Toyota Motor may be eating other automakers' lunch in North America and Europe, but it's having problems developing a successful strategy for emerging markets in Brazil, Russia, India and China.

Established automakers around the world are rushing to plant a flag in these markets of the future, but Toyota finds itself handicapped by the strategy that led it to success elsewhere - a focus on quality and safety. The problem is that Toyota has made market-leading quality a cornerstone of its corporate identity, a strategy that plays well in established markets with sophisticated buyers, but one that just doesn't resonate with cost-conscious customers in emerging markets.

As a result, Toyota's most successful models are priced out of reach for the majority of emerging market consumers, and the company admits it badly needs a new, cheap, no frills compact model to pump up sales volume in countries like India, where price is king.

A partnership with small-car specialist Daihatsu is an obvious solution, but Daihatsu wants to grow its own brand in overseas markets, independently of Toyota.

However Toyota solves this problem (and I wouldn't bet against them), the result should be the fuel for countless B-school case studies in the next five years.

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