Toyota Australia in Peril - Case Study - Business Assignment Help

Assignment Task

TOYOTA AUSTRALIA IN PERIL                              

On Wednesday, December 11, 2013, General Motors Holden (Holden) announced its plan to exit car manufacturing in Australia by the end of 2017.

Immediately after the exit announcement by Holden, Toyota expressed its fear that it was in peril:

This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia. We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia. We will continue with our transformation journey as planned.

Other stakeholders in the automotive industry also expressed similar fears. Apprehensive of Toyota’s ability to continue manufacturing, the Australian Manufacturing Workers Union (AMWU) national vehicles division secretary, Dave Smith, said, “It’s now highly likely that Toyota will leave Australia. In fact it’s almost certain.”

Why did Toyota fear that Holden’s exit would put unprecedented pressure on the local suppliers? How was Holden’s exit related to Toyota’s ability to build cars? Why were observers contemplating an exit by Toyota, the best-selling and most trusted brand in Australia, especially when it had been planning to continue its transformation journey? What had gone wrong with the company that had such a glorious long history of production? Should Toyota stop manufacturing in Australia?

TOYOTA AUSTRALIA: A GLORIOUS LONG HISTORY OF PRODUCTION5

Toyota Australia (Toyota; see Exhibit 1), a subsidiary of Toyota Motor Corporation Japan, was founded in 1958 in Port Melbourne, Victoria, Australia. It started assembling vehicles in Australia in 1963 in the Melbourne factory of Australian Motor Industries. The first Toyota model assembled in Australia was the Tiara. Between 1964 and 1968, Toyota began assembling three more models —the Corona, the Crown and the Corolla. At its new Altona plant in Melbourne, it started producing engines in 1978, and car body panels in 1981. In 1986, for the first time, Toyota started exporting. In 1987, Toyota began the local
manufacture of the Camry, which replaced the Corona, at the Melbourne plant. In 1988, Toyota’s local operations were unified to form Toyota Motor Corporation Australia.

Questions
                           
1.    What type of market structure is Toyota Australia operating? What are the features of this market? What challenges does this market structure pose for the company?

2.    What factors are affecting the profitability of Toyota Australia? Which side of the market are they related to? Which of these factors can the company control to improve profitability? What strategy would you suggest to improve the profitability?
3.    What should Toyota do? Should it wait for demand and cost conditions to improve, or should it exit the market? Give reasons.

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