STEEP
Social/Demographic
- Demand shifting from OECD countries.
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Technological
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Economical
- Rising price of fossil fuels.
- Growing demand for cars, as much as a 50% increase by 2010, could certainly drive up the price of gas, which in turn could eventually decrease demand and make people shift to public transportation, or bicycles, for example.
- Countries adopted trade barriers to protect local automobile industry. Therefore, if a car maker wanted to enter the market, they would need to invest in building a plant in the country, as opposed to simply exporting cars to that country, meaning higher capital expenditure.
- Stronger Yen damaged exports.
Environmental
- Concerns with pollutants emitted by cars.
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Political/Legal
- Legislation controlling and regulating automobiles, concerning safety, pollution, traffic congestion, and fuel scarcity, and governmental encouraging car makers to increase fuel efficiency. It could lead more people to look for alternative means of transportation, and higher costs of research and development for the car makers.
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5 Forces
Power of Buyers: High
- Having in mind the average automobile, consumers are price sensitive.
- Low switching costs, and competition among players encourage consumers switching for benefits, be it lower price or better specifications.
Power of Suppliers: Low
- The number of automobile makers is not big, therefore suppliers depend on the demand of a handful of customers. For example, in the US, 3 companies make up over 60% of the automobile market sales (1994), and if you look at the top 5, they are responsible for over 80%, which gives them huge power over the suppliers.
- Many automobile parts are standardized, and therefore suppliers are substitutable.
- Backwards integration in the industry is possible, which can further decrease the third party suppliers’ power.
Substitutes: Moderate
- “Go green” trend makes people more inclined to use alternatives such as public transportation, bicycles, or even walking
- Motorcycles are a substitute but lose in several aspects of convenience when compared to cars: less comfortable in long trips, space to carry items is low to none, weather (strong heat, rain, or snow) can be disturbing or even make it impossible to ride a motorcycle
New Entrants: Low
- Enormous capital investment and operational efficiency requirements
- An automobile factory is not easily convertible into another industry if need be. Therefore there are more risks involved in the capital expenditure.
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Rivalry: High
- Competitors copy/imitate each other’s innovations quickly.
- High market commonality makes attacks among players very likely in the industry.
- Aggressive pricing, advertising, and product development fronts.

SWOT
Strengths
- Third largest automaker at the time (1994). And currently (2012), the largest.
- Excellent operational efficiency. The creator of Just-in-time production.
- Marketing and sales prowess.
- Highest market share in North America among foreign car makers, at 7% in 1994, and lowest number of problems per 100 vehicles.
- Early environmental commitment (The Earth Charter 1992: “To provide clean and safe products”)
Weaknesses
- Lack of product innovation led people to see Toyota as following the trend, rather than setting it.
- Distrustful dealers, because of dealer’s incentives cut as part of a cost cut in the company.
- Higher foreign exchange risk exposure, due to lack of production overseas.
- Decline in domestic market share.
Opportunities
- First mover advantage, regarding the hybrid car segment.
- Image of innovation to the first mover in the hybrid car segment.
- Value added created with the new product.
- Environmental consciousness is a global consumer trend.
Threats
- Perhaps the consumer market is not ready yet for the type of product.