International Corporate Strategy For LEXUS Essay

Question:

Discuss about the International Corporate Strategy Analysis For LEXUS.

Answer:

Overview of the company and current operating position:

Lexus enterprises are the luxury vehicles division of the automaker company Toyota Motor Corporation that belongs to Japan. The company has a customer market that is widespread to 70 countries all over the world, and has been crowned as the pioneer in designing and providing premium luxury cars to the world with the largest annual revenue. The lexus began its operations in the United States in the year 1989, where the company sold premium cars exclusively; however, the company grew its brand reputation gradually and the company expanded to various locations worldwide (Pressroom.lexus.com. 2017).

In elaboration regarding the current operational stand of the company, the4 barnd Lexus international sold 677615 premium cars for the year of 2016 which can be interpreted as a 5% annual rise in the total sale from the previous year; now this hike is more than commendable considering the high manufacturing cost involved with luxurious cars and the high market competition. The primary focus of this company is centred on the elite socioeconomic class, hence, the target market for this division of Toyota is compartmentalized into a separate sector; and in the last decade, Lexus had not been subjected to the competition that it faces in the present day (Bourreau, Sun and Verboven 2016). Yet the brand has been successful in retaining its hold on the premium motor vehicle market with ease, and there have been a myriad of different international competitive strategies employed for the company to retain its monopoly in the market. The current operating head quarters of the company remains in the United States headed by the general manager and vice president Jeffrey bracken (Pressroom.lexus.com. 2017).

Review of company's international competitive strategy:

It has to be understood that Lexus introduced a very novel concept into the automobile market; the premium cars that Lexus built had lean design, minimal detrimental impact on the environment and the best of performance, comfort and quality. Despite the company aiming to provide the best of both worlds to the target market, there is a significant and somewhat alarming competition that Lexus had to battle for it to establish a strong and sustainable place for itself in the dynamic economy (Pressroom.lexus.com. 2017). One of the greatest threats in the context of international expansion that Lexus has faced is in accordance to poor brand recognition and poor exposure to the right target market in expansion centres like in Europe. However in order to improve the under-recognized brand imaging for the company in such regions, the company has resorted to robust international competitive strategies (Meyer and Peng 2016).

First and foremost, the company employed a focus strategy as it introduced into the market presenting a unique product and lean production system in the United States in 1989, however, as the brand started to expand it recognized the need for a more improvised and targeted strategy in order to overcome the choking threat of competition that it received in centres like Europe. Now, among the generic strategies available, Lexus Corporation opted for the differentiation strategy to combat international competition. The differentiation strategy emphasizes on highlighting the uniqueness of the product from that of the competitors taking into account both the consumer preferences and product strengths into account. Along with that, the company also resorted to portfolio diversification as a strategy that broadens the marketing scope of the brand tremendously, and allows the company to build a brand image separately attracting more customers than the mother company (Narula and Verbeke 2015).

Entry strategies used to enter other regions/countries:

The Japanese automaker Toyota Motors Corporation has dominated the automobile industry both on the basis of annual unit and customer profitability, hence when the luxury division of the company was launched in the United States of America in the name of Lexus, the tremendous success and growth that it generated had been a welcome surprise for the company. However, as the brand propagated towards the necessity of global expansions, there have been a large number of blows that the annual sales and profit statistics of the company faced (Nkomo 2013). According to the research surveys the most sensitive grounds for Lexus where it had been battered by the three German luxury automobile brands had been china and Europe, where it failed to make a considerable impression on the consumer market. However in order to recapture the lost grounds, the company resorted to improvised and more consumer market centred global entry strategies. A global market entry strategy can be defined as the pre-planned procedure of delivering products or services to a particular target market taking into account all the different aspects of the particular target market into account (Prange 2016).

  • One of the first strategies that Lexus resorted to had been to facilitate global scale motorization, in which the company attempted to explore and understand the global market trends in acute detail and mould the manufacturing and marketing strategies according to the discovered trends (Prange 2016).
  • For instance, for the European market, where Lexus received most competitive threat, it opted for marketing organization restructuring and concentrated on sectors like UK and France, where brand image building had been easier with more informed and approachable consumer market.
  • In the Chinese market, the improved entry strategies included both marketing and manufacturing reorganization activities; as the market growth in that particular market had been robust, Lexus relied on product line up and brand image establishment to reach the potential customers (lexus.com. 2017).
  • Outside exporting is another key traditional market entry strategy that is incorporated by the company in most cases, in locations where the manufacturing is costlier; this strategy is a proven useful one, along with turnkey contracts.
  • The turnkey operation can be defined as the agreement that equips the seller to supply the buyer with the fully equipped and ready to be operated which is a great franchising method for any expanding brand, which has been effective in case of Lexus as well (Verbeke 2013).

On a concluding note, it can be stated that Lexus started its journey with the slogan ‘engineering the impossible: pursuit for perfection’ and the company has achieved to do so. Toyota has emphasized on two key strategies, understanding the new market and improvising marketing and manufacturing based on the new market. And these strategies have helped the company tackle the rather difficult markets with ease in the last couple years contributing to its appreciable growth.

References:

Ajami, R. and Goddard, J.G., 2014. International business: Theory and practice. Routledge.

Bourreau, M., Sun, Y. and Verboven, F., 2016. Market Entry and Fighting Brands: the Case of the French Mobile Telecommunications Market.

Meyer, K. and Peng, M.W., 2016. International business. Cengage Learning.

Narula, R. and Verbeke, A., 2015. Making internalization theory good for practice: The essence of Alan Rugman's contributions to international business. Journal of World Business, 50(4), pp.612-622.

Nkomo, T., 2013. Analysis of Toyota Motor Corporation.

Prange, C. ed., 2016. Market Entry in China: Case Studies on Strategy, Marketing, and Branding. Springer.

Pressroom.lexus.com. (2017). Lexus International 2016 Year In Review | Lexus. [online] Available at: [Accessed 5 Oct. 2017].

Verbeke, A., 2013. International business strategy. Cambridge University Press.

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