Toyota : core competencies

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Amaury COBBAERT May 2010

Corporate Strategy

Toyota’s core competencies

Luc Moeremans


The aim of this paper is to identify the core competencies of Toyota. Therefore, I will analyse what distinguishes this brand that became the number one constructor from the others since 2007. This work will be divided in four main parts - a short analyse ofthe car industry, the identification of the strategic capabilities and the competitive advantage, the analysis of the core competencies of Toyota and finally some suggestions.

1. The trend of the car industry

After a very difficult year 2009, the car industry seems to get its colour back. In 2010, the global car production will reach 61 million vehicles. According to forecastsfrom PricewaterhouseCoopers (PwC), in 2011 global production will recover the same level as in 2008, that is to say 68 million vehicles. Already impacted by a slowdown before the crisis in late 2008, the production forecasts for 2015 were revised downward to just 2.4% at $ 82 million.

While the auto sector has relatively struggled last year because of the economic crisis, the Chinesemarket was doing well and was boosted by fiscal measures taken under the recovery plan. It jumped to 36.23% during the first ten months of the year. With more than 10.89 million vehicles sold during this period, the Chinese market became the first world market ahead of the U.S.

In the United States, the total market grew 13% in one year, and 12% as compared to January 2010, to780,265 units according to the firm Autodata.

And in Europe, new cars sales still supported by “scrap premiums” have jumped by 10.8% in March YoY, the European Automobile Manufacturers Association (ACEA ) said. In total, 1,637,478 new vehicles were registered in March in the EU countries. Germany, which ended its scrap premiums, has known a 26.6% drop of sales (294,375 units).

2.Strategic capabilities and competitive advantages
In this part, I will start by identifying and briefly explaining the threshold resources, the threshold competencies and the unique resources. After that, I will give a deeper explanation of Toyota’s core competencies.

Let’s begin with the four segments:

| ||
|Threshold resources: |Threshold competencies: |
| | |
|Human capital (quantitative aspect)|Develop and produce cars |
|Financial resources |Commercialise cars |
|Physical resources |After-sales service |
|| |
|Unique resources: |Core competencies: |
| ||
|Reputation |Market presence |
|Innovation |Toyota Production System (TPS) |
|Human capital (qualitative aspect) |...
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