Discussion Question:

Read the following article $($If the link doesn't work, please refer to the file under introduction above$).$ In addition to producing automobiles, Toyota does business in other fields too. List three of them. Of the three, which one do you think make more business sense based on strategic assets theory? Explain why.

Toyota couldn't car less

The auto giant has diversified into some surprising areas.

Looking for the biggest Toyota on the market? Take a trip to the Toyota factory in Kasugai, a city of $300,000$ people west of Tokyo. The models on the assembly line don't amount to much in terms of acceleration or horsepower, but are they ever roomy $-$ as in multiple bedrooms, a living room, kitchen, bath and patio.

The Kasugai plant is one of three Toyota factories in Japan that make prefabricated houses. Just like Toyota's cars, these come with foreignsounding names and plenty of options, such as solar roof panels and keyless entry.

For those with a Corolla$-$size budget, the top$-$selling, $1300$ square feet $(121$ square metres$)$ Smart Stage costs about $US$175,000($$$235,000),$ excluding land. For the Camry set, there's the $1800$ sq ft Espacio Mezzo, with three bedrooms and a garage, selling for about $US$225,000,$ though add$-$ons can take buyers into Lexus territory, with one big spender paying out $US$860,000$ for a super$-$sized version.

As Detroit's car makers have shed virtually all of their non$-$core assets, the world's most successful car company is heading in the opposite direction.

Toyota controls dozens of businesses that have virtually nothing to do with auto$-$making, ranging in size from resort developer Nagasaki Sunset Marina $(77$ per cent owned by Toyota$),$ with just five employees, to Toyota Financial Services Corp, a wholly$-$owned subsidiary with $8000$ workers. Revenues for Toyota's non$-$auto businesses jumped $15\mathrm{.}5$ per cent to $ US$10.3$ billion in the year through to March, and are up $50$ per cent since $2003.$ While last year's total still represents less than $6$ per cent of Toyota's overall sales, if floated separately, the company's sideline businesses would rank $192$nd among companies in the S&P $500$ index.

Houses are just the beginning. The car maker owns $100$ per cent of Delphys Inc, an advertiser with revenues of $US$66$o million; Toyota Amenity, a wholly$-$owned subsidiary that provides consulting services for hotels, wedding halls, and restaurants; Good Life Design, a $51$ per cent$-$owned company, offers

support services to medical institutions; and should its employees go hungry, Toyota could turn to Toyota Bio Indonesia, a grower and processor of sweet potatoes. As its name suggests, $70$ per cent$-$owned, Tokyo$-$based, Toyota Roof Garden, designs and sells greenery for rooftops using peat from China.

Many wonder what Toyota is doing in housing, roof gardens, and advertising. Kurt Sanger, an analyst at Macquarie Securities, says Toyota's wide$-$ranging interests mean it will have ample padding if its plans for global car domination fall short. $"$If things got really bad, they've got lots of things they could sell," he says.