Toyota - Strengths and Weakness, Improving Leadership Performance - Report Example

Management of the of the Data Contents Introduction 3 Company Background 3 Survey Results 4 Company Strength and Weakness 6 Strength 6 Weakness 6 Analysis and Discussions 6 Recommendation 11 Challenges and Solutions 12 Lessons Learnt 12 13 References 14 Introduction Leadership in an organization is an integral aspect that guarantees long-term viability of the organization. Researchers have argued that leaders have a responsibility to set the mission for the organization, overlooking the practices and processes that are followed by the organization and finally ensuring that the goals that are set for the subordinates are ultimately reached by them (Ciulla, 1999). The contemporary leadership suggests that, apart from fulfilling the professional duties, leaders also have the responsibility to fulfill certain personal leadership qualities like caring for the employees, providing personal care for their professional growth and act morally to ensure that the stakeholders does not lose trust in the organization. There is a plethora of evidence in the management literature that suggests effective leadership in an organization is the key to improve the performance of the organization (Kirkpatick and Locke, 1991). Leaders are bestowed with the responsibility of improving both the people-related process as well as the task-related processes in an organization which makes their role even more crucial. This paper has used a questionnaire survey to collect relevant information regarding the aspects of leadership that are followed in the organization to obtain an understanding about the current leadership practices in the organization. The rest of the paper is organized into six segments. The first segment provides a detailed description of the company and its business profile. The second section provides the survey results that have been obtained from conducting the questionnaire surveys. This is followed by an assessment of the strengths and weakness of Toyota. The fifth segment deals with the analysis and discussions relating the present practices to the theories in the literature. This sixth section is recommendation which can help Toyota to improve its leadership performance. The final section provides a description of challenges faced during the research and the ways they were overcome. Company Background The Toyota Motor Corporation is headquartered in Aichi, Japan. Founded in August, 1937 the company began its humble journey and by the end of 2012 it had become one of the largest and most powerful names in the global automobile industry. In 2012, the capital value of the company was estimated to be around 397.05 billion yen. Presently the operations of the company are spread across the continents of North America, Asia and Australia. The company is mainly involved in the production and sales of the automobiles. In 2014, the company had a total of 338,875 employees working for it all over the world. In 2012, the company had a market share of 45.5% in Japan and 13.4% market in Asia excluding Japan. In North America the company had a market share of 12.2% in 2012 (Toyota, 2012). The company is engaged in the production, manufacturing, designing and sales of automobiles. This forms the core business of the company. Apart from producing automobile parts and vehicles, the company is also engaged in providing financial services to its clients who can be considered as a secondary business of the company. There is a global reputation of the company for producing superior quality vehicles at an affordable cost. Toyota has been driven by innovation in its business practices that have cemented its position as one of the biggest automobile manufacturers in the world (Ichniowski & Shaw, 1999). Constant innovation in the organizational practices and respect for the entire workforce are the two pillars which provides the basis of business strategy of Toyota. Survey Results A questionnaire survey containing 14 principles of leadership were used in this research. The principles were of alignment, distributed leadership, integration of effort, Out-Front principle, Up-front principle, resourcing in medium term, time based, bias for action, learning focus, discipline, reporting and publication, customer value, capabilities creation and micro to macro. The answers provided by the respondent have been plotted in the following graph. Figure 1: Graphical representation of answers obtained (Source: Author’s Creation) The above graph shows that the scores obtained are in the range of 3-5. The manager had reported that a score of 5 was obtained in seven aspects namely alignment, distributed leadership, time based actions, learning focus, discipline, customer value and micro to macro approach. Similarly, a score of 4 was obtained in five aspects namely integration of effort, up-front principle, out-front principle, bias for action and reporting a publication. A score of 3 was obtained in the areas of resourcing in medium term and capability creation. The survey had used a scale of 1to 5 Likert scale to rate the questions. A score of 1 would have indicated that the company does not follow that principle at all, 2 indicates that the principles are followed weakly, 3 indicated principles are followed to a moderate extent, 4 indicates policies are followed to a large extent and 5 indicates policies are followed to a great extent. The scores of Toyota, therefore, indicate that the company follows most of the principles of leadership in an appropriate manner. This is perhaps one of the reasons which have provided Toyota with a competitive advantage among rivals in the automobile industry. Company Strength and Weakness Toyota has created a global reputation for itself for being one of the most reliable names in the automobile industry. The major strengths and weakness of Toyota are presented below: Strength The innovative work culture of Toyota and the leadership are the biggest strengths of Toyota. The company makes enormous investments in the research and development departments to develop quality products. The brand reputation created by the company has allowed it to become a global leader. In 2013, the company had emerged as a top brand in the car market after beating Ford, Chevrolet and General Motors. The creation of environmental friendly vehicles has made Toyota a leader in the market to embrace the culture of production of green culture. The vehicles produced by the company have been trusted as one of most reliable and durable ones providing value for money to the customers. It has been reported as one the companies with best human resource practices and learning culture allowing personal and professional growth of the employees. Weakness Despite being a global presence, Toyota has been unable to continue to grow strongly in the emerging countries. The financial crisis of 2008 has had a major impact on the revenues of Toyota and the company had reported a loss in that year. Despite boasting about the quality of the products produced by it, Toyota had faced issues of recalls in the past which had hampered its brand image. Analysis and Discussions The management literature has pointed out that the corporate vision of a company can only be realized when the leaders are efficient in communicating those goals to the subordinates. According to the research conducted by Judge, et al. (2002) it has been observed that strong leaders who are dynamic, charismatic and strong have an ability to align the personal goals of employees to that of the organization. Transformational leaders have been found to integrate the organizational goals with the goals of individual employees which enhance job satisfaction of employees (Bass, 1991). Mr. ABC has revealed that in case of Toyota it has been reported that the company builds individual teams around processes and team leaders are given the responsibility to guide their teams. The leaders constantly strive to invoke innovation regarding the process of work which inspires the team to work in a better manner. The second question was regarding distributed leadership which relates the concept of providing leadership responsibilities to individuals and teams which can improve the overall performance of the organization. The idea of distributed leadership comes from the rationale that leadership is not the forte of a particular individual. It is rather a fluid or dynamic concept that flows through the organization and is an organizational entity. According to researchers like Harris (2008), it has been observed that distributed leadership is positively correlated to organizational performance. The management of Toyota is exactly based on this principle as the leadership power in the organization is focused on empowering the small teams. The interview with MR. ABC at Toyota office had revealed this as he was constantly highlighting the concept of individual team empowerment of the company. The third question probed about the fact that whether the organization is a hierarchical one or a one that is based on value creation. The answer clearly indicated that lean teams are the backbone to the problem solving nature of the company. There are three types of teams in the company which reduces the need of senior management intervention. The problem solving teams looks after resolution of the problems while the management teams are responsible for making strategic decisions. Networking teams on the other hand are focused on improving the skills of the employees. This proves that the organization is indeed a value creating one and not a hierarchical one. Effective teamwork is the key to organizational excellence as has been shown in the research of Tarricone & Luca (2002). The management literature states that the first mover advantage has the ability to create consumer awareness and provides added competitive advantage to the firms. The fourth and fifth question in the interview was framed around this line. The interview had revealed that Toyota has been a leader in terms of providing green cars and other vehicles that are environment friendly. The experience of Toyota can be equated to that of technological innovation that emanates from the patents in research and development as has been revealed by Mr. ABC. He has also revealed that the company has a strict line of business ethics and corporate governance that guides the business practices. It has been observed that organizations which follow transparent business practices are able to create higher value for the stakeholders and a better reputation in the market. Better reputation in the market attracts higher investment in the company thereby, strengthening its brand image (Porter & Kramer, 2002). The eleventh question in the paper was also related to the transparency of the business practices followed by the company. Mr. ABC had happily recalled the moment when the company was rewarded with the title of hyper transparency in terms of its corporate governance. Reporting of financial and non-financial information has become an integral part of the overall corporate strategies to improve the accountability to the stakeholders (Warrington & Caldwell, 2000). It has been observed by Bushman, Piotroski and Smith (2004) that the transparency in the reporting practices of business not only improves accountability to stakeholders but also improves the attitude of the managers to look beyond personal interests of managers and focus on long-term objectives of the company. The sixth question was related to resourcing needs in the medium term. Mr. ABC is not very content with the present system of resource allocation and has provided a rating of 3 to the resource allocation strategies. He had expressed that there are often lack of funds to meet the short time resources. The ninth and the tenth question in the questionnaire were related to the concept of organizational learning and the prospect of creating strong system perspectives in business. Mr. ABC had revealed that Toyota has incorporated the system of training and development programs as a part of its work culture. Armstrong & Baron (2000) has commented that organizations should formulate training and development programs according to the needs of the employees. Failure to do so may result in the poor performance of organizations. Mr. ABC had confirmed that Toyota implements lean manufacturing systems that has greatly reduced the cost that is required for manufacturing. “The Toyota production system” has been implemented by the company to reduce the wastage to maximum possible levels which have made the cost-cutting objective of the company a stark reality. The business practices are based on Jidoka and Just-in-Time Production (Toyota, 2011). The seventh question in the questionnaire was related to the aspect of time management in the assembly line of the company. The answer obtained had strongly supported that wastage in time reduction is one of the primary concerns of the Toyota management and the production process is deeply committed to the reduction of time required for assembling products in the assembly line. The eighth question was related to the efficiency with which new ideas and strategies are implemented in the business. According to the response provided by Mr. ABC, there is no such problem in implementing new strategies. The strategic plans are formulated at the corporate level and the management is provided clear instructions regarding the implementation of new approach. The twelfth question was regarding the customer-centric approach followed by the company. Mr. ABC had confirmed that Toyota is a company that mainly develops products based on the needs of the customers solely. The management of the company has focused on the formulation of teams because this enables each of the team to understand the expectations of the consumers and develop products that satisfies their needs closely. The Dibb (2001) satisfying the need of the consumers is at the centre of the marketing of any firm. Following the needs of the customers and satisfying those needs are at the centre of marketing philosophy. Kotler and Armstrong (2013) had also commented that societal marketing has become the focal point in the contemporary age, as companies are trying to cater to the specific needs of the customers to maximize customer welfare. The thirteenth question was regarding the creation of capabilities and the response provided by Mr. ABC confirmed that there are certain pressing issues which require immediate investment. He could summon a score of 3 in this aspect. The final question in the questionnaire was related to the role that is played by the individual employees in the overall business structure. Mr. ABC had said that building strength of individual employees is the priority of Toyota production system. Mr. ABC had described that the system of managing people is based on creating individuals with multi-tasking capabilities who have the power to solve crucial problems so that it requires no intervention on the part of the senior management. This not only saves considerable time of production but also saves the cost of hiring consultants to solve any type of organizational problems. The individual efforts put up by the employees help in achieving the overall organizational goals. The company strives to produce superior quality vehicles for customers at an affordable cost and strives to achieve this by developing the efficiency of the individual employees. Researchers have found that employee empowerment and participative decision making are management tools that have been used by many companies to obtain competitive advantage over their rivals. Locke and Latham (1990) have provided evidence that the best managed organizations are the ones that have effectively empowered the employees by delegation of duties and decentralization of power. Motivation of employees can be effectively achieved through empowerment and the interview with Mr. ABC has provided testimony to this fact. The issue of sustainability in Toyota was raised in the course of the interview with Mr. ABC. Mr. ABC had confirmed that Toyota had become one of the legal legislators in formulating laws related to corporate social responsibility. It was clearly expressed by Mr. ABC that Toyota has accepted the responsibility it has towards the broader society as a whole and is performing the responsibility to improve the local communities around which it is working. Mr. ABC has confirmed that Toyota works in four main directions to ensure that the issue of sustainability can be maintained namely pollution prevention, product stewardship, use of clean technology and vision of sustainable practices (Liker, 2004). According to Mr. ABC, Toyota has excellent pollution prevention mechanism which aims at reducing the overall emissions from production and minimizes the production of waste. Toyota uses product stewardship programs that have the capacity to recycle products in an environmentally friendly manner and use least toxic materials in the product design. Mr. ABC had strongly asserted that Toyota uses clean technology to focus on repositioning and innovation of brand. Toyota is also involved in number of charitable programs like donating for students programs and conducting programs for eco-driving. Toyota’s strategy can be found close to the strategy described by Carroll (1979) who had stated that, majority of the organizations invest in sustainable practices primarily because of two purposes namely improving the brand image and profitability resulting from cost savings. According to the definition provided by Beamish (1990 cited in Hassel, et al. 2003), internationalization is a process followed by firms to improve their awareness regarding direct and indirect influences as well as establish transactions with other countries. Internationalization definitely comprises of grabbing opportunities that are not available in the domestic market. From the information obtained from Mr. ABC the internationalization process of Toyota can be compared to that of the model that had been developed by Korhonen, Luostarinen & Welch (1996). The researchers had confirmed that internationalization has four main stages. The first one is when the firm has no international operation, the second option is when the firm imports raw materials or conduct technology transfer. The third stage is involvement in outward process like exporting and ownership of manufacturing subsidy and the fourth stage is establishing co-operation strategy with other firms. The issue of internationalization in Toyota has a long history according to Mr. ABC. It began after the Second World War when the company had to almost re-establish itself from a scratch and this was the first stage. The second stage was the entry in the American market and the third stage was its consolidation there. Finally, the current phase can be characterized by expansion strategies by investing in the emerging economies by focusing primarily on the poorly served market segments. Recommendation Conducting the interview with Mr. ABC and conducting secondary research on Toyota had revealed that Toyota is a company that largely derives its strength from its innovative culture and effective human resource practices. Though the brand name of the company and its global presence can be considered as major strengths yet, few weaknesses have been found out as well. Based on the primary and secondary research regarding the topic few recommendations can be suggested that can help Toyota to improve its performance even further. Firstly, it was revealed during the research that resourcing in the medium term is not a very strong point of the company and this could be improved in future. The problem of allocating resources in the short and long run needs can be improved by introducing corporate bodies and forums that can consider the long-term needs with the short and medium term objectives. Constructing a balance is crucial and reviewing the progress is equally important. Secondly, it is imperative to improve the capabilities creation of Toyota. The numerous issues of recalls in the past are evidences that, certain investments need to be made in the business which can prevent these instances in the future. It is extremely important for the company to invest in factors like limited availability of spare parts and faulty parts which can reduce the instances of recalls of previously launched vehicles. This need should be balanced with the ambition of creating technologically advanced cars in the future. Thirdly, it has also been observed that Toyota had limited expansion in the emerging economies as it has limited presence in these countries. Expanding in virgin markets can provide the opportunity of first mover advantage to the company which can improve profits. Finally, the issue of resource allocation can also be improved by improving the communication between the parent and subsidiary companies by integrating the local needs of each region. Challenges and Solutions Conducting the interview with the Mr. ABC was an uphill task as the manager is an extremely busy person. Contacting MR. ABC through the Human Resource manager was the most formidable task of the operation. I believe convincing the HR manager to fix an interview with Mr. ABC was a daunting task. The purpose and nature of the research was thoroughly explained first to the HR manager to convince him that the research will only be used for the purpose of an academic project. There were initial resistances to the idea in the form of reluctance of the HR manager to set a proper time and date for the interview. However, effective communication with the HR manager has been the key to solve this crisis. I had to clearly explain to him that the interview will cause no possible harm to the business interests of the company. It can however be helpful to point the existing flaws and help in their improvement. Once the interview was fixed it was really difficult to choose the correct set of questions that can yield maximum response in a small span of time. Preparing the questions required reading of relevant articles regarding leadership and management by consulting the works of other researchers. Initially it was challenging enough to find the correct articles that would help me to grasp appropriate knowledge about the topic. This phase had required considerable amount of research on my part which I had find extremely challenging. In order to overcome this challenge, I had to invest considerable amount of time and energy to select the appropriate academic literature. Lessons Learnt I believe completing this research has been able to improve both my professional and personal self. Professionally, I have learnt the ways in which I should be approaching people when I enter a formal job environment. Personally, it has helped me to improve my knowledge regarding the subject that I have chosen. Reading the scholarly articles regarding management and conducting the interview has allowed me to link my academic knowledge to a practical context. The fact that, I have been able to relate my academic knowledge to the practical scenario has been the greatest aspect of working on this project. I have learned to focus on my objectives strongly and handle complicated situations in an effective manner. In the initial phase of conducting the project I had to use the internet widely to collect information regarding the data to compare and contrast my findings. This has helped me to improve my internet using skills. The most important learning from this project was improvement of my convincing power to tackle adverse situations. I believe I will carry forward this learning with me in my professional life where similar challenges may arise and I can use this experience to combat these challenges. Conducting the interview was an experience of a lifetime. Meeting Mr. ABC and talking to him about his company and discerning the core principles were indeed an enriching experience. The answers provided by Mr. ABC have allowed me to understand that Toyota has been able to grow as a company based on its principles of management and leadership solely. The commitment of the company towards excellence is strongly rooted in its robust culture of innovation and human resource development. References Armstrong, M. & Baron, A. (2000). Performance management. Human resource management, 69-84. Bass, B. M. (1991). From transactional to transformational leadership: Learning to share the vision. Organizational dynamics, 18(3), 19-31. Bushman, R. M., Piotroski, J. D. & Smith, A. J. (2004). What determines corporate transparency?. Journal of accounting research, 42(2), 207-252. Carroll, A. B. (1979). A Three-Dimensional Conceptual Model of Corporate Performance. Academy of Management Review, 4(4), 497–505. Ciulla, J. B. (1999). 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