Challenges in International Management - Case Study Example

Challenges in international management Name: Number: Course: Lecturer: Date: Toyota Motor Corporation Overview Toyota Motor Corporation is a multinational corporation founded in 1937 by Kiichiro Toyoda, a subsidiary of the Toyoda industries belonging to his father. Its first production was in 1936. After it was fully established in 1937, its name changed to Toyota; a symbol of home and ease in pronouncing it. Its first establishment was in 1938 when it opened a factory and was affected by the World War II to an extent of not going on with their production (Assenmacher, 2012). Toyota Motor sales were established in 1950 beginning with BX trucks, BJ Toyota Jeep and SG trucks. Toyopet chain was further established in 1956; Toyopet SA being its first one to be sold bearing the name. It stopped n 1960s. Afterwards, Toyota opened a new Research and development center at the same time; they build another station in Thailand. They had achieved a 10 millionth model and they were celebrating it on this period (Daniells, 1993). Both the Toyota Motor Company and Toyota Motor Sales merged together to form one company with common interest and was named Toyota Corporation. Toyota entered a joint venture with New United motor Manufacturing Incorporated. Being its deal, Toyota was lucky to have a manufacturing plant at California and Fremont. Lexus was launched in 1989 as part of their luxury products. The whole of 1990s they were working on the luxury models (Gooderham & Nordhaug, 2003).Toyota Motor Corporation is currently regarded among the largest corporations that develop hybrid vehicles meant for commercial market. Apart from the motor manufacturing, Toyota Motor Corporation has been seen in the aerospace and robotic developments which are a technological cutting edge. They have also involved themselves in educational philanthropy activities such a Toyota Technological institute which was established in 1981 (Sinkovics & Ghauri, 2009). Toyota Motor Corporation being Multinational Corporation has led by missions and visions which has made it to emerge among the competitive multinational corporations in the world market. The mission statement of Toyota Motor Corporation is to attract and attain customers with high-valued products and services and the most satisfying ownership experience of the world." There mission is aimed at satisfying the world market and not small markets as others may operate. Although the success of a business enterprise usually start from a step, Toyota Motor Corporation has move forward and is now focused at the entire market of the world ( Scullion, 2006). The reason is that most of its competitors are Multinational therefore it will not be logic for them to focus on the local market. Vision on the other hand has made Toyota Motor Corporation achieve its success. Its vision therefore was set as “To be the most successful and respected car company of the world”. Since it has specialized in vehicle production, it will be easy for them to achieve this since they have enough time and specified resources with skilled personnel who can push Toyota Motor Corporation to higher achievements .The success of Toyota Motor Corporation has been monitored through a number of goals out of which they expect to meet. The goals at Toyota Motor Corporation act as timed targets. The company is aiming at achieving 15% market share, making it globe’s largest auto company. Previously, the company has been working on a smaller percentage and is determined to increase from 8 % - 15 % in the international market (Root & Visudtibhan, 1992). Internationalization of Toyota Motor Corporation The international business has been of focus for the last three decades, this is the time that Toyota Motor Corporation gained competitive advantage in the market due to its unique products. What was later valued in the international business was exportation, technology and direct investment in the transnational corporation. Various theories have been established to explain the international business though have not attained much popularity. The first theory was the international product cycle. Toyota Motor Corporation has been affected with widespread competition across the globe. Other factors that have challenged this corporation are the uncertainties of economics and the rapid change in market needs. For instance, technology has been witnessed to change quite often, this will automatically influence business operations from the usual ways to its current demands. The relations that existed between suppliers have been tempered by functions that have been outsourced with an organization thus complicating the entire process. The distance that suppliers and vendors are located is not a big issue but the challenges that they add to the global market (Root & Visudtibhan, 1992). Internationalization As a multinational corporation, the Toyota Motor Corporation has been affected by two broad factors, and they include; failures in the market and the geographical distributions. Focusing on Toyota Motor Corporation, its personnel are highly skilled which may hardly be identified in other regions. In a country that Toyota Motor Corporation has manifested itself in it finds this corporation to be quite unique in terms of their operations. This has made Toyota Motor Corporation to emerge superior in many countries. The Multinational Corporation has decided that they will only exploit their own assets by only transferring them to other countries for their own use in their own newly and existing firms other that selling them to foreign enterprises based abroad. In so doing, their motherland in which this skills and asset were first established have suffered a big blow in that countries that received the assets and skills have benefited a great deal. For instance, at first, the manufacturers of Toyota was those from Thailand and those other countries where Toyota landed first, it is until recently when they realized that there are other skilled personnel outside there who can perform the same job, this countries have suffered unemployment instead of employing its people new ones are brought in (Vance & Paik, 2010). In discussing about multinational Corporations globally, they are believed to have scattered all over the world. It is also indicated that it contribute about 50% of the total world’s industrial output which is calculated to be 65% of the world trade (McFarlin & Sweeney, 2010). A common currency has been brought in that can be used by all countries across the world. Investors have been forced to move all over looking for best investment with the best returns. This trend has greatly affected the economy as borders that were established many years ago do not apply to business. In this case therefore, there is a small group of countries who will be benefiting from this process. For instance, the beneficiaries of Toyota Motor Corporation are only but a few countries such as Japan, USA and some other few countries. This is determined by the participation in making the Corporation successful. The ration of contribution of every country will determine the benefits that hey will accrue from the returns. Developed countries are therefore the most beneficiaries of Toyota Motor Corporation as all the stakeholders are situated in their countries (Luthans & Doh, 2009). On the other hand terrorism and wars has affected the success of Toyota Motor Corporation. The conflict between two countries such as US and Afghanistan that was witnessed a decade ago caused great losses. The bomb blast that was experienced in the US destroyed millions of products including those of Toyota Motor Corporation. As a result, Toyota Motor Corporation suffers a back fall in their business (Hosn & Khalil, 2004). In globalizing its products, Toyota Motor Corporation has been an agent of environmental pollution and also eating up natural resources. For instance, Toyota Motor Corporation has spread its manufacturing firms to all parts of the world. Since this entails a long process, smoke is emitted; a lot of noise is emitted, at the end of the day many scrap materials will be scattered all over. In addition, natural resources are diminishing just because Toyota Corporation requires more raw materials to keep their business running (Scullion, 2006).The number of cars being produced annual are many, the amount of raw materials are also huge. All these has caused damages to the natural resources thus quality reducing when customers are in need of it. The owners of Toyota Motor Corporation are very rich and they preferable come from developed countries, there are those in the developing countries who are very poor; they are struggling for basic needs. This is a huge gap that that multinational Corporations has introduced into the international market. Generally, the gap between the poor and the rich is gradually increasing (Scullion, 2006).Another issue is that Toyota Motor Corporation is held by the triad (Japan, EU and USA) because what they contribute as foreign direct investment globally are accountable to them. Generally, the largest Multinational Corporation are summed up to 500, out of these, 434 are from the three giant. This has affected developing countries as they are part of foreign direct investment destinations for the three. Developing countries have had nothing much to do rather that welcoming the triads for them to establish their organizations in their own countries. The triad usually ensure that marketing, production is organized in their places of origin but the ones outside are for distribution purposes. This had embraced on boundaries since they market to their products to the neighboring countries more than those outside. For instance, in North America, they capitalize their marketing in Latin America and Caribbean, for EU, they have targeted (Root & Visudtibhan,1992). The issue of Toyota Motor Corporation has not been a new thing to them. They have been in business for nearly a centaury all over the globe since it was established. The issue of recruiting employees to work in the companies has been a difficulty because with time problems keep on increasing. Lessons The coming up of new markets is based between developing and developed counties and has been witnessed to grow at a very high speed. Despite the fact that new markets can not be easily identified, countries such as India, Russia, Brazil China and Russia are considerably emerging. Parts of these countries are also in the transitional economies. In reality the new markets currently occupy approximately five-sixths of the globe’s population. Additionally, the rapid changes entail all aspects of operation within the international market. The level of technology, obsolescence, knowledge and competition are significantly increasing among many industries with unpredicted events also significantly changing both the economic and political perspective in which markets expand and strategies formulated. Technological progress makes production processes, product development and knowledge rapidly becoming obsolete, as a result leading to increasing investment costs and increased competitive pressures. Looking at the notebook segment within the computer industry, for instance, the series of new models that are being introduced have shrunk, making models obsolete and demanding continuous attention in terms of new products development and attention with regards to being ahead of competition. Global marketing agents of change are not only introducing innovative products to other nations, but are being forced to act in response to the increasing speed in which societies and marketing trends are changing. While there is an increasing speed in terms of change engineered by technology and mass communication, it is increasingly becoming unpredictable. Events like the separation in the Soviet Union have significantly affected global markets and world trade geopolitics. Subsequent economic and political events significantly affected the economic growth rates and foreign investment within the economy of soviet. Additionally, it put an instant stop to the Cold War, as a result, ushering in a modern political era. Industries like defence that relied on the need to uphold geopolitical balance, decreased, prompting the repositioning of related industries such as electronics, vehicles and aerospace. A new order in terms of the economic superiority therefore seems to be coming, exemplified by new trends of trade and new players (Hosn & Khalil, 2004). So far, the trends seem loaded with uncertainty, as the rush in a given direction is met by a pull from the other. Instability has crept in global markets, threatening to tilt the unstable balance of the economic forces. Progress towards global economic development, regional integration and third world countries empowerment, can without caution be frustrated by pressures to draw back the economic nationalism wall. Another challenge comes from the growing complexities in managing global operations. Alternatively, Technological progress is facilitating the directing, coordination and control of operations of the management on a broader and diverse geographical level and scope than before. Equally, such progress adds more complexities, since management is to master the skills and tools necessary to handle the rapidly increasing global infrastructure. As geographical scale and scope of operations increases further, management faces a difficult task of controlling diverse activities at different stages within the value chain, often in divergent environmental perspective. Additionally, organization layers start to invade corporate infrastructure, further complicating global management tasks. According to Daniells (1993), the management systems are not only created to direct but also to coordinate the market operations regionally. They also link up the corporate headquarters with the local management. Equally, the organizational connections between the functions in every value-chain level are increased globally for effective information, knowledge, and experience transmission across various regions. This is also to optimize the potential synergies globally (Sinkovics & Ghauri, 2009). The increased dispersion of the customer markets similarly leads to increased need to link up with the suppliers and clients to enable proper coordination for timely and efficient delivery and servicing of the markets. Links may occasionally be created with various organizations including some competitors, for the purposes of optimizing the rising opportunities in some product markets, and other countries generally. Establishment of strategic alliances with other organizations may also be deemed necessary in ensuring the desired coverage of the geographical market while also providing the expertise and resources relevant in the execution of a strategy. Sometimes far-flung partners like the competitors, suppliers, and clients create short-term networks. They often share costs, operations, skills and access in the world markets via electronic links, thereby optimizing on the newest information technology to leverage on a given market opportunity (Vance & Paik,2010).Such networks are often fluid and elastic, surfacing in correspondence to the varying market conditions. The network changes with presence and absence of opportunities. The spatial market trends are also increasing in complexity. The collapse of boundaries globally, however, signifies that the markets previously perceived as separated become united and work together. The increased competition globally is another challenge companies depending on the international markets face. With market opening and increased integrations there comes rapid change, technologically-induced distance reduction in markets, new competitors, and heightened competitive pressure. This competition proliferates when more organizations enter the global market, thereby creating more threats. Apart from competitions from the giant multinationals and other competitors, the newly industrializing countries have firms that pose threats too. Industrializing states like Taiwan, Hong Kong and Singapore have firms that are gradually getting involved in the global competitions, instead of being low-cost suppliers to other companies. The competitor response to the price changes, modern promotional techniques, and new distribution channels are also encouraged by the modern communication methods Bibliography Assenmacher, K. (2012). The Challenges of International Human Resource Management Within Multinational Enterprises. GRIN Verlag. Daniells, L. M. (1993). Business Information Sources. University of Calofornia Press. Gooderham, P. N., & Nordhaug, O. (2003). International Management . Blackwell Pub. Hosn, Y. A., & Khalil, T. M. (2004). Management of Technology: Opportunities and Challenges for Developed and Developing Regions of the World : Selected Papers from the Eleventh International Conference on Management of Technology. Internet economy. Emerald Group Publishing . Luthans, F., & Doh, J. P. (2009). International management: Culture, Strategy, and Behavior. McGraw-Hill/Irwin. McFarlin, D. B., & Sweeney, P. D. (2010). International Management: Strategic Opportunities and Cultural Challanges . Taylor and Francis. Root, F. R., & Visudtibhan, K. (1992). International Strategic Management: Challenges And Opportunities. Taylor and Francis . Scullion, H. (2006). Global Staffing. Routledge . Sinkovics, R. R., & Ghauri, P. N. (2009). New Challenges to International Marketing . Emerald Group publishing . Vance, C. M., M, V. C., & Paik, y. (2010). Taylor and Francis. M.E. Sharpe . Read More