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Toyota Corporation Difficulties Analysis Essay

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Updated: Jul 23rd, 2021


The success or failure of an organization can be attributed to the organization’s structure or design, its adopted organization’s culture and the organization’s relationship with the environment. An organization’s structure defines how duties are allocated, how work is channeled and managed, and the system or processes that enable proper coordination. The organization’s environment can be explained as anything outside the walls of the organization which can influence or can potentially influence it. Looking at Toyota Corporation, its difficulties can be attributed to both the organization’s structure and also its relationship with the environment (McShane & Travaglione, 2003: 28).


Toyota Corporation main objective is to manufacture and distribute automobiles throughout the world and provide financial assistance to its customers. However, just like any other large corporation, the company has been undergoing various difficulties in manufacturing processes; distribution of its products; and also corporate difficulties, which can be explained to its organizational structure and also its reciprocal environmental relationship (Chappel, 2002:67).

Some of these problems started to be experienced long ago from the time Japan Airline filed for bankruptcy, massive miscalculated production which has resulted to dead stock years back, to the most recent problem of faulty gas pedals in the Prius, car model in the United States. These difficulties have seen the company lose grip as the leading automobile manufacturer to other companies and also a decrease in quality of its products. However, the company has put in place counter measures on these challenges, although its difficulties seem persistent (Mehri, 2006:45).

An organization structure can be generalized into social and physical structures. The social structure is the routine and institutional patterns of normative code of conduct in an organization. These social behaviors allow and restrain members’ behaviors although it is the outcome of that conduct. Porter (1980:144) quotes “The organizational structure is the degree of complexity, formalization and centralization in an organization that enables and constraints action.”

The physical structure is composed of the organizational locality; its layout; and its landscape, and design. In addition, organizational structure takes the following dimensions: the organization’s size; its administrative part; the differentiation of duties and departments, that is, vertical and horizontal differentiation; integration and managing systems and processes; its centralization of authority; level of specialization; and standardization of its processes and decision making (Abbeglen, 1958:32). Organizational structure can be explained using three main approaches, which are modernistic, symbolic interpretive and postmodern approaches.

Modernism argues that physical structure affects the organization members’ efficiency and code of conduct. Symbolic interpretive approach argues that an organization’s structure is fluid and ever evolving and that tasks and power are negotiated. While postmodern approach argues that organization is a system of power relation and control is achieved by language and organizational discourses rather than by an organization structure. In defining the organization structure of Toyota Corporation modernistic and symbolic interpretive offers more concrete facts (Osono, Shimizu & Takeuchi, 2008:79).

To an extent the difficulties in Toyota Corporation can be attributed to its organizational structure. Toyota exercises a decentralized organizational structure in directing its operations globally. Through this system the management delegates its routine decision making role to other personnel while the senior management concentrates on other productive activities, thus see it achieve its full potential. This organizational structure to allows delegation of decision making roles for faster innovation and problem solving (Rinehart & Robertson 1997).

The position of the top management is only required as a gateway to critical processes and in management of the made decisions (Mehri, 2005). This model of authority as much as it has helped to fasten the decision making process, it has brought problems due to rapid decisions been taken without deliberation or consultation. For instance, the paddle-related problem can be associated to a decision that was made by one person but seemed to be good to others resulting to a major problem and a huge loss to the organization. The innovation team therefore, to an extent affects the production quality and quantity within the organization, and one negative input by one or more individual within the team would lead to significant difficulty in the company (Spear & Bowen 1999:78).

The system aims at encouraging innovative ways, joining hands with other business units and departments and ensuring that the stakeholders in the company are satisfied with its operations (Cole, 197:123). With the expansion of Toyota operations into other countries, such as the United States and other places, the decentralized organizational design enabled the company to centralize its innovation team in into regions thus ensuring that its products are designed according to the customers’ specifications within the region (The Economist 2009).

The company has as well fostered collaboration with business units from other departments and also a well organized way of creating awareness to its customers concerning their issues on advanced technology. The aim of this is to allow and facilitate innovation management in a more effective way, and improving the efficiency onto which technology is embraced in the organization (Womack & Roos, 1990:33).

For instance, by the end of 2003, the advanced innovations of 3M machines revised its innovation and decentralized its research and development department. This brought the technicians closer to the business resulting to location of about 400 laboratories of 3M’s members to the division labs. The expansion of the technician department resulted to disintegration of the existing lab for easier and faster functioning of the innovation team. For instance, the Honeywell’s big R&D department was split into four labs (Dyer & Hatch, 1998:20).

However, merging and collaboration with other business units comes with problems. In this case, by allowing other business units and many individuals to operate from inside the organization has resulted to a massive leakage of Toyota’s technology and ideas (Dyer & Hatch, 2004:60). This is has led to the imitation of Toyota vehicles by other companies, thus leading to drop in sales in the original Toyota products.

The more the number of joined business units the greater the information transferred from the organization to the outside world hence making it easier for individuals, for example technicians, to imitate the model. Exposure of the company’s ideas to the market and to the potential customers who are not aware of the imitations, has adversely affected its market (Snow, Miles & Coleman, 2000:34).

However, there is a clear centralization of innovation team assigned to individual divisions. This team reports to the head of the division of any necessary information regarding the innovation and the team. In order to enable innovation, there is an innovation management structure, which allocates responsibilities to this team (Sobek & Liker 1999:83). However, this structure ignores the pressure and operations which are established and concentrating on the speed of getting to the market would result to problems. For example, the acceleration problem could have been caused by the ignorance of the innovation team, or it could have skipped some procedure that was necessary in ensuring proper paddle adjustment. (Besser, 1996:72).

The company uses a Toyota Production System which directs manufacturing and logistical services of the company. The aim of the system is integrate its activities with its suppliers and customers to decrease the production process lead time. Although this system has enabled the company eliminate wastage of resources and time, it has drastically decreased the quality of Toyota’s products. It fails to offer proper quality checks on the finished goods before they are distributed and guaranteeing on the customers’ satisfaction (Ohno, 1988:54).

Organizational environment is anything outside the walls of the organization which can influence or can potentially influence it (Hatch & Culniff, 2006:79). Environment includes economic, political/legal issues, social/cultural issues, technology and physical attributes. These factors greatly influence an organization’s processes. To a greater degree the difficulties in Toyota can be attributed to its relationship with the environment.

The automobile industry is very competitive due to the many and established market players, offering Toyota a competitive edge, which has been a major challenge to Toyota’s expansion plans. Furthermore, local legislations in some countries are very restrictive to foreign investments and also imports. One of Toyota’s car model, Prius has received a lot of criticism from some countries for environmental claims and some governments were considering banning it in their countries (The Economist, 2009:12).

Social differences among people influences Toyota’s market, for instance people in America prefer huge cars and are very proud of their own home products. So it is been difficulty for Toyota to diversify its operations to such regions, although people have started buying Toyota cars due to their cost efficiency and low maintenance. Although some people consider Toyota products to be cheap and lowly esteemed, and prefer other more elegant car models. Due to these factors Toyota has capitalized on other models of business, such as acquisitions and mergers and producing many car models to suit different customers, from low-end to high-end products (Dyer, 2000:89).

Toyota’s relationship with its environment can be explained using different theories: A population ecology model argues that an organization must identify its ecological focus to come up with survival strategies (Dore, 1973:77).

Resource dependence model argues that an organization is dependent on the environment for in-puts and out-puts and the environment is powerful than the organization. Toyota to an extent has managed its dependence in the environment and developed counter dependencies (Pfeffer & Salanscik, 1978:105).

Brandt (2008:32) identifies two organizational structures that are: mechanistic and organic structures. Mechanistic structure is characterized by high formalization, narrow span of control; highly centralization; and hard to adopt change while organic structure has low formalization; wide span of control; low centralization of operations; and easier to change. Toyota Corporation operates an organic structure due to its diverse operations, a fact that could have led to the difficulties in its operations.

Institutional theory argues that an organization is institutionalized through adoption of the values of the organization members and the general environment. Toyota’s management understands coercive and normative expectations within the environment (Spear & Bowen, 1999:56). Hegemony model argues that an organization exists in a boundaryless environment. In the case of Toyota the management engages actively in breaking down boundaries and engaging all the stakeholders.

Organization culture

More recently the Toyota Company was hit hard by the defect pedals problem. Where many complaints were received from the customers, but initially the company failed to address the issue and tried to cover up the information. On the verge of losing its image, the automobile maker owned up and admitted it was its fault. Though, the silence of the top management on this issue could be due to the power distance the organization’s hierarchical structure, and information took long to be conveyed to the top management. If at all proper action was taken earlier on before the issue blew out of proportion, corrective measures could have been made on time (Toyota Corporation, 2010).


Although Toyota Corporation still remains to be one of the leading automobile manufacturers, it has been encountered by several difficulties which can be attributed to its internal structure and also from its relationship with the environment. Most of the internal difficulties can be attributed to the weaknesses in its organizational structure, which has over time been modified to address new challenges (Fucini & Fucini, 1990:145).

For a large company like Toyota, coming up with an efficient organizational structure still remains the biggest challenge. The company has adopted a decentralized structure to ease its operations and ensure that it still remains relevant in the market. In addition, the company is faced several environmental challenges such as: political issues; social and cultural issues; technology and physical challenges. Structural adjustment within and outside the organization needs to be implemented effectively to curb the existing and recurring problems (Dicken 2007).

Reference list

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Besser, T., 1996. Team Toyota: Transplanting the Toyota culture to the Camry plant in Kentucky. NY: State University of New York Press.

Brandt, D., 2008. ‘Losing Momentum? As Toyota faces quality and sales setbacks, questions arise about its production system.’ Industrial Engineer, vol. 40 (1). Pp. 26-32.

Chappel, L., 2002. ‘Toyota: Slash — But We’ll Help.’ Automotive News. vol. 77. Ppp. 4.

Cole, R., 1971. Japanese blue collar. Berkely: University of California Press.

Dore, R. 1973., British factory, Japanese factory: The origins of national diversity industrial relations. Berkeley: University of California Press.

Dicken, P., 2007. ‘Wheels of change: The Automobile Industry.’ Global Shift. Pp. 120-150.

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Mehri, D., 2006. ‘The Darker Side of Lean.’ Academy of Management Perspectives. Vol. 20 No.2. Pp. 21-42.

Mehri, D., 2005. Notes from Toyota-Land: An American engineer in Japan. London: Cornell University Press.

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Snow, C., Miles, R. & Coleman, H., 2000. ‘Managing 21st Century Network Organisations.’ Managing Change. London: Open University Press. Pp. 20-34.

Sobek, D., Ward, A., & Liker, J 1999, ‘Toyota’s principles of set-based concurrent engineering,’ Sloan Management Review, vol. 40, pp. 67–83.

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