Building Quality Organization for Toyota Corporation - Case Study Example

Building Quality Organization for Toyota Corporation (Student Name) (Course No.) (Lecturer) (University) (Date) Table of Contents Table of Contents 2 Company Overview 3 Classification of Organizational Structure 4 Organizational Structure According to Mintzberg Theory 7 Effectiveness of the Organizational Structure 9 Evaluation of Effectiveness 10 Structural Problems and Improvement Mechanisms 12 Conclusion 13 References 14 Building Quality Organization for Toyota Corporation Company Overview Toyota Motor Corporation is a Japanese company founded in 1937 to engage in designing, manufacturing, assembling, and selling various automobile products such as cars, minivan, and commercial vehicles. The company also sells associated parts and accessories majorly in Europe, North America, Japan, and Asia. The current business brands are Hino, Toyota, Daihatsu, and Lexus. Currently, the business is leading in the auto manufacturing industry and eighteenth largest company globally. The annual revenue for Toyota Motor Corporation stood at $213 billion as at March 31, 2013 and about 333,498 employees. Toyota is successful business that operates in more than 170 states. Nonetheless, the industry has been facing huge survival threat (Nkomo, 2014). Oil accounts for 95% of the global energy used in transportation, energy security threats, concerns on the level of carbon emissions, and increased demand for fossil fuels within the emerging economies are the major factors shaping the industry. As a result, the cost of petrol used in powering the vehicles was predicted to increase which makes Toyota products less attractive to the customers. Based on these issues, to achieve the required competitive advantage, the company needs to adjust on its quality management practices. Toyota experiences several challenges since it has not integrated quality management practices into organizational culture. Classification of Organizational Structure Toyota Corporation has a structure set up in a manner that help the business reach the required goals and objectives. It is important to understand that depending on the nature of the business, the design of the structure could assist in reaching the goals or hinder the business from realizing such goals depending on the methods used to incorporate various key elements. Irrespective of the size, businesses can only realize huge sales and profit when they match their requirements with the structures utilized to achieve the set objectives (Ashkenas, 2010, 167). Inadequate structures often leads to organizational failures as they result in bewildering morass of contradictions, confusions, poor coordination of the roles and decision making process, and complexities. Considering the scope of Toyota Corporation, it utilizes a divisional structure as it operates within a wide geographical area with separated departments operating under one umbrella to take on various activities on the products and market areas. This type of structure offers significant benefits to the business since it ensures accomplishment of the duties on time. Nonetheless, this method limits communication in various locations especially when there is no coordination. Complexity, formalization, and centralization are the major elements of organizational structure. Complexity involves different activities taking place within the organization. Moreover, it is the extent to which differentiation exist within the business (Elsaid, Okasha, & Abdelghaly, 2013, 6). The horizontal differentiation involves different occupational tasks and administrative grouping that occur within the business while vertical differentiation refers to the amount of layers of management employed within the organization. In Toyota Corporation, there are different operations that need employees to have adequate skills and knowledge to ensure that the business achieves the required outcome (Anderson, 2010, 124). Toyota Corporation has offices in every country it operates within their Chief Executive Officers (CEOs). Therefore, it experiences complex hierarchical structure, which defines and outlines the rules and procedures that every employee need to adhere to for efficiency in the coordination of various responsibilities. These activities often allow the company to enjoy the benefits associated with efficiency. Organizations that utilize specialized formalized and centralized organizational structures such Toyota Corporation often has a tall hierarchy of authority which most researchers consider to be highly bureaucratic as it uses the mechanistic structure. Max Weber was the first used the term bureaucracy. Initially, the term had no negative connotation as it is used currently since it meant complex businesses that use hierarchical structures. The method used by businesses in reaching the decisions defines its level of efficiency and performance. Toyota Corporation has a centralized decision making system since it has numerous departments. Considering that each segment of the company has its CEO, the decisions should take place at the respective stations since the problems might not be common. Nonetheless, most departments are situated within organizational headquarter without decentralization of certain activities considered very critical. Decentralization of activities limit departmental capacity to deal with certain problems. The business needs to decentralize most of its activities in a bid to empower its satellite branches, encourage democracy, and ensure efficiency in operations. The business has been able to increase its scope of operation through encouraging specialization and division of labour. This has also been able to break down the responsibilities of the satellite businesses and assembling of the manufactured accessories within a centralized location (Elsaid, Okasha, & Abdelghaly, 2013, 11). Since most of the jobs are structured, the business has formalized structure, which takes into consideration the extent to which the business governs the rules and procedures of the workers. Moreover, formal organizational structures are considered to distinct the employees based on their positions. Businesses that practice informal organization seem to focus much on individual employees but formalized structures allow the evolution of the roles and positions based on the preferences and skills presented by individual employees. Organizational Structure According to Mintzberg Theory Henry Mintzberg developed a theory that views organizational structure to emerge from the interaction of organizational strategy, environmental factors that influence the operations, and the organizational structures. In order to ensure efficiency, businesses need to integrate properly these factors. Through integration of these factors, the business can create an entity that performs efficiently and meets the needs of the customers. Consequently, poor incorporation of these factors might lead in severe business problems. Different organizational structures often arise from different organizational features and forces responsible for shaping them. According to Mintzberg theory, these forces are the basic pulls (Liker & Meier, 2007, 107). Based on theory, Toyota Corporation seems to be portraying two defined organizational structures: professional and the machine organizational structures. The major factor defining the machine organizational structure is institutional level of standardization. Toyota Corporation has a formalized, procedure, several routines, and centralized decision-making. According to the theory, professional bureaucracy also forms the organisational structure. The main difference between profession and machine bureaucracy as viewed with Mintzberg theory is that professional organization depends on the trained employees who in most cases demand control over their work. With many restrictions at the work, professions and trained employees might not have the opportunity to improve their skills and ensure the achievement of organizational results. Therefore, in regards to professional bureaucracy, there is high level of specialization and associated decision-making process is decentralized. In the company, profession organization refers to just a typical structure since large number of employees are knowledgeable. Professional organization structures are complex in nature because of their rule and procedures. Hence, these organizations seem to enjoy the advantages that result in efficiency of the machine structure although the output results from the professionally trained workers enjoying the autonomy (Mintzberg, 2007, 197). Nonetheless, the employees within professional and machine bureaucracy typically tend to follow the machine structure. The demerit associated with professional bureaucracy that the company experiences is lack of control among the senior executives over some activities considering that the authority and power seem to spread down in a hierarchical manner. Consequently, the structure makes changing the company difficult. Effectiveness of the Organizational Structure The main organizational goals and objectives that define business activities undertaken by Toyota Corporation include increasing the level of productivity by 20% annually, ensure adequate reduction in the operational expenses and cutting down the expenditure by $2billion annually, and increasing the level of profitability by 10%. Based on the revenue objective, Toyota Corporations aims to increase the level of its total revenue. However, to achieve these objectives, the business would have to increase its market share, the level of saving, and create a positive image on various brands especially with increased concern on environmental sustainability towards the customers. Organizational structures determine the quality of the services that the business offers. The acquisition of the needed competitive advantage depends on organizational commitment to marketing activities and investment on qualified employees to ensure greater levels of efficiency and effectiveness of the services offered to the customers. Consequently, Toyota Corporation invests a lot of resources focusing on the means rather than the end in achieving the required results. It is important to note that the needs, tastes, and preferences of the customers change from time to time. Even though concentrating on the end might assist the business achieve its desired objectives, in some cases, the results often fail to reflect the organizational competitive advantages. There are different methods that the business could employ to achieve their desired competitive advantage including employ motivation, efficiency improvement, employee engagement, and innovation especially with increased improvement in technology. Employees play important role in ensuring customer satisfaction. Moreover, the employees are the most important organizational approach; as a result, when they are involved in organizational issues, they are likely to ensure effectiveness in the organizational structure (Reider, 2008, 157). In such cases, adequate alignment of the means with the organizational objective could help Toyota Corporation to meet the requirements efficiently. Focusing on the result might lead to deviation from the required outcome or continuous alignment with the organizational structure. Dividing organizational structure ensures that the business achieves its required objectives at each department depending on the relevance of goal to every department. Evaluation of Effectiveness Organizational effectiveness play important role in measuring the effectiveness of the master strategy used within the organization. Nonetheless, it is important to note that the selection of the most appropriate method in assessing organizational effectiveness always present numerous challenges for the managers. Different approaches are applicable in measuring organizational performance. The premise of goal attainment approach is based on the mechanistic of the organization. However, the method assumes that business has effective plans, logic, goal-oriented, and means of accomplishing the initially projected goals. The approach majorly focuses on the output used by the business and determines whether the output helps the organization in obtaining the required objectives. Moreover, goal attainment approach views effectiveness concerning the internal organizational goals and performance, which makes its typical factors for consideration to be profit and maximization of efficiency. The main constraint to the approach is associated with the content comparability of the business goals, which makes it dependable identification of the comparable objectives within different organizational groups. Another approach is system resources, which tends to respond to the shortcomings associated with the goal attainment approach since it considers an organization as an open system. Based on the system resource approach, the business obtains the input, ensure adequate participation in various transformation mechanisms, and generation of the outputs. Nonetheless, the method seems to stress on the inputs over the outputs and views most entities as organizations operating to survive the economic trends while rivalling the scarcity and important resources (Robbins & Barnwell, 2006, 132). The main assumption of the approach is that the businesses have interrelated subsystems, which need to function effectively and efficiently. The balanced scored approach, on the other hand, seems to fix the output view presented by the goal attainment approach since it focuses on the internal activities. The approach assesses the organizational level of effectiveness as internal organizational health and effectiveness. This approach views the effectiveness as the ability of getting things better at the internal efficiency, satisfaction of the employees, coordination, and commitment. As a result, it aims to assess the efforts of the business rather than the acquired effects. Nonetheless, some researchers note that the approach has no ability of contributing a legitimate indicate of the organizational effectiveness. Considering that, the aim of Toyota Corporation is to outline the objectives through integrating various business processes. Hence, the best applicable method is the strategic constituencies approach which suggests that an efficient business institution needs to fulfil the demand associated with the constituencies: both at the external and internal levels. Moreover, the method plays significant role in assessing the effectiveness to satisfy the multiple strategic constituencies. Since Toyota Corporation relies heavily on the responses to the demand, strategic constituencies approach suitably meets its organizational structure (Smith & Hitt, 2005, 205). The strategic constituencies approach often considers that the businesses have to fulfil the multiple goals. Nonetheless, the major challenge associated with the organization is applying the approach to approach is isolation of the strategic constituencies from the environment under which they function. Structural Problems and Improvement Mechanisms Toyota Corporation uses divisional structure, which presents various challenges due to its scope of operation. Divisional structure involves duplication of the resources and responsibilities since each of the company branches operating in different locations has complete functional departments. In addition, each of the product group of the organization requires most of the function areas such as finance, marketing, and production to ensure efficient and effectiveness of operations. Hence, the top organizational leadership have a greater responsibility of deciding on the best methods to reduce redundancy, which is affordable to the organization (Dive, 2008, 166). Based on the organizational structure, Toyota Corporation suffers from very weak accountability especially at the individual levels because of the difficulty in measuring the activities that occur in different places. The business is likely to suffer from the challenges associated with poor coordination between different organizational branches. Therefore, the major problem likely to emerge is that resulting from inadequate organizational frameworks. To ensure effectiveness in organizational performance, it is important that the business ensure proper integration of the goals and activities. Nonetheless, frequent monitoring might be appropriate for the corporation to ensure proper alignment of the organizational objectives and planned business activities. For efficiency, the business needs to fully equip each of its satellite branches to encourage decentralization of the processes involved in the decision-making and ensure effective and quality decision. Since the workers play important roles in ensuring the achievement of the required objectives, the business needs to involve the employees in a bid to improve the quality of the decisions made since they are professionals. Conclusion Organizational structure plays important role in defining organizational performance and extent to which it achieves the required objectives. Focusing on the operational scope of Toyota Corporation, it mainly uses the divisional structure in ensuring the efficiency and improvement in the operations across its functional scope. In addition, the business has various objectives and a series of outlined activities for achievement of the required objectives. The business uses the means focus rather than the end focus in encouraging the development of various designs and mechanism and incorporate them with organizational structures. According to Mintzberg, organizational structure stands for interplay between different organizational strategies to ensure realization of the outlined objectives. References Anderson, D. L. 2010. Organization development: The process of leading organizational change. Los Angeles: Sage. Ashkenas, R. N. 2010. Simply effective: How to cut through complexity in your organization and get things done. Boston, MA: Harvard Business Press. Dive, B. 2008. The accountable leader: Developing effective leadership through managerial accountability. London: Kogan Page. Elsaid, N. M., Okasha, A. E., & Abdelghaly, A. A. 2013. Defining and Solving the Organizational Structure Problems to Improve the Performance of Ministry of State for Environmental Affairs -Egypt. International Journal of Scientific and Research Publications, 3(10). 3-12 Liker, J. K., & Meier, D. 2007. Toyota talent: Developing your people the Toyota way. New York: McGraw-Hill. Mintzberg, H. 2007. Tracking strategies: Toward a general theory. Oxford: Oxford University Press. Nkomo, T. 2014. Analysis of Toyota Motor Corporation. Retrieved March 15, 2017, from http://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf Reider, R. 2008. Effective operations and controls for the small privately held business. Hoboken, NJ: John Wiley & Sons. Robbins, S. P., & Barnwell, N. 2006. Chapter 4: Dimensions of organization structure. In Organization Theory: Concepts and Cases (5th ed., pp. 105-142). Pearson Education Australia Smith, K. G., & Hitt, M. A. 2005. Great minds in management: The process of theory development. Oxford: Oxford University Press. Read More