Wednesday, May 11, 2011

Toyota quarterly profits drop but recovery expected

According to a BBC article, “Toyota Motors' profits plummeted by 77% in the last quarter because of disruption caused by March's earthquake. “ Reports say that profits fell to $315.5 million USD between January and March. The drop is caused due to a shortage of parts caused by the earthquake. They claim that by July production will start increasing but that it will not recover until the end of the year. Toyota Motors is currently having a shortage. Thought eh demand remains the same or probably even higher, the company is unable to supply the quantity demanded causing disequilibrium. During this time of the shortage Toyota will losing customers to competitors creating a substantial loss of profit for the company. But as well over the time of their shortage, demand will build up, as more and more consumer want to purchase a car from Toyota. This build up of demand will eventually benefit the company in the future when they are able to supply the quantity demanded. Over the next few months their production will pick up and the factory will start being able to supply more cars, witch eventually will put their market back in equilibrium and some of their profit will be made up by the excess demand during the shortage.
Santiago Z

1 comment:

  1. This goes to show how one unexpected event can affect a product, or a company, in a big way. In this example, the supply of the products got affected, however, other incidents can affect demand, or possibly other factors. In this instance, nothing could have been anticipated or done to prevent this negative impact in supply from occurring, but in some other instances, companies need to be careful about what they do, because the most unexpected thing could hugely jeopardize their products or future.