Toyota Australia produces high-quality vehicles and engines at the plant located in Altona. To improve the production process and respond to the principles of sustainability and environmental protection, it is necessary to implement the new technology to save the water used in the technological process.
The project is developed to demonstrate the advantages of the new water cycling technology with references to the specifics of the process and aspects of its successful implementation at the Altona plant. In 2011/2012, 355,611 kL of water was used at the plant with the minimal utilization of the recycled water (Toyota Australia Sustainability Report 2012).
The new water cycling technology allows the implementation of the non-waster process when 100% of recycled water are utilized in manufacturing. To implement the technology, the microfiltration system, several reverse osmosis systems, and the industrial storage tank is necessary.
To guarantee the space and costs savings, the location of the system should be determined. The practical value of the project’s development and implementation is in decreasing the costs, savings the water and energy resources, and protecting the environment.
Background Information
Toyota Australia focuses on the sustainable production meeting the main concepts and ideas of the corporate social responsibility. Nevertheless, to improve the manufacturing process and contribute to the reduction of water resources usage, it is necessary to implement the new water cycling technology.
355,611 kg of water was used at the Altona plant in 2011/2012, and it is possible to operate this number as the average amount of water which will be saved with the usage of the new technology (Toyota Australia Sustainability Report 2012).
The implementation of production based on the 100% water cycling process is the effective strategy to save the company’s costs and operate according to the ideas of the organization’s corporate social responsibility while preserving the water and energy resources (Dissolved metals removal from wastewater 2011).
The new technology is based on the pattern of the electric’s membrane separation method of recycling water used at the plants of Mitsubishi (Mitsubishi Electric: a practical water recycling solution 2013). The usage of the technology guarantees the 100% reuse of water with diminishing the environmental risks and increasing the company’s profits.
The wastewater treatment system allows the regulation of microfiltration the heavy metals removal process with minimal risks for the environment. It is necessary to use reverse osmosis technology in order to achieve higher results and control the water purity completely.
If the previously used systems contributed only to save 30% of all the water used in the technological process with its further recycling, now the other 70% will be saved with the help of the technology (Commercial water tanks 2013; Reverse Osmosis Unit 2010).
As a result, the technology meets the requirements of the company’s environmentally responsible strategy and meets the interests of the community, saving the water resources (Toyota Sustainability Report 2012).
The successful implementation of the new technology in the production process requires the effective and cooperative work of the whole organization’s structure.
The main focus is usually on the work of the engineering department, manufacturing department, information systems department, and distribution systems center which should work cooperatively to implement the new technology during the shortest period of time. The business initiative leads to the creation of the effective cooperative environment within the company oriented to the principles of social responsibility.
References
Commercial water tanks 2013. Web.
Dissolved metals removal from wastewater 2011. Web.
Mitsubishi Electric: a practical water recycling solution 2013. Web.
Hitokoto (2010) argues that the automobile industry is one of the industries that have witnessed rapid growth over the last few decades with new cars emerging in the market yearly. Hitokoto notes that the advancement of technology has made manufacturing processes easier than they were two decades ago. The automobile industry is one of the most competitive industries. As a result, all car manufacturers are struggling to remain relevant in the market. Research indicates that a majority of car customers emphasize quality, efficiency, and customer service as the key determinants when choosing the company from which to purchase (Hitokoto, 2010). As such, many companies are becoming more customer-focused in their manufacturing process. Increasing the ability to fulfill market needs is a way of attracting customers towards the company and gaining a competitive advantage over other firms in the automobile industry. Toyota, which is one of the major players in the industry, is fully aware of the dynamics of the market. This has allowed it to command a large section of the global market share since its incorporation in 1937.
Toyota Motor Corporation
Toyota Motor Corporation (TMC) is a Japanese automobile manufacturer of vehicles. The company was incorporated in 1937 and its headquarters are in Toyota, Aichi, Japan. Toyota has since then, emerged as the leading maker of automobiles in the world according to its annual report in 2010. The company also ranks seventh globally by revenue. Since its incorporation over twelve decades ago, the company has expanded its brunches in several countries around the world in order to increase its customer base globally. The company currently commands the largest customer share globally. Some of the common brands of Toyota cars include Toyota Corolla, Toyota Land cruiser and Toyota Prado, just to name but a few (Toyota, 2012).
Toyota’s strengths in manufacturing and sales
Toyota is determined to maintain it competitive advantage over automobile industries through a number of strategic plans announced by its chief executive officer in March 2011 (Toyota Motor Corporation, 2012). Toyota’s greatest strength that has enabled it to keep up with the competition is its ability to build high quality cars based on the latest technology. The company is focused on manufacturing cars of high quality that satisfy the needs of its customers (Toyota Motor Corporation, 2012). To ensure this, Toyota has a team of experts who carry out research and development to identify the needs and trends of their customers, globally (Toyota Motor Corporation, 2012).
Customers have become increasingly sensitive with regard to vehicular fuel consumption. Toyota is well aware of its customers’ preference for cars with low fuel consumption. Hence, the company ensures that all its cars consume lower amounts of fuel compared to similar types of cars from competing brands. This has enabled the company to attract and retain more customers than other brands. Research conducted on customers revealed that fuel-efficiency was a key determinant in purchasing Toyota cars. The low fuel-consumption level for Toyota cars has allowed the users to save a lot of money that would otherwise, have been spent in fuel consumption with other brands. This has enabled the company to stay ahead of its competitors in the automobile industry (Toyota Motor Corporation, 2012).
Toyota has also ensured that its cars are designed in accordance with the purpose for which the car is meant. The company has divided its vehicle manufacturing sector into four zones namely fleet and personal transport cars; sport cars; buses and trucks; and green cars. The company endeavors to use the latest technology in designing the cars to meet the demands of its customers. Manufacturing cars, based on the purposes for which they are meant, has increased the market segment of Toyota beyond just specializing on one category of cars, as has been the case with some of its competitors. The ability of Toyota to manufacture and provide a variety of cars to the market has enhanced its competitive advantage over its competitors. The numerous Toyota car models provide customers with a variety of cars to choose from, depending on taste, preference, and purpose (Rapp, 2000).
Price is also a key determinant of success in the automobile industry. As such, Toyota is ensuring that all its cars are affordable and easy to maintain. During the March 2011 Company briefing, Toyota revealed that it would continue with its plans of manufacturing affordably priced vehicles as a way of enhancing its competitive advantage over other firms. This is beneficial for Toyota since few customers are willing to purchase expensive cars (Rapp, 2000).
Toyota’s strengths are manifested through its focus on expanding into the emerging markets. The company has been able to penetrate into the emerging markets globally by increasing its subsidiaries and sales branches all over the world. This has enabled customers to get the cars of their choice locally. The availability of Japan cars in local branches saves the consumers from the trouble and cost of searching, investigating and importing vehicles directly from Japan. In addition, the company has a team of marketing and sales experts who ensure that customers are handled with courtesy and respect. This has enabled the company to build a close relationship with its customers; thus, building loyalty between the company and its customers. Investing in the distribution network through local dealerships and efficient sales and marketing personnel has enabled Toyota to gain a competitive advantage over its competitors in the automobile industry (Toyota Motor Corporation, 2012).
Toyota’s Weaknesses
Toyota has various weaknesses that it must address in order to stay ahead of other popular brands like General Motors, Ford and Nissan. The most notable weakness of Toyota is its inability to understand what the customers need. The company has, for a long time, been manufacturing many cars that end up idle and unsold in the market. This inability to identify market needs has allowed companies like Ford to make inroads in the U.S. market, taking up some of Toyota’s customers (Leikanger, 2006). Some customers have also cited quality as a serious concern with Toyota brands. In this regard, the customers argue that the lifespan of Toyota cars is unusually short since they wear out easily (Leikanger, 2006). This has posed a significant challenge to the Toyota brand, calling for the company to make improvements in terms of quality so as to satisfy the customers.
Hitokoto (2010) states that Toyota has suffered negative publicity due to the high number of recalls. For instance, Toyota recalled over 8 million vehicles globally between the last and first quarter of 2009 and 2010 respectively. The company also has a weak risk assessment and management team, as seen from its first annual loss in its history after it lost over $4 billion during the 2008 financial crisis. The primary markets for Toyota are Japan and the United States. The huge loss during the financial crisis was partly due to reduced sales in US. Hence, the heavy reliance on the US market is a significant weakness for Toyota,
Capitalizing on strengths and addressing weaknesses
Toyota has strong strategic plans aimed at capitalizing on its strengths and eliminating the weaknesses that exist in the company. For instance, the company has introduced the ‘Toyota New Global Architecture’ (TNGA) program. TNGA seeks to optimize design freedom and ergonomics, which will ensure that cars manufactured are of high quality, and that they meet the requirements of customers. The company also notes that TNGA will help to improve the vehicles’ road performance.
In addition, Toyota employs new technologies in its manufacturing processes to enhance standardization of parts and improve development efficiency. Toyota has also introduced the monozukuri structure reform in its manufacturing technology to improve the quality of cars being manufactured (Toyota Motor Corporation, 2012). The company has also introduced research initiatives aimed at analyzing what the customers want. This will ensure that all its subsequent cars are in accordance with the demands of their customers (Toyota Motor Corporation, 2012).
Conclusion
The future of the automobile industry is uncertain due to the changing energy trends. Toyota recognizes the challenges posed by various energy needs such carbon capture, storage of electricity in batteries, future oil production costs, and environmental concerns. Part of the research and development team in Toyota is involved in finding alternative sources of power for its future cars. The company is investing in alternative-energy vehicles such as the Prius hybrid and other vehicles that utilize battery power and hydrogen fuel-cells for energy. This will ensure that it remains competitive in the future.
References
Hitokoto, T. (2010). Big carmakers back on the road. Yomiuri Shimbun, Japan. Web.
The main purpose of a positioning strategy is to create an effective brand that can easily differentiate a product from other competitors in the market (Kotler & Armstrong, 2010). In other words, the best way to differentiate a product or business is to devise a positioning strategy. This essay briefly compares the positioning strategy between Toyota and Ferrari. They are both popular companies in the automobile industry.
To begin with, low cost and differentiation strategies are used by Toyota as major positioning strategies (Marksberry, 2012). The company has managed to gain control of the automobile market by ensuring a high level of competitive advantage. Toyota also utilizes a broad marketing scope. In arother words, it attempts to meet the tastes and preferences of all customers in the market.
Since the company regularly streamlines the needs of all categories of customers, it has gained a very large share of the automobile market. For instance, in the case of individuals who reside in erratic weather conditions, the company manufactures vehicles that are suitable for such environments.
SUVs and drive trucks (four-wheeled) are typical examples of vehicles manufactured by the company. Clients who are interested in safeguarding the environment can purchase hybrid models such as the Prius. Also, there are scores of model selections that customers can buy from Toyota.
Another critical positioning strategy for Toyota is the pricing factor. A wide range of prices is available for different types of markets and the purchasing power of consumers. Customers who attach value to price can opt for expensive models such as Lexus and SUVs. On the other hand, the low end of the market can buy cheaper models like the Toyota Corolla.
Low cost is also another positioning strategy for Toyota. The company acknowledges the fact that its low cost can indeed assist it in outwitting other close market rivals. Low cost is equally an effective marketing campaign for Toyota, especially in the emerging markets.
To position itself as an affordable seller of automobiles in the industry, Toyota has so far embarked on some major restructuring process. Some of the measures adopted so far include low costs of servicing, effective channels of distribution, proper selection and jurisdiction of suppliers, and lean production.
On the contrary, Ferrari boasts of a prestigious segment of the automobile market (Baglieri & Secchi, 2007). The company has gained a lot of reputation for exclusivity and high performance. The various models fall within the subcategory of a super luxury car.
It is positioned as an expensive product. Besides, high pricing is a key positioning factor for Ferrari. It also stands out as a unique product that cannot be compared to other competing automobile brands in the market. Hence, Ferrari has set up its class in the targeted market.
The ‘race red’ painting for Ferrari is also another positioning strategy for the different car models manufactured by the company. This aspect of color assists the company to differentiate itself from other competitors. The latter attribute is completely different from the hat of Toyota, which uses all types of colors for the manufactured cars.
Ferrari has also managed to position itself through market dominance (Baglieri & Secchi, 2007). One of the profound methods that Ferrari has used to dominate the market is the production of high-quality models. Innovation is part and parcel of the positioning strategy for the company. Finally, the retained earnings policy, working capital, and mobilization of funds are key tenets in the positioning strategy at Ferrari.
Works Cited
Homer. The Odyssey. New York, NY: Penguin, 1997. Print.
McDermott, J.R. “Transgendering Clytemnestra.” The McGill Journal of Classical Studies 2.1 (2002): 1-8. Print.
Van Oenen, Gijs. “Fabrications of Self: Identity Formation in the Odyssey.” Cultural Values 5.2 (2001): 221-244. Print.
Strategic management involves activities that are conducted by a company’s management in regard of resources and performance in the external business environment (Meyer, 2008). For effective strategic management, a company must develop projects and programs that are in line with its mission, vision and objectives, and then allocate proper resources that will facilitate the implementation of the projects and plans (Hamel & Prahalad, 1989).
Studies conducted by management theorists have shown that successful strategic management has to develop from the stakeholder expectations. Strategic management is very important for multinational companies such as Toyota which operate in a heavily competitive environment. It is of interest to understand how such companies employ strategic management to stay ahead. Therefore, this paper will use Toyota as a case study, and it will establish discuss the company from a strategic perspective.
The paper will particularly establish the following: opportunities that are available for Toyota to move forward in the competitive automotive manufacturing and sales environment; determine the threats faced by Toyota; and establish actions that are being taken to capitalize on the opportunities and address the threats faced.
Opportunities for Toyota to move forward in the competitive automotive manufacturing and sale environment
Toyota Motor Corporation Group (TMC) is a large multinational conglomerate that includes automotive and non-automotive companies (Takahashi, 2011). This section will concentrate on the automotive segment of TMC.
Toyota has a number of strategic opportunities that are mainly attributed to its innovative team. For more than a decade the company has concentrated on developing environmentally friendly cars. Indeed, the world’s most environmentally friendly car is a Toyota (schimitt, 2011). The continued commitment to the development of an environmentally friendly car has developed a good reputation for the Company. Advanced technologies developed by the Company have enabled it to develop environmentally friendly cars. Toyota Prius and Lexus have hybrid variants that are increasing in popularity. Factors such as increased fuel prices are leading to the increased demand for hybrid vehicles, and Toyota is leading the pack.
Toyota uses a special technology for its hybrid vehicles. The innovation is so advanced that other companies have rushed in to purchase it and, therefore, take advantage of the increasing market demand for hybrid vehicles.
This implies that Toyota has an opportunity to grow by producing more environmentally friendly cars (Toyota Group, 2012).
Another opportunity lies in the Company’s practice of producing affordable and yet quality vehicles. With more and more challenges with the global economy, more people are turning to cheaper vehicles that consume less fuel. Toyota is the world’s largest manufacturer of cost effective vehicles and, therefore, has an opportunity to take advantage of the growing market segment.
The company is also undertaking the three pronged integrated approach in which vehicles are fitted with safety features that take into account automotive, environmental and human factors (Rao, 2011).
The three pronged approach has made Toyota vehicles to be much safer compared to vehicles from other companies. This evidenced by a study report that showed a significant reduction in the number of car accidents in Japan, a country whose population predominantly uses Toyota vehicles (Toyota Group, 2012).
Toyota also produces vehicles that target various market segments. For instance, the Company launched the Aygo to utilize the urban youth market. The vehicle is modeled to the streetwise nature of dance and DJ culture (schimitt, 2011). This particular segment is known for much narrow margins and various challenges in branding. Nevertheless, it provides the company with a new opportunity to grow its business.
Threats faced by Toyota
The automotive industry is prone to a lot of competition in both manufacturing and marketing activities. The major threat that faces automobile manufacturing industry as a whole is the rate at which vehicles are recalled. For instance, Toyota recalled 90,000 sports utility vehicles and pick-ups trucks in 2005 due to faulty suspension systems (Takahashi, 2011). The company never disclosed the amount of money it incurred in loses given that some of the vehicles were being used in faraway regions such as US and Europe.
The Company also faces a threat from adverse effects of natural calamities. The economic effects that were caused by the Great East Japan Earthquake are still present. Following the earthquake, the Company suspended most of its domestic operations due to extensive damage that was caused major infrastructure components. Disruption was witnessed across the board, including energy supply, transportation systems, water, gas and communication systems, shortages of supply components, and other damages that were caused to some local subsidiaries located in the disaster region (Meyer, 2008).
The Company has resumed most of its operations in the domestic market but many challenges are still are still being faced. Overall, Toyota was adversely affected by the Great East Japan Earthquake and the duration of the negative impacts is still not clear. However, according to the initial assessments, the earthquake might have caused a significant impact on the Company’s financial operations.
The Company also faces a significant threat from the world financial services industry, which has been found to be extremely competitive. The increase in financing services for the automobile industry has led to decreased margins (Hamel & Prahalad, 1989). The Company needs to develop proper strategies to prevent effects that will arise due to increased competition in automobile financing. If this is not undertaken, then the company’s financial operations will be adversely affected.
The company has also been a victim of fluctuations in currency exchange rates. The company is specifically affected by fluctuations that involve the U.S dollar, the euro, the Japanese Yen, and to a lesser extent, the Australian dollar (Toyota Group, 2012). Fluctuations in currency exchange rates directly impacts on materials and products that are sold in foreign markets and materials that are purchased from the foreign markets (schimitt, 2011). For instance, the worst effects are usually observed when the Japanese yen strengthens against the U.S dollar. This threat has always been there and sadly, there is very little the Company can do to mitigate the effects.
In the recent past, Toyota has faced a significant threat from new entrants that have posed a tremendous completion in the car market (Meyer, 2008). The rate at which new car manufacturers are being established a cause for worry. New entrants are specifically coming from countries such as China, South Korea and certain countries in the Eastern Europe region (Takahashi, 2011).
Actions that are being taken to capitalize on the opportunities, and to address threats
With all the odds faced by Toyota in the automotive industry, an innovative team has helped the Company to stay afloat and remain ahead of many competitors. Toyota is currently the second largest car maker after General motors. The company has undertaken steps to ensure maximum benefits are gained from the opportunities it has. This includes increased research activities that are intended to improve the hybrid technology. This is in response to the projected growth in the environmentally friendly automobile segment (Rao, 2011).
The Company has also increased the production of affordable vehicles that target the lower market end. The company effectively deals with threat posed by new entrants by offering quality, and time tested products.
In relation to the Earthquake threats, the Company has developed strategies that will ensure that its operations are not brought to an abrupt standstill in the event of such an occurrence (schimitt, 2011).
In regard to unfavorable financial operations, the Company has taken steps to increase unit sales, reduce the residual value of lower vehicle prices, and lower the ratio of credit losses. This challenge is being addressed by increased marketing activity.
The company has used some strategies to try and mitigate the effects of changes in interest rates and fluctuations in foreign currency. The instruments that have been advanced to reduce such effects include increasing localized productions and swapping of interest rates (Toyota Group, 2012).
Conclusion
This paper sought to use Toyota as a case study to discuss strategic management.
The paper has particularly established the following: opportunities that are available for Toyota to move forward in the competitive automotive manufacturing and sales environment; determine the threats faced by Toyota; and establish actions that are being taken to capitalize on the opportunities and address the threats faced.
Toyota remains a leading car maker that has developed a loyal market for its products. However, the Company needs to develop strategies that will help it cope with changes in the external environment.
References
Hamel, G., & Prahalad, c. (1989). Competing for the Future. Boston: Harvard Business School.
Meyer, D. (2008). Strategy Process, Content and Context,. London: Thomson Learning.
Rao, S. B. (2011). Strategic management. Mumbai, India: Global Media.
Takahashi, Y. (2011). Toyota registers surprise profit; Auto maker forecasts 48% growth in fiscal-year earnings as it bounces back from recall-related concerns. New York: Wall Street Journal.
Toyota is one of the leading automotive manufacturers that is famous for its focus on quality and sustainability. The company has received numerous awards, which can be regarded as the acknowledgment of its effort (Toyota, 2016; Golden Peacock Awards®, 2016). I believe the high quality of the products is largely ensured by the self-assessment system used in the organization. According to the Business Excellence Institute (2015), self-assessment is one of the key elements of the production cycle. This procedure enables organizations to detect issues at the stage of development and eliminate them, which reduces costs and ensures quality. The lean production system utilized at Toyota facilities encourages employees to work as a team and focus on continuous improvement (“TMHE Improves Efficiency & Quality,” 2011). Every employee can (and is encouraged) to stop the production cycle at any stage if a defect is detected. The cause of the problem is then identified, and the problem is eliminated. Thus, employees work hard to provide the highest quality as they can be rewarded for detecting a defect and penalized for concealing or causing it.
Toyota’s self-assessment system has proved to be effective as Toyota cars are safe and reliable although some issues appeared in the past. The recalls that took place in 2009 were associated with unintended acceleration that could be caused by displaced driver’s mats. Many people can see 2009 recalls as an illustration of certain flaws in the self-assessment system. However, I believe this is only another example of how a company should act in certain situations. It is impossible to predict all issues. However, if some issues occur it is the company’s responsibility to make sure that people will not get hurt and the products will be improved. The self-assessment system involves a meticulous examination of each item by a team of professionals (“Toyota Mirai 2015,” 2015). Some issues can only be revealed during the continuous use of the product. It is also noteworthy that there is a lot of controversy concerning the causes of unintended acceleration as well as the validity of customers’ claims. I believe the self-assessment system is not compromised since the problems that occurred in 2009 are now taken into account, and Toyota employees make sure that possible errors made will not occur again.
I believe Toyota has numerous opportunities for improvement via its self-assessment system. The company has developed a comprehensive self-assessment system that ensures the high quality of products and continuous improvement (“2011 new Toyota Yaris video,” 2011). As has been mentioned above, the company’s employees are encouraged to detect any flaws and come up with strategies to eliminate any defects. As far as the continuous improvement is concerned, regular cross-functional meetings play an essential role in this process. Professionals in different areas can collaborate to develop effective and innovative ways to address various issues detected during the self-assessment process. At the same time, there are certain limitations as some issues can be detected during the continuous use of the product. However, I would not call those issues defects. The first vehicles were considerably less comfortable, fast, and efficient. Only years of use and research are leading to innovation, progress, and improvement. However, self-assessment is also a good platform for improvement. The issues detected and innovations developed translate into various standards that are followed during self-assessment. Therefore, self-assessment and research/innovation are interrelated processes or even segments of the production cycle.
References
2011 New Toyota Yaris video. Maintaining the highest levels if built-in quality. (2011). Web.
The article “You Probably Didn’t Know Toyota Builds Houses, Too” in the Jalopnik Magazine, November 2013 tells us about building services in Toyota. Toyota is one of the largest automobile companies in the USA. The company is located in Aichi, Japan, and it annually delivers millions of vehicles worldwide. Therefore, it is evident that building services, in this case, do not represent the principal focus of the company’s activity, but serve to be a support service that the company provides.
There are two particular aspects that should be analyzed in the framework of the Toyota case. First of all, initially, the company did not have a separate department that could be responsible for providing such a support service. Therefore, the company got engaged in this activity due to the moral implications. At first, housing service was developed in order to provide temporary shelters for the victims of a disastrous earthquake that took place in Turkey. After that, the company decided to expand its service to large-scale production. It was only in the late 1990s that Toyota changed the focus of the service, trying to make it more environmentally friendly (You Probably Didn’t Know Toyota Builds Houses, Too, 2013).
The article does not provide any information on whether the company has an FM-like department that is supposed to be in charge of providing support services. Thus, it is problematic to indicate whether miscellaneous support services are an integral part of the corporate strategy. Nevertheless, it is evident that building services are not a core function of the company; therefore, the case fits the subject of the assignment.
Another curious aspect concerning the case under analysis is that the provision of a support service has assisted the company in improving its general image. The development of the new service branch has helped to advance the brand and draw the customers’ attention to the core service of the company. The relevant phenomenon might be explained by the fact that the management employed a wise approach – they began naming the houses after the names of the most popular automobiles that the company produces.
As a result, those customers that used the support service of the company were, likewise, sure to get informed on its core service as well. Moreover, the company has always had a powerful public appeal for being “green” and environmentally friendly (You Probably Didn’t Know Toyota Builds Houses, Too, 2013). The implementation of the support service has helped Toyota to strengthen its positions in the relevant field. Providing a “green” housing service was supposed to make the clients think positively about all the other services that Toyota offers.
Therefore, the relevant example shows that miscellaneous support services have a positive impact on a company’s performance in general. Managers might use this measure in order to create consistent support for the core activity of the company. The example also shows that the service might be carried out by any department; therefore, it is not necessary that support service is provided by FM-like departments only. In Toyota’s case, the support service it provides has no direct connotations for its core activity. Nevertheless, it is critical that support services perform a considerable contribution to the improvement of the company’s image. As a result, the company is more likely to enlarge its client’s base and increase its profits rates.
Reference List
You Probably Didn’t Know Toyota Builds Houses, Too. (2013). Web.
In an article (Aston Martin $50, 000 Compact for the masses), Aston Martin joined hands with Toyota, to make a new car model, the Aston iQ with a mutual agreement that Toyota Company will supply the components. This document, therefore, reflects my opinion on the article, in a management capacity.
Body
In my view, even though the cost of manufacturing Aston iQ is high, the company sales will significantly soar. The interior design and the compactness of the automobile will attract buyers to purchase this ultra-luxury product. Consequently, annual sales will soar, since they plan to sell 1500 cars yearly.
The Cygnet is eco-friendly; it since consumes less fuel. The automobile will also require little parking space due to its compactness. With the ongoing ‘save our environment’, people will tend to ‘go green’ and opt for this modern vehicle thus an increase in sales.
Moreover, the Aston iQ will provide Aston Martin and Toyota companies with a better platform for competition. Other companies are on the verge of unveiling new models that will try to outdo Cygnet. Among the competitors are, the Volkswagen’s Audi, BMW’s A1 super-compact and Daimler’s electric Mercedes car. Aston iQ will have an upper hand, since it will have set roots in the global market.
With the Toyota Company providing the spare parts, the cost of manufacturing the Aston iQ will dramatically reduce. However, since the selling cost is high, the gain will be high consequently increasing the earnings of both companies.
Conversely, many challenges lie ahead. With the looming recession times, many people lack the purchasing power. Therefore, a number of people will opt for other similar but cheaper models such as the Volkswagen’s Audi, instead of the Aston iQ. As a result, the two companies may record decreased profits.
Conclusion
The production Aston iQ will increase the annual sales of both Toyota and Aston Martin companies. The car is also eco-friendly and small hence many people will opt for this model. Although, the car is comparatively costly, people will still purchase it due to its new and attractive features.
Toyota company was founded by Kiichiro Toyota in 1937 as a spin-off from his fathers company (Ronkainen and Ronkainen 535). It is headquartered in Toyota, Aichi, Japan, though, there are factories in most parts of the world. The company is headed by President Akio Toyoda and the board of Directors. Toyota produces vehicles under five brands. These are Toyota, Hino, Lexus, Ranz, and Daihatsu (Nkomo 6). Its main objectives imply the companys further evolution and increase in the number of sales. At the current moment, it is one of the most profitable cars manufacturing companies as there is a tendency towards the growths of its incomes (Nkomo 9).
Industry Background and Competitive Situation
The fact is that the current competitive situation is complex. A number of car manufacturing companies condition a great level of rivalry. Such brands as Volkswagen, Ford, GM are the main actors who determine the evolution of the market. Volkswagen Group has an advantageous position in Europe, while Ford and GM hold leading positions on the American market. These facts could be taken as their main strengths as there is the opportunity to acquire new customers. However, Toyota has a certain competitive advantage as it is considered the greatest car manufacturer in the world and produces about 7.17 million vehicles annually (Nkomo 9).
Market Structure
The current international car market could be considered the most important and profitable aspect of the world economy. Global sales of vehicles hit 73.9 million cars in 2015 (Kubota para. 6). This sales level guarantees the giant income for the main manufacturers. The current market size is about $700 billion dollars (Ferguson 4). For this reason, this sphere is attractive for the leading actors.
Case problem
Problem Situation Background
Recently the company faced a problem that had a great pernicious impact on its image. The defective design of floor mats resulted in an increased risk to the patients safety. Improperly installed, they could interfere with the accelerator pedal and guarantee the speed gain, which is extremely dangerous (Ronkainen and Ronkainen 536). The problem resulted in the initiation of the procedure of recalls and the negative market response.
Presentation of Facts Bearing on the Problem
The given incident could be considered important as Toyota proclaimed security to be one of the greatest values appreciated by the company. However, the problems of this sort might obviously lead to serious traffic incidents. The negative aftermath of the floor maps defective design should be mitigated by the wise and well-thought-out solution that will be able to satisfy customers demands and guarantee the improvement of the companys image.
Case Issues
Analyzing the given case, there are several important issues that should be given attention. The problem was first discovered in Prius (Ronkainen and Ronkainen 536). This model was given great importance as its main aim was to attract an extra audience and guarantee stable positions on the world market. However, the inability of the given vehicle to assure security to its owners resulted in a decrease in the brands popularity. At the same time, Toyotas main rivals were able to use the given incident and attain some extra revenues by emphasizing their vehicles and their safety and robustness. In these regards, the company announced that it could face losses totaling about $2 billion (Ronkainen and Ronkainen 537). Furthermore, the importance of the problem is evidenced by the fact that the company introduced specific solutions to guarantee the improvement of the current situation and the mitigation of the negative effects. Altogether, these issues contribute to the great importance of the given problem.
Analysis of issues
When investigating the incident, it is also crucial to conduct a precise and comprehensive analysis of the companys main peculiarities. It will contribute to a better understanding of the main incidents roots and help to create a clear companys image.
SWOT Analysis
Besides, applying the concepts of SWOT analysis to the situation, one should admit a number of factors that could be considered Toyotas strengths. The company is known for its high-quality vehicles that are used by thousands of people all over the world. The brand is popular in various states and has stable positions in the international car market. Furthermore, Toyota tends to assure the continuous improvement of its showings to acquire new customers and significant revenues (Ferguson para. 6). The companys policy is focused on the satisfaction of the main customers needs and implementation of innovations. This unique Toyota way could be considered the companys great strength as it guarantees the adherence to the specific policy and creation of the unique brands image. However, Toyota obviously has some weaknesses that also result from its nature.
The orientation on innovations and outstanding quality results in the high price of all vehicles. This fact decreases the rates of the companys evolution as it is difficult to attract customers who belong to other social groups. Moreover, the complexity of the manufacturing process results in the increased importance of qualified staff which also makes the product cost higher. This aspect poses certain threats. Yet, the company might face great losses because of its inability to find new customers and outlets needed to sell vehicles. Additionally, the high level of rivalry conditions the necessity to create new approaches to price policy. However, the nature of the company makes it a complicated task. At the same time, there are still numerous opportunities for the company to evolve. The high quality of its products attracts a certain category of people who appreciate it and who will continue buying cars of the company. In other words, the existence of a certain targeted audience provides numerous opportunities for the companys further evolution as it guarantees the stable level of incomes. Portfolio Analysis
Furthermore, the analysis of the elements of the companys product mix could also provide the crucial information needed to evaluate the case and create the efficient solution. Besides, investigating the given aspect of Toyotas functioning, we could predict its blistering further growth. The fact is that the company has a number of product lines and allied companies that could help it to face any serious problem and survive. At the moment the brand Toyota also incorporates Lexus and holds leading positions (Nkomo 7). These vehicles are considered rather popular and could be perceived as the element of luxurious lifestyle. This status could be used to guarantee stable incomes and achieve a notable increase of sales by emphasizing its unique image. The alterations of the marketing mix are essential for the company as they determine its prosperity and profitableness. Yet, the companys great success evidences that it managed to determine the optimum allocation of its sources to assure that they will be used in the most efficient way (Nkomo 7). Finally, when speaking about the portfolio analysis, the company’s ability to measure its own market share with that of the main competitors and outline the relative market share helps it to create the efficient strategy which aims at achieving a certain competitive advantage.
Financial
As stated above, Toyota sustained certain losses because of the appearance of the problem with floor maps and accelerator pedals. Besides, it still remains a powerful actor which could influence the market greatly. According to its official statistics, the company expects to sell 9,76 million cars and light trucks globally (Kubota para.2). The given sales level will obviously guarantee the great revenue. Toyota states an operating profit of 353 billion yen (“Annual Financials for Toyota Motor Corp. ADR” para. 5) which is higher than ever. In these regards, investigation of the given aspect of its functioning proves the companys great financial power as it is still able to introduce new models and compete with the main rivals. The companys profitability also remains high. Its financial power comes from the stable level of sales, brand popularity and its ability to provide customers with the high-quality products.
Product life cycle
Finally, investigating Toyota company, one should also mind its concern about the product lifecycle. It has already been mentioned that the company adheres to its own unique way that implies the positive brand image. For this reason, it is extremely vital to guarantee the clear and efficient product lifecycle. The vehicles manufactured by the company go through the examination procedure to assure that they correspond to the companys high standards (“Life Cycle Assessments (LCAs)” para. 6). However, Toyota also provides the recycling procedure that will help to mitigate the negative impact its functioning has on the environment. In general, the company tends to implement environmentally friendly technologies into its functioning to obtain the image of an organization that cares about the planet. It could b taken as the part of their brand. That is why the product lifecycle is given great attention.
Altogether, the companys analysis proves its great competitive and financial powers and highlights the possibilities for the further evolution. However, it is still crucial to suggest the efficient solution to the existing problem.
Effective leadership and strategic organization management have become major factors that determine the overall productivity and profitability levels that a company can achieve. Studies reveal that the ability of an organization to balance between its internal procedures such as decision making, leadership and communication with external demands of value for consumers and competitors in the dynamic market is the key to success. This notion is therefore built on change demands which are articulated at different levels of organization management. This has been the case at Toyota Company and Google Inc. because they have assimilated particularistic strategic mechanisms that have made their leadership admirable as well as effective management style.
A brief background of Toyota and Google Companies
Toyota Company
Toyota Motor Company is a multinational company that was founded in1936 (Liker and Hoseus, 2007). The company immediately embraced the concept of effectiveness and assimilated important change mechanisms to keep abreast with the trends that were in the dynamic automobile business. By 1980, the company had instituted major operations considerations that made it to be awarded the first Japanese Quality Control Award (Hopkins, 2009).
The beginning of the 21st century saw the company assimilating highly modernistic models of manufacturing its automobiles thereby colonizing the US market with ease (Liker & Hoseus, 2007). Today, the company has captured over 15% of US market share with over 2.5 million of its products sold annually (Janicijevic, 2010). Globally, the company has been able to provide jobs to about 350, 000 people and make sales of over $ 264,758.9 million (Liker & Hoseus, 2007).
Google Inc.
Google Inc. is one of the leading American multinational corporations that was founded in 1996 (Waters, 2007). Its major area of specialization has been to provide internet related products and services. Over the years, the company has advanced to become an important pillar for individuals and corporate institutions for its effectiveness in fostering communication and information acquisition. Ahenkora and Peasah’s (2011) reference to Google as a strong leader in information technology and communication is therefore correct as Google has become an empowerment point first, to its workers and most importantly to consumers.
Operating environment of the companies
Legal environment
Current effective leadership and management calls for careful coordination between internal and external demands that create the intrinsic harmony of the services provided to consumers with objectives and goals of the organization. Johnson (2002) indicates that leaders in a company should possess the necessary legal and administrative skills that derive their ability to balance and address key uncertainties proactively before they explode to disasters.
Toyota Company has in the recent past been faced with legal issues pertaining to the quality of its products, a consideration that has put its legendary manufacturing model into risk (Liker & Hoseus, 2007). As a result, it adopted a Total Quality Control (TQC) program due to a special demand for greater caution regarding control and management of possible risks. In addition to the quality system, it introduced a high level compliance oversight committee to handle typical bureaucratic issues. According to Leavy (2010), a company can only be referred to be effective when its staff adhere to high levels of ethics and therefore avoid abuse and possible fraud or privacy infringement. Google Inc. has been very particular on this by regularly subjecting its staff to sequential training on law regarding communication and its related privacy requirements (Waters, 2007).
Social and economic environment
Poor business ethics forms one of the most demoralizing factors that not only affects negatively an organization’s social relationship with its customers but also its ability to make huge gains. At Toyota Company, leaders have established important business elements that determine its overall ability to assimilate high levels of creativity and innovation (Liker & Hoseus, 2007). Such include payment of taxes and adhering to economic requirement of the states where they operate. According to Markle (2011), the role of a business should not only be based on the need to generate profits, but need to be keen on the social and economic demands within its environment to provide the necessary social cohesiveness for further societal progress.
On the other hand, the management at Google has realised that through objective questioning and criticism, new ideologies are easily improved. These objectives are in line with the demands of its economic environment (Waters, 2007). Therefore, it has been keen on economic factors such as economic growth and payment of taxes. It has developed its culture based on the understanding that development and improvement have to be progressive and harmonic with its social and economic environment.
Managerial issues
Company culture and performance
Organization’s culture has over the years remained as one of the key elements that determine how well a company can trace its ideals. In her model of cultural dynamics, Mary Jo Hatch indicated that the levels of efficiency an organization can reach are determined by the beliefs, values, communication models, and relationships that exist between the employees and management (Palmer, Dunford & Akin, 2009). Google and Toyota Companies have faced issues pertaining to effecting change and have come note that one of the most difficult aspects in their organization is the changing organizational culture. Palmer, Dunford and Akin (2009) indicate that in order to enhance change in a company’s culture, the change demand must emanate from employees so as to reduce external resistance.
Promotion Policies
Current promotion policy issues in the economy are very relevant in determining the strategies, structures and practices that a business can assume so as to achieve its objectives. Ensuring that an organization recognizes the current promotion issues forms a major step in determining the ability and levels of successes that will be realized via seeking the best strategies of addressing the emerging issues. Since the onset of the current economic slowdown in the global economy, Toyota Company, unlike Google Inc. has found itself in hard times with imminent loses and possible closures (Liker & Hoseus, 2007).
Strategic decisions making and decision making style
Decision making among companies has been considered as a major tool that enables a business to effectively carry out its activities, solve emerging issues and reach its set objectives. However, in Google Inc., leadership has faced several issues coming from implementing its decisions most of which have not received full support from stakeholders (Waters, 2007). Unlike Google, Toyota Company has sought to empower workers by increasing their autonomy and further promoting their decision making capacities (Liker & Hoseus, 2007). In order to counter resistance to its decisions, it has promoted communication between the management and lower level workers, a consideration that has been cited to have major positive affect since it is able to pro-actively identify variant problems that affect the organization and generate the best solutions.
Management, leadership and communication style
The management and leadership styles of both companies have remained steady since their establishment owing to the customers’ needs and the stiff competition from other companies in the market. However, a special focus in their style of leadership has been laid on the need for planning and management that provides the necessary focus for each company to achieve its objectives and strategies. However, communication is still a major issue in both organizations. Analysts are of the view that their leadership can be very effective if they improve vertical and horizontal communication in the company.
Use of SWOT tool and operations strategy framework
The management of the company has remained steady since its establishment owing to its strategic framework and analysis of strength, weakness, opportunities and threats (SWOT). The latter is required in order to meet customers’ needs and high level of competition from its market rivals. However, special focus goes to Google Inc. which still needs leadership that provides the necessary focus for the company to achieve its objectives and strategies (Waters, 2007).
Impact of potential change factors and changing external conditions
Schumann (2001) points out that the current success at Toyota Motor Company and Google Inc. could not have been realized in the absence of effective leadership and implementation of potential change factors. The presence of change in both companies has defined their internal operational demands, relations and external interlinks.
The concept of change management in Toyota Co. has been tied to the company’s major philosophy ‘the Toyota way’ which defines the internal and external boundaries for all change management operations (Liker & Hoseus, 2007). Schumann (2001) indicates that management of change as dictated by this philosophy denotes the need for thorough understanding of the overall application ideals.
References
Ahenkora, K. & Peasah, O. (2011). Crafting strategy that measures up. International Journal of Business and Management, 6(10), 278-283.
Hopkins, M. (2009). 8 Reasons Sustainability Will Change Management (That You Never Thought of). MIT Sloan Management Review, 51(1), 27-30.
Janicijevic, N. (2010). Business processes in organizational diagnosis. Management: Journal of Contemporary Management Issues. 15(2), 85-106.
Johnson, L (2002). Issue selling in the organization. MIT Sloan Management Review, 43(3), 8-9.
Leavy, B. (2010). Design thinking – a new mental model of value innovation. Strategy & Leadership, 38(3), 5-14.
Liker, J. & Hoseus, M. (2007). Toyota Culture: The Heart and Soul of the Toyota Way. New York: McGraw-Hill.
Markle, G. (2011). Constructions of citizenship among multinational corporations. International Journal of Business and Social Science: Special Issue, 2(24), 283-293.
Palmer, I., Dunford, R. & Akin, G. (2009). Managing organizational change a multiple perspective approach. Boston: McGraw Hill.
Schumann, P. (2001). A moral principles framework for human resource management ethics. Human Resource Management Review, 11(1/2), 93-111.
Waters, W. (2007). Google scholar coverage of a multidisciplinary field. Information Processing & Management, 43(4), 1121-1132.
Toyota began to conduct its business operations at an international level more than thirty years ago; at the moment, this company has manufacturing facilities, located in such countries as the United States, the UK, or Russia. Furthermore, this enterprise has several joint ventures in China, India, and the Czech Republic (Toyota, 2010, p 10). Certainly, such dispersion makes it very difficult for the management to control each business process within the organization.
Yet, continuous monitoring of these foreign divisions and meticulous planning has enabled Toyota to boost its financial performance. It would be much better to explain the foreign operations of this corporation using an organizational flowchart.
This chart relies on the statistical information, provided by the company, itself (Toyota, 2010). We can argue that that the majority of Toyota’s foreign divisions are located in North America and Europe; in part, it can be explained by the fact that people living in this region, are the largest consumers of the company’s products. However, Toyota does not disregard such emerging economies as Brazil, Argentina, and South Africa.
One should not overlook such factors as the cheapness of labor in Latin America or Africa. However, the key reason why the management of Toyota prefers to operate in this region is its political stability. Each of the countries that we have mentioned is a market-driven economy, which means that the government avoids intervention in the private sector.
Strategic management
The main strategic objective, set by the management is to become the world leader in automobile manufacturing by providing only high-quality products and services to their customers (Toyota, 2010, unpaged). To some extent, we can argue that this firm has already accomplished this task. The key challenge for them is how to retain this status. This strategy impacts various aspects of Toyota’s organizational structure: the choice of foreign vendors, distribution channels, supply chain, and manufacturing process.
The structure of the firm’s foreign operations is also affected by the company’s strategy, for instance, the business divisions of this enterprise are located in those areas, where the purchasing power of people is very strong. Furthermore, in these regions, the company can hire very qualified employees who can live up to high production standards, set by the management. This is why one can say that the structure of this firm is subordinate to its strategy and not vice versa.
Risks in international business
In the context of international business, such term as political risk can be defined as any decision of the government that may have a detrimental effect on the financial or organizational performance of the company (Aswathappa, 2005, p 77). The most common examples of political risks are quotas and import taxes, imposed on foreign goods, compulsory labor legislations, and expropriation of the company’s assets (Aswathappa, 2005, p 77).
Naturally, there are even greater risks such as civil wars or military coups but they are less common. As far as Japan is concerned, we can argue that this is one of those countries, where private businesses practically do not feel the interference of the government. The political situation in this country has been stable for more than sixty years, and the principles of free trade have long been established. The only possible risk is that the government would introduce laws, forcing the company to lower gas emissions and make the company’s vehicles even more eco-friendly (Borowski, 2010, p 7).
One should bear in mind that nowadays, the advanced countries try to diminish the pollution of the environment and decrease the dependence on oil as its supplies are not inexhaustible. Therefore, the potential decisions of the Japanese government affect the production process of Toyota and its marketing strategies. Overall, Toyota can manage these risks: one should bear in mind that they have already launched the production of flex-fuel vehicles that can use both gasoline and biofuels (Toyota, 2010, unpaged). Therefore, this firm will be prepared for this change.
State interference in the activities of an international company
The Japanese government does not try to impede Toyota’s growth. This company is one of the largest employers in the country that makes the nation’s economy one of the most advanced in the world. There is no reason why the government should place barriers to Toyota’s Growth. We can provide evidence that the government of this country encourages the company’s success and renders support if it is necessary.
For example, in 2009 when Toyota, as any other car manufacturer, passed through a period of economic recession, the government offered them a loan, amounting to three billion dollars (Willacy, 2009, unpaged). As long as Toyota remains a responsible corporate citizen that complies with the anti-trust and labor laws of the country, the Japanese government will not try to interfere in its affairs.
Reference List
Aswathappa. A. (2005) International business. Tata McGraw-Hill.
Borowski. A. (2010). Report on the Toyota Company. GRIN Verlag.
Magee. D. (2007). How Toyota became the number one. London: Penguin.
