Case Company: Toyota

"Toyota Australia is a subsidiary of Toyota Motor Corporation, which is based in Japan. It markets Toyota products and manages motorsport, advertising and business operations for Toyota in Australia. It is also responsible for Lexus vehicles in Australia."[1]

Background to business scenario:

"Toyota's most affordable hybrid RAV4 is the best new vehicle available on the Australian market, according to judges of the prestigious Drive Car of the Year Awards.

The hybrid RAV4 - also named the best mid-size SUV - won the Drive award ahead of 19 other category winners, three of which were also Toyota vehicles.

It is the third headline media award for Toyota's all-new RAV4 in recent weeks.

A second Toyota hybrid, a top-of-the-line Camry SL, was named best medium car, while Toyota's reborn GR Supra sports car and the "king off the road" turbo-diesel LandCruiser 200 Series VX topped the judging in their competitive sets.

Drive editor Trent Nikolic said Toyota's RAV4 had moved the game forward significantly in a segment that attracted the biggest number of new-vehicle buyers.

"Medium SUVs show no signs of losing popularity and the RAV4 is the best of the current crop," Mr Nikolic said.

"Always a strong performer, the redesign, and especially the hybrid drivetrain, put the RAV4 right at the pointy end of the field," he said.

Toyota Australia President and CEO Matthew Callachor said Toyota was proud to receive the Drive awards because of the focus on assessing cars with consumers in mind.

"As our first hybrid SUV in Australia, we have been thrilled to see how the all-new RAV4 has been received, as a popular choice for customers delivering a renewed sense of style, performance, refinement, advanced safety features and driving dynamics," Mr Callachor said.

"We are proud that the Toyota RAV4 Hybrid has now also received such critical acclaim from Drive's motoring experts."[2]

You, as a management accountant consultant have been engaged by the Manager of Fleet Pricing, Toyota Australia to review the current pricing strategy of three of their vehicles from the RAV4 Hybrid range:

1.2019 Toyota RAV4 GX 2WD HYBRID

2.2019 Toyota RAV4 GXL AWD HYBRID

3.2019 Toyota RAV4 CRUISER 2WD HYBRID

As a minimum Toyota sets a profit margin of 20 per cent on all products.

Required:

Report for the Manager of Fleet Pricing, Toyota Australia to outline your pricing analysis and recommendations. The report should include:

An analysis of the target costs of the three RAV4' being reviewed, given the target profit margin and using the current pricing information you can obtain. Please include links to your sources as an appendix to your report.

Provide recommendations regarding how to achieve and/or maintain the target profit margins. Consider supply chain opportunities to improve costs and provide industry related research to support your recommendations.

Explain how value chain analysis could help Toyota Australia to identify value-added and non-value-added activities (provide examples) to find opportunities to improve costs.

Provide recommendations regarding the current prices of each product comparing cost-based and market-based pricing strategies and providing at least one advantage and one disadvantage of each pricing method. Please include your calculations and research supporting your market-based strategies as an appendix to your report.

Recommend a final price for each product, whether it should be kept the same, increase or decrease to the Manager of Fleet Pricing.

Complete the assignment coversheet and attach it to your submission.

Use the additional materials provided and your own research to complete the required sections of the report.

Where appropriate use Harvard style referencing.

[1] https://en.wikipedia.org/wiki/Toyota_Australia

[2] https://www.torquetoyota.com.au/2019/11/22/top-award-affordable-hybrid-rav4-suv/