Toyota Motor Corp: Launching Prius
Executive Summary: Toyota Motor Corporation (Toyota or TMC) is currently working on the first mass produced hybrid car in the world, Prius and is aiming to launch it by end of 1998. Toyota’s new President Hiroshi Okuda wants to advance the launch to 1997 to ensure they are the first to market. Toyota needs to choose between the following choices: (i) Target an aggressive global launch in 1997 (ii) Launch in end 1998 as per the original plan (iii) Target a smooth launch in 1998 allowing for any unforeseen delay till 1999. I recommend that Toyota Motor Corporation (Toyota or TMC) target a smooth launch for end 1998 and allow for any ...view middle of the document...
c) improving proximity to global/American markets (ii) Build an attractive product that targets younger buyers (iii) Lobby regulatory laws such as QRWR to incorporate hybrid technology. A compete SWOT analysis of Toyota has been performed in exhibit B. Toyota has been broadly successful in following a competitive scope giving cost leadership and a broad perceived uniqueness. While marketing the Prius, it must bring focused differentiation with a high perceived uniqueness. Toyota’s valuable resources are TPS (Toyota Production System) and Reliability (see exhibit C for VRIN analysis). If Toyota launches the Prius without addressing all known issues in the car, then the company would damage its reputation and weaken its most valuable resources. Additionally, fear of competition should not push Toyota to release a product which does not match their internal standards. The odds are in favor of Toyota that other car manufacturers are not going to beat Toyota in launching a hybrid car in the market (i) No car manufacturer has launched a successful mass-market alternate energy powertrain till date (ii) Most companies initially developing hybrids dropped out of the race after the CARB refused to consider hybrids under Zero Emission Value (ZEV) (iii) Few companies are working on producing a battery capable of
Toyota Motor Corp: Launching Prius
generating the adequate amount of power (iv) Other technological challenges for building a hybrid such as overheating of cells, regenerative breaking require innovation and do not have known solutions. Recommendation: I recommend that Toyota should not advance the launch of the Prius to 1997. Instead it should invest the necessary resources in the project and expand the team to ensure a quality, reliable product which can ultimately be mass-produced is prepared by 1998, or take additional time if necessary. This is because (i) it can address the known technical issues (ii) build a superior quality product compared to any competition that is working on hybrid technology (iii) use the time to improve its brand image in the younger generation (iv) address factors such as creating a left-hand drive, improving acceleration as per preference of American consumers and improving resistance to harsher temperatures to make it competitive and attractive to the regular consumer (v) Toyota has a long standing concern with environmental issues and competition launching a hybrid car will not cut into Toyota’s positioning. (v) Innovations built from scratch can require time significantly more than the average and we should look to invest more time than just 33% over the company average of 30 months to market (33% considering a Dec 1998 launch). Cons: (i) Toyota is losing market share in the local market and revenues and net profit is declining. This will impact investment in long term projects such as Prius (ii) Market may change and competition may launch hybrid cars (iii) Costs will increase...