Toyota Motors the Largest Carmaker in the World: A Testament to the Impact of Globalisation

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Table of Contents

Background
Toyota Motors
As Powerful as Nation States
Management Issues
Conclusion
References

One the most important concept in the world of business is globalisation. In a nutshell it means that the whole human race is interconnected to a great degree. It also means the successful breakdown of barriers such as language, culture, and traditions. This is because of the rapid development of technology that has made it possible for different ethnic groups to come together and interact in a level that was impossible to accomplish in the past.

There is therefore a greater interconnectedness not only in human interactions but also when it comes to doing business in the international level. The success of the Toyota brand is the most powerful argument when it comes to the impact of globalisation. However, there is more than interconnectedness there is also an emerging phenomenon in the modern age – the rise of a business organization that can dominate the whole world in the same way that empires used to conquer and subdue nations.

Before the emergence of sea vessels that can travel halfway around the world the idea that the West can control the East was absurd. There were Europe-based empires that were able to control the Middle-East and to some extent Africa but a European superpower that can boast of dominating China was just impossible. But after the West established colonies in the Far East and South-east Asia it was no longer a matter of debate.

Nevertheless, the concept of globalisation was not yet in the minds of intellectuals, politicians, and business leaders. The West belongs to the Europeans and the East belongs to the Asians. It was not until Japanese carmakers began to demonstrate that they can compete with the big firms in America and Europe that the world took notice. People began to understand that there will come a time when Europe will no longer be considered the centre of the world.

Background

Sea vessels that came from Spain, Portugal, France, Holland, and the United Kingdom laid down the foundation of the present structure of international trade. This was enhanced even further when man invented aeroplanes. The rapid acceleration in technology when it comes to the field of transportation knew no bounds even after railway cars became the main reason why Europe and the United States achieved the status of a highly industrialised society.

As a result it became relatively easy to travel around the world to move from one continent to the next. This capability was none existent even as early as 300 years ago. Four hundred years ago it is already an extraordinary human feat to circumnavigate the globe, but today the same achievement can be done in a matter of hours.

Although the transportation sector played a major part with regards to globalisation, the degree of interconnectedness would not have been possible without an equally rapid pace of innovation in telecommunications technology. The telegraph, telephone, and then radio made it possible to communicate effectively and efficiently over long distances.

A mere one hundred years ago it took weeks or even months depending on the location to deliver a message. Half a century later this gap was narrowed when the telegraph was invented and the use of the telegram was popularized but still it requires elaborate set-up and complicated processes in order to communicate through long distances.

When the TV was invented it changed the game entirely and the whole world reached a level of understanding that never existed since the history of mankind. Asians are now able to see what was happening in the West and vice versa. Musicians and other artists became popular all over the world. Their songs translated into different languages and it was as if a global community was born. There is now common ground between two different cultures.

Globalisation is not an entirely new concept. When Europeans learned to circumnavigate the globe and created colonies halfway around the world, it can be argued as the beginning of globalisation. But it is only in the 20^th century when the whole world felt the impact and full meaning of the concept. It simply means that people with influence, such as businessmen, political leaders, and ambitious individuals can no longer limit the effect of their activities within their country of origin.

In the the age of globalisation, business, political and social decisions and actions created ripples across the globe. It is through the radical change in the field of technology, transportation and communication that made it all possible. This study will focus on the Japanese company known all over the world as Toyota.

The rise of this Asian business giant and its daring move to snatch the crown of achievement from an American conglomerate is a major testament that a local operation can be made into a global enterprise that in turn can affect every man, woman and child on earth.

Globalisation is not a mystery but it is like a diamond with multiple facets. Others see the interconnectedness of people with different cultural backgrounds and religious orientations and yet able to transcend these differences through the use of modern technology such as the Internet. There are those who see globalisation in the context of mobility, that a person can be a citizen of the UK, yet lives in New York and travels frequently to China.

Globalisation is also seen as the destruction of diversity and the emergence of one dominant culture. In this case one company can now dictate the prices of a commodity and how products are made. There are also others who argue that globalization is nothing more than a planet being partitioned into manageable pieces by multinational corporations that are now as powerful as nation states.

Toyota Motors

The success of Toyota Motors in the world stage is nothing less than spectacular. The automotive industry is more often than not associated with the United States and Europe. In America there are the iconic brands such as Ford and Chrysler.

In Europe there is no need to elaborate even further the impact of Mercedes Benz, Jaguar, and of course Ferrari. But how come Toyota, a firm that originally came from Japan began to take over a territory once controlled by Americans and Europeans. The answer can be understood if one will apply the principles of globalisation.

Notice for example that Toyota did not become number one by simply outproducing Ford and Chrysler. This company became the biggest carmaker only after it decided to branch out and establish factories in the United States and other parts of the world. It only began to dominate when it learned how to sell cars outside Japan. This means that the company had to emphasise the need to break down barriers and create a system of effective communication and coordination to manage a business that has a global presence.

It was also pointed out in the article in the BBC website that the Japanese car manufacturer was able to sell 8.42 million vehicles because of the spectacular economic growth in China and other Asian countries (BBC 2011). It has now become a global business. It is no longer possible to simply focus on the country of origin or even to focus on one market such as the United States.

The positive aspect of globalisation can be seen in the way that a businessman or an organisation can succeed past the hurdles that is usually encountered in a traditional business model. For example Toyota can build factories in China but sell the products not to the Chinese but to the Americans.

In the past the factory workers in the United States are also the consumers of the products that they produced and therefore as the company succeeds so does the economic status of the workers. This means that their standard of living also improved tremendously. This is a good thing for employees but the firm suddenly finds a market where the profit of margins is not as great because they have to deal with increasing payroll.

This problem is solved by moving factories from a region where the firm is forced to pay higher wages to a location where Toyota does not have to spend so much on payroll. This is why the growth of the company can be achieved at such a rapid pace. The limitations imposed by geography and old business models no longer apply.

Aside from improving cost-efficiency the most important consequence of globalisation is the fact that the market is no longer limited to the local economy. It used to be a simple process. A businessman sets up shop in the city. The businessman either buys or sells goods or manufacture them.

But the customers are the residents of the city or the people that live in nearby cities or provinces. Today, this is no longer the traditional target market for businesses such as Toyota. Their products can be sold to India, Singapore, Norway, and even as far as New Zealand.

As Powerful as Nation States

Globalisation is a double-edged sword. On one hand it makes possible an efficient and highly lucrative way of doing business. On the other hand it created an environment that will give rise to multinational corporations that are as powerful as nation states. In the not so distant past nations were governed by royalty.

These rulers either took the crown by force or by diplomacy but they rule a particular region. They may build an empire so expansive and yet it is still easy to see the boundaries of their power. The same thing cannot be said of multinational corporations.

The claim that multinational corporations are the true rulers of the world deserves a more in-depth examination simply because there is very little that an ordinary citizen can do to influence their decision-making process. There is no electoral process that can be used to correct the abuses of multinational corporations. If it can be proven that multinational corporations are the ones that are controlling this planet then perhaps governments and their respective citizens can do something to lessen their influence.

It is not the scope of this paper to dwell deeper on the strategies that can be adopted to lessen the negative impact of corporate leadership. It must also be pointed out that if there is indeed too much power in the hands of a few CEOs then it is imperative to create some form of a check and balance that will mitigate the effects of greed and absolute power that may emanate from the boardroom of some of the world’s most powerful companies.

Management Issues

Globalisation is a contemporary management issue because it is no longer possible to start a business, manage an existing one, and try to improve the performance of a firm without thinking about internal and external factors. Globalisation is a force that can radically alter not only the economic landscape but also the social landscape as well.

This is an important consideration when it comes to the problem of competition. It is not only a very complex world but also a highly competitive environment. It is more and more difficult to establish a business without first considering the fact that other firms had already penetrated the market and has found a way to sell their wares at a cheaper price.

The implication of this problem is not only limited to contending with higher barriers of entry but also the fact that multinational companies has the power to dominate an economy in such a way that it is no longer easy to offer an alternative because these organisations had already set up a system in place where consumers can have access to quality but low priced items.

This is a good thing if the general public is assured of perpetual access to cheap but quality goods. However, this is not the case when a company succeeded in defeating the competition.

Once a company has successfully prevented a rival from flourishing then it means that there is now a higher demand for their products. If there is a high demand then there is always a price hike that follows.

However, rising prices are not the only problems that comes with a dominant force without a rival. There is also the problem of not having a competitor that acts as a check and balance. In other words the company may not be driven to improve their products knowing that customers had no other choice but to go to them for their need of their product or service.

It is therefore important to allow for the benefits of globalisation but also be cautious of the negative impact of such a development. The world is in need of innovators more than ever. The problems with the environment and the need for better products can only be solved if more people are involved and if more organisations are given the chance to participate.

It is therefore crucial to develop a system or a set of international laws that will lessen the probability of a totally dominant business organisation to have a level of power that will force every single competitor out of business.

Conclusion

Globalisation is the result of radical technological advancements. It has given rise to a new business environment wherein a corporation can become as powerful as a national government. There are benefits as well as risks in this kind of environment. A company like Toyota can create a business model where they can supply quality but affordable cars.

This is because the company has found a way to make money by simply utilising what the whole planet can offer instead of being limited by local conditions. On the other hand the tremendous success of a global brand discourages the entry of innovators because of the high barrier of entry. It is possible that a fledgling company has the answer to the problem of petroleum dependent cars but because of the dominant position of one multinational corporation in the market, it becomes impossible to compete any longer.

References

BBC 2010. Toyota beats GM to end 2010 as world’s biggest carmaker. Available from <https://www.bbc.com/news/business-12264396>. [24 January 2011].

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