Production facilities of an international company
Toyota began to conduct its business operations at an international level more than thirty years ago; at the moment, this company has manufacturing facilities, located in such countries as the United States, the UK, or Russia. Furthermore, this enterprise has several joint ventures in China, India, and the Czech Republic (Toyota, 2010, p 10). Certainly, such dispersion makes it very difficult for the management to control each business process within the organization.
Yet, continuous monitoring of these foreign divisions and meticulous planning has enabled Toyota to boost its financial performance. It would be much better to explain the foreign operations of this corporation using an organizational flowchart.
This chart relies on the statistical information, provided by the company, itself (Toyota, 2010). We can argue that that the majority of Toyota’s foreign divisions are located in North America and Europe; in part, it can be explained by the fact that people living in this region, are the largest consumers of the company’s products. However, Toyota does not disregard such emerging economies as Brazil, Argentina, and South Africa.
One should not overlook such factors as the cheapness of labor in Latin America or Africa. However, the key reason why the management of Toyota prefers to operate in this region is its political stability. Each of the countries that we have mentioned is a market-driven economy, which means that the government avoids intervention in the private sector.
Strategic management
The main strategic objective, set by the management is to become the world leader in automobile manufacturing by providing only high-quality products and services to their customers (Toyota, 2010, unpaged). To some extent, we can argue that this firm has already accomplished this task. The key challenge for them is how to retain this status. This strategy impacts various aspects of Toyota’s organizational structure: the choice of foreign vendors, distribution channels, supply chain, and manufacturing process.
The structure of the firm’s foreign operations is also affected by the company’s strategy, for instance, the business divisions of this enterprise are located in those areas, where the purchasing power of people is very strong. Furthermore, in these regions, the company can hire very qualified employees who can live up to high production standards, set by the management. This is why one can say that the structure of this firm is subordinate to its strategy and not vice versa.
Risks in international business
In the context of international business, such term as political risk can be defined as any decision of the government that may have a detrimental effect on the financial or organizational performance of the company (Aswathappa, 2005, p 77). The most common examples of political risks are quotas and import taxes, imposed on foreign goods, compulsory labor legislations, and expropriation of the company’s assets (Aswathappa, 2005, p 77).
Naturally, there are even greater risks such as civil wars or military coups but they are less common. As far as Japan is concerned, we can argue that this is one of those countries, where private businesses practically do not feel the interference of the government. The political situation in this country has been stable for more than sixty years, and the principles of free trade have long been established. The only possible risk is that the government would introduce laws, forcing the company to lower gas emissions and make the company’s vehicles even more eco-friendly (Borowski, 2010, p 7).
One should bear in mind that nowadays, the advanced countries try to diminish the pollution of the environment and decrease the dependence on oil as its supplies are not inexhaustible. Therefore, the potential decisions of the Japanese government affect the production process of Toyota and its marketing strategies. Overall, Toyota can manage these risks: one should bear in mind that they have already launched the production of flex-fuel vehicles that can use both gasoline and biofuels (Toyota, 2010, unpaged). Therefore, this firm will be prepared for this change.
State interference in the activities of an international company
The Japanese government does not try to impede Toyota’s growth. This company is one of the largest employers in the country that makes the nation’s economy one of the most advanced in the world. There is no reason why the government should place barriers to Toyota’s Growth. We can provide evidence that the government of this country encourages the company’s success and renders support if it is necessary.
For example, in 2009 when Toyota, as any other car manufacturer, passed through a period of economic recession, the government offered them a loan, amounting to three billion dollars (Willacy, 2009, unpaged). As long as Toyota remains a responsible corporate citizen that complies with the anti-trust and labor laws of the country, the Japanese government will not try to interfere in its affairs.
Reference List
Aswathappa. A. (2005) International business. Tata McGraw-Hill.
Borowski. A. (2010). Report on the Toyota Company. GRIN Verlag.
Magee. D. (2007). How Toyota became the number one. London: Penguin.
Toyota. (2010). Toyota in the World. Web.
Toyota. (2010). Company Website. Web.
Willacy M. (2009) Japan asked to bail out Toyota. ABC News. Web.