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Source Problem The source problem is the unpredictable condition of the minicar segment in Europe. The minicar segment in Europe, although one of the fastest growing segments in Europe, there are different challenges that minicar manufacturers face. The minicar segment is affected by different business environment factors such as the economy, government regulations and policies as well as the demands and requirements of the consumers. Although there is increasing support for minicars in Europe, sales remain inconsistent. 2. Secondary Problems Short Term Problems
The shortterm problems that TPCA faces in launching Aygo in the European market revolve around manufacturing considerations. 2.1 One problem is the changing regulations and government policies, which will have direct and indirect impacts on the operation and sales of minicars. For example, there is growing concern about the impacts of carbon dioxide to the environment. In order to alleviate the negative effects of carbon dioxide to the environment many countries and policy makers are imposing policies and regulations that seek to reduce CO2. 2.2 Cultural problems are seen as shortterm problems. The difficulty of integrating Toyota’s Production System (TPS) in TPCA arises from differences in organizational as well as country culture. Integrating TPS in TPCA proved to be challenging, because of cultural differences between TPCA which is located in Czech Republic, Peugeot Citroen (PSA) which is in France and Toyota which is headquartered in Japan. 2.3 Another shortterm problem is that TPCA must embrace Toyota’s business philosophy and at the same time consider local demands and employment practices. This may cause conflicts in how business will be done in TPCA. An example of this conflict was experienced by TPCA concerning its workers. Implementing Toyota’s normal shift system of 4day workweek with 10 hours each resulted in high absenteeism. Long Term Problems 2.4 The company needs to deal with marketing challenges. Toyota Aygo is similar with two other Toyota cars that are currently in production. Also selling to younger clients is seen as a challenge, and Toyota has no strong background in selling to younger clients in Europe. 2.5
Another longterm problem is the changing customer demands and requirements. Toyota Aygo is focused towards generation Y that has unique characteristics compared to other market segments. Selling to Asegment consumers will be challenging for Toyota as the company has no recent history of selling cars in the Asegment nor a loyal customer base in that segment. 3. Analysis Table 1