Introduction
Toyota is one of the most popular companies in the automobile industry. This company started from a very humble beginning, but due to strategic planning, it has managed to achieve its organizational goals. Japan is the company’s headquarter, and this being its parent branch it has played a major role in inspiring the establishment of other branches (Chester, 2004).
Now that the company is ranked among the top organizations in the world, there is more work to be done to ensure that the position is retained. This is because there are other companies that are struggling to achieve the same goals. Currently Toyota manufactures a wide range of vehicles including Rav4, Prado, and Pajero among many others (Kendra, 2009).
This paper focuses on Toyota’s company, particularly strategic methods and tools that have led to its superior performance.
Policies of Toyota Japan
Every organization has its own tailor-made policies that all employees must adhere to, and this is meant to guarantee the achievement of organizational goals. Without clear policies, an organization is most likely to divert to other concerns that were not included in the master plan. It is therefore important to employ salient policies that would act as the guidelines when the going gets tough (Johnson & Scholes, 2008).
For instance, if a passenger decided to commute to a given destination and it happens that the vehicle breaks down, he/she will look for another mode of transport to ensure that he/she gets to the intended destination.
According to Dess and Allan (2006), Toyota mainly focuses on long-term goals regardless of whether those goals will hinder the achievement of short-term goals. This was evidenced back in 1973 during the oil crisis that caused many customers who had purchased Toyota models to replace them with other models.
This was because the big cars were consuming a lot of fuel and thus, were not considered pocket friendly. In the years that followed, the company had to pay high taxes for it to export vehicles to other markets. The management of Toyota thus decided to collaborate with General Motors (GM). This move was logical because it would help in cutting back on the costs that were incurred on the exports.
Additionally, Bremner and Dawson (2003) argue that Toyota was initially established as Toyoda and thus the brand name had to be changed for this company to be assimilated with its regional market. It was perceived that the initial brand name was not appealing to the local consumers probably because of its sound.
It was then proposed that the brand name be renamed to Toyota, which sounded much better and uplifted the reputation of the logo and the brand. This approach was logical because it made it easy for Toyota to penetrate the Asian market due to its familiarity and association with the local dialects.
At Toyota, the processes of production flow in a sequential manner and this is meant to unveil any underlying problems that can cause the quality of its products to be compromised. The policies of Toyota clearly states that in case a problem or a fault is discovered in the course of production, the processes should be halted until the problem has been solved.
In the year 2009, Toyota recalled quite a number of vehicles that were believed to be having faulty accelerator pedals. Although the initiative cost the company dearly, it was considered to be noble because the image the company would have been tainted and the monetary fine would have been heftier (Valdes-Dapena, 2010).
Lynch (2006) points out that strategic management in an organization’s set up requires collective participation of all the employees. This aspect is greatly emphasized at Toyota in Japan. This is because if decisions were made in a hurry, the participants would not grasp anything that is contained in the plan.
The gradual process of making decisions is important because it creates room for the options provided to be analyzed. Besides, dialogue prepares the employees and the other stakeholders to be prepared for the changes that may cause changes regarding how things are done.
Likewise, Toyota’s head office has established indicators that are used to dictate when the level of production should be increased and vice versa. Kendra (2009) agrees that this is because the automobile industry is a very dynamic sector and if the vehicles that are manufactured within a specified period are not sold, they will accumulate as dead- stock.
This implies that Toyota must regularly analyze the relationship between demand and supply by referring to its inventory system; this is through lean manufacturing. For instance, when the oil crisis struck in 1973, then it would have been illogical for the company to continue making the big trucks while it was apparent that the market was moving towards a new trend.
Apparently, the demand of Toyota Prius is on the increase compared to other models. This argument has been cemented by the financial reports of 2010, which clearly indicate the sales of this particular vehicle model had increased (Micheline, 2010).
Possible Causes of Future Changes
When referring to strategic management, it is important to understand why the changes come about. The major inhibitor of changes is the environment that businesses exist.
This is to say that organizations can be influenced to embrace the changes with the aim of conserving our environment. International organizations are exerting a lot of pressure on manufacturers to make products using materials that are not harmful to the environment (Johnson & Scholes, 2008).
As far as this issue of environment is concerned, Toyota has had to adjust itself because there have been numerous awareness campaigns on the importance of eco-friendly products. Toyota therefore realized that if it did not adopt the new trend, it would soon be ejected out of the automobile business.
Vehicles have been found to be the most notorious agents of pollution and thus, the manufacturers have been advised to come up with models that emit minimal amounts of carbon (Lynch, 2006). Toyota has already introduced hybrid plug-in vehicles, which are powered by a lithium battery and gasoline simultaneously.
This suggests that such vehicles are fuel-efficient and at the same time eco-friendly. This is what the consumers in the automobile industry have been looking for. Toyota has therefore upped its game by integrating the needs of the consumers with their products.
It is also obvious that the stiff competition in the automobile industry have also played a major role in inducing Toyota to employ a strategic plan. Chester (2004) points out that other companies like Ford are also making fuel-efficient vehicles besides Nissan and Honda brands. In business world, an organization must be on the look out to spot the emerging trends or risk being left out.
Strategic management is purely driven by speculations because most people might think that Toyota is overreacting, but then if this company was to sit back and wait for the day when the demand for electric vehicles will swell, then it is bound to fail in its mission. This is because opportunities tend to favor the entities that are more crafty and prepared.
In fact, this period is used to evaluate Toyota’s preparedness in handling the changes. This is because the company needs to be certain that the plans will work in its favor. However, it is important to have a backup plan because other changes could occur and hinder the realization of an organization’s mission (Dess & Allan, 2006). For instance, the recent earthquake has greatly affected Toyota’s branch in Japan.
This latest development reveals that humankind has no control over nature and thus backup plans should be put in place to ensure organizational goals are realized. There is a common phrase at Toyota that puts its managers under obligation to familiarize themselves with the situations as they unfold.
This requires them to spend ample time with the employees. This is thought as the surest way of ensuring that all stakeholders are committed to the success of the organization.
Competitive Positioning
Toyota is completely committed to improving the quality of its products, but this initiative has cost the corporation a lot of money because the vehicles that are eco-friendly require more resources to manufacture. However, Vlasic and Fackler (2008) state that the situation is expected to remedy itself, as more customers purchase the new breed of vehicles.
Among the changes incorporated lately, include the making of automobile engines that are powered by electricity and gasoline. This has placed Toyota at the top of the rankings compared to similar vehicles that are being manufactured by her competitors such as Ford. This is because Toyota’s models tend to be unique because the other brands that employ the same approach are only powered by electricity.
Besides, Toyota has introduced automatic parking systems in its vehicles that are meant to assist Motorists Park their vehicles hustle-free. More features are yet to be incorporated in Toyota models because customers make their choice of a model depending on its specifications (Kendra, 2009).
Furthermore, the approach of value improvement has really helped Toyota to reach greater heights. Similarly, the customers of Toyota have responded positively because they are always interested in unique products. Toyota has therefore worked had to earn its recognition as a household name.
In fact, the government of Japan has acknowledged the progress of Toyota and this has resulted in Toyota being awarded the contract of manufacturing and maintaining the motorcade that is normally used by the mayor. This noble gesture by the government is truly an honor because it acts as an endorsement that will continue to develop the company’s portfolio (Valdes-Dapena, 2010).
Other Open opportunities
Toyota is looking for other areas that are yet to be exploited. Valdes-Dapena (2010) asserts that the need to diverse has been brought by the speculations that the future markets of vehicles could decline as new technologies continue to be developed in the transport sector.
Toyota has already proposed a joint venture with Mitsubishi to manufacture airplanes for regional airlines. This is a smart move because the demand for air transport is increasing and only the entities that will align themselves to the growth of that industry will reap the benefits.
For Toyota to make it in this venture, it has to observe the possible competitors such as Boeing, identify what is missing in their products, and incorporate the missing concept in its aircraft models.
Although Toyota is a mature organization in the automobile industry, that growth is yet to be realized in the new ventures and thus, patience is required for growth to be experienced. Other areas that are potential for exploitation by Toyota include the manufacture of healthcare products such as assistive aids for the disabled (Kendra, 2009).
Marketing
The strategy employed by an organization in marketing its products is what helps in uplifting the image of its products (Lynch, 2006). Toyota has been able to penetrate the local market through re-branding. According to Micheline (2010), Toyota has managed to thrive in automobile business by developing models that are meant for both low and high-end markets.
The success of Toyota would not have been realized if there was no balance between the two markets. The vehicles intended for low-end market have lesser specifications compared to the models intended for high-end markets.
The Century Royal is a particular model that is specifically designed for the mayor of Japan. If Toyota were to concentrate on luxury vehicles, its sales would decline gradually because there are more prospects in the low-end market.
In addition, Toyota has been using the field events such as motor sports to market itself. The company incorporates its models such as the Lexus in the local races including Formula 3, Super GT, and formula Nippon.
Toyota makes money by making the engines of automobiles that participate in these races and uses them as an avenue for advertising itself. Engaging in the races was not enough and thus, another strategy had to be established to ensure the local market for engines remained stable. This entailed developing the models that are appropriate for racing.
Besides, more talents had to be developed to ensure that the sport did not run out of talented drivers. This goal was achieved by establishing a program for nurturing drivers into seasoned motor sport drivers. The program is commonly known as TDP (Toyota Young Drivers Program) (Johnson & Scholes, 2008).
The technological institute was established to act as a reservoir of skills that are needed in this company. Though the initial founders of this initiative are non-existent, the project has served its intended purpose. The talents are derived from learning institutions, such as high schools and other tertiary institutions.
The students who demonstrate competitiveness while still in high school are offered scholarship opportunities to enable them pursue further education and thereafter use their skills while working at Toyota Corporation.
The initiative is more of a corporate social responsibility program. The program can be used as a succession plan for Toyota because the current crop of employees will one day retire and thus, they will have to be replaced by new skilled employees.
Although the programs are expensive, the money is paid back when the trained individuals are absorbed into the company. Likewise, Toyota has its own rugby team known as Verblitz team. This team is sponsored by Toyota and therefore is a medium of marketing. This is done by making the players put on jerseys that are printed with the company logo and emblem.
Johnson & Scholes (2008) argue that the education programs are not only focused on inspiring upcoming talents, but also the existing employees. This is because the changes in the environment cause their skills to depreciate and thus they need to be regularly updated.
As time moves by, the approaches that were once used as solutions cease to be useful and thus, new approaches have to be brought on board and this can only be acquired by investing in continuous learning to promote organizational development.
Aspects of Strategic Management
Goal Setting
Toyota has been able to achieve its organizational goals because it had set the goals from the start. The managers and employees of this corporation are aware of what needs to be done to get to the company’s destiny. The goals are categorized into two: long-term and short-term. Short-term goals take less than five years to be experienced while long-term goals take more than five years.
When the company was established the founders had one long-term goal, and it involved setting up a learning institution and in fact the goal took more than twenty years to be realized. Besides, Toyota had short-term goals that included increasing its market share within Japan and beyond its national boarders. This goal was near from being accomplished when the oil crisis struck and temporary goals had to be set (Vlasic & Fackler, 2008).
Analysis
Analysis is another important aspect of strategic management because it enables an organization to get a clear picture of the happenings as they unfold and make the necessary changes to be able to cope with the challenges (Lynch, 2006). Toyota has been very observant of the situation in the industry. Being analytic has helped Toyota to understand the needs of the customers.
There are other companies in Japan that deal with automobiles. These other companies are competitors and Toyota has to analyze their operations and as well as their products. By being analytical, Toyota has been able to identify other opportunities that are yet to be exploited.
However, before Toyota decided to venture into other resources it must have analyzed its strengths and weaknesses. This is because if the weaknesses outweighed the strengths then there is no point of venturing into other fields such as aviation, which are more complicated, and very demanding.
Strategy Formation
According to Dess and Allan (2006), strategic management requires an organization to have a clear vision of future expectations. Toyota has been visionary on the market and that is why it has developed options of venturing into other areas. When the options were first drafted, they must have been allocated priorities depending on the availability of resources that are needed to implement the decisions.
The electric vehicles were accorded the first priority because the market is changing drastically – unless Toyota evolves with the market, then its products would be rendered useless in the automobile industry. The other options implemented include the development of robots used in the healthcare and entertainment industries.
The above stated priorities were implemented because Toyota has the ability and the capacity that is required to implement them. This implies that Toyota has enough work forces skilled in this sector because if there were no skilled personnel, then the idea would have to wait until when the situation was favorable.
As stated earlier, the plan of making an aircraft is a long-term goal, but then negotiations are underway and they involve other like-minded entities. Mitsubishi is an appropriate partner in this venture because it also deals with automobiles and therefore the two parties are compatible with each other. Currently, Toyota needs to merge its resources with those of Mitsubishi in order to realize its goals.
However, this partnership may not last long because each entity would want to be independent in future (Micheline, 2010). It is therefore certain that there will be a merger between Toyota and Mitsubishi. Toyota has been successful in its mission because it has involved its members who include employees and stakeholders in decision-making processes; this approach must be reflected in its merger with Mitsubishi.
Strategy Implementation
Once a strategy has been established, an organization needs to embark on the mission of implementing the decisions that are contained in the strategy. Before implementing strategy, an organization must review the available resources just to be sure they are in good shape to deliver the desired results (Johnson & Scholes, 2008).
For Toyota to be able to challenge its competitors, it must have upgraded its equipments to meet international standards. The staff at Toyota has been inspired to improve their skills. The availability of skilled personnel has cautioned the company from outsourcing its tasks.
The main reason behind Toyota’s success lies under its goal setting strategies. From the look of things, Toyota has all along remained committed to fulfilling its long-term goals. Similarly, other companies in this industry have diverted their initial plans at the onset of challenges. It is this attribute of soldiering on that has enabled Toyota to excel in its ventures.
In strategic management, it is important to note that short-term challenges and solutions do not last long, and it is therefore important to focus on long-term solutions.
When the environmental and international organizations raised concerns about the amounts of carbon emitted by vehicles, Toyota thought of a solution that could solve the problem entirely. Short-term solutions are very expensive to implement because the processes have to be repeated regularly and they may not work as expected (Dess & Allan, 2006).
In this regard, Toyota established a production system commonly known as Toyota Production System (TPS).The system is used to manage inventories and in improving the quality of production. By having such a system in place, the company can be certain that there are minimal errors and that the customers only get what they require.
When the suppliers of Toyota deliver the raw materials that are to be used in the manufacture of automobiles, the TPS is invoked to evaluate the materials and components needed and discard the others. In fact, this idea was borrowed from a very different field and hence it had to be configured to meet the needs of Toyota.
Leadership at Toyota
The success of Toyota is owed to its efficient leadership structures. The mangers at Toyota have good working relationships with their employees in their respective departments. This enables the two parties to communicate effectively and thus, move collectively towards a common destiny. This kind of interaction favors teamwork because it strengthens the bondage among employees and their superiors.
From another concept, it favors innovation because the employees are free to incorporate their skills into their tasks (Johson & Scholes, 2008). In fact, at Toyota, every employee is regarded as his/her own inspector – employees should not wait until the supervisor is physically present to implement a decision when things are not in the right order.
This has instilled a strong sense of belonging, which makes employees to work as if they owned the company. Respect is highly emphasized at Toyota and this means that everyone commands respect regardless of his/her position in the company.
Conclusion
Toyota has emerged as one of the most successful companies in the automobile industry. Having defined goals has helped Toyota to overcome the challenges as opposed to other companies that have resorted to remaining dormant.
For the current success to be retained, Toyota must remain focused because the competitors are also designing new models that are intended to compete with those of Toyota, and hence more efforts must be directed towards remaining ahead of the game.
Besides, the approaches that have worked in Japan’s branch should be extended to regional offices so that the entire organization can become uniform, such that the images of the other branches reflect the image of the parent branch.
References
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Dess, G. L. and Alan, B. E., 2006. Strategic Management: Text and Cases. Boston: McGraw-Hill Irwin.
Johnson, G. and Scholes, K., 2008. Exploring Corporate Strategy. 8th ed. London: Prentice Hall.
Kendra, M., 2009. Toyota passes GM as world’s largest automaker. The Washington Post. January 22.
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Micheline, M., 2010. Toyota pays its $16.4 million fine over pedals. The New York Times. [online].
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