments 3. Strong Focus on R&D SWOT MATRIX 4. Extensive production and distribution network Toyota 5. Efficient Production System 6. Competence in hybrid vehicle production 3. Poor allocation of resources 4. Poor brand Portfolio 5. Lack of competence in autonomous vehicle Opportunities 1. Globalization 2. Expanding global automotive manufacturing industry 3. New market by strong growth in Indian and Chinese markets 4 Educational Attainment 1. Marketing globally (S1, S2, S6, O1, O2, O3) 2. Product Development (S3, S5, O1, O2, O3) 3. Market Development (S1, S2, S3, S4, S5, S6, O1, O2, O3) 1. Marketing Campaign: Awareness of all the brands (W2, W4, O1, O2, O3 2. Product Development (W1, W3, W4, W5, O1, O2, O3, O5) 5. Dual-Income Families 6. The Threat of New Entrants Treat 1. Intense competition 2. Stringent environmental regulations 3. Green Trend make more costs 1. Market Penetration (S1, S2, S6, T1, T5) 1. Market Penetration (W2, W4, T1, T5) 2. Quality First Approach (S1, S2, S3, T1, T4, T5) 2. Improving muscular business structure to respond flexibly to rapid changes in the business environment (W1, W5, T1, T2, T3) 4. Weak economic outlook 5. Bargaining power of Buyers 6. Bargaining power of suppliers 7. Taxation in US is progressive 8. Interest Rate “TOYOTA” Case Analysis Page 42 of 54 BUSINESS STRATEGY GRAND STRATEGY MATRIX RAPID MARKET GROWTH Quadrant II Quadrant I TOYOTA MOTOR CORPORATION WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION Quadrant III Quadrant IV SLOW MARKET GROWTH “TOYOTA” Case Analysis Page 43 of 54 BUSINESS STRATEGY APPENDIX C: PRO-FORMA STATEMENTS “TOYOTA” Case Analysis Page 44 of 54 BUSINESS STRATEGY Income Statement All numbers in thousands 31/03/2014 31/03/2015 31/03/2016 Projected Year 2017 Remark Revenue Total Revenue 249,472,000 227,096,000 252,708,000 265,343,400 Sales increase by 5% Cost of Revenue Gross Profit 201,982,000 47,490,000 182,128,000 44,968,000 201,125,000 51,583,000 211181250 54,162,150 25,233,000 22,033,000 26,191,000 24,485,667 22,257,000 22,936,000 25,392,000 29,676,483 1,637,000 1,377,000 1,466,000 1,493,333 23,894,000 24,313,000 26,859,000 31,169,817 191,000 23,703,000 7,456,000 7,281,000 17,703,000 191,000 24,122,000 7,450,000 7,164,000 18,122,000 315,000 26,544,000 7,814,000 7,665,000 20,576,000 232,333 30,937,483 9281245 8971870 23,899,206 17,703,000 17,703,000 18,122,000 18,122,000 20,576,000 20,576,000 23,899,206 23,899,206 -4,458,000 -5,205,000 -6,932,000 -7169762 16,729,444 Operating Expenses Selling General and Administrative Operating Income or Loss Income from Continuing Operations Total Other Income/Expenses Net Earnings Before Interest and Taxes Interest Expense Income Before Tax Income Tax Expense Minority Interest Net Income From Continuing Ops Net Income Net Income Applicable To Common Shares Dividend Reinvestment income “TOYOTA” Case Analysis Page 45 of 54 Profit Increase Income Increase Increase BUSINESS STRATEGY Balance Sheet All numbers in thousands Period Ending 31/03/2014 31/03/2015 31/03/2016 Projected Year 2017 Cash And Cash Equivalents 19,820,000 19,050,000 26,153,000 39,693,727 Short Term Investments 21,625,000 24,444,000 22,629,000 22,899,333 Net Receivables 86,253,000 81,530,000 83,027,000 83,603,333 Inventory 18,398,000 17,825,000 18,342,000 19259100 Other Current Assets 6,525,000 6,716,000 11,863,000 11,863,000 Total Current Assets 152,621,000 149,563,000 162,014,000 177,318,494 Long Term Investments 168,395,000 163,197,000 166,799,000 166,130,333 Property Plant and Equipment Other Assets 74,198,000 77,513,000 86,662,000 90995100 7,150,000 7,725,000 6,497,000 7,124,000 Total Assets 402,364,000 397,997,000 421,972,000 441,567,927 Accounts Payable 49,728,000 45,262,000 48,570,000 47,853,333 Short/Current Long Term Debt Other Current Liabilities 83,759,000 82,356,000 85,069,000 83,728,000 9,065,000 9,397,000 9,824,000 10315200 Total Current Liabilities 142,552,000 137,015,000 143,462,000 141,896,533 Long Term Debt 82,992,000 83,505,000 86,944,000 91291200 Other Liabilities 11,449,000 11,158,000 12,427,000 13048350 Deferred Long Term Liability 17,593,000 Charges Minority Interest 7,281,000 19,166,000 18,204,000 18,204,000 7,164,000 7,665,000 7,665,000 Total Liabilities 261,866,000 258,008,000 268,703,000 272,105,083 Misc. Stocks Options Warrants Common Stock 4,269,000 4,269,000 4,269,000 4,269,000 3,855,000 3,311,000 3,533,000 3709650 Retained Earnings 137,071,000 130,014,000 149,422,000 166,151,444 Treasury Stock -10,911,000 -10,219,000 -14,265,000 -14978250 Capital Surplus 5,353,000 4,562,000 4,877,000 4,877,000 Other Stockholder Equity 5,129,000 12,321,000 5,434,000 5,434,000 Total Stockholder Equity 140,498,000 139,989,000 149,001,000 165193844.1 Net Tangible Assets 140,498,000 139,989,000 149,001,000 165193844.1 Current Assets Current Liabilities Stockholders' Equity “TOYOTA” Case Analysis Page 46 of 54 BUSINESS STRATEGY APPENDIX D: BALANCED SCORECARD “TOYOTA” Case Analysis Page 47 of 54 BUSINESS STRATEGY BALANCED SCORECARD Perspective Goal Measurement Financial perspective 1. Sales Growth Annual sales increase > 5% 2. Increasing of cost structure Operation cost reduction > 15% 3. Increasing of asset utilization ROA > 5.5% 4. Profitability Profit margin > 9% 1. Perceived value Gasoline cost saved > 20% 2. Loyalty 50% of customers bring friends to buy customer perspective 3. Satisfaction of customers Complained rating < 10% Internal Business Learn& Growth 1. Innovation processes Introduce 1 quality and cheap car to public 2017 2. Human resource management Satisfaction of employees > 95% 3. Quality Regulatory No recalling during 2017 1. Human capital Motivate employees to keep all core employees 2. New market opening Transfer attention to unfamiliar market--fuel cell vehicle 3. Recycle the old vehicles Cost of material reduced > to reduce cost 5% “TOYOTA” Case Analysis Page 48 of 54 BUSINESS STRATEGY APPENDIX E: EXTRA CREDIT MATRICES EFE MATRIX CP MATRIX IFE MATRIX QSPM MATRIX “TOYOTA” Case Analysis Page 49 of 54 BUSINESS STRATEGY EFE MATRIX (External Factor Evaluation) Opportunity Weight Rank 1. Globalization 2. Expanding global automotive manufacturing industry 3. New market by strong growth in Indian and Chinese markets 4. Educational Attainment 5. Dual-Income Families 6. The Threat of New Entrants 10 % 10 % 4 4 Weighted Score 0.4 0.4 7% 7% 7% 5% 3 3 2 1 Treat 1. Intense competition 8% 3 2. Stringent environmental regulations 8% 4 3. Green Trend make more costs 7% 3 4. Weak economic outlook 7% 3 5. Bargaining power of Buyers 4% 2 6. Bargaining power of suppliers 4% 2 7. Taxation in US is progressive 8% 3 8. Interest Rate 8% 3 Poor (1), Below Average (2), Above Average (3), Superior (4) TOTAL WEIGHTED SCORE 100% 3.03 0.21 0.21 0.14 0.05 0.24 0.32 0.21 0.21 0.08 0.08 0.24 0.24 Note: Total weighted score of 3.03 indicates that the Toyota has higher than industry average. Toyota is responding good way to existing opportunities and minimize the potential adverse of effects of the external treat. “TOYOTA” Case Analysis Page 50 of 54 BUSINESS STRATEGY Competitive Profile Matrix (CPM) TOYOTA Critical Factors Market Share Weight Rating GM Score FORD Rating Score Rating Score 0.1 3 0.3 4 0.4 3 0.3 Financial Position 0.11 4 0.44 3 0.33 3 0.33 Product Quality 0.17 3 0.51 3 0.51 4 0.68 Brand 0.15 3 0.45 3 0.45 3 0.45 Customer Loyalty 0.17 3 0.51 3 0.51 4 0.68 Global Expansion 0.13 3 0.39 3 0.39 2 0.26 Price 0.11 4 0.44 3 0.33 2 0.22 Advertisement 0.06 4 0.24 3 0.18 2 0.12 Total 1 3.28 3.1 Poor (1), Below Average (2), Above Average (3), Superior (4) “TOYOTA” Case Analysis Page 51 of 54 3.04 BUSINESS STRATEGY IFE MATRIX (Internal Factor Evaluation) Strengths Weight Rank 1. Strong Market Position 2. Brand Recognition 3. Strong Focus on R&D 4. Extensive production and distribution network 5. Efficient Production System 6. Competence in hybrid vehicle production 11 % 11 % 10 % 8% 8% 8% 4 4 3 3 2 3 Weighted Score 0.44 0.44 0.30 0.24 0.16 0.24 Weakness 1. Product Recall 2. Declining sales in key geographic segments 3. Poor allocation of resources 4. Poor brand Portfolio 5. Lack of competence in autonomous vehicle 11 % 9% 9% 8% 7% 4 3 3 3 3 0.44 0.27 0.27 0.24 0.21 Poor (1), Below Average (2), Above Average (3), Superior (4) TOTAL WEIGHTED SCORE 100% 3.25 Note. Total weighted score of 3.25 indicates that the Toyota has higher than industry average. “TOYOTA” Case Analysis Page 52 of 54 BUSINESS STRATEGY Quantitative Strategic Planning Matrix (QSPM) S1 S2 S3 Strategy 1: product development Weigh Ran Weighte Ran Weighte Ran Weighte strategy 2: Market development in US t k d Score k d Score k d Score strategy 3: Market penetration Poor (1), Below Average (2), Above Average (3), Superior (4) opportunity 1. Globalization 10% 4 0.4 1 0.1 4 0.4 2. Expanding global automotive manufacturing 10% industry 4 0.4 1 0.1 3 0.3 3. New market by strong growth in Indian and Chinese markets 7% 3 0.21 2 0.14 3 0.21 4. Educational Attainment 7% 3 0.21 4 0.28 4 0.28 5. Dual-Income Families 7% 2 0.14 4 0.28 4 0.28 6. The Threat of New Entrants 5% 1 0.05 4 0.2 4 0.2 0 Treat 0 0 1. Intense competition 8% 4 0.32 4 0.32 4 0.32 2. Stringent environmental regulations 8% 4 0.32 3 0.24 1 0.08 3. Green Trend make more costs 7% 3 0.21 3 0.21 1 0.07 4. Weak economic outlook 7% 3 0.21 3 0.21 1 0.07 5. Bargaining power of Buyers 4% 2 0.08 3 0.12 1 0.04 6. Bargaining power of suppliers 4% 2 0.08 3 0.12 2 0.08 7. Taxation in US is progressive 8% 2 0.16 4 0.32 3 0.24 8.Interest rate 8% 3 0.24 3 0.24 3 0.24 Total 100% Strengths 1. Strong Market Position 10% 4 0 0 0 0 0 0 0.4 “TOYOTA” Case Analysis Page 53 of 54 4 0.4 4 0.4 BUSINESS STRATEGY 2. Brand Recognition 9% 3 0.27 3 0.27 4 0.36 3. Strong Focus on R&D 10% 4 0.4 4 0.4 2 0.2 4. Extensive production and distribution network 8% 3 0.24 3 0.24 2 0.16 5. Efficient Production System 8% 3 0.24 3 0.24 2 0.16 6. Competence in hybrid vehicle production 10% 4 0.4 4 0.4 4 0.4 0 Weakness 0 0 1. Product Recall 15% 4 0.6 4 0.6 4 0.6 2. Declining sales in key geographic segments 7% 3 0.21 4 0.28 4 0.28 3. Poor allocation of resources 8% 3 0.24 2 0.16 3 0.24 4. Poor brand Portfolio 10% 3 0.3 2 0.2 3 0.3 5. Lack of competence in autonomous vehicle 5% 3 0.15 3 0.15 3 0.15 Total 100% 6.48 “TOYOTA” Case Analysis Page 54 of 54 6.22 6.06
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Attached.

Running Head: TOYOTA MOTORS COMPANY FINANCIAL ANALYSIS

Toyota Motors Company Financial Analysis
Name
Instructor
Institutional Affiliation
Date

1

TOYOTA MOTORS COMPANY FINANCIAL ANALYSIS

2

Toyota Motors has a very sound financial position because the company has been
recording a tremendous growth in annual revenues. Historically, Toyota Motors has been a very
profitable business that generates high returns and revenues. As of 2016, the company generated
net income of $ 235.83 million (Motor Corporation, 2017). This is a clear indication that Toyota
Motors is performing extremely well in the industry. For the year 2016, the global net income for
the company increased by about 6.4% enabling the company to the net in total revenue of about
$ 235.83 million. On the same note, the global sales of vehicles for the company has been on an
increasing trend although the company recorded a slighter decrease in vehicle sales for the year
2016 by about 290,536 units compared to the previous fiscal year 2015 Toyota (Motor
Corporation, 2017). Although the operating income for the company also increased in the year
2016 to about 2.86 trillion yen, the company managed to record a 6.4% increase in its net
income.
There is a positive trend in the company’s profitability as indicated by various
profitability ratios of the company. From the fiscal year 2014 to the fiscal year 2016, gross
margin increased from 19.04% to 20.41%, while operating margin changed from 8.92% to
10.05% and profit margin went up from 7.1% to 8.14%. This is a clear indication that Toyota
Motors has a sound financial condition in the industry (Motor Corporation, 2017). All other
profitability ratios indicate that the company is performing relatively well in the industry and its
performance is likely to rise in the company years because the company records a positive trend
in its profitability.
Through innovative inventions the company has adopted strategies such as intensive
differen...


Anonymous
Super useful! Studypool never disappoints.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags