TAILIEUCHUNG - Analysis of strategy of Toyota Motor Corporation operating in Vietnam

The Toyota Motor Corporation was founded in 1937 by Kiichiro Toyoda. It originally started as a subsidiary of his father’s company Toyoda Industries. The first vehicle, the Toyota AA, was produced in 1936 whilst the company was still associated with Toyoda. The brand as we know it became established as an independent company in 1937 and changed their name to Toyota. The name change was implemented to signify a separation of work and home, to simplify the pronunciation and because it only took 8 brush strokes (which is considered lucky) to write in Japanese. Toyota opened their first factory in. | Facing a firm with foreign market orientations are two apparently contradictory goals, to reduce cost by product standardization and to cater to local demands by product customizing, which unquestionably tends to raise cost. In order to deal with these two opposing ends, several international strategies have been worked out, namely global strategy, transnational strategy and multi-domestic strategy. Global strategy focuses on increasing profitability and profit growth by reaping the cost reductions that comes from economies of scale. Products are standardized across national markets. Firms has top-down management and often lacks responsiveness to local markets. The strategy applies best when there are strong pressures for cost reductions and minimal demand for local adaption. A multi-domestic strategy practioner increases profitability by customizing the firm’s goods and services so they provide a good match to tastes and preferences in different markets. This works most appropriately when customers show substantial difference in hobbies and cost pressures are not too intense. A national strategy aims to simultaneously achieve low costs through economies of scale and differentiate their products offering across geographic markets for local differences. It fosters a multi-directional flows of skills between subisdiaries in the firm’s global network of operations.

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