Core Competencies For Business Excellence: An Analysis Of Toyota’s Internal Environment

Internal Environment Analysis

Discuss about the Core Competencies for Business Excellence.

Toyota is one of the leading car manufacturing Companies based in Japan. The Company has been operation worldwide and has been satisfying the demand of the consumers throughout its business journey. The aim of the report is to analyze the internal environment of operation of Toyota. An analysis and identification of the key resources and competencies of the organization will be done. It is on the basis of the findings, the key issues faced by the organization will be identified and certain recommendations will be made.

The internal environment analysis of Toyota can be done by using SWOT and VRIO frameworks.

Strengths	§  Strong market position and brand recognition. Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper §  Toyota enjoys 45.5% market share in Japan, 12.2% in America, 13.4% in Asia (Keisler & Romar, 2016) §  Strong R&D. Toyota has its operation in 14 worldwide regions. This allows the Company to gain technological leadership in the areas of operation
Weaknesses	§   Product recalls affects brand image. In 2011, Toyota recalled 111,000 models of Toyota and Lexus brand that has affected the brand image (Nayak & Sahu, 2014) §   Declining sales in major areas like North America, Europe and Asia §   Available resources are not allocated properly compared to its competitors
Opportunities	§   Increasing global automobile market that has been estimated to grow by 8.9% worldwide §   Better opportunities on partnership with BMW (Keisler & Romar, 2016)
Threats	§  Intense competition from major companies like Volkswagen, Maruti Suzuki, Tata Motors and others (Gupta, 2013). §  Increasing value of dollars along with increase of the rate of fuel §  Japan is an earthquake prone zone that can affect the manufacturing of cars

Fig: SWOT analysis of Toyota

As stated by Keisler and Romar, (2016), Toyota does not have any core competencies and it rather operates following two ideals. These are continuous improvement in the manufacturing of cars and increase the respect for people. Toyota works under a set of 14 principles that are based on the philosophy of the Company’s work (Keisler & Romar, 2016). The mission of the Company is to focus on the improvement of management and production of cars along with a workplace culture. This particular competency can attribute towards innovative production practices of the Organization. As commented by Nayak and Sahu, (2014), Toyota’s products have revolutionized the automobile industry in the past that has challenged other competitors in the market. Toyota has a cornerstone for the cost leadership strategy that a company can pursue.

Distinctive Competency:

If the distinctive competence of Toyota is considered, it has to be said that the Company has a unique Toyota Production System. Their production is based on Lean Manufacturing concept. The innovative practices include Just in time production, Kaizen and Six Sigma opportunities (Singh & Salwan, 2015). These are the competencies that act as the major factors that provides competitive advantage to the Company.

VRIO framework:

Valuable ü  Attractive features ü  Affordable pricing (Hsu et al. 2014)	Rare ü  Lean Manufacturing technology ü  Just in time production (Wen et al. 2015)
Inimitable ü  Many companies have tried to recreate the system but none have been successfully able to do it in an effective manner (Singh & Salwan, 2015)	Organization ü  A particular organizational culture ü  The Company has been focusing in obtaining highest market share (Hsu et al. 2014)

Fig: VRIO framework of Toyota

Tangible resources §  Capital §  Manufacturing hubs and plants §  Equipment §  Laborers §  Suppliers

Intangible resources §  Organization culture §  Brand equity §  Market reputation §  Patents §  Trademarks (Gong, 2013)

Fig: Key resources of Toyota

With the detailed analysis of the internal and external environment of Toyota, it has been observed that due to its corporate strategy, Toyota experience competitive advantage in the market. The Company has to deal with major competitors like Volkswagen and General Motors. The Company fulfils the market demand and has been able to supply overall products. Analyzing the external environment factors, it has been evident that Toyota faces certain issues regarding the usage of environmental friendly raw material for the production of their cars. In addition to this, there has been great innovation in the field of car manufacturing with the introduction of electric and hybrid cars. Therefore, the Company needs to focus on their production as well. However, economically, the organization has better scope for expansion in different BRIC countries like India and China. Rapid economic growth has created vast opportunity for the Company.

Key Resources and Competencies of Toyota

The internal environmental analysis has put forwarded the strengths and weaknesses of the organization. As it has been observed that the Company has good reputation and a positive brand image, thus there remained successful opportunity for the Company to expand in various markets and try out various innovative techniques in designing and manufacturing different types of cars.

The Key issues faced by the Organization are:

Intense competition: Along with the presence of existing car manufacturing companies like Volkswagen and General Motors, the Company also faces threats from the new entrants as well (El Shafeey & Trott, 2014). With the growth of the automobile market globally, it has opened up the opportunity to many other companies to enter into the car manufacturing industry.

Issues related to negative environmental impact: In the recent time, there have been a number of negative environmental issues related to the manufacturing of the cars (Rothaermel, 2015). This has raised questions on the sustainability approach of the Company towards the environment that has created negative impact on the Company to some extent.

Introduction of hybrid cars: In order to meet the intense competition and rivalry in the market, it is recommended to come up with better and innovative strategies in the production of cars. Introduction of hybrid cars can be of great option to the Company. In order to combat against increasing price of fuel, it is also recommended to come up with more fuel efficient cars.

Better production techniques: The Lean Manufacturing technique used by Toyota for the manufacturing of their cars is one of the unique means of manufacturing. However, the organization can undertake other means of manufacturing as well. For instance, the Company can open up assembling plants where the different parts of the car can be assembled into a car.

Conclusion:

In order to evaluate the internal environmental situation, primarily SWOT analysis of the Organization has been done. In addition to this, the core competencies of the Organization have also been identified. It is based on the analysis, the key issues faced by the organization have been identified and a number of recommendations have been made to improve the business operation and activities of Toyota. It has been observed that the Company has better opportunities to expand and prosper in the market and in the car manufacturing industry.

References:

El Shafeey, T., & Trott, P. (2014). Resource-based competition: three schools of thought and thirteen criticisms. European Business Review, 26(2), 122-148.

Gong, Y. (2013). Resource-Based Fundamentals. In Global Operations Strategy (pp. 141-172). Springer Berlin Heidelberg.

Gupta, R. K. (2013). Core competencies for business excellence. Advances In Management, 6(10), 11.

Hsu, C. C., Tan, K. C., Jayaram, J., & Laosirihongthong, T. (2014). Corporate entrepreneurship, operations core competency and innovation in emerging economies. International Journal of Production Research, 52(18), 5467-5483.

Keisler, J., & Romar, E. (2016). Core Competencies, Core Values and Core Compromises.

Nayak, S. K., & Sahu, S. (2014). “Improving Quality with reducing cost” an approach by applying TQM and Outsourcing with their combined impact on automobile OEMs.

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill.

Singh, N., & Salwan, P. (2015). Contribution of Parent Company in Growth of its Subsidiary in Emerging Markets: Case Study of Maruti Suzuki. The Journal of Applied Business and Economics, 17(1), 24.

Uchil, S. A., & Yazdanifard, R. (2014). The Growth of the Automobile Industry: Toyota’s Dominance in United States. Journal of Research in Marketing, 3(2), 265-268.

Wen, C. L., Wee, H. M., & Wu, S. (2015). Revisiting Lean Manufacturing Process with Vendor Managed Inventory System. In Proceedings of the 5th International Asia Conference on Industrial Engineering and Management Innovation (IEMI2014) (pp. 139-142). Atlantis Press.