Toyota's Business Strategy Increases Profits by 9%

Toyota shows other businesses how to increase profits with their new business strategy of diversification, experimenting with emerging markets and exploring multiple revenue streams.

According to an NYTimes.com business article, Toyota is slowly gaining ground in their efforts to overtake General Motorls as the leading global automaaker by sales. “Operating income has become more equally balanced among the regions, with significant higher contributions from growing markets, specifically emerging and resource-rich countries,” Takeshi Suzuki, a board member, said in a statement.

That is a winning strategy for the company, analysts said.

“It’s a good thing for Toyota to diversify its revenue sources away from North America into the emerging markets,” said Hirofumi Yokoi, senior manager for Japan and South Korea forecasts at CSM Worldwide, a provider of automotive market forecasting services. “Mixed revenue sources will help the company hedge against risks in specific markets.”

While sales declined in North America, they increased in Asia, especially in Indonesia and Thailand, and in other regions including South and Central America, Africa and Oceania.

In the nine months through December, less than half of Toyota sales came from its showrooms in North America.

(image frm boston.com)

Sales to North America slid to 44 percent from 57 percent a year earlier, while Asian sales rose to 25 percent from 15 percent.

Toyota, which is widely expected to overtake G.M. in annual sales in 2008, has also expanded its global production footprint. Late last year, the company opened a plant in St. Petersburg, Russia, with a capacity to produce 50,000 cars a year.

The Russian factory is scheduled to begin operating next year and initially produce about 20,000 cars a year, Toyota said.

Management Tips As Chrysler Goes Global

Weak revenue streams from the US market now has Chrysler taking a more serious look at global markets.

According to Wall Street Journal, the auto maker, which relies on North America for about 90% of its sales, is planning to bolster its dealer network in Russia and China this year in hopes of benefiting from the rapid growth in those two big, developing markets, Mike Manley, Chrysler's international-sales chief, said in an interview.

So what's the strategy? Well here are some of them as quoted from Wall Street Journal

1. Chrysler boosted the number of products offered overseas to 20 from nine. In China, Chrysler said it is reintroducing Dodge-brand vehicles after a 62-year absence. The Caravan minivan is in production. The Caliber hatchback and Avenger sedan are also slated to be sold in that country.
2. The auto maker has started using recruitment teams, investment forums and the promise of large territories with more products to expand its dealer network overseas.
3. They hired key management - CEO, Philip Murtaugh, who spurred GM's growth in China, this past September.
4. U.S., incentives will be kept to a minimum as the auto maker sticks with its vow to curtail production rather than fill dealer lots, North American sales chief Steve Landry said.
5. Chrysler is in the midst of eliminating shifts at five North American plants, resulting in job cuts of 8,500 to 10,000 hourly workers. The cuts are slated to be completed by April.
6. Introduction of the Dodge Journey, Chrysler's redesigned Dodge Ram pickup truck and the hybrid version of the Chrysler Aspen and Dodge Durango to bolster sales.

These are their plans, whether they'll work or not only time will tell.