SOLUTION: SUNY Morrisville Toyota European Drive & European Consumers Case Study

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SOLUTION: SUNY Morrisville Toyota European Drive & European Consumers Case Study 1

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Surname 1

Student’s Name
Professor’s Name
Course
Date
Case Study on Toyota’s European Drive
Question 1
Why did the Europeans try to protect their auto industry from Japanese imports, and do
you think this was fair to European consumers?– you should discuss the pros and cons of
global, bilateral, and regional integration using the European market and Japanese autos
as an example.
Europeans explored protectionism because of various reasons; first, Japanese automobiles
were comparatively affordable, dynamic, and versatile. Usually, the global market allows
consumers to examine a wide range of products from different countries before making a choice
on the most preferred items. The European markets had permitted the accessibility of car imports
from Japan cheaper than the pricey European manufactured vehicles, such as Mercedes Benz and
BMW. The Japanese car manufacturing company, Toyota, had the upper hand because of its
affordability. Favorable government policies and a flourishing economy in Japan gave Toyota a
unique advantage over European car manufacturers. Low production costs associated with lowcost labor from the ever-expanding pool of talented engineers gave Toyota a competitive edge.

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Thus, Toyota can sell its cars at a significantly lower rate. European car manufacturers were
unable to fairly with Toyota imports.
Second, it was pivotal to secure jobs in the European continent. Allowing Toyota imports
to flood in the European market was suicidal to the people that worked in European car
manufacturing companies. Low sales would have translated into reduced profits, which would
have resulted in decreased production and loss of jobs. Protectionism ensured that Toyota
imports could not go beyond a specific quota across many countries within the European
community (Fajgelbaum et al. 45). The bilateral agreements between different countries in
Europe made them make similar restrictive policies that barred Toyota imports. The restrictions
allowed the European car manufacturers to strategize themselves as they took advantage of the
ready market. Toyota’s design-based production approach helped it manufacture many cars that
differed in model and aesthetic. The technique presented a threat to European car manufacturers
as consumers became increasingly interested in cars customized to meet their needs. European
buyers became inclined towards the uniqueness of the motor vehicles manufactured by Toyota.
On the contrary, the expensive European cars were not well received in Asian markets.
Consumers in the Japanese market preferred locally manufactured cars to European cars. Thus,
the European countries realized the imbalance in bilateral trade, which would have been more
injurious if they continued to give Toyota unlimited access to the European markets, whereas the
company did not have product plants that could have created job opportunities and payment of
taxes.
Third, the move was envisaged to enable European car manufacturers to be more
competitive, especially as the European community transformed into a common market. Daniels,
Radebaugh, and Sullivan noted that “the arrangement was set up to allow European car makers

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to become more competitive as the EC made the transition to the common market (261).” Post
Second World War, the Japanese car manufacturing industry was almost collapsing. However,
the Japanese government reached out to European countries to minimize the exportation of cars
to Japan to give the carmakers in japan grows and rebuild the auto industry. Thus, the restrictions
put on the Toyota Company are similar to those made after the end of the Second World War.
The growth of the Japanese automobile industry has pushed car manufacturers to scout
consumers outside the Asian market, which has ended up making the European market the most
attractive and lucrative. The European countries envisioned a situation where economic
integration will be the remedy to the ailing automobile ind…

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