Impact of globalization on toyota motors
Download as PPTX, PDF3 likes8,372 views
Toyota is a major global automaker that has expanded significantly through globalization. It has production facilities in over 27 countries and markets vehicles in over 160 countries. While this global expansion has helped Toyota become very profitable, it has also had impacts on labor, communities, and the environment. Toyota uses practices like lean production and exploiting cheap foreign labor to maximize profits. This stratification of labor and economic displacement of communities has negative consequences. Additionally, Toyota's large profits are dependent on tax incentives from various governments that divert funds from public services like education. Moving forward, Toyota will need to develop more environmentally friendly vehicles and invest in emerging markets to continue benefiting from globalization.
Impact of globalization on toyota motors
- 1. Impact of Globalization of Toyota
- 3. Introduction of Toyota Motor Company Toyota Motor Corporation is the third world’s prevalent automaker. It has 12 plants in Japan as well as 54 manufacturing companies in 27 countries it also markets its vehicles in more than 160 countries worldwide. In the year, 2010, Toyota employed approximately 300,734 people globally. It is the second largest automobile manufacture worldwide plus the ninth largest company globally by its revenue. 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.
- 4. Impacts of globalization on Toyota Motor Company Globalization can be termed as the network in which policies and networks operate in so as to aid in the success of multinational corporations in their aim to exploit successfully the resources of nations and communities. Globally, Toyota Motor Corporation is ranked the seventh biggest company and the second largest in the automobile industry. Toyota Motor Corporation has its branches in 28 countries with over 50 branches in place. In the year 2007, it is reported that Toyota Motor Corporation made a profit of 14.9 billion dollars. Globally, Toyota can be categorized as the standard of globalization since its practices and policies have been imitated. Toyota Motor Corporation uses lean production as a way of maximizing its profits, minimized cost while the sellable outputs are maximized.
- 5. Cont.. Toyota Motor Corporation can be seen to be using cheap labor to fulfill its policies of lean production. It is evident that their revenues are boosted further by tax abatements and the reduction of the operational costs. It is no wonder that Toyota Motor Corporation has reported to be reaping millions of profits with a net profit of over fifteen billion U.S dollars in the year 2007 and it is speculated to grow as the year’s progress. However, as the profits of Toyota continue to grow the impact of globalization must be the community, environment and people.
- 6. Labor Toyota Motor has succeeded in globalization by laboring people all across the world. Globalization, by utilizing cheap labor markets has divided labor into two levels. Firstly, the competition between laborers for workers has intensified and secondly, the laborers have been stratified. creating competition for cheap labor, there has been a large economic displacement of the working communities, laborers have become more frustrated since they are paid way below the living wage which is not enough to sustain them. These laborers and the communities in which they live in has been the key driver to globalization.
- 7. Community The impact that Toyota Motor Corporation has had on the community is parallel with that of labor. It is only some few individuals who stand to gain from the plants of Toyota that have been distributed all over the world. In the end, the community at large is at a big loss. This can be specifically portrayed in the education sector. In 2003, the Toyota Motor Corporation was granted an incentive package that diverted the public funds and abetment of taxes. In the end, the community at large continues to lose public education funds leading to the rise of the rate of school drop outs. This can be greatly reflected in the Toyota plant that exists in Texas. In the end, while the community is losing a big deal since they are unable to challenge Toyota in the courts because of their influential powers, it is evident that Toyota has more to gain.
- 8. Various Direct Investment of Toyota Japanese direct Investment in the U.S has been highly publicized especially in the automobile industry. There are various advantages that these Japanese Automakers which include Toyota stand to benefit. Firstly, this was a way to curb the critics and the propagandas that was being spread that autos which are to be sold in the United States are to be made there. In addition to that, this was another way of curbing any import barriers that might arise in the United States. Moreover, this was a way of expanding their markets since the local markets in Japan were becoming oversaturated. Lastly, the Yen Dollar fluctuation rate was increasing therefore this was a way of curbing it.
- 9. Foreign Exchange Risks faced By Toyota Company Generally, for the past years, the value of the Japanese yen has plunged against the Euro and the dollar though there had been eras of fluctuations. Adjustments in foreign exchange rate impinge on Toyota's retained earnings, revenue, and net income, gross margins, operating income and operating costs. Its liabilities and costs are affected by exposure which is transactional which primarily relates to sales proceeds from its non domestic sales produced in Japan. To a lesser extent it also has an effect on the sale proceed from Toyota’s Continental Europe Sales produced in U.K.
- 10. How Toyota Company can benefit from the global capital Market In respect to future global capital market, it is expected that the economy of developing countries such as China and India is likely to grow. However, in the USA and Europe, there are certain risks which are associated in investing in them for instance the unemployment rate and the rise in crude oils. In its home market Japan, it is expected that the economy will rise slowly There were Toyota plantations that were located in these areas. For Toyota to survive in the global market, they have to put every effort to recover from the tragedy For Toyota, the global competition in automobile is likely to rise due to the rise of vehicles that are environmental friendly and also cheaper than the Toyota brands. However, Toyota must continue to market their brand name and should also try and address these issues of environmental friendly cars and cheaper products.
- 11. Cont.. In the development of their products, Toyota should aim to improve their designs and also quality. In addition to that, when launching new products, Toyota must put in mind the needs of that particular environment they are to launch their product. Since it is known that global warming has become the topic of the day, in order for Toyota to benefit from the global market, they must develop eco friendly cars such as electric cars and hybrid cars. In addition to that, there are markets that are emerging that are promising. For these markets, Toyota should design new models for local production for instance Innovative Multi-purpose Vehicles and also should consider launching hybrid vehicles. In this way, Toyota will have addressed the needs of both developing countries and developed countries.
- 12. Cont.. Toyota should also highly invest in research and development so as to get its clients feedbacks. In this, they should build local firms whereby decisions are made according to the demands of the customers. Toyota should strive to improve the quality of their products, to reduce their costs and also develop the human resource. In this way, Toyota will highly benefit from the global market and make huge returns of profits.
- 13. Future Strategy Increase competitive strength through advanced technology. Environmental technology : fuels consumption, emission, recoverability. Hybrid vehicles & next generation fuel cells Cost reduction efforts Discontinuation, integration of older models Increased emphasis on financial services and information communication system
- 14. Strategic Plan • Utilize the inherent talent of workers. • Focus on technology and innovation of hybrid vehicles • Focus on product quality control , continuous learning and improvement on manufacturing system • Invest and expand in European market • Develop presence in emerging market • Increase customer responsiveness ; identify and satisfy needs
- 15. Conclusion it is evident that Toyota is a multinational corporation that uses the international Trade Theory in order to stay relevant in the market. However, there are many challenges that Toyota face. Firstly, Toyota has been widely publicized for paying way below the living wage. Toyota must address these issues. In addition to that, in the past two years, Toyota has recalled most of its products due to technical failure. This greatly affects their brand name and the number of customers loyal to their products goes down. Toyota should be more careful in addressing such issues in the nearby future. In order to stay relevant in the market, Toyota should also expand their territories and invest in the developing countries such as China and India since their markets look promising. They should be in a position to address the future needs of cars for instance developing eco friendly cars.