Toyota business level strategy analysis

Case Study Analysis On "Toyota" Car Company

Case Study Analysis - Toyota Car Company

History and Development

Toyota is a car manufacturer of Japanese origin with a headquarters which is located in Aichi, Japan. It also was founded in 1937 by Toyota Kiichiro. Toyota is one of the best manufacturing automobile companies in the world that also ranked 11th best in the world for its revenue generation in 2012. The methods that Toyota adopts in manufacturing are called the lean manufacturing system. This system ensures that the vehicles that were produced by the company were of high quality and provided continuous improvement. The company's objectives would quickly make the most efficient vehicles to meet the requirements and demands of its customers. This paper will examine the Toyota car company and explain its production, manufacturing, and distribution processes at all levels.

Toyota devised an unbeatable supply chain management technique that allows them to work faster to meet the company demands. The first part of the process is locating parts, and then importing them. Goods are received stored and produced in dealerships, and then the customers buy the cars. The raw materials are procured from a third-party company, and then they are assembled in line for manufacturing (Rothaermel, 2013).

In the transportation process, it entails that Toyota would deliver the products to its customer base using barges and or trucks. Toyota company strives to be efficient in its system by utilizing what is required when it's needed. They also hold production whenever there is a malfunction in the system. Toyota has had the competitive advantage of efficiency and speedy delivery of the products and the company hardly squanders materials or resources (Monden, 2019).

Several factors have contributed to Toyota's long withstanding global success. One of these key drivers is a supply chain management that was developed by Shigeo Shingo and Taiichi Ohno. The management technique components consist of compatibility capabilities, joint improvement undertakings, interlocking structures, mutual understanding, and trust. When Toyota expanded its dealings overseas, they encountered a significant setback where the efficiency was weakened. Regardless, they made a comeback by utilizing their joint improvement activities and recovered the process. This move made the customers extremely impressed with their ability and efficiency to make production fast (Rothaermel, 2013). By utilizing parts until they are finished, then ordering some more, Toyota eliminates unnecessary purchases on the inventory. Therefore, the company can plan and improve processes.

The External Environment for the Toyota Car Company

The 21st-century business is highly competitive. Today, maintaining the status quo is not enough to prevent competitors from achieving a competitive advantage over any company. A successful company is recognized by its ability to coordinate, integrate, and manage its resources appropriately. Businesses today expand to international levels to maximize their sales revenue. Toyota's growth over time has resulted in it developing its business in other countries as well. Companies that operate both locally and internationally counter diverse factors that may affect their operation processes (Monden, 2019). These factors mainly consist of external and internal. Internal factors are those that can be controlled by the business; and the external factors are those that the company has no control over. Multiple successful international organizations decide on the strategies to use once they encounter different environmental factors in their business. Toyota is a Japanese motor manufacturing company in which operations are both local and International. Some of the factors that affect the decisions made by the Toyota company are economic, legal, political, cultural, and technological (Rothaermel, 2013).

These factors become challenging for the business and then strategic decisions are required to make the transitions easier. Toyota sells its products following the current internal market; this is because of global market interdependence. Whenever there is a high demand from the domestic market, Toyota adjusts its market strategies to meet the needs of the requirement or vice versa. Toyota has entered into various trade agreements to be an agent in specific markets. It is demographics, infrastructure, and culture diversity and other social factors that affect the consumers' decisions and perceptions. Toyota has mastered its consumers and knows they have a variety of viewpoints. Therefore, they create a choice of vehicle that suits every consumer. Toyota also participates in corporate social responsibility by building colleges and schools. They donate relief food to families that are affected by natural disasters such as earthquakes or drought (Monden, 2019).

The Strengths and Weaknesses of Toyota

Toyota is one of the best automobile makers worldwide that have been labeled as a highly reliable company that boasts a vast employee base and has broken numerous world records on car manufacturing. It is Toyota that has also invested in human resources in which in return has gained significant results. While Toyota emphasized quite a bit on innovation in its operations it has created a lean supply chain management for its manufacturing process (Dyer& Nobeoka, 2000).

Toyota has produced a wide variation of cars, from hybrid to electric vehicles and family to compact oriented in which fulfill the right availability and options for consumers. Since innovation has become a new push in today’s automobile market world, Toyota also utilizes advanced technology with introduction of its hybrid vehicles into the market that creates a new segment for demand of consumers with high manufacturing capability; they produce up to 10 million cars each year. Some of Toyota's weaknesses include negative publicity as it recalls a large number of vehicles due to faults found in the cars. Just like any other car manufacturing company, Toyota takes no exception to mistakes but has also suffered from poor brand recognition (Rothaermel, 2013).

The company has four different flagship product. That is, Daihatsu, Lexus, Hino, and Toyota. And only two of the four products Toyota and Lexus, are more recognized worldwide. Additionally, Toyota overly depends on suppliers worldwide to make its products; this sometimes slows down the manufacturing process (Dyer& Nobeoka, 2000).

The Toyota SWOT analysis

The business strengths and weaknesses, opportunities, and threats are areas that contribute to whether or not a product or service is successful in the market. Toyota has multiple strong points that have propelled the business to its current successful position. Toyota has an innovative organization culture that advances its functional strategies and technical operating systems. From the onset, Toyota's management created a lean supply chain management system that has been fruitful and has been recognized and set by example from many companies worldwide. Moreover, Toyota is a sharp brand image that attracts more consumers to its products. Whenever people see cars, they search for brand names such as Toyota; this advantage has kept them ahead of many competitors as well as the word spreading of reliability and pricing factors.

Toyota has a growing human power capital of over 369,124 skilled workers as of 2018. Another advantageous factor that contributes to the strength of Toyota includes its advanced technology in car production. Their hi-tech technology has introduced the first hybrid cars in the market and with this green technology it has attracted more customers. The introduction of this technology indicates that Toyota aims to have a sustainable competitive advantage. Lastly, Toyota has a high production capability that keeps them on top of their competitors and in result has lead them to producing large numbers of up to 10 million vehicles every year.

Like any other company, Toyota has its weaknesses. Toyota has not been grabbing all the market successfully. Toyota created a green vehicle technology that has failed to grasp markets, especially in India and China, which has the numbers to convert the sales to profits. In past experiences some of its vehicles have been recalled due to defects. Also, even though Toyota and Lexus are well-known cars, Toyota has some cars from its flagship lines that are unpopular such as the Hino and Daihatsu. There are multiple opportunities for Toyota to achieve more revenues, and these factors are vital for the brand's growth. Since Toyota has gone into Green technology it has been a slow process in gaining popularity around the world. If Toyota focuses more on creation of innovative and sustainable brands, they have a high chance of hitting a massive market sooner than expected. In regards to the expansion of developing countries; with people's perspectives changing, more people are inclined to buying more cars, and demand will be higher. The world is changing drastically, and so is the environment. The growing concern for environmental degradation will propel many people to buy environmentally-friendly vehicles. Therefore, this will lead into opportunity for Toyota to maximize sales on their hybrid cars.

At times Businesses encounter downturns or threats due to many factors. Toyota faces potential threats, such as the number of competitors in the market. The Toyota Company faces rivalry from other gigantic names in the market place, such as Honda, Ford, Mitsubishi, Hyundai, and Volkswagen to name a few. The threat of lower profits is always looming on Toyota due to different exchange rates worldwide. When the sales revenues are sent back to Japan, the benefits become quite small in comparison to other currencies in the world.

The Corporate Level Strategy

Toyota's corporate-level strategy aims to accommodate all its business aspects. A corporate strategy also encompasses the scope of the business, the marketplace, market position, and the nature of its business. Planning is critical to implement any strategies put in place to achieve business goals. Toyota's business strategy and management are said to be one of the world's best business strategies.

Following the long-lasting Toyota success, the management culture quickly transitioned to world leadership. This success is attributed to Toyota's strategically techniques that are the "just-in-time production" and their “Jidoka” lean method widely-adopted in manufacturing and product development in which they also try to prevent defects. The other method ensures that car parts are always available when needed. The managers at Toyota use the “A3” tool. This method means that the managers will always mentor the rest of the team. “A3” will always establish the root cause analysis and support the interests of departments and individuals. It is in this method that encourages productive dialogue between workers and team members assisting each other (James, 2019).

The Nature of the Company's Business Level Strategy

The Toyota Company has a variety of products. Some of its flagship products are Hino, Daihatsu, and Lexus. Toyota's management believes in making quality cars. They strive to improve quality and employee empowerment. Toyota also strongly believes in taking responsibility and developing self in whatever situation. Toyota's competitiveness is self-critical and internal. The company does continuous training on the staff to improve the quality of products they produce. The Toyota vehicles have been designed in such a way that they are long-lasting and seem to meet the demands of many markets.

The Company Structures and Control Systems

The strategic manage structures put in place by Toyota are effective. They have the production process that strives to meet the demands just in time, and 'Jidoka' which acts as a check and balance on the quality of cars produced. Jidoka ensures that defects are prevented entirely. This A3 management style also enables the workers to be on the lookout for each other and help where necessary to improve the process. The structures and systems put in place by Toyota have ensured continuous improvement and quality production (Dillon, 2019).

Recommendations

The emerging markets are a real threat to Toyota. That being said, Toyota must realign its structures with the ever-changing world. Toyota has to be proactive and champion with the introduction of green vehicle technology appropriately into the market. This product has the potential to generate massive sales revenue today due to the rising concern of environmental issues. Toyota must also increase its production of sustainable brands, as the marketplace demands are more aligned with environmental friendlier cars (Debnath, 2015).

The Toyota business strategy has ensured that the company remains a leader in the market. Toyota's lean manufacturing process has proven to be a successful business model that has been emulated by numerous businesses worldwide and continues to push the market share upward or forward.

References

Debnath, S. C. (2015). Environmental regulations become restriction or a cause for innovation–a case study of Toyota Prius and Nissan Leaf. Procedia-Social and Behavioral Sciences, 195, 324-333.

Dillon, A. P. (2019). A study of the Toyota production system: From an Industrial Engineering Viewpoint. Routledge.

Dyer, J. H., & Nobeoka, K. (2000). Creating and managing a high‐performance knowledge‐sharing network: The Toyota case. Strategic management journal, 21(3), 345-367.

James, R. (2019). The Toyota Way or the unions’ way? Examining the nexus between lean and unions in Toyota Australia. The International Journal of Human Resource Management, 1-39.

Monden, Y. (2019). Toyota management system: Linking the seven key functional areas. Routledge.

Rothaermel, F. T. (2013). Strategic management: concepts. New York, NY: McGraw-Hill Irwin.