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OPERATING EXPOSURE

THEORY & MINICASE: TOYOTA
by

Zabdi Arvizo

on 19 October 2012

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Transcript of OPERATING EXPOSURE

FACTS CASE: TOYOTA NOWADAYS MINI-CASE: TOYOTA OPERATING EXPOSURE WHY THAT HAPPENED TO TOYOTA? OPERATING EXPOSURE QUESTIONS Why do you think Toyota waited so long to move much of its manufacturing for European sales to Europe?
If Britain were to join the European Monetary Union, would the problem be resolved? How likely do you think it is that Britain will join?
If you were Mr. Shuhei, how would you categorize your problems and solutions? What was a short-term and what was a long-term problem?
What measures would you recommend Toyota Europe take to resolve the continuing operating losses? 1999-2000 2001 2000 Yen strengthened against Euro
*Toyota had to absorb most of exchange rate changes* British pound strengthened against Euro *Europe 2nd market for Toyota behing North America

*Toyota a nnounced no profits in 2 years because of Euro

*624,000 autos…increase to 800,000 in 2005
YARIS 180,000 in this year manufacturing in Japan

PROBLEM: The euro had been falling continuously against both the yen and British pound *Over 60% manufactured in North America

*24% sold and manufactured in Europe

*Operating looses (because of currency) 2004 New operations in France- small sales Expand 25% European sales Assembly in France BUT assembly facility Expensive value added
is in Japan or UK 2002 #1 in Japan
3rd largest in the world (5.5 million units)
8th in Europe (Auto & truck done in Japan) smaller profits and a reduced flow of cash into the business making it harder to remain competitive. IMPACT WHAT ABOUT TOYOTA? WHAT CAN THEY DO?

*DIVERSIFY* Last year Toyota told all its suppliers to settle their bills in euros to "minimise its currency risk exposure- BBC, 2001 assessing the rate of exposure is a constant process can help a business or an investor minimize losses and also aid in creating a position for growth at some point in the future. Matching currency cash flows
Risk-sharing agreements
Back-to-back or parallel loans
Currency swaps
Leads and lags
Reinvoicing center POLICIES:
Matching currency cash flows
Risk-sharing agreements
Back-to-back or parallel loans
Currency swaps
Leads and lags
Reinvoicing center FUTURE Why do you think Toyota waited so long to move much of its manufacturing for European sales to Europe? If you were Mr. Shuhei, how would you categorize your problems and solutions? What was a short-term and what was a long-term problem? What measures would you recommend Toyota Europe take to resolve the continuing operating losses? If Britain were to join the European Monetary Union, would the problem be resolved? How likely do you think it is that Britain will join? Did you know Toyota invests $1 million dollars every hour in research and development worldwide!¿! Did you know Toyota does business in more than 170 countries worldwide; that’s more countries than McDonald’s has with restaurants in over 100 countries!¿! Did you know Toyota spends more on research and development than any company in the world!¿! Did you know the 2012 Toyota Camry has made Bluetooth hands-free connectivity a standard feature!¿! Alexandra Bauer
Zabdi Arvizo
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