Toyota Motor Corp.: A Successful Organizational Management

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Table of Contents

Introduction
Trade Risk and Management
Cultural sensitivity
Globalization
Marketing Strategies
Financial Practices
Branding
Foreign Direct Investments
Conclusion
Reference List

Introduction

Toyota Motor Corporation is a Japanese company that was started by a man called Sakichi Toyoda in 1924. Toyota Foundation was established in the year 1974 after which the prefabricated housing business was begun in the year 1975. In the year 1988, Toyota Motor Manufacturing, USA, Inc. was established and began its production. The years that followed were characterized by the company undertaking massive expansion programs that enhanced its policy of globalization.

In the year 2008, Toyota maximized its sales amounting to the 1 million mark. In the year 2010, Toyota hit the 2 million mark of its sold products (Toyota 2011). This report reviews how the company manages its operations, the culture, marketing strategies and financial practices. The success of Toyota is therefore a paradigm to many companies that intend to capitalize on matters of globalization.

Trade Risk and Management

Managing trade risk is an essential part of any business organization, whether it is dealing with local products or dealing with international products. Trade risk management has helped business organizations expand and remain in the market for a long period. This means that without trade risk management, it is difficult for a business to expand.

The management of Toyota Motor Corporation (TMC), has ensured that it manages trade risks to enable it expand more and spread its roots in globalizing its operations. This is actually because trade risk management is an important aspect of globalization. Trade risk management predicts by indicating where or when the risk is lowest (Reuvid 2006).

Thus, it helps TMC to have the opportunity of making more money. To summarize this, trade risk management is actually practiced by smart business organizations like TMC. It is not necessarily important for one to feel lucky, or for a business organization to fancy its chances of flying blind into the market. In fact, the business organization should actually feel the opposite. It is very important for the organization to conduct a serious market research and analysis before venturing into a business operation.

TMC ensures that this research is conducted extensively through a considerable amount of time. The good part of making money in business is that a business organization need not have gurus and the smartest mathematicians in order for it to make money in the market. The organization only needs smart people who would let trade risk management give the business a winning edge (Trade Risk management 2010). This is actually what TMC is made up of.

The expectation of TMC is that the demand for hybrid vehicles will increase in the near future. It is therefore beneficial for the company to offer this kind of technology for an affordable price. In order to guarantee high quality at lower prices, the company is contemplating the implementation of more cost reduction. This is one of the reasons why the company is planning an efficient use of unemployed and idle facilities.

Cultural sensitivity

The most important aspect in a large and successful organization like TMC is the communication within the organization, as well as the communication between the customers and business partners (Liker et al. 2008). Cultural interests and sensitivity, self-awareness, and global mind-set act as solid foundations of any international business operation.

The leadership of TMC has developed a kind of cultural sensitivity that accommodates diverse cultures and remains competitive in the global market. The development of these competencies has been initiated through foundation courses that focus on cross cultural management issues and skills (Doh & Stumpf 393). In addition to the above, the leaders have been exposed to a variety of experiential assignments that address not only cross cultural sensitivity but also self awareness.

TMC ensures that it recruits its workforce from highly competitive people who have the necessary minimum requirements for the jobs. The company also trains its staff on relevant courses in order to stay abreast with globalization issues. Such courses serve to expose the employees to different countries and cultures at the same time so that they are better equipped in the competitive global market (Doh & Stamp 393).

Globalization

Globalization has enhanced greater mobility in international capital and labor markets, which creates a global marketplace that offers more opportunities due to the availability of more customers. The increased competition between local and foreign companies improves the quality of the products and services offered to consumers.

TMC has ensured that it continues to globalize its operations with minimum conflicts between the stakeholders in the automobile industry. The company has also ensured that it remains in the market by maintaining the high level of competition. Thus, the company has avoided the conflict caused when technology for manufactured goods becomes synchronized internationally.

This is because multinational companies with different sets of norms and other characteristics compete in the markets for goods that are similar. This creates tension in trade especially when it releases forces, which tend to overshadow those policies that are set in place in local workplace operations. TMC has tackled this problem by enacting a new philosophy that came into action in 1992. The philosophy encompasses guiding principles of its domestic and international operations.

Marketing Strategies

Toyota is the most valuable car brand in the world with a brand value of USD 58 billion. The company is not only focused on general advertisements such as TV, Radio, and internet. The company also focuses on charity activities, motor sports, movies and many others.

The brand name is actually a representative of eco-friendly, beloved, efficient and dynamic cars. The logo of the company consists of three bonded ellipses that symbolize Toyota’s philosophy: the ambition for customer satisfaction, innovation and fusion of quality and creativity (Borowski 2010).

Financial Practices

TMC has been successful in managing its inventory. The table below shows a comparison of Toyota’s inventory turnover ratio and days’ inventory on hand in 2007 and 2006. Dollar amounts are in millions: inventory in 2005 is $12,568.

Source: Needles & Powers

From the above table, it can be deduced that Toyota experienced a small improvement in its inventory turnover, as well as a mall reduction in the number of days it had inventory on hand. This is actually a good performance, especially in light of the decline in the housing market and economy later on in the year 2007.

The company uses supply-chain management and a just in time operating environment to manage its inventory. By doing so, the company reduces its operation costs. A note in Toyota’s annual report discloses how the company uses the average costing method and applies the lower-cost-or-market rule to its inventories. This means that Toyota’s approach to valuation adheres to the conservatism convention because it may recognize losers in value before the products are sold if their value decreases.

Branding

Different brands of TMC have different effects on the customer’s image. For instance, some customers may recognize high quality brand names for their automobiles. It is thus very important to display such names so that the purchasing decisions of customer are made easier. TMC does exactly that to all of its brands.

The operators of the company’s products have a positive experience with the company’s brand. Customers also feel more positive about Toyota’s brands. This is because they have developed that confidence in the company’s products (Feinstein & Stefanelli 2008).

Brand position is clearly a strategy for competitive advantage. Developing a brand statement should occur after an extensive research of the market has been done. This statement must be easily understood by the target audience. Its context must be properly presented to demonstrate its relevancy in the market. Brand positioning must promise the customers that which it has to offer. If the existing customers get what the brand promises, they will help in marketing the brand. This will help to increase the market share and thus increase the volume of the product.

Brand positioning should also have the ability to deliver the unexpected because an engaging and unique message to the customers always attracts them to the brand. Customers will expect the organization to offer good services or standard products. This means that if an organization has to increase its market share, it must offer quality services or products that are above the standards of other similar products to enhance competitive advantage (Bloise, 2011).

Brand positioning is therefore not about running more ads because this does not actually increase the number of customers of the brand. The most important thing that branding should be able to demonstrate is to differentiate itself from other competing products in the market (Sengupta 2007). This is exactly what TMC has managed to do.

Foreign Direct Investments

Toyota Motor Corporation has invested in many foreign countries everywhere. It has foreign investments in Europe, Asia, Africa and the American continent. Its direct investment includes factories that manufacture automobiles under supervision from the head quarters (Stonehouse & Campbell 2004). For instance, the total investment for the expansion of Toyota’s operations in Europe would amount approximately USD 2 billion.

The main reason for the selection of France was that the French small-sized car market was one of the largest in Europe. Toyota Motor Corporation also expanded its operations through Poland taking into considerations factors such as geographic position that is close to carmakers, high unemployment rate in the region and the availability of abundant subterranean water needed for industrial production.

Thus, during the year 1999, Toyota announced an investment of around 10 billion Japanese yen for an initial employment of 300 workers. The transmissions produced in Poland would be exported to France, the UK, and Turkey for Toyota car production in the three countries (Marinova & Marinov 2003). This is just one of the major direct investments of this noble multinational corporation.

Conclusion

The most important aspect in a large and successful organization like TMC is the communication within the organization, as well as the communication between the customers and business partners. Toyota is the most valuable car brand in the world with a brand value of USD 58 billion.

The company is not only focused on general advertisements such as TV, Radio, and internet. The company also focuses on charity activities, motor sports, movies and many others. The success of Toyota is therefore a paradigm to many companies that intend to capitalize on matters of globalization.

Reference List

Borowski, A. (2010). Report on the Toyota Company. Norderstedt: Grin Verlag.

Bloise, J. (2011). Successful Brand Development. Web.

Doh, J. & Stumpf, S. (2005). Handbook On Responsible Leadership And Governance In Global Business. Cheltenham, UK: Edward Elgar Publishing Limited.

Liker et al. (2010). Toyota Culture: The Heart and Soul Of The Toyota Way. New York: McGraw-Hill Companies.

Marinova, S.T. & Marinov, M.A. (2003). Foreign Direct Investment in Central and Eastern Europe. Hampwhire: Ashgate Publishing Limited.

Nasser, H. & Overberg, P. (2003). Nation: Old Labels just do not stick in 21^st Century. Web.

Needles, B & Powers, M. (2010). Financial Accounting., England: Cengage Learning.

Stonehouse, G. & Campbell, D. (2004). Globaland Transnational business: Strategy and Management, Ed. 2. West Sussex: John Wiley and Sons, Ltd.

Toyota, (2011). History of Toyota. Web.

Trade Risk Management. (2010). Trade Risk Management. Web.

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