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Case study - Toyota's strategy and initiatives in Europe: the launch of the Aygo

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  1. What is competition like in the minicar segment of the European automobile industry? What do we learn about the nature and strength of the competitive pressures Toyota Motor Europe (TME) faces from doing a five-forces analysis?
  2. Is competition in the minicar segment of the European automobile industry best described as global or multi-country? Why? Which type of international strategy is TME using in its international operations?
  3. What do you see as the key success factors for firms in the European minicar segment of the automobile industry?
  4. What forces are operating that have the power to alter the nature and structure of competition in the minicar segment of the European automobile industry?
  5. Based on the information in case Exhibits 1, 3 and 4, how well are the Toyota in general and, more especially, the Aygo positioned to compete against rivals in the minicar segment? Does the Aygo compare favourably to other minicars and to similar cars made by Toyota's partners (i.e., the Peugeot 107 and the Citroën C1)?
  6. What does a SWOT analysis reveal about TME's situation? Just how attractive is the company's situation and position in European minicars?
  7. Based on your analysis of the industry and TME's situation, what challenges will TME face in attempting to reach its goal of selling 100,000 Aygos annually? Do you think the company's marketing strategy will be effective in enabling the company to meet this sales goal? Why or why not?
  8. What actions would you recommend to TME's top management team to improve the company's competitive position and make the Aygo a resounding success?

Toyota Motor Corporation is one of the most important car manufacturers in the world. In 2005, Toyota was one of the nine members of the $10 billion club, which refers to the $10 billion of net income generated in one year. And in 2006, Toyota with its 35 percent of the total market capitalization in the global automotive industry nearly overtook the American General Motors, the world's largest car manufacturer. Despite these excellent results, the company continued to set ambitious goals for the future. Thus, the Japanese firm expected to reach 15 percent global shares by 2010. However, to reach its objectives, increasing its market shares in Europe was a paramount necessity. In 1999 Toyota launched the Yaris model with success. The initial goal of reaching a European sale volume of 800,000 units was reached two years ahead. But this success was only the first step of its strategy in Europe. In July 2005, the Japanese manufacturer launched the Aygo, a 3.41-meter car, with the intention to penetrate an unexploited market, which is the minicar segment. Buyers in different countries are attracted to different product attributes, as said 'what is good for one country may not necessarily be good for another'. That's why Toyota decided to recruit 10 artists from different countries to redo the outside of the Aygo. Among the different European countries, we can see differences in the manner of which people perceive car attributes. For example, in Italy people would generally prefer the style and the design of the car. In Germany, customers are generally more interested in the performance and the reliability of the car.

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