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Toyota Indus Motor Company Limited
SITUATION ANALYSISHISTORY•Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC).
•The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993.
•Toyota Motor Corporation and Toyota Tsusho Corporation have 25 percent stake in the company equity.
•IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres.
•Heavy investment was made to build its production facilities based on state of art technologies.
PRODUCT PORTFOLIOToyota Corolla• Small passenger car • Deals in six variants • Out performed its competition and established a market leadership position in Pakistan by maintaining market share and a sales growth of 14.6 percent per year.
Daihatsu Cuore• Passenger car • Economy segment of 850CC • Deals in four different variants• Increases its market share shows an impressive growth in a small car segments. (Currently Closed)
Hiace and HiluxIMC Hiace and Hilux also increase its market share by increasing its sales every year.
PRODUCT PORTFOLIO
Camry• New generation Camry introduced in the beginning of 2006-07• Shows an inspiring performance • Established a market leadership position
Land Cruiser/Prado• The new SUV category targeted Fleet Customers• Stunning performance • Established a market leadership in its category.
OPPORTUNITY AND ISSUE ANALYSIS
SWOT ANALYSIS
• Toyota has become the generic name in the Pakistan market.
• Toyota has a great strength for its XLI car.
• Ample availability of the spare parts in the markets.
• The price of spare parts is comparatively low
• Toyota vehicles have got a much stronger resale value than
other car in Pakistan.
STRENGTHS
WEAKNESSES
• The power steering is not speed sensitive.
• Air conditioning system in severe heat is in-effective.
• The company having internal operating problems because
of dependency on Toyota’s principles delivery of cars is
done after 2 to 3 months.
OPPORTUNITIES• Toyota can do better by focusing on segments much more
than presently being done.
• Daihatsu Coure is a major opportunity for Toyota to excel
further careful planning and the right time to launch the
new car can prove to be a success. Although it is being
closed.
• Prius or any other Hybrid / Fuel Efficient Car
THREATS• Honda has adopted aggressive strategies for capturing the
market.
• A major threat is the changing political and economic scenarios
of Pakistan.
• Import of re-conditioned cars is also considered as a threat for
the company.
• The planned car manufacturing plants of Hyundai and
Chevrolet can prove to be tough competition for Toyota if they
are successful.
ANALYZING OPPORTUNITIES• Pakistani market has many opportunities for the Indus
Motors.
• Toyota currently targeted upper class by producing luxury
cars to serve their segmented customers
• Toyota cars are better than Suzuki in mind of customers,
so company may easily capture a market share for this
segment as well which is currently facing a monopoly of
Suzuki.
OBJECTIVES• Profitability Balanced with customer
• Maximum brand exposure
• Image enhancement
• Technological leadership
• Human resource skills
GOAL FORMULATIONSTRATEGIC GOALS
• To control 45 percent of market share in the next year.
• To increase the number of hours offered in management
training courses.
• Efficient use of physical assets and financial resources,
such as human resources.
• Enhancing the quality of our product and reach 3S
Dealership Network.
• Enhancing corporate value and respect while achieving a
long-term growth for the benefit of our shareholders.
OPERATIONAL GOALS• Increasing sales by 10 percent.
• To increase productivity while working efficiently.
• To maximize customer satisfaction.
• Increase quality of sales and service.
TACTICAL GOALS• To sell more than 55000 units in the next year.
• Make sure that employees are well trained.
• Each department must accomplish their assigned task in
an effective manner.
• Every employee must follow the quality management
standards.
PLANNING PROGRAM
• Indus Motor Company, with support from Toyota Motor Corporation has worked closely with its 62 local vendors.
• Since the successful launch of the Corolla and its ever-increasing demand, company has been making continuous efforts to increase production and the current capacity enhancement program will boost.
• Its production capacity to 200 vehicles per day, generates production of around 50,000 vehicles per year.
• In this expansion plan, company will be investing over Rs 500 million so that the total investment in the project would exceed Rs 3.2 billion.
• Indus has embarked on to enhance in-house manufacturing, increased localization, cost reduction and production efficiency.
• The capacity expansion would not only offer more vehicles to meet the growing demand of the Pakistani market, but it would also yield greater revenue to the government through taxes and duties.
PROBLEMS OR ISSUESTHE NATURE OF PROBLEMS/ISSUES
• Numerous complaints reached Indus Motors of locking up
steering this resulted in the automobile having to being
towed to dealer locations for repair.
• The problem was caused by locking the steering wheel for
security purposes, which was stated as being the root
cause of the problem.
• Some Toyota models accelerators were mysteriously
getting stuck. This malfunction could possibly create many
dangerous driving conditions for consumers.
THE CURRENT PRACTICES/POLICIES/PROCEDURE
• Toyota’s inherent ability is to adapt, improve and
embrace changes even during the harshest times.
• They are giving training to their employees in order to
perform well and meet the demands of the customers.
• They are also working on technological aspects as they
are trying to make their cars fuel efficient.
• In order to keep their market leadership they are doing
good manufacturing practices in order to improve their
market share.
•The Customer Relations team focused on putting in
place customer-friendly policies and procedures at Indus
and its 3S dealerships to achieve quick turnaround on
customer inquiries and complaints to maximize
Customer Satisfaction.
UNDERSTANDING THE NEEDS
• Toyota should improve the quality of their cars and as
they are giving the promise of quality, durability and
reliability to its customers, some customers are
disappointed as well.
• They could introduce some programs which provide for
prompt maintenance of vehicles and have strong customer
appeal for speedy delivery of service of vehicles with
attention to quality detail.
SALES ORGANOGRAM (structure)• Their sales team is headed by manager sales and
marketing.
• One deputy manager assisted by two assistant manager
sales well supported by a team of five sales executives
achieves their targets prescribed by their senior
management & Indus Motors Company.
• There are fully computerized sales department with
remote terminals hooking up all sales areas with each
other.
• Their networking is managed by a receiving, new vehicle
preparation & delivery.
ACTION PROGRAMDEVELOPING STRATEGIES• Toyota aggressively marketed their cars as being fuel
efficient, environmentally friendly, and having better
quality than Pakistani automotive industry.
• Toyota was also able to identify new opportunities for
market development and spent time on product
development to tap into these markets.
• The company uses different strategies for promotion of
their products such as Advertising and Corporate
Communication.
• The company made special budget for ads to be
broadcasted on electronic media as well as print media.
ACTION PLAN• To achieve the forecasted sales company has developed
budgets to be spent on promotions.
• As the first quarter of fiscal year begins, the company
develops its electronic and print ads and in the meantime
working on Corporate Communication throughout the same
quarter.
• Each quarter will be treated with the same actions unless
and until any new potential threat from the existing
competitors are not being observed.
FINANCIAL PROJECTIONBUDGET PLANSALES FORECAST
The sales forecast is only for the Year 2012, which is
calculated by using a formula of sales forecasting
method which is called naïve method.
Formula: Next Year’s Sales = This Year's Sales * This Year's Sales /
Last Year's Sales
Next Year’s Sales (2012) = Rs. 63,355,325,000
MARKETING BUDGET
2012
Advertisement and promotion
40,000
Marketing research 25,000
Corporate communication 15,000
Others 10,000
Total Marketing Expenses
90,000
Marketing Budget Rs in ‘000
MILESTONE1989 Company Incorporated – Dec 171993 Corolla XE Launch – May 131996 Hilux Launch – Jan 20 / Corolla Diesel Launch – Apr 172000 Daihatsu Cuore Launch – Mar 252003 Daihatsu Cuore (CNG) Launch – Jan 292005 Corolla Altis Launch / IMV (CBU) 4x4 Hilux Launch2006 Capacity Expansion (200 units/day, 50,000 units/yr)2007 Cogen plant start up / IMV Hilux S/C 4x2 Launch – Nov2008 New Corolla (242L) Launch – Aug 19
Press Shop SVP – Oct 13300,000th Vehicle Line-off
2009 20th year of Company Incorporation 2010 Launch of New Prado, Fortuner, Avanza, Terios – Jan
400,000th Vehicle Line-off
2011 IMV 4x4 Launch – JanCorolla Ecotec Launch – Jul 450,000th Vehicle Line-off
2012 Launch of Vigo Champ
CONTROLSFEEDBACK MECHANISM
•Social Media Allows Getting Near Real-Time
Market Feedback On New Products
•Tapping Into Social Feedback to Improve
Chances of Launch Success
CONTROL MECHANISM•The purpose is to explain Toyota’s budgeting and
manufacturing control systems, both of which are integral
to the achievement of Total Quality Control (TQC).
•Most Japanese companies use the terminology "Kaizen"
(continuous improvement) and "Kanban" (Just-In-Time
Manufacturing).
•Toyota’s budgeting system is not purely based on target
costing, but instead on cost control, target costing, and
Kaizen.