Company had to be bailed out by consortium of banks. •
•
Downsized and restructured.
Cntd… • By 1952, Toyota’s financial health
restored coz of the Korean war. • Showed interest in TQM . • Launch of Corolla and more than 71,000
cars. • Joint Venture with GM . • Had a major achievement in US market
when it successfully launched the Lexus and even Celica. • Appreciation of yen and restrictions put
on imports of Japanese cars by western counties, Toyota stepped up its efforts to set up plants abroad.
Toyota had increase in operating income and vehicle sales. • Made plans to buy 5% stake in Yamaha. • By early 2000s, Analysts considered Toyota to be the
strongest of Global auto manufacturers.
Problems faced by Toyota & the solutions Expensive vehiclesUndercoated prices Govt. help After effects of World War-II Banks helped Downsizing and segregating business. Korean war Higher Cost of Production Tracing problm to its roots Dies Market Expansion Joint ventures with GM, Tianjin Automobile in China Buying/Increasing stakes in Daihatsu, Hino motors. Opening plants in Britain, France Re-positioning Corona
Strategies used by Toyota to overcome risks: Financial risks are those due to which the company might get affected in its cash flows thus unable to meet its financial obligations. Risks that are involved in Toyota are:
Credit Risk:
Market Risk: Derivative Type
Amount Invested (Yen)
Amount Invested ($)
Foreign Exchange Forward Contracts
(2464)
(21)
Interest
103038
857
5935
49
Option contracts written
(3581)
(30)
TOTAL
115018
957
rate
and
currency
swap
agreements Option contracts purchased
Currency Risk: Translation Risk :
Transaction Risk
Particulars
Revenues
Operating Income
2001
2002
2003
12955237 14190308 15501553
790729
1093632
1271646
% Change to 2002-
% change 2003-
2001
2002
8.70%
8.46%
27.70%
14.00%
Interest Rate Risk:Commodity Price Risk:-
Equity Price Risk S.No.
Particulars
Amount ($ millions)
1.
Time deposits
461
2.
Total Receivables
39,308
3.
Short term Borrowings
15,438
4.
Long Term Debts
44,969
TOTAL
100,176
Derivatives Financial Instruments •
Adopted in 2001 By Toyota
•
Classifies Derivatives in 4 Types (FAS 133) –
–
No Hedge Fair Value Hedge- loss 2002 $5.12 million, 2003 $4 million