TOYOTA

1. TOYOTA

2. Toyota a Multinational Company • Origins of Toyota • Toyota’s history of operation (in selected market). • How the company was formed and how it operates today

3. Toyota a Multinational Company • Toyota’s growth in the marketplace responding to the following: • Maintaining current markets • N. America/Europe/China/Middle East/Africa • Latin America/Asia/Oceania/Japan • Specific markets the company is targeting today

4. Toyota a Multinational Company • Toyota’s growth in the marketplace responding to the following: • The reporting structure needed for operating in that marketplace, regulatory requirements, and so on • Federal Regulators/Regulatory Agencies • Safety Regulators such as NHTSA • The company’s major competitors • Ford/General Motors/Honda/Volkswagen

5. Toyota a Multinational Company • Toyota’s growth in the marketplace responding to the following: • The unique competitive advantage of the company • Improvement of quality/reduction of inventory cost • Improvement of efficiency • Customer service • Trade pact associated with the marketplace • Political Action Committee (PAC

6. International Market Entry Strategies • Companies such as Toyota are expanding into new markets, and are facing risks and challenges. Toyota Motor Corporation must not only be able to minimize these risks, but they must also ensure regulatory compliance, if they want to thrive in these markets. It is also imperative that research be conducted on political and economic challenges of market entry. • Toyota’s capitalization in the foreign market • Current capitalization • Operating Income/Marketing Activities & Cost Reduction • Increased sales of vehicles in North America & Asia • Reforming Manufacturing Technologies & Vehicle Development Processes • Opportunities to tap into new capital in the markets where it operates • Technologically Advanced, high-value-added products • Optimize Manufacturing Investments • Responding to Growth in Markets & Sales

7. International Market Entry Strategies • Major challenges Toyota is facing or can anticipate • Labor market • TMC’s 2011 Executive Structural Change • Competition • Future Efforts in Emerging Markets Calling for New Strategies • Legal Issues • Trade Pacts/Tariffs/Risks

8. International Market Exit Strategies • Multinational companies often research both entry and exit strategies, but most do not put much emphasis on the impact that their departure may have on surrounding communities, or worse, how to manage that impact (Collaborative for Development Action Inc, 2003). Corporations should look at both community needs and government capacity in order to avoid the following pitfalls; that of not sufficiently preparing communities for what to expect when the company leaves; that of depending on governments to take over to ensure sustainability of social programs; that of decreasing community relations budgets as the time for closure approaches, but the need in those services does not decline; and that of companies leaving behind infrastructure that is unsuited to community needs (Collaborative for Development Action Inc, 2003). • Some political and economic issues Toyota may face when exiting a specific market? • Tax Benefits/ Facility & Real Estate Incentives/ Financial Incentives –(Loss Of) • Decrease in Economic Status, Decreased Social Status & Decrease in Company Provided Services • How does the cost to move a company out of a country differ from the cost of continuing operations in that market? Example? • Taxation • Toyota Experiencing Taxation Issues Domestically

9. International Market Exit Strategies • At least 5 different local regulators a company would need to satisfy prior to exiting a country. • Legal Issues Raised at Home & Host Country laws/ Regional Regulations or Directives/ Bilateral & Multilateral Treaties/ International Standards/ Certifications • Example? • Some countries regulate exiting firms more than other countries. What can companies do to anticipate these regulations? • Exit Strategies/ Engaging Communities/ Soliciting a Range of Perspectives

10. Legal & Economic Risks of Expansion • Taxation issues • Inbound/Outbound • Distinguish U.S. GAAP versus IFRS • Generally Accepted Accounting Principles • International Financial Reporting Standards (IFRS) • Differences • Political • Laws & Governmental Regulations • Related to Vehicle Safety • Foreign exchange • Local Currencies & Foreign Currency Exposures

11. Legal & Economic Risks of Expansion • Economic. The automotive industry continues to face a number of issues that threatens its growth potential, such as the earthquake and tsunami that hindered Japan’s supply chain, the ongoing debt crisis in the European Union that created massive production cuts and accelerated the need to right size operations, and of course the effects of Hurricane Sandy in the Us, which destroyed 250,000 vehicles (PWC, 2013). • From a regulatory standpoint, meeting global emission standards has become a daunting task for the automotive industry (PWC, 2013). The World Resources Institute claims that motor vehicles are responsible for 15% of global CO2 emissions, which gives reason as to why companies are investing into research and development of new innovations and development of next-gen technologies (PWC, 2013). The following interests will meet various global regulations; improvements in aerodynamics, the introduction of lightweight materials, low rolling resistance tires, various efficiency gains in internal combustion engines, advanced transmissions, and a broader rollout of various hybrid, plug-in, and pure electric applications (PWC, 2013). “By 2020 the development and production of EVs [electric vehicles] and supporting technologies will shift to more of a global collaboration model (PWC, 2013, p.3).” • Pricing • Product Regulations

12. Legal & Economic Risks of Expansion • Corporate governance • Toyota Motor Corporation (TMC) believes in positioning itself in order to stabilize long-term growth of corporate value and TMC believes that by achieving this long-term and stable growth requires building positive relationships with the following: stakeholders, shareholders, customers, business partners, local communities and employees, and by supplying products that will satisfy their customers (Toyoda, 2013). • Organizational Structure • Policies • TNGA & International Advisory Board • Issues • Labor-Management Council/ Joint Labor-Management Round Table Conference/ Toyota Environment Committee / CSR Committee

13. Risks of Unstable Economic Conditions • Issues operating locally. Toyota’s headquarters and domestic production plants are located in the Nagoya region, specifically in the city of Toyota (Japan-guide.com, 2013). Since the devastating earthquake and tsunami that disrupted the car industry output in Japan, Toyota has had to close down about 18 factories (Euronews, 2011). The cost of closing down these factories really negatively impacted Toyota, setting them back, but they were lucky enough to resume production of three hybrid cars, the Prius and two Lexus models (Euronews, 2011). In 2011 Toyota opened two factories, but they only functioned at half their normal capacity because the carmaker’s suppliers were still not operating (Euronews, 2011). This situation resulted in Toyota having to reduce the number of vehicles being made at North American plants because of the disruptions of the production of parts in Japan, due to the earthquake and tsunami, but the worst, was knowing that the total estimated lost production by all manufacturers worldwide was 6000,000 vehicles, an estimate made by Industry analysts at IHS Automotive (Euronews, 2011). • Customers • Legal & Economic • Capital

14. Risks of Unstable Economic Conditions • Issues operating in multinational marketplaces • Governmental Regulations From Home Country • Japan has three pillars of interest when it comes to major corporations such as Toyota; lifetime employment, seniority-based pay and promotion, and company trade unions in order to improve the firm’s systems and performance (Aoki, Delbridge, & Endo, 2011). • Sourcing products • Import export restrictions • Capital

15. Current Financial Status and Future Growth • The automotive market environment is highly competitive and volatile with many factors affecting it, such as social, political and general economic conditions and of course the introduction of new vehicles and technologies as well as costs incurred by customers to purchase and operate vehicles (Annual Report, 2008). Based on vehicle unit sales Toyota’s primary markets for fiscal 2012 were: Japan (28%), North America (25%), Europe (11%), and Asia (18%), but during fiscal 2011unit sales decreased due to market conditions in Japan deteriorating (Annual Report, 2012). However in 2012 unit sales in Japan increased, mostly because of the introduction of new products and sales efforts of domestic dealers (Annual Report, 2012). • Comparable Financial Statements (balance sheet and income statements) • Versus Competitors • Last three years • Noticeable trends

16. Current Financial Status and Future Growth • Investments in The Specific Country or Regional Area • Past • Recall Issues • Present • Targeting New Emerging Markets • Future • Technological Advances

17. Current Financial Status and Future Growth • Recommendations and insights on the company • Toyota must be able to understand several cultures, be able to design a new goal-oriented corporate culture strategy depending on global environmental changes in order to create competitive advantage (Moran, Palmer, & Borstorff, 2007).

18. Reference Akio Toyoda. (2011). Toyota Global Vision: Rewarded with a smile by exceeding your expectations [PDF Document]. Retrieved from http://www.toyota-global.com/company/message_from_president/president110309.pdf Forbes.com Staff. (2005). Twenty Most Influential Businessmen: Sakichi Toyoda (1867-1930). Retrieved from http://www.forbes.com/2005/07/13/toyoda-toyota-automation-cx_0713bizmantoyoda.html NHTSA. (2013). Who we are and what we do. Retrieved from http://www.nhtsa.gov/About+NHTSA/Who+We+Are+and+What+We+Do Pressroom.toyota.com. (n.d.). LA Times questions and Toyota answers [PDF]. Retrieved from http://pressroom.toyota.com/images/document/LA_Times_questions_and_Toyota_answers.pdf Richard Schaffer, FilibertoAgusti, Lucien J. Dhooge, & Beverly Earle. (2009). International Business Law and Its Environment, 8th ed. South-Western College. Mason, OH. Rawal, S. (n.d.) Toyota and its competitors (Slideshow). Retrieved from http://www.slideshare.net/sunilrawal/toyota-5128057