Modern Organisational Context - Essay Example

? Part A The external environment of an organization plays a pivotal role in determining the future of a company. As per Ahrens , today Toyota has increasing sales with figures yet it also has recalls which are mounting to 8 million vehicles globally (Jensen, 2010). The economic conditions that affect the brand are many. Firstly, the firm has expanded globally. This means that during recession, when its sales decreased in the USA, it concentrated on developing countries like China and India where the economic crunch was not that deep and thus the firm was able to increase its sales. Moreover, I feel that the increase in the credit facilities coupled with decreasing interest broadened the market for the firm, as more people could not easily afford a car. As per Barney and Hesterly (2005), in addition to that, the working population has increased as more women have entered the working sector and many are working and studying simultaneously. This has increased the purchasing power of the customers and sales have increased because of it. However, I feel with the increasing working population, the demand has increased along with the competition (Gourlay, 2001, pp. 27-46). As per Ahrens (2010) this means that consumers have more choice and have become much more demanding. Moreover, in countries like India for instance the middle class expands every year by 30-40 million people, which in turn means more people now demand cars in these countries. Today, moreover, the consumers are being offered car loans on easy instalments, which make a positive impact on the sales of Toyota. Additionally, explain Berzon and Khan (2010), the prices of raw materials and petrol have increased which affects the price and thus the sales of Toyota products. These economic conditions play an important role in the increase of sales on Toyota. These conditions have of course affected the strategies of Toyota. With the economic crunch especially in the USA, the firm was proactive and aimed to increase its sales in developing China and India where the crunch was less prominent. The global strategy adopted by the firm worked positively. Additionally. When the economic conditions in the USA lowered the purchasing power of the consumers, the firm changed its strategy and started production of smaller and cheaper cars. Lastly, Jensen (2010) explains that with the increasing prices of the raw material, the firm resorted to the hybrid variety of cars, which reduced the prices increasing the sales. Thus I feel that Toyota altered its strategies very smartly as per the changing economic conditions with the result that even with a global economic crunch, the firm had little effect on its sales (Kane, 2010). Berzon and Khan (2010) explain that the social aspects include the changing trends, the smarter consumer in terms of being more knowledgeable regarding product information. Kane (2010) adds that the customer can now use the internet to know about the number of Toyota recalls in any part of the world, the latest technology available, the new models, price comparisons, product features and much more. The consumer has become more knowledgeable and thus firms cannot fool them with smart and deceptive advertising. Also, Gourlay (2001, pp. 27-46) add that the consumers are becoming more demanding with globalisation, as there are many more products available in the global market. The consumer has now become more fashionable and seeks comfort. Thus Toyota needs to cater to both these social aspects. Ahrens (2010) adds that tradition, culture and the customers in the respective markets have to be studied before the firm can design a car. Jensen (2010) explains that for instance, in India, the drivers are right hand drivers, thus the cars have to be designed differently for the market. In the US there are more left-hand drivers. Kane (2010) adds that colour preference, design and accessory preference varies from market to market and thus the firms have to cater differently to them. This means that Toyota has to change its traditional lean production system as in the long run it is not going to be its competitive edge anymore. Berzon and Khan (2010) add that the social environment is very demanding and requires the firms to be flexible as per the needs of the consumers. Additionally the consumers are now seeking “value for money” which means that more than brand loyalty, the consumers seeks for a product that suits his needs and he is happy with the product and the price he paid for it. The brand loyalty is decreasing as consumers look for more products and features in the new products available in the market. Thus, the social environment has influenced the strategies of Toyota as the product design and prices have to be altered as per the changing needs of the consumers. Moreover, with the consumers being more informed, Toyota has to adapt more effective marketing tactics and has tried to be more interactive with the consumers as the consumers need more information and be satisfied with the product before he purchases it. aaaaaa Part B Toyota needs to understand that it has to change its strategies, as the consumers require them to do so. Consumer strategy With the consumers having more disposable income with the increase of working women and the expansion of the middle class, I feel that Toyota has to give up its lean production system, which is based on mass customization. This is because with the economic crunch in the USA, the consumer have become very selective about how they spend their money. Moreover, the social culture is that they have become fashion conscious and comfort oriented and thus have become more demanding. This means in the future, Toyota has to study its consumer markets more closely understanding their culture and needs. Toyota should also focus on consumer niches and design products as per the needs of the niche. For instance, it cannot market the same cars in the US market as it does in the Indian markets as the preferences, tastes and the income level of the consumers defers tremendously. Moreover, the insurance policies of the two countries also differ and thus the firm needs to understand the economic aspects of the markets before it can indulge in mass production. previously the customers were happy with foreign brands. However, the customers have become accustomed to it and now seek for products that suit their needs. The market has so many different products to offer that the firms need to change their production policies and consider their customer demand as top priority. the brand thus needs to interact with the customers more often to understand their economic conditions and social needs and thus make the requied chsnges in the products for them. In addition to this, Toyota should also offer loan facilities and easy instalments for consumers who wish to purchase the brand. This is because the middle class cannot purchase the cars on full payment and thus if easy instalments are offered by the firm, then it will be an easier procedure for the consumers and at the same time, Toyota will benefit from the interest rates it will earn from these loans. Operational strategies The firm should expand in different countries. This is because there is an increasing need in markets like the Middle East and Fareast. Moreover, India is also a prospective market. Toyota should produce innovative designs with hybrid varieties so that they are cheaper for the consumers and are more fashionable and comfortable. Additionally, innovative designing and increasing its R&D budgets can meet the consumer demands, which are influenced by the changing market needs. Sophisticated software should be incorporated so that the firm can make innovative changes and make a smoother transition. Keeping the social and economic conditions in mind, the firm should change its production strategies. It should move away from its lean production system and become more customised. the firm should concentrate on hybrid varieties of products, and for this the firm should make sure that it purchases its resources and raw materials from Managerial strategies To meet the global demand of different markets, the firm has to change its managerial style. This means that their management styles should be more local. the firm should understand each market and then make suitable moves. It cannot apply their lean production system in their managerial style. This means that they need to have a more open management system. Currently the upper management in Japan has more control and most decision-making is in their hands. This limits the innovativeness of the firm, which in turn affects the economic conditions of the firm as it adds to the cost. Additionally the social trend is such that the management needs to make fast decision like selling through online means etc. without decision making authorities in their hands, the management has little contribution to make which wastes their time and costs the firm. The firm should decentralise and as it moves away from its lean production system it should rely on regional management and allocate decision-making powers regionally. Such a distribution of power will work positively for the firm. When the decisions will be made quicker, the firm will be better able to understand the market needs and adjust itself swiftly to the ever changing market needs and trends. Social –cultural understanding as a strategy The firm should also involve in understanding the culture of its different markets. For instance the Chinese market has different festive occasions, the Middle East has a passion for football and in India, which is a multicultural society, the festivities are innumerable. Thus the marketing strategies should be altered in line with the cultural and social demands of the different consumer markets. Jensen (2010) explain that the firm needs to understand that the lean production system worked previously and the same Japanese pattern was replicated but today the trends both social and cultural are given a lot of precedence and thus the firm needs to understand them and incorporate them in their production system. With women entering the working environment, the firm should also start producing cars that are design specifically for women. This means that there should be more variation in colour and designs and may be more child friendly or the car seats should be designed for a woman’s smaller frame etc. References Ahrens, F. (2010) ‘Why it's so hard for Toyota to find out what's wrong with its vehicles’ [Online] 1st September 2010. Available from: http://voices.washingtonpost.com/economy-watch/2010/03/i_wont_lie_to_you.html Barney, J.B. and Hesterly, W. (2005) Strategic Management and Competitive Advantage: Concepts. Pearson Education, Inc., Upper Saddle River, New Jersey. Berzon, A. and Khan, G. (2010) ‘Toyota Complaints Surged After First Recall’ [Online] 5th September 2010. Available from: http://online.wsj.com/article/SB10001424052748704655004575114173177670654.html?mod=WSJ_Autos_AutoIndustry Gourlay, S. (2001) Knowledge management and HRD. Human Resource Development International, Vol. 4 No. 1, pp. 27-46. Jensen, C. (2010) ‘New Toyota Recall Involves About 400,000 Vehicles’ [Online] 2nd September 2010. Available from: http://wheels.blogs.nytimes.com/2010/07/29/new-toyota-recall-involves-about-400000-vehicles/ Kane, L. D. (2010) Toyota Sudden Unintended Acceleration. Safety Research & Strategies. Columbia University Press. Rall, P. ( 2010) ‘Toyota recalls 1.13 million vehicles, GM recalls 200k Toyota-built vehicles’ [Online] 5th September 2010. Available from: http://www.examiner.com/autos-in-detroit/toyota-recalls-1-13-million-vehicles-gm-recalls-200k-toyota-built-vehicles Ramsey, M. and Mitchell, J. (2010) ‘Release of Toyota Documents Blocked’, [Online] 4th September 2010. Available from: http://online.wsj.com/article/SB10001424052748703999304575399523349443634.html?mod=wsj_share_facebook#articleTabs%3Darticle Welsh, J. (2010) ‘Toyota Corolla Recall Affects Other Models’ [Online] 30th August 2010. Available from: http://blogs.wsj.com/drivers-seat/2010/08/26/toyota-corolla-recall-affects-other-models/ Read More