Toyota’s identification or focus on becoming the world’s leading car company was materialized in 2012 when they achieved record sales ahead of Volkswagen and GM which followed closely behind. The car industry however is one characterized by volatility and is highly susceptible to shocks or any slight change in the environment. Competition as well is extremely aggressive, car companies each day fight to be and stay at the top. Competitive advantage is usually short-lived thus Toyota has to constantly be looking for new ways of maintaining their competitive advantage.
Their strategy, as highlighted in the case began with a focus on North America in the 1980s and 1990s where the company gained competitive advantage by emphasizing quality with lower manufacturing costs as opposed to their US counterparts. Toyota, continuing into the 1990s shifted its focus slightly to the European market, however they were criticized for designing reliable, yet ‘dull’ cars. The European consumer is deemed to be more style conscious and therefore this early approach by Toyota did not serve the company well. They changed their approach when they introduced the Yaris specifically for the European market which became somewhat of a success.
The Toyota Production System has resulted in its success in lowering factory costs tremendously and achieving economies of scale. Strong supplier relationships, effective marketing and strong branding have also contributed tremendously to the company’s success. Despite this, there has been a lot of complaints about the quality of some of the Toyota cars exacerbated by the fact that Toyota had to recall some of their cars in 2010. Toyota has also had to deal with increasing competition from such companies as GM and the increasingly popular Volkswagen.
Volkswagen’s strategy according to the case is focused on their manufacturing prowess and maintaining