Capstone Project: Toyota Co.
Toyota’s Mission statement: “To provide safe & sound journey. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. The environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world. The global vision statement: Toyota recently unveiled a global vision:
Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet challenging goals by engaging the talent and passion of people, who believe there is always a better way (Ledwidge, 2012, p. 150).
The mission and vision of a company provide an avenue for communicating a company’s purpose and values to the stakeholders (Brown, 1998). This message is aimed at the company’s stakeholders; they may be employees, clients, investors, and others who may include the government. Every company will tend to display these statements at every available opportunity so that they are clearly understood, spread, and accepted. The more employees comprehend an organization’s purpose; say through its mission and vision, then the more they are likely to comprehend, formulate and implement on a clear strategy. A company’s mission and vision form the basis of the strategy to be taken. A company’s strategy ultimately defines its success or failure. The mission statement would normally be bold while the vision is a bit narrower so that it can guide the company towards the development of clear strategies. The vision statement can be said to be the link between the mission statement and an effective strategy. At Toyota, the vision: “moving forward” requires the management at Toyota to seek more innovative and Eco friendly ways of impressing their customers. This has clearly worked for the company in the seventy five years it has been in existence as it continues to grow and serve its clients to their satisfaction (Halliday, 2005).
Porter’s five forces can be used in analyzing the competition Toyota faces. Firstly, on the threat of new entrants, the threat can be said to be low. The manufacturing industry is very costly, and the risks are enormous (Henry, 2008). The capital that one may initially need is very high. It is also noteworthy that there exists intense competition between companies in the motor industry which is essentially dominated by the established brands. Toyota, on the other hand, has an advantage, it has a strong brand name that cannot easily be shaken. The company has a very strong market presence across the globe which essentially gives it an upper hand over possible new entrants. On the threat of substitutes, the company faces an average threat here. With the economic downturn in Europe, the U.S and some other parts of the world, car users have turned to the used car market which essentially poses a threat to the ability of Toyota to maintain its’ market. However, the company can cut costs with ease, unlike its competitors (Halliday, 2005).
The company has and will continue to narrow the gap between the price of the used cars and that of their cars; thus the threat of substitution is of lesser danger to the company. Thirdly, the rivalry among competitors poses a high threat to the company. Most automotive industries usually characterize an oligopoly. Competition for a sizeable share of the market is ever present, and this happens because customer’s expectations are always high and customers are ever expecting a reduction in prices. Despite Toyota’s strength in the ability to cut costs, the company now faces pressure after the recent natural disaster in Japan. Furthermore, the Detroit three has been offering competitive sales discounts to counter competition, needless to say, this complicates matters for Toyota as it has to put more effective production and strategies on how to cut costs. However, Toyota is still a market leader in low cost manufacturing, even causing its competitors to change how the conduct business (Halliday, 2005). Fourthly, the buying power is moderate. With the increasing cost of fuel prices, consumers are increasing preferring fuel-efficient cars. This has also led to an increase in the demand for the hybrid cars which provide low-cost alternatives for operating the vehicle and the expectation of high product quality (Henry, 2008).
In an industry where the buyer has a wide field of choice in the market, the buyer will have a strong bargaining power and low switching costs. Nevertheless the cost cutting strategies executed by Toyota minimizes the buyer power and its products are more likely to sell than those of its competitors. Fifthly, the supplied power is low. The auto manufacturing industry tends to have more manufacturers and lesser suppliers. The suppliers provide materials for several manufacturers. However, manufacturing companies stipulate very high standards and quality in the signing of contacts; failure of the supplier to meet the set threshold will make that manufacturer change supplier. Toyota Inc has an advantage in the good relations it enjoys its suppliers; it has an efficient style of monitoring supply thus its suppliers have a low bargaining power.
Toyota’s internal factors, or rather strengths and weaknesses are several as we will discuss them below. The strengths include: a strong brand name give the company is the largest car manufacturer in the world in terms of production and number of sales, it is also recognized as the best caliber for cheap and affordable cars. Secondly Toyota has a reputation for innovation. The company continues to develop technologically and closely monitors trends in the industry, as well as consumer behavior, the company pioneered in the mass production of gasoline-electric hybrid automobile which sold more than two million in the year 2010 alone. Thirdly, the company continues to benefit through efficient manufacturing that has saved on caused and increased profit margins.
Fourthly, as discussed earlier, Toyota has maintained good relations with its suppliers. Fifthly, the company has an established organizati9onal culture and prides itself of a distinctive loyalty from employees. With its Japanese cultural values, the company has a high regard for the hierarchy and respect for authority. Toyota management empowers all employees and provides an opportunity for every worker’s unremitting improvement. However, like every other company, Toyota Co. has several weaknesses. Firstly, given its large size and the huge production in Japan, the company is the most affected by the natural tragedy in Japan. Secondly, the decrease in Toyota’s market share is a major weakness. In 2011, GM and Volkswagen outsold Toyota in global sales each of more than two million units. The third weakness is the high number of recalls, with 8 million trucks being recalled in 2010 alone. The opportunities that are available for Toyota include: emerging markets there has been a swift development of emerging markets more so in China and Africa.
This market gap offers an opportunity to increase sales in these markets and enabling low-cost production. The other opportunity is the change in consumer preferences. Consumers now want fuel efficient and low cost vehicles, this niche is an opportunity for Toyota to establish itself as a market leader in this area. The company also faces threats. Firstly, the Japanese Yen has tended to strengthen against the dollar and the Euro; this portends a rise in the cost of production for Toyota and narrower profit margins. Secondly, a repeat natural tragedy would jeopardize future sales at the company. Thirdly, the rise in fuel prices, raw material and new consumer preference pose a threat to the future running of Toyota Co. One recommendation for Toyota is to be more aggressive in taking advantage of its early leadership in the sale of hybrid systems and electric-vehicle technology. It is expected that all the major car manufacturers will be trying to enter this market; however, Toyota has the advantage of being a first among equals in this market.
In the near future one can expect a hybrid version of almost every car that will be in the market. Such a strategy has the effect of mitigating the threat posed by changing consumer preferences and builds on its strength as a market leader. Another recommendation for Toyota is to focus more on the manufacture of safe cars given the bad publicity it has often received; this aspect shields the company from the threat of recalls and bad publicity. The company may also consider buying smaller companies in areas it has not ventured as this gives it a chance to reach unexploited market as well as to reinforce its brand name as the largest company, the result of this is that the company takes advantage of the emerging markets and shields it from the weakness of low sales. The company should also separate the hybrid model and market it as a different model so that it can appeal to a new client base that will associate the brand as Eco friendly. With the economic situation going south, a strategic move for the company may be to launch a new brand, such a model would be cheap, very Eco friendly and efficient in terms of safety and speed.
This strategy would shield the company posed by the used cars, it would also shield from the threat that the economic crisis has posed to the company. The company should consider a pricing strategy that will give it a lead over its competitors. Even though, the production of one Toyota car is quite high, the company continues to enjoy massive sales, which would mean large scale production would be lower. As such, the company can cut prices, make profits where its customers are making losses. The other strategy is product differentiation. Toyota should differentiate its products buy building environmentally friendly, low cost and efficient cars. This is the major attribute that can best differentiate Toyota products. The other strategy is the distinctive competency. This is when a company is able to do that which its customers are unable to produce. Toyota has the ability to produce low cost hybrid cars, more than any other vehicle manufacturing cars.
Given the future is with the hybrid cars adopting the distinctive competency as a strategy will help Toyota gain competitive advantage over peers in the auto-mobile manufacturing industry. Communication of information plays a key role within the corporate world. To come up with an effective strategy, several issues emerge. The first question concerns whom your stakeholders are, why you need to communicate with them, what you wish to communicate, when you should communicate, what mechanisms best enhances your communication, and what challenges you face to communicate to your stakeholders effectively. On the first question, a stakeholder may be said to be an individual or group that can affect or be affected by a company’s engagements. For Toyota, among the stakeholders are the employees, the media, customers, and suppliers. After identifying the stakeholders, you then segment the stakeholders so that you take care of each stakeholder considerations separately. For example, you could segment them depending on the urgency. The most important and urgent stakeholders to know these strategies is the management and employees, the suppliers come in second followed by the advertisers, press, and customers in that order. The second question is about why we need to communicate. For each stakeholder, there is an answer for them.
Given that Toyota is announcing plans to adopt new market strategies, the company will need to inform suppliers of the new product, that is, the manufacture of a new brand that is hybrid and cost friendly. This is because the company will need d8ifferent supplies from the ones they traditionally make, even before announcing such a plan, the first people to be informed should be the supplies so that then can confirm the cost of supplying the needed raw materials, and the volume in which they would be able to produce the raw materials. For employees, it is important that employees are always informed of the engagements of the company; the company will need these employees to manufacture the new product. Therefore, employees must be well aware of what is expected of them, in what time and the purpose of launching the new product. The purpose of communicating to employees is to prepare them of the new strategies, its use to the company and what will be expected from them. Failure to engage employees often leads to low morale, and may even lead to misinformation leading to strikes and go-slows. For the advertisers, you need to prepare them early enough so that they are able to come up with clear advertising strategies in time. The press is always the link between the company and the consumers. As such, the company must allow the press know of its plan to launch the new products this not only complements the advertising but also informs the consumer to expect the product and on what the features of the product will be. Consumers, needless to mention will need to be informed of the company’s new product and what its advantages are going to be. The third question is about what we wish to inform our stakeholders; in this case Toyota is launching a new strategy by launching a new car brand. The answer to the question of when to communicate with the stakeholders is immediately, as the company should be proactive in communicating its ideas. On the most appropriate mechanism to communicate, the answer should depend on whom you are reaching. After segmenting the stakeholders, then you can employ the different mechanisms which include: advertising, face to face communication, memos, newsletter, among others (Brown, 1998).
As a company with Japanese values, Toyota’s corporate governance is concerned with a broad group of stakeholders; they include employees, shareholders, suppliers and customers. However, unlike most other companies, Toyota is known to be very responsible and does not limit its focus to the interest of shareholders. At Toyota, the rights of the shareholders are theoretically greater than in most other companies (Demise, 2006). The shareholders are given powers to nominate and elect directors. The remuneration given to the management is decided at the general meeting of the company’s shareholders. Nevertheless, the shareholder does not have much influence on the decisions of the board of directors. Another important corporate governance mechanism is the work culture. Again, the company has Japanese roots, and the possibility of dismissal is usually high. Given that a dismissed employee or manager would have a hard task getting a job, employees are much more hard working at Toyota which has indeed led to a good organizational culture at Toyota, increased production and thus the expansion of the company. It is thus prudent for the company to continue with the work culture that is mainly borrowed from its Japanese roots. However, it is recommendable that the company changes its corporate governance structure by balancing the Japanese values with modern corporate governance practices suit the global company it has become (Brown, 1998).
Since, its start, Toyota has sought to enrich the society it operates in by doing its corporate social responsibility. The company adheres to the principle of openness and fairness in the activities it partakes, for example, by pushing for cleaner and safer car making. Among its values, the company says it is committed to being the leader in global regeneration; to manufacture automobiles in which the people of this earth can live safely and comfortably; to gain the respect of all the people of the world. The company, in 1992, set some guiding principles which are ideally seeking to make Toyota respect the culture and customs of every nation and take part in the social economic development by engaging in corporate responsibilities, in the local communities. The company would later, in 1998, create a division charged with environmental affairs; the department would be under the supervision of the company’s president. The company has seen then reported its environmental activities. The company has also embarked on a campaign to train its employees on environmental awareness (James, 2011). Furthermore, the companies also award employees who have done well towards the conservation of the environment. In Thailand and Cambodia, Toyota has partnered with other organizations in providing technologies that aid in the detection of landmines. In Britain, the company partners with the British Red Cross in raising awareness on road accidents(Halliday, 2005).
The company, however, has not escaped criticism after, the Revered Jesse Jackson threatens to lead a boycott in 2001 over what was seen as aspects of racism in a post card the company had issued. The management would later apologize for the incident. It is quite clear that the company has set a high standard for the company in terms of ethics and corporate responsibility. This bold effort has led to the acceptance of the company in all corners of the globe and earned the respect as a good employer and a responsible corporate.
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