1.0 Introduction
The main aim of this report is to focus on the environmental analysis and organizational capability. Toyota Company will be taken into consideration in order to accomplish the researches in which various factors will entail that have contributed to the poor performance of Toyota Company. Along with that strategies will be discussed under this assignment for the purpose of growing the business of the company. At last, the recommendations will be made in order to bring better change within the company so that they can stay in the competitive market for a long time.
Toyota Company is an automobile Japanese company that connects in the manufacturers, design, and sale of commercial vehicles, passenger cars, and connected components and accessories majorly in Japan, Europe, Australia, and Asia. The company has dealt in a number of brands such as Hino, Daihatsu, and Lexus. It is the eighth main company in the world and the company’s revenue was $213 billion and the employee of the company is around 333,498 people (Toyota, 2018). The core competence of Toyota Motor Corporation is its aptitude to produce automobiles of immense excellence at best prices, thus providing a worth for money to the clients.
The vision of Toyota Corporation
The vision statement of the company shows the long-term strategic direction of the company for the long term in the automobile industry. The vision statement of the company is “Toyota will lead the way to the prospect of mobility, inspiring lives around the world with the safest and most accountable ways of affecting people”.
There are major areas of Toyota company is included in the vision statement. It entails the company aims to accomplish the leadership in the worldwide market. along with that the vision statement of the company shows that the company goes ahead on the basis of the quality, environmental conservation, and innovation. Hence, the company involves corporate social responsibility in its vision statement.
The mission of Toyota Corporation
The mission statement is different for its businesses in various markets. In the context of the automobile manufacturing and sales, the strategic action in technology is entailed in the mission statement of the company. hence, the mission statement of Toyota company is as follows: “Create vehicles that are popular with consumers.” It shows that the company provides vehicles with full of safety to prevent the lives of customers as well as overall development of its products to make customer satisfied.
The company has distinctive competencies in its production system which is known as the “Toyota Production System”. This system is dependent on the Lean Manufacturing concept. There is involvement of some innovative practices such as Kaizen, Six Sigma and Just In Time. The company has put a lot of efforts in making distinctive image of the company all over the world. This different capability has led to a cutthroat benefit that has specified Toyota a market leader position and sustainable brand name.
|
|
Aspects |
Rank |
|
Strengths |
· Strong market position and brand recognition · Strong focus on R&D · Extensive production and distribution network · Great Quality Products · Innovative Organizational Culture |
2 1 3 4 5 |
|
Weaknesses |
· Product recalls could affect brand image · Declining sales in key geographic segments · Poor allocation of resources as compared to peers · Vulnerable supply chains · Small profit margins on low priced subcompact cars |
2 3 4 5 1 |
|
Opportunities |
· Growing global automotive industry · Toyota poised to benefit from growing partnership with BMW · Strong outlook for the global new car market · make use of the growing interest in ecological and environmentally-friendly cars · Investment on Innovation |
2 1 3 4 5 |
|
Threats |
· Extreme rivalry · Valuing Japanese Yen a main unease · Natural disasters could impact production structure · a constant threat from exchange rates · the threat of the rise in raw material costs |
4 1 3 4 2 |
The above-mentioned table shows that Toyota Company has some factors in the form of the strengths, weaknesses, threats, and opportunities that can impact the performance of the company. The company has one of the good positions in various geographies across the world. The company has a market share of 13.4% in Asia, 12.2% in North America and 4.3% market share in Europe (Nkomo, 2013). This represents the strength of the company, along with that, a strong focus on R&D operations at 14 facilities globally. The company is poised to advantages from the developing partnership with BMW. It shows the huge chance for the company to expand its business globally in which the company is signed a memo of sympathetic motive at long-term strategic collaboration in the fields of technological (Rajasekera, 2013). Hence, the firm viewpoint for the global new car market joined with the launch of a new product in the company that gives a growth opportunity for the company (Vilanova, Lozano and Arenas, 2009).
In the context of the weaknesses, it has been found that the company has made various products recalls in the recent past, which could influence the brand image and entire sales of the company (Lucky and Takim, 2015). For instance, in 2011, there were 111,000 models which recalled because of the damage to aspects of the substrate and potential shutdown of the hybrid system (Piotrowski and Guyette 2010). Along with those declining sales in key geographic is another weakness of the company which can become the major threat for the company in future terms. There is a massive fear of intense competition as amplified competition can lead the company towards the lower vehicle unit sales and a great catalog. The major threat for the company is the appreciating Japanese Yen as the company has the nature of sensitive in the context of the fluctuations in foreign currency exchange rates (Heller and Darling, 2011). It has been evaluated that the great bonding of the Japanese Yen adjacent to the US dollar that would have the material unfavourable consequences on operating result of the Toyota company that can put negative impact over the valuation of the company (Victor and John, 2011).
Tangible resources
Physical Asset
Physical assets are essential resources of Toyota Company as the company owns the physical resources in the structure of manufacturing plants, equipments, offices and vehicles. It has been found that in 2014, the total value of the property of Toyota Company stood at $76 billion.
Financial Resources
The financial condition of Toyota Company is healthy as the revenue of the company is amounted to $ 228 billion, developing its top the largest company in the relation of the revenues. The net income of the company is around $ 4.5 billion in 2014.
Human resources
Toyota Company has around 300,000 employees all over the world. The company provides quality services to them and involve them to make important decisions on the behalf of the company (Magee, 2008).
Intangible resources
Intellectual resources
It has been found that the company has a number of intellectual resources. The brand of Toyota is significant all over the world that attracts a number of customers to buy the product of them. the company has categorized its brand for all kinds of people. it has many brands such as Corallo, Lexus, RAV 4, Probox and SUV.
Technical resources
In the context of the technical resources, Toyota Company is a market leader when it comes to a manufacturing technology. To enhance the manufacturing operation, the company is eager to invest in the technology (Monden, 2011). Along with that, the company uses this technology to help activities of the management and operation.
Goodwill
Goodwill is the term which is related to the value of the company beyond the asset value of the company. The image of the company has been depicted by goodwill.
5.0 Strategy
Porter’s 5 forces
Porter’s five forces of Toyota company are mentioned below which would be helpful in elaborating the condition of the company in the competitive market.
The threat of new entry (weak)
The threat of new entry in the context of the automotive industry is weak in the point of view of Toyota Company. It would not be possible for the new company to invest more in the automotive industry to compete with existing brands (Heller and Darling, 2011). There is a number of products in the automotive industry that is majorly differentiated by design and engineering quality. Innovation act is considered as the barrier for the new entrants since patents do not permit to involve in the existing markets.
The threat of substitutes (weak)
There is a number of substitutes available in the market that can influence customers to switch from one product to others. These are train, planes and another type of transportation. Substitutes can easily offer customers to get a similar price with the same convenient. it shows the weak factor of the threat of substitutes (De Felice, Petrillo, and Autorino, 2014).
Bargaining power of buyers (strong)
There are many buyers in the market that prefer the car to get more convenience. Buyers have many options in the automobile industry to choose the car which makes their nature flexible in the decision-making process (Dul and Neumann, 2009). Buyers are most sensitive about the price and their decisions are widely based on the cost of the vehicle.
Bargaining power of suppliers (weak)
The company has many suppliers and in a number of cases, suppliers are a subsidiary of companies. Suppliers of the company do not pose a threat of forwarding integration. Company uses a different kind of materials to manufacture the product and the supplier can switch from one brand to another due to the availability of a number of companies in the same industry (Takeuchi, 2008).
Competitive rivalry
The company has a massive range of competitors in the industry such as Hyundai, Volkswagen, Ford, BMW, Audi, Mercedes, and GM. However, the industry is large but it has the mature feature. Customers of this industry are loyal to their brands and there is the moderate threat of being acquired by the competitor.
The cost leadership generic strategy and the broad differentiation generic strategy are used by Toyota Company. The aspect of cost leadership includes the reducing the cost of operations and the price of the products. The broad differentiation strategy entails improving the uniqueness of business and product to make sure competitive advantages of Toyota Company. A major aim of the company is to correspond to generic strategy of Toyota Company for the purpose of reducing the production costs to achieve cost leadership. Just in Time manufacturing method has been implemented by the company which is known as the Toyota Production System (Kaneko and Nojiri, 2008). It is the procedure that helps company to address the impact of waste over the company and inventory cost and response time. As a result, the company is able to generate the maximum business efficiency. Innovation is the major impact that leads to attractive products for all market segments. The company differentiates itself from its competitors on different levels. First and primary, the quality products of the company help to build and invent designs in order to develop the brand image of the company globally. The company has invented hybrid and electric car that represents the stand of the company in the innovative market. There is another factor which makes difference of this company to another and this factor is the technology which facilitates company to claim the global leadership position (Datta, 2010).
To attain the generic strategies of the company, the more focus of the company is on the intensive strategies.
Market Penetration
Market penetration is the intensive growth strategy of the company as it helps to support the growth of the business by attracting and reaching more customers. Toyota makes sure that each product of the company reaches every market (Hill, 2017).
Product Development
The company uses product development in the form of the secondary intensive growth strategy. There is an intensive strategy which is used by the company to attain the generic strategy which helps them for rapid innovation.
Market Development
The company has a global presence as it has been found that the market development is just considered as the supporting intensive growth strategy for the business. The company growth significantly by developing its product globally and expand its business internationally (Kapferer, 2012).
It has been announced by Toyota Motor Corporation that a mutual agreement to merge three of its information technology subsidiaries in January 2019. There are three companies of Toyota Communication Systems Co., Ltd. (TCS), Toyota Caelum Inc. (TCI) and many more which will include under the merger process. Each company has its own potential as TCS has the skills of development of core systems; TDC is specialized in the introduction of networks as well as infrastructures and TCI in the growth of the manufacturing support systems (Toyota, 2018).
In the context of Alliances, it has been found that Mazda and Toyota have developed a monetary corporation. The company will take a 5% stake in the smaller company in which Mazda will attain a 0.25% stake in Toyota in the form of the deal (Hanley, 2017). The merger of both companies will take the production cost around $1.6 billion and the number of employees will be more than 5,000 at the beginning of 2021. It would have the utmost capacity of 300,000 vehicles (Schilling, 2010). With respect to Toyota Acquisition Strategy, it has been found that the company has acquired Daihatsu, Cascade Corporation and Hino Ottawa Gatineau.
Toyota Corporation is the multinational company that leads globally and attract millions of customers towards its products. However, the company has a number of factors that make it different from others but there are some suggestions mentioned below in order to make improvement the system for getting more competitive advantages in the completive market.
It has been analyzed from above mentioned porter’s diamond model that the competitive performance of the country and the company are interlinked. The national environment of the country is dynamic that impact the performance of the company. The recommendations are mentioned below regarding bring improvement within the organization.
9.0 Conclusion
It has been concluded from above discussion that the strategic management has significant importance within the business that helps the company to grow in the competitive market. Toyota Company has put a lot of efforts in making an effective working environment. This report has entailed the description of the company with a mission and vision statement. Along with that the swot analysis has been done under this assignment in order to elaborate the section of the strengths, weaknesses, opportunities, and threats by which the company can overcome the issues. Innovation is the core heart of the Toyota Company that helps the company to remain in the completive market by becoming a market leader. Toyota has a strategic tool to make an effective culture of the company and to focus on continuous development by implementing the Just In Time approach. In the context of Porter’s generic strategy, it has been found that the main focus of the company is on the cost leadership strategy as it makes a product by taking consideration of the affordability of the customers.
References
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Datta, Y., 2010. A critique of Porter’s cost leadership and differentiation strategies. Chinese Business Review, 9(4), p.37.
De Felice, F., Petrillo, A. and Autorino, C., 2014. Maintenance Strategies and Innovative Approaches in the Pharmaceutical Industry: An Integrated Management System (IMS). International Journal of Engineering Business Management, 6(Godište 2014), pp.6-29.
Debnath, S.C., 2015. Environmental regulations become restriction or a cause for innovation–a case study of Toyota Prius and Nissan Leaf. Procedia-Social and Behavioral Sciences, 195, pp.324-333.
Dul, J. and Neumann, W.P., 2009. Ergonomics contributions to company strategies. Applied ergonomics, 40(4), pp.745-752.
Hanley, S. 2017. Mazda And Toyota Form Strategic Alliance With An Eye On Electric Cars. Available [online] https://gas2.org/2017/08/04/mazda-toyota-form-strategic-alliance-electric-cars/ Accessed on 27th Nov 2018.
Heller, V.L. and Darling, J.R., 2011. Toyota in crisis: denial and mismanagement. Journal of Business Strategy, 32(5), pp.4-13.
Hill, T., 2017. Manufacturing strategy: the strategic management of the manufacturing function. Macmillan International Higher Education.
Kaneko, J. and Nojiri, W., 2008. The logistics of Just-in-Time between parts suppliers and car assemblers in Japan. Journal of transport geography, 16(3), pp.155-173.
Kapferer, J.N., 2012. The new strategic brand management: Advanced insights and strategic thinking. Kogan page publishers.
Lucky, B, O.and Takim, S., 2015. Manufacturing defects in the automobile industry, a case study of the remote causes and effects of Toyota’s transmission malfunctions in cars, International Journal of Engineering and Applied Sciences, ISSN: 2394-3661, Volume-2, Issue-8, August 2015.
Magee, D., 2008. How Toyota became# 1: leadership lessons from the world’s greatest car company. Penguin Books India.
Monden, Y., 2011. Toyota production system: an integrated approach to just-in-time. Productivity Press.
Nkomo, T., 2013. Analysis of Toyota Motor Corporation. Available [online] https://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf. Accessed on 17th Nov 2018.
Piotrowski, C., and Guyette, R. 2010.Toyota Recall Crisis: Public Attitudes on Leadership and Ethics, Organization Development Journal, 28(2), 89-97.
Rajasekera, J., 2013. Challenges to Toyota caused by recall problems, social networks and digitization, Asian Academy of Management Journal, 18(1), 1-17.
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Takeuchi, H., 2008. The contradictions that drive Toyota’s success. Strategic Direction, 25(1).
Toyota, 2018. About Us. Available [online] https://www.toyota-global.com/. Accessed on 17th Nov 2018.
Toyota, 2018. Toyota Motor Corporation to Merge Three Information Technology Subsidiaries and Create Comprehensive IT Solutions Company. Available [online] https://newsroom.toyota.co.jp/en/corporate/21269526.html. Accessed on 27th Nov 2018.
Victor, L. H., and John, R. D., 2011. Toyota in crisis: Denial and mismanagement, Journal of Business Strategy, 32(5), 4-13.
Vilanova, M., Lozano, J.M. and Arenas, D., 2009. Exploring the nature of the relationship between CSR and competitiveness. Journal of Business Ethics, 87(1), pp.57-69.
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