Chart topper Toyota and its S.W.O.T analysis

People associate Toyota cars with durability, fuel efficiency, affordability and comfort.

In 2013, Toyota's sales totaled around 7.412 million vehicles worldwide , up 0.1 percent from the same period a year ago, making them the #1 car manufacturer beating rivals 'General Motors' and 'Volkswagen AG'.

Analysts expect Toyota to post 2.4 trillion yen ($24.7 billion) in operation profits for the year ending March 2014, more than the record 2.27 trillion yen it hit in the year ended March 2008, due to a weaker yen which makes exports more profitable.

(Reference: http://www.reuters.com/article/2013/10/28/us-global-autos-toyota-idUSBRE99R04K20131028)

Lets have a look at Toyota's strategic management in an Ansoff's Matrix.

(Reference: Screen shot of my own research)

                               

Strengths.W.O.T:

Toyota is #1 when it comes to R&D, it has been researching and developing environmentally-efficient mobility solutions for more than 40 years. As a result, it has established a significant lead in the design and production of full hybrid powertrain technology ahead of rival companies(BMW, Volkswagen, General Motors etc)

(Reference: Booz & Company)

Wide Range of products
Having a wide range of products means more variety for consumers, this leads to more consumers, resulting in a higher sales volume.

Toyota's range of cars go from the very bottom to top. With makes such as trucks, hybrids, family sedans, SUVs and sports cars.It has become a household name. Toyota has got a good grasp of the geographic, demographic, psychographic, behavioral, and product related principles of every country it markets to.

Diversification
When a company that focuses on a narrow range of products will only have access to a finite number of customers. Diversification is therefore importance for any business to ensure survival, market expansion and attracting new customers, opening doors previously closed to it.

Toyota diversified and operates a luxury car division, Lexus. This other sister company of Toyota manufactures premium cars to cater for wealthier consumers. Lexus has landed $18.7 billion in sales and has become the 73rd wealthiest company world wide. 
(Reference: Forbes, http://www.forbes.com/companies/lexus/)



At the core of the company’s success is the Toyota Production System
Having a cost effective, reliable and robust production line is a huge advantage in a manufacturing  industry.

One example would be when Toyota engineer, Taiichi Ohno, turned necessity into virtue. He came up with a system to get as much as possible out of every part, machine, and worker. The principles were simple and obvious, do away with waste, ensure parts arrive on time, fix problems as soon as they arise. This isn't fascinating rocket science, it is similar to the principles of Henry Ford's "Fordism" 



Innovation at its highest

Innovation is what gives a company the competitive edge in terms of productivity, sales and brand image, just to name a few.

In production line, one example would be that Toyota developed the andon cord, which any worker can pull to stop the assembly line if he notices a problem and kanban, a card system that allows workers to signal when new parts are needed.

Andon cords can now be found in almost every car factory today.

Technology innovation

Toyota has been developing various safety technologies by using different measurements towards realising the ultimate goal of making a vehicle that is safe for everybody. Such enhancements includes intelligent collision warning, traffic monitoring systems, cars to power up homes.

The most interesting development is developing electric cars to not only receive power but with the ability to power up homes. A new way to save energy if the car(s) has excess energy.

S.Weakness.O.T

Oversupply of cars

Being big has its problems. The world's market demand for cars is in a condition of over supply.

Car manufacturers need to know the models of cars consumers are after. Toyota markets most of its cars in the US and Japan. This leaves Toyota exposed to the fluctuation economy and political conditions in those markets. As a result of this, Toyota has to shift its market towards other countries such as China. 

Production uncertainties

Car factories require huge investments in expensive fixed costs. Toyota needs to constantly produce cars in order to retain its operational efficiency and sales growth.

However, should the car market experience a down turn, Toyota could see over capacity. On the other hand should the market experience an upturn, Toyota might miss out on potential sales due to under capacity. A common problem with high volume car manufacturing as it takes time to adjust to the current situation in each country.

Large-Scale recalls

Toyota had quite a few large-scale vehicle recalls over the past few years. The business recalled 9 million vehicles in 2009-2010 and 7.43 million cars in 2012. Such recalls does not only hurt the firm financially but significantly damages firm’s brand image. (Reference: http://www.bbc.co.uk/news/business-19894322)

                           

Weak presence in the emerging markets

Toyota’s main markets are Japan, US and Europe, while such emerging economies as China or India make only a small percentage of all Toyota’s sales. Due to poor presence in the largest automobile market (China), Toyota will find it hard to compete with General Motors that has huge market share there.

S.W.Opportunities.T

Increasing Fuel Prices

As the price for fuel and petrol increases, consumers may decide to switch to energy efficient “green” vehicles. This can open up a large market for Toyota’s hybrid cars. 

                                

Positive Attitude Towards Green Vehicles

As there is a growing trend of social responsibility, more consumers are now aware of the large amounts of carbon emissions cars produce that can harm our environment. Thus, more consumers are switching to buy hybrid and electric cars that emit less CO2. Thus, the market for electric and hybrid vehicles is growing. 

Toyota’s great efforts in the hybrid and electric car segment puts Toyota in a good position to become a leader in the market for these types of cars. 

Growth Through Acquisitions

Toyota may acquire other car companies, as they have done in the past, so as to grow, gain assets, new skills and access to markets that they have not successfully entered. 

Car companies aside, Toyota could acquire marketing and material production companies.
Infact, Toyota has acquired the later having successfully completed its acquisition of Cascade Corporation for $65.00 per share in a transaction valued at approximately $760 million. Cascade is  one of the world's leading manufacturers of materials handling load engagement devices and related replacement parts. (Reference: http://www.marketwatch.com/story/toyota-industries-corporation-completes-acquisition-of-cascade-corporation-2013-03-28)

S.W.O.Threats

Competition From Other Car Manufacturers

Toyota has many strong competitors. One of them is Volkswagen, who has a strong global presence and owns 13 automotive brands, including Audi, Bentley and Porsche. The biggest threat being GM, who is stepping up to become more competitive after its reorganization.
Intense competition might lead to a saturated market.

Rising cost of raw materials
Raw materials are especially important to automobiles manufacturers. Higher prices mean higher costs and less profits for Toyota as the raw metals are the main components in car manufacturing.

Natural Disasters

An earthquake could tear a city apart, what more a factory. After the earthquake’s occurrence on March 11, 2011, Toyota temporarily suspended operations at all of 

its domestic factories due to damage to social infrastructure including energy supply, transportation systems, gas, water and communication systems caused by the earthquake

(Reference: Toyota's Annual Report 2011)

Toyota's suppliers too were affected and this resulted in a domino effect. All from a single act of nature.

(Reference: Toyota's Annual Report 2011)

Unfavourable exchange rate

Since Toyota’s revenue is mostly from foreign countries, profits that are earned abroad would be converted to yen when it is sent back to Japan. Thus, as the yen is appreciating against other currencies, Toyota’s profits would be lower.


Conclusion
As strong a company Toyota might be as the whole world knows, it is no different than any others. A paradox in itself. Toyota is subject to the ever changing political, economic, natural and consumer behaviour environments, just to name a few.

An example of a company that has done astronomically well. However some improvements such as manufacturing 'Super sports' cars to compete in the 'Horse power' market or perhaps take diversification to a new level by introducing house hold appliances like what competitor Mitsubishi has done. 

With Toyota's brand image, expertise and resources and dedication I believe that the above mentioned is achievable if the right amount of effort and time is spent.  

Globalisation, a force to be reckoned with.

Globalisation is a topic that attracts much controversy. What exactly is globalisation? How does it affect businesses, culture, technology, politics, economy and the society we live in.

"Globalization can be defined as the ability to produce and good or service anywhere in the world using capital, technology and components from anywhere and to sell the output anywhere and place the profits anywhere" - Peter Jay 1996 

A process of the world responsible for producing and representing the ability to share and discuss many aspects of that which I have listed above. One of the biggest factors affected as a result of globalisation is businesses.

When companies participate in the emerging global economy and establish themselves in foreign markets, products and services are adapted to the meet the demands of the culture, economy and politics.  Enough of the boring bits.


Here we go..

    SUBWAY! EAT FRESH!

On an economic scale, SUBWAY has surpassed even the likes of MacDonald's.
http://www.theguardian.com/lifeandstyle/2011/mar/09/subway-biggest-fast-food-chain

By simply franchising its brand, SUBWAY has managed to opened more than 35,000 stores in the world. (SUBWAY)
SUBWAY broke barriers and rapidly increased international trade by doing so.

(Subway and its climb to the top)

This video is in english

SUBWAY was first opened by Fred DeLuca in 1965, Connecticut, USA.
SUBWAY 's franchising system is both efficient and effective, proving itself time and time again throughout the world.                         
One of the key strengths behind the success of the SUBWAY brand is the solid support network and robust processes in operation.

(Empire of Subway's franchisees worldwide)

It is achieved by 5 internal factors
1. Staff training
2. Close relations with franchisees (and some form of empowerment given)
3. Company purchases management (Manages the purchase and supply chain activity for all food, packaging, equipment and services in the UK and Ireland and other European countries)
4. Two-way communication (Sharing of best practices)
5. Brand Image ( SUBWAY sells millions of Subs every week in the UK and Ireland.)
Source :http://www.subway.co.uk/business/franchise/support_network.aspx

Ability to 'reproduce'

SUBWAY is able to have many stores due to its low start up costs($15,000) and the size of each store is smaller compared to regular restaurants. It can be build almost anywhere; inside superstores, gas stations, convenient stores etc.

Loss of identity

"The question of whether this is good or bad requires a glimpse at the international debate on globalization. Many expats living in Panama would not be here if not for globalization. Information technology allows me to live in Panama, manage people in the US and communicate with family and friends spread around the world. I could not live here if not for globalization; still I question whether it is good for the people." -Lee Zeltzer, Levin Institute, part of the State University of New York.

The writer has a valid point. Globalisation might induce unwanted change such as a lost of cultural identity. By introducing new products and services into a foreign land, it might have a negative impact in its cultural roots; food and working culture may digress from origin when SUBWAY is concerned.

Creating Job opportunities
By going global, SUBWAY has created thousands of job opportunities worldwide. Certain countries such as Singapore and Malaysia has a ratio of locals to foreigners employment rate policy. For every 6 locals only 1 foreigner is allowed to be employed, a form of safe guarding against negative aspects of globalisation.

A Subway store generates 8–10 jobs, which means there are about 350,000 jobs in the SUBWAY restaurants. With 1,200 positions at headquarters and regional offices and combining that with Subway partners, the vendors who supply goods, the farmers and meat manufacturers, food processing, and the equipment providers, you begin to see that Subway cuts a wide swath.

(Source: Personal analysis from an interview with Don Fertman(Subway's Director of Development)

http://www.qsrmagazine.com/executive-insights/subway-effect




Creating global health awareness for kids as a result of expansion
(Globalisation of technology)SUBWAY has devoted an entire website to kids to help build health awareness in a fun and captivating way, supported by celebrities such as Michael Phelps. (SubwayKids.com)

Cost effective (Global economic interdependence)

SUBWAY's meat is produced in Denmark, Thailand, Uruguay, German and the U.K. The region(s) closest to the location production will save costs by importing directly from SUBWAY owned production lines. Thailand is SUBWAY's largest manufacturer. As a result of this, the store depends on the supply of meat to make sandwiches, and the manufacturers depend on payment from the store to continue production.

Legal issues
Subway has had so many legal issues like any other franchised business, however Subway was in a league of its own due to the shocking number of 160 legal cases more than the combined total of MacDonalds, KFC, Wendys and TacoBells' legal cases. 
(Reference: Federal Trade Commision annual report)

Some of Subway's franchise terms are illegal in certain states. The agreement requires arbitration of all disputes in Connecticut regardless of store location and caps awards at $80,000. (Subway has found a way to skip arbitration by signing leases with landlords and then subletting stores to franchisees; as de facto landlord, Subway can quickly evict owners in a dispute.) 

An Illinois court has condemned the arbitration because it "lacks mutuality"
and  awarded more than $10 million in damages to Nicholas and Victoria Jannotta after finding lease and contract violations. (Reference : Robert Lee Allen, Nations Restaurant News)

In Michigan, officials discovered in 1989 that Subway was not registered to do business there. When it did register, it listed only two of nine contract clauses that are unenforceable in that state. 

A domino effect is very evidently present in this situation. Subway never rectified its problems since the beginning and has led people into believing in its 'ethical' business sense. This has in-turn led to the dismay of franchisees feeling cheated when something goes wrong and Subway decides to 'Shut them down'. It just goes on in a loop whenever such situations arise.

Unhappiness within the community

A consultant Marshall estimates that 25% of franchisees are unhappy and suffering, while about 40% are "just getting by and making a few dollars," and 30% to 35% are happy and doing fine though many of the happiest owners are also agents, who can control the number of competing Subways in their vicinity. It is estimated that half the franchisees in the Northeast are suffering. FORTUNE tried hard to find happy franchisees, but even those who were doing well complained about the company's practices. (Reference: Sagar, Small Business Committee)
Hence, we can see that anger and unhappiness are far more prevalent among Subway's franchisees than any other major chain.

Global Culture change

Subway has applied for two different trademarks for "footlong," one referring to sandwiches and another for restaurant services. If it results in a success, it would mean that no other businesses can refer to their sandwiches as foot long. People have generally been referring to the length of sandwiches by lingo such as foot long or half foot for hundreds of years. This wouldn't be ethical. Foot long is by default a generic English word.

The dispute between a man named Casey and Subway surfaced when one of Subway's lawyers wrote to Casey, saying Subway's owner had applied for the trademark "footlong" for its sandwiches. The lawyer told Casey's it was on notice to "cease and desist" from using "footlong" and remove all references to it or face legal action. 

(Source: http://www.cbsnews.com/news/subway-restaurants-face-lawsuit-over-footlong-trademark/)

As a result of this act, sandwich businesses might not be able to use the word 'Footlong' and will have to re-brand/strategise their menus/billboards. 

I would suggest that this is an act of human greed. In hopes of forcing small businesses in every way possible to evict, as if setting up a Subway across the road wasn't detrimental enough. 

Political Issues

Subway is facing problems from the effects of 'Obamacare', also known as the 'Affordable Care Act' in the states. The sudden government intervention on payroll sets itself to increase minimum wages and to end the payroll tax holiday.

1)Payroll taxes (USA)

This regulation has affected the overall sales of Subway by 2% in the states. It not only puts pressure on the company but on consumers also. An increase in taxes would lead to an increase of price.

2)Minimum wages (USA)

Another adverse effects is the sudden rise of minimum wages in the states. As a rise in wages would lead to a similar effect on the price set by franchisees regionally. 


3)Biased VAT treatments (UK)
In October 2010, Subway franchisees in the UK lost a high court appeal against paying standard VAT on all toasted subs, as required by HM Revenue and Customs. In the UK, toasted sandwiches incurs VAT, however a cold sandwich, eaten off the premises, does not. Competitors such as Quiznos and McDonald's do not pay VAT on similar food. (Reference: "Subway VAT appeal: Subway loses". Howlader & Co. November 4, 2010.

Health issues brought to other countries as a result of globalisation (Complacency)

Subway has been feeding people with bread and chicken filled with toxic chemicals in small portions in a bid to cut cost. It contains chemically engineered ingredients such as petroleum. In short, the ingredients contain so much preservatives, they wouldn't rot for years.  However Subway claims it is following the guidelines set by the government.
(Reference & Email containing proof of Subway's ignorance: http://healthwyze.org/index.php/component/content/article/540-the-2010-worst-restaurant-of-the-year-award-goes-to-subway.html

Conclusion

It is impeccable as a rule of thumb for any business to observe, understand and adapt to the political environment due to the significant effects which will directly/indirectly affect a business.
Some factors to consider are:
1. Constancy of the government
2. Type of Government (democratic, dictatorship, monarchy, etc)
3. The government have Economic policy
4. Available Trade policy
5. Diplomatic actions in nearby countries
Furthermore, political context can change for the foreseeable future.

What does PESTLE say about "Apple Inc"?

Apple Inc is one of the largest organisations in the technology industry, it takes pride in its sense of design and ergonomics. Apple's main products are iPhone, iPod, iMac and its latest, iPad.

In year 2005, Apple Inc had controlled 4.2% of the US PC market. The revolutionary iPods had controlled 70% of the hard drive MP3 player market. Apple Inc sits on the throne when it comes to the mobile phone market, generating over 71% of the industry’s profit and 6.5% of the international mobile phone market. (OPPapers.com 2012).

This puts Apple Inc in one of the top positions when it comes to music players and mobile devices.

                                                            (The graph shows it all)
                                                          (Source: Company filings)


Lets look at the macro factors, it will give us a clearer on Apple Inc's situation and see how factors such as political, economic, social, technology, legal and environmental analysis helps determine the current situation of Apple Inc., identifying potential influences of the political, economic, social and technological sectors; and maybe predict the future of Apple.

Political Influences:
In 2007, it was reported that 52% of Apple's sales came from outside the USA. The influence of war and terrorism might very well have been the primary cause of this.
These are factors that no company large or small can control, not even Apple. Much of Apple's production is based overseas in countries such as Korea, China, Czech Republic, Cork and Ireland, this gives Apple an absolute advantage. Any political conflicts between either of these countries and the USA will most likely result in a decrease in production accretion..

Economic Influences:
The global economic depression might have an immense impact on Apple Inc. With inflation soaring
high and a stagnant or decrease in consumer salaries, coupled with ever increasing unemployment rates, consumers will less likely splurge on 'luxury' products. Not forgetting the devaluation of the U.S dollar which would result in a loss in the currency exchange process. However the astute Apple purchased much foreign currency  to minimize the economic repercussions. On the contrary, I found out that while the U.S dollar depreciated, Apple's international market revenues rose.

Social Influences:
Globalization includes the interaction of people worldwide, in which technology plays the main
role. Imagine what the world would be like without technological devices such as computers and mobile phones. Many regard Apple Inc as the King of technology as a result of widely accepted design and quality.

The other big social influence is the music industry, which over the last decade has become one of the most lucrative industries. Apple took advantage of this and developed the largest virtual media store, iTunes, which is currently well ahead of its competitors in this field. Although media piracy might pose a threat, another factor has politically made it illegal to do so, invoking deterrence, namely the government.

Apple Inc portrays the modern individual’s lifestyle, combining technology with design. Apple in this aspect has created a strong brand image and attracted a large pool of loyal customers. Hence social influences have positive effects on Apple Inc.

Technological Influences:
The market for computers and mobile phones has grown in astronomical proportions and competitiveness. Technology innovations and changes are ever changing dynamically, what is defined as advanced today might become obsolete the very next. As a result, a products' life cycle is very short. Investing largely in Research and Product Development is key to a success. People want innovation and  Apple is constantly bringing its 'A-game' into the market. This might spin off a series of 'copy-cat' competitors. However, innovation occupies a large part of Apple's brand image and it has been statistically proven to have paid off.
(Refer to statistic image in Introduction)

Legal Factors:
In a technology centred industry, patents are what protects a businesses' blueprint from being infringed.
In August 2011, Apple and Samsung were litigating 19 ongoing cases in nine countries; by October, it increased to ten countries. ("Every Place Samsung and Apple Are Suing Each Other". PC Magazine. Ziff Davis)

By July 2012, the two companies were still embroiled in more than 50 lawsuits around the globe, with billions of dollars in damages claimed between them

Mueller, Florian "Apple seeks $2.5 billion in damages from Samsung, offers half a cent per standard-essential patent". FOSS Patents. 

Nokia has filed various lawsuits against Apple Inc, claiming the violation of 13 additional patents by iPhone, iPad and iPod touch, this apart from US complains covering 24 Nokia patents. Also, in China Apple Inc has been fighting the battle for its right to the iPad trademark.

Apple has been going through a storm of legal battles back to back, despite this Apple is still seen as the leading brand in technology devices.

Environmental Factors:
Apple adopts a comprehensive life cycle analysis approach to determine the contributing factors of greenhouse gas emissions generated from the manufacturing, transportation, use, and recycling of products, as well as the emissions generated by their facilities. 98% of Apple's carbon footprint is directly related to their products and the remaining 2% is produced from facilties.
(Source: Apple published reports)

Apple is of one of the companies that has achieved 100% renewable energy at all their data centers, at facilities in Austin, Elk Grove, Cork, and Munich, and at the Infinite Loop campus in Cupertino. On average, Apple is at 75% worldwide when renewable energy is concerned. Apple claims to strive till the target of 100% is reached.
(Source: Apple published reports)

In this analysis it is clear that Apple is headed generally towards the right direction and know what they are doing. However under a VRIO analysis Apple still has much to accomplish under the factor(s) of immitability which led to their biggest problem, the numerous legal disputes. A stronger competitive advantage is required if Apple were to go even further.