Toyota Strategic Management

Author

Institution

Introduction

The importance of strategic management in any organization can never be gainsaid as far as safeguarding the long-term and short-term sustainability and profitability of the organization is concerned. It has been acknowledged as one of the most fundamental pillars of any organization, involving the identification, as well as description of strategies that managers aim at using in order to enhance their competitive advantage. It is worth noting that the competitive advantage of an organization is underlined by its profitability being considerably higher than all organizations in the industry’s average profitability. Varied definitions of strategic management have been devised. Nevertheless, it mainly revolves around a collection of decisions and activities undertaken by managers and which have a bearing on the performance of the firm both in the long-term and the short-term. It demands that the managers have comprehensive knowledge, as well as analysis pertaining to competitive ad general organizational environment in order to make the appropriate decisions. It is imperative that the managers undertake a SWOT analysis where they would examine the organization’s strengths, weaknesses, opportunities, as well as threats. This analysis allows them to optimize on their strengths, minimize their weaknesses, exploit the available opportunities and avert the effects of any threats. This underlines the complexity of strategic management. The process of strategic management is continuous involving the evaluation and control of the operations of the organization, the assessment of the competitors and setting strategies and goals that enhances competitiveness, as well as the regular reevaluation of the strategies to determine their implementation and effectiveness.

More often than not, organizations make mistakes that threaten their existence and cripple their competitive advantage. This is the case for Toyota Company. In the recent times, the Toyota Company has been dogged by massive recalls, thanks to the compromised quality of some components of their cars (Saporito, 2010). All in all, the company had to recall about 9 million cars in November 2009 as they were found to have been susceptible to unregulated acceleration, as well as balky brakes. Toyota had made previously made two small recalls in 2005 and 2007 after a rise in unintended acceleration accidents (Saporito, 2010). Initially, the unintended acceleration was blamed on floor mats, with Toyota Company putting the blame on their customers for “inappropriate installation of the floor mats”. It had stated that the accelerator pedal could be jammed in an open-throttle position in instances where the vehicle trim or floor mat came loose. However, investigations by the National Highway Traffic Safety Administration (NHTSA) in 2003 put the blame on the faulty gas pedals leading to the massive recalls to the tune of close to 3.8 million vehicles in the United States alone in November 2009 (Saporito, 2010). Needless to say, the company’s reputation was severely damaged at this time, and consequently its sustainability and profitability at least in the short-term. While the $2 billion losses in terms of repairs may count for something, the worst scenario was the inability of the company to salvage its name in time. The company has previously been known for its capacity to sight problems, eliminate them and even use them for its own gain, something that is credited with propelling the company into the realm of one of the world’s most admired organization (Saporito, 2010). Unfortunately, the company has been unable to replicate these past efforts. The situation is worsened by the internal wrangles between the top management on who is to blame, what should have been done and even who should guide the strategies (Saporito, 2010).

Nevertheless, the company established a plan that would restructure its domestic production structure. Initially, the company closed about 8 plants in the United States. Recalling the faulty vehicles and undertaking their repairs was one of the key strategies for salvaging its public image. While this may have come a little too late especially considering that the loyal customers had been given a reason to try out other brands, it is worth noting that it was effective at salvaging its name and reputation. The company reduced the trade-in prices of the cars, all in an effort to retain their customers. This is undoubtedly bound to work as it would mean that trying out other brands would be more costly to the customers than trading in their faulty cars. The strategy was in line with the company’s distinctive corporate culture that emphasizes on preventative measures and problem solving (Toyota, 2013). The company’s approach revolves around enhancing quality through its manufacturing processes, improvement of the quality pertaining to everyday operations, as well as strengthening the corporate governance (Toyota, 2013). In this regard, the company agreed with Kanto Auto Works and Toyota Auto Body that the two companies would be converted into Toyota’s wholly owned subsidiaries in January 2012 (Toyota, 2011). On the same note, Kanto Auto Works started merger discussions with Toyota Motor Tohoku Corporation and Central Motor Co. in an effort to improve the manufacturing specialization, as well as respond more accurately to the customer demands and lower the costs of production and development(Toyota, 2011). Each of the auto manufacturers would, therefore, have the capacity to execute the business strategy of the company as they are called upon to act in their own initiative in executing their roles in their areas of expertise. In this case, the company aimed at strengthening its supply strategy. While these may not have been entirely effective in regaining public trust, they may have been responsible for halting its fall beyond the fourth ranking.

Nevertheless, the president of Toyota Motors Co. outlined four other steps that the company would take in order to regain public trust. He stated that the company was taking responsibility for its mistakes, using them as a lesson and taking immediate actions to address the concerns of the independent government regulators and those of their consumers (Toyoda, 2010). As part of the strategies for ensuring that the company’s products meet high safety standards, Mr. Akio Toyoda stated that the company would create an Automotive Center of Quality Excellence in which top engineers would strive to enhance quality control and management throughout North America (Toyoda, 2010).

In addition, Mr. Toyoda stated that the company would enlist the services of blue-ribbon safety advisory group made up of experts in quality control and management to carry out a comprehensive review of their operations, as well as ensure that any deficiencies existing in the company’s manufacturing process are eliminated (Toyoda, 2010). This is done in an effort to ensure that its standards match the best industry practices. The fact that the findings of the independent experts and the company’s review was to be made public was undoubtedly bound to restore trust in the company as it created the impression that the mistakes were not deliberate and that the company was open to ideas on how to improve the situation (Toyoda, 2010). The most fundamental reason for the downfall of the company was its inability to act quickly to the complaints and resolve them in time. The president sought to assure the public that the company was investigating the customer concerns pertaining to the anti-lock brake systems of Lexus HS250h and the Prius so as to address the safety issue (Toyoda, 2010). He acknowledged that the current situation was predicated by deficiency of sharing information pertaining to quality and safety in its global operations. In this regard, the company was to increase information sharing and reach out to government agencies responsible for safeguarding motorists and passengers’ safety (Toyoda, 2010).

These solutions would e effective in restoring the company’s fortunes and enhancing public trust in the same especially considering that they meet the three criteria for strategic alternatives. These, according to Rao (2010), include feasibility, acceptability and suitability. Their capacity to meet these criteria is built on the fact that the strategies are in line with the corporate culture of the company. The company’s corporate governance is built on the conviction that the provision of products that cater to the needs of the customer is necessary for the achievement of long-term growth and stability. The strategies outlined by the president would strengthen the competitiveness of the company as it enhances transparency and aims at assuring the general public that it is getting the best deal in the market with the Toyota products.

In addition, the conversion of Kanto Auto Works and Toyota Auto Body into wholly owned subsidiaries that would undertake their own initiatives in pursuing the company’s objectives speaks of delegation of duty and a change in the organizational culture. As much as the subsidiaries would be responsible for their output and operations, they would still be answerable to the Toyota Company. However, their independence in the pursuit of the overall objective is in line with the belief in the company that every individual would like to make a contribution to the organization’s growth. This would inculcate a culture of self-discipline, which propels the prospects of the company to higher levels. On the same note, it is in line with the control organizational culture, where there is standardization, as well as well-designed structure that is effective for the enhancement of performance. Needless to say, the increased supervision is an element of control organizational structures where leaders monitor, coordinate and organize people and processes (Tharp, 2009).

References

Subba, R. P. (2010). Strategic management. Mumbai India: Himalaya Pub. House.

Tharp, B.M. (2009). Four organizational culture types.Haworth White Paper. Retrieved August, 2011, from HYPERLINK “http://www.haworth.com/en-us/Knowledge/Workplace-Library/Documents/Four-Organizational-Culture-Types_6.pdf”http://www.haworth.com/en-us/Knowledge/Workplace-Library/Documents/Four-Organizational-Culture-Types_6.pdf

Saporito, B., Szczesny, J.R & Schuman, M (2010). Behind the Troubles at Toyota. Times Magazine. Retrieved 14th March 2013 from HYPERLINK “http://www.time.com/time/magazine/article/0,9171,1963744,00.html” l “ixzz2NWEMsUUb” http://www.time.com/time/magazine/article/0,9171,1963744,00.html#ixzz2NWEMsUUb

Toyota (2013). Corporate Governance: Aiming to steadily increase corporate governance in the long term. Retrieved 14th March 2013 from HYPERLINK “http://www.toyota-global.com/sustainability/csr_initiatives/corporate_governance.html” http://www.toyota-global.com/sustainability/csr_initiatives/corporate_governance.html

Toyoda, A (2010). At Toyota, working to regain trust. The Washington Post. Retrieved 14th March 2013 from HYPERLINK “http://articles.washingtonpost.com/2010-02-09/opinions/36916151_1_toyota-team-members-andon-cord-quality-management” http://articles.washingtonpost.com/2010-02-09/opinions/36916151_1_toyota-team-members-andon-cord-quality-management

Toyota (2011). Annual Report: Restore and Renew Our Production Structure for Further Growth. Retrieved 14th March 2013 from HYPERLINK “http://www.toyota-global.com/investors/ir_library/annual/pdf/2011/p21.pdf” http://www.toyota-global.com/investors/ir_library/annual/pdf/2011/p21.pdf

Toyota Strategic Management

Author

Institution

Introduction

The importance of strategic management in any organization can never be gainsaid as far as safeguarding the long-term and short-term sustainability and profitability of the organization is concerned. It has been acknowledged as one of the most fundamental pillars of any organization, involving the identification, as well as description of strategies that managers aim at using in order to enhance their competitive advantage. It is worth noting that the competitive advantage of an organization is underlined by its profitability being considerably higher than all organizations in the industry’s average profitability. Varied definitions of strategic management have been devised. Nevertheless, it mainly revolves around a collection of decisions and activities undertaken by managers and which have a bearing on the performance of the firm both in the long-term and the short-term. It demands that the managers have comprehensive knowledge, as well as analysis pertaining to competitive ad general organizational environment in order to make the appropriate decisions. It is imperative that the managers undertake a SWOT analysis where they would examine the organization’s strengths, weaknesses, opportunities, as well as threats. This analysis allows them to optimize on their strengths, minimize their weaknesses, exploit the available opportunities and avert the effects of any threats. This underlines the complexity of strategic management. The process of strategic management is continuous involving the evaluation and control of the operations of the organization, the assessment of the competitors and setting strategies and goals that enhances competitiveness, as well as the regular reevaluation of the strategies to determine their implementation and effectiveness.

More often than not, organizations make mistakes that threaten their existence and cripple their competitive advantage. This is the case for Toyota Company. In the recent times, the Toyota Company has been dogged by massive recalls, thanks to the compromised quality of some components of their cars (Saporito, 2010). All in all, the company had to recall about 9 million cars in November 2009 as they were found to have been susceptible to unregulated acceleration, as well as balky brakes. Toyota had made previously made two small recalls in 2005 and 2007 after a rise in unintended acceleration accidents (Saporito, 2010). Initially, the unintended acceleration was blamed on floor mats, with Toyota Company putting the blame on their customers for “inappropriate installation of the floor mats”. It had stated that the accelerator pedal could be jammed in an open-throttle position in instances where the vehicle trim or floor mat came loose. However, investigations by the National Highway Traffic Safety Administration (NHTSA) in 2003 put the blame on the faulty gas pedals leading to the massive recalls to the tune of close to 3.8 million vehicles in the United States alone in November 2009 (Saporito, 2010). Needless to say, the company’s reputation was severely damaged at this time, and consequently its sustainability and profitability at least in the short-term. While the $2 billion losses in terms of repairs may count for something, the worst scenario was the inability of the company to salvage its name in time. The company has previously been known for its capacity to sight problems, eliminate them and even use them for its own gain, something that is credited with propelling the company into the realm of one of the world’s most admired organization (Saporito, 2010). Unfortunately, the company has been unable to replicate these past efforts. The situation is worsened by the internal wrangles between the top management on who is to blame, what should have been done and even who should guide the strategies (Saporito, 2010).

Nevertheless, the company established a plan that would restructure its domestic production structure. Initially, the company closed about 8 plants in the United States. Recalling the faulty vehicles and undertaking their repairs was one of the key strategies for salvaging its public image. While this may have come a little too late especially considering that the loyal customers had been given a reason to try out other brands, it is worth noting that it was effective at salvaging its name and reputation. The company reduced the trade-in prices of the cars, all in an effort to retain their customers. This is undoubtedly bound to work as it would mean that trying out other brands would be more costly to the customers than trading in their faulty cars. The strategy was in line with the company’s distinctive corporate culture that emphasizes on preventative measures and problem solving (Toyota, 2013). The company’s approach revolves around enhancing quality through its manufacturing processes, improvement of the quality pertaining to everyday operations, as well as strengthening the corporate governance (Toyota, 2013). In this regard, the company agreed with Kanto Auto Works and Toyota Auto Body that the two companies would be converted into Toyota’s wholly owned subsidiaries in January 2012 (Toyota, 2011). On the same note, Kanto Auto Works started merger discussions with Toyota Motor Tohoku Corporation and Central Motor Co. in an effort to improve the manufacturing specialization, as well as respond more accurately to the customer demands and lower the costs of production and development(Toyota, 2011). Each of the auto manufacturers would, therefore, have the capacity to execute the business strategy of the company as they are called upon to act in their own initiative in executing their roles in their areas of expertise. In this case, the company aimed at strengthening its supply strategy. While these may not have been entirely effective in regaining public trust, they may have been responsible for halting its fall beyond the fourth ranking.

Nevertheless, the president of Toyota Motors Co. outlined four other steps that the company would take in order to regain public trust. He stated that the company was taking responsibility for its mistakes, using them as a lesson and taking immediate actions to address the concerns of the independent government regulators and those of their consumers (Toyoda, 2010). As part of the strategies for ensuring that the company’s products meet high safety standards, Mr. Akio Toyoda stated that the company would create an Automotive Center of Quality Excellence in which top engineers would strive to enhance quality control and management throughout North America (Toyoda, 2010).

In addition, Mr. Toyoda stated that the company would enlist the services of blue-ribbon safety advisory group made up of experts in quality control and management to carry out a comprehensive review of their operations, as well as ensure that any deficiencies existing in the company’s manufacturing process are eliminated (Toyoda, 2010). This is done in an effort to ensure that its standards match the best industry practices. The fact that the findings of the independent experts and the company’s review was to be made public was undoubtedly bound to restore trust in the company as it created the impression that the mistakes were not deliberate and that the company was open to ideas on how to improve the situation (Toyoda, 2010). The most fundamental reason for the downfall of the company was its inability to act quickly to the complaints and resolve them in time. The president sought to assure the public that the company was investigating the customer concerns pertaining to the anti-lock brake systems of Lexus HS250h and the Prius so as to address the safety issue (Toyoda, 2010). He acknowledged that the current situation was predicated by deficiency of sharing information pertaining to quality and safety in its global operations. In this regard, the company was to increase information sharing and reach out to government agencies responsible for safeguarding motorists and passengers’ safety (Toyoda, 2010).

These solutions would e effective in restoring the company’s fortunes and enhancing public trust in the same especially considering that they meet the three criteria for strategic alternatives. These, according to Rao (2010), include feasibility, acceptability and suitability. Their capacity to meet these criteria is built on the fact that the strategies are in line with the corporate culture of the company. The company’s corporate governance is built on the conviction that the provision of products that cater to the needs of the customer is necessary for the achievement of long-term growth and stability. The strategies outlined by the president would strengthen the competitiveness of the company as it enhances transparency and aims at assuring the general public that it is getting the best deal in the market with the Toyota products.

In addition, the conversion of Kanto Auto Works and Toyota Auto Body into wholly owned subsidiaries that would undertake their own initiatives in pursuing the company’s objectives speaks of delegation of duty and a change in the organizational culture. As much as the subsidiaries would be responsible for their output and operations, they would still be answerable to the Toyota Company. However, their independence in the pursuit of the overall objective is in line with the belief in the company that every individual would like to make a contribution to the organization’s growth. This would inculcate a culture of self-discipline, which propels the prospects of the company to higher levels. On the same note, it is in line with the control organizational culture, where there is standardization, as well as well-designed structure that is effective for the enhancement of performance. Needless to say, the increased supervision is an element of control organizational structures where leaders monitor, coordinate and organize people and processes (Tharp, 2009).

References

Subba, R. P. (2010). Strategic management. Mumbai India: Himalaya Pub. House.

Tharp, B.M. (2009). Four organizational culture types.Haworth White Paper. Retrieved August, 2011, from HYPERLINK “http://www.haworth.com/en-us/Knowledge/Workplace-Library/Documents/Four-Organizational-Culture-Types_6.pdf”http://www.haworth.com/en-us/Knowledge/Workplace-Library/Documents/Four-Organizational-Culture-Types_6.pdf

Saporito, B., Szczesny, J.R & Schuman, M (2010). Behind the Troubles at Toyota. Times Magazine. Retrieved 14th March 2013 from HYPERLINK “http://www.time.com/time/magazine/article/0,9171,1963744,00.html” l “ixzz2NWEMsUUb” http://www.time.com/time/magazine/article/0,9171,1963744,00.html#ixzz2NWEMsUUb

Toyota (2013). Corporate Governance: Aiming to steadily increase corporate governance in the long term. Retrieved 14th March 2013 from HYPERLINK “http://www.toyota-global.com/sustainability/csr_initiatives/corporate_governance.html” http://www.toyota-global.com/sustainability/csr_initiatives/corporate_governance.html

Toyoda, A (2010). At Toyota, working to regain trust. The Washington Post. Retrieved 14th March 2013 from HYPERLINK “http://articles.washingtonpost.com/2010-02-09/opinions/36916151_1_toyota-team-members-andon-cord-quality-management” http://articles.washingtonpost.com/2010-02-09/opinions/36916151_1_toyota-team-members-andon-cord-quality-management

Toyota (2011). Annual Report: Restore and Renew Our Production Structure for Further Growth. Retrieved 14th March 2013 from HYPERLINK “http://www.toyota-global.com/investors/ir_library/annual/pdf/2011/p21.pdf” http://www.toyota-global.com/investors/ir_library/annual/pdf/2011/p21.pdf