Executive Summary
Due to current changes in the world economic situations, business is faced with the challenge of adopting measures to keep then in business currently and ensures continuity.
Traditional methods of conducting affairs have become out-dated and more strategic methods are required. The initial point in developing a competitive and business continuity strategy is interpolating current conditions and developing futuristic policies. Efficiency should be embraced at all time.
Introduction
In the recent past, and into the future, businesses are undergoing changes in management styles to remain competitive in modern changing world. Management traditional functions have been increased to ensure that they position their business in the changing world business treads. A competitive strategy is a combination of different policies implemented by a business to ensure that an organization remain competitive.
It involves a total business re-engineering and adopting management tools like Six Sigma management tools, porter’s tools, S.W.O.T. analysis tools, P.E.S.T.L.E. tool to make decisions (Camillus, 2008).
The changes bring about positive influence or negative one depending with a certain industry and the way a business is prepared to face it. This paper discusses the various strategic options efficiently managed business should implement to remain competitive in the current and future projects. It will use Toyota Motor company as a case study.
Toyota Motor Company
Toyota is world leading automobile company with it headquarters in Tokyo Japan. It was started in 1937; its founder is Kiichiro Toyoda. In 2008 survey of top 500 big companies in the world, it emerged as the world’s number five best company. The success of the company came more to the light when it surpassed general motor’s which has been world’s largest auto mobile producer.
This happened in 2008. It was possible to have increased revenue despite world’s economic crisis which started in 2007. What are the reasons behind this? What is the company doing while others in the same industry are not doing?
The answers to above questions lie in the management and leadership strategies established by the company. Managers of the company are adopting different measures to ensure that there is continuity of business. They adopt strategic management tools; as the paper develops, it will give an analysis of how the company has adopted strategic tools (Toyota Official Website, 2010).
Process analysis and re-engineering
Current treads are different from future treads and thus the initial stage in implementing strategies to remain competitive understands current conditions in an organization’s industry. This involves interpolating internal factors that are affecting a business (IFAS) and external factors affecting the business (EFAS). Understanding the factors that affect a business will assist in making sound decisions.
Managerial decisions are the driving force in an organization and thus using information for decision making is a scientific approach to decision making. The end result will be a business that can make effective current decision and futuristic decisions.
Data has become an important part in businesses and management is currently developing tools that enhance data collection and data analysis for decision making. Such tools include business intelligence (BI) tools.
Toyota Company is an international company which implemented a BI tool in 2000, the tool brought efficiency in logistic issues. The benefits from the new approach resulted to the company overtaking General Motors to be the world number one automobile company. Toyota was able to overtake general motors’ due to a continuous improvement of its products.
Marketing and Advertising strategy
Development has created the need for a different marketing strategy than the traditional marketing strategy. There is the invention of online marketing and deviation from mass marketing. Online marketing involve using tools like social networks like facebook and twitter. The reason for the move is for company to align itself with the changing population which is increasingly using technology.
When creating a market segment, marketing managers should interpolate the market adequately so as they can devise marketing strategies that can persuade the target customer. Traditional mass marketing has been changed. When developing a marketing strategy, there is need to understand 4Ps of marketing.
Products
Products and services produced in a company should be of the right quality and quantitative. They should be continuously be improved to meet customers’ needs
To continually improve products, it calls for an increase research and development conducted within and without a company.
Price
The price a commodity or a service is sold determines its affordability. Price does not mean that it must be l0w but it means that products are sold at affordable price to a target market.
Promotion
Target market dictates the promotion mechanisms that a company should employ. To have a competitive marketing strategy there is need to ensure that promotions done on a product will persuade target customers.
Place
In today’s competition, there are a number of alternatives/substitutes in the market. A business should ensure that its product is available in target customers expected place of purchase.
Internal processes re-engineering
To remain competitive, a business must ensure that it has efficient internal processes. To create efficiency, there is need to interpolate all process and calculate the collation between a number of process. Areas of deficiency are recognized and rectified. It is in the spirit of ensuring efficiency that Motorola Company in 1981 invented Six Sigma management procedures.
To remain in business today and in the future, there is need to implement such a policy in ones business. It ensures that all processes are interpolated and any inefficiency removed from the system. A six sigma policy ensures that alongside business re-engineering process there is a quality improvement and defects detections (Collis & Rukstad, 2008).
Toyota Company uses Kaizen (continuo’s improvement) management processes. This is where it improves the quality of its automobiles to meet the world changing tastes. McDonald is a food supply chin which has remained in business for a long time because of improving quality of its products.
Value change management
When integrating and ensuring efficient internal processes, there is need to ensure that crucial areas in the business attain high levels of efficiency. In a value chain management, it ensures that right from inbound logistics to support services attains efficiency. The management tool divides processes in an organization into main business processes and support processes levels.
Main business include; logistics either internal or external (supply chain management), productions processes, sales and finally customer service. They are supported by firm’s physical resources, personnel resource management information systems and automation level and procurement.
Subway restaurant is a recognized company that is known for sand wishes, the company adopts a total quality management system where it vets all process in its production. This is what has made it internationally recognized for its quality (Wheelen & Hunger, 1998). Toyota Company has a well structure supply chain management which ensures that there is just in time inventory management system.
It also outsources some services like outbound procurement. Recently, early 2010, the company called from the market faulty brands of motor vehicle; the efforts was aimed at creating a close relation between the customer and the company.
Competitive strategy
To attain a competitive strategy, there is need to have both internal and external factors aligned for the benefit of a company it starts with analyzing a company’s strengths and weakness. Then opportunities offered by prevailing situation should be interpolated. This is conducting an S.W.O.T. analysis on all process and the general circumstances.
Porters discuss five forces that determine the competitiveness of a company they are;
Supplier power
To have a competitive advantage a company should ensure that it gets its material from reliable suppliers who can supply in time. They should have raw materials or products of the right quality. This ensures that the final products are of the right quality. A just in time supply process should be employed. Toyota company suppliers are reliable and supplies quality products.
Barriers to entry
Business operating in a certain industry creates barrier to entry; in the case of an established business it may be enjoying this benefits but it limits it in one way or another. When portraying ones good, a company should ensure that they have a competitive edge to break barriers to entries set up in new markets.
Threat of substitutes
Substitutes are products which can be used instead of one that a company produces. They threaten the future of a business. To survive this effect, the solution is on continually improving ones process to ensure that there is a new development at all time which fits the expectations of customers.
Product differentiation and creating a strong brand name is another move that a business can take to ensure that it remains competitive in the foreseeable future. There are a number of international motor companies however Toyota has been able to lead the market because of its product differentiation and continued efficiency improvement.
Buying power
Understanding the market is of great importance; when a company understands its market segment, it will know the power of control that the market have on the business. It will assist in pricing of goods and services. In times of changes in price, the sensitivity of the market segment should be done.
Rivalry
This is the competition that a business wants to overcome or derive a competitive advantage upon. Competition is not in all aspects bad but it enhances higher efficiency as each company seeks to persuade a certain portion of the market.
Toyota Company is one international company which has survived five porters’ forces. It has created product which have satisfied customers in the home country, Japan and since it produces quality products which are continually improved it has entered international markets effectively (Porter, 1985).
Diagrammatically;
Ethical business and Social corporate responsibilities
Education and globalization has resulted to an enlightened population which understands the need to have a cross relationship between a company and the people. To answer this demand, companies should conduct their businesses ethically. Ethically conducted business is one which effects of production are reduced. Through ensuring there is efficiency in internal processes.
On the other hand CSR involves in a company analyzing the environment that it is operating in, come up with a problem that it can address and take the initiative of undertaking sucha project. It is seen as a way that an organization can give back to the society. There are a number of current and future benefits that a company will derive from such measures.
One of the most outstanding is creation of customer loyalty. Customers will not be seeing an organization as an exploiter but it will perceive it as a social institution operating in the society for the good of the society. This leads to an increased business currently and in the future (Fred, 2008).
One area that the world is concerned about is the area of environmental damage; recognizing this, Toyota Company has produced fuel efficient motor cars and is on its way to making electrically charged automobile; this will boost it future business.
Adopting a Total Quality management system
This is a system where a company ensures that it vets all its processes and department for the betterment of the entire organization. It aims at ensuring that all stake holders in an organization benefit from the organization. The organizational culture adopted to ensure that an organization can adopt changes effectively.
Organizational structure should be made in such a way that all departments can integrate efficiently and enhance supervision. When departments communicate effectively, they create a level of efficiency in the entire organization.
An organization requires both human and physical resources for its operations. Management should ensure that these resources have been blend in the most productive manner. This will ensure that there is maximum resource utilization. Human resources are the drives of an organization and thus they should be treated well (Kotter & Schlesinger, 2008).
Toyota operates under five broad aspects; Kaizen (continuo’s improvement), this is to continually improve on internal processes. Secondly team work, the focus here is efficient human resources.
Challenges and Respect, the focus is to produce well recognized products, and Genchi Genbutsu (go and see), ensures that management makes decisions after a research has been conducted regarding prevailing market conditions. These principles ensure that the company understands its processes fully and integrates measures to benefit from opportunities offered by current situation and mitigate possible threats (Hino, 2006).
Conclusion and recommendations
The world is going through a series of changes; they are in technology, consumer enlightens competition and changed life style among others. To remain competitive, a business must employ strategies that give it a competitive edge.
These strategies starts by an in-depth understanding of a company’s internal and external factors and then develop measure aimed at maximizing strengths, tapping opportunities and mitigating against threats. To have an overall strategy, there should be individual strategies in all areas that affect a business. Areas that require strategy include procurement, internal processes, marketing, and customer care.
Despite the changes in the business world, a well constituted company wills well framed structure will remain competitive. It is thus important for team leaders and management to analyze their prevailing condition and come up with custom made strategies to assist them remain competitive currently and in the future.
Bibliography
Camillus, J.C (2008). Strategy as a wicked problem. Harvard Business Review. 86(5), 98-106.
Collis, D.J and Rukstad, M.G (2008). Can you say what your strategy is?” Havard Business Review,86(4), 82-90.
Fred, D. (2008). Strategic Management: Concepts and Cases. New Jersey: Pearson Education.
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Hino, S. (2006). Inside the mind of Toyota: management principles for enduring growth. Tokyo: Productivity Press.
Kotter, J.P and Schlesinger, L.A (2008). Choosing strategies for change. Harvard Business Review, 80(30), 117-124.
Porter, M.E (1980). Competitive strategy, New York: The Free Press.
Porter, M.E (1985) competitive advantage. New York: The Free Press.
Toyota Official Website. (2010). Web.
Wheelen, L.; Hunger, J. (1998). Strategic Management and Business Policy: Entering 21st Century Global Society, 5th edition, Reading, Massachusetts and Harlow: Addison Wesley.
Glossary
- S.W.O.T. means Strengths Weaknesses Opportunities and Threats.
- P.E.S.T.L.E. means Political, Ecological Social, Technological, Legal and environmental.
- IFAS means Internal Factors Analysis Summary.
- EFAS means External Factors Analysis Summary.
- BI means Business Intelligence.
- 4Ps means Product Price Promotion Place.