Introduction: Definition of Concepts
Strategic management refers to the methodical examination of the factors related with clients and competitors and the firm to come up with the ground for maintaining maximum management practices. Simply put, it is the process of examining the internal and external environments of an organization (BusinessDictionary.com, Web). Strategic management involves examination, decisions, and actions that a firm carries out to create and maintain competitive advantages (Dess, 2005).
Competitive Strategy refers to continual plan of action designed to enable an organization achieve a competitive advantage in a certain market segment or over its competitors (BusinessDictionary.com, Web). Deriving from this, strategic competitiveness is the advantage that one firm has over its competitors. This essay seeks to examine Toyota Corporation on various aspects.
Impact of Globalization and Technology on Toyota Corporation
There exist different definitions for globalization but for the sake of this essay, globalization is the evident identifiable organization of firms and regulations that enable taking of advantage of communities and states and their resources by international companies (Vogel, 2008). Globalization happens not only in the developing world but also in the developed world. For instance, Toyota has 13 operational manufacturing units in North America (Vogel, 2008).
The Toyota Corporation laid claim to the fact that its revenues went up due to ‘lean manufacturing’ but looked at closely, that translates to a myth. Globalization has enabled Toyota Corporation to venture out into regions that have cheap labor.
This is what the company has taken advantage of, as well as the drastic slashing of operational costs to boost its revenues (Vogel, 2008). Where technology is concerned, Toyota has engaged in hybrid technology, an idea that saves on fuel consumption. This has lead to a high demand for such cars and more revenues for the company (Vogel, 2008).
Industrial Organization Model
Industrial organization Model of above Average Returns looks that the external environment influences the strategic plans of an organization. According to the model, the production field that an organization opts to compete in has a greater impact on performance than the options that the management comes up with in the company (Adner & Helfat, 2003).
The organizational performance is seen to be influenced by such industry features like economies of scale, penetration barriers, differentiation of products and services, diversifying, and the level of concentration of organizations in the industry (Adner & Helfat, 2003).
The model operates on four assumptions. First, external environment exerts force and constraints that will influence the strategies that will lead to above-average returns (Adner & Helfat, 2003). Secondly, majority of the rivals take charge alike strategically relevant inputs and such inputs dictate the companies’ strategies (Adner & Helfat, 2003).
The third assumption intimates that inputs used to realize strategies are highly movable across organizations and as such, input gaps between various cannot last long (Adner & Helfat, 2003). Lastly, a company’s management is rational and acts in the best interest of the organization as indicated by their desire to maximize profits (Adner & Helfat, 2003).
The model decrees that firms must identify the most appealing industry in which to compete. This is informed by the fact that firms in any industry have similar valuable inputs that are transferrable from one firm to the other and that for firms must therefore compete in the industry with the greatest profit potential (Adner & Helfat, 2003).
In addition, firms must learn ways of utilizing their inputs to execute strategy required by the field’s structure features (Adner & Helfat, 2003). Toyota could earn above average returns if it embarks on the technological innovativeness that has driven it throughout the years. More research should be carried out on hybrid models of vehicles.
Resource Based Model
This model is based on the uniqueness of an organization’s internal inputs and abilities. A five-stage system explains the interconnections between input identification and method selection that will afford the company over average profitability (Open Learning World.com, n.d.). Therefore, the model emphasizes that an organization’s inputs and skills are more crucial to realization of profitability than the external resources or strategic decisions (Open Learning World.com, n.d.).
The five stages include inputs, skills, competitive edge, an appealing industry and strategy formulation and execution as explained hereafter. Primarily, organizations must identify their internal inputs, and gauge their strengths and weaknesses against rivals’ strengths and weaknesses (Open Learning World.com, n.d.). Secondly, organizations must know what set of inputs grant the organization capabilities that are special to the organization compared to their rivals (Open Learning World.com, n.d.).
The company should then gauge the potential for their special group of inputs and skills to outdo their competitors regarding profitability. In other words, the organization should prognosticate how the inputs can grant them competitive edge in the industry (Open Learning World.com, n.d.).
The fourth stage involves detecting and competing in an appealing industry (Open Learning World.com, n.d.). Lastly, if companies must realize above average profits, they must come up and execute strategies that enable them to utilize their inputs in a better way to exploit chances in the external environment (Open Learning World.com, n.d.).
Toyota is currently the world’s greatest car manufacturer. This implies enough internal resources and all that they need to do is to come up with strategies to allow them exploit the external environment where they have a niche too in selling hybrid cars (Vogel, 2008).
Toyota’s Vision and Mission Statement and Their Impact
The company’s global vision as it is called influences the company’s overall success in that, it encompasses all stakeholders and gives a very special place to the global environment.
In addition, the global vision takes keen interest on current and future innovations, which the company expects to be the best. In other words, the mission and vision statement adopts both industrial organization model – focus on external environment- and resource-based model – focus on the internal resources and capabilities (Vogel, 2008).
Lastly, the company utilizes both internal and external stakeholders to reach great heights in the industry. The company engages the best employees possible and trains them accordingly. In addition, due to its superior innovations and eco-friendly products, the company is in tandem with its actual and potential customers (Vogel, 2008).
Conclusion
For any company to succeed in an industry, several factors must be at play. The company must understand the whole concept of globalization. In addition, they must be aware how globalization can affect the company. It must take advantage of such incentives like cheap labor force and local government subsidies.
In addition, the company must focus closely on its internal resources as well as its external resources or opportunities therein. Unique internal resources enable a company to go out and exploit opportunities in the external environment. Lastly, the mission and vision statement must encompass all that a company intends to do.
References
Adner, R., & Helfat, C. E. (2003). Corporate Effects and Dyanamic Managerial Capabilities. Strategic Management Journal , 1011-1025. Web.
BusinessDictionary.com. (Web). Strategic Management. Web.
Dess, G. G. (2005). Strategic Management (2nd Edition ed.). New York: McGraw-Hill Irwin.
Open Learning World.com. (n.d.). Resource Based Model. Web.
Vogel, R. D. (2008). How Globalization Works: Toyota Motor Manufacturing, Texas (TMMTX) – A Case Study. Web.