April 23rd 2016. BEIJING: “Toyota Motor Corp. (TM) is considering whether to lau
ID: 453791 • Letter: A
Question
April 23rd 2016. BEIJING: “Toyota Motor Corp. (TM) is considering whether to launch a new, small, low-priced car in China, Toyota Motor (China) Investment Co. President Masahiro Kato said Toyota hopes to introduce such an entry-level car within five years and the model could be developed specifically for the Chinese market.” What would be the top 4 information about the Chinese market you would want to know before launching this project? Should GM or Ford also launch their own version in China? List one argument in favor of such launch and one against. Some (including yours truly) are predicting a real estate bubble burst in China in the near future. Should Toyota wait and see? List one argument in favor of such launch and one against.
Explanation / Answer
Top 4 information about the Chinese market are as follows:
1. Size of the target market in China. It establishes the demand.
2. Preferences and societal acceptance shown by the target market with respect to the small and low priced cars
3. Information about the existing Cars and manufacturers who can compete with the small car launched by the mentioned company
4. Business outlook in near future in China
One argument in favor of the launch:
Yes, these companies should launch as target market of small sized car is very big in China. Economy of scale will help in reducing costs.
One argument against the launch:
No, a small size car may not be accepted by the society as it reduces the status symbol. Also, consumers can shift to the bikes in the same budget instead of buying a small car.
One argument in favor of such launch w.r.t. the bubble burst:
Yes, the Company should launch as the target market will not be affected from the real estate bubble. Even if, Bubble is burst, more people will move towards small sized car due to lower price.
One argument that is against the launch w.r.t. the bubble burst:
Bubble burst can bring in recessionary impact on the Chinese economy. It can cause uncertainty in the business environment. Thus, it will be wise for the company to wait and see.
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