Toyota Operations Exposure Assignment Example | Topics and Well Written Essays - 4250 words

Toyota Operations Exposure - Assignment Example This paper is aimed at the provision of an in-depth analysis of the impact of the exchange rate movements in the manufacturing and sales of Toyota in Europe. The paper begins by providing the reasoning behind a long time it took for Toyota to shift manufacturing of Europe sales operations to Europe, followed by an analysis of the impact of British Pound joining the European Monetary on Toyota, short-term and long-term problems that faced Toyota, and solutions to the determined problems provided. The reasons for the Toyota taking so long in moving manufacturing operations to Europe sales to Europe include the capital intensiveness and complexity of manufacturing production. The need for Toyota enjoying economies of scale and scope in the production of vehicles destined for global locations and avoiding the capital requirements for the development of manufacturing locations in Europe. The possibility of increasing production in Japan at a low cost per unit would have been the other reason behind the long period taken by Toyota to set up manufacturing plants and capacities in Europe until 2004. The lack of manufacturing plants in Europe resulted in losses to Toyota in Europe sales owing to an operational exposure that arose from the euro losing value compared to the Japanese Yen (Khan & Jain, 2007, 35). The reasons for Toyota continuing to incur losses through not setting up manufacturing plants in Europe include the need to maintain competitiveness in the Europe market (Kandi l, 2000, 4). Another reason that could have made Toyota take time in making the decision to set up manufacturing plants in Europe for Europe sales is the large size of the company with massive production capabilities in Japan. The large amounts of  production in Japan allowed for efficiency, greater employee understanding, high technology and smooth operations, factors that must be developed in new manufacturing plants affecting the ability of the company to deliver quality and at a lower cost.