S.K.PATEL INSTITUTE OF MANAGEMENT AND COMPUTER STUDIES

PRESENTATIONON

APPLICATION OF ECONOMICS CONCEPTS ON

TOYOTA MOTOR CORPORATION

SUBMITTED TO

Prof. Sonu Gupta

GROUP NO 24

SUBMITTED BY o Hiren Vaghelao Viram Bharwado Nikhil Prajapati o Hitesh Chaudhario Pankaj Kamaliya

FLOW OF THE PRESENTATION

Introduction PrincipalsEconomic model

The Circular Flow DiagramMacro and Micro Analysis

Demand and Supply AnalysisStudy on demand of Toyota motor

Elasticity and its applicationConsumer surplus and producer surplusCost structure Factor affecting price of toyota motor

PRINCIPLES

PRINCIPLES

•People Faces Trade off-

people has to decide whether to purchase car of Toyota

or other company. If it People purchase car of ford than

the option of purchase Toyota car will be a trade off for

customer or visa-versa.

LIVA FIGO

Toyota main function is to sale car to customers.

Except this Toyota have its financial services and

museum and etc

•Rational People Think at Margin

Economic Models

First Model: The Circular Flow Diagram

TOYOTACUSTOMERS

CARS AND SERVICES

FACTOR OF PRODUCTION

EXPENDUTIRE

services

MICRO ANALYSIS

COMPANY OVERVIEW

Established in 1937 out of Sakichi Toyoda’s weaving machine company

Launched first car (SA Model) in 1947 “Toyota Production System” formed in

1950 based on Just-In-Time principle Overseas production starts in 1959

(Brazil) In 1972, cumulative production >10M

units In 2002, entry in the Formula 1 circuit

Company Name Toyota Motor Corporation

President and RepresentativeDirector

Akio Toyoda

Head Office

1 Toyota-Cho, Toyota City, Aichi Prefecture 471-8571, JapanPhone: (0565) 28-2121

Capital397.05 billion yen (as of March 31, 2011)

Shareholders Shareholder Composition

Fiscal YearFrom April 1 to March 31 of the following year

Main Business ActivitiesMotor Vehicle Production and Sales

Business Sites Information on Business Sites

Number of employees (consolidated)

317,716 (as of March 31, 2011)

TOYOTA GLOBAL VISION

Toyota will lead the way to the future of mobility,

enriching lives around the world with the safest and most responsible ways of moving people.

Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile.

We will meet challenging goals by engaging the talent and passion of people, who believe there is always a better way.

TOYOTA GLOBAL MISION Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities

Work with business partners in research and creation to achieve stable, long-term growth and mutual benefits while keeping ourselves open to new partnerships.

OBJECTIVe

Fuel efficient, low-cost vehicles, reliable and of high quality. Sales and after sales service, total automobile value and customer satisfaction. Increase competitive strength through

advanced technology Promoting a global perspective

Increase competitive strength through advanced technology Environmental technology fuel consumption, emission, recoverability Hybrid vehicles and next generation fuel cells

TOYOTA PRODUCTS

Economies of ScopeEconomies of Scope

•CAR MUV SUV•TRUCKS COMMERCIAL BIG TRUCKS

•FINANCIAL SERVICES

•Museum

•SPORT CARS

•FORMULA RACEING CARS

TOYOTA COMPANY IN WORLD

Manufacturing companies in Japan

Toyota Motor Kyushu, Inc. Toyota Motor Hokkaido, Inc. Toyota Auto Body Co., Ltd. Kanto Auto Works, Ltd. Toyota Industries Corporation Aichi Steel Corporation Toyoda Machine Works, Ltd. Toyoda Gosei Co., Ltd. Toyota Boshoku Corporation

Manufacturing companies overseas

Toyota Motor Manufacturing, Kentucky, Inc. Toyota Motor Manufacturing, Indiana, Inc. Toyota Motor Manufacturing Canada Inc. Toyota Motor Manufacturing (UK) Ltd. Toyota Motor Thailand Co., Limited Toyota Motor Corporation Australia Ltd.

Financial companies Toyota Finance Corporation Toyota Motor Credit Corporation etc.

Through these partnerships, TOYOTA implements diverse collaborations that complement each other and create synergies.

MACRO ANALYSIS

AUTO MOBILE Industry in world

The auto mobile industry in world total selling like 2009 61,791,868 12.4%

2010 77,857,705 26.0% Total automobile industry in India is 50000 cr.The industry can be divided into the SUV and the MUV small cars market. The SUV market at present is more than 50 lakh per annum valued at Rs. 300 croresThe per family use car ratio is 10:1SUV and MUV together constitute approximately 78% of the market..In 2008-09, in the branded car market, toyota held the number one spot, with a market share or 28%, followed by GM Walls at 24%, VW at 20% and OTHERE at 28%

NO

CARS GROUP Total LCV HCV HEAVY BUS

Total 77,743,862

60,343,756

13,370,432

3,510,681

518,993

1 TOYOTA 8,557,351 7,267,535 1,080,357 204,282 5,177

2 G.M. 8,476,192 6,266,959 2,197,629 1,175 10,429

3 VOLKSWAGEN

7,341,065 7,120,532 220,533

TOYOTA WORLD’S LEADING AUTOMOBILE COMPANY

Region wise sales car in world

Auto mobile INDUSTRY IN GUJARAT

The Rs 50000-Crore Indian Auto mobile markets.

Out of which, Gujarat contributes 25%

Stiff competitions in Gujarat

Major dip in car sales during festival.

Ahmadabad, the auto mobile hUB of India

After come TATA also come FORD,SUZUKI.

competitors

DEMAND AND

SUPPLY ANALYSIS

Demand Curve

Price ofToyota

cars

Quantity ofToyota motors

Increasein demand

Decreasein demand

Demand curve, D3

Demandcurve, D1

Demandcurve, D2

0

Shifts in the demand Curve

SUPPLY CURVE

supply Curve

Quantity of toyota motors

quantity

prices

8 L

5 810

Shifts in the supply Curve

ELASTICITY AND

APPLICATION

Elasticity of Demand

The Price Elasticity of Demand

% change in quantity damanded% change in prices

1. Demand is to be Elastic.(p>1)

2. Demand is to be Inelastic(p<1)

3. Demand is to be perfectly Elastic (p=infinity)

4. Demand is to be perfectly Inelastic

(p=0)5. Unit Elastic demand(p=1)

The price elasticity of demand is the relation between percentage change in quantity demanded of the goods and percentage change in price goods

The price elasticity of supply

The price elasticity of supply is the relation between percentage change in quantity supplied of the goods and percentage change in price goods

% change in quantity supplied% change in prices

1. Supply is to be Elastic.(p>1)2. Supply is to be Inelastic(p<1)3. Supply is to be perfectly Elastic

(p=infinity)4. Supply is to be perfectly Inelastic

(p=0)5. Unit Elastic Supply(p=1)

year Toyota

LIVA price

Quantity

TR %change in price

% change in quantity

Elasticity Description

2007 6lakhs 6 36 L 0 0 0 0

2008 5.5lakhs

8 44 L 8 25 3.1 Elastic

2009 5lakhs 9 45 L 9 11 1.2 Elastic

2010 4.80lakhs

9.5 45.6 L

4 5.25 .76 Inelastic

2011 4.5lakhs

10 45 L 7 5 .70 Inelastic

PRICE ELASTICITY

CONSUMER SURPLUS AND PRODUCER

SURPLUS

CONSUMER SURPLUS

When any person or organization order it in bulk quantity, they get benefits on price such like as 15% discount on price. So these consumers get benefits from company and this is consumer’s surplusEXAMLPE:- Any doctor give a order of car than any dealer give discount of 10% and extra 10,000 Rs so there will be a consumer’s surplus.

PRODUCER SURPLUS

PRODUCER SURPLUS

Consumers are ready to pay more price due to some of feature and On extreme product and organization sale product at higher price and consumer Will willingness to pay for buying that product

EXAMLPE:- TOYOTA sale CAMRY car to its consumers and the cost of car is 20 lakhs. The consumers pay for it 24 lakhs for purchase car than 4 lakhs is producers surplus.

Here point B will be producer surplus

COST STRUCTURE&

PRICING

Fixed Costs

Variable Costs:SalaryPetrol and diesel

expenses,Electric expenses,Advertisement

expenses,Stationary and

various

Cost structure

Factors affecting Pricing OF TOYOTA

Internal Factors:Internal Cost StructureMarketing Strategy

External Factors:Market conditionsCompetitors pricingIncrease in various costsPrices of various materialsDuties and taxes and many factors