Business Strategies in Toyota Industry - Essay Example

Analysis of and Evaluation of Business strategies (the Toyota industry) Introduction Development of a propermarketing strategy for a company is a crucial step to an organization. Any market should adopt the changing market strategy based on its financial capability and adaptability. It helps the company to reach new customers, new market potentials, and new market orders too. A company may use a current product to penetrate in the market, improve an existing product, or make it meet current demands. The most recommended strategies and that have been adopted by the top achieving companies are; intensive, integration, and diversification strategies (Armstrong and Kotler, 2002:243). These strategies are very workable for any company in need of expansion to adopt. The intensive strategy used by an organization can improve its market share and the revenue benefits it acquires. It is a strategy of aggregation and strategy where benefits come through expansion of the business. The business can expand its product’s range and market with the view of deeper market penetration. Market development for a business means introducing a new product in the market to achieve an increased profit margin. It also aims at reducing the total cost of produce but increase the average cost of the output (Lamb, 2011:453). Market development of a company makes a company enjoy the economies of scale and a diverse spread of the business risks. However, market development is different from product development but is more often than not confused. Product development helps the current product achieve more revenue under a new strategy. A business may improve its products that are presently in the market or replace it with a new product. For example, the Toyota Company always seeks for new technology to increase its vehicle fuel efficiency hence making it to be more competitive than others do. Therefore, the Toyota Company gains more sales by selling the hybrid vehicles that help reduce pollution to the environment as well (Mullins, Walker and Boyd, 2010:45). Integration strategies can be forward either backward, or horizontal. Forward integration is where a firm grows by taking over it functions forward in the chain value previously provided by manufacturers, distributors, or retailers. This takes more control over the final product and distribution strategies. Backward integration means that growth of a company may take functions that were earlier in the chain as provided by suppliers and other organizations. For example, the Toyota may make agreements with suppliers who wish to meet the JIT processing. This is a win-win deal where the company may increase its control powers over the suppliers and hence increase revenue and profit (Thomas, 2001:276). Horizontal integration is a strategy that seeks the ownership to increase control over the firm’s competitors. This form of integration increases control power of the company over the firm’s competitor and encourage mergers and takeovers by the enhanced transfer of resources and competitiveness (Armstrong and Kotler, 2002:267). Diversification strategy is also another from of cooperate strategy that seeks to increase the profitability of a company through greater sales obtained from new products and new markets. Diversification of the business can be at unit level or at the cooperate level. Diversification can be concentric, conglomerate, or horizontal. Concentric diversification focuses on portfolio creation with business relation. Conglomerate diversification refers to diversification on matters that relate to the current line of business. It aims at improving the profitability and achieving proper marketing. The case study analyses the growth strategies of the of Toyota industry in the era of currency fluctuations and the new needs of the market. The Toyota industry, founded in 1926 by the Sakichi Toyoda, manufactures and sells the automatic looms, which he had invented and perfected. Since then the Toyota Company has diversified and expanded the scope of its business domains to include textile machinery, automobiles, material handling equipment, electronics and logistics solutions. The production of the Toyota products has expanded its bases from North America, Europe, and Asia to the worldwide network (Thomas, 2001:276). The company celebrated its 80th anniversary in November 2006. The industry however committed to the development of their business and has an unwavering pursuit of sustained innovation and creativity. Toyota market development Toyota Company is the leading car manufacturer and marketer in the world. The perfect growth and development of the Toyota Company is due to the efficient management of the company starting from the highest authority, the CEO, to the lowest rank of the distributor. The constant growth of the company is also due to other salient factors like the modernistic nature of the company and the good workers cue. The company is the dominant car exporter in world market and can to some extend acquires the monopoly title. The Toyota Company has grown substantially in the last few decades (Armstrong and Kotler, 2002:345). The company in order to achieve this growth it evaluated and selected a strategy of capturing a potential market through being unique in the market. Toyota became a successful car manufacturer by first having an effective marketing process aims at attracting customers and new market potential zones. The company has also expanded its product range to cater for the growing and new market demands. In its early stages the Toyota Company and other Japanese car manufacturers ware not considered as a threat to the American car industry. This is because its products had no appealing power to the consumers and the American market generally. The problems that were associated with the ameri8can car industry like the Oil Embargo and the quality control issues of the 1970 saw the rise of the Japanese car industry to considerable heights. The car owners of in America started looking for alternative models of vehicles (Mullins, Walker, and Boyd, 2010:56). This made the Toyota and other Japanese carmakers are the immediate option for the Americans. The great preference of the Japanese cars was because they were very fuel efficient, environmentally friendly, and had better built quality than the American cars. In addition, the Toyota Company marketed their cars as hip with memorable funs and slogans like “you asked for it, you got it, Toyota”, All these marketing campaign of the Toyota made it realize a 20 percent increases in the totals sales in 1980 alone. After the successful campaign of the Toyota Company in the US market, the Toyota Company introduced the Lexus brand in 1989, which targeted the luxury-car market luxury segment, dominated by Mercedes-Benz and BMW. Their intention to create the new brand was to combat the dire range for fun and fuel-efficiency (Armstrong and Kotler, 2002:423). The success of the Toyota industry is because the company has indentified fine growth opportunities and market strategies to capture customers and new market potential. The great market achievement of the Toyota Company is due to their invention of the fuel-efficient cars, well built, and with gas-guzzling opportunities unlike the American cars. The Toyota industry has spend a lot of time looking for the emerging market demands and mould vehicles that are cater for the new market demands and maintain their existing customers. The Toyota companies also down sizes their products in order to evaluate market opportunities and develop the right products with new marketing tactics to capture the markets interests. Strategic Focus and Plan The Toyota Company has three strategic corporate strategies that from its main focus and plan (Lamb, 2011:567). The first focus is the mission statement of the Toyota Company that has facilitated it to crate a more prosperous society in the automotive industry. Through its mission, statement the company aims at achieving a stable and a long-term growth focus in the future. This long-term growth will however be synchronized by various factors like the global economy, local community demands and the internal environment of the stakeholders (Thomas, 2001:289). The company also has a goal that has committed it to offering hybrid alternatives of every model that the market expects. These specific developments have enabled the company sell more than a million brands every single year, a goal achieved since 2002. The company has substantial plans, is commitments to reduce the carbon dioxide emission to the environment, it is felt that it should combine actions to ensure that the environment is kept clean by observing the stated fuel economy plan. The company is committed to environmental management changes in energy and climate. The company is also working towards achieving a better and a more sustainable economy in the global market (Mullins, Walker, and Boyd, 2010:79). The company aims at achieving its goal through assuming the new technology and other related matters. The well equipped and the developed network system of the company enable it to keep the company on top in terms of delivery in the global market. The company has a vision of attracting all potential customers through their more efficient, comfortable and safe hybrid vehicles. It also focuses on providing the most satisfying ownership experience in the whole of the American market. The internal environment of the Toyota Company gives it capacity to remain on top for the next many years to come (Armstrong and Kotler, 2002:476). The top management of the Toyota Company is widely known for their competency in performance. This top management monitors that production process to ensure that it very effective. This management has sustainably improved the manufacturing operations making it very efficient and effective (Kurtz and Boone, 2011:678). SWOT Analysis Toyota This is an acronym for the strength and weaknesses faced by a firm or industry due to the environmental opportunities. The same case applies to the Toyota Company. Strengths Increased profits due to diverse investment, Collaboration with countries that command the world market, Constant rising net profit Expertise of the company in mixing the brand quality that serve the immediate market , Management which is goal oriented, Fast ability to adapt to the changing market forces, Diversity in product market, Good customer relation , Technical approach to the manufacture of its products, Highly qualified personnel, Weaknesses Very stiff competition from the companies in the same industry, Constant changing market demand hence the company is forced to keep abreast, Tough market conditions of the developed countries like united states and China, Constant fluctuating economy of the market countries, Fluctuating if currency of Toyota company compared to the market countries, Shifts in the attention to the emerging market demands, Frequent loses due to the operational inefficiency of the production, A lot of expenditure in acquiring and maintain of their workers, Lots of losses witnessed in the down turn session of the year, Inconveniences brought about by the unpredictable market down turns and upturns, Opportunities An outstanding reputation of by the customers about their products, Products that are very environment friendly, Advanced technology in the organization, Changing ability to the customer’s demand, Ability to manufacture fuel efficient vehicles, Incorporation of other services that favor the youths Good marketing strategies, Brand appreciation of the company by the customers, SO- Strategies Constant planning of the company management over the company’s future, Training workshops for the workers to keep them updated, Constant teaching of the staff about the long term goal achievement, Good strategic plans on the company future , Developed social networking through which the company can market its products, WO- Strategies A very busy management team, High taxation by the government due to the spread fame hence the assumption that the income is high, Increased laziness among the workers due to o9verreliance on the technology, Diversified demands due to the common belief that the company should be updated due to its bigness, Contributing to the spoilage of the youth through dances where they can get opportunity to do some evil acts, Overexploitation from the customers, Threats Increase in the oil prices which threatens the future of the company, Envy from other car manufacturing companies, Product recall complications, Suspension systems by the governments of some market countries, Gross losses recorded during some international functions like the sports utility, Stiff competition from other car companies, Fluctuating prices for the raw materials like rubber, steel, and fuel, Economic slow downs of the major market countries like United States and China, Strict environmental conservation rules, Inability to acquire skilled work force Increased health care costs ST- Strategies Continue making fuel efficient cars, Establish measures to counteract the envy from the existing companies, Minimizing loses through strict auditing of the companies books, Establish support staff to ensure constant production process, Lobbying for better government taxation terms, Assist in the environment conservation measures, Improve the workers health through assurances, Motivate the workers through extra benefits like getting cars at very standardized prices, WT- Strategies s The company intends to make cars that use alternative force other than oil, The company is growing good rapport with other companies so as to maintain the internal economies of scale, Growing a good rapport with the government The company plans to Make quality products to eases the competition from the competing companies, Maintain good business friendship with the major market countries through partnering or direct investment, Making more environmentally friendly vehicles, Lobbying for skilled labor from other countries, Going for the complicate insurances for the health purposes of the workers and their assets, Marketing strategy The Toyota Company has employed various strategies to market their products in the producing country and across the globe. For example, the company has interactive bar codes through which it uses the mobile phones to promote its goods. Therefore, the mobile phone owners can access sales promotion from the comfort of their phones. The company has also changed its logo to a ring with Toyo tag circumventing it as in below Retrieved from http://www.nytimes.com/2011/08/03/business/media/toyota-tries-snap-and-send-marketing.html?_r=1 Potential customers or otherwise can snap the logo and retrieve product-related content using a smart phone. The iphones users can download a snap tag to receive Toyota’s content. The Toyota Company has adopted the new technology with a strategic c focus of attracting innovators and customers (Lamb, 2011:635). The Toyota Company is moving with mass production, which has enabled it to sell much of its products. The company is on its way to satisfaction of the emerging needs in the market and look for more customers as well. The company has been able to market its products through the very reasonable price it offers. The company tactfully induces market prices that are generally favorable to all and relatively lower than the other automobile industries. The General Motors’ Company has a branch almost in all the world countries. This has enabled it to market easily their products through its branches in the specific countries. The company has a lot of determination to use the pricing mechanisms to counteract the competitive end of the world competitors (Armstrong and Kotler, 2002:567). Through this mechanism, the company can hold a good share of the market that can help it maintain its new status. The focus of the Toyota Company is to dominate the markets of China and Europe. It is also concerned with relinquishing the threats posed by the market counterparts in the automobile industry. The main advantage of the Toyota industry over the other industries is its wide range of products. The company aims at opening up more branches and franchise with other smaller car producing companies as a means to ease the penetration and conquer new markets. The company recognizes the importance of human resource in the progress of any business. Therefore, it ensures that the workers are always motivated. The raw fact is that a highly motivated human resource directly translates to a high produce. The Toyota Company has means of recognizing the efforts of the workers like it sells car to them at a very standardized price which is free of tax (Mullins, Walker, and Boyd, 2010:176). The company also educates the workers to ensure that their expertise is up to date. Financial Projections The Toyota company has grown and grows each year expect the year 2009 when it experienced a financial downturn. The Toyota Company has a sustained financial development. The company will however need constant innovations to maintain the financial position. The company however has projected about its financial affair in the next three years. The company expects to get an average of 103.5 billion Yen as the total profits of the year 2013. The company does not expect to encounter any other financial crises in the near future after the downturn of the 2009. The company faced high losses in that year due to the earthquake that made the country record lot of loses in terms of assets (Thomas, 2001:299). Conclusion The company has mentored, evaluated, and set to watch the progress of the company in its pursuit to realize its strategic goals. The short-term goals of the company should be under scrutiny because they translate to the fulfillment long-term goals. The Toyota Company has sold the highest number of cars in the last three years. This has made it clinch the highest position as the market leader surpassing the general motors and the Ford cars. The company being the global leader faces many pitfalls. The Toyota Company may become a victim of its own success following the decline in its complacency. Being the best the company may also have a greater chance of target for criticism and protection backlash (Armstrong and Kotler, 2002:585). The company is turning to be the new industry benchmark. The strength of the company is on the financial arm and grounded on the manufacturing prowess. The company is as well the highest profit maker in the automotive industry. The company also proves to have won the victory of uniqueness in the corporate culture in the so-called Toyota way. This has rooted the artisanship and constantly motivated the company performance. Bibliography Armstrong, G., and Kotler, P. 2002. Marketing: an introduction (International edition). New Jersey: Prentice Hall. Hartline, M., Ferrel, O., 2010. Marketing Strategy. Belmont: Cengage Learning. Iansiti,M., 2009. One Strategy: Organization, Planning, and Decision Making. New Jersey: John Wiley and Sons. Kurtz, D., Boone, L., 2011. Contemporary Marketing. Belmont: Cengage Learning. Lamb, C., 2011. Marketing. Belmont: Cengage Learning. Liker, J.,Morgan,J.,2006. The Toyota Product Development System: Integrating People, Process, and Technology. New York: Productivity Press. Mullins, J., Walker, J. O., and Boyd, H. W. 2010. Marketing management: a strategic decision making approach. Boston: A McGraw-Hill Irwin. Thomas, J. G. 2001. Business planning: long range and strategic management. Dublin: Black Hall Publishers Ltd. Appendix Toyota is First in relation with suppliers Available online from: http://www.ppi1.com/site/wp-content/uploads/2011/05/Freep-2011AnnualGraphs.jpg Available online from: http://www.ceret.cl/wp-content/uploads/2009/07/autodealer_inventory_4501.jpg Improvement in the Automobile industry in the US precisely Toyota Company Available online from http://image.thefabricator.com/a/turning-the-brights-on-the-automotive-industry-graph.gif Toyota Industries discloses the preliminary interim result of its public tender offer Available online from: http://www.4-traders.com/graph.php?type_chart=Custom&intraday=1&codezb=360809&width=360&height=360&cycle=DAY1&duration=4&render=Candle&showCopyright=2&showName=0&language=2 Available online from: http://harbus.org/wp-content/uploads/2011/04/Graph-A-Color.jpg Read More