Discuss about the Approach To External Business Environment.
The main focus of this assignment is to analyze the case study of Toyota Motor Corporation and identify the problems which the company faces. The assignment will also be containing possible solutions which are associated with the problems. The case study will be applying strategic management principles and analyzing the problems which are present in the operational structure of the company (Hitt, Ireland & Hoskisson, 2012).
Toyota Motors Corporation was founded in 1937 and has its headquarter situated in Japan. The company is engaged in manufacturing of automobiles and the company operates in more 170 countries around the world. As per estimates the company has an established market globally and has research and development centers which are located in North America, Japan, Europe, Asia Pacific and China. The company has developed so much over the years that the company has in present diversified from manufacturing cars to marine, housing, financial services, biotechnology and web-based information technologies. Toyota Motor Corporation aims to capture maximum market shares in automobile industry and also aims to develop the global markets where the business is currently operating (Toyota Motor Corporation Global Website., 2018). The company is currently unavailable earn decent profits or be competitive in the US market. The company is also investing in hydrogen fueled cars which as per the president of Toyota Motor Corporation, is the future of automobile industry and introduction of such technology can re-strengthen the position of the company in the industry.
There are certain macro factors which affect the business of Toyota Motors Corporation which are given below:
Toyota Motors have been a leading brand in automobile industries and have achieved popularity among the customers for the introduction of the fuel-efficient car series. However, the company have been facing certain problems which the management needs to adhere to immediately. The company in recent years has struggled be competitive with its rivals due to the intense competition between the competitors in the automobile industry. In other words, the company is having difficulties to keep up the pace of advancement with its competitors. In addition to this the company operating in US, have lower amount of profits which is at 9% and the profit rate of the company is falling sharply in the industry which is an indication that the company’s market share is falling. The operating income of the company as per comparison of annual reports of 2017 and 2016 shows that the operating income of the company has reduced from 10% to 7.2% which shows that the company is having certain difficulties in the operations management of the company. The Toyota Production System (TPS) which has proven to be quite effective for stable markets is not at all suitable for fast growing, global and competitive environment. TPS system which the company is using is not sufficient enough for the companies when operating in global and competitive markets like United States similar European nations. Another major problem which the company is facing is relating to quality of the cars which is produced by the company. There have been servals product recalls for car which was mainly due to production failures. This has affected the overall reputation of the company. The quality of the products which the company has been manufacturing have deteriorated from previous quality standard. The company has to recall around 11 million vehicles from the start of the year 2014 which shows that the diminishing standard of quality of its automobiles. The company has been having problems in three of the brands which have been introduced by the company. Even the best seller of Toyota Motor Corporation which is Lexus model had to be recalled for faulty quality. For such purposes Toyota Company has also faced fines which includes a fine of 1.2 million for misleading the customers with the unintended acceleration issues in the cars manufactured by the company. The problem which the management of the company is facing is due to operational inefficiency and therefore the management needs to incorporate a plan which can improve the situation. The problem is quite severe as the reputation of the company is being harmed. The company needs to reestablish its name in the market by improving the overall quality of the products and also avoid situations which may result in product recalls. The decreasing profits and falling profit rate of the company is significant problem which should be dealt by the management immediately as possible. The management also needs to come up with a strategy which can provide an edge to the business in the intense competition which the company is facing. The problems which are given above have to be seriously considered by the company as the company needs to increase the profitability of the business and moreover combat the situation of competitive pressure. If the problems are not dealt with in the current circumstances than it might also affect the going concern principle of the company in the long run.
The problems which the company is facing is to be handled by the top-level management of the company. The top-level management of the company needs to formulate a plan whereby the company can manage the problems. The president of the company is of the opinion that the company can re-strengthen the financial position of the company in the industry by means of innovations. The future products of the company as per the case study consist of hydrogen fueled cells which can be used to run cars and thus it will be saving large amount of energy resources.
The role of management accounting in any business is closely related to business planning and decision-making procedures. Over the years, there has been significant amount of development in management accounting aspect as new tools have been developed which uses computer aided techniques. In the case of Toyota Motors, the company has been leading in management accounting innovations and uses techniques like kaizen costing, target costing and improved styles of performance of management.
The company utilizes techniques like Kaizen Accounting, target costing and other similar techniques which are used for performance management of the company. Kaizen costing techniques refers to the cost reduction techniques which allows the management to control the costs of the company as per the management’s budget (Sani & Allahverdizadeh, 2012). Target costing refers to the cost techniques which is used to determine the product life cycle cost. The technique involves setting a target for a product after deducting a desired profit margin from the market prices of the product (Drury, 2013). The management is engaged in innovation activities which can improve the overall operations of the business. The basic advantage of target costing techniques is that the management is able to target a particular product and allocate cost and resources accordingly to such a product. The method which are utilized by the management for the management accounting are effective, however the company profits have decreased from the previous year’s profit and therefore the management of Toyota Motors Corporation should introduce new methods of management accounting in order to improve the overall efficiency of the business. The management can use techniques likes marginal costing, process costing techniques to measure the costs effectively.
The management of Toyota Motor Corporation have the option of using other management accounting techniques. The techniques which can be used by Toyota Motors for improving the operational performance of the company are standard budgeting techniques, marginal costing techniques, application of balance scorecard (Klychova, Faskhutdinova & Sadrieva, 2014). The management of the company can use standard budgeting techniques to set a standard for both costs and revenues which are to be followed by the employees and respective departments and on the basis of which actual results will be measured. The basic advantage of using standard costing techniques is that the company will have a set standard on the basis of which actual results are to be measured and any variances which arises between standard and actual can be investigated by the management and corrective actions can be taken to improve the situation. The company can also use balance scorecard. Balanced scorecard is used as a performance metrics in strategic management and it can indicate the results of various decisions as taken by the management. The application of balance scorecard which are adopted by the rival companies like General Motors, Honda Motor Company and Nissan Motors. At the heart of manufacturing in Toyota is the Toyota Production System (TPS). The system was innovative in the way it is designed to ensure the capacity to manufacture a wide range of products without sacrificing continuity in the production process. As the company is involved in manufacturing processes, standard costing techniques will be perfect as it will be able to keep a close track of the overall production and efficiency and also identify variances which are present and take corrective actions for the same.
The management of the company needs to implement standard costing techniques as it will be able to improve the performance of the different departments which will take the company closer to the organizational goals of the business. The company will be able to keep the costs and profits which are incurred and earned in check while using standard costing techniques.
Conclusion
Therefore, from the above analysis of the case study of Toyota Motors Corporations, it can be justified that the company needs to improve the operational structure especially when operating in global countries which have a competitive market. The problems which the company faces can be handled by using standard costing techniques.
Reference
Drury, C. (2013). Costing: an introduction. Springer.
Gupta, A. (2013). Environmental and pest analysis: An approach to external business environment. Merit Research Journal of Art, Social Science and Humanities, 1(2), 13-17.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012). Strategic management cases: competitiveness and globalization. Cengage Learning.
Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.
Klychova, G. S., Faskhutdinova, ?. S., & Sadrieva, E. R. (2014). Budget efficiency for cost control purposes in management accounting system. Mediterranean journal of social sciences, 5(24), 79.
Sani, A. A., & Allahverdizadeh, M. (2012). Target and kaizen costing. World academy of science, engineering and technology, 6(2), 40-46.
Toyota Motor Corporation Global Website. (2018). Toyota Motor Corporation Global Website. Retrieved 17 March 2018, from https://www.toyota-global.com/
Yüksel, ?. (2012). Developing a multi-criteria decision making model for PESTEL analysis. International Journal of Business and Management, 7(24), 52.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download