COMPETITIVE ADVANTAGES

A competitive advantage is an advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retains more customers than its competitors. In order to succeed, a business must develop strategies to counter this forces which is rivalry of competitors within its industry, new entrants into an industry and its market, substitute products that may capture market share, bargaining power of customers and bargaining power of suppliers.

• The organization must be sensitive to bargaining power of suppliers who can increase prices or force the organization to pay more attention to the supplier’s needs than to organization’s needs. For example, China is one of the suppliers that supplies almost 97 percent of the raw material to produce a product. But if China blocked export the raw materials to Japan, automatically the cost of raw material was increased. Therefore, Toyota must find the ways to reduce the dependency toward China.

• The organization must be sensitive to bargaining power of customers. Toyota cannot stop to produce their product because it becomes more popular and demanding. The gasoline-electric cars have been in high demand in European countries, United States and also Japan.

• The organization must be sensitive to the threat of new firms entering into an industry. For example, Tesla Company is a one of the electric car manufacturer that produces hybrid cars in United States. It was founded in 2003.

• The organization must be sensitive to the threat of new products or services that can replace existing offerings. Tesla Motors will launch it new model which is Model S, the first premium sedan to be built from the ground up as an electric vehicle, goes on the market in mid-2012.

• The organization must be sensitive to rivalry among existing competitors. Ford Motor Company, General Motors Corporation, Honda Motor Co. Ltd are principal competitors of Toyota.

After the company knows the competitive force that they faced, now the company can overcome all of the forces based on these competitive strategies. There are five competitive forces that include cost leadership, differentiation strategy, innovation strategy, growth strategy and alliance strategy. For cost leadership, Toyota vision is being a company respected worldwide for producing the highest quality vehicles at the lower price in order to gain the customer’s satisfaction.

Toyota may enter into alliances with other company to produce products. For example in 1982, the Toyota Motor Company and Toyota Motor Sales merged into one company, the Toyota Motor Corporation.

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References:

http://en.wikipedia.org/wiki/Toyota 
http://www.teslamotors.com/about/press/releases/panasonic-enters-supply-agreement-tesla-motors-supply-automotivegrade-battery-c 
http://www.toyota-global.com/innovation/safety_technology_quality/quality/ 
http://www.toyota-global.com/sustainability/stakeholders/employees.html 
http://www.hreonline.com/HRE/story.jsp?storyId=142379047 
http://www.referenceforbusiness.com/history2/63/Toyota-Motor-Corporation.html