Strategic Management of Toyota Motor Corporation - Case Study Example

s Strategic Management essentially deals with the formulation as well as the implementation of various objectives and goals designed by the top management of the organization, relying on the resources after careful analysis of the internal as well as the external environment of the organization (Hitt, Ireland & Hosskisan 1999: 10). On a holistic level, strategic management involves structuring and offering a direction to the organization after specifying objectives, designing policies (both short term and long term), coming up with a plan to achieve the desired goals. In addition, the resources are allocated in such a way so as to most effectively implement the strategy. The decision making process involves a variety of steps and frameworks which are researched and studies by the scholars in the field to come up with an analysis. The paper will look at the policy analysis, formulation and implementation phases in depth to see how it works. Also, the Toyota Motor Corporation would be taken as a sample organization to see how strategic management would take place under the pretext of the organization. Strategic Analysis: Strategic planning is a functionality of organizational management which ensures that priorities are set right, energy is focused and resources are being depleted in such a way so as to strengthen the operations and ensuring that the employees are working towards the common goal so as to satiate the concerns of all stakeholders involved. Furthermore, via strategic management, the managers ensure that the intended outcomes or results are agreed upon and effectively communicated, also that the organization is adapting to the changing needs of time. In other words, strategic management is essentially an activity which ensured discipline and coherence in the decisions of an organization to the future goals by assigning roles and duties in such a way so as to achieve a higher success rate (Raimbolt & Barr 2012: 20). Furthermore, strategic management also deals with monitoring and analysis of the activities against the intended goals. Since the organization being discussed in this context is the Toyota Motor Corporation which is the third position automobile company globally, thus, strategic management is this case would be to effectively communicate the aim of the organization along with its goals to the subsidiary branches and thus, allocating resources in such a way so as to increase the success rate, i.e. better communication, improved economic integration and results oriented production activities along with consistent monitoring and evaluation of the activities. Furthermore, strategic management deals with the dynamic nature of activities which constitute systemic coordination and organization of processes while aligning the resources with the mission and the vision of the organization. In other words, the entire strategy over how to achieve the goals and satisfy the mission statement of the organization comes under the umbrella of strategic management. Also, strategic management deals with constant feedback for the decision making processes so as to evolve and transform the processes in case of divergence from the intended goals. This part of strategic management which essentially deals with monitoring and evaluation with respect to execution of strategy constitutes what may be referred to as the strategic analysis. Strategic analysis is an important for an organization as is the execution of strategy itself. For instance, the Toyota Motors Corporation has discrete goal to retain the sale of 8.8 million units, for which strategy at local level as well as regional and national level had been initiated, yet unless there is constant analysis of the program needs and outcomes, the execution wouldn’t give the desirable results (Chiarini 2005: 11-12). Strategic Management must take place systematically where certain steps are followed constituting the frameworks along with the methodology which have been developed carefully. Though given the dynamic environment of markets and environments, an absolute model can`t be generated yet, following steps may be followed to achieve strategic management goals; 1. Analysis/Assessment; understanding and researching on the internal as well as external environment of the organization 2. Formulating Strategy; designing a holistic strategy along with the strategy for the subsidiaries and carefully documenting the plan 3. Execution; translating the plan into operational planning and implementing strategic designs 4. Evaluation; evaluating the performance, communication paradigms and other communication needs of the programs being implemented to see if any amends need to be made Thus, in this context, strategic analysis seems to be quite a significant aspect of the strategic management since it needs to be dealt even before the real process begins in order to ensure smooth transitioning into subsequent steps. Thus, in order to avoid failing at strategic management, it is essential to focus on the analysis of goals alongside the internal as well as the external environment. The organization`s vision, its mission along with the strategic objectives constitute the goals. In order to analyze the external environment, looking into the competitors is an essential requirement which will pave way for the opportunities and threats which must be kept in mind which formulating management strategy. This external environment consists of demography, technology along with other economic factors. Also, other organization in the same field competing for similar revenues or outputs also makes up the external environment. Similarly, assessment of the internal environment is also crucial since it determines the strengths and weaknesses of the organization. This internal environment can be gauged by conducting an analysis of elements like the value chain of the organization, its HRM, marketing, advertising and other similar aspects. Application of the process and analysis of the strategic management into the firm being analyzed would give interesting insights (Lasserre 2012: 99-100). The Toyota Motors, as an organization has a dynamic and a farfetched internal as well as external environment. In the internal environment would constitute it`s production designs, quality control mechanisms, customer`s loyalty, mechanisms of value chain management and other human resource mechanisms, which would be analyzed to reap conclusions about the internal environment. Similarly, the external environment would be analyzed and in this case, the threats would emerge from the competitive environment where other companies like Nissan and Honda prevail, alongside various demographics which are constantly changing with time and also the macro-economic setup affecting the performance of Toyota Motors. Strategy Formulation: Since it has already been established that the strategy is the product of the effort, i.e. the plan which has been developed by the manager to achieve the goals and meet objectives. Thus, it is clear that a well designed strategy is the route to achieve a high level of effectiveness while monitoring whether or not the goals are being met. In this context, the entire phase where the strategy is being developed is what can be referred to as the strategy formulation. For instance, to ensure that the millennium development goals are being met, firstly, the firm will conduct an analysis after which, considering the SWOT analysis, a plan would be made at various levels to see how the resources would be allocated in order to get the maximum benefits out of the projects (David 2005: 24-25). Sometime, the broad goals are communicated to regional offices who then formulate strategy for grass-roots levels, yet, a holistic strategy is formulated by the managers to institute a systemic way over how to achieve the goals of development globally. Strategy formulation is yet another quite a significant step of strategic management. This step actively involves the analysis of the environment where the organization is operating, after which the decisions regarding the organizational management would take place, i.e. strategic decisions of the firm. Strategy formulation is conducted against a variety of goals and objectives which the management must measure as the firm is proceeding through the process. Thus involves the PESTLE analysis alongside Poter`s forces and the analysis of the internal environment. The PESTLE analysis deals with the external environment of the firm i.e. its political, economic, social, legal as well as environmental environment (Dess 2012: 86). Furthermore, Porter`s five forces would involve an industry analysis where rival organizations would be evaluated i.e. the bargaining capacity with respect to customers as well as suppliers, including any threat from those aiming at entering the market. Similarly, the analysis of the internal environment would include the internal strengths and weaknesses of the organization. Furthermore, strategy formulation deals with a variety of steps which may be followed in a strategic manner. These steps would then be built one upon another. In this context, two steps would be deemed necessary i.e. the environmental scanning and the continuous implementation of these steps. Environmental scanning, as mentioned above, in the step where considerate level of attention is put towards analysis of the external environment to see which factors may be effecting the performance of the organization, since the competitor`s behavioral patterns and performance will pay way for a strategy for the organization. Secondly, the continuous implementation implies execution of the steps being formulated in parts to ensure that everything is in order. In addition, a few more steps would take place which may also take place in the order being mentioned here. The first step is the value assessment, i.e. the inherent and the implied values of the organization must be kept in mind in order to ensure that the planning is coherent with these values, and that there is no conflict. In this case, an analysis of the personal values of the board members of the organization along with organizational culture and philosophy would be crucial to ensure that operational steps are unequivocal to these values. The next step deals with the vision and the mission of the organization, since these would be the foundation of the strategy and the formulation phase must ensure that the mission of the organization isn`t being ignored. The vision incorporated the core ideology of the organization along with the future which is envisioned by the senior leadership. The ideology is an essential part of the process since that is what binds the parts of the organization together, and that is what defines the values and the core purpose behind the functioning of the firm. A few managers ignore this step, while this is the most sensitive one in the entire process as this is inherently what defines the organization and makes it unique amongst the competitors. The mission statement of the organization is another pillar over which the organization stands, i.e. the expression of the ideology and intrinsic values of the firm. Thus, the mission statement facilitates the manager in the effective allocation of meager resources, further guides the organizational culture and limits the manager from touching certain boundaries prohibited by the code of conduct designed by the leadership. Also, it helps the manager plan and formulate the policy within a time frame, assigns a certain criteria and also facilitates the accountability procedures of the firm. Thus, as simple and unimportant as this step may seem, an analysis of the values and mission statement makes the manager`s job confined to a manageable sphere of time and space. The next step in the process is strategy design, which deals with the planning out of the essential and accurate yet precise steps which the operational team would be following. These steps include the identification of the business (LOBs), i.e. the chart of activities which have been followed in the past and thus, can also be used as future reference. This step is followed by the one where effective and measurable success indicators are designed, which are yardsticks to measure the progress within the firm to see which goals and being met. Allocating timeline or deadlines to these goals is another crucial part of this particular step. Also, other important indicators of success may include investment returns and profits, marginal returns, customers` loyalty and also employee retention parameters. The next steps deals with the strategic thrusts, i.e. the process whereby the efforts are focused. In other words, more focus on enhancement of the quality of products and services, the marketing campaigns, forming alliances and joint ventures, also seeing if there is a need for liquidation or rather diversification. The last step incorporated the organizational culture which must be coherent with other steps involved. Thus, the strategy design process must be focused and precise where the manager has to make sure that the technicalities aren’t being compromised. The last step essentially deals with the performance audit analysis which sums up all the activities being conducted so far to measure success. In other words, the performance of the firm is again analyzed and evaluation to look for potential weaknesses, strengths, opportunities or threats. At the same time, the performance so far is measured in terms of output, and if need be, surveys are conducted to see if targets have been met. Once that has been done, the audit analysis leaves the manager with some recommendations to overcome the shortfalls after which the cycle may also repeat itself if need arises. Thus, performance is audited as a part of policy formulation to test if the manager was right in claiming the operational objectives to be true. In case of the organization being analyzed i.e. the Toyota Motors Corporation, the policy formulation stage is a very important one which must be clear and objective. Thus, the managers at country level as well as at global level need to first conduct an analysis, i.e. the PESTLE analysis as well as the Porter analysis to see where the organization is lacking, and since the objectives are more economic and political in nature, the environment would be analyzed accordingly. Once that has been done, the mission statement and the values of the organization need to be re-measured, in this case the mission statement is attract high value customers and also to retain the satisfaction level of the customers with respect to products and services. Also, the vision of the company is to make the organization such that not only the customers but also the others view the company as one which is respected by all. Thus the strategy would be to enhance efficiency with respect to changing environment, while enhancing brand awareness by marketing the hybrid vehicles in states like Japan, India and China to increase sales. Furthermore, ground-level strategy in this case would be to focus more or innovation and technological improvement, and at the same time adding hybrids as a differentiation strategy to attract to more customers. Similarly, the measurable indicators would also be political in nature, while in case of fiscal and economic terms; measurable statistics would also be used to measure impact. Once that has been done, the operational strategy can also be enhanced by concentrating on quality control mechanisms and strengthening the marketing strategy for the organization. Thus, Toyota Motors would follow the steps which any other corporate firm would follow with a different and a more relevant focus. Strategy Implementation Thus step of strategic management deals with strategic decisions over how the resources of the organization can effectively be managed, aligned and also mobilized to achieve the objectives. The resources include all kinds of human as well as physical resources i.e. processes, technical expertise, time, finances and other similar domains. Implementation solely deals with structuring the organization`s resources in such a way that maximum results are produced. In simple words, it involves communication paradigms of the firms, its PR objectives, incentives management, leadership management along with monitoring and tracking paradigms along with other similar parameters (Lynch 2012: 109). Sometimes, strategy implementation phase is also dealt as a day-to-day operational task which may also be termed as the operational management or in some cases it may also be referred to as the logistics management or even marketing management or other similar perspectives which imply the execution of the management decision taken by the managers. The tools utilized for implementation of a strategy may be quite diverse in nature. For instance, leadership may be one of the significant tools in this context, if the manager feels, leadership can be utilized as the resource of the company to persuade and motivate the middle level as well as the bottom level employees and managers to compete and meet objectives in time. Similarly, the structural design is yet another tool which can ensure implementation. In this context, the manager would essentially constitute teams in an effective way while determining the parameters of centralization. Also, the entire organizational chart may also be designed and communicated to the staff and lower managerial staff to help them understand the structural values of the organization. Similarly, human resource is yet another significant tool which must be made use of to further recruit teams as part of strategy, or to align the rewards system with the organizational culture. Similarly, the system of transfers or promotions is also included in the process where lay-offs may also be needed as a part of strategy implementation designs. At the same time, information and the control systems are also tools on the hands of the managers to achieve objectives, i.e. in order to revise or update the salaries of the pay grades, this tool may prove to be handy. Similarly, the budget allocation of the various departments and teams must also take place as part of the strategy. In addition, the rules and procedures with an inclination towards the values of the organization are also essentially part of the implementation of strategy. Thus, the organization`s tools to achieve the implementation objectives may be quite varied in nature depending on the organization. In the context of strategy implementation, the implementation at a global level must also be discussed. While considering the international scenario, dialogue and communication are the most effective tools to implement strategy. The leadership skills while implementing a strategy for a globally functional strategy play a great deal since flexibility and understanding diversity is the key to keeping all stakeholders on boards and the customers satisfied. Structural designs in this case must on only be converged with the mission statement and the vision of the organization, but also with the culture of the host country where the strategy is being implemented. In other words, the designs of all the states having stakes must be merged in such a way that foreign operations must be in sync with the operations at home, and it takes quite a planning on the part of the managers. Similarly, the control systems must also send a clear yet friendly message to the locals operating in host states to elevate the success level and be competitive with other similar firms. In this context, the diversification techniques alongside recruitment and other human resources patterns also need to be in sync with the labor laws and cultural traditions operational in the host countries (Sadler 2003:55). Thus, implementation at the global level is far more complicated and difficult. In case of the Toyota Motos, the global pretext of strategy implementation elaborated above needs to be kept in mind since the products are more popular abroad than at home. This implies that the organizational culture of the Toyota Motors as an internationally recognized organization must be keep in mind the local traditions and cultures, especially while execution of the operational management strategies. For instance, in some developing states, the hybrid cars may not be such a huge success, thus to make their presence visible in the developing countries, strategy of differentiation and marketing mechanisms need to be varied and focused. More importantly, customer responsiveness is crucial since the cultural constraints in a few localities deem disrespectful if response measures aren’t accurate which can affect market value. Furthermore, the manager must consult the local experts to designs effective campaigns. Similarly, recruitment criteria would be designed and implemented to match that of the locals. Also, the teams must be designed in the context of the changing needs of the time. For instance, the communication paradigms must be shifted to incorporate the social media dimension which is quite far-fetched. Thus, while implementing strategy, a social media staff would also be allocated its fair share of budget. Similarly, to achieve the goals, the resources would be spent where the need is highest and the implementation would lead towards measurable improvement. Conclusively, Strategic Management essentially deals with the formulation as well as the implementation of various objectives and goals designed by the top management of the organization, relying on the resources after careful analysis of the internal as well as the external environment of the organization. On a holistic level, strategic management involves structuring and offering a direction to the organization after specifying objectives, designing policies (both short term and long term), coming up with a plan to achieve the desired goals. In addition, the resources are allocated in such a way so as to most effectively implement the strategy. The decision making process involves a variety of steps and frameworks which are researched and studies by the scholars in the field to come up with an analysis. The paper looked at the policy analysis, formulation and implementation phases in depth to see how it works. Also, the Toyota Motors Corporation was taken as a sample organization to see how strategic management would take place under the pretext of the organization. Strategic planning is a functionality of organizational management which ensures that priorities are set right, energy is focused and resources are being depleted in such a way so as to strengthen the operations and ensuring that the employees are working towards the common goal so as to satiate the concerns of all stakeholders involved. Furthermore, via strategic management, the managers ensure that the intended outcomes or results are agreed upon and effectively communicated, also that the organization is adapting to the changing needs of time. In other words, strategic management is essentially an activity which ensured discipline and coherence in the decisions of an organization to the future goals by assigning roles and duties in such a way so as to achieve a higher success rate. Furthermore, strategic management also deals with monitoring and analysis of the activities against the intended goals. Since the organization being discussed in this context is the Toyota Motors Organization, thus, strategic management is this case would be to effectively communicate the aim of the organization along with its goals to the subsidiary branches and thus, allocating resources in such a way so as to increase the success rate, i.e. better communication, improved advocacy campaigns and results oriented activities along with consistent monitoring and evaluation of the activities. References: CHIARINI, A. (2013). Lean organization from the tools of the Toyota Production System to lean office. Milan, Springer. http://dx.doi.org/10.1007/978-88-470-2510-3. DAVID, F. R. (2005). Strategic management: concepts and cases. Upper Saddle River, N.J., Pearson Prentice Hall. DESS, G. G. (2012). Strategic management: text and cases. New York, McGraw-Hill/Irwin. HITT, M. A., IRELAND, R. D., & HOSKISSON, R. E. (1999). Strategic management: competitiveness and globalization. Cincinnati, South-Western College Pub. LASSERRE, P. (2012). Global strategic management. Houndmills, Basingstoke, Hampshire, Palgrave Macmillan. LYNCH, R. L. (2012). Strategic management. Harlow, England, Pearson. RAIMBAULT, C., & BARR, A. (2012). Emerging risks a strategic management guide. Farnham, Surrey, Gower. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=438436. SADLER, P. (2003). Strategic management. Sterling, VA, Kogan Page. http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=81155. Read More