Management at Toyota Motor Corporation - Research Paper Example

First and Research paper: Toyota Motor Corporation Toyota Motor Corporation is one of the worlds largest automotive manufacturers by auto sales, designs and manufactures with a diverse line of products starting from buses, minivans, trucks and ending luxury and sports vehicles. In its collection the company has as combustion and hybrid engines. According to Wikipedia (Toyota, n.d.), the company was founded in 1933 with the division of Toyoda Automatic Loom Works that was devoted to the production of automobiles. However, in 1937 it already performed its activities as an independent company. Since its founding, the Toyota Company was trying to contribute to a more prosperous society by means of manufacturing its automobiles and operating with a focus on vehicle production and sales (History of Toyota, n.d.). In the present time, the biggest Toyota competitors are the General Motors, the American automobile corporation, For Motors, the American company and Honda Motor Company, the Japanese automobile enterprise. The company is guided by the main principles, which are to honor the language and spirit of law of that country where it operates, contribute to the economic and social development through corporate activities, provides clean and safe products and to increase the quality of life through sustaining the high quality of the activities of company (Guiding Principles at Toyota, n.d.). There is no other industry in the world that the automotive one with the largest volume, capital, employees and annual turnover. Therefore, history knows hundreds of companies which emerged in order to display the certain country or the world their own provision in such industry. Toyota Motor Corporation is among them, having the long history of its performing and the story in which it faced challenges that taught it how to become the best Asian product known in the global market. However, due to the severe competitiveness, the immediate, impending and invisible, and the wide range of offers that Toyota’s competitors are ready to provide to their customers, the company should always think of new strategies and ways of how to improve its performance in order to stay on the world leading position. The important strategic marketing objective of Toyota is to build sales by widening the market. Therefore, Toyota moved towards in its product branding from the corporate branding concept, presenting its Lexus as the outcome of this strategy. Figure1. Market sales and production in USA As it is seen on the Figure 1, there is an increase in sales and production of Toyota vehicles since 2008 (Review of operations, 2014). Moreover, there is an enlargement in spending much for research and development (Figure 2). Figure2. Research and development scale Taking into account the marketing and research development moves that Toyota made, its customer perception was moved from the cheap and reliable to the best quality car at competitive prices. Such consumer-oriented approach gave the company opportunity to earn its five percent of rise of market share over the last five years, along with the healthy rise in profit margins as well. The brand loyalty was also reached to fifty percent, making it the market leader in retained business (Hoque, et al, 2013). In addition, with the implemented cost leadership strategy, Toyota showed that its cost reduction, quality and accurate delivery of services are able to provide the impetus for the worldwide shift with regard to the enlargement of cost-cutting strategies (Baroto, Abdullah & Wan, 2012). While the cost-leadership strategy was aimed to supply a certain standard, high volume product of Toyota became available to the customers for the most competitive price. That was very important especially in those countries like Malaysia and Indonesia where the level of living does not allow spending much on the vehicle. According to New York Times (Soble, 2015), due to the growing car market in U.S. and the favorable exchange rates, Toyota succeeded to close the most profitable year. It also remains the larger lead company with regard to its profit. This is one of the strengths of Toyota, since it has led the global auto industry and despite the crisis period managed to stain in the top leaders in its industry. Besides, Toyota’s strength is in its reliability and high quality image of research and development, in addition to the biggest spent amongst car manufacturers and innovative and in time production of vehicles. In addition, Toyota has big financial capability of its bank (Hoque, et al, 2013). While the sales of electric cars and plug-in hybrids are slow, that calls for an implementing of green cars on hydrogen fuel cell technology that would be popular in the future. Here Toyota wants to be a leader since it favors the use of hydrogen instead of batteries to power its green vehicles (Fleming, 2014). Its launch of a fuel cell sedan in Japan and U.S. means that it goes the eco-friendly path now, which is a competitive advantage for the company and its strength. There are also certain weaknesses in Toyota’s operations, such as a decline in the energy and marketing segments and weak performance in Asia. As The New York Times informs, Toyota also face serious challenges. First of all it is the shortening of its home market, Japan and the retard from China, the market where more vehicles are sold (Soble, 2015). While it is considered that Toyota’s strength is to have a distinctive brand image, however, it can become a weakness if the eventual success of Lexus will go by with time. Besides, localizing should also be focused on quality control. However, the organization cannot manage the macro factors, therefore, Toyota cannot expect it will handle all situations connected with those factors. Despite the introduction of hybrid technology, it has extracted big sum of investment from the company and not Toyota needs to capitalize on the expense they made. Since car manufacturers are producing a big amount of cars, that creates certain threat to Toyota, e.g. the company needs to make sure that Toyota’s vehicles are exactly what consumers want to purchase. Nkomo (n.d.) states that since Toyota’s main markets are the U.S. and Japan, the company will be always under the influence of changing economical and unstable political conditions. Moreover, the increase in the cost of raw material is another threat to future profitability in addition to the stronger yen that can threat its profit margin. In such a condition, Nkomo argues that any change in the currency exchange rates can reduce Toyota’s profit margin. Therefore, the company should produce more cars to keep its competitive advantage. However, that would need more investment in terms of labor and raw material. The company should also be aware of the change in market trend that can cause overproduction (Nkomo, n.d.). Despite the facts of recalls of Toyota’s vehicles, especially the last one connected with the inappropriate quality of airbag, the company still believes that excellent quality and customers should go first in its philosophy. Besides, Toyota’s product development, marketing strategy creates all predispositions in trusting its service and quality of product. Soble (2015) in his article highlights the key factors of vehicles such as volume, exchange rates and fixed costs that are the most favorable for customers and Toyota has such qualities. If to combine all these features, one is able to create a good shape. Since Toyota is capable to go this way, it is worth trusting. Moreover, some analysts predict total sales in the U.S. will exceed seventeen million vehicles in 2015 and that is the number indicated for the first time since the financial crisis (Soble, 2015). There is also a sense to understand the unique strategy of Toyota that made it one of the biggest vehicle manufacturers. With its precise attitude toward every piece of its vehicle, like the measuring of the noise that car doors makes, it becomes understandable why the company is the leading one. Moreover, the world’s first implementation of commercial hybrid car forecasts Toyota better future comparing to its competitors (Stewart & Raman, 2007). Despite the positive prognosis for Toyota company, due to the growth in car sales in the U.S., Japan, and Western Europe, the company is expected to remain slow. Therefore, it will search for new opportunities in the emerging markets to produce sales growth, such as India, Russia and Brazil (Profitability analysis, n.d.). Works cited Baroto, M., Abdullah, M. and Wan, H., 2012. Hybrid Strategy: A New Strategy for Competitive Advantage, International Journal of Business and Management; Vol. 7, No. 20, [pdf] Available at: [Assessed on February,13th, 2015]. Fleming, C., 2014. Carmakers prepare to shift to hydrogen fuel cells, The Los Angeles Times, [online] Available at: [Assessed on February,13th, 2015]. Guiding Principles at Toyota, n.d., Official website for Toyota, [online] Available at: < http://www.toyota-global.com/company/vision_philosophy/guiding_principles.html>[Assessed on February,13th, 2015]. History of Toyota, n.d., Official website for Toyota, Available at: [Assessed on February,13th, 2015]. Hoque, I., et al, 2013, Analysis of Toyota’s Marketing Strategy in the UK Market, European Journal of Business and Management, Vol.5, No.20 [pdf] Available at: [Assessed on February,13th, 2015]. Nkomo, T., n.d. Analysis of Toyota Motor Corporation, [pdf] Available at: [Assessed on February,13th, 2015]. Profitability analysis, n.d., Stock ana;ysis on net, Available at: < https://www.stock-analysis-on.net/NYSE/Company/Toyota-Motor-Corp/Ratios/Profitability#Operating-Profit-Margin>[Assessed on February,13th, 2015]. Review of operations, 2014, The annual report, Available at: < http://www.toyota-global.com/investors/ir_library/annual/pdf/2014/ar14_e.pdf>[Assessed on February,13th, 2015]. Soble, J., 2015. Toyota Profit Gets Lift From U.S. Market and Favorable Exchange Rates, The New York Time, [online] Available at: [Assessed on February,13th, 2015]. Stewart, T. and Raman, A., 2007. Lessons from Toyota long drive, Harvard Business Review, [online] Available at: [Assessed on February,13th, 2015]. Toyota, n.d., Wikipedia.org, Available at: < http://en.wikipedia.org/wiki/Toyota> [Assessed on February,13th, 2015]. Read More