This case study is about Toyota Motor Corporation (Toyota), the world's leading automaker. When Akio Toyoda (Akio) took over as President of the iconic Japanese automaker on June 23, 2009, the automotive industry was going through a very difficult phase. Moreover, Toyota was also facing some serious problems itself. In mid-2009, the company reported its first losses since 1963, the year it began reporting business data. Analysts felt that the global financial crisis had had its impact on Toyota and that the company was also trying to cope with a shift in the global automobile industry. The challenge before Akio, grandson of the founder of Toyota, was to bring the automaker back to profits. Akio immediately announced a slew o f measures to bring the company back to t o profits. According to him, the industry was going through a µonce-in-a-century transformation' and thus he wanted to break from the past to provide a solution for t his µonce-in-a-century challenge'. The case study discusses some of the measures taken by Akio and also d iscuss iscusses es the challenges that t hat he faced in bringing Toyota back into profits. profits. While many analysts felt that Toyota would bounce back, some analysts expressed doubts over whether Akio would be able to manage a turnaround and pull the company co mpany out of the crisis. Some insiders were also worried that the selection of a member of the founding family as President might lead to disunity within the company. Issues:
» Examine some of the reasons for the problems faced by Toyota in 2009. » Analyze the strategy adopted by Akio Toyoda in his bid to bring Toyota back to profits. » Examine the challenges faced by Akio in achieving his objective. » Explore strategies that Akio could co uld adopt in these difficult economic times.
Planning : The Number One Automaker Over
the years, Toyota had made a name for itself for its innovations, financial soundness, and global competitiveness (Refer to Exhibit III for world's most admired companies and Exhibit IV for Toyota's industry rank on ke y attributes)...
Problems
In the new millennium, automakers had to contend with many challenges including high gas prices. As the global financial crisis deepened in 2008, the consumer demand for cars and other goods plummeted, especially in the US and European markets... What Went Wrong? Analysts felt that Toyota's bad performance was due to the fact that it had expanded its global production facilities in the mid-2000s to meet brisk demand, particularly for its fuel-efficient cars, leaving it vulnerable to the current slump in worldwide sales... Change in Leadership
Toyota expected that the global vehicle demand would eventually increase. However, for the fiscal year 2010, the company expected its global unit sales to fall about 14% to 6.5 million vehicles. The projected slip forced Toyota to make changes at every level right from its plants to its dealerships to the top management of the company...
Back to Basics
Akio planned to adopt a "back to basics" approach to revive the company. "The global automobile industry has been facing extreme hardships since the latter half of last year... We expect our losses to deepen this fiscal year, and so all of us in the new management team at Toyota feel like we are setting sail during a storm... Regional
Autonomy
The company's management was to place a priority on meeting the needs of regional markets by closely watching consumers and markets and noticing changes. In order to respond to consumer needs, each of the EVPs was to oversee a global region - North America, Europe, Japan, and emerging markets... Challenges Ahead
Akio expressed confidence that Toyota would bounce back but he added that it would take at least two more years for the company to turn a profit. Some analysts too echoed this view. According to CLSA's Richter, "Toyota has a history of rising to overcome crises...
Exhibits Exhibit
I: Vehicle Production, Sales and Exports of Toyota*: 2008 Exhibit II: Toyota's Primary Markets*: 2008 Exhibit III: World's Most Admired Companies Exhibit IV: Toyota's Industry Rank on Key Attributes: 2009 Exhibit V: Toyota's Balance Sheet Exhibit VI: Toyota's Income Statement Exhibit VII: Five-Year Stock Chart of Toyota Exhibit VIII: World's Top 10 Auto Groups by 2009 H1 Sales Exhibit IX: International Car Sales Outlook Exhibit X: Car Sales in Developing Nations Remain in the Fast Lane
