STRA Final Toyota Motor Corporation.docx

STRA Final Toyota Motor Corporation.docx - Strategic...

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Strategic Management – STRA 6201, 2019 Spring Muzi Zhou Toyota Motor Corporation: Launching Prius Value-cost analysis of a hybrid powertrain automobile (10 points) Q1 (5 pts). What customer value is created with a hybrid powertrain automobile? A1: There are several different customer value created by a hybrid powertrain automobile. First of all, customers spend less on gas. This economic benefit is based on the utilization of electricity from batteries. Saving money on gasoline is a big deal to customers, especially for customers in Japan and Germany who pay much more on gasoline than customers in the U.S. since 1978 (according to exhibit 1b). Then, the higher fuel efficiency also creates environment benefit by reducing pollution. According to Okuda: “Customer recognize the threat that pollution and global warming present to them and their children”. Governments also encouraged manufacturers to increase vehicles’ fuel efficiency. In addition, early adopters pursue psychology benefit by being the first group of customers of this new high technology. Many people want to be offered aspirational value in addition to a basic mode of transportation; purchasing hybrid powertrain automobile shows their difference between old-style automobile consumers and gain reputation by showing their concern on environment. How much money can a customer save from the hybrid powertrain in total? Note: Assume the fuel savings from the hybrid powertrain of 194 gallon/year and fuel price of $2.30/gallon. You can make other assumptions necessary for your calculation, for example, a discount rate. Saving=$2.30/gallon *194 gallon/year=$446.2/year, assuming the battery of the car last for 10 years: 10-years total saving=$446.2*10=$4462 Q2 (5 pts). Given the customer value and the extra variable cost associated with a hybrid powertrain stated in the case, do you think hybrid automobiles will appeal to mainstream consumers? In order to answering this question, who are mainstream consumers is the first thing to be answered. The case mentioned that about 80% of the automobiles were driven by less than 20% of world population in OECD countries. Thus, most existing mainstream consumers are wealthy and older generations. However, in the future mainstream consumers is shifting to non-OECD countries and younger consumers. Meeting future customers’ need is also part of Toyota’s strategy. There’s extra variable cost associated with a hybrid powertrain, but the case also mentioned that one survey shows people are willing to pay additional 20% for hybrid cars. I think hybrid automobiles will appeal to mainstream consumers because for existing consumers, they are more likely wealthy and well educated. Environmental problems like emission pollution and global warming are going to rising and they concerned about these problems and are able to afford additional fee for hybrid automobiles. For future consumers, they are more willing to focus on hybrid automobiles’ helping saving money on gasoline which makes up to this additional payment disadvantage.
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  • Winter '15
  • Toyota Motor corporation, Plug-in hybrid, Fuel cell

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