Toyota's Economy Essay Example | Topics and Well Written Essays - 1500 words

Toyota's Economy - Essay Example Most of the banking institutions have closed or merged their operations with the existing other institution in order to facilitate uninterrupted service to their customers. The financial institutions were not the only ones affected by the crisis, as other manufacturing and service sector companies like General Motors, Satyam Computers and so on were also affected. The recession has done bad things, but also good things to bring out some of the malpractices to the light of the stakeholders and government taking place within the organization of the company that resulted in bankruptcy. Additionally, there are companies that faced the past and present crises and are still going strong. This paper intends to study the impact of the crisis on Toyota’s economy, while assessing its strategies for future development. Growth of Toyota Motor Corporation Toyota Motor was the second step taken by its founder Sakichi Toyoda, when he first started the Toyoda Automatic Loom Company, which was supported by the Japanese Government due to its military application. In December 1945, Toyoda was permitted to start up a peacetime production by the U.S. military and by 1947 made the SA Model, called ‘Toyopet’. ... Apart form manufacturing, Toyota was involved in many mergers and acquisitions which included the acquisition of Hino, Daihatsu and Denso, which were once Toyota’s electrical component that broke up after WWII (Toyota History, 2009). Presently, the current investment of Toyota Motors stands at 1.9 bn, with 6,850 employees. As per the 2007 FY Report, consolidated net sales valued at 1,651.2 bn yens, current income at -0.5 bn yens and net income -1.0 bn yens (Economic Report). However, the financial crisis has a definite impact on the development of Toyota in certain parts of the world. Effects of Financial Crisis Toyota suffered its worst slowdown since its inception in the year 1937, reduced the production, and cut back on investments to combat falling sales and increasing yen. It is reported that Toyota Motors will be incurring a loss of around 1.2 billion euros (rfi.fr). The recent financial crisis had a drastic effect on the business of Toyota Motor Corporation. According t o the Economic Report in FY 2008, despite the increase of net sales, the company incurred huge operating losses, which resulted in the value of assets and shareholder equity. Mreg Marco (2008) reports that Toyota experienced a downslide of 32% in U. S. sales alone. Moreover, experts warned more doom and gloom in the coming years despite frantic measures being taken by the government to stem the tide of bad data (AFP, 2009). These financial losses and net decrease in sales has resulted in DBRS downgrading the long-term ratings of Toyota and its subsidiaries from AAA to AA. DBRS also reported that recent fiscal reports were far below the expectations with total revenues dropping to 20.5 trillion yen, a decline of 22% and an operation loss of 461 billion yen, despite cost cutting