Analysis of and Evaluation of Business Strategies - Essay Example

?Analysis of and Evaluation of Business Strategies Table of Contents Task (a Diversification Strategy of Toyota 3 Task (b) Market Development Strategy of Toyota 7 Task (c): SWOT/TOWS Matrix of Toyota 13 References 15 Task (a): Diversification Strategy of Toyota Toyota is regarded as one of the biggest vehicle manufacturers in Japan that covers greater than 40% of market share. This particular renowned business organisation holds the topmost ranking in attaining customer satisfaction by delivering quality products and ultimately has built an excellent business reputation all over the world (Toyota, n.d.). The significant visions of Toyota include delighting its worldwide customers through delivering quality as well as innovative products, transforming into a core company while performing global business operations and becoming the most respected as well as admired business organisation in the world (Toyota, n.d.). The aspect of employing diversification strategy is viewed as one of the effective as well as proficient business tactics, which assists the organisations to grow considerably in future. The word ‘diversification’ is typically linked with a specific transformation especially in the features relating with the aspect of product line or the business market of a business organisation. The major objective of implementing the facet of diversification strategy is to introduce new product in the business market along with attaining significant market share (Ansoff, n.d.). As a matter of fact, Toyota is always recognised as an innovative business organisation especially in the automobile industry. The aspect of innovation has been observed in the production system of the organisation along with the cost factor while taking the quality of its valuable products into greater heights. In this context, the main strategic reasons of Toyota in order to choose the aspect of diversification strategy include effectively complying with the business market demands and maintaining the technology in relation to environment friendly aspect which is constantly becoming a core principle of its several products. Furthermore, the other significant reasons behind Toyota pursuing the idea of diversification strategy broadly include viewing a better opportunity for synergy, increased rate of market competition in automobile industry and ultimately expanding its production facilities around the business world (Scribd Inc., 2012). Additionally, the different reasons behind Toyota pursuing the diversification strategy across its broad business operating regions can greatly be understood by focusing upon the targets that are made individually towards its the employees, business partners, shareholders, local community or global society and ultimately the customers. From the viewpoint of the staff, Toyota mainly prioritises diversification strategy in order to generate safer as well as healthy working situation that would ultimately assist the organisation to make successful and effective growth in future. In terms of the business partners, Toyota strives for executing diversification strategy with the intention of establishing along with developing advantageous business relationship especially with the distributors or dealers and the suppliers. From the outlook of the shareholders, Toyota believes that the adequate execution of diversification strategy might ensure sustainable growth along with making strong and stable base for making business. With regard to the global society and local communities, Toyota realises the necessity of diversification strategy in order to respect the business culture along with the customs belonging to every country and contributing towards communal development. Moreover, with the intention of minimising congestion along with traffic accidents, the organisation i.e. Toyota deeply focuses upon the execution of diversification strategies in relation to the global society or local community. Finally, from the perspective of the ultimate customers, Toyota seeks for delivering reliable and safe vehicles as reputable brands, particularly at a cheaper price that can be afforded by its large base of customers (Toyota Motor Corporation, 2011). Thus, it can be stated that due to the above discussed strategic reasons that are based upon the different key stakeholders of the organisation, Toyota has chosen to pursue the aspect of diversification strategy across a broad range of its business areas. On the basis of the above discussed reasons, it has been recognised that the diversification strategy of Toyota can be related with the motive of developing its business market. In this context, the diversification or the market development tactic of Toyota is normally based upon the idea of “Zero-nize” which depicts that the brands or the products belonging to Toyota are developed on the basis of safe as well as eco-friendly design for the purpose of eradicating accident ratio. The application of this sort of strategy can be observed in few of its brands or products that include Toyota Prius 2nd Generation, Highlander HV and Lexus RX400h that possess restful and powerful driving experience along with the factor of eco-friendly drive. Additionally, Toyota also executed consolidation strategy by performing joint venture especially with GM Motors (USA) in order to enlarge its production amenities throughout the business world along with declining the costs towards the export of cars in the business market of the United States directly from the market of Japan (Scribd Inc., 2012). Besides, along with the execution of diversification as well as consolidation theory, Toyota also initiates innovative and cost-effective business tactics concerning with the imperative fact of increased market competition along with the mounting growth of the automobile industry at a faster rate. In this context, one of the products of the organisation i.e. the launch of Prius in the year 1997 on the basis of Toyota’s cost-effective strategy was regarded as one of the tactical moves that the organisation ever performed which addressed the message of environment friendly along with ensuring sustainability towards the business world. With the introduction of this particular brand of Prius, Toyota largely captured the automobile market of China by a significant level. The introduction of Prius was considered to be the first ever brand that was produced outside of Japan (Scribd Inc., 2012). On the basis of the above mentioned strategic reasons, Toyota focussed largely upon the structure of its production system by maintaining superior quality along with continuous enhancement of the products. In relation to diversification strategy, Toyota greatly emphasises upon the foremost technological conceptions of “Just-in-time” (JIT) as well as “Jidoka”. The notion of JIT technology essentially represents that each procedure in the production process is formed only when needed by the next process in a continuous flow. In contrast, the idea of “Jidoka” depicts that when a difficulty arises in the production system; the necessary equipments stop functioning instantly and thus prevent the production of defective products. These significant conceptions ultimately contribute largely towards the advancement of the production system of Toyota by a large extent (Slideshare Inc., 2012). In relation to the diversification strategy of Toyota, the necessary facets of the diversification strategy that Toyota initiated generally include protecting the support of the higher management officials of the entire organisation and founding real objectives through which the organisation can attain its expected business goals. Furthermore, the other essential characteristics of the diversification strategy of Toyota include committing towards generating training as well as educational programs with the intention of obtaining latest skills along with gaining new understanding and creating a well-organised and a well competent diversity management structure in order to assist the organisation to reach its target or vision. In this context, the organisation i.e. Toyota quite enthusiastically concentrated upon its significant strategy of diversification and recognised to be a leading organisation to execute this particular business tactic in the automobile industry. The organisation greatly believes that the execution of the diversification policy would provide various dynamic opportunities to it that include enhancing the business of the organisation, generating new business partnerships, gaining respect of all its business communities and finally actively participating in this competitive worldwide financial market. These particular opportunities would ultimately support the organisation to attain competitive position in future by a considerable extent (Ward, 2002). Task (b) Market Development Strategy of Toyota The notion of new market development strategy typically involves the sales performance of the existing services as well as products especially in the new business market. This particular new market development tactic is generally used when the existing business markets are recognised to be stagnant in respect of growth and quite difficult to attain significant market share. This is due to the fact of increasing level of business market competition and the presence of strong as well as dominant market competitors (Boone & Kurtz, 2011). Thus, collectively, it can be stated that the idea of new market development tactic assists the business organisations to enter into new business markets keeping in focus the sales of their existing brands or products by a significant level. It has been recognised that Toyota became quite successful in various countries throughout the world where the organisation performed its business operations. This is due to the reason of the brand name that Toyota possesses along with the adoption of various significant new market development tactics that were initiated by Toyota. In this context, the crucial objectives of Toyota in relation to new market development strategy generally include gaining continuous market growth, increased market share along with attaining competitive position as well as boosting the profitability of the organisation. In order to fulfil these significant business goals, Toyota has largely focussed upon initiating certain crucial new market development strategies. Initially, the organisation has delivered numerous deliberate efforts towards advancing as well as progressing certain important operational areas that include technology, marketing as well as production, personal training along with research and development. The business organisation i.e. Toyota dynamically believes that its technological related factor is considered to be one of the chief market drivers for making considerable growth in its different business operating regions. Along with the technological aspect, the organisation has also emphasised upon environmental factors by enhancing its exclusive hybrid technology that it executes while producing different valuable products (Promprasit & Jumreorn, 2009). Additionally, the other major new market development strategy of Toyota is regarding concentrating upon conducting its business operations locally as well as regionally. In order to remain competitive in this current situation of business market, the organisation deeply considers providing utmost priority towards performing its efficient business operations on a local basis. In this regard, the organisation also realises that certain important aspects which include local marketing along with sales and local production of products are the indispensable components for sustainable growth in the competitive business market. Toyota, in lieu to this particular conception, locally designs as well as produces its brands or products and sells to the local business market. Thus, the prioritisation upon locally design, manufacture and sale of different brands of the organisation have ultimately made Toyota to get much closer towards the preferences as well as the likings of the customers in its each specific business operating region. Furthermore, the organisation has focussed upon the aspect of localisation due to the reason of balancing the risks that are generated from exchange rates, trade restrictions and tariffs that are imposed by the local government. In order to maintain effective leadership especially in the area of research and development in the automobile industry, the organisation also made deliberate efforts in the field of research and development, particularly in environmental friendly technologies. In this context, Toyota has largely focussed upon the enhancement of the hybrid technology which has proven to be quite beneficial for the organisation. The other noteworthy new market development strategy of Toyota is regarding the production of distinguished brands or products in order to acquire maximum business opportunities in all of its business operating regions by forming the idea of “Global Best, Local Best” (Promprasit & Jumreorn, 2009). This particular strategy in relation to new market development generally involves the local production, engineering and distribution of the products that comply with the regional demand. With the implementation of the above discussed strategies, Toyota has gained immense importance as well as has become quite successful and as a result, has remained in a leading position in the automobile industry in its business operating regions. For instance, the organisation has maintained continuous growth in Europe and has established a leading position in the progressing Asian business market. Moreover, Toyota has experienced autonomous growth especially in North America and ultimately attained significant competitive position by a considerable extent (Promprasit & Jumreorn, 2009). The business organisation i.e. Toyota became quite successful by making a dynamic move towards implementing the strategy of new market development. In this regard, the major reasons for the organisation to attain huge success by utilising the new market development business tactic include recognising the business growth opportunities and developing business market tactics in order to capture new business markets. Initially, Toyota attained greater market penetration by adequately marketing its fuel-efficient cars in the financial market that ultimately facilitated the organisation to attain considerable market share in contrast with other competitors belonging to automotive industry. From the perspective of recognising business growth opportunities, Toyota spent enormous time especially upon the feature of product advancement in order to tap the new business markets (Promprasit & Jumreorn, 2009). It has been recognised that Toyota experienced a difficult time while implementing its different significant business tactics or action plans particularly in China. The business organisation possesses several joint ventures in the business market of China and coped up with the difficult situation by a certain extent. In lieu of the business performance of Toyota in China, the organisation along with its regional joint-venture business partners delivered approximately 293,200 vehicles in China in the earlier months of this year i.e. 2012 making an increase of 14.3 percent as compared with the preceding year i.e. 2011. Furthermore, the organisation also declared that it is on track to sell 1 million cars particularly in China this year (Inautonews, 2011). The business performance of Toyota in Turkey reveals that the organisation in Turkey, named Toyota Turkey is regarded as one of the leading exporters and manufacturers of the well-recognised brands that include the models of Verso and Auris among others. It has been observed that Toyota Turkey has engaged 3,000 working people and represents a total investment of €1.2 billion. The organisation has planned its year end production target in 2012 to deliver approximately 95,000 vehicles in Turkey. In this context, Toyota Turkey broadly aims to increase its production along with sales in the forthcoming years because the organisation was not able to execute its business functions due to the occurrence of certain problems regarding the issue of its auto spare parts (Toyota Motor Manufacturing Turkey, 2011). Toyota is recognised as “Expanding Horizon” in Brazil and the organisation engages approximately 3,800 working people in its different business units in Brazil. In the year 2010, the organisation declared a crucial investment of US$ 600 million and also announced that it would start to construct a new plant where the organisation would produce compact as well as superior quality of products to be launched in the second half of 2012 (Toyota, n.d.). From the business performances of Toyota in the countries of South East Asia that include Philippines and Thailand among others have been observed. Particularly, Toyota Motor Philippines is not a big organisation that prevails in South East Asia. This is due to the fact that the car market in Philippines business market is quite small; along with it the organisation in Philippines was faced with a major difficulty of labour dispute. By taking into concern all these valuable facts, it can be stated that the organisation shows little interest in contributing major investment in Philippines. In this context, apart from the business performance in Philippines, the organisation sold more than 400,000 units in the year 2006 in Thailand and ultimately raised huge earnings as compared with the previous years (Toyota Motor Thailand Co. Ltd., 2006). Thus, it can be stated that the organisation has been one of the foremost leaders in the automobile industry in Thailand and still continues to maintain its dominant market position in Thailand. Task (c): SWOT/TOWS Matrix of Toyota Strengths Strong execution of different superior new market development strategies Continuous innovation of products Superior monetary or financial strength Weaknesses Narrow profit margins in car market due to substantial movement in exchange rates Huge cost relating to training as well as retaining labours Limited production facility Opportunities Expansion into new business markets Growing automobile industry due to improved technology Offering widespread fuel-efficient cars SO- Strategies Investment towards research and development Developing more strategic alliances or mergers with different business organisations Utilisation of the market development strategies in new business market WO- Strategies Mounting production capacity Introduction of latest as well as innovative technologies Offering advanced and enhanced quality of training Threats Increased competition in the business market Considerable shifts in the exchange rates Mounting oil prices ST- Strategies Establishing continuous new or existing product innovation to cope up with huge market competition Developing the financial strength to mitigate growing oil prices WT- Strategies Initiating more valuable strategic partnerships or mergers in order to mitigate the narrow profit margin along with considerable shifts in the exchange rates References Ansoff, H. I., No Date. Product-Market Alternatives. Strategies For Diversification. [Online] Available at: http://foswiki.org/pub/Sandbox/SimiWiki/Strategies_for_diversification.pdf [Accessed May 15, 2012]. Boone, L. E. & Kurtz, D. L., 2011. Contemporary Marketing. Cengage Learning. Inautonews, 2011. Toyota: China Sales Up 68% in April. Toyota. [Online] Available at: http://www.inautonews.com/toyota-china-sales-up-68-in-april [Accessed May 17, 2012]. Promprasit, S. & Jumreorn, N., 2009. Toyota’s Strategies. Business Coordination Across Borders Within Toyota: A Case Study Focusing The Coordination Between Japan and Thailand. [Online] Available at: http://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&ved=0CG8QFjAG&url=http%3A%2F%2Fmdh.diva-portal.org%2Fsmash%2Fget%2Fdiva2%3A224180%2FFULLTEXT01&ei=v6CzT8eyKs7rrQf7q8nwAw&usg=AFQjCNF5lL8Izc4Jje5AoGcwOMwDpv1TJA&sig2=VqJXpitoOHzUzH6qW7XsgA [Accessed May 16, 2012]. Scribd Inc., 2012. Product Development and Diversification Strategy. 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