Toyota’s generic competitive strategy supports the company’s competitive advantages and global business growth. The company’s success in the automobile market is based on its generic competitive strategy and intensive growth strategies. Toyota’s generic strategy represents the approach that the automotive business uses to compete in the global market. On the other hand, the intensive growth strategies define actions for Toyota’s business development and growth. Continuing innovation and success are indicators of the fulfillment of these strategies and Toyota’s mission statement and vision statement. The automaker effectively implements its generic competitive strategy and intensive growth strategies.
Toyota’s generic strategy determines the company’s overall approach to developing its competitive advantages in the global automotive industry. The intensive growth strategies are applied to ensure the company’s continued growth in markets worldwide, relating to Toyota’s marketing mix (4Ps) and associated marketing strategies and tactics.
Toyota’s Generic Competitive Strategy (Porter’s Model)
Toyota’s generic competitive strategies are cost leadership and differentiation. Cost leadership minimizes the cost of operations to enable relatively low selling prices that add to competitive advantages and the business strengths shown in the SWOT analysis of Toyota. Additionally, the generic competitive strategy of differentiation requires business and product uniqueness for competitive advantages over other automakers, such as General Motors, Tesla, Ford, Nissan, and BMW. These generic strategies support Toyota’s competitive advantages and global reach in all market segments.
A strategic goal corresponding to Toyota’s generic competitive strategy is to minimize production costs to attain cost leadership. The company does so through the just-in-time (JIT) manufacturing method, which is also known as the Toyota Production System (TPS). This method addresses the generic competitive strategy by minimizing waste, inventory cost, and response time in Toyota’s operations management. As a result, the firm achieves maximum business efficiency and competitive advantages for its cars, trucks, and other products.
On the other hand, considering the opportunities, threats, and external factors noted in the PESTEL/PESTLE analysis of Toyota, innovation as a strategic goal based on these factors addresses the company’s generic competitive strategy of differentiation. Innovation leads to unique, attractive, and competitive cars for all market segments. Thus, the automotive company fulfills its generic strategy for competitive advantage.
Toyota’s Intensive Growth Strategies (Ansoff Matrix)
Market Penetration. Toyota’s main intensive growth strategy is market penetration. This intensive strategy supports business growth by reaching and attracting more customers in the company’s current automobile markets. This intensive growth strategy involves offering products for many market segments, while addressing tough competition, which is noted in the Five Forces analysis of Toyota. For example, the company has sedans, trucks, SUVs, luxury vehicles, and other product lines for every type of customer. This intensive growth strategy supports the cost leadership component of Toyota’s generic competitive strategy by enabling the company to maximize sales volume, which ensures profits despite relatively low selling prices.
Product Development. Toyota uses product development as its secondary intensive growth strategy. This intensive strategy supports the automaker’s growth by attracting customers to new products. The company uses this intensive growth strategy in the form of rapid innovation. For this purpose, Toyota’s organizational culture (corporate culture) supports innovation processes. For example, through innovative product development resulting in the Prius, this intensive growth strategy empowers the firm to attract customers concerned about the environment. This intensive growth strategy supports Toyota’s generic competitive strategy of differentiation by developing innovative products that are attractive based on uniqueness or advanced features.
Market Development. Toyota already has a global presence. As such, market development is just a supporting intensive growth strategy for the business. In this intensive strategy, Toyota grows by entering new markets or selling to new market segments. However, the company already operates in many segments of most automotive markets around the world. This intensive growth strategy employs Toyota’s generic competitive strategy of cost leadership for maximizing the company’s global market presence using cost-based competitive advantages.
Diversification is not a growth strategy of significance in Toyota’s current operations. The objective of this growth strategy is to diversify the company’s business, industry of operations, markets, or products. Currently, Toyota focuses on its automotive business and its products, such as cars, trucks, and other vehicles. If diversification were to be prioritized, Toyota’s generic competitive strategy of cost leadership could enable competitive pricing in the new operations, and the generic competitive strategy of differentiation could make the new operations or new products more competitive based on qualities that stand out against competitors.
References
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- Toyota Motor Corporation Form 20-F.
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- U.S. Department of Commerce – International Trade Administration – Automotive Industry.
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