Strategic Management: Toyota - Case Study Example

Running Head: Strategic Management Analysis Strategic Management Analysis Inserts His/her Introduction Toyota is the world’s leading automobile company. The global sales of Toyota are evidence of the quality and services offered by the company. Toyota is also well known for its tough cars and has a worldwide target market. It basically targets consumers who want toughness and quality at a relatively cheap price. This is why the company has achieved this much success throughout the world. But recently Toyota is facing a few problems. The company recently called millions of cars due to brake problems. This has turned into a major crisis and people are losing confidence in the brand. This problem will be explored keeping in mind strategic management and suggestion will be made to Toyota. Strategic Management Opportunity Areas at Toyota There are many areas of opportunity for strategic management in Toyota. First of all it is important for the company to focus on its deteriorating reputation in the market. Toyota is losing customers due to its recent brake problems and worldwide recall (Welch, D. 2011). The brand image of Toyota was always of a reliable car that can be used by consumers who wanted durability. The recall of millions of cars by Toyota has hurt that image of the company badly. Lower sales are stopping the company from achieving its growth plan. This is the first area of opportunity for strategic management. It is important to enhance the brand image of Toyota in the eyes of stakeholders. The second opportunity for strategic management in Toyota lies with increasing the cost effectiveness of its cars. It is extremely important in today’s competitive world to reduce costs. Financial difficulties are staring firms and customers alike and this why sales are getting adversely affected. In order to maintain profits it is essential that cost effective cars are produced and sold. The damage done by the Toyota brake problem has also affected the market share of the company therefore winning back customers is essential (Welch, D. 2011). This can be done through cost effective strategy because the target market of Toyota will appreciate lower prices. This is another opportunity for strategic management. Another opportunity for Toyota is to innovate. In today’s competitive markets it is vital that firms come up with new ideas. Toyota was also the first company that came up with a hybrid car. An innovation similar to this will help the company a lot. This should be the main focus of the company. Any innovation related to the use of fuel can do wonders for the company and can again make it leader in the automotive sector. Management Style at Toyota Management style of Toyota is very famous among management scholars. Toyota actually created its new management style called lean management and it has since become successful in business circles. Lean management involves increasing operational efficiency by utilizing resources in an efficient manner (Jackson & Jones, 1996). This management style emphasizes on zero waste policy. Toyota uses lean management philosophy to increase its production capability and lower its costs. The main principle is to exclude all the processes from the production process that do not add value to the end users. The goal of every process should be to deliver value to the customer. This is the main philosophy Toyota follows and it can be regarded as the reason of success of the company (Jackson & Jones, 1996). Continuous improvement is another philosophy that is followed by Toyota. The company regularly changes its practices and the goal is to constantly improve (Henry de Frahan, 2010). Toyota constantly improves it strategies in order to compete with other automobile companies. They do not believe in any fixed organizational culture or style. Rather their aim is to reform their culture whenever is required in order to improve the efficiency of the company. The continuous management philosophy of Toyota has done wonders for the company and has made its name as the world’s top automobile manufacturer. The Use of Strategic Management at Toyota Toyota can use strategic management to solve the issues that the company is facing. The first issue that needs to be resolved is the deteriorating reputation of the brand. Due to recall of the Toyota cars the reputation of the company has been tarnished. Immediately money should be spent on marketing and the brand should be associated with positives things. Events should be held and people should be informed that the company cares about the safety of the customers. The company should use the recall event to its advantage. The correct message should be communicated to the consumers and this can improve the reputation of the company and its brand name. The second issue is that Toyota needs to increase its competitiveness. It is important that company takes steps to compete in this tough business environment. Ford, Honda and other competitors of the company have gained some market share after the recent brake problem of Toyota. It is important that those customers are attracted back. By reducing costs Toyota can improve its market share and can also attract customers. The target market of Toyota is cost centric and therefore any reduction in price will immediately knock all competitors out. Therefore Toyota should increase its cost effectiveness. The third strategic management decision should be focused to innovate. The company needs a new innovation right now. It is vital that a separate division or team should be organized with the sole purpose of coming up with new ideas. This can solve the problem of Toyota. The company should look 10 to 15 years ahead of its competitors and this can solve problems of the company. Toyota should also try to identify new markets. The company is doing well in the Asian countries where population is huge but more areas should be identified. South America is another populated area of the world. Toyota should target this market specially. European markets are also a good option for Toyota. Another option for Toyota is to increase marketing in South Asian countries. The sales of Toyota are impressive but more people should be targeted. The future population of these countries will increase massively in future and they will need car to commute. This is why more vigorous marketing is required in this region. Conclusion Toyota is a well known company that is recently facing some problems. The company has attracted bad reputation due to its brake problems and recall. The company can use marketing to clear its name. Also it should be the main focus of the company to increase competitiveness and innovate in order to gain back the market share it has lost due to the brake problem and recall. References Henry de Frahan, A. (2010). How Toyota Is Rejuvenating the Idea of Corporate Culture, Frahan Blonde. Retrieved from http://www.frahanblonde.com/files/Toyota_Corporate_Culture.pdf Jackson & Jones. (1996). Implementing a lean management system. London: Productivity Press Welch, D. (2011). Toyota Recalls Another 2 Million Cars. Apology Needed, Bloomberg Business Week. Retrieved from http://www.businessweek.com/autos/autobeat/archives/2011/02/toyota_recalls_another_2_million_cars_apology_needed.html Read More