Toyota Five Forces Of Competition

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Like every industry, Toyota has a number of elements that affect its success and threaten its growth. By conducting a competitive analysis, it allows the company to gauge where they are in their industry, in this case, automobiles. Porters Five-Forces Model exemplifies this idea by giving five key themes that are most prevalent in corporate America pertaining to success and growth of a company. According to Porter, the nature of competitiveness can be viewed as a composite of five factors: rivalry among competing firms, potential entry of new competitors, potential development of substitute products, bargaining power of suppliers, and bargaining power of consumers (David,87). These five keys allow a window into any industry in any field and measures how high the competiveness is among companies. The stronger each force is, the more companies are limited in their ability to raise prices and earn greater profits (scribd.com). A strong force may be regarded as a threat because it is likely to reduce a profit. A weak threat however, may be viewed as an opportunity because it may allow the company to earn greater profit. Rivalry among competing firms Potential entry of new competitors Potential Development of Substitute Products Bargaining Power of Suppliers Toyota's "just-in-time" supply-chain concept has become a model for manufacturers around the world, and not just for automakers. The Toyota Production System (TPS) calls for the end product to be pulled through the system. This means the right parts reach the assembly line at the right place, just as they are needed, and with no excess (AC). The idea of TPS, on the contrary, is to produce only the products required in the precise quantities desired at a given point in time. This creates a 'pull' production system as opposed to a 'push' system. Toyota manages to keep inventories of both parts and of

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