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Strategic Management Individual Assignment
Typology: Study Guides, Projects, Research
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3 February 2023
Toyota Motor Corporation is one of the main automobile production companies in the world. In 2008, Toyota Motor Corporation became the largest automobile manufacturer in the world where finally this company was able to surpass General Motor as the leader of automobile manufacturers in the world. Things that make Toyota so special than other automobile manufacturers are because they produce high-quality, high-value cars, vans and trucks that actually became a standard for long-term resale value and durability (Encyclopaedia, 2022). The history of Toyota started with Sakichi Toyoda. Sakichi Toyoda's ideas were implemented to manufacture and sell the automatic looms which he had invented and perfected. The Toyota legacy continued by his son after his death, which is Kiichiro Toyoda. In 1933, Toyota Motor Corporation became a division of the Toyoda Automatic Loom Works, Ltd. Later the company changed its name to a more pleasing sound in Japanese which is Toyota. The company suspended their production of passenger cars and concentrated on trucks during world war II. By the year 1950, they began a careful study of American automobile manufacturers in order to get back in full operation and to gain competitiveness with other companies. Later in 1957, Toyota was able to market their first model which is the Toyopet sedan. However, it was not welcomed well by the audience because of the lack of horsepower and price. Evolutions happened towards this model where it was redesigned in 1965 to meet the interest of American drivers and was released as the Toyota Corona where it became the first major success for the company in the United States.
1.4 Organisational Culture/Values Values that are practised in Toyota were called “The Toyota Way”. This values combining software, hardware and partnerships to create unique value that comes from the Toyota Way. Below are the details of every value: · Software This philosophy will apply imagination to improve society by making sure that people-first design will be prioritised. To understand operation at their essence, Toyota practising Genchi Genbutsu · Hardware To achieve a flexible system that aligns with the software, there are needs to create a physical platform to enable the mobility of people and things. · Partnerships Toyota will focus on expanding their abilities by uniting the strength of partners, communities, customers, and employees to produce mobility and happiness for all.
1.5 Goals and Objectives Toyota objective comes in four-principal documentation: · Kaizen (Continuous improvement) Improving products and internal processes has always been the aim for Toyota in order to ensure they are able to satisfy their customers. They also want to always be relevant in the market by making sure they are updated with the recent development in the introduction of electric automobiles. · Teamwork Having a motivated team is an important element for Toyota. This will aim to increase the efficiency and operations in the company for the benefit of the company. · Respect Toyota aims to maintain high respect for its internal and external customers, as well as to be in harmony with the environment. To achieve this goal, the company has an ethical code that every employee must follow. Ethics is defined by the codes as a set of moral principles or values that organisations use to monitor the conduct of both employees and the organisation in how they carry out their activities both internally and externally. · Genchi Genbutsu (go and see) Through research and development programmes, Toyota hopes to improve internal processes and products. It has an active research team that strives to create better products and processes.
· Sir Philip Craven · Teiko Kudo Audit & Supervisory Board Members · Haruhiko Kato · Masahide Yasuda · Katsuyuki Ogura · Hiroshi Ozu · George Olcott · Ryuki Sakai Operating Officers · President: Akio Toyoda Executive Vice President · Kenta Kon · Masahiko Maeda · Masanori Kuwata Banto: Koji Kobayashi Operating Officers
· Keiji Yamamoto · Yoichi Miyazaki · Jun Nagata · Yumi Otsuka · Koji Sato · James Kuffer Executive Fellow · Mitsuru Kawai · Shigeki Terashi · Shigeki Tomoyama · Gill A. Pratt
Strength ● Market position and brand recognition. In terms of market share worldwide for the automotive sector, Toyota is in a good position. In Japan, Toyota and Lexus held a 45.5% market share in the fiscal year 2012, excluding micro vehicles. Similar to this, Toyota has 4.3% of the market in Europe, 12.2% in North America, and 13.4% in Asia (excluding Japan and China). The company also controls a sizeable portion of the markets in South and Central America, Oceania, Africa, and the Middle East, and it holds 7% of the Chinese market. Additionally, Toyota is able to obtain a competitive advantage and expand their business globally since they hold a strong market position. As a result, it enables Toyota to maintain growth in both domestic and global markets because of the competitive advantage. ● Solid research by Research and Development (R&D) department. To broaden its product line and enhance the usefulness, dependability, safety, and environmental friendliness of its offerings, Toyota places a solid focus on research and development. The company's research and development efforts are concentrated on developing new products and processes as well as enhancing the functioning of its present products. The company runs 14 locations for its R&D operations across the globe. The company has added new features to its present product range and developed cutting-edge technologies that are used in a variety of industries thanks to a strong emphasis on R&D. Due to a significant concentration on R&D, the company maintains technological leadership in the majority of its product fields. Additionally, it enabled Toyota to produce new goods in order to boost sales.
● Massive production and distribution network. Toyota has a vast production and distribution network. Through more than 50 production facilities located outside of Japan in 27 other countries and regions, Toyota and its partners manufacture vehicles as well as related parts and components. In Fiscal Year 2012, the company produced around 7.5 million automobiles, around 3.5 million of them in Japan and another 3. million at all other manufacturing facilities. Toyota also has a broad distribution network in addition to that. Although the company's highly dispersed production base helps to diversify business risks, its global distribution network provides it with a larger audience, which enhances sales. Weaknesses ● Product recollections could have an effect on brand image. Recent product recalls by Toyota may have an effect on the company's overall brand reputation and sales data. For example, in 2011 Toyota was forced to recall around 111, different Toyota and Lexus car types due to damage to the foundation components and the possibility for the hybrid system to fail. According to Thembani Nkomo's research of Toyota Motor Corporation, during that year, Toyota recalled around 180,000 vehicles in Japan because of excessive noise and oil leaks that might have been brought on by unfastened nuts in the rear wheel differential and sub gearbox. The company also cooperated with government investigations into product recalls. For example, a Toyota product which is a 2007 Camry and RAV4 product had to be recalled due to the side doors that had been suspected had a faulty side
Opportunities ● Rising global automotive industry Between 2008 and 2009, it is the year of the downfall of the global automotive industry which is an economic downturn. Nevertheless, a large rebound began in 2011 and persisted through 2012. According to MarketLine, the global market for the manufacturing of automobiles reached more than 1.5 billion in 2012, an increase of 8.9% from the year before. As a result, it will lead to a broad number of new customers that will buy their products due to the revival of the global automotive industry. ● Toyota is poised to benefit from developing a partnership with BMW. In June 2012, Toyota and BMW agreed to make a collaboration between them, resulting in more profit being generated by Toyota. In the agreement, they will work together strategically in a long-term period in technology areas. They also agreed to share their resources for fuel cell systems, design the architecture and parts for a future sports car, electrify the powertrain, and conduct joint research and development on lightweight technologies. Due to the collaboration, it is forecasted that their relationship will lead to the growth of their technological expertise and development of new products, which will lead to more sales. Additionally, this partnership will cover a lot of expenses and synergies and enable them to improve their operational margins. ● Solid expectation for the global new car market There will be slight growth for new cars in the global market between 2008 and 2012. However, it is predicted that between 2012 and 2016, there will be an increase of double-digit.
As a result, it will give the company a chance to expand due to the company’s new products and optimistic outlook. Threats ● Severe competition One of the threats that we found is severe competition. In the automotive industry, there is a lot of competition throughout the globe such as Nissan, Honda, Porsche and others. As a result, Toyota will face stiff competition between them in the automotive industry. There is a good probability that competition between various vehicle manufacturers will increase given the continuous globalization and consolidation of the global automotive sectors. Competition between the companies existed due to their products’ characteristics, quality, how long is their product creation, fuel economy, customer service and others. Because of the competition, Toyota may be able to see in their sales of their products had become declined, which could put pressure on the company’s profits and operational outcomes.
Internal factor Evaluation Matrix (IFE) is a tool that evaluates the company’s internal in order to reveal the strengths and weaknesses of the company. It was introduced by Fred R. David in his book Strategic Management. The information that was used in the tools was gained from the analysis of the external and internal environment of the company. The key data to be used in this tool is obviously strengths and weaknesses. When gaining data for strength, we need to evaluate first. Ask yourself what you did better at other than companies’ products and what is your competitive advantage. Same goes for weaknesses, which areas that needed to be improved and what product that can we catch up with other competitors. Generally, we need to gain as much data for the internal environment as soon as possible in order to make the evaluation. There are three parts we need to look at when we have the data and we want to evaluate the data. Firstly, the weight. The range for the weight is from 0.0 which indicated as low importance to 1.0 which indicated as high importance. The number represents how crucial the aspect is for a business to succeed in a particular sector. All the components would have equal weight if no weights were applied, which is not achievable in real life. All of the weights must add up to 1.0. Next, is ratings. Ratings indicate how strong or weak each data in the company is. The range for ratings is from 1 to 4, which indicates major weakness for 1, minor weaknesses for 2, minor strength for 3 and major strength for 4.
The sum between the weight and rating is the score. We need to multiply both of the elements. Scores are required for each important element. The sum of each individual weighted score is the total weighted score. In both matrices, the company can obtain the same overall score between 1 and 4. A score of 2.5 is considered average. A low score in internal evaluation suggests that the business is vulnerable to its rivals. KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE STRENGTHS
External Factor Evaluation (EFE) Matrix is a strategy that was invented by Fred R. David in his book, Strategic Management to evaluate external environments by using elements Opportunities and Threats that were faced by the company. It is to discover the company’s strengths and weaknesses. There are three parts we need to look at when we have the data, and we want to evaluate the data. Firstly, the weight. The range for the weight is from 0.0 which indicated as low importance to 1.0 which indicated as high importance. The number represents how crucial the aspect is for a business to succeed in a particular sector. All the components would have equal weight if no weights were applied, which is not achievable in real life. All of the weights must add up to 1.0. Next, is ratings. Ratings indicate how strong or weak each data in the company is. The range for ratings is from 1 to 4, which indicates major weakness for 1, minor weaknesses for 2, minor strength for 3 and major strength for 4. The sum between the weight and rating is the score. We need to multiply both of the elements. Scores are required for each important element. The sum of each individual weighted score is the total weighted score. In both matrices, the company can obtain the same overall score between 1 and 4. A score of 2.5 is considered average. A low score in external evaluation suggests that the business is vulnerable to its rivals.
