Toyotas Internal Environment - Case Study Example

Running head: Toyota Internal Environment Student’s name Institution Course Professor Date Toyota is a multinational company with branches in many countries of the world. It mainly specializes in manufacturing and selling of vehicles (Borowski,2010). The Toyota’s internal environment can be analyzed by looking at the following areas: Toyota’s Resources Toyota has five main types of resources, these are; financial resources, physical resources, human resources, technological resources and organizational resources. The company utilizes these resources in ensuring the achievement of its objectives. The company’s physical resources includes the various plants, equipment, buildings, inventories, land, vehicles and other facilities it owns across the entire world it operates in. The company has over 50 manufacturing companies in 26 countries and regions. It has around 170 distributors in these countries (Borowski,2010). These distributors and the manufacturing companies are well equipped with necessary physical facilities to carry out their functions. The company’s human resources comprise; a wide range of specialists, who includes engineers, managers, sales personnel, production specialists, supervisors among others. Toyota put much weight on its human resources to ensure it continues to be more productive and competitive than other companies in the motor industry. It carries out human labour development programs and has Toyota institute for training its workers (Ller, 2011). In 2009, the company was estimated to have over 320,000 employees across all over its branches. Toyota has various technological resources like patent rights, licenses rights, and rights over certain designs and production methods of vehicles, technological skills among other resources. Technology in this industry is the main factor giving a company a competitive edge over others and Toyota has effectively taken advantage of its technological resources (Borowski,2010). Organizational resources of Toyota company lies in its good will due to loyalty and quality vehicles, good management system, and good company reputation and effective decision making mechanisms among other things. Toyota has enough financial resources given its continued profitability in majority of the countries it operates. Its recently released financial statements that showed increase in profits for nine-month period that ended Dec. 31, 2012 as compared to identical time last financial year. Its net profits were 16.2 trillion yen (Ller, 2011). This massive profit clearly shows presence of good financial resources. However, the company stills make losses in some of its branches. Toyota’s capabilities Toyota has been able to maintain its consistent manufacturing capability, a superior competitive performance and stable profit performance for a long time. This company has been having three capabilities and is described below. Manufacturing capability: the company has continuously maintained its high level of balanced performance in productivity, lead times, quality and flexibility. This has been due to its efficient organizational routines, which collectively control efficient flow of good design models of vehicles (Ller, 2011). Improvement capability: Toyota’s improvement capability consists of a set of dynamic routines for effective cycles of problem-finding, goal-setting, root cause identification, alternative searching, on-the-spot verification, standardization, and diffusion (Borowski,2010). This is a set of organizational routines controlling repeated cycles of problem finding and problem solving. Evolutionary capability: it involves the non-routinized ability to maintain manufacturing and improvement over a prolonged period. Toyota has been able to evolve and adapt to the changing market conditions hence being able to continue operating and make profits (Ller, 2011). Toyota’s core competencies The Toyota Company pushes for four major components. It uses just in time production (JIT) management philosophy which is aimed at eliminating waste from any aspect of manufacturing and their related activities (Towill, 2006) to push for its competence. Its components are: One, production of just what is needed, when needed and in amount needed. Two, total quality control as a concept of quality operation of the business with all workers in all its branches involved in meeting customers’ needs (Ller, 2011). Three, total productive maintenance as a concept of productive maintenance that aims at achieving overall effectiveness of the production system through involvement of all the workers in the company. Four, computer-integrated manufacturing as concept to integrate the company operations in design, production, and distribution and after-sales service and support in field, through use of computers and modern information technology (Towill,2006). The company’s efficient management invest greatly in research and development as their core competence. Research and development improves the safety, functionality, quality and the environmental compatibility of its products. This is also dedicated to give rise to new products given the high competition in the market and the high demand of improved models in the market. Toyota has many research and development facilities such as Toyota central R&D Laboratories, design and motorsports R&D centers distributed worldwide. Toyota invests nearly 4% of its revenue in research and development (Borowski,2010). This R&D usually focuses on personal mobility, environmental technology, safety technology, intelligent transport systems and robot technology. Investment in this sector has highly made Toyota to be extremely competitive in market. Value Chain of Toyota Value chain of a company comprises mainly the factors in the company that gives it competitive advantage over other companies. This chain comprises of a range of activities creating and building value to the company (Hino, 2006). The value chain activities in Toyota include: Efficient and effective marketing and sales services: Toyota has a wide range of qualified staffs involved in its marketing all over their operating areas. These staffs help in meeting clients’ needs like brand Prius. It has over 40000 sales men marketing and selling their vehicles. Provision of after sale services: After selling their products to clients this company goes further to assist clients whenever they need help. They usually handle complaints and provide solutions to them (Corporation,2012). They give training to potential, current and to those they immediately sale their cars to if they require any training from them. Efficient production method: Toyota Company has quality operation instruments which assemble vehicle components and tune new car engine. Has its own automation processes which are very effective in stopping work immediately when problems emerge thus guaranteeing the quality of its products (Ller, 2011). This hence ensures there is no leakage of poor quality products into the market that may eventually tarnish their reputation. It has good inbound logistics: after purchasing its automobile components from the different parts in the world it uses the method of “Just in Time” on production. This method is very efficient and effective given the fact that it ensures the company manufactures, delivers vehicles with proper quantity in timely manner, and maintains low inventory. This production system thus ensures all the clients ‘demands are made and the storage costs or wastages due to lack of demand for the vehicles are not incurred. Good accessibility: Toyota Company usually manages their own show rooms across the various countries it operates (Ller, 2011). It usually does not outsource its services. This hence makes their products easily accessible and their values not inflated. These five factors discussed above have given the company competitive advantage. Financial Position Toyota Company has been able to maintain excellent books of account. The company has been able to earn profits continuously for the last 10 years except the year 2009 when it realized losses. In the financial statement of the results, for the nine-month period ended Dec. 31, 2012, its net profits totaled to 16.2 trillion yen. It increased by 26% as compared to the same time last fiscal year. The company’s units of cars of cars sold have continued to increase giving it stable working capital (Ller, 2011). The company’s statement of financial position for the same period shows that 62% of the company’s assets are held as fixed assets while the rest are current assets. Its liabilities mainly are current liabilities. Liabilities are slightly higher than shareholders equity that is a sign of good financial status of the company (Corporation,2012). Current Strategies and Objectives The main objective of Toyota Company is to be the leading auto motor industry while expanding its market share and maintaining its loyalty among its clients. The company has been adapting various strategies to ensure that it realizes its objectives and it continues being profitable and enjoying competitive advantage. Most of its strategies have been fully relying on the implementation of new technology and research and development (Ller, 2011). Some of the strategies employed by Toyota include the following: Smart design strategy: The Company has set this strategy as one of their ways of achieving their goals. The company invests in designing for a certain market segment and ensuring that they manufacture at a reasonable costs that are affordable to the specified customers and earning profits from them (Corporation,2012). Smart production strategy: Toyota usually relay on its method just in time production system to achieve this strategy. This strategy is one of the ways the company has developed to ensure customers tastes are fulfilled within the required time. This usually results to quality and affordable products. Smart marketing strategy: This is a strategy developed by the company to enable it efficiently market its products. This strategy is set to help reach new clients, satisfy existing client’s needs, and help maintaining the company’s reputation among various things (Ller, 2011). These strategies and other subordinate strategies were developed in line with the company’s multi-faceted strategy of lean production and design that evolves into smart production and design strategy. This is supported with their operation strategies of good production system, re-engineering, superior technology and quality, production of hybrid vehicles, introduction of welfare cost and the general employee satisfaction (Ller, 2011). Reference Borowski, A. 2010. Report on the Toyota Company. Munich: GRIN Verlag. Charles Hill, G. R. 2009. Strategic Management: An Integrated Approach : Theory. Boston: Cengage Learning. Christoph M Ller, C. M. 2011. Case Study and Comparative Strategic Analysis of Toyota and Ryanair: The Key Differences in the Operations Strategy of Manufacturers and Service Firms in Terms of Process Design, Supply Chain, Human Resources, Capacity, Innovation and Quality Management. Munich: GRIN Verlag. Corporation, T. M. 2012. Financial results for the nine-month period ended Dec. 31, 2012. Toyota: Toyota. Henry, A. 2008. Understanding strategic management. Oxford: Oxford University Press. Hino, S. 2006. Inside the mind of Toyota: management principles for enduring growth. Cambridge: Productivity Press. Liker, J. 2004. The Toyota way. Porur: McGraw-Hill Education (India) Pvt Limited. Read More