Strategic Management and Integrated Approach - Case Study Example

yоtа Саsе Study Student’s Name: Institution: Date of Submission: Тоyоtа Саsе Study Introduction The history of Toyota Company traces back to 1933 as a branch of Toyoda Automatic Loom Works which started as an automobile production company. The company was founded by Kiichiro Toyoda who had traveled across Europe and Americas investigating automobile production and gasoline powered engines. The company is currently ranked Second globally in Production of Automobiles. Toyota Company produced its first Engine in 1935 and later followed by Type AA Engine in 1936. However, commercial production was delayed until 1947 when the first passenger vehicle Model SA was produced and by 1950, almost 300 trucks were already in market (Hill & Gareth. J2010). Expansion of the production came in 1960 when the company established research facilities in Thailand entering in partnership with Daihatsu and Hino Motors. The first production of Toyota outside Japan was in Melbourne Australia in 1963 which was then followed by expansion to Europe through Toyopet Tiaras in Finland, Denmark, Norway and Sweden. In 2008, weakening US economy and high fuel prices led to decline of sales mainly affecting Tundra Pickups, Prius, Corollas and Yaris (Hill & Gareth. J2010). The situation later worsened in 2010 when Toyota was forced to recall 8 of its models from the market after it was discovered to be having mechanical problems. This problem arose at the time the company was shifting it priorities from quality to quantity and it revealed problems within its internal process of making decisions. The issue of quality affects the safety of the company products hence affecting the larger North American consumer making the company to recall its vehicle for further inspection. The problem start when the company reacted slowly to issue facing its customers and the cultural differences between the US and Japan. For example in Japan the process of making decision is typically longer than in the United States, this is because in Japanese companies there is a consensus for action and the society company is operating the consumer activism is young and lawsuit unusual. And in the united state and the west countries, this lack of time sensitivity is interpreted as a lack of interest and uncertainty (Hill & Gareth. J2010). SWOT ANALYSIS. SWOT analysis shows the strength, weakness, opportunity, and treats of accompany in strategic management. The SWOT analysis of Toyota Motor Corporation is as follows; Strengths Inventive culture Toyota being the most inventive auto company in the world with strong traditions and specialized on regular innovation. It was the first company to introduce Total quality management, Keizen and Kanban systems in their organization. The company sells hybrid vehicles which they produce them in mass (Hill & Gareth. J2010). Brand name valued at $30 billion The brand of Toyota is one of the most valued automotive brands in the world. It is known because of its friendly environment, long lasting cars build with a lot of safety measures. Toyota cars are sold all over 170 countries in the world. The company is also one of the oldest and reputed vehicle manufacturers in the world which helps the company bring more brand awareness. Manufacturing leader in production and sales The company was the first to introduce lean manufacturing and total quality management practices in manufacturing process. The company dominates for quit sometime in these practices, its production and manufacturing cost was the lowest worldwide. Many companies has try to replicate the Toyota manufacturing systems but the company still remain the most favored and profitable manufacturing company in the entire world (Hill & Gareth. J2010). Strong brand collection Currently the company sells about 70 different types and models of cars under its brand name. The sell of Toyota cars does not increase its brand around the world but it meets the expectation of almost all the consumers. Toyota Company has also been able to produce a wide range of vehicle variants which are cheap fuel efficient and powerful engine performances. This means that the company has been able to satisfy the diverse customer demands and make it compete well with its competitors. The leader in ‘green’ cars development The understanding and research make the company environmental friendly which is making a mandatory requirement in the industry. Most consumers mind about the emission of gases such as Co2 and fuel efficiency of the cars they buy from the car industry. The sell of hybrid and efficient is the major strength of Toyota company that its most competitors cannot match in the industry (Hill & Gareth. J2010). Weaknesses Large scale recalls of their cars The company has been forced to recall millions of vehicles over the last few years due to mechanical problems associated with their problems. Such massive recalls have hurt the company financially and damaged the company`s reputation and brand. Unexplored emerging markets The company has not been successful in penetrating new emerging economies such as China and India. The company`s poor presence in China which is the largest automobile market makes it hard for the company to compete with the giant manufacturer General Motors (GM) which has a huge market share in the region (Hill & Gareth. J2010). The company has also been unable to explore the large European market as compared to other vehicle producers who have more grips in the market. This means that Toyota remains restricted in narrow markets in Asia, Africa and America. Opportunities Consumer`s perception of ‘green’ vehicles Toyota Company has ventured into production of hybrid cars which emit less CO2. These cars are becoming more environmentally friendly. Consequently they are attracting a larger number of consumers who are more aware of the adverse negative effects of air pollution caused by cars. These gases intensify the greenhouse effect which affects the life on the earth negatively (Hill & Gareth. J2010). Rise in fuel prices. The skyrocketing fuel prices are fast opening up demand for the Toyota hybrid vehicles which are more efficient as compared to vehicle produced by other companies. This has created an important opportunity for Toyota to explore and compete favorably in the automobile industry. Changing customer demands The company`s introduction of new car models has come handy for the changing customer needs. The company is now able to satisfy the various customer tastes and needs and in turn being able to meet a wider customer base (Hill & Gareth. J2010). Expansion through acquisitions Toyota has been able to successfully acquire other car manufacturing companies in the past. This has enabled the company to continue growing through gaining new skills, acquiring more assets and accessing new markets. This in turn has helped the company compete favorably with other manufacturers and expand its market share (Hill & Gareth. J2010). There is also an expanding automobile market and ready opportunities for launching new vehicles. This creates a good opportunity for Toyota which has been aggressive in invention and market penetration. The company has also specialized in production of hybrid vehicles which is the future of automobiles due to their efficiency in fuel consumption and engine capabilities. Threats facing Toyota New emission regulations There has been an increase in the number of emission regulations introduced by most governments on automobiles. These new regulations require a lot of investments in order to produce cleaner car engines which in turn adversely affect the profitability of vehicle manufacturers including Toyota (Hill & Gareth. J2010). Expected decrease in fuel prices There is an expected decrease in fuel prices due to expected extraction of more shale gas. This will consequently make the more fuel-efficient and electric cars more unpopular and less attractive to cost conscious customers who form major customer group for Toyota`s new models such as Prius (Hill & Gareth. J2010). Rising raw material prices There has been an increase in the cost of raw materials for manufacturing vehicles. These high prices will push high production costs and reduce profit margins for Toyota because raw materials such as metals are the main components in automobile industry. Appreciating Yen value The Japanese currency Yen has been appreciating in value compared to other foreign currencies. This appreciating value means there is a higher yen exchange rate against foreign currencies and hence lowers profits of the company because most of Toyota`s revenues are obtained from foreign countries (Hill & Gareth. J2010). Intense competition Toyota Company, just like any other manufacturing company faces an intense competition from other automobile producers notably Volkswagen and General Motors which are strongly growing. These companies provide strong competition in production and marketing of the vehicles. This competition has also led to companies offering innovative features at comparatively lower prices in order to attract more customers. This consequently increases cost of production and manufacture and hence lowering profit margins. Massive competition in the industry has also led to an entry of new manufacturers producing the same brands with better features and at lower prices. This competition negatively affects the growth of Toyota Company (Hill & Gareth. J2010). Natural calamities Toyota Company has manufacturing plants in many countries across the world including Japan, Thailand, China and Indonesia. Unfortunately these countries are prone to natural disasters which end up destroying these manufacturing plants and consequently decrease the company`s production (Hill & Gareth. J2010). Conclusion Toyota Company, through its innovative culture has been able to successfully produce hybrid vehicles over the recent past. These new variety of cars together with the hybrid and fuel-efficient engines has helped the company compete favorably in the automobile industry. Fuel efficiency and strong engine performances have been the factors for continued growth of the company. The few misfortunes that have struck the company in the past can easily be overcome if efficient and proper manufacturing processes are observed. However, the future of the company is brighter as more car brands are being invented (Hill & Gareth. J2010). References Hill, C. & Gareth. J. (2010) Strategic Management: An Integrated Approach. OH: South Western Cengage Learning, 2010. Read More