Major Strategic Problem

• Price of steel and other raw materials continue to rise, while fossil fuels becomes more scarce

• The high prices of raw materials and strong pressure on Toyota’s suppliers could negatively impact Toyota’s profitability

External Analysis

• General Environment Threats– Government Regulation– Political instability, fuel shortages,

terrorism, war, labor strikes• Specific Environment Threats

– Highly competitive industry– Rising prices of raw materials

• Opportunities– Market demands fuel efficient vehicles

Internal Analysis

• Strengths– Global organization with strong

international position• Growth opportunities in developing markets

– Strong brand image based on quality, environmental friendly (green)

– Management & Kaizen Culture• Continuous Improvement

Strong brand image based on quality & environmentally

friendly image

Global organization with strong international position

Corporate Management & the Kaizen Culture

Toyota’s Management system enables theManagers to make decisions directly with on-siteoperations by reflecting on-site personnel opinions onmanagement strategy and swiftly implementing managementdecisions into actual operations. Kaizen: Philosophy & Culture of Continuous

Improvement

Toyota’s Plans to Improve Future Earnings

Short-term Measures•Enhance the development of our

environmentally friendly products– Further expand product line-up in each region

1. “Maximizing Our Revenues”•Develop a new product line-up which

responds to..• the customers’ requirements in each

region• friendly vehicles, such as hybrid vehicles• Strengthen product line-up in• resource-rich and emerging countries

Toyota’s Plans to Improve Future Earnings

• 2. “Reducing Costs Across the Board”

• Reduce 10% in Fixed Costs

Build a structure that promotes efficiency

• Cancel or postpone our plans to build new plants and expand production capacity

• Maximize use of our existing production capacity

Achieve further Cost Reduction

• R&D and Marketing Expenses: Prioritize allocation of resources into the environmental sector

• Labor Costs: Implement adequate measures that are considerate to employees