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
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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
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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
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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;
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•
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
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•
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
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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:
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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
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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.
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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.
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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.
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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.
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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)
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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).
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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).
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•
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.
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•
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
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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
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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
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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).
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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
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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
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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:
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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:
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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
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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
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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
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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:
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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
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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
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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
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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.
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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
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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
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BUSINESS STRATEGY
APPENDIX C: PRO-FORMA STATEMENTS
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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
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