Porters 5 Force Analysis Of Toyota Marketing Essay

Porters 5 Force Analysis Of Toyota Marketing Essay

Porters 5 Force Analysis, In this severely violent business world, the goal of most firms is to establish distinctive or unique capabilities to gain a competitive advantage in the marketplace through utilizing the most of their core competencies. Competencies refer to the fundamental knowledge owned by the firm (knowledge, know-how, experience, innovation and unique information), and to be distinctive they are not confined to functional domains but cut across the firm and its organizational boundaries.

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Today, business enterprises in developed countries operate in a more complicated, and more regulated, environment. The strategic task, then, is to create a distinctive way ahead, using whatever core competencies and resources at its disposal, against the background and influence of the environment. Through these distinctive capabilities the organization seeks sustainable competitive advantage. Competition in many domestic and international markets appears to be entering a new phase, in which product quality and performance are becoming more important to customers than price.

In such markets, the effective management of the new product development process is the essence of competitive advantage. Due to such changes, a review of the organizations strategic capabilities is a must if they are to keep up with the demands of the changing times. This paper analyses the strategic capabilities of Toyota Company in face of the ever-stiffening competition in the automotive industry, as a potential tool to further strengthen Toyota position in the automobile market.

Threat of New Entrants – Low

Entering a car manufacturing market is very costly and risky. The initial capital investment is extremely high, while the competition between the companies is very intense and dominated by the well established companies.

The well-known brand, unshakable market presence in various segments, and large size gives Toyota a competitive advantage over new entrants in the auto manufacturing industry.

Threat of Substitutes – Medium

As the industry trends indicate, the customers still have a solid reliance on the used car market. Considering the fact that economy has not fully recovered, a significant part of the car demand is taken by the used car industry.

With the ability to cut costs more efficiently than its competitors, Toyota has narrowed the price gap between the used cars and its own automobiles. Therefore, compared to its peers, the substitution with the used cars is less of a danger for Toyota.

Rivalry Among the Competitors – High