Strategic Management: Strategic Choices of Toyota - Admission/Application Essay Example

? Strategic Choices at Toyota Corporation of the of the Strategic Choices at Toyota Corporation Introduction The Toyota Motor Corporation is today regarded as one of the world’s top manufacturers of automobiles. In fact the automobile company was started by Kiichiro Toyoda, the son of Sakichi Toyoda, who had invented the Model G Automatic Loom in 1924. Thus while the father opened a loom and spinning business, his son diversified into automobiles. Their first car models were sold back in 1936, priced about 400 yen cheaper than Ford models. This from the very beginning, there was an emphasis on quality, low price and innovative techniques. These very principles plus customer convenience and ergonomic design form the backbone of production in the Toyota plants all the world over. Strategies Used to Turn Toyota into a Powerhouse The manufacturing industry in Japan has evolved and prospered under a cooperative and investment friendly climate. The concepts of Keiretsu and supply chain management are well known. To get early capital for the automobile firm, the father Kichiro Toyoda sold his loom patent to a British company to raise capital for his son’s business. Admittedly their ancestors were in farming since the name Toyoda means ‘fertile rice paddles’ and so the change of name to Toyota also earned them more respect as it disassociated them from farming. The Toyota logo the company employs was chosen from 27000 entries in a contest-the writing of which uses 8 strokes in Japanese which is considered auspicious. The oil embargo of 1973 enabled Japanese models to make inroads into the American market because people began to prefer smaller fuel efficient models. American companies had treated smaller models as experimental concepts and cut down quality on them to reduce the cost. With the imposition of Chicken Tax in 1964 barring the import of lightweight trucks Honda, Nissan and Toyota retaliated by opening plants in USA. Toyota entered into a joint venture with General Motors to refurbish and operate a closed GM plant in California. Subsequently, Toyota began introducing new models to the world. Lexus was unveiled in 1989, Camry and Prius in the 1990s (Toyoland, 2011). Two of the main principles of success that Toyota incorporates in its production management are Lean manufacturing and Just in Time inventory. It followed the lead of an American firm (Piggly–Wiggly) and also used the works of Edward Deming the late great quality guru to inculcate quality consciousness and long term thinking in everything it does. The values and guidelines that guide its processes are the following: 1.Challenge; 2. Improvement; 3. Go and See; 4. Respect; and 5. Teamwork. These are jointly called the ‘Toyota Way’. Changes in Strategy over the Years Toyota entered the market using Low Cost Leadership as its principal strategy but as it improved its production and quality processes, the vision of the company has also improved and today it serves all segments of the automobile market, from lightweight and compact models to heavy duty vehicles. Focus and Differentiation are evident in the facilities provided in a Camry and Lexus, compared to a Corolla (Porter, 1980). Each of these would serve a different class of customers. The changes in strategy adopted by Toyota are well known and understood by management and industry experts today. The Toyota Way has the following four components: 1. Long-term thinking used as the basis for management decisions; 2. Having a process for problem-solving; 3. Developing its people to add value to the organization; and 4. Recognizing the fact that continuously solving root problems leads to organizational learning. Strategy Fit in with the Environment of the Automobile Industry The success of Toyota has not been entirely due to luck- rather its rise has been carefully planned at every juncture and thought through before implementation. Thanks to the vision and foresight of its management, Toyota has emerged as one of the well known leaders in the automobile industry. First of all is the fact that all management decisions are based on a long-term philosophy, even at the expense of short-term goals. Whenever there are problems, these are explored in all their dimensions so that the effects can be seen and anticipated. The sales and market environment is constantly scanned for changes in demand and consumer preferences. Strategy Fit with the Internal Resources and Competencies of the Firm Of course, a strategy can only be regarded as efficient and effective strategy if it has a fit with its internal as well as external environment. As far as possible, the workload is evened out so that workers are not overburdened. Instead of stopping to fix problems, Toyota concentrates on doing it right the first time. All tasks are standardized and timed for improvement. Workers are monitored by camera so that problems are documented rather than hidden. The right technology is considered that will speed up the work process and also maintain or enhance quality. Toyota picks its leaders and supervisors from inside the company and gives them opportunity for growth. Its people are developed through its particular culture and philosophy. Toyota has a valuable relationship with its suppliers and distributors and is known for helping them improve as well. Toyota believes in leaders looking at the problem themselves rather than getting reports- which signifies personal involvement. The Japanese make decisions by consensus, taking into account every aspect of a problem before a final solution is chosen to be implemented. Finally, the organization believes in learning through continuous reflection of what it is doing and efforts towards improvement. Recommendations to the Executives of Toyota Corporation I would recommend that Toyota take a little more care in respect of customer safety. A few years ago there were cases of deaths and accidents caused due to faulty braking of the vehicles and this year, cars have been recalled due to steering difficulties. They need to reengineer and solve these problems at the root. In terms of losing and low market share in Europe, a detailed study of the market leader strategies, customer preferences and culture as well as other life perspectives such as demographics, psychographics and lifestyle will enable Toyota to see why they have not been successful here so far. What I Have Learned in Module 4 The research into Toyota Motor Corporation has enabled me to observe the rules and principles that the company used to become a worldwide name and success. Many of these principles have been enumerated and discussed in the works of Michael Porter, Peter Drucker, Philip Crosby and W. Edwards Deming. This proves the value of turning theory into practice and bringing success to the workplace. References Liker, J. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw Hill. Porter, M.E. (1980). Competitive Strategy. The Free Press. Toyoland.com (2011). Toyota history: corporate and automotive. Retrieved 13 Nov 2011, from http://www.toyoland.com/history.html Read More