20500198 entry #8

Toyota's Strategy To Overcome Hard situation
Toyota projected cost-cutting efforts.

Toyota's latest records aside, the automaker projects a 29.5% profit drop for the current year, well below analyst expectations. Toyota is hurting from the impact of a stronger yen, a slowing U.S. economy, and rising raw materials costs. This three difficult situations are dangerous enough to beat toyota largely. In the U.S., Watanabe said Toyota would raise prices by 0.7% but in Japan, where sales for almost all carmakers have long been falling, Toyota has "no plans to raise prices," he said. But there's the rapid growth in Asia, the Middle East, Eastern Europe, and other resource-rich emerging markets. That is, the profit growth of Asian market will can be offset the profit decrease of American market. But it's very hard to sale more or got more profit from selling in total business. So they choose to do effort to cut the cost of business. On May 8, Toyota projected that its cost-cutting efforts will offset increases in raw materials costs by using 20% fewer types of steel in auto production and reducing the amount of resin it uses in cars by 30%. Watanabe added that internal reviews of the way the company is administered or conducts research and development can also save hundreds of millions of dollars. I think the Toyota's starategy is fit to the present situation. They got growth from new market, and they offset the increasing cost by cost-cutting efforts. The difficult situation will be continue, but Toyota's net earning will be recovered.
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source: http://www.businessweek.com/globalbiz/content/may2008/gb2008058_447061.htm?chan=top+news_top+news+index_news+%2B+analysis