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Strategy Analysis of Toyota Essay

Toyota Motor Corporation is a famous Japanese multinational corporation, and is considered the world’s second largest automaker of automobiles, trucks, buses, robots, and providing financial services ( 2007). Its founder is Kiichiro Toyoda, born in 1894, and the son of Sakichi Toyoda, who became popular as the inventor of the automatic loom. Kiichiro inherited the spirit of research and creation from his father, and devoted his entire life to the manufacture of cars. After many years of hard work, Kiichiro finally succeeded in his completion of the A1 prototype vehicle in 1935, which marked the beginning of the history of the Toyota Motor Corporation ( 2007). The first Type A Engine produced in 1934 was used in the first Model A1 passenger car in May 1935 and the G1 truck in August 1935, and led to the production of the Model AA passenger car in 1936. In addition to being famous with its cars, it still participates in the textile business and makes automatic looms that are now fully computerised, and electric sewing machines that are available in different parts of the world.

It has several factories around the world, which serve to manufacture and assemble vehicles for local markets. The corporation’s factories are located in countries such as the United States, Australia, Canada, Poland, France, Czech Republic, United Kingdom, Turkey, South Africa, Brazil, Argentina, Venezuela, Mexico, Japan, Indonesia, Pakistan, India, Mexico, Malaysia, Thailand, China, Vietnam, and the Philippines. Despite the many locations of its factories, its headquarters is located in Toyota, Aichi, Japan (2007). It invests a great deal of time and effort in its research into cleaner-burning vehicles, such as promoting a Hybrid Synergy Drive and running a Hydrogen fuel cell in its vehicles (2007).

It has significant market shares in developed countries, such as the United States, Europe, Africa and Australia, and has significant markets in South East Asian countries. Its brands include the Scion, its division in the United States, Guam and Puerto Rico, and the Lexus, which is Toyota’s luxury vehicle brand ( 2007). Aside from producing cars and other types of automobiles, such as SUVs and coasters, Toyota also, participate in rallying or racing. The company’s presence in Motorsport can be traced to the early 1970s, when Ove Andersson, a Swedish driver, drove for Toyota during the RAC Rally in Great Britain, and in succeeding years, Toyota Team Europe was formed ( 2007). Up to the present, Toyota cars are still being used in a variety of racing events in different countries around the world.

These events include the CART in Vancouver, the Le Mans, the Indy Racing League, the NASCAR, and the Toyota F1 Series (2007). As the leader in the industry of automobile manufacture and production, the company adopts a philosophy in terms of its production system, which is named The Toyota Way. The company’s philosophy in production involves a list of fourteen principles that are implemented in the company, and serve as guides to the operation of the company. This includes the following principles: * Base the company’s management decisions on a long-term philosophy, even at the expense of short-term goals; * Foster a continuous process flow to sight problems;

* Utilise “pull” systems to prevent over-production;
* Level out the workload of the workforce;
* Build a culture that stops to fix problems, in order to get quality perfect at the first try;
* Standardised tasks are the company’s foundation for its continuous improvement and the development of the employees;
* Use visual control to let problems surface;

* Use reliable and tested technology, which serves both the people and the company’s processes; * Train leaders who understand the company’s work, live its philosophies, and share it to others; * Train and develop a workforce who follow the company’s philosophy; * Respect the work and responsibilities of partners and suppliers by challenging them and helping them improve; * Actually immersing one’s self to understand the situation; * Slow but sure decision-making through consensus, through considering a variety of options, and to implement decisions effectively and efficiently; and, * Becoming a learning business organisation through expression and continuous improvement ( 2007)

With these principles, the company is guided in terms of its operations and production. Through these principles and philosophies, it can become efficient and effective in manufacturing its products, keeping in mind the welfare of its employees, the image and brand of the company, and the satisfaction of its employees. 2. MACRO ENVIRONTMENT ANALYSIS Suggested model PESTEL model (showed how the environment affect the industry we chosen) reference: http://en.wikipedia.org/wiki/PEST_analysis

Currently, Toyota faces a need for accelerated investment, in order to deploy the new technologies, for pressing geo-political, economic, environmental and societal reasons. 3.1. Political

Observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. Whether this is related to flat demand or to the company’s creation of an ever-wider range of vehicles that many buyers seem to care little about, there is a problem. The company is likewise linked closely to the policies of governments, the earnings of banks. Little wonder then that so many emerging countries are keen to develop an auto sector or that there is such a political pressure to protect it in the developed countries. Toyota Company is currently dominated by little more than a handful of firms, each wielding colossal financial, emotional and political power. The company’s approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear. 3.2. Economical

For much of the developed world, and increasingly for the developing world, Toyota Company is a pillar company in auto mobile business, a flag of economic progress. Without Toyota Company in automotive industry, it is impossible to develop an efficient steel business, a plastic industry or a glass sector – other central foundations of economic progress. The Toyota Company has been a core company, a unique economic phenomenon, which has dominated the twentieth century (2007). However, the automobile industry including the Toyota Company now suffers from a series of structural schisms and has become riddled with contradictions and economic discontinuities.

For the capital markets and the finance sector, it has lost a lot of its significance, as a result of ever declining profits and stagnant sales. The proliferation of products means that it has become hopelessly wasteful of economic resources. While all these and more sound like a very gloomy assessment of such a vast economic phenomenon, the industry is not in the end despondent. A different future is possible for the industry, a highly desirable one.

3.3. Social

As part of the development in automotive industry, the Toyota Company actually affects the society as a whole. It employs millions of people directly, tens of millions indirectly. Its products have transformed society, bringing undreamed-of levels of mobility, changing the ways people live and work (2007). The social value of the additional mobility that this industry brings involves the value of the people being able to commute over longer distances easily, among many others. For most of its existence the Toyota Company has been a model of social discipline and control and it is not just that the auto sector offers a ‘pillar’ of something else.

There are, on the other hand, particular social issues to address in many developing countries, often those that are the result of an undertone of religious faith. Toyota company has the role to play in helping develop the mobility of such countries and it can be achieved at an acceptable social cost of the country is prepared to learn the necessary lessons from those who have traveled this route before it, and to make the necessary investments.

3.4. Technological

The Toyota Company works on a scale so awesome and has an influence so vast that it is often difficult to see. The level and diversity of technologies that it must deploy are increasing, which imposes both new investment burdens and new uncertainties and risks (2007). Roughly a million new cars and trucks are built around the world each week – they are easily the most complex products of their kind to be mass-produced in such volumes. The industry uses manufacturing technology that is the cutting edge of science.

But still, the potential for developing coordination skills, intellectual capabilities and emotional sensitivities through electronic technologies remain far from fully exploited. There are numerous additional near-term technological opportunities to adapt the company to changing energy availability. The possibilities suggest that automotive technology is unexpectedly robust and provides a powerful defence against energy starvation even if the real price of oil climbs steadily during the next couple of decades.

3.5. Environmental

Other than the vehicles themselves, and the roads and fuel needed to run them; the business is intricately tied to the manufacture of a wide range of components and the extraction of precious raw materials. Indirectly, it brings people road congestion, too many fatalities and a wave of other environmental troubles. The effect to the Toyota Company is that they needed to establish R&D centres to take advantage of research infrastructure and human capital, so that they can develop vehicle products locally to satisfy the requirements of the environmental and safety regulations more effectively.


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