Toyota Motor Corp - Term Paper Example

 I. Executive Summary II. International Management Issues III. Fortune 500 companies IV. Company i. Background and operations ii. Competitive Challenges in various Markets iii. Subsidiary Management iv. Cross Cultural Management Issues V. Conclusion VI. Reference I. Executive Summary In the recent past, economies of various part of world have experienced tremendous change due to the fast changes in technology and socio-economic patterns. The economies of various parts of world opened provided opportunity to the player from all over world in the globalisation process. This process opened tremendous opportunities for the firms that could do better in bigger market place but it came along with some challenges with it. These challenges were related to the diversities of market and consumer group these companies were operating in. The challenges were not limited to these two groups. The challenges were also due to difference in the economic structures of various countries, their different legal frameworks and policies, social and cultural issues and many other things. Organisation tried building their strategies to deal with it. The company discussed in this paper is Toyota Motor Corp which rank 7 in the Fortune Global 500 list 2005. This is one of the largest automotive manufacturers in world, a trusted brand name and worldwide-admired company. It is known for its JIT and Quality programs and altruistic approach towards people working for it. II. International Management Issues Globalisation has provided many business opportunities to organisations worldwide. These opportunities to grow profitably in the worldwide market have come with some complications. These changes have raised various issues. There have been various debates on the global marketing mix strategies for the international market. Lots of studies and opinions have been developed. (For example, Ghoshal, 1987; Jain, 1989; Levitt, 1983; Quelch and Hoff, 1986)1 The communication process for the different market focusing on advertising issues, its objectives, message, presentation and various decisions related to advertising has gained attention and interest of most of the researchers. It was early 1960 when the issue of advertising standardization in foreign markets was first discussed. (Elinder, 1961; Fatt, 1964)2 These complications are due to the differences and diversity of the various parts of the world. The companies operating in various countries have several issues to ponder upon before starting its business and throughout its operations. These factors can be broadly grouped into two main groups. External Factors: These include the issues are related to the socio-cultural, political-legal, economic and various other issues. The parent country of the firm and the operating company can be different in various social and cultural aspects. These issues are important for the organisation to take care of. Internal Factors: Internal factors include factors like decision-making, autonomy of the subsidiaries, leadership, knowledge management, technological know-how, relationship between parent-subsidiary company and many other operational issues. Various countries have different policies for the foreign companies. For instance any company to start its operations in Japan one of the requirements is to establish a branch over there. III. Fortune Global 500 list companies Fortune Global 500 list is a list of top 500 global company based on revenues. The Fortune Global 500 list provides the list and broad structure of specific company, industry, industry competition and revenue details. This is one of the most reliable listing of the companies. At present the top place of the list has been occupied by Wal-Mart Stores with revenue of 288,189.0 million dollars and profit of 10,267.0 million dollars as on the basis of data of April 2005. The company chosen from the list is Toyota that ranks 7 in the Fortune global list. The top ranker in global automotive industry is General Motors with the revenues of 193,517.0 million dollars and profit of 2805 million dollars. Toyota ranked 8 in year 2004. Rank Company 500 rank Revenues ($ millions) 1 General Motors 5 193,517 2 Daimler Chrysler 6 176,688 3 Toyota Motor 7 172,616 4 Ford Motor 8 172,233 5 Volkswagen 15 110,649 6 Honda Motor 27 80,487 7 Nissan Motor 29 79,800 8 Peugeot 41 70,642 9 Fiat 57 59,973 10 BMW 71 55,142 11 Renault 80 50,640 12 Robert Bosch 83 49,759 13 Hyundai Motor 92 46,358 14 Delphi 179 28,700 15 Volvo 180 28,643 Competition among the ranks of 6,7 and 8 is high due to lesser differences in the revenues. The market leader GM is way ahead with this group that ranks 5 in the global list and is ranked one in the automotive group. IV. Company-Toyota i. Background and operations Toyota Motor Corporation is one of the world‘s leading automakers. It offers a full range of products and models. The product ranges from mini-vehicles to large trucks. Global sales of its Toyota and Lexus brands, combined with those of Daihatsu and Hino, totalled 6.78 million units in CY2003*. Besides its own 12 plants and 11 manufacturing subsidiaries and affiliates in Japan, Toyota has 51 manufacturing companies in 26 countries/locations, which produce Lexus- and Toyota-brand vehicles and components. It employs more than 264,000 people worldwide. It and markets vehicles in more than 140 countries. It operates into automotive sector. ii. Competitive Challenges in various Markets Toyota has already proved itself in various markets of world with brands like Lexus with its many variants, Land Cruiser, Corolla, Celica, Corolla Verso to name a few. It has its own reputation in the market for its fresh designs, quality and dealer satisfactions. Though Japanese cars are one of the top choices of customers worldwide. Today still there are some products, which have been extremely successful in one market but have been not done well in the other market. One of such example is Toyota Camry. Performance of Camry was not encouraging in the European market but it was highly successful in USA market. One of the reasons for it marketers say was the failure of Toyota to analyse the preferences of the customers and promote the product within the distribution channel. Japanese companies are known for their small models and altruistic values within the working environment. Toyota has adopted various strategies to enter various markets. At some part of the world it adopted Joint Venture i.e. 1984 Toyota-GM joint venture in the U.S., New United Motor Manufacturing, Inc. (NUMMI), started production, establishing a production unit i.e. 1988 Toyota Motor Manufacturing, Kentucky, Inc. started production; establishing dealership network i.e. Lexus dealerships established in the U.S, cooperative agreements and other business strategies. The strategy of Toyota subsidiary depends upon the following issues: To establish manufacturing unit: Government Policies and attractive schemes for FDI Availability of cheap labour Overall cost of production Capacity of manufacturing unit Possibility to extend the manufacturing capacity Technological, raw material and other manufacturing inputs Cost of transportation Manpower requirement Government Regulations for export-import and manufacturing. To start marketing: Market demand for the product Market size Competition Distribution channel and Support Manpower requirement Government Regulations for export-import and manufacturing. The strategic Issues involved are: Sustainable demand of the product. Sustainable market. Required Management effort Investment requirements Human Recourses requirement Socio-cultural Issues Political legal issue Need for any strategic alliance. Any product or service is result of needs and wants of buyers and consumers. The marketing structures and systems of the company will be evaluated to identify what exists and its effectiveness. Marketing structures include marketing organisation, marketing training, and intra and interdepartmental communication. Marketing systems include marketing information systems, the marketing planning system and the marketing control systems. When we talk about Toyota as a group lot many operations management concepts we recall, like quality control process. The cornerstone of Toyota's quality control system is the role of the team members in the production process. The principles on which Toyota was founded are employed at the Georgetown plant. Toyota involves its team members by: Encouraging an active role in quality control, Utilising employee ideas and opinions in production processes, And practicing "kaizen" — striving for constant improvement. (Toyota Motor Manufacturing, Kentucky Inc.) The only assumption made in the study was that all the information available for the research of this paper is reliable. iii. Subsidiary Management Toyota is a big organisation and continuously growing in its operations and revenues. It is prevalent by its record on Fortune Global company list. Toyota adopts simple subsidiary management policy. It supports the subsidiary unit to establish in the initial phases, provides all the required technical know how, establishes the vision and mission of the subsidiary among the people working there and leaders and than leaves it as an independent group to make its strategic decisions and market moves. According to Gary Convis managing officer of TMC, executive vice president of Toyota Motor Manufacturing North America, Inc. (TMMNA) and president of Toyota Motor Manufacturing Kentucky, Inc. “Previously our parent plant had always taken the lead in readying us for production. But this time we changed tack and prepared independently. They assisted us only when we requested support in a few areas that we could not handle ourselves. This approach allowed us to minimize dependence on the parent plant all the way through to line-off.3 This way defining the issues to be consulted with the parent company and the decision which subsidiary can take clearly divides the area of work for each party. This added with proper communication flow within the organization and its subsidiary provides other support to the group as a whole. The subsidiaries enjoy considerable amount of autonomy, which is required for it’s functioning. The concepts like quality control, JIT and Kaizen and others add value to the operations. The primary concern and objective of the group is to satisfy customers. The product development and all the other process are targeted towards achieving that goal. iv. Cross Cultural Management Issues Company faces various cross-cultural issues when it starts its operations in international scenario. It starts with the perception of people of the host country about the company and country of origin. The perception cannot only affect the operations of the company but also can take a big shape to hinder its operations fully. Coca cola has faced the similar problem, which got politicised in India in the past. American companies usually face the problem with the general perception of taking more than giving worldwide. All these issue impact the primary and secondary stakeholders of the company. The primary stakeholders include the investors, consumers and employees while secondary stakeholders include third parties, community, legal framework and other concerned parties. Various issue of concerns for any international firm are as follows: Leadership style: Leadership is a very important component of the success or failure of any organisation. The leadership style of this Japanese major can range from democratic styles to Laissez-faire style. It depends upon leader to leader in its subsidiary group. Culture The organisation culture promotes the teamwork, human relationship, good work and considers the advices and suggestion from the workers and partners. Information dissemination: The organisation emphasises on timely and appropriate information dissemination. Transparency of communication Concerns for the community Toyota is a socially responsible company. It has been working on various community projects in various parts of world. Legal framework The organisation has to abide by various legal framework of different company to operate within it successfully and respectfully. Decision-making Subsidiaries enjoy considerable amount of autonomy in decision-making. Parent company promotes the autonomy of the subsidiaries in the decisions like human resource, operations and customer development. The new product launch and product re-engineering, re-launch and other decisions are taken with the jointly. Cost concerns The concepts like just-in-time, kaizen and others not only promote timely production of the products but also stress on minimum wastages and low inventory costs. Knowledge of the market Regular market updates and surveys keep the organisation and its subsidiaries informed about the market, growth, competitors and customers. Audit of external and internal environment Regular internal audits provide information on the internal functioning of the company. It helps in finding the areas where organisation can work upon to improve the productivity and efficiency. The external audit provide information on market, rivals, customers, suppliers and distribution network which helps the organisation to serve the customer n better way. Ethical Standards Adopting proper ethical standard has established Toyota as a respectable brand name. Responsibility and accountability Well-defined job profiles draw a distinct line of accountability and control. The responsibilities are defined which help people work to the expected level, understand what is expected from them. Knowledge management The knowledge flow from subsidiary to parent company and parent company to subsidiary helps them making various decisions jointly and separately. The technological and non-technological information is managed well within the organisation. Technical know How Toyota is technology-based company. The parent company initial provides support to the subsidiary to establish and run the subsidiary efficiently and later on it provide supports on limited and specific areas. In this hotly contested market segment we must remind ourselves that our goal is to conquer customers, not our rival automakers. The challenge is how well we can meet and exceed customer expectations.4 V. Conclusion Toyota’s relationship with its subsidiary is satisfactory due to the fact that it has adopted strategies, which gives substantial amount of autonomy to the subsidiary. It respects the cultural values, people working for it and the legal and ethical ground on which it works. The parent company does not provide the medium where the problems with subsidiaries can grow. Transparency of communication and addressing any controversial issue in very early stages do not allow the problems to grow stronger. VI. 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