Understanding Strategic Management of the Toyota Motor Corporation - Case Study Example

al Affiliation) TOYOTA MOTOR COMPANY Executive summary The Toyota Motor Corporation is an international corporation whichhas over the years become one of the largest automakers in the world in relation to net worth, sales, profit and revenue. The company was founded in 1926 and has been productive consistently compared to its competitors. Toyota Motor Corporation is globally recognized particularly due to its quality products as well as their production systems. So far, the company has made progress in the hybrid automobile sector and is currently on its third generation whereas other companies have not yet started their first. This gives the company a big head start against its competitors. Over the years, Toyota cars have been on high demand particularly due to the efficiency of their cars as well as the hybrid car which makes it cheap for consumers particularly during these times where the gasoline prices are on the rise. Statistics also show that consumers prefer and trust Toyota products compared to US technology in terms of hybrid production. So far, the car industry is being faced by many barriers such as the increasing fuel prices. However, Toyota is making all efforts to overcome these hurdles and still maintain its top position in the car industry. In order to achieve this, various strategies have been implemented targeting various hurdles and the best way to overcome them. In order to achieve this, the company has developed a value chain which gives it a competitive advantage compared to other companies particularly due to the human resource chain and the inbound logistics. Additionally, the company focuses on environmental cleanliness through the production of hybrid cars. This paper focuses on the strategic review of Toyota Company relating to various aspects and factors that influence the success of the company. It also includes various aspects of the review such as the environmental analysis, strategic analysis and recommendations for future development. Strategic review Strategic analysis of the company Toyota’s main strategies revolve mainly around the value chain and the human resource. According to Henry (2008, pg.79), Toyota has an extremely developed value chain to the point that it makes it more profitable compared to three of the largest vehicle companies in US. The value chain is particularly strong due to the inbound logistics. In this sense, the company minimizes the costs of inventory by using the just-in-time production method whereby the products are produced effectively and on a timely manner. Another important aspect is the human resource whereby employees are usually perceived as the human capital of the company. Employees at the company work under suitable conditions and the organizational culture at the company is suitable to guarantee that all employees are happy. As a result, this is translated in the production and quality of products which consequently satisfy the customers. Strategic targeting of groups Toyota targets the moderately low-price market. This market also happens to be high in volume thus increasing the market for the company. However, the company has also targeted the high-end market with the production of luxury cars thus overcoming the established mobility barriers. This can be seen with various car models such as the Lexus brand which currently competes on the same level with other automobiles such as Mercedes and the BMW (The Economist 2009). Political strategy Toyota has established a strong relationship with the Japanese government to the point that during times of crises, the government funds them. In addition to that, the company adheres to majority of the rules and regulations set out in different countries and continents. For example, it observes the carbon dioxide regulations in Europe hence the production of hybrid cars which reduce the emission of carbon dioxide into the atmosphere (Magee 2007, pg. 89). The company is still advancing in this sector and is making progress in improving their cars. In addition to that, Toyota is aware of the political instability in different oil-producing countries in the world thus putting more emphasis on hybrid production as a strategic solution. Technological strategy Currently, Toyota aims at having their products producing no emissions or waste into the atmosphere. For this reason, the company aims at producing hybrid-electric systems which will be sold along with every product they sell. The technological sector of the company has been rated as the most innovative company sector as they make attempts improve hybrid technology and further encourage the development of technology of the hydrogen fuel cell (Hooveer’s Inc 2009). With this strategy, Toyota targets to secure its future particularly in relation to depletion of fossil fuels and the instability in the global oil prices. Environmental analysis The Toyota Company is greatly invested in production of vehicles with low carbon emissions. For example, the use of the Hybrid Synergy Drive for the manufacture of the Prius which is considered to be the most widely used system in the vehicle industry in terms of environmental friendliness. Toyota further benefited from this environmental initiative in 1998 when the UNCCE (United Nations Economic Commission for Europe) approved the Global Agreement on Vehicle Regulations (Market Watch 2009). This agreement limited the amounts of carbon dioxide emitted into the atmosphere which each car can eject. Resources and competence Toyota is resourceful in terms of knowledge and awareness about the car industry. It is also resourceful particularly because it is noted to be important for innovations regarding to the car industry. Their innovation skills are clearly outlined and have always been noted to be progressing over the years rather than retrogressing. The team of workers is competent and dedicated particularly in the marketing field whereby they use the best approach towards pushing products into the eyes of the public. Recommendations for future development TOWS Matrix The main threat against Toyota is their competitor VW. The company is widely buying other company cars and extending its range of vehicles all over the world. Recently, the business group further extended their range by acquiring Porsche. This made it the second largest car firm in the world. Currently, the company (VW) has 10 car brands. In order to curb this threat, the company ought to focus on expanding its market base through the production of more luxury vehicles so as to penetrate into a larger market (Walker 2009). In addition to that, the company should also focus on making different brands of hybrid cars that would be suitable with different individuals. Toyota has had opportunities to extend its market over the years and consequently attracting a larger market of people from all over the world. The company has increased its profits and closed the gap between them and their main rivals at the moment; GM and Ford. This opportunity has been achieved through their unique concepts such as the “Just-in-Time production and Jikoda (Medeiros 2009). These concepts allow the company to manufacture their vehicles fast and precisely to the satisfaction of the customers. Experimentation with other concepts would go a long way as to increase the market for the company as there would be more ways to provide and cater to the customers’ needs. The significant weakness with Toyota lies with its controversial issues mainly brought about by the claims of inadequate standards of safety while manufacturing their products. Recently, the company had to recall all Lexus vehicles from the market as they were deemed unfit. Additionally, lawsuits have been filed against the company regarding the malfunctioning of one of their car brands. However, the company has learnt from its mistakes and used their weaknesses to strengthen their car brands for the future. As a result of these litigious issues, Toyota invested in implementing standards of safety and quality that cannot be compared to other automobile companies. Another important strategy for the future would be better investment in the testing of the cars before they are released to the public. Employees should be vigilant and keen with their work so as to provide quality products to customers. Most importantly, the main strength underlying in Toyota is their brand name which is trusted all over the world. The company also emphasizes on the value of its employees who have been trained effectively and understand the importance of manufacturing and providing valuable products to their customers. Another important strength is the investment of the company in technology. The company uses the most effective technology and machinery in the manufacture of their vehicles thus providing quality to their customers. Tapping into this strength is important for the development of the company. Technology could be used to develop necessary energy sources for vehicles in the future that would be an alternative to fossil fuels (AUTOeBID 2009). Ansoff matrix Market development Development of the Toyota market involves targeting more people in different regions of the world. This is particularly in relation to the hybrid vehicle as this would greatly reduce the carbon emissions in the world and also expand the market for the company. In addition to that, the company should also try out new sales platforms such as the internet to sell cars and other products. This way, they reach to a wider range of people all over the country thus tending to the needs of more customers. Toyota should also target different groups of individuals from all over the world. It should target people of all age groups and geographical locations. One suggestion would be the production of cars depending on the popularity of that particular car within the region. Market penetration Suitability In order to increase the market, it would be effective for Toyota to focus on preferably expanding their market within the automobile industry particularly due to their established name within the industry. Acceptability During their attempt to expand their market, the management of Toyota might be cautious about targeting the customers of competing companies. This is particularly because the rivaling manufacturers might decide to retaliate and do the same with Toyota customers. It is therefore important for them to invest in the implementation of a retention plan which would ensure that the Toyota customers are retained while at the same time targeting a wider range of customers. However, it is important for stakeholders to understand the risk taken during the implementation of this strategy. Undertaking such an opportunity is risky and could or could not pay off. In order to ensure that the risk pays of effectively, the company should focus on improving the quality of products being sold to all markets. In addition to that, they should also improve on the levels and quality o service provided to their customers. Shareholders should be warned that the strategy might not pay off. This would consequently lead to them losing value in shares. Additionally, the employees might lose their jobs as a result of lost revenue and failed venture ( International review of strategic management 1990) . Feasibility Toyota already has potential to penetrate further into the market due to its viability and also its position in the current world market in relation to sale of automobiles. Therefore, the company should create and implement strategies which would see towards the cars targeting a different market such as that of the young people by production of small cars. Development should however be emphasized on the hybrid market. This is because the company has already made positive progress in this sector and as such it is it is easy for them to develop within this market. They should also focus on developing their products to fit the needs of all their customers particularly in relation to carbon emissions and fuel- efficiency. Recommendations for the future of Toyota It is important for the company to be ruthless particularly regarding its early leadership in the hybrid sector mainly in relation to electric-automobile technology and commercializing hybrid systems. The company is ahead of other companies in the manufacture of hybrid vehicles and should invest in that greatly so as to ensure that they stay on the top. Toyota Company should focus on concerting all their cars into a hybrid version. It is also suggested that Toyota should expand its market rather than focusing on vehicles that would appeal to families and households. This would go a long way as to increase their market base and also invite customers to a different side of Toyota. Secondly, so as to avoid bad press, the company has to invest in improving their safety standards particularly with their products. This involves training personnel effectively on how to use new technology related to safety and also carrying out enough tests to guarantee the suitability of products. Another recommendation for the company would be for them to focus on acquiring other companies that would boost their sales and market. This is effective as it would help in expanding the market for Toyota and also helps in reinforcing its position in the market. Toyota could also strategically separately create a new brand for its hybrid models so as to separate them from the other brands (Cunningham et al 2012, pg. 14). This would be effective as it would help them reach out to the environmentally friendly people who could find the car of their choice without a lot of trouble. In addition to that, a new brand of car would be effective during these times particularly due to the recent financial crisis. Providing people with a cheap, environmentally friendly car that is also efficient would be taken very well by the customers. Conclusion The strategies used by Toyota are effective in making the company successful so far and also in the future. It is important for other companies to also understand the functioning of Toyota so as to know how to carry out their future endeavors and plans. At the same time, it is important for Toyota to brainstorm and come up with new innovative ways of boosting themselves and maintaining their position at the top of the car industry. References Henry, A. (2008) Understanding Strategic Management, Oxford University Press The Economist, Dec 10th 2009, Losing its shine. Retrieved from http://www.economist.com/displaystory.cfm?story_id=15064411 MAGEE, D. (2007). How Toyota became #1: leadership lessons from the worlds greatest car company. New York, Portfolio. Hoovers, Inc., (2009) Toyota Motor Corporation, retrieved Dec, 3 2009 from http://www.hoovers.com/company/Toyota_Motor_Corporation/crxxsi-1.html Market Watch, (2009), Annual Financials for Toyota Motor Corp http://www.marketwatch.com/investing/stock/TM/financials Walker, M. (2009) Toyotas Strategy and Initiatives in Europe: The Launch of the Aygo, Retrieved November, 30 2009 from http://www.scribd.com/doc/21176071/Toyota-s-Strategy-and-Initiatives-in-Europe- Medeiros, J. (2007) Toyota Motor Corporation, Retrieved December, 03 2009 from http://www.associatedcontent.com/article/267670/toyota_motor_corporation_strategic.html?cat AUTOeBID (2009) TOYOTA - background & news Retrieved November, 26 2009 from http://www.autoebid.com/getReview.asp?make=TOYOTA (1990). International review of strategic management. Chichester, Wiley. Cunningham, James, and Brian Harney. Strategy & Strategists. Oxford: Oxford University Press, 2012. Print. Read More