Business Strategy of Toyota - Research Paper Example

Toyota Business Strategy A business strategy refers to the processes which and organization carries out in order to achieve their desired goals (Cappelli 14). It is also defined as the way in which a company plans to achieve its long-term goals. A business strategy is concerned with activities such as expanding a business, dealing with competition and internationalization. This paper will talk about the business strategy of the Toyota Company which it has been using to overcome challenges and to create new opportunities. Toyota is one of the world’s preeminent automobile industries and has its headquarters are located in Japan. The company has over 371,605 employees’ worldwide working in different positions (Ireland, Hoskisson, and Hitt 57). Toyota has successfully grown into a multinational corporation since they entered into the market. They have expanded into many countries and were rated as the best automobile company in 2008. Toyota operates brands such as Lexus, Hino and Daihatsu alongside other non-automotive companies. The Toyota Company bases its business strategy on five major principles. The first principle is introducing new and unique ideas into the market so as to outdo their competitors by achieving the dreams of their customers. The second principle is that they are always ready to develop, create and improve ideas and services in their existing markets. The third principle is teamwork since they are aware that cooperation fosters better production and nurtures success. Their fourth principle is fulfilling the market needs by producing what the market wants and adjusting their production with the market needs and demands. Their last principle is developing one another which imply that their employees get better by learning from each other and frequent training so as to ensure they have the best employees. Toyota has been in the forefront of innovation and was the proud inventors of the hybrid vehicle. The company invests in innovation and appreciates the opinion of all their employees. They have come up with cheaper production methods whereby they produce high quality and economical vehicles at considerably cheap prices. This enables them to have a price competitive advantage since they can respond to demand by altering their prices and still remain profitable. Producing high-quality vehicles has helped them build an irrefutable image in the market and have also gained customer loyalty in most of their customers. Toyota assures their customers that their low prices are due to better production methods and not compromising quality. Due to the problems they were experiencing in the Domestic market, they announces a global strategy in 1995 and having they have been working towards up to date. Their aim in globalizing was to eliminate the restrictions of a small market since they were sure that having a larger market would lead to better sales, and they could easily specialize on certain goods. Expansion to different nations has made them produce different types of vehicles since each market has its requirement and hence they have diversified in the car models they produce (Ireland, Hoskisson, and Hitt 58). Globalization ensures that the company does not over depend on certain consumers and suppliers and hence their risk of collapse is nullified. Expanding to different markets has helped build better relationships with their customers and hence the company gets more sales and can easily identify what exactly the market’s needs. Toyota has a lot of focus on technology and is always researching for innovative technologies with better quality. They are the best automobile company in terms of automotive technologies. They assume responsibility for the future by developing intelligent responses to the current challenges in the industry. Regarding the global fight against pollution, The Toyota Company has developed vehicles that do pollute the environment, and they have shown their commitment to being eco-friendly by developing a hybrid vehicle. The high breed vehicle has the ability to use different forms of energy. They most prominent discovery is a vehicle that can use to forms of energy interchangeably. The manufacturing style has more focus on making the vehicle user more comfortable and the giving the user a higher performance as compared to other automobile companies. They are also keen on safety and hence have designed the best breaking systems and easy steering. Their vehicles have been designed in such a way that they absorb shocks, and they were the introducers of airbags in vehicles. Over time they have improved active and passive safety in their vehicles, and they have benefited by having more customers. The company values each customer or group of customers independently and responds to their needs. This is evident since they have developed certain types of vehicle that are adaptable to specific areas, and such market responses have helped them penetrate deep into new markets and gain dominance in the industry. Toyota Company is dedicated to employee training in order to maximize their output and hence increase its productivity and profits. The train their employees on using technical manufacture software such as the CAD that helps in faster production of vehicles (Ireland, Hoskisson, and Hitt 57). By using such software, the employees are able to come up with perfect designs within short a short period. Constant employee training has boosted their pre-production and production knowledge and has improved the speed at which they come up with designs. Their manufacturing software has improved their ability meet design goals as well as meeting the demands of the market in terms of production quantity. The company also trains their employees in the marketing and customer service departments. The marketers are trained on handling their customers and ensuring that they serve them well, training marketers has helped improve the volume of sales of the company as well as create customer loyalty. Managers are also trained on better management styles so that each manager is able to coordinate their groups constant employee training has reduced the companies rate of employee turnover that saves a lot of cost to the company. Apart from saving costs, low employee turnover ensures that the employees serve the company for a long time and hence gain experience and improve productivity over time. Communication systems and models in the Toyota Company is another effective strategy in the company. The company values their employees and their customers, and they believe that a constant flow of information and ideas between the management, employee and the customers is crucial for the creation of healthy business environment. Upward and downward communication between the management and the employees ensure that the managers are aware of the problems and difficulties experienced by the employees. Communication also ensures that the employees know the requirement of the management, and they work towards achieving the set standards. The Toyota Company organizes four forums every year in different markets whereby they meet their customers and listen to their complaints, opinions and their demands. Such forums are created in events such as trade shows and trade fairs. Such forums have offered guidance to the company on the designs to produce and the specifications to include in their vehicles (Ireland, Hoskisson, and Hitt 58). Constant communication enables them relate well with the customers and eventually enjoy the benefits of customer loyalty, high sales and brand dominance. Toyota effectiveness and quality ranking are based on its internal environment. Everybody in the organization is focused on high-quality production, and their management is famous for their competency (Liker, and Franz 34). They have managed to show their ability to satisfy customers’ needs by producing extraordinary products that satisfy most unmet customer desires. They have overcome the costs of distribution networks and have opened branches all over the world. The company has improvised selling technologies whereby their customers can purchase products from any of their opportunities r shops at the comfort of their homes. The company has managed to apply strengths and opportunities in creating a competitive edge in the automobile industry. Unlike other automobile companies, Toyota has differentiated their production line and hence has a global presence. They have also been in the headline of innovation, and with the high risk of fossils extinction, they have a chance of remaining in the market due to their hybrid vehicle technology. The company has been living its mission over the last decade since they have been ranked as the best automobile company. This has been achieved due to their desire to supply their customers with the trump value for their money. The company has heightened their popularity all over the world with their consciousness on sustainable development. They have been active in corporate social responsibilities which have given them a good image in the market (Ireland, Hoskisson, and Hitt 59). They recognize the income disparities in all nations and hence have developed vehicles of different types some of which are cheap to fit the low-income earners and others that are luxurious to fit the higher social class. The company’s production also considers factors such as age and culture and hence produces vehicles adaptable to a variety of customers. By considering a variety of groups, the customers are confident that the company addresses their needs and hence become loyal to the company. The company has studied the market deeply, and they have come up with a production chart. Different markets purchase levels vary with economic seasons. Having understood the economic seasons of different markets, the company knows the kind of goods to produce at a certain time and the average quantities to produce. Toyota has embraced product differentiation as their major market penetration strategy, and it has helped them increase their sales year after year. In the past, the company was experiencing losses due to the eminent cost of production when producing many vehicles. However, they have recently discovered mass production plants that enable them produce many vehicles at considerably low prices and hence are more advantaged that their competitors (Liker, and Franz 104). Toyota’s large size and economic capacity place it at an advantage of keeping up with industrial growth. The numbers of customers are constantly increasing as the perceived importance of owning cars rises among customers. Their mass production technique helps them meet the market demands and hence their customers are confident that the company can provide an enough supply. The high-quality production over many years has made customers loyal and hence the company is not affected by price competition of other companies. The company is prospecting invention of lesser platforms that will be used to assemble vehicles at a very high speed and hence meeting market demands will be easy and cheap. The company’s marketing program consists of four marketing mix elements that they have specifically modified to fit their markets. Their products strategy of mass production and hybrid vehicles has proved a competition blow to their competitors. They have developed a pricing strategy whereby they offer high-quality products at low prices. Toyotas locational strategy has ensured that they uncover all the hidden markets and hence controls about 35% of the automobile market share (Ireland, Hoskisson, and Hitt 61). In conclusion, Toyotas success is based on their well-structured business strategies, and it is expected that they will continue being successful and dominating the automobile sector. Works Cited Cappelli, Peter. Employment Practices and Business Strategy. New York: Oxford University Press, 1999. Internet resource. Ireland, R D, Robert E. Hoskisson, and Michael A. Hitt. Understanding Business Strategy: Concepts and Cases. Mason, OH: South-Western Cengage Learning, 2008. Print. Liker, Jeffrey K, and James K. Franz. The Toyota Way to Continuous Improvement: Linking Strategy with Operational Excellence to Achieve Superior Performance. New York: McGraw-Hill, 2011. Internet resource. Read More