Toyota Business Strategy In Global Environment Marketing Essay

There have been two reasons of arbitrariness at work to evolve Toyota from its very humble beginning to a world renowned car maker. Firstly, the oil crisis of mid 1970s became an exogenous jolt that increased the demand for smaller and fuel-efficient vehicles in the U.S. Toyota was a making these cars and the U.S buyers who would never have bought Toyota cars , were stirred to make the purchase for the first time. Many of them got pleasantly surprised by the value offered by Toyota and became long term customers as oil prices soared. The oil crisis, in a sense, proved a welcome break and a critical incident to get entrance to the main-stream of the automobile market in U.S.

The Toyota Production System can be called a paradox as on one side, all activities, production flows and connections in a Toyota plant are inflexibly scripted. Yet, its operations are extremely flexible and quite responsive to consumer demands, at the same time. It is considered that the very inflexibility of the operations which makes flexibilities reality. It is because of the operations can be regarded as constant series of controlled experiments. Upon defining any specification, it is actually making a hypothesis which can then be examined in action. This scientific method way is not forced on its workforce rather ingrained in them. It inspires them to indulge in the type of tested and experiments that are generally accepted as the basis of a learning organisation. The Toyota Production System evolved from the day to day working of the company over a long period and has actually never been written down as a manual. Toyota builds up all its working operations as experiments and ingrains the scientific method to its workforce. The first step establishes how workers do their job. The second is how they interact with each other. The third is about the construction of the production lines. Lastly, how workers can learn to improve. Every production path, link, and action planned on these steps should have built-in tests which can indicate problems straight away. And this apparently inflexible system is made so flexible and adaptive to its ever changing environment through the repeated responses to those in built tests.

This made it well positioned in the mist of 1970s oil crisis. Toyota coming from the Japan where size and fuel economy were big issues then in the U. S. But after the Oil crisis, Toyota just had want the U.S consumers were looking for in a dramatically changed environment. According to Louis Pasture, “Fortune favours the prepared mind,” and this small piece of fortune could have proved useless had Toyota made poorer cars. But instead, U.S consumers straight away realized its quality which was a reflection of its tradition and strategy of production excellence, of reduction in costs and defects and improvement in the quality.

The use of thorough standardization to achieve a strategic flexibility is an apparent paradox at the centre of Toyota’s excellent quality and efficiency through making a lot more predictable quality and timing outcomes than possible otherwise. Common architecture, standardization of the processes and reusability are the concepts and tools included in this kind of principle. Taking waste out of the product development process is absolute critical. Actually, standardization of skills, processes and designs enable for the customization of specific programme, broader individual responsibility and a JIT HR strategy, more elastic capacities for product development and quite a few other benefits.

The ministry of international trade and industry (MITI) encouraged Japanese firm to enter to automobile industry despite establish competitors from the West by imposing high tariffs discouraging import and prohibiting foreign ownership.

Post-war conditions put Japan into a country lacking significant capital, so that Japan had to rely mostly on producing its own technology.

Toyota family vehicles are preferred and popular. Toyota needs to develop new technology to enhance their diesel engines, to make less pollution which will impact the low CO2 emission in environment, and which will be socially benefit for the world.

Toyota needs consistent policies, regulations and incentives to accelerate technology and acceptance of technology. Toyota overall technology is good but its electric cars have an issue of less battery time etc.

In Toyota the process of decision making is mostly done by the top level management according to the facts and findings of the research departments. Toyota got very strict organisational structure in order to achieve their high goals in international market. Firstly Taiichi Ohno was the guy who basically designed their management style and gave the Toyota’s most famous concept of Toyota production system or lean manufacturing system. According to Ohno work means the production of the perfect goods only, because he thinks that if a machine is not producing the perfect goods then it is not in good working condition or maybe not working. This concept tells us that Toyota is very quality conscious. But actually now Toyota is being questioned about the quality after millions of recalls and hundreds of accidents in last four months to Toyota drivers.

But actually in Toyota when the decision making is done then the workers are really pushed hard by the managers to achieve the targets. And that’s why currently Toyota is facing problem with Brake override system and they had to recall millions of cars, because software problem related to brake and acceleration system and in some models gas pedal sticks with the floor pad. All competitors of Toyota are already using this brake override Technology but Toyota was slow to understand this technology but now they are saying that in future this system will be available in all Toyota upcoming cars. But honestly speaking in U.S Toyota’s reputation has been reduced tremendously after some accidents due to their mistakes. And now currently at first place Toyota should do something to get the customer confidence back to prosper in future market.

http://www.mainstreet.com/article/smart-spending/autos/what-toyota-should-have-done-brake-override?page=1

http://www.egmcartech.com/2010/02/26/inaba-toyota-shouldve-done-a-better-job-sharing-information-with-lawmakers/

Toyota needs to improve the knowledge management system because only then they can learn from their past mistakes and their solutions and by doing so they can make a strategy to avoid those mistakes in future.

Toyota should be quick to spot new technologies those are highly recommended by different markets for the safety of the road users.

Try to design products for different regions according to the needs of local people where the final product will be used.

As company want to be more globalised then we should try to build a database in which everything is available for each and every individual who is working in Toyota anywhere in the world.

There should be a system through which company can communicate more effectively to decrease the safety defect issues in products around the globe.

Always try to consider local knowledge about the industry before designing any type of vehicle for local people and presenting or marketing it around the globe.

Try to do more than competitors in every market to please the consumer, because this will contribute to brand loyalty and then people will have more confidence to buy a Toyota product.

As Toyota want to compete in the international market in more countries then marketing strategy for each country or region should be different and according to the local way of thinking.

Toyota should try to localise production and supply base to avoid expenses like storage and transportation. And it also enables them work more quickly and efficiently in most of the times.

Find workers which are needed for the job and develop them according to the needs of the company to achieve high and efficient productivity.

Toyota should always keep a look on all types of suppliers and their product quality because it’s directly related with the Toyota’s product quality.

As product designs and technologies are changing day by day that’s why Toyota should not indulge itself to long term contracts with suppliers.

Train and encourage innovative people working within the company to create something new and exciting for international markets according to the demand of public and international standards.

There should be no compromise on the user safety of the product in any kind of circumstances.

For the purpose of more globalization of Toyota supply chain management should be improved to oblige the commitments in international market.

Dealers working with Toyota motors should be trained in such a way that customer service and support should be their main priority.

The decisions that are concerned with the environment in which the firm operates, the entire resources, owner of company and the interface between the two are known as strategic decision.

Here are some of the characteristic of strategic decision

Strategic decisions play an important role for an organisation. These decisions may be related to the new resources, organising others or reallocating others.

Strategic decision deal with the threats and opportunities with harmonizing organizational resource capabilities.

Strategic decisions are long term decision.

Strategic decisions are what is our future panning and these decisions are made very carefully.

Strategic decisions are always arranged according to the organisation mission and vision.

These decisions are related to the overall planning of the organisation.

These decisions deal with the organisation growth that how we have to do planning for the successful future of the organisation.

Strategic are always at the top most level, as these deal with the future so these decision are always uncertain and involve lot of risk.

Strategic decisions are complex in nature.

Figure 1

Strategic decisions are always designed to help the senior management to improve the quality of their decisions. The whole process of strategic decision gives all the participants a good grasp of modern concept of strategic analysis. However all the decision are made by the managers and the people at the senior level but strategic decision will help the managers that how to deal with the process of decision making.

Cost leadership mean to gain the competitive advantage over the rivals in market. In order to gain the competitive advantage firms always try to recruit cheap labour and produce the goods at low cost. Firms try to sell their products at average price to gain higher profits than its rivals or they sell their products below the average industry price to the higher market share. However it does not mean that low cost always lead to low price of the product. If you are the only producer of the product in the market then you can produce the product at the low price and can sell the product at your desired price. Some of the organisations are very good in that strategy, such as Toyota, they are not producing high quality autos at low price level, but they have their brand name and use high quality marketing skills to maintain a premium price policy. (www.marketingteacher.com). (www.coursework4you.co.uk)

Figure 1

Micheal poter’s generic model (1985)

Just in time:

Just in time mean what is needed, when its needed and the quantity needed. In order to produce a large number of products such as automobile, which consist of almost 30,000 parts, it is very important to create a detailed production plan, for example.

If we work on the production plan we can eliminate so many factors like waste, inconsistencies in production and work, and unreasonable requirement and this all can lead to an improved productivity of product. Toyota use pull approach for the production like kanban card paced pull strategy to minimize the inventory level. In the pull strategy customer demands the product and pull it out from the delivery channel. This is because when the demand and the production of the product in very high and it is used to decrease the lead time. Differentiating your product what is also call a pull strategy in these days is basically a genuine pull strategy. And all thye marketing approach is diverted to this pull strategy. The just in time pioneer Toyota using pull strategy which manages there inventory level in the cost effective away and stringent possible way that does not mean that the product is made and pushed to the customer but it is produced in response to the customer. This strategy is becoming common now a days and every firm tries to follows this strategy. Toyota is using a cacr electronic to increase the communication between people, society and automobile. To achieve their goal they have dividing ITS in to five basic areas to work on. So by the managing and coordinating the relation between them the plan is main tain the high growth and development which is called as total Mobility Company. The first car that has the more complex and sophisticated function which include onboard computers and sensor which control the car function and second they are providing the multimedia for their vehicles which represent the new field for the mobile communication.

Conceptual diagram of the Kanban System

Two kinds of kanban (the production instruction kanban and the parts retrieval kanban) are used for managing parts.

(www2.toyota.co.jp)

http://www.managementstudyguide.com/strategic-decisions.htm

http://tools.ashridge.org.uk/website/content.nsf/FileLibrary/4C8918B0EA4CDB988025718E00558E14/$file/STDC.pdf

http://www2.toyota.co.jp/en/vision/production_system/just.html

Inside the mind of Toyota: management principles for enduring growth

 By Satoshi Hino ……..page number 327 edition 2006

Information technology strategies: how leading firms use IT to gain an advantage

 By William V. Rapp…..page number 149..152………edition 2002

http://www.marketingteacher.com/Lessons/lesson_generic_strategies.htm

http://www.quickmba.com/strategy/generic.shtml

http://www.coursework4you.co.uk/essays-and-dissertations/porter-generic-strategies.php

As we know that Toyota is the leading automobile company but to gain the competitive advantage on its rivals in automobile industry is not so easy. There are many competitive challenges which Toyota is facing in the global market environment. Basically competitive challenges are a research offering design to help asset management, to improve the productivity and effectiveness of a business and to maintain the standard performance against competitors. Competitive challenges are confront in annual competitive challenges report on the competitive dynamics of the industry.

Competitive challenges identify the inefficiencies in an organisation. It also examine the; profitability, productivity, asset growth, and product competitiveness, customer satisfaction and marketing.

Senior managers are enabling to plan business strategic objectives by highlighting the areas of success and failure compared to peers. It allows you to clearly identify sales resource efficiency.

http://www.greenwich.com/WMA/products_services/comp_chal/comp_chal_home visited 29/03/10 at 21.20

Toyota is great example of what happens when your competitors build a strategic advantage by setting a high standard in a critical area. For more than two decades Toyota and Honda have been the quality leaders in attracting car buyers who wants better reliability and quality in their vehicles. In Dec-2009, the economists described the problem of quality issues which Toyota is facing and how it is trying to deal with them. Akio Toyoda the president of company recognises that there is need for an innovative design to beat competitors. That may be challenge. Toyota’s success has been built on its reliability and standard of quality.

http://www.baldrige.com/sector/business/toyotas-strategic-challenge/

To maintain quality standards and building an innovative design is not an easy task. Toyota never compromise on quality but still having problems due to its massive production.

Consequently, to establish in the global market the three main technologies, TPS (Toyota production system, TDS (Toyota development system), TMS (Toyota marketing system) should be established and strengthened.

http://williamghunter.net/images/toyota_management_structure.png

Management structure at Toyota

In global market a firm face number of challenges these challenges the effect the competitive and determines how the firm can achieve economies of scale in multi countries environment. In striving to develop a strategy that will make it more competitive, the firm must deal with four interrelated challenges of global marketing strategy.

To bring the change and be innovative is very big challenge for every firm and for Toyota as well. Rapid change pervades product development, production processes and it also builds the competitive pressure as customers more mobile and is exposed new ideas through new global media. Introducing a new model every year has become compulsory which incurs high cost and also keeps in consideration the taste, culture and infrastructure of the area. Rapid change has both positive and negative aspects. To bring a positive change you have to be very care full about the utilization of resources effectively. For instance, we know very well that Toyota launched its new model Prius and the car has a manufacture fault. It was a good change but lake of quality management and now faced a huge loss and company recalled for its 8.5 million cars because of its accelerator and floor mat problem.

http://news.bbc.co.uk/1/hi/8505402.stm

http://www.google.co.uk/search?hl=en&q=four+challenges+of+global+market&meta=&aq=f&aqi=&aql=&oq=&gs_rfai=

Another challenge which most of the companies face is complexity of managing international operations. Technological advances enable management to control operations on a broader geographic scale but at the same time these advances add complexity, as management has to analyse tools and skills to handle the international infrastructure. As we know Toyota is already facing a quality problem because of its massive production. As we know Toyota mostly designed its all product in Japan according to the local environment and launches the same product in the international market. It increases the complexity of product. Yet it is difficult for the organization which elevates quantity its main goal instead to focus on providing the highest quality. Toyota is putting more pressure on their supplier to increase their production without listening to their possible effects on quality. This is because of in experience Toyota managers and rapid expansion. The level of complexity increase when Toyota introduced a hybrid vehicle, the Prius with its two power sources which requires greater engineering expertise.

http://blogs.hbr.org/cs/2010/02/toyota_the_downside_of_hyper_g.html

Increasing competition in global market brings another challenge to Toyota at all stages of involvement in international market. In countries such as India, China, Malaysia the threat of competition is more because, their own domestic market is opening up to foreign competition, increasing more awareness of international market opportunities. Competition can be on different basis like delivering superior quality to consumers. However Toyota’s success on global market depends on knowledge accumulation and effective use of resources. Introduction of hybrid car by Toyota is one of great example of building a competitive advantage and capturing the global market.

http://www.hoovers.com/company/Toyota_Motor_Corporation/crxxsi-1.html

http://www.google.co.uk/search?hl=en&q=four+challenges+of+global+market&meta=&aq=f&aqi=&aql=&oq=&gs_rfai=

This challenge relates to the firms social responsibilities in the global market place. Environmental issues for example, to limit pollution of the atmosphere through the emission of gases and other toxic substances is one of the challenges Toyota is facing. To produce and design which are environmentally friendly is very challenging. Rapid change, higher competition and increased complexity in the global market make it more difficult. To become environment friendly Toyota has come a long way since they launch their first hybrid car ten years ago.

http://www.design21sdn.com/organizations/196/posts/997

These are some problems which is Toyota facing from last few years. The problems started in 1998 with Toyota’s luxury car Lexus and now Toyota again in trouble with its newly launched Prius hybrid car. After becoming the giant of automobile Toyota looks bit careless. But when we talk to Toyota’s representatives then we found that the reality is different. After the recent scenario people have started thinking about Toyota.

In the light of Toyota’s recent quality failure we can easily say that Toyota is only focusing on massive production. We can say if Toyota start focusing on some current issues which company facing now then Toyota can gain its lost repute easily.

References

Inside the mind of Toyota: management principles for enduring growth

 By Satoshi Hino ……..page number 327 edition 2006

Information technology strategies: how leading firms use IT to gain an advantage

 By William V. Rapp…..page number 149..152………edition 2002

http://www.thinkingmanagers.com/companies/toyota.php

http://blogs.hbr.org/cs/2010/02/can_toyota_hansei_its_way_out.html

http://www.mainstreet.com/article/smart-spending/autos/what-toyota-should-have-done-brake-override?page=1

http://www.egmcartech.com/2010/02/26/inaba-toyota-shouldve-done-a-better-job-sharing-information-with-lawmakers/

http://www.managementstudyguide.com/strategic-decisions.htm

http://tools.ashridge.org.uk/website/content.nsf/FileLibrary/4C8918B0EA4CDB988025718E00558E14/$file/STDC.pdf

http://www2.toyota.co.jp/en/vision/production_system/just.html

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http://www.greenwich.com/WMA/products_services/comp_chal/comp_chal_home visited 29/03/10 at 21.20

http://www.baldrige.com/sector/business/toyotas-strategic-challenge/

http://news.bbc.co.uk/1/hi/8505402.stm

http://www.google.co.uk/search?hl=en&q=four+challenges+of+global+market&meta=&aq=f&aqi=&aql=&oq=&gs_rfai=

http://blogs.hbr.org/cs/2010/02/toyota_the_downside_of_hyper_g.html

http://www.hoovers.com/company/Toyota_Motor_Corporation/crxxsi-1.html

http://www.design21sdn.com/organizations/196/posts/997

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http://answers.yahoo.com/question/index?qid=20100210132838AAHTQJm

http://www.fastlane.com.au/News_Toyota/vision_2010.htm

http://www.mainstreet.com/article/smart-spending/autos/what-toyota-should-have-done-brake-override?page=1

http://www.egmcartech.com/2010/02/26/inaba-toyota-shouldve-done-a-better-job-sharing-information-with-lawmakers/

www.marketingteacher.com

www.coursework4you.co.uk

http://www.managementstudyguide.com/strategic-decisions.htm

http://tools.ashridge.org.uk/website/content.nsf/FileLibrary/4C8918B0EA4CDB988025718E00558E14/$file/STDC.pdf

http://www2.toyota.co.jp/en/vision/production_system/just.html

http://www.marketingteacher.com/Lessons/lesson_generic_strategies.htm

http://www.quickmba.com/strategy/generic.shtml

http://www.coursework4you.co.uk/essays-and-dissertations/porter-generic-strategies.php

http://www.greenwich.com/WMA/products_services/comp_chal/comp_chal_home visited 29/03/10 at 21.20

http://www.baldrige.com/sector/business/toyotas-strategic-challenge/

http://news.bbc.co.uk/1/hi/8505402.stm

http://www.google.co.uk/search?hl=en&q=four+challenges+of+global+market&meta=&aq=f&aqi=&aql=&oq=&gs_rfai=

http://www.design21sdn.com/organizations/196/posts/997