Assignment Cover Sheet Subject Code

Assignment Cover Sheet
Subject Code: FIN 928 Subject Name: Multinational Financial Management Submission Type: Case Study Assignment Title: Toyota’s European Operating Exposure Student Name: Meenakshi Prabjot Singh and Aizhan AshimStudent Number: 5968884 and 5274692 Student Phone/Mobile No. 0526244630, 0568379708 Student Email: [email protected], [email protected] 
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Case study 2
Toyota’s European Operating Exposure

Prepared By
Meenakshi Prabjot Singh
Aizhan AshimWhy do you think Toyota waited so long to move much of its manufacturing for European sale to Europe?
Answer: – The main source of the proceeding with the misfortunes suffered was the falling value of the Euro against the Japanese Yen then suddenly the cost increases when it calculates in Euros. Toyota had absorbed most of the exchange rate changes and suffer from low margin if they preserve its price competitiveness in the European market.
Toyota waited so long because the rate of euro is fallen, and it directly effects the Toyota Motor Europe in which they face loss of 9 billion Yen. After that they announce all over that they would not generate profit for the next two tears only due to weakness of Euro. However, they decide to manufacture Yaris in the European market and they introduce their Yaris car which is very successful to sale and it is specially design for the European market. Moreover, it is the best decision to manufacture Yaris car in the Japan. Furthermore, the success of the Yaris car explains that why Toyota waited so long.

If the British pound were join to European monetary union, would the problem be resolved? How, likely do you know think this is?
Answer: – The British pound is in rise against the Euro which is the same situation of yen compared to euro. Toyota has 25% European market sale to expand their ability and capabilities. If British pound join the European monetary union will not the problem because as the Euro has fallen against Japanese Yen and the British pound. If joining the European monetary union against pound or euro, then it will reduce their deviations not the Euro and Yen.

According to my point of view, British pound will not join the European monetary union due to the non- stable euro currency. If the British pound will join the Euro, then it is a state of dependence which is not accepted by British pound.

3.If you were Mr. Shuhei, how would you categorize your problems and solutions? What was a short term and What was a long-term problem?
Answer: – The main problem for Toyota was Exchange rate and due to this the Toyota suffered from billion of loss. On the other hand, the British pound was not join the European monetary union because of weakness of Euro. After that, the short-term problem was the fallen in value of the Yen and British pound and the long-term problem was that the North America sales were supported full but in Europe there is no support which cause the loss in billions. The most important is the solution which is to continue the absorbing the Yen costs until the market stabilizes and it starts moving manufacturing to European market to European countries which are the part of European monetary Union.

What measures would you recommend that Toyota Europe take to resolve the continuing operating losses?
Answer: – There are some factors which would recommend to Toyota Europe to get solutions for the Continuing operating losses. First, they should manufacture, and assembly plants should be incorporated in the European countries. Second, the manufacturing of product done after customers taste and which result into more sale of the product in the market, so the company make sale at low cost but earns the high profit. Third, Toyota should hedge against the foreign exchange market by engaging in forward and futures contract. Last, Toyota should manufacture plant in concentrated area which they do not face any problem which result into serious losses.