Tag Archives: marketing myopia

Toyota Motor Corporation: Could it Become the Next Kodak?

By James D. Roumeliotis

The Eastman Kodak Corporation was founded in the late 1880s. At its peak, by 1988, Kodak employed over 145,000 workers worldwide, and was a giant in the photography industry in the 1970s, dominating 90% of film sales and 85% of camera sales in the U.S., according to a 2005 case study for Harvard Business School. Sadly, it filed for bankruptcy in 2012. For almost a hundred years, Kodak was at the forefront of photography with dozens of innovations and inventions. However, the irony here is that the ignorance of new technology and not adapting to changing market needs initiated Kodak’s downfall. Kodak invested its funds in acquiring many small companies, depleting the money it could have used to promote the sales of digital cameras. Today, it employs approximately 4,500, and its main business segments are Print Systems, Enterprise Inkjet Systems, Micro 3D Printing & Packaging, Software & Solutions, and Consumer & Film.

Looking at Toyota Motor Corporation today, a company founded in 1937 and headquartered in Toyota City, Japan, Toyota and employing nearly 350,000 people globally, a similar story seems to be emerging here in regard to a future possible bankruptcy. Though, unlike Kodak, the Japanese government will probably throw at it a financial lifeline as it’s too important for its economy to allow the carmaker to fail.

The Marketing Myopia of Toyota

Toyota is one of the largest and most well-known brands in the world. The 2022 fiscal year which started in April, shows that Toyota has fallen behind its targets by more than 10%. In addition, profit slumped a worse-than-expected 42% in its first quarter as the Japanese automaker was squeezed between supply constraints and rising costs. It presently also holds the distinction as the global company with the biggest net debt on its books ─ $186 Billion and total liabilities also high at $269 Billion. Toyota has less than $83 Billion in assets. If its debt continues to grow in the next few years, a possible bankruptcy cannot be ruled out.

The main problem today is they can’t make enough cars. If you go to any Toyota dealership, they’re very low with an inventory of new cars. Their management of supply chain issues appears dysfunctional. However, their issue goes beyond that. They are stuck in a conundrum when it comes to the reality of the future of the electric car (EV). The Toyota leadership is in denial while the rest of the world moves on with EVs.

For Toyota, the hybrids were supposed to be the bridge to an electric future. Seems like they are stuck on the bridge and refuse to get off. Furthermore, Toyota has been pushing for hydrogen but neglected to put any effort into building infrastructure for it. In fact, they didn’t even try to lobby to have hydrogen stations built. Their hydrogen plan was really dead-on arrival from the get-go.

China and the Non-Legacy Car Manufacturers

The Chinese EV auto manufacturers such as BYD and Nio, along with the American EV manufacturer, Tesla, are doing to Toyota what it did to GM, Ford and Chrysler in the ‘70s. Toyota struggles with the EV shift and has continued to be highly critical of going all-in in battery-electric vehicles despite announcing its own plan last year to bring 30 battery EV models to market by 2030.

For now, the 2023 Toyota bZ4X is the lone representative of the company’s EV plans — an awkwardly named crossover that raises some questions about what the company really believes to be the future of battery-electric vehicles and just how committed they are to the entire thing. Though, the Toyota bZ4X stumbled out of the starting blocks, with the automaker recalling all of them due to an issue where the wheels could literally fall off the EV. The problem took several months to correct, with Toyota only announcing a fix and the restart of production earlier this month. During the recall, the company even offered to buy back affected vehicles from customers.

Foretelling the Future of Toyota’s EVs

According to a report by Reuters, Toyota has formed a working group to come up with ways to improve its EV strategy. The group reportedly has a deadline of early next year to decide whether to improve its existing EV platform known as e-TNGA, or suggest an entirely new EV architecture, four sources with knowledge of the discussions told Reuters.

Alternatively, Toyota may just rebadge and import Chinese EVs or license another automaker’s EV platform, such as VW’s MEB platform, though outsourced automakers and other 3rd party suppliers can drain Toyota’s margins, leaving Toyota very little funds to invest in developing their own EV platforms.

In the End

Kodak was the very first company whose engineers came up with a digital camera, in 1975. Although the company had an early insight into digital, it lacked the commitment and management support for a huge production shift. Moreover, the business of films and paper was very profitable at that time and those items would no longer be required for photography. As a result, Kodak would be subjected to huge losses and end up shutting down the factories which manufactured those items. Kodak finally went to market with its initial digital camera model (the DC40) in 1995 but was considered a latecomer in the category. Instead, in 1989, its competitor, Fujifilm, released the FUJIX DS-X, the first fully digital camera to be commercially released.

Another example of the industrial cycle. From tiny beginnings to rule the automotive world to self-destruction. From leading innovation to crippling indecision.

At least Kodak had many worthy patents to trade/sell. What about Toyota?

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