Question

Critically analyse reasons that may cause Toyota to consider an international supplier over a local supplier

Answer 1

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Following are the reasons why Toyota may prefer an international supplier over a domestic supplier

• Cost: An international supplier may be more cost-efficient due to access to cheaper man-power or manufacturing technology and raw-materials. For example, China is cost-efficient in mass manufacturing whereas India is cost-efficient in labor-intensive operations due to the availability of cheap manpower. China also has large reserves of precious metals which make it cheaper to manufacture electronic components in China
• Quality: An international supplier may have superior technology which could give Toyota an edge over competitors
• International markets: Rather than manufacturing in the domestic market and exporting to the international market, Toyota may set up dedicated plants in international markets and procure from international suppliers in the vicinity to serve there locally. For example, Toyota has a plant in India where they manufacture passenger vehicles the India market using supplies from Indian vendors