Toyota Australia in Peril
(5 pages of text)
When General Motors Holden announces its plan to exit from car manufacturing in Australia, Toyota faces a decision dilemma amid losses and adverse business and economic conditions. Should it continue as the country’s sole vehicle manufacturer and wait for business and economic scenarios to change favourably, or should it exit the market? Toyota’s position is assessed by applying microeconomics concepts, including the optimal scale of operation, minimum efficient scale of operation, economies of scale, short-run and long-run cost analyses, concentration ratio and fragmented markets.
The case is designed for postgraduate managerial economics or microeconomics courses.
- To illustrate the concepts of economies of scale, optimal scale of operation, minimum efficient scale of operation, envelope curve and their importance in a company’s decisions to enter or exit a market.
- To demonstrate the differences between short-run and long-run cost and demand conditions and their impact on managerial decisions.
Australia, Large, 2013
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