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Introduction
Entrepreneurial spirit is critical to the success and survival of both small and large organisations. It enables investors to view challenges and needs as potential opportunities. In the process, the investor is able to start a business to serve the identified market niche, either alone or in collaboration with others (Justa et al. 2006).
It also guides all aspects of planning and management. Innovation, on the other hand, involves the development of new ideas, processes, and devices. In most cases, the new elements are more effective compared to the pre-existing ones.
The skills are important for both start-ups and already established businesses. Failure to identify the different aspects of entrepreneurship and innovation can contribute to the downfall of an organisation. The growth of many corporate entities in the world today is attributed to the entrepreneurship and innovativeness of the founders (Devinney 2009).
It is important to note that entrepreneurship and innovativeness come with expenses and risks (Kotabe & Murray 2004). In the case of entrepreneurship, one will need initial capital. At the time, one has limited resources. Starting up the business will mean draining these resources.
In the event that the business does not pick up well, one will have lost their investment (Newell et al. 2003). Innovation is also an expensive undertaking. Usually, it involves intensive research.
Labour is also required. A lot of testing is also needed in the adoption of innovation. In spite of incurring all these costs, it is not guaranteed that the venture will be successful.
It is evident that entrepreneurship and innovation can either support or hinder the development of an organisation. In this paper, the author will analyse how the two elements impact on organisational development. The analysis will be based on Toyota Motor Company.
Toyota is a global organisation that is involved in the manufacture and distribution of cars. It is one of the major players in the global automobile industry. Before becoming global, the business started as a single entity (Toyota Motor Corporation 2015).
Innovation and high entrepreneurial skills have led to the tremendous growth and development of the entity. In addition, proper management has played a major role in the success of the business. Today, the organisation has various subsidiaries in different countries around the world.
The business cannot function without the input of the employees. It is through innovation and proper management of skills that the entity has been able to maintain the productivity of its employees and the high quality of its products (Payne & Frow 2005).
A number of theoretical concepts and tools relating to entrepreneurial and innovative activities will be used in this analysis.
Impact of Entrepreneurial Activities on the Development of Toyota Motor Company
In attempting to analyse the impacts of entrepreneurial activities on the development of the company, a number of theoretical frameworks will be used.
In this paper, the author will use Cantillon’s theory, the social enterprise school of thought, and the Schultz approach. Quality control will also be used as a tool to conduct the analysis.
Cantillon’s theory of 1775 is one of the oldest frameworks in this field. It views the entrepreneur as a factor of production (Norrman & Jansson 2004). The entrepreneur provides labour, which is instrumental in the growth of an enterprise.
Resources that could otherwise have been used in remuneration of an extra worker are saved. Toyota Motor Company started its operations in 1937. It was founded by Kiichiro Toyoda and was a spinoff from Toyota Industries, a company started by his father (Toyota Motor Corporation 2015).
Before 1937, it served as a department of the Toyota Industries. The main objective of establishing the company was to manufacture automobiles. The investor achieved this by building Type A engine. The engine was used to power Toyota AA, the company’s pioneer car.
By working at his father’s company, he was able to gain skills on the construction of automobiles. As such, he did not need the assistance of another person to head the project. For this reason, he was able to save the resources at his disposal (Toyota Motor Corporation 2015).
Through his leadership, the company was able to develop further. Ever since the invention of Toyota AA, the company has continued to engage in entrepreneurial activities to further its objectives. Currently, it owns a total of five brands that include Lexus, Hino, Ranz, Scion, and Toyota.
The social enterprise school approach can also be used to show the impacts of entrepreneurial activities on the development of Toyota Motor Company. Social enterprise initiatives often involve the provision of charitable contributions to the public. The contributions are part of the profits made by the enterprise.
The revenue contributed is often aimed at assisting members of the public to deal with social problems (Toyota Motor Corporation 2015). Toyota Motor Company has over the years established a number of social enterprises in the education sector.
The enterprises are aimed at promoting literacy among members of the society. The most popular is the National Centre for Family Literacy and the United Negro College Fund. The two are aimed at promoting the provision of high quality education to children from poor backgrounds.
As a result of such initiatives, the company has been viewed by many as a philanthropic entity. As such, more customers are willing to purchase its products to increase its capacity to support the programs (Devinney 2009). Consequently, the entrepreneurial activity has led to the development of the organisation.
On the other hand, supporting such programs can be seen to eat into the revenues generated by the organisation. The resources could be injected into other profitable ventures to generate more revenue.
As such, to some extent, social enterprises established over the years by Toyota Motor Company have hindered its development.
One can also use the Schultz approach to analyse the effects of entrepreneurial activities on the development of the automobile company. The theory states that an entrepreneur has the capability to deal with different issues affecting their business. It also acknowledges that change is inevitable.
As such, entrepreneurs must be in a position to anticipate and be adequately prepared for it. In most cases, additional resources are required to ensure the continuity of a business when such changes occur (Emiliani 2006). For this reason, reallocation is vital.
Reallocation can also be necessitated by the emergence of new needs. In most cases, the move will alter the performance of a business. As such, the entrepreneur must have the capability to reallocate the resources effectively with minimal negative effects.
Changes in the automobile industry have prompted Toyota Motor Company to shift its strategy. One major change that has occurred recently in the sector is the rising demand for hybrid cars. The change was as a result of constant calls by environment protection agencies on automobile manufacturers to adopt green technology.
In 1997, the company set up a plant to help in the production of hybrid automobiles that had the capability to run on electricity. The entrepreneurial activity led to the production of Toyota Prius in the same year. It was the first mass production of hybrid cars.
Today, the organisation has sold over 7 million hybrids across the world. The adoption of green technology has helped Toyota Motor Company receive the backing of many environmental agencies. Its activities have been considered to be environmentally friendly.
As such, most customers who are environmental conscious go for the company’s products, promoting its development in the process (Kleindorfer, Singhal & Wassenhove 2005).
By venturing into the production of hybrid cars, a new concept at the time, Toyota Motor Company also gained competitive advantage over rivals, such as General Motors. As such, the company continues to develop. Consequently, the company was declared the leading automobile manufacturer in the world in 2012.
Numerous quality controls are also conducted to ensure the success of the hybrid car. As such, customer satisfaction is achieved, translating to higher sales. With high sales, revenue increases, leading to further development.
The Schultz approach can also be used to describe instances where an entrepreneur identifies the need to expand the operations of the enterprise. In such a case, reallocation is required (Kleindorfer, Singhal & Wassenhove 2005).
Its purpose will be to set aside resources to be used either in increasing of the pre-existing plants or constructing entirely new ones. In the case of Toyota Motor Company, there was a felt need to increase the entity’s global presence. Initially, the organisation had manufacturing operations only in Japan.
However, the situation has changed over the years. Today, the company has production factories across the globe. The entrepreneurial activity has not only increased the supply of the company’s products, but also the revenue generated.
The move was also seen as a means of cutting down on the cost of production. There was no need to export finished cars from Japan to other continents when they can be manufactured there. The elimination of such production costs has led to the development of the company.
The reason behind this is that the profit margins that could have been lost in production costs are reinvested in other ventures. With increased supply of the company’s products in the global market, sales have also gone up (Gowen & Tallon 2003). The reason behind this is that the products are readily available to customers.
According to the Schultz approach, reallocation can also be done to support entrepreneurial activities that do not necessarily correspond to the initial objectives of the company. In this case, an entrepreneur can set aside funds from one business to start up an enterprise that does not in any way complement the existing one (Kolk 2008).
In this case, Toyota Motor Company has shown interests in the aviation sector. The activities are contrary to its initial objective, which was to manufacture and distribute automobiles. In 2002, the organisation secured the services of Scaled Composites.
The aim was to create proof of a model aircraft. In the process, the TAA-1 was created. Toyota Motor Company also collaborates with other players in the aviation industry. Currently, it is the minority shareholder at Mitsubishi Aircraft Corporation.
The automobile manufacturer invested US$ 67.2 million in the corporation to fund a project involving the production of a regional jet. The first deliveries of the project are set to be made in 2017. The entrepreneurial activity is likely to encourage the development of Toyota Motor Company.
If the project becomes a success, the organisation will have diversified its sources of revenue. It will be in a position to shield itself from poor performance in its automobile manufacturing and distribution business (Werner 2002).
However, the new enterprise can also hinder the development of the company in the event that the project becomes a failure.
Other areas where Toyota Motor Company has been seen to pay a great deal of attention include the agricultural and robotics sectors. It the agricultural sector, the company has continued to invest in a number of start-up companies (Toyota Motor Corporation 2015).
Agricultural entities that Toyota Motor Company has contributed to their initial capital include Toyota Roof Garden Corporation and P.T. Toyota Bio Indonesia. It has also partnered with various biotechnology companies to start enterprises.
Such enterprises include Toyota Floritech Co. and Sichuan Toyota Nitan Development Co. Agriculture is a constantly evolving sector. Since food is a basic commodity across the globe, agriculture is a viable sector to invest in.
Such entrepreneurial activities by Toyota Motor Company are expected to increase its revenues in the long term. As such, its future development will be encouraged. In the field of robotics, the company has developed robots capable of performing multiple tasks.
The devices have been used in different fields in the world. Their applications range from such fields as entertainment to care for the elderly and manufacturing processes. One of the most notable of these entrepreneurial activities involved the development of a wheelchair with a brain machine interface.
The elderly can now operate their wheelchairs through their thoughts with only a 125 minute delay. Such entrepreneurial activities has also enabled the company to diversify its revenue sources (Kang & Snell 2009).
Impacts of Innovative Activities on the Development of Toyota Motor Company
Innovation at Toyota Motor Company started with the development of the aforementioned Type A engine. It was used to power the first automobile manufactured by the company. Over the years, more innovations have been made by the organisation.
To analyse the impacts of innovativeness on the development of the organisation, a number of theoretical frameworks can be used. They include the Knight’s approach, the Schumpeter, and the contingency theories.
The contingency approach states that an organisation needs to be carefully managed in order to satisfy its internal needs and those of its immediate environment (Zhu & Sarkis 2004).
The theoretical framework goes ahead to state that no one particular way of organising can be considered to be the best. An organisation must, for this reason, strive to adapt to the environment that it is in.
A common mistake done by many management teams involves trying to adapt the environment to their organisation. As such, there is wastage of resources. At the same time, there are more chances of failure owing to unforeseen risks.
According to the contingency approach, an organisation’s management must also provide goods and services that fit the needs of the market. Toyota Motor Company, having being a major player in the sector for more than 8 decades, has become familiar with the needs of its customers.
Its innovations are aimed at satisfying the needs that have been identified. One such innovation involves the manufacture of multipurpose automobile. In 2002, the company initiated the Innovative International Multi-purpose Vehicle project (IIMV).
The project has spurred and incubated a number of innovations over the years. For example, it has led to the production of various brands, such as the Fortuner, Hilux (Vigo), and Toyota Innova. The demand for these brands has been on the rise in over 140 countries across the globe.
As a result, they are produced on a continuous basis (Frohlich & Westbrook 2001). The organisation has, for this reason, continued to make more profits as a result of innovation. An increase in revenue in the future will translate to continued development of the business.
The Schumpeter theory can also be used to analyse the innovativeness of Toyota Motor Company. Schumpeter viewed entrepreneurial activities as a form of innovation (Thompson 2009). To this theorist, an innovator is an original individual who does not imitate the work of others.
According to the theory, an innovator also qualifies as a social and economic leader in the business world. Such an individual is not overly interested in the profits likely to emanate from the innovation.
On the contrary, their focus is on how the new product will serve the members of the society. Similarly, Toyota Motor Company has come up with a number of innovations deemed to be of more help to customers than to the organisation. A good example is the advanced parking guidance system.
It assists drivers to park with relative ease. It is of greater assistance to inexperienced drivers as compared to experienced ones. The technology has, to some extent, led to the development of the company. Less competent drivers opt to go for automobiles with such technologies.
In the process, more sales are made. More sales translate to high revenues, which can be used for further development. However, such innovations require a lot of research (Kang, Morris & Snell 2007).
The research work is funded by the company, translating to higher operational costs. In the process, development may be hindered, impacting negatively on the company’s profitability.
Knight’s approach can also be used in assessing the impacts of innovation on development within an organisation. The approach states that the entrepreneur plays the role of an innovator.
In the process, they shield other stakeholders from potential risks and uncertainties associated with a particular venture (Zsidisin, Panelli & Upton 2000). Although there are numerous risks associated with innovation, it is also potentially profitable (Westerveld 2003).
Similarly, Toyota Motor Company has engaged in a number of innovative projects that are risky put potentially profitable. The most notable is the creation of hybrid hydrogen fuel cell as a means of powering the engine. Research on the technology commenced back in 2002.
Different models have been tested over the years. Finally, the concept car was launched almost a decade later in 2011. The car had a hydrogen cell stack with a pressurised tank that could see the car run for about 700 kilometres.
The project was time intensive and required a lot of resources. As a result, it led to an increase in production costs incurred by the company. Resources that would have helped in the development of the organisation were instead allocated to the project (Koplin, Seuring & Mesterharm 2007).
However, the innovation made the company a leader in the technology. As such, it gained competitive advantage over other players in the sector (Klefsjo, Bergquist & Garvare 2008). The situation is likely to promote further development of the company in the future.
Conclusion
Toyota Motor Company is a leading manufacturer and distributor of automobiles in the world. Currently, it is leading other players in the sector, having overtaken its major competitors, Volkswagen and General Motors. Its success can be attributed to a number of factors.
One of them is its continuous entrepreneurial and innovative activities. As a result, the company has been able to develop rapidly over the years. In addition, it has taken advantage of technological advancements in the sector.
Currently, the company is engaged in a number of businesses that are not directly related to the manufacture and distribution of automobiles. For example, it is involved in the development of agricultural, aviation, and robotic components.
In spite of the development and growth realised by the company as a result of its entrepreneurial and innovative activities, a number of risks are evident.
They include a rise in operational costs and change in technology. The organisation, just like any other business operating in the sector, has to look for a suitable way to balance between risks and benefits to avoid losses.
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