Global Strategic Management - Toyota Company - Case Study Example

Global Strategic Маnаgеmеnt Name: Number: Course: Code: Lecturer: Date: THE HISTORY OF THE PRODUCT The Toyota Company was started by a separate and independent company in early 1937 by a family called ‘Kanji Toyoda’. Later, the name was renamed synonymously to Katakana (Toyota). The name was renamed because the ‘Katakana’ is an eight letter word it signifies a lucky number in Asian traditions and culture. Because ‘Kanji’ is basically character of Chinese culture, most of the vehicles have been renamed after it but with their ascent. At the course of Second World War, the company was committed to production of heavy commercial vehicles like trucks specifically for imperial Japanese army. However, due to severe deficit in the country, Japan, the armed forces’ trucks were simplified as much as possible e.g. they had only a single headlight. After the Second World War, Japan faced severe financial crisis forcing the production of private public vehicle in 1947. Two years later, the company was on it knees to collapse, but it was saved by bank loans. The banks raised an independent sales body that dealt away with a lot of sale brokers. By 1950, over 300 trucks had been produced by the company and were ready to venture into the business. The managerial team proclaimed wage reductions and retrenchment which provoked the workers’ union to strike. The unrest lasted for two months though it was resolved late by an agreement that rendered some top management team laid off. For instance, the president of the company by then, Kiichiro was forced to resign and succeeded by another director. After reshuffle of the management team, the company increased its production and up to five thousand tracks were produced. With that increased production, a new plant was constructed in 1949 that gave the company a lead over it competitors. Several sales companies were established in different parts of the world. For instance, in 1950, Toyota Motor Sales Company was set up though it lasted shortly. By 1957, a new model, called the Crown was the first Toyota car designed by Japanese to be exported. One year late, sales raised up to 288 vehicles, 287 were Crown and one Land Cruiser. It created a lot of curiosity when it was realized that the vehicles had quality features with readily available spare parts. This promoted the company’s reputation, and sooner, the company was the flag bearer. As many people realized the reliability and quality of their products, volume of sale increased steadily. By 1972, the company had sold a total of one million vehicles of different models. In the same decade, the company launched its marvellous marketing campaign using various principles like, ‘Ask and You will get it.’ By the time it was the company’s 25th birthday, it had opened national headquarters for selling its products. Since then, the company has created several other plants in the world due to increased consumption of their products. TOYOTA’S GLOBAL STRATEGY Some of the strategies that are used by Toyota Company so as to gain success on some selected markets to expand business and to inflict theses selected markets are the strategies that were formed by Japanese professionals. The strategy that mostly based on Japanese companies especially on Toyota Company is KAIZEN strategy meaning an on-going improvement and the effects that it has on the quality of a product. “KAIZEN” strategy is an integrative idea meaning multi-functional strategy that employs steady management, improvement and continuous company activities and the parameters of productivity (Liker, 2004), competitiveness and quality, which involve all the staff of the company. The strategy employed in the products of Toyota Company is majorly based on development of new innovative technologies, quality, creativity, hard work and focusing on further research. Toyota Company is the global leader in research and development of highly developed automotive industry in the market. The company comes up with quick responses to the challenge s facing the motor vehicle industry today, while taking the responsibility of generations to come. When it comes to challenges of pollution, the company explores at the same time a number of solutions for designing vehicles that are polluting. Toyota Company is dedicated to developing hybrid systems as a major factor in developing clean technology vehicles that combines various sources of power (Ohnsman, Green &Inoue, 2010). The company has made a major progress in developing engines which uses alternative sources of energy. One of the approaches is merging two different sources of energy in one system with the possibility of using the two. This solution is regarded as hybrid technology and it is one of the potential ways of achieving Toyota’s green machine. Alternative ideas require a way of expression, and upcoming technologies must be tasted in day after day life. As a result, Toyota creates concepts like Fine-engine power-driven by fuel cell or CS and S roadster driven by a Hybrid Synergy system. One of the valuable properties of Toyota is the production technology of engines. Advanced designs and range of Toyota engines shows the kind of standards that is set by the engineers of the company (Taylor, 2003).. Toyota’s engines are devised for performance and comfort, while it always aim at minimizing optimal consumption of fuel and emissions. Therefore, today, the company offers its customers the following advantages: petrol engines with improved technology, D-4 common rail turbocharged engine, variable rate control valves VV-i and VVT-I all available in D-CAT variant to furnish Avensis, distinctive hybrid propulsion system Synergy Drive. Safety is one of the priorities of Toyota Company. Advanced brakes, steering systems, traction and suspension control assists in keeping control of the car. Every car is designed with a lot of care regarding to safety, by use of crash tests and sophisticated computer simulations. Chassis and body are designed in a manner that absorbs energy from shock and offer an optimum occupant protection; moreover there is use of airbags to provide protection. The company has made over time many improvements and innovations in passive and active safety. Toyota company makes customer analysis on consumer needs so as to win their confidence. Furthermore, this is backed up by outstanding performance of Toyota brands in Euro safety tests. Most of the customers trust Toyota brands and feel safe while driving them. This is a result of quality and outstanding designs of Toyota products The Japanese have focused their attention to markets with major potential growth. In Europe, the automobile company has invested a lot of capital in building production plants, design workshops and research centers. The company designers are searching visions, ideas and desires so as to develop sophisticated machines and technologies that adds quality to life In order to explore the European market, Toyota Company opened Europe Design Development in France so as to understand the local preferences and influences of the local citizens and potential customers. In France the Toyota team has created successful models like Corolla, Yaris, Corolla Verso, Land Cruiser and Avensis. Another key component in the strategy of Toyota Company is to build more design and research centers in the nearness of production facilities so as to bring particular items of the areas concerning the amenities and design. While penetrating foreign markets, the company adopts this strategy that think globally and act locally. Toyota has also implemented the strategy of direct investment on the stable and growing markets. Drivers of Toyota Company global strategies The journey of Toyota Company to becoming a leading automotive firm in the world has had several important drivers. The leadership of first Kiichiro Toyoda and Sakichi during the early days and later by Fujo Cho have been critical in Toyota Company developing aspirations to succeed on the international basis (Taylor, 2003). Homogenization of culture has played a big role since populations in growing economies particularly aims at owning a car. Countries like India, Brazil and China are regarded as big potential market for Toyota products with the middle class people seeking to own a car to confirm their status. Economies of scope and scale has been one of the drivers since the company made use of large scale economies by opening manufacturing industries in countries that have low cost of production, and exploited scope economies by ensuring that they share major parts across the lines of product together with other car manufacturers in joint business enterprises. Although there was some effects of emergence of new technology, Toyota Company decided to centralize all these activities in its international operations in the third globalization program. Reduction of trade barriers and deregulation has been another driver since it opened up markets in countries like China, and in turn it shaped up how the company went into the market by setting up joint ventures and alliances. Another key driver of the company is the strength of its global competitors (OICA, 2009). Kiichiro Toyada appeared to have been influenced by what he saw at Ford and the urge to compete at a certain level became entrenched with the fabric of Toyota Company. The company’s clear aim is to outdo General Motors as the leading global company in the automobile industry Challenges facing the global strategy of Toyota Company Although Toyota company has been one of the best car industry in the world, it has been facing a lot of challenges ranging from within the company to those emerging from the outside the company. Some of them are: Reputation of the company The main challenge is the understanding of the company of its obligation to the rest of the public especially if public’s interests and the perceptions do not concur with the company’s obligations. This happened due to the success of the company and the noticeable ease by which it became the quality icon. Apparently, this is partly the blunder of an approach to packaging and branding which oversimplified the most complex task of producing such exceptional outcomes. In fact, at some instance, people began thinking of Toyota as a quality company that makes automobiles and not as an automobile company that produces quality products (Taylor, 2003). Therefore, when quality did become the real product and the overall reputation divided into two: quality and size. This led to increased reputation risk. Since reputation component is unappreciated corporate value, it considerably increases the risk profile of the company contrary to the company’s success expectation. As the reputation of the company deteriorates, its sales volume decreases proportionally thus posing a lot of threat to the overall productivity. Financial crisis The stability of the currency globally has never been predetermined. Most operating companies take a lot of risks in their operations with their expectations held very high to make profits. This has been the case to Toyota Company as well. In the past few years, the world market experienced severe crisis that brought down their financial scale down. Most of them retrenched their employees and others even closed completely due to the effect. The Toyota Company was forced to restructure its strategic plans so as to accommodate disaster (Bak, 2003). The products which were already in the market were disposed at a throw-away price since potential customers had been equally affected. The company had invested heavily in their manufacture only to be disposed cheaply. Nonetheless, as in any financial crisis relating to the public especially in western economies, the customers started managing their own opinions of risks requesting more information. The company, in response, sought to be certain of its solid facts thus not coming up with information. As a result, cracks appeared i.e. difference in internal opinion. This exploded to external customers thus affecting their credibility and purchasing decisions. Certainty and complexity Increase in complexity of products and services pose a very big threat to engineering-driven industries. Problems emerge very fast and are not easy to diagnose and resolve. On the same note, the marketers would wish to evade from complexity and manufacture products several products which are very simple and reliable. Therefore, a gap between consumer benefits and understanding of risks emerges (Bak, 2003). When such problems arise, companies, like Toyota, should be proud of its processes so as to find convenient ways of resolving interior debates concerning the causes and possible solutions. The world is very dynamic in technological advancement and constantly requires new skills to counter-attack. This implies that new ideas should be integrated to meet the advancements. However, the certainty of these advancements is hidden and unpredictable. This makes the operational processes of the company very difficult. Competition Competition is very health for operational businesses. Companies compete for opportunities and secure market for its customers (Hara, 2004). Toyota Company has been facing very stiff competition from its counterparts like Mercedes Benz, Mitsubishi, and Isuzu among others. These companies have equally produced products that have beaten the world threshold. The fate of their products has been left in the hands of customers to decide which company to purchase. With this regard, the volume of the company sales has been declining. Although competition is good, the company has sometimes been left at stake. Poor market In the last two years, Japan, which is main producer of the automobile in the world, suffered severe disasters i.e. tsunami and earthquakes. In order to promote the automobile market, the Japanese government gave tax incentives so as to encourage the customers to purchase more vehicles. However, the company’s financial position globally had been threatened (Hill, 2009). The sales volume fell significantly in the world market. Therefore, the rampant disasters in the mother country have yielded poor market locally and internationally. Overcoming the challenges Going to social media Going into media provides the company a platform to air out issues to its esteemed customers and accommodate their views on the discussion (Cusumano, 2009). This is an opportunity that the company can make us of to express its plans to solve a given problem. Social media also gives the company an ample time of receiving feedback from its customers of their views and opinions on the quality of the products they get. Furthermore, going to social media is another way of advertising the company’s products. It creates awareness to customers on the available goods and services thus keeping constant touch with them. Lucky enough, the company is going towards the right direction maintaining a stronger emphasis on media team that is yet to come. Conclusion The global business strategy is a form of homework that any company in need of expanding global market must be keen on. After scaling the pressure for local responsiveness and cost reduction, companies should position very well their global business strategy: transnational strategy, global standardization strategy and international strategy (Bak, 2003). Toyota company has employed transnational strategy thus has emerged to be the world’s biggest car seller. However, the present crisis has posed a lot of threats to the company’s market image whereas the continuing crisis has been a hard working environment of Toyota. Both of these challenges require some divine wisdom and vast knowledge to handle. In fact, a lot of challenges do exist like the US Big Three are limiting the cost and quality gap with the company and other competitors has been steadfastly growing to beat the market demands. Nevertheless, there are a lot of opportunities that are emerging that will provide market for vehicles. The success of the company will depend entirely on the management strategies of the company. If the company puts in steady strategic plans, it stands better position to withstand the market challenges and survive. All these depend entirely on global strategic management (Liker, 2004). Reference List Bak, Richard (2003). Henry and Edsel: The Creation of the Ford Empire, Wiley Cusumano, M.A. (2009), The Japanese Automobile Industry, Cambridge, Mass: Harvard University Press Hara, M. (2004), Moving Target, Automotive Industries Hill, C.W.L. (2009), International Business: Competing In the Global Marketplace, 7ed, New York: McGraw-Hill International Liker, (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill Ohnsman, A, Green, J. and Inoue, K. (2010), Toyota Recall Crisis Said to Lie in Cost Cuts, Growth Ambitions, Bloomberg Business week, 06 May, 2010 viewed, http://www.businessweek.com/news/2010-02-26/toyota-woes-said-to-lie-in-cost-cuts-g rowth-targets-update1-.html OICA (2009), World motor vehicle production by manufacturer: World ranking of manufacturers 2008, OICA (The International Organization of Motor Vehicle Manufacturers), July 2009, viewed 09 April, 2010, http://oica.net/wp-content/uploads/world-ranking-2008.pdf Taylor, A. (2003), The Americanization of Toyota: The World's Most Profitable Car Company Is Adding Some Red, White, and And Blue to Its Corporate Culture, CNN, reviewed 29 April 2010, and http://money.cnn.com/magazines/fortune/fortune_archive/2003/12/08/355134/index.htm Read More