Imagine the trouble that Toyota, a Japanese automaker, has faced in the last year. In March 2011, an earthquake hit off the coast of Japan resulting in very powerful tsunami waves. As if this wasn’t enough, Thailand has experienced an excessive amount of rain during its monsoon season.
These occurrences have affected Toyota, but in different ways. For example, the natural disasters affected Toyota’s production chain. Factories used by Toyota were damaged by both natural occurrences. Parts produced at these plants could no longer be fabricated here. This interruption in the production of parts interfered with Toyota’s distribution plans. The rising value of the yen has also caused problems because the production of these cars is more costly. Thus, Toyota needs to look at low-cost production options in other countries. If production costs rise, this forces Toyota to raise their prices when they bring their products into foreign countries, such as the United States. With this rise in cost, Toyota runs the risk of losing market shares due to unhappy consumers. An option that Toyota could explore is opening a factory in Brazil. With a growing automotive market, Brazil seems like an ideal place for Toyota to resume production.