Essay about What Challenge Does Toyota Face?

976 Words Mar 21st, 2016 4 Pages
(7a): What challenge does Toyota face?

The market for automobiles is mature and the intensity of rivalry is only going to increase as the industry continues to age. Therefore to be successful in the auto industry, a company must focus on a variety of changing factors or challenges that continue to include demographic, geographic, and technological factors. Another challenge could be the furtherexpansion of its lean low cost manufacturing process. Looking at demographic factors, age is important to the car industry due to the global population being older than younger. According to the case, J.D. Power estimated that the average customer for Toyota was 44 years old, compared to 38 for Volkswagen and 41 for Honda (Hill et al., 2015). Therefore, due to the concern that the company was losing its touch with the younger generation it decided that it needed to expand its product line. Consequently, the company introduced a new car brand in 2004, which is known as the Scion. Scion cars are targeted, by the company, at young entry-level buyers and decreased Toyota’s customer age by 13 years (Hill et al., 2015). As Toyota continues to expand geographically, it will continue to experience challenges such as market overexposure and the risk that its corporate culture becomes sedated. The risk of overexposure in the auto market may result in a decrease in the company’s brand or prestige, which could decrease sales due to margin compression. In addition to overexposure, the company…

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