International Business - Toyota
Introduction of Prius by the Toyota Group in Taiwan
The plan to introduce Toyota Prius in Taiwan is possible because there are several areas where Toyota can produce its cars in Taiwan. The Kuozui Motors Ltd is a Toyota affiliate company in Taiwan that has several plants that produces vehicles. Kuozui Motors Ltd has two plants namely Chung-Li Plant and Kuan-Yin Plant (Toyota, 2012). In the year 2012, Kuozui celebrated its production of two million units of Toyota in Taiwan. The high production was possible because the Toyota cars were attractive, and made the people happy. The high production led to the introduction of a new type of car called the Camry Hybrid. The car made its debut as the first hybrid car to be produced in Taiwan (Toyota, 2012). There is a large market for the Toyota cars in Taiwan because the Toyota cars make people happy.
The introduction of the Prius line will require a lot of space to accommodate the units produced. The production capacity of the Chung-Li Plant is 100,000 units per year. The production capacity at Kuan-Yin Plant is 65,000 units per year (Toyota, 2012). The two plants are already producing many units of other Toyota cars, and these cars have won the hearts of the citizens of Taiwan. Introducing Prius to these plants will not be possible because the plants do not have space to accommodate a new line.
The introduction of the Prius to Taiwan will need a new location. Guashin is a good location in which a new plant can be made. Guashin is in Taoyuan County just like the other two plants of Kuozui Motors Ltd. The two plants are Chung-Li Plant and Kuan-Yin Plant. Having a third plant in the same county will enable the new plant to stabilize faster because accessing the other plants will be easy. Opening a new location will cost a lot of money, but it is the best decision. The company will be able to return its investment with time.
The opening of a new location will create new jobs for people (MOEA, 2014). The plant will need about 1000 workers as it begins, but the number of employees will be increased later as the plant expands and produces more units. Job opportunities will be created from the onset because casual laborers will be needed to start laying out the foundation of the plant. Constructing a plant will require many employees as well as creating business opportunities for suppliers of sand, stone, and other materials required in construction.
After completing the construction of the plant, the company will need to hire workers that are skilled and experienced. The company will, therefore, create many employment opportunities for the citizens of Taiwan. The employment opportunities offer income to the citizens of Taiwan. Employment affects the economy in various ways. Some of these effects of employment include stimulation of economic growth, increase in consumer spending, and loosening the capital of the business (Lister, 2014).
The employed people will get increased income that will enable them to take care of their financial obligations. The workers will increase their spending patterns because they have extra income. The effect of this is that businesses will benefit from the increased expenditure of the consumers, and will be able to stay open and pay their suppliers (Lister, 2014). The country of Taiwan will benefit from this because money will be kept in circulation in the market. The local economy is made healthier, and many businesses will record success.
Economic growth will be stimulated because employment encourages people to spend their income. Unemployment makes people save their money and spend less (Lister, 2014). Unemployed people spend on basic needs only. Employment of workers by the Toyota plant in Taiwan will enable more money to be spent on consumable goods. Expenditure on goods and services by the consumers will enable the company to sell its products to the market. Increase in sales will lead to the development and introduction of more product lines. Consequently, the company will be able to hire more workers. The process is a cycle, and as long as all the parties are spending on each other the economy will grow.
Employees that have steady incomes are able to pay their debts, and improve themselves financially (Lister, 2014). The financial institutions are more willing to lend money to people who have stable jobs. The financial stability of the people and businesses in Taiwan will make the financial institutions more enthusiastic about lending out loans to people and businesses in Taiwan. The flow of capital will enable the employees at the Toyota plant to make big purchases such as cars and real estate. Such purchases help in the improvement of the economic conditions of the region and country. The Toyota plant will also grow in terms of sales and revenue. It will be able to access loan facilities from the financial institutions, and can expand its operations. Expansion will make the company hire more employees who will help in the promotion of the Prius. The market for Prius will also grow because people can afford to buy the car.
Companies do various kinds of research before entering certain markets. Toyota Company is doing the same research in order to compare the wages of its employees in Taiwan and Japan. In Taiwan, for instance, there have been calls for an increase in pay to employees. These calls mean that the pay has been deliberately small. In February, 2014, workers' alliances vowed to keep on with their push for an increase in their wages. (http://www.tradingeconomics.com/taiwan/wages-in-manufacturing)
There is a problem with enough human resources in Taiwan. The government is quenching this by employing foreign employees whose percentage stand at 4.7 % as at July, 2014. Toyota, should not, therefore, consider the fact of low levels of labor and that there are foreign workers. There are also rules and regulations that govern the compensation of the employees. The workers’ wages in Taiwan are small thus becoming an advantage to Toyota Company. Firms are striving to be as competitive as much as possible in Taiwan, and that is why Toyota should also take place. In 2013, the average Taiwanese monthly salary stood at NT$45,112 ($1,507) as compared to NT$45,514 in 1998. (http://www.tradingeconomics.com/taiwan/wages-in-manufacturing)
In the japan case, there have been average pay rise. The Toyota Motor raised its wage pay for the employees to 2,700 yen, about $26 that amounts to 0.8 % of the total monthly pay. The average pay is thus higher in Japan, the origin of the Toyota Company. This rise is due to the demands that the Toyota workers unions had demanded. The requirements were ¥4,000 per month, but out of which Toyota managed two-thirds. Basing on the above, Taiwan is much cheaper than Japan in terms of labor. (http://www.tradingeconomics.com/taiwan/wages-in-manufacturing)
In conclusion, Toyota Motors Company should consider setting up their base in Taiwan and not Japan. Taiwan is less costly, more competitive, and a lot of companies are moving there.
References
Toyota. Cumulative Toyota Production in Taiwan Tops 2 Million Mark. 2012. Retrieved from: http://www2.toyota.co.jp/en/news/12/05/0531.html
MOEA. Kuozui Motors: Leading the Automobile Market with Talented Employees and Solid Business Operations. 2014. Retrieved from: http://investtaiwan.nat.gov.tw/eng/show.jsp?ID=5187&MID=5
Lister Jonathan. How Does Hiring Additional Employees Affect the Economy. 2014. Retrieved from: http://smallbusiness.chron.com/hiring-additional-employees-affect-economy-31964.html
Trading Economics (2014). Taiwan Average Monthly Wages in Manufacturing. Retrieved from: http://www.tradingeconomics.com/taiwan/wages-in-manufacturing On 7th December, 2014.
