The automobile industry is considered among the global industries where all firms regardless of their location must compete in the entire world market in order to break-even and survive. Most of the industry’s products are spread around the entire world with only several firms in the industry competing for global recognition.
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The failure or success of an individual firm in the industry therefore depends on how well it is able to define its niche and achieve a competitive advantage through effective business strategies. An effective international business strategy in this regard must therefore be one that enables the individual firm to attain some economies of scale both in terms of size and markets.
In recent front, market expansion and penetration into new markets has been termed a key factor for future success in the auto industry. This requires that automobile companies pursue global strategies to shape and define how their businesses compete in the global market.
The strategy employed by any of the individual firms in the industry determines to a very large extent the performance of that particular firm in the global market. There are various factors that need to be considered whenever a firm is devising and developing a global strategy.
These factors include an assessment of the existing interdependencies of the firm’s business competitive positions in the various world markets it operates in. First, the firm must identify a number of factors if any similarities of the operating environment exist in its various markets. Secondly, the firm also needs to identify the sources of these interdependencies.
Again here the firm would want to understand whether these similarities arise out of similar factors such as same tastes and preferences, similar economic conditions and so forth in the various markets or not. Thirdly, the firm needs to establish the critical factors that the adopted strategy would have to point at to configure and coordinate its world business activities.
Finally, the firm needs to focus on itself and its internal processes to ascertain whether they support and are well aligned with the derived global strategy. All of these areas need to be looked at carefully and interpreted correctly in devising whichever strategy that a firm devises for its international business.
Luckily for the automobile industry, it is considered the most global and geographical boundaries do not really alter to a large extent the competitive position of a particular firm in a given market provided that its product offerings are well focused on customer satisfaction.
This paper looks to study at the effectiveness in international business strategies of two auto companies from the ASEAN region, Toyota and Proton.
Toyota comes from Japan and is considered to be the world’s leading auto manufacturer while Proton is Malaysia’s leading manufacturer and national automobile company; both of these companies and with much regard to the ASEAN economy play vital roles and are very much important to their respective countries.
The global automotive industry has lately been facing a myriad of new and challenging factors. These pressing challenges ranging from increased globalization, digitalization, increasing competition not to forget the increasing requirements for safety and enhanced environmental consciousness by individual players in the industry are greatly reshaping the entire industry.
Unlike a while ago, size is proving to be no longer a guarantee to success but rather innovation. The current global automotive industry environment has it that, only those companies that find new ways to enhance value in all their processes and products as well do prosper in defining competitive frontiers for the future.
Strategic Analysis and Key Success Factors
Strategy is defined by Campbell, Stonehouse, & Houston (2002) as the set of forecasts by business that can be adopted to guide and form the centers of decision making in supposition that an environmental situation of the future tends to be different from the past.
In this regard the firm must define conditions and means of responding and acting on any variables that intervene to affect the status quo and exercise some influence and control over these. This means that there’s need of putting in place of a constant process of making and reviewing decisions inside any environmental situation.
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In their turn, Mintzberg and Ghoshal (2003) conceptualize strategy within five dimensions christened the five P’s effectively defining strategy as a plan, pretext, perspective, poll and a position. However, Michael Porter made another decision and viewed strategy from a competitive point of view.
Allen et al. (2007) admit that this researcher figured out that a competitive strategy is one that enhances the company vision in a manner that its entire structure and processes are so designed as to enable the firm succeed and grow in a competitive environment.
He identified five forces namely supplier power, buyer power, barriers to entry, degree of rivalry and threat of substitute products as the main factors that guide the strategic direction of any firm. In the context of globalization, Porter redefines the concept of strategy to imply it as a process in which individual firms strive to differentiate themselves from rival competitors in a bid to attaining a competitive advantage.
In this context he portends that, strategy simply means choosing firm unique ways of competing by altering or modifying specific activities or processes in all areas of the business while at the same time putting into consideration the suitability and situation of the business.
In a more recent proposition, strategy is seen in the dimensions of product quality, customer satisfaction, and the integration effectiveness of other support activities and processes. The three fundamental considerations in a devising an effective strategy according to this new proposition are; operation effectiveness, customer targeting and innovation.
Key success factors
It is very important that players within the industry know and understand the key success factors that shape the industry they are in. These factors help individual firms to assess themselves in terms of where they are, know themselves in terms of their competitive strengths and weaknesses, and define where they want to be in the industry and devise effective strategies towards that course.
A number of factors in the industry are currently very crucial in determining the success of each individual firm in the global front. These include; customer orientation, innovation and cost position. Customer orientation is very critical not only for the automobile companies but also for any business. Any business needs to identify its customers in terms of their needs and the general direction of their tastes and preferences.
The modern consumer is increasingly becoming more complex and specific in terms of what he needs. Tastes and preferences as well are becoming more dynamic and hence the need for manufacturers to understand such diverse needs and move in to develop products that will build satisfaction for their customers.
For instance, in emerging markets basic mobility is of key concern to auto consumers in these markets. Manufacturers would therefore want to come up with products that enhance basic mobility in most emerging markets at the lowest possible price offering to also enhance affordability.
There are a number of discussions and misunderstandings which are connected to the development of Toyota Motor Corporation. It was founded at the beginning of the 1900s; the year of 1937 was the year of Toyota’s introduction to the automobile market in Japan.
In fact, this date played a very important role in the history of Toyota’s development: the company had several years before the war to be promoted through the world and got a chance to contribute the war by means of providing special productions (e.g. trucks) for the Imperial Army (Japan – 101: Information Resource 2005, para.3).
During the period of war, Japan had to rebuilt itself in order to achieve the necessary success, this is why Toyota as the main manufacture of the nation had to undergo certain changes as well and consider the innovations which were in demand.
Taking into consideration such rich past, the company remains to be successful and overcomes a number of economic challenges and losses; More (2009) admits that its high level of market focus that was demonstrated during the last 50 years become the main key of the company’s success nowadays.
It is not always easier to succeed in manufacturing under the current conditions; still, the company under consideration proves that it is crucially important to focus on cost savings and neglect the possibility to improve employees’ morale in order to succeed and take the leading position in the existing competitions on the market (Hauser & Paper 2007, p. 687).
The managers of the company find it necessary to emphasis the experience of ownership of the company. The point is the chosen company’s ownership experience is usually targeted in properly developed slogans which attract people’s attention and prove that the offered services are worth recognition.
For example, from 2004 and till now, the same slogan “Moving Forward” is known to the vast majority of people around the whole world (Toyota 2011).
Proton Holdings Berhad is another significant manufacturer that has been discussed in the paper. The point is that this company is considerably younger than Toyota, still, its popularity and recognition in the market is not less impressive. The success of the company is based on the licensing agreements offered by China (Song 2008, p. 18).
Of course, it is not that easy to introduce the company as an absolutely new idea for society regarding the presence of numerous competitors in the market, this is why the company makes a decision to reflect its quality in order to improve its brand and become a significant global player in the chosen market (About Proton 2011).
During the 1990s, Malaysian government made a decision to provide each citizen with the car as the new century should promote new improvements, and cars for every household became one of the main goals set by the government. Proton identified this need and wanted to present the best solution for the problem (Pope et al. 2002).
It turned out to be the period when the company was recognized by almost each citizen. The changes which take place in the company are usually based on the safety standards which are dictated by different nations that are ready to cooperate with the company.
In spite of the fact that Proton considers the requirements set by such countries like China or the USA, it is not always possible to meet all environmental points at the same time, this is why some challenges still bother the company.
However, it is not the time for the company to lose the game and promote other companies with a chance to succeed in automobile manufacturing, and Proton tries to find more financial aid due to ownership of such organization as the Lotus and Norwich City Football Club.
Comparison of the Competitive Positions between Toyota and Proton
As it has been identified in the previous sections, Toyota and Proton are the two leading automobile companies in different regions: Toyota leads the Japanese market, and Proton is noticeable on the Malaysia market. Both companies are powerful and innovating from a number of perspectives.
If Proton aims at increasing the productive capacity of the automobile sector (Sumormo 2005), then Toyota has to be recognized as the company which production system has been improved during the last decade as no other system in the world (Rooney 2005). Being charges with a number of economic and business issues, the companies under analysis have to make use of their best qualities to prove their worth on the market.
Many potential customers are afraid of the global economic slowdown, this is why the companies have to consider quality and price at the same time to meet the expectations of the customers. Operating environment is overcrowded, and it is not always possible for the companies to choose appropriate platforms for development.
Still, both companies are ready to address the issues and the problems in order to prove that their services and their production worth of customers’ attention even under current unstable economic conditions. For example, the representatives of Proton make a decision to phase out petrol production and focus on other ideas to help people save their money but still continue using the cars (Rahim 2005).
In the table offered below, it will be easier to compare the services offered by Toyota and Proton and to define those positions are stronger in order to take the leading position on the global automobile market.
|Purposes of the companies||To improve the already offered production considering available profits and technologies||To create the services and products which are innovating and appropriate to the technologies available for society|
|Strengths of the companies||Possibilities to introduce production in a number of countries, innovating manufacturing approaches, satisfaction of consumers’ needs.||Cost control, desire to seek for new ways to satisfy customers’ expectations, investments in environment and health|
|Weaknesses of the companies||Necessity to observe the economic conditions in different countries and define which country is more preferable, narrow segmentation promotes narrow branding, time for accommodation||Quality issues affect the company’s branding, poor funds decrease the level of cars’ quality and frequency of production.|
|Opportunities of the companies||Reputation of environmentally friendly manufacturer, possibility to sell advanced technologies to other manufacturers (cooperation with Ford)||Cooperation with Egypt and expanding its brand within a short period of time; a chance to consider customers’ needs.|
|Threats for the companies||Product recall, continuous competitions on the car market.||Unstable prices, inabilities to consider all customers’ needs at the same time.|
Effects of the global turmoil on the strategic positions of the two automobile manufacturers
The current situation on the automobile market is not stable, and customers’ demands as well as customers’ opportunities and companies’ possibilities vary considerably. It is not easy to create certain strategies and plan actions as the conditions may require some improvements within a short period of time.
This is why even such strong and recognizable companies like Proton and Toyota may undergo some challenges and problems. This is why Proton is not able to carry considerably its brand equity, and customers admit that nowadays Proton can make cars still, the vast majority of them are short of excitement.
It becomes harder to satisfy the customer, and the company has to search for more reliable models. Poor sponsorships prevent using green engine technologies to their full extent (Investor Relations 2011).
This is why talking about Proton and the effects of the turmoil that is spreading through the world, it is necessary to admit that the company faces certain problems because of inabilities to forecast social needs and consider the company’s possibilities.
Toyota does not undergo the same challenges due to the possibility to use governmental support from the Obama Administration and some environmental groups which have an impact on the technological development (Nurturing a Sustainable Society 2011), still, the global turmoil deprives the employers pay certain attention to the moral conditions of the employees who have to think about the improvement of the company and about the technological aspects that need evaluation.
This is why this automobile manufacture is under a threat to decrease the quality of work because of workers’ physical or emotional problems.
Future strategies to Make Toyota Competitive
Toyota is probably one of the most successful manufacturers on the automobile market. The company is ready to use its full potential and benefit from using the technological improvements within a short period of time. The only weak point of the organization under analysis is the attention to its workers’ emotional condition.
Any international strategy aims at promoting the best conditions under which the company may sell the products outside the chosen domestic market, and in case the company’s workers are aware of the needs of the citizens from different countries, it will be easier for the company to sell its products.
This is why the offered improvement lies into the fact that managers should be attentive to all details, and emotional preparedness for work has to be also crucial.
In general, both Toyota and Proton demonstrate their readiness to compete on the automobile market. Though the companies have different approaches of how to win the customer and take the leading place, the achievements of Toyota remains to be more powerful due to its richer history and possibilities to cooperate with different countries at the same time.
Proton is good on the Malaysian market, still, it is not as strong as Toyota in regard to the economic challenges which appear frequently. This is why the competitive analysis of the companies shows that Toyota should become a good example of how activities have to be organize and what strategies must to be considered by managers.
List of References
‘About Proton’ 2011, Proton. Web.
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Campbell, D, Stonehouse, G, & Houston, B 2002, Business strategy, Butterworth-Heinemann, Woburn, MA.
‘Investor relations’ 2011, Proton. Web.
Hauser, K & Paper, D 2007, ‘Simulation of business re-engineering processes: Case study of a United States motor manufacturing company’, International Journal of Management, vol. 24, no. 4, pp. 676-687.
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Toyota 2011, website.
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