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Internationalisation path of Toyota

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Table of Contents
Introduction...........................................................................................................................................3
International growth and motivation......................................................................................................3
Market entry modes of Toyota and its approaches.................................................................................4
Value chain analysis..............................................................................................................................5
Advantages of current internationalisation strategies............................................................................6
Potential risks for the company.............................................................................................................7
Conclusion.............................................................................................................................................8
References.............................................................................................................................................9
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Introduction
For increasing the growth rate and reaching to a larger customer base, internationalisation or
expansion of the business is one of the most critical aspects. It can be assured by designing
and implementing internationalisation strategies. Toyota is one of well-renowned brands in
the automobile industry and deals globally. For expansion and entering new markets the
company follows different market entry modes depending on the economical environment
and local automobile industry of targeted market place. Toyota is a Japanese automotive
company that was founded in the year 1937. The essay will cover the identification of
international strategies adopted by the company along with motivation, modes of entry and
geographical presence. It will help the learner to understand the advantages of current
internationalisation strategy by analysing the value chain of Toyota. Also, it will discuss
some potential risks that the company may face in near future.

International growth and motivation

The company is serving the market from decades and it has become of the best car makers on
the planet. For ensuring the growth and retaining its huge customer base the company focuses
on innovativeness. The company deals in automobile and innovativeness is one of the main
growth drivers that motive Toyota’s employees. In response to its innovativeness and
contribution to the global automobile industry the company has been awarded several times
that motivates the stakeholders (Toyota, 2021). For the continuous growth and development
of the company, its employees and management have played a vital from its establishment.

The Japanese workforce is well-renowned for its dedication and discipline in the workplace.
The company’s workforce is one of the major factors that have made the company a global
leader in the industry. Also, the motivated board and creators of Toyota design more cars
with unique designs and better quality that attracts the customers and build rapport in the
market. Along with its designing and built quality Toyota cars are made by implementing
customer centric approaches. After its establishment, the company has focused on expansion
and internationalisation which is made possible through innovative designs and affordable
pricing strategies in all the marketplaces. After adopting the concept of globalisation the
company followed the policies and legal terms of each marketplace to avoid any kind of issue
that could lead inconvenience. With the advancement of technology the company adopted
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robots and other hi-tech equipment that encourages increasing productivity and efficiency
(Toyota, 2021). Also, the employees find it interesting while they operate or control the entire
production unit through the automatic and technically advanced tools. The company believes
in expansion and developing a huge network of car sellers around the world and this zeal of
expansion encourages the team of Toyota to innovate and manufactures that can be
affordable and reliable.

Market entry modes of Toyota and its approaches

Entering a foreign market and establishing the business can be challenging for the company
due to different market trends, government policies for foreign companies and more. Toyota
is a Japanese company that operates in more than 25 countries. Since various nations have
different policies and opportunities, the company follows different market entry modes in
those nations. For example, the company established its business in Chinese market and it
becomes one of the most successful expansions. Since the local car manufacturers were not
capable in fulfilling the Chinese market needs, it was an opportunity for the company to
expand and attract a huge customer base. For the expansion the company chose joint venture
to penetrate the market. Joint ventures are beneficial for both the companies involved in the
deal as they both have power to control and make operational decisions (Sestu and Majocchi,
2020).

The company also used alliances as the market entry modes while forming Dongfeng
Automobile by collaborating with PSA, Volkswagen (VS), and Daimler Chrysler. Similarly
the company formed a joint venture in India with Kirloskar group to form Toyota Kirloskar
in the year 1999 (Toyota, 2021). This market entry mode is mostly preferred by the company
as it helps in expansion and requires less research about the targeted marketplace. In the past
few years, the company has focused on developing strong network and hire best talent for
encouraging the innovativeness in all of its marketplaces.

With the help of well founded companies in the European market, the company started
selling its cars and grown its market tremendously to become Europe’s leading automotive
company. It helped the company to establish other facilities like Toyota Motor Europe
(TME). The effectiveness of the internationalisation strategies of the company reflect in the
success and growth of the company in Indian and Chinese market. Toyota chose both the
countries due to their high population and technological abilities. It is easy to find
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experienced and skilled labour at minimum possible labour cost in both the countries
(Parameswar et al. 2018). Although, the rules for foreign countries are different in both
nations they support the foreign investment as it boost their economy. However, the entire
operation and decision making is led by headquarter that is in Japan. For the expansion and
entering new markets the company can also use other entry modes like wholly owned
subsidiaries, foreign direct investment and more. The company majorly invest in developing
nations as a fact that the income and spending power of people in developing countries is
increasing that ensures the buying potential in those marketplaces. Some of the other joint
ventures of Toyota are with Denso, Panasonic and more that have helped the company to
expand and increase their market share by sharing resources and workforce for research and
development of the companies involved in joint venture (Toyota, 2021). Toyota prefers
establishing a strong business structure in all of its international markets to ensure the
competitive advantages and growth.

Value chain analysis

The value chain of Toyota motors is divided in two major categories as per Porter’s value
chain analysis model. These two categories are primary and support activities.

Primary activities

Inbound and out bound logistics

For the shipment of parts and raw material for manufacturing the cars in all the
manufacturing units the company effectively manage its logistics operations. The centre is
located in Belgium and the parts are transported to other nations via means of various
transportation modes to fulfil the requirements.

Operations

The company internationally operates its business and headquartered in Japan. All the
decisions related to the operations are directed from headquarter. Apart from the designing
and manufacturing of cars, the research and development are major game changers in the
global market for Toyota.

Marketing and sales

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The automotive industry is competitive in nature and it requires planning and strategies to
ensure the sales. In this aspect, the sales and marketing team of the company works
effectively. For the promotion and marketing, the company uses both conventional and
unconventional marketing platforms (Orero-Blat et al., 2020). Toyota invests a lot in
marketing and uses a combination of traditional and modern advertisement mediums.

Support activities

Technology

The company is known for its technological advancement and innovations in the automobile
industry. Apart from a great production capability the company majorly focuses on research
and development that helps in identifying market trends and understand the requirement of
market (Lindgren, 2018). From the last several years, the company has majorly focused on
establishing its own research centres and fasten the rate of innovation to attract more
investors.

Infrastructure

The company has established a network of manufacturing and assembling units. The
company is headquartered in Japan, and operates in North and South America as well as in
Asia and Europe; hence, maintained a huge network throughout the globe. The company
owns an impressive presence in all the marketplaces.

HRM

The HRM of the company responsibly manages the entire workforce by critically evaluating
their performance and rewarding them as per their efforts and role in the success of the
organisation. Also, it works for hiring the most talented people to work in the company and
contribute to the organisational growth (Khosrow-Pour, 2018). It is ensured by the HRM that
all the resources are being used optimistically to increase the profitability and decreasing the
operational cost.

Advantages of current internationalisation strategies

The current internationalisation strategies of forming joint ventures help the company to enter
new market without facing major challenges that a company may face in its expansion or
entering a new market. Some of the main advantages are as follows:
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Easy market entry

A joint venture allows the company to enter new market with less complexity of government
laws. It helps the company to enter the market without giving much emphasis on
understanding labour and employment laws (Schmid, 2018). It reduces the cost of hiring any
expert or third party for handling legal matters.

Fast growth

The companies form joint ventures if they find it useful in terms of production and increasing
market share. It helps in expanding the business fast and ensures the high growth rate.

Better understanding of market trends

Local companies in targeted market are aware of the market trends, culture and choices of
local customers. It reduces the requirement and investment on research and development. By
using the data base of local company, Toyota formulates strategies to attract more customers
and introduce unique designs (Panibratov, 2017). Forming joint ventures has helped Toyota
to expand its business in a lot of nations successfully.

Balanced risk of investment

In a joint venture all the involved parties invest their share to become a partner due to which
the investment is not made by single company. It helps Toyota by decreasing the investment
and risk on that investment as the probability of getting success is high because of the local
company. Also, the rapport of local company helps in building trust among the customers that
encourages fast sales growth.

Potential risks for the company

The technology is getting advanced and all the companies in automotive industry are focused
on introducing new models of cars that contain advanced features. Having multiple options in
the market, decreases the chances of sale and increases the bargaining power of buyers.
Hence, the company can face challenges in the future due to the new entries in the
automobile industry (Toyota, 2021). On the other hand, the frequently changing market
trends will require putting more efforts that will increase the capital investment and loss.
Recently, the entire supply chain of the company was badly impacted due to the pandemic
situation caused by spread of the novel corona virus. Nowadays, environmental sustainability
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is one of the major challenges as most of the nations are working to impose several policies
or guidelines for improving the environment. The company follows a highly expensive
process for manufacturing that also consumes a lot of time. As the options are increasing the
customers prefer fast delivery and best quality product in least possible price that will be a
threat for Toyota motors to reduce the cost of investment and provide the vehicles on
minimum price.

Conclusion
For the expansion of a business it is necessary to adopt several strategies and marketing
techniques. In this essay it has been concluded that Toyota has majorly adopted the strategy
of forming joint ventures in most of the international marketplaces. Joint ventures are
considered one of the best market entry modes due to its several advantages as discussed
above. From the example of Toyota Company, it has been summarised that the innovation
and motivation are two main growth drivers of an organisation to sustain in the global market
and fulfil the market needs according to the market trends. By using various
internationalisation strategies Toyota has become a global leader in the automotive industry
and build a strong and international brand image. The essay summarised possible challenges
that the company may face in the near future due to the high degree of competitiveness of the
global automobile industry. The company has adopted a sustainable and reliable pattern of
growth depending on its unique car designs and superior build quality that attract the
customers. It has been summarised that the company invest a lot on research and
development that helps in understanding the contemporary market situations and fulfilling
them with minimum possible cost of investment.
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References
Khosrow-Pour, D.B.A. ed., 2018. Entrepreneurship, Collaboration, and Innovation in the
Modern Business Era. IGI Global.

Lindgren, P., 2018. The Multi Business Model Innovation Approach. River Publishers.

Orero-Blat, M., Palacios-Marqués, D. and Garzón, D., 2020. Knowledge assets for
internationalization strategy proposal. Journal of Innovation & Knowledge.

Panibratov, A., 2017. International strategy of emerging market firms: Absorbing global

knowledge and building competitive advantage. Taylor & Francis.

Parameswar, N., Dhir, S. and Ongsakul, V., 2018. Purpose of international joint venture and
interaction post termination. Journal for Global Business Advancement, 11(6), pp.687-705.

Schmid, S., 2018. Internationalization of Business. Springer International Publishing.

Sestu, M.C. and Majocchi, A., 2020. Family firms and the choice between wholly owned
subsidiaries and joint ventures: A transaction costs perspective. Entrepreneurship Theory and
Practice, 44(2), pp.211-232.

Toyota, 2021. Awards and recognition. Available at: https://www.toyota.com/usa#!/awards

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Toyota, 2021. Fast facts. Available at: https://www.toyota.com/usa#!/fast-facts [Accessed on:

16th March 2021]

Toyota, 2021. The Toyota way. Available at:

https://www.toyota.com/usa/our-story/index.html [Accessed on: 16th March 2021]
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