Environment Of Toyota Motor Corporation: Strategic Management Plan

Toyota External Environment

Discuss About The Environment Of Toyota Motor Corporation.

The primary of writing this report is to prepare a strategic management plan of the company, Toyota. The Toyota is a Japanese company founded in the year 1937 that produces trucks, buses, cars, robots, etc. and is considered as the largest car manufacturer in Asia. This report includes the identification of the external and internal environment of Toyota Motor Corporation. This report also comprises of the current business strategy of the company. The strategic options for Toyota along with the mission and vision statements are also included in this report. This report proposes the implementation plan along with the change management approach for Toyota Motor Corporation. The critical analysis of the formulation of the plan is also included in this report.

The Toyota has generated the net income of yen 1.99 trillion with an operating income of yen 1.93 trillion. The revenue of the company measured in 2017 was yen 27.6 trillion. Toyota is the first largest car manufacturing company in the world in terms of revenue and in the year 2017, it was the world’s second largest automotive manufacturer. The product life cycle of the company is in maturity stage. The market share concentration is low in the industry and the major companies in the industry are Volkswagen, General Motors, Ford, and others. The success factors behind Toyota in the automotive industry are the use of efficient work practices, flexibility in determining expenditure, establishment of export markets, effective cost control, optimum capacity, and implementation of the latest technological advancements . For evaluating and accessing the position and competitive strength of the Toyota, the Porter’s five forces framework is used:

Threats of new entrants: Entering market of car manufacturing is very risky and costly. The initial investment in terms of capital is high while the competition is intense between the companies and nominated by the well established car manufacturing companies. Toyota has a competitive advantage as it has an unshakable market presence and is in well-known segments.

Threat of substitutes: The threat of substitutes on the Toyota is medium as there are many types of transportation such as trains, motorcycles, bike, cycles, planes, and the substitutes can provide very rare of the same convenience.

Supplier power: The supplier power of the Toyota is low as the suppliers are likely to sell multiple automakers and are smaller than the manufacturers. The long term contract by the company with the suppliers adhere quality and strict standards. Toyota has a strong association with their suppliers which is considered as one of the competitive advantages of Toyota.

Porter’s Five Forces Framework

Buyer power: The buying power of Toyota is moderate due to the rising oil prices. Also, as the choices are abundant in the car market, the buyer has low switching cost and strong bargaining power. It has also been identified that Toyota implements the cost cutting practices to lower the buyer power .

Rivalry among the competitors: The rivalry among the competitors in Toyota is high as there is a constant competition and prevalent industry dominance. Also, as Toyota follows the cost cutting strategy, it has put a pressure on the cost of Toyota due to the natural disasters.

The internal environment analysis of the Toyota is considered as one of the basic identification to develop a strategy. The internal environment helps in measuring the power of the industry by identifying the strength and weakness aspect that in turn assist in building the objectives and goals for the company depending upon the outcomes of the environmental analysis and helps in formulating the strategy to implement . In the automobile industry, the competition is strong in Europe and Toyota Motor Corporation faces struggle to increase their market share. Toyota has created a unique brand image which brings an advantage over their competitors by continuously lowering the cost and improving the quality. The Toyota Motors had successfully completed an achievement of low price and less fuel consumption cars and has created a competitive edge over their clients make them satisfied by implementing and developing the capability and competence. The core competence of Toyota lies in their implementation of Technology, professional skills in management, and their relationship with the competition. The qualities which make the Toyota distinct among competitors are high capability of production and performance. The just in time production provides the Toyota to continue improvement and implement the high efficiency in the production. The Toyota has strong management capabilities which they use in competitive strategies while making the value to increase with time. The company focuses on resources, assets and market position, which further provides the ability to successfully compete in the Global market. The value chain of Toyota comprises of primary activities and support activities. Toyota gives value and appreciates their customers and focus prominently on the promotions and marketing to meet the target customers . They distribute and stores the finished product to their suppliers and properly assemble and manufacture the cars through durability and reliability. They keep good relationship with their suppliers and controls and handle different departments by MIS and procurement through e-purchasing. Further, the internal analysis of Toyota as per SWOT matrix is as follows:

Toyota Internal Environment Analysis

Currently, the Toyota follows the broad differentiations generic strategy and cost leadership generic strategy. The broad differentiation generic strategy need business to be developed through uniqueness in the product to make sure that there is a competitive advantage. On the other hand, the cost leadership generic strategy provides with the details of how to minimize the cost of operations. The combination of both the strategies brings the success of the Toyota in having the global reach in their market segment. The goal behind implementing the generic strategy by the Toyota is to attain the cost leadership by minimizing the production cost. The Toyota maintains it through the just in time manufacturing method which is also known as TPS or Toyota production system. This helps in inventory cost minimization, minimizing the waste and minimizing the response time. This results in achieving the maximum efficiency to address the broad differentiation segment of generic strategies. The innovation in the Toyota leads to attractive and unique products for all the market segments .

The other intensive strategies implemented by the Toyota for intensive growth are the market penetration, product development, and market development. The cost leadership strategy of Toyota helps in enabling the company to increase the volume of the sales, which make sure that the company can attract more customers and can have an intensive growth. The intensive growth strategy also empowers the company to attract the customers by using innovative products on the basis of advanced and unique features. The company also maximizes the global market presence by entering into the new market and implementing the intensive growth strategy.

Effective strategists in the company help the industry to make strategic choices based on two fundamentals, and then align resources and communicate those choices appropriately. The two fundamentals are known as Business Growth and emphasis on the competition.

In the Business Growth, it is prominent for the organization to analyze if the company can generate enough new growth, and how to build internal capabilities and value-chain that will help in moving towards the success and beat the competition. The emphasis on the competition helps in identifying the factors that can be measured to evaluate all suppliers. This can be made possible by aligning the strategic options which will help in creating the market value. This also brings the confidence in the company that the strategies will help them in maximizing the profits .

SWOT Matrix

The strategic options of the Toyota can be comprehended through Porters matrix which provides 4 options for the competition. This can be understood through 4 probabilities like large market scope, small market scope, low competitive advantage, and high competitive advantage. The strategic options as per Porter’s matrix for Toyota are as below:

For further extension Toyota can implement the Ansoff Matrix, which works as an identification of existing markets, new market, existing product, and new product in the industry. The Ansoff Matrix for Toyota which helps in further extension is as below:

The mission statement of the Toyota is to contribute to an economy through manufacturing of automobiles. Toyota also wants safety, customer satisfaction, comfort which ultimately provides the target profit. The vision of the Toyota is to accompany the second and third earning driver in the automotive business. They want to achieve a half or 50: 50 balance between the non automotive and automotive business. It has been analyzed in 2015, that the ratio of automotive and non automotive in the year 2000 16 was approximately 60: 40 which includes the nonrecurring factors. The company can create a new global vision by generating the synergies and establishing the business to achieve business portfolio with 1: 1: 1 in each domain. They need to move forward to the new global vision. The three domains include mobility, life and community, and resources and environment. This new vision will help in contributing to the next generation automobiles, better lifestyles, and solutions to global issues. This new vision will also help in maximizing the individual capability and diversity to build synergistic strength. It also provides the assurance of quality, safety, and reliability based on the requirements of the customers with unique capabilities and insights to explore the possibilities for a sustainable society and future . 

One of the most prominent phases of the strategic management process is the implementation of the strategy. It has been studied that there is the failure of the strategies because of the poor implementation. Thus, the company needs to analyze the existing Strategies and must use control, culture, and structure to implement a strategy and fulfill their target based on the mission and vision statements. These vision and mission statements help in reviewing the past for improving the quality of operations.

Currently, the Toyota has adopted principles for the strategic implementation by respecting the customs and culture of every Nation and contributing to social and economic development through corporate activities. Toyota used to develop and create advanced technologies and provide services and products that meet the satisfaction of the customers. They foster the corporate culture that improves the value and creativity of the teamwork while maintaining the respect and trust between management and labor. The strategic management process of Toyota emphasizes more to make sure that the transparent and fair corporate governance is monitored multi-directional that would help in preventing the dissatisfaction of the customers by controlling the guidelines and imposing the strategies .

Current Business Strategy of Toyota

Thus, Toyta must comprehend a clear vision while looking for the demands of the customer with high tech innovations and addressing all the engineering challenges and marketing realities. The Toyota can implement the following action plan for preparing themselves for the rapid changes in the automotive industry. This implementation plan may help the Toyota to grow and retain in the automotive industry base and strengthen the global automotive market.

There are various principles which can be followed by the Toyota to manage the change process. The Toyota production system needs to base their management decisions on building the long term relationship and must create the continuous process flow to address the problems of the customers. The Toyota must use the pull system in order to remove the over production and eliminate the waste evenness in the production. Toyota must develop their culture to implement all the modern Quality Assurance methods and standardize the task through employee empowerment and continuous improvement. Toyota must also use the visual control system to analyze the problems or issues and must use only the reliable technologies that are thoroughly tested. Toyota also needs to grow their leaders so that they can comprehend the work and provide the guidance to the others. The company also needs to develop the teams and people who work hard to meet the mission and vision statement of the company .

While formulating the plan, I have learnt that the company needs to implement their strategies to identify the problems or obstacles. The strong management in the organization helps in overcoming those barriers by implementing the efficient strategies to achieve the vision and change the approach process. I have acquired the knowledge on implementing the low cost leadership strategies in which the company needs to be improved through implementing the latest technologies. I have also learnt that when any company tries to apply the low cost strategy, the supportive and primary activities automatically decreases for all value chain. This subsequently affects the quality because the company may not support the innovation capital or invest in the research and development team, which slows the technological growth and increases the competition within the industry. Thus, the strategies in any company should be focused on speed, quality, performance, objective, flexibility, dependability, and cost to build the competitive products while achieving the goals of the organization without neglecting technology and safety .

Conclusion

This report scrutinizes that the strategic management and planning is prominent for the organization which helps in decision making and it is prominent to comprehend the strategic planning models that would help in providing specific advice on how to implement and formulate the strategies in different situations without conflicting the objectives or goals of the organization. The strategies must be implemented in the way that it fulfills the Vision and Mission and serve efficiently, effectively, and responsibly.

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