Toyota SWOT Analysis

SWOT analysis is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis can be carried out for a product, place or industry. It involves specifying the objective of the business venture or project and identifying the internal and general factors that are favorable and unfavorable to achieving that objective. Recently, I watched a movie about cars. The car of the main character used is a Toyota car. So let’s take a look at this Japanese company.

For the strengths, Toyota has a strong brand portfolio. Toyota currently sells about 70 different models of cars under its namesake brand. This does not only increase brands awareness but also satisfies nearly every consumer group needs. Toyota’s flagship models are Corolla and Prius. They are the leader in “green” cars development. Toyota understands that environmental friendly cars are the necessity nowadays. Consumers are more selective in terms of CO2 emissions and fuel-efficiency of the cars they buy and Toyota’s early move towards selling hybrid and efficient cars is the strength few competitors can match.

In the weaknesses, they are weak presence in the emerging markets. Toyota’s main markets are Japan, US and Europe, while such emerging economies as China or India make only a small percentage of all Toyota’s sales.

Their opportunities are the increment of fuel prices. Increasing fuel prices open up large markets for Toyota’s hybrid cars as consumers shift towards efficient cars. They will change the customer needs. By introducing new car models, Toyota could satisfy varying consumers’ tastes and needs and access wider customer group such as young people and families.

To their threats, Toyota faces more intense competition from other auto manufacturers. Volkswagen group is strongly growing and GM steps up after its reorganization to become more competitive than ever. Also, rising raw material prices are especially important to automobiles manufacturers. The cost will be higher and affect their profit for Toyota because the raw metals are the main components in car manufacturing.

Our Neighbor---McDonald's

Globalization has affected almost every aspect of life in almost every country. From economic to social to culture, this widespread exchange of goods, services and ideas have influenced changes around the world. Food is one of the elements in defining culture.

In globalization, one of the most influential changes came with the introduction of fast food restaurants like McDonald’s into foreign countries. McDonald’s has become the best-known fast food brand in the world. It has 30,000 restaurants in over 120 countries.

McDonaldization is the term invented by George Ritzer to describe a sociological phenomenom. We may think it started with Ray Kroc in the 1950's when he bought his first hamburger restaurant, but actually it is much earlier than that. In fact, Henry Ford was the first McDonaldization pioneer with his vision of an assembly line for improving the production of automobiles. His revolutionary idea dramatically changed how many automobiles could be produced and was very efficient.

In essence, McDonaldization is the process of rationalization. The process of McDonaldization takes a task and breaks it down into smaller tasks. This is repeated until all tasks have been broken down to the smallest possible level. The resulting tasks are then rationalized to find the single most efficient method for completing each task. All other methods are then deemed inefficient and discarded. According to Ritzer, the four main dimensions of McDonaldization are efficiency, calculability, predictability, and control. In additional, there are some important areas that Ritzer had not mentioned, which are irrationality, deskilling, and consumer worker.

McDonald’s revolutionized the food industry, affecting the lives both of the people who produce food and the people who eat it. The McDonalds applied automation to food, just as Henry Ford had to car-manufacture. When McDonald’s Pushkin Square opened in Moscow on January 31, 1990, it broke all opening day records for customers served, and is still the busiest branch in the world.

Currently, the slogan of “I’m lovin’ it”, which is the new theme that McDonald’s has been promoting globally since 2003. It shows that they had changed their strategy to target the market group of youngsters from children and family consumers. They try to create a young and vibrant image, targeting at young people.

Moreover, we can see that how can they get into a new culture. In Italy, McDonald's serves Mediterranean salads, and teriyaki burgers are available in Japan. In Israel, there are several kosher McDonald's restaurants, and in Mexican outlets sell burritos. These are just a few examples of when McDonald's has actually changed itself to fit into the local culture. In India, the people in this country usually do not eat beef, but consumers can get McDonald's sandwiches made with mutton and chicken instead of beef, respecting their religion.

Lastly, under globalized environment, people always do not enough time to sit down and have a good meal due to the amount of work. Therefore, fast food is the only way to go. McDonald's has come up with all sorts of ideas to fit all sorts of people. They have a morning menu for those that wake up early and the "24hr" drive-thru strategy.

PESTEL to Nike

“Just do it”, we may see this in Nike’s advertisement. From the analysis of PESTLE, we can know that how Nike can become a well-known sportswear company in the global market. PESTLE analysis describes a framework of external environmental factors and component of strategic management.

For the political factor, Nike has been helped by the US policies which enable it to advance its products. The support accorded to Nike by the US government, particularly in the low interest rates, stable currency conditions and the international competitiveness of the tax system, help the growth of Nike. As USA is a powerful country, she can enjoy a larger bargaining between countries in the trading policies. This can provide more opportunities to Nike to enter different countries’ market.

In economical factor, the global economic recession will be the largest threat to Nike. During recession, Nike’s growth will be adversely affected. A weak Euro and an Asian recession could mean weak sales for Nike. Consumer purchases would be slowing down. Additionally, the labor costs and material prices are going up. For instance, the manufacturing costs are increasing in China, so they are started to find another country to produce in a lower cost.

From the social-culture factor, people are more concerned about their health nowadays. Diet and health are getting more prominence. Consequently, more sportswear wears, shoes and equipment are needed for doing exercise.

In the view of technical factor, the research and development for their products is important. Just like the shoes for running, they need to design and find a lighter material for making a pair of new running shoes.

For legal factors, whenever any company enters a new country, it has to worry about the existing laws and practices. Every time they have entered a new country, they have done so after checking the local laws in detail. For example, the government policies with regard to foreign investment and franchise business are different in the developed world and the under developed world. It mostly depends on the government that is friendly or strict with them.

With environmental factor, they need to take care of green issue and environmental policies of the corresponding countries. They should reduce the pollutants and lower the effects to the environment.

 

Porter's Five Forces for Apple

Today I will take a look at Apple by implicating Porter’s five forces model. The Five Forces Model is a useful tool for understanding where power lies in a business situation. It purposes analyzing how the ability of a firm to generate or maintain a competitive advantage. The five forces are included threat of new entry, competitive rivalry, threat of substitution, suppliers power, and buyers power.

For the threat of entry, it is quite low as they put huge effort in research and development. Each product is very unique feature compare to same product that produced by other companies. Also, they have found a way to continuously differentiate its products from its rivals. They also have such wide-spread production that it can produce at a lower cost due to its economies of scale.

On the other hand, they do not have to worry too much about the threat of rivals. For instance, in mobile phone market, once Apple introduced iPhone, it quickly rose to the top and gained the advantage on rivals like Samsung. It is because Apple is used a separate system which is iOS, while all the other companies such as HTC and SONY are using android. In addition, they have their own apps like itunes and siri. They are offering something special to the buyers.

For the threat of substitutes, there is nothing can replace for a smart phone or computer. The next threat, the threat of suppliers, is also not so severe. They have a strong vertical integration so they do not rely on the third supplier so much. But they announced that they will use Intel” so they need to fight against with other competitors.

The final force, the threat of buyers, is really vital threat to Apple. Apples products are unique and differentiated, illustrating the power of buyers is lower.  Their target customers are emphasized on quality so they are willing to pay for a higher price. They has developed a high brand loyalty, as a result, the buyers will tend to return and purchase their products.

Hong Kong Business Leader

This week I learned about management theory, different person will have their own ways to management their organization. In Hong Kong, I am interested in a business person which is Shih Wing Ching. In 1978, he established Centaline Property Agency Limited, which is now one of the largest property agencies in both Hong Kong and China.

As he can able to create and lead a sizable, influential company, and remain firmly in this tension market competition, he must has his personal unique vision and perspective.
He said the philosophy of Sun Tzu has some impact to his administration. In this ideology, the concept can be used from ancient till now.
Sun Tzu had said that “politics, it is making people and the monarch share common goals with spirit, and enable people together through life and death without disloyalty to the emperor". Also, “society agreed the same value with the king” can be adapted in management, it is affiliated with the boss’s idea to be consistent. Therefore, Shih Wing Ching will use his own thoughts and ideas on a regular basis to share with employees, so that employees understand his theory. His company will hold monthly plenary meeting, he will express his management philosophy and the latest development. As a result, employees know the boss orientation and market situation. The staff will know how to handle their work without asked his opinion all the time. He believes that if the staffs are closed to the market, with the up-to-date market information, the staff can provide the best decision to him.
Under his management, the key factor is from the “Art of War”, it says “Ordering the many is like ordering the few. It is division and counting”. How to consolidate their power is more important than how to manage a group of people.
“Division” is crucial to an army as it must has good organizational structure. If the army compiled inappropriately, it is not easy to command, and cannot take good use of the advantages of a great force. In fact, in his supervision, apart from authorized strength, he needs to consider division of labor, responsibilities, autonomy and share the accomplishments.

Oh Fitch Please

In my London trip, I have bought some clothes from Abercrombie and Fitch. When my flatmate saw them, he showed me a video about this brand.

In the video, it is the interview of the CEO of this popular teen clothing retailer. He doesn’t want larger people shopping in his store, he wants thin and beautiful people. Also, He doesn’t want his core customers to see people who aren’t as hot as them wearing his clothing. People who wear his clothing should feel like they’re one of the cool kids.

Apparently, his business was built around sex appeal. If we have been to Abercrombie and Fitch in the last few years has probably noticed that they do not provide XL or XXL sizes of women’s clothing because they are not willing to let overweight women wearing their brand. Compare to us clothing brand, the largest pants for women available at Abercrombie are size 10, however, H&M goes up to 16 and American Eagle even goes more to 18.

We do realize that their target group is for charming and muscular men while girls need to be skinny and pretty. In the business side, due to their market strategy, they do not want to sell their clothes for fat people can be right but they should not say that they reject to sell them to ugly and obese people. This is totally damaged their image and let people refuse to buy their products anymore. Some of Hollywood famous stars are telling the public to burn their Abercrombie clothes after they were accused of discriminating against overweight customers and insisted to burn their clothes which are damaged instead of giving to poor and homeless people.
Nowadays, business ethics is an important issue in the business sector. It is not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer. For me, I will not buy their stuffs anymore and I do hate this brand because I used to be a little fat boy.

Arsenal

On this Saturday, I travelled to London for a one day visit. It does a really nice city. As a fan of Arsenal, I must go to Emirate Stadium. I wish I can go to there since I was small. My little dream finally comes true but I cannot watch a match in it that is the only thing that I can be blemished.

         Apart from the strong and brilliant players in the team, we cannot neglect Arsène Wenger who is the coach of the team. He has led Arsenal in a successful way since 1996. Some leadership methods and the implementation of economy policy  can be learnt from him. Most of the team like Manchester City FC will spend a lot of money to purchase the players. However, he earned a reputation for spotting young talent, and he has remained focused on developing a youth system. The club develops young players instead of buying expensive player.
          Arsenal is the only few top level clubs which obtains net profit around the world. He can strike a balance between the position of the league and the money making. He is not only showing a good game to us but also demonstrate the consistent motivation to football, business, anything you do in life. He believes one of the best things about managing people is that we can influence lives in a positive way. That's basically what a manager is about.
        Unfortunately, in football, there is more money than talent. For instance, he sold Van Persie to Manchester United for an initial £22.5 million, with an additional £1.5 million clause if United won a Premier League or Champions League title within the next four years. It is not easy to drop a player who remains one year contract by selling in this higher price. And Van Persie even made a speak that he would not renew his contract with the club.
       Lastly, the club faced a bad time in the last few years as they had not won any trophies. He is still maintained his own ideas against the results that is what a manger should do. Being tursted in himself for working in his own way.