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According to netmba.com (2010) this process is most applicable to strategic management at the business unit level of the organization. For large corporations, strategy at the corporate level is more concerned with managing a portfolio of businesses. For example, corporate level strategy involves decisions about which business units to grow, resource allocation among the business units, taking advantage of synergies among the business units, and mergers and acquisitions. In the process outlined here, "company" or "firm" will be used to denote a single-business firm or a single business unit of a diversified.
For Toyota, this company needs to organize once more again the strategic planning since the decline in sales starting from January and that is why the objective is there to help Toyota win back consumers with discounts.
Business objectives are specific statements that give projections about growth or development to companies. Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed.
1.2 IMPORTANT OF OBJECTIVES
Business objectives are important to give direction to a business. If Toyota is running a business without any business objectives, Toyota Car Corporation shall not be able to grow successfully in any direction. Whereas a mission statement sets forth an official purpose for Toyota and the core values describe appropriate standards of behavior for its accomplishment, operating objectives direct activities toward key and specific performance results. These objectives are shorter-term targets against which actual performance results can be measured as indicators of progress and continuous improvement. Any of all operating objectives should have clear means to the mission and purpose.
Having business objectives, gives this company a much better understanding of where there stand, how to improve the decline sales and what changes in their current method of working will be required to reach the objectives in the series of safety recalls. Objectives are the quantifying targets for achievement and communicating these targets to Toyota for achieving it. Since the sales of Toyota decline because of the safety problems of Toyota's cars, this company needs to set new objectives so that this problem will not appear again after the recall process. This objective is a basic in developed a process of planning strategies of manufacturing Toyota's car and will be a goals that can be quantified. Not having business objectives leads to an un-coordinated business that has a very low probability of being successful. It is important that the objectives are clear and in agreement by all employees, donors, managers and those utilizing the services. The strategic plan strategies through goals and objectives offer a set of measurable outcomes which can be evaluated.Â Individuals within the Toyota with clear goals based on the objectives are able to focus on specific accomplishments.Â
2.0 STRATEGIES TO CHANGE STAKEHOLDER'S ATTITUDE
Toyota plan to address the issue stated in the scenario whereby Toyota started shipping new parts dealers and plans to resume production of the eight suspended models. All customers who would receive a fix at dealership may receive a new pedal when they become available. They should contact their local dealer immediately and exercise caution until repairs can be made. Then if customer is satisfied with the services, Toyota can improve the present cars or services or developing new type of car.
2.1 RESTRUCTURING AND DIVESTITURE STRATEGIES
When organizations such as Toyota experience performance problems, perhaps due to unsuccessful diversification, retrenchment of some sort often takes place. The most extreme retrenchment strategy is liquidation, when operations cease due to the complete sale of assets or the declaration of bankruptcy. Less extreme but still of potential dramatic performance impact is restructuring. This changes the scale and/or mix of operations in order to gain efficiency and improve performance. The decision to restructure can be difficult to managers to make because at least on the surface it seems to be an admission of failure. But in today's area of challenging economic conditions and environmental uncertainty, restructuring is used frequently and with new respect.
Restructuring is sometimes accomplished by downsizing which decreases the size of operations with the intent to become more streamlined. The expected benefits are reduced costs and improved operating efficiency. A common way to downsize is cutting the size of the workforce. Research has shown that such downsizing is more successful when the workforce is reduced strategically. Restructuring by divestiture involves selling off parts of the Toyota to refocus on core competencies, cut costs and improve operating efficiency.
2.2 DIVERSIFICATION STARTEGIES
This can also be taken form of vertical integration where Toyota added the value creation by acquiring suppliers or distributors. In automobile in industry, backward vertical integration has been common as Toyota purchased suppliers of key parts to ensure the quality and control over their availability.
Organizational audit and environmental audit is categorized under strategy evaluation of the strategic planning process. These audit is to determine whether the strategy of Toyota in recall the safety problem of the safety crisis of all their models. These two audits are the steps that Toyota should do before the performance metrics or the performance level and lastly the corrective actions.
PORTER'S FIVE FORCES ANALYSIS
According to mindtools.com, The Porter's 5 Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps Toyota understand both the strength of their current competitive position, and the strength of a position you're looking to move into. http://www.mindtools.com/pages/article/newTMC_08.htm
184.108.40.206 INDUSTRY RIVALRY
With the rise of foreign competitors like Honda, Nissan and etc, Toyota competes on both price and non price dimensions. All companies make cars, trucks or SUVs. Toyota competitors are compared to another constantly that there has been important market share variation, another indication rivalry and its very strong threat to profits. Since there was problem regarding the car, Toyota competitors will take offensive action in acquiring market share of automotive industries. There will be huge rivalry between the automakers and as Toyota loyal customers have to send back their cars due to the faulty brakes, this provides opportunities for competition to expand.
THREATS OF NEW ENTRANTS
With high barriers to entry and other costs this threat is low to Toyota. The industry wise there are huge barriers to entry and minimal capital available. Since new automakers entering the market and claiming a large share of the market share, even a small entrants may impact because there will sell theirs cars, the same design plus with additional features than Toyota cars that have problems.
220.127.116.11 THREATS OF SUBTITUTE PRODUCTS
Substitutes meet the same consumer need but do it in a different way whereas rivals meet the need in the same way. Ford, GM, Honda, Toyota, and Nissan are rivals in that they all produce a small fuel-efficient car. Public transportation systems are substitutes for these small cars. Substitutes create a ceiling on prices and profits. If the substitute is close in terms of filling the customer need to the local firm's product, then customers may switch because of relatively small price differences.
18.104.22.168 BARGAINING OF CUSTOMERS
Not powerful suppliers may be able to limit firm and industry economic returns, powerful buyers may also extract above normal returns by exploiting market imperfections. The threat posed by buyers is increased if one or more of the following conditions exist where if other firm such as Nissan is trying to sell into a market that has only a few buyers, those buyers will have relatively more powerful bargaining position because they can pay the sellers off one another. If Toyota s vehicles being sold are a commodity, buyers have no preference for the output of any Toyota Motor Corp, this allows buyers to stop around and force selling firms to compete on price. Then if let say one of Toyota car is being sold significant to the buyer, the buyer is preferred to pay close attention to exchange to help ensure that they get the possible lowest price.
22.214.171.124 BARGAINING OF SUPPLIERS
Suppliers pose a threat to firm and industry profits to the extent that the market in which the local firm buys from suppliers is not competitive. Market imperfections may allow suppliers to extract above normal profits from the local firms. The stronger the power of suppliers in automotive industry the more difficult it is for Toyota within that sector to make a profit because suppliers can determine the terms and conditions on which business is conducted.
3.2 ENVIRONMENTAL AUDIT
As what I understand the environmental audit is an analysis that analyzes what is the external factor outside the control of Toyota Motor Corp. What is in the external factors is factors that surrounds the company such as economic, social, cultural, demographic/environmental, political, legal, governmental, technological and competitors.
3.2.1 INDUSTRY ANALYSIS (EFE)
According to Maxi-Pedia.com (2010), external Factor Evaluation (EFE) matrix method is a strategic-management tool often used for assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threatsÂ that a business is facing.
In the first column lists key external factors, namely opportunities and threats. These key external factors are derived from tine external-audit process including the opportunities and threats exercise, the CPM (competitor analysis), Porter's Five Forces and etc.
The second column is weights assigned to each factor. They show the relative importance of that factor to being successful in the firm's industry. The sum of all weights equals 1.0.The third column is the rating. This represents how effectively GM's existing strategies address each factor. A 4 means it responds to that factor superbly, while a 1 indicates a poor response.The weighted score is in the last column. This figure is simply the weights multiplied by the ratings. At the bottom of the last column lies the total weighted score. 1.0 is the lowest possible, 2.5 the middle, and 4.0 is the highest. With a rating of 2.1, GM is not performing exceptionally well. It is slightly below the average possible score of 2.5. This is in response to the industry's key external opportunities and threats.
Note that the rising of oil prices was considered to be the most important factor affecting this industry, as indicated by the weight of 0.20. The total weighted score of 2.10 indicates that Toyota is below average in its effort to pursue strategies that capitalize on external opportunities and avoid threats. It is important to note here that a thorough understanding of the factors being used in the EFE Matrix is more important than the actual weights and ratings assigned.
Key External Factors
New Segment Market
Increase of competition
Rising oil prices
SWOT Matrix is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The aim of any SWOT matrix is to identify the key internal and external factors that are important to achieving the objective. SWOT matrix groups key pieces of information into two main categories: Internal factors - The strengths and weaknesses internal to the organization. With this SWOT matrix, Toyota Motor Corp can begin to formulate and possibly implement competitive strategies to deal with its future
Global organization with a strong international position in 170 countries worldwide
High financial strength [sales turnover and sales growth]
Strong brand image based on quality, environmental friendly and customer range
Industry leader in manufacturing and production & the second largest manufacturer in the world
Production capacity where Toyota produce most its cars in US and also Japan whereas the competitors may be more strategically located worldwide to take advantage of global efficiency gains
Some critics has been made due to the large scale recall
First to develop commercial mass produced hybrid gas-electric vehicles that fit consumers looking to alternative sources of fuels away from gas guzzling cars.
Expand more aggressively into new segments of the market by launching new model of car
Toyota is one of the global brand and one of the largest car manufacturers in the world of General Motors that produce diverse brand of automotive especially its well recognized brand "Lexus". The productions of this automotive industry have gone through innovations by offering full range of models from mini vehicles to trucks and developing hybrid cars that will fit to customer and hybrid gas-electric vehicles.
The operational of production are also weak because high level of capital expenditures in new product lines and opening of new production facilities. This can be seen in the scenario that the vehicles of Toyota is having problem that make them to recall it back. Toyota can do better by focusing on segments much more than presently being done.
Saturation and increased of competitions because of the intense marketing campaigns.
Downturn in economy
Changing of demographic e.g. number of large families is declining
Toyota are going through further globalization prospects as the another country light truck market has not fully developed and there is high demand for more diesel powered offering in USA. Nowadays, Research & Development and technology have been more advances that encourage Toyota very active in new technologies proven with its hybrid vehicle. But Toyota USA will have to compete because Toyota still faces some threat from competitors especially Honda that have adopted aggressive strategies for capturing the market of automotive industry.
The competition between Toyota and others automotive firms is very strong because there are large number of competitors in USA and even in others country. Regarding the issue in the scenario, Toyota having problem with the safety problems that ask them to take it all cars that faced this problem to check it back so that customers getting back the guarantee. This issue has affected the company's name and financial conditions. This crisis will change customer needs and trends that not sure more to purchase Toyota's cars.
It is evidence that a SWOT analysis can only give a snap shot of where the company is at a critical moment of decreasing of sales in the early of January. But this could give managers the necessary tools to direct the company in the right decision. It is important for them to feel pulse of the company and guide it in the right decision what to do to solve this issue. This SWOT used by Toyota as the strategy formulation of strategic management process.
4.3 STRATEGIC POSITION FOR TOYOTA MOTOR CORP
Having a competitive advantage is necessary for Toyota Motor Corp to compete in the automotive market is US but what is more important is Toyota must identify its position relative to the competition by knowing if it is a leader, challenger, follower or nicher so that Toyota can adopt appropriate strategies in competing with other automotive industry. For example Ferrari, this company is the nicher where it has specialized in their production of vehicles because it only produce sports car.
STRENGHT AND OPPORTUNITES AS THE STRATEGIC POSITION
As the Toyota Motor Corp is the global organization with a strong international position in 170 countries worldwide, this is an opportunities to this company to expand their market by produce more design and type of cars even the truck.
4.3.2 TOYOTA AS THE CHALLENGER
Toyota Motor Corp will become the leader by Toyota has defined its strategic objective that aim too increases the market share. For example, Toyota Motor Corp produce hybrid car called as Toyota Camry Hybrid (2.4L 4-cyl ECVT) so as Nissan that produce a Hybrid car that call Nissan Altima Hybrid Hev (2.5L 12VA) in 2010. The features of both hybrid cars is just similar but little bit different whereby Camry Hybrid 4-Door Sedan's Fuel Economy (highway) is 34 while Altima Hybrid HEV's Fuel Economy (highway) is 33 and Bluetooth Hands Free Telephone Access is Optional on Camry Hybrid 4-Door Sedan but Not Available on Altima Hybrid HEV.
These two companies maybe will challenge each other in setting up the price. Another firm that have been small challenger to Toyota is Saturn company that also produce Saturn Aura Hybtid in 2009 because compare Saturn to Nissan this company just produce a sedan car that have four number of transmission speed compare to Toyota and Nissan hybrid cars with variable transmission speeds.
Other example is where driven by the demand of customer, Toyota have made 100,000 Prius Hybrid cars in the US market for 2005. So Nissan planned to sell cars that don't run on traditional petrol or gas.
5.0 STRATEGIC PLANNING PROCESS
5.1 FORMULATION OF STRATEGIC MANAGEMENT
5.1.1 VISION & MISSION
First of all, this strategic management model begin where Toyota suppose to setting the vision and mission of Toyota Motor Corp. The vision should state what the management wants to be in terms of growth, values, employees, contributions to society a point of view of the management is meaningful as a developed. As the management has defined the vision, Toyota can begin develop strategies for moving the organization toward the vision. Part of this includes the development of Toyota mission.
And for the setting of mission, management should consider the business strategy and developed from the customer's perspective and should suitable with the vision for Toyota Motor Corp. the mission of this company should consider what they do?, how they do it?, and for whom they do it?. One mission statement can be written and setting to answer each of that question for each or target customer or more question. The vision and mission is important to help Toyota guide this automotive industry business. As Toyota grows and as the competitive environment changes, the mission may require to change.
5.1.2 EXTERNAL AUDIT
This is the step that Toyota supposes to determine the factors surrounds by the company. Toyota should analyze the economic of automotive industry, social and cultural of customers, the demographic of factory, political of US, technological offered in automotive industry and the competitors of automotive industry in US. These shift Toyota focus to external factors when they audit the opportunities. Toyota supposes to identify the areas of business that Toyota looking to enter and opportunities to gain market share from Toyota's competitors or do market development to new customers. Other factor is the threat that will appear in the company that enquires Toyota to do threat analysis. Any internal problem is a threat to the company's well-being and should be evaluated alongside the external threats
5.1.3 INTERNAL AUDIT
This internal audit is focusing on developing objectives and strategies to capitalize on internal strengths and overcome weaknesses. This audit is whereby the factors that appears within the company that owned by or related to the company directly. These could be seen in terms of Toyota Motor Corp staff, products, customer loyalty, processes or location. Toyota needs to audit the management, marketing, finance/accounting, production/operations, research & development, computer information systems and human resources to compare with competitor. Toyota must know their strengths compared to competitors
5.1.4 LONG TERM OBJECTIVES
After that, a long term objectives can be set where a statement that set a measurable, stretch targets that are consistent with Toyota Motor Corp mission and strategy. These objectives will be the primary drivers for change and how this company will measure the success. For example, if there any campaigns in media, it is long term objectives in establish Toyota's name as a world famous brand.
5.1.5 GENERATE, EVALUATE SELECT STRATEGIES
Strategies are formulated and implemented at the Toyota corporate level, business level and functional level. All this should be integrated on to accomplish objectives and create sustainable competitive advantage. The level of corporate strategy directs Toyota as a whole toward sustainable competitive advantage. Business strategy is whereby the strategy for a single business unit or product line. This is where the strategic business unit (SBU) is used to describe a single business of Toyota or a component that operates with a separate mission within Toyota and lastly the functional strategy that will guides the use of Toyota resources to implement business strategy. This level of strategy will focus on activity within a specific functional area of operations.
5.2 IMPLEMENTION OF STRATEGIC MANAGEMENT
Regarding the management issues of Toyota, strategies that can be implemented by this company is the Porter's Generic Strategies, Product Life-Cycle Planning that a series of stages a product of Toyota and service goes through, Portfolio Planning that were to approach the best mix of investments among alternative business opportunities, and BCG Matrix to analyze business opportunities according to market growth rate and market share. These strategies can be implemented towards the corporate governance, management systems and practices and strategic leadership. This is the process allocating resources and putting strategies into action. Once strategies are created, they must be successfully acted upon to achieve desired result.
5.3 EVALUATION OF STRATEGIC MANAGEMENT
How Toyota can evaluate the implementation of strategic management by using the strategic control and renew strategic management process.