The application of Strategic Change Management in Toyota

This report deeply discusses the application of the Strategic Change Management in world’s fifth biggest company, Toyota Motor Corporation which is founded by “Kiichiro Toyoda” in 1937. As an organization which has significant changes through last years, The Toyota Motor Corporation will be a good example. As the world’s largest automobile manufacture, The Toyota aims continue the 21st century with stable long-term growth whereas determine for harmony with society, People and the environment. According to the Vision of the Toyota, “Good corporate citizen,” they focus on constantly winning the trust and respect of the international community.

The Toyota Motor Corporation always adopt with business environment for the purpose of long term growth. The Toyota Motor Corporation implemented “The Toyota Way 2001” in April 2001 by expressing values and guidelines that should be embraced by all employees in the Toyota. There are four components in “The Toyota Way 2001”

As a root for Management Decisions, think long-term.

Problem-solving process

Develop employees for Adding value to Toyota

Recognize the solving root problems constantly initiatives organizational learning

The Toyota Motor Corporation Makes decisions gently by consensus, Consider entire options thoroughly and implement its decisions rapidly with the changing environment. The Toyota Motor Corporation is now expanded in different countries and worldwide market and it has grown-up as a large multinational corporation from wherever it started. In 2008 it displaced General Motor and became the largest automobile manufacturer.

The Toyota Motor Corporation acquired 51% ownership of Daihatsu, 16.7% ownership of Fuji Heavy Industries and acquired 5.9% of Isuzu Motors Ltd in 2006. The Toyota Motor Corporation is planning to introduce Isuzu diesel technology for the products of Toyota. The Toyota introduced new technologies comprising hybrid gasoline-electric vehicles which are one of the first mass-production and it is sold 2 million in global by 2010.

The Toyota accepted “The Global Vision 2020”, that is established the Guiding Principles at Toyota in 2007. It has drafted management plan from medium to long term and how work Toyota in order to achieve its goal.

Likewise, The Toyota always is making decisions and implements changes in terms of achieving goals with changing environment.

In this report, first discuss the background to the change affecting Toyota Motor Corporation. In here, try to identify a range of models in Change Management, Factors to change and value of intervention techniques. At the next step, recognise the issues in strategic changes. Then identify the key stakeholders in Toyota, develop systems for understating them and analyse the benefits and drawbacks of these systems. After that explain how the organization can develop strategy for a change with its key stakeholders and for managing resistance to change. Finally, plan to implement a model in order to achieve its goals and discuss how to measure the improvements.

TASK 01: BACK GROUND TO THE STRATEGIC CHANGE IN THE ORGANIZATION

In terms of achievement of the Global Vision 2020 the Toyota has to change their system according to the plan that they have drafted.

Models In Change Management

First of all, The Toyota should be explored that the models in change Management which they can follow. Here, we can discuss,

Freeze Phases (Developed by Kurt Lewin 1975)

Concept of “Force Field” (By Kurt Lewin)

Transition Modal ( by Beckhard 1969)

Change through the learning of organization ( By Peter Senge 1992)

Change by entrepreneurship ( By Rosabeth Moss Kanter)

Freeze Phases (Developed by Kurtt Lewin 1975)

This is one of the most useful models we can use for successful change. This is proposed by Kurt Lewin (1975). He discussed the model of change in three steps or three stages as given below.

Unfreezing – Finding alterations or reductions for change that most employees can understand and accept those factors easily.

Changing – developing patterns of their behaviours in new attitudes, feedback on new information and new change.

Refreezing – Supporting devices to make sure the patterns of the new behaviour is maintained.

At the stage of Unfreezing, the managers use the threat of competitors from external environment to make sure that employees are jolted out of satisfaction with current situation. At the stage of changing, develop or change the new attitude, behaviour and feedback on new information and implementation of change. At the refreezing, the managers have danger in generating a new system.

Concept of “Force Field” (By Kurt Lewin)

This concept also created by Kurt Lewin (1975). When there is a change required by driving forces or restrictive forces motivate to maintain the current situation, this concept of “Force Field” can apply. Change is possible by identifying driving forces and utilising them while minimising restrictive forces.

Organizational Goals and objectives, problems and need

Driving Forces Restrictive Forces

(Forces Favoured on change) (Forces restricted on change)

Current Situation

Change through the learning of organization (By Peter Senge 1992)

He explained this model by five core competencies involve in creating learning organization.

Create a shared vision to make sure that employees are focused on

Personal mastery learning by persons who are frequently finding out how creates more of what matter to them.

Working with people to overcome their challenge such as unconscious assumptions and to appreciate.

Learning about team. The learning organization is required individuals to gather together and work as a team.

The systems focus on importance of consideration on interrelationships and networks rather than distribute the problems in to parts and performing with alone.

Intensification of factors that driving to change

External Triggers to Change

Because of the external development the change is necessary. The Toyota should be come to terms with number of external factors including global market share, environmental issues, and changes in demographically and awareness of health. Eventually, these factors will cause to triggers to change. It is very clear that the external triggers are occurred by the direct action (Task Environment) and indirect action (General Environment) of the organization. These changes in both two environments have to be monitored and reacted according to them.

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When considering the general environment of the Toyota Motor Corporation, those triggers can be discussed under PESTLE.

Political effects of new government.

As an example, in 2010 the US government required from The Toyota Motor Corporation a penalty of US$16.375 million for its delayed response to the notifying the National Highway Traffic Safety Administration

Changes in economy such as global competition, fluctuation of exchange rates, activity level of macro economy.

As an example, in 2008 The Toyota Motor Corporation had to face the global financial crisis of 2008 and it was in a loss after 70 years.

Changes of social or demographic such as education level and changes of expectation or values.

Because of the succession of Toyota Team Europe in 1997, The Toyota Motor Corporation decided to implement the TMME, Toyota Motor Europe Marketing & Engineering. After two years, The Toyota could create the customer base in the United Kingdom, since the Toyota’s cars were very popular among the British people.

Changes in Technology such as innovations and developments in product and production process.

The Toyota Sienna, popular minivan is programmed to join the hybrid line-up by 2010, and it plans to suggest its entire line-up of cars, SUVs, and trucks with a Hybrid Synergy Drive option by 2030. By 2012 also Toyota hopes to issue an electric version of the RAV4.

Implications of the legal environment like government policies.

Tariff on Imports introduced by government

As an example, in 2010 the US government required from The Toyota Motor Corporation a penalty of US$16.375 million for its delayed response to the notifying the National Highway Traffic Safety Administration

Environmental implications by legislation

The Toyota Motor Corporation is a leader in manufacturing vehicle environment friendly technologies. In 2005, Toyota implemented Fourth Environmental Action Plan.

The Task Environment discuses about all stakeholders, those who can effect to the Toyota and who can effected by the Toyota as well. The economist Michael Porter introduced this context and it has five dimensions.

Power of Buyer: Develop the new market and search for a new customer base for the products of Toyota. Because of the succession of Toyota Team Europe in 1997, The Toyota Motor Corporation decided to implement the TMME, Toyota Motor Europe Marketing & Engineering. After two years, The Toyota could create the customer base in the United Kingdom

Power of Suppliers: Seek the new bases of raw materials to make sure that they can supply continuously and stability of the prices of materials.

Threatens from its substitute: Develop the awareness of the customers about benefits from the products not reached through substitutions.

Entry barriers to the Market: It is good to make the advantages from economies of scale in production which cost savings can be delivered to the customer

The degree in rivalry of inter-firm: Put effort on making agreement with the competitors to level of advertising.

Internal Triggers to Change

The internal triggers will occur as the result of:

A new head in the organization

When performing external organization by benchmarking exercises

Dissatisfaction of the management with the current situation

Conflict of the management and employees

The system approach highlighting the necessities of interrelationship within subsystem in the Toyota Motor Corporation, such as,

Responsibilities that everybody has

Technology that they using

Employees of the organization

Structure of the organization

Management of the organization

After summarising all the factors which driving to change the organization I can suggest the Concept of “Force Field” (By Kurt Lewin) is the best model for managing the change in The Toyota Motor Corporation. The Force Field Analysis is really important to identify all the forces which favourable on change and on the other hand it identify forces which are against to the change. In addition to that it helps us to consider the importance of these factors and to make the decision whether the implementation of the plan for change is worth. When we made the decision to carry out the plan, the Force Field Analysis is supported to recognise the changes that we have to make to improve it.

TASK 02: UNDERSTAND ABOUT THE ISSUES IN STRATECIG CHANGE

According to the explanation of Richard Daft (1998) there are some key parameters that would be observed for the purpose of succession of change in the organization.

Needs and Ideas for the change

If there is not a perceived need for the change, ideas not considered seriously. When managers identified the gap between predicted performance and the actuals performance, the perceived need arise. Success of change would be difficult whereas the organisational culture is very strong or interest is obliged by internal stability.

Ability to adopt

When the decision makers of the organization decided to go ahead with the suggested Idea, Adoption will occur. The top managers and employees of the organisation should be agreed to support for the change. Sometimes the decision might be required by signing a legal document by the directors in occasions such as acquisition of ownership in another company. For any small changes, the formal approval of the middle management is enough.

Available resources

Resources requires at the time of scheming, planning, and implementing of the change and reinforcing change as well. Most of the innovations are going over the budgeted funds and requires special funds.

Implementation

When the organisation decided to make a plan to utilise new ideas, techniques or a system, the implementation will occur. This would be happened to a system that already exists such as, approval system for capital spending, budgeting process for departments or divisions. The organization should be acquired the equipment and materials and the employees should be trained to use their ideas.

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Managerial Barriers to the Change

The Managers can generate barriers for the benefits of change. The management can generate mistakes by ignoring their objectives, availability of materials or resources and the alternatives they able to undertake. There are several factors to describe by Daft and they are discussing as a framework for this issue.

Extreme focus on costs – The management always possess by mind-set that the most importance thing is cost and they forget to appreciate that the cost is not the most important thing for the change, as an example when we suppose to change employee motivation or customer satisfaction at higher level. Unless the forthcoming yields are considerable, when performance of an idea that cost more than existing applies, is unlikely to be accepted.

Failures in highlighting benefits – Both negative and positive responses will be produced by any kind of changes. The managers should be perceived more positive aspects than the negative aspects of the change and education would be helpful for the manager to achieve this.

Lack of corporation and coordination ability – Because of the lack of coordination to the implementation of the change, organizational conflict and fragmentation will be resulted. In addition to that, the old and new systems might not be compatible. Sometimes, the progress at the operational level may be seriously slow and the performance of the new system is not known. This type of problem will arise in projects that re-engineering the business process since, failure to assume properly that how thing are going on currently.

Uncertainty avoidance – The managers fear uncertainty related to the change at the single level. To avoid this situation communication should be strong horizontally. Then the team may know how process is going on and they can understand the how the change will impact on their duties.

Fears on Loss- Fear of loss are related to uncertainty of avoidance. Managers may feel fear not only about their status and authority but also about their jobs.

TASK 03: IDENTIFY THE RESPONSES TO CHANGE BY THE STAKEHOLDERS AND OVERCOMING THE RESISTANCE FOR CHANGE

The all activities of The Toyota Motor Corporation are directly associated with its key holders such as shareholders, customers, employees, competitors and etc. So, it is really important to concentrate about stakeholder’s responses on change. The organizational goals and The Global Vision 2020 of Toyota is affected by performance and work return and the responses by its stake holders. Therefore it is very essential to create a positive image of the strategic change for both Toyota and its stakeholders.

The stakeholders of the Toyota highly concentrate on benefits that they could have through the strategic change. The shareholders of Toyota Motor Corporation are seeking higher return for their investments, the employees are expecting salary increment and as well as good working environment in their working places and customers are expecting batter value for their investments on Toyota Vehicles due to the strategic change in Toyota Motor Corporation. Consequently if there is any failure on strategic Change in Toyota it will badly effect on response of stakeholders. Therefore the responses of the stakeholders to change are really important to make decision on Strategic Change. Because the strategic change, can be accepted or rejected by the stakeholders.

How Attitudes of stakeholders will effect on Strategic Change

Resistance on change can be forecast if the change is inevitable. As the responsible persons in the organization, top management of Toyota Motor Corporation should be focus on how and why resistance to change grows within the organization. Torrington and Weightman (1994) distinguish the different types of change experience.

Imposition, Commenced by The Toyota from “on High”

Adaptation, make changes in behaviors or attitudes of stakeholders

Growth, favorable responses for opportunities

Creativity, when stakeholders are initiator and they in control

The imposition complies with resistance, adaptation complies with uncertainty, growth complies with delight and creativity complies with excitement. Therefore the management of the Toyota need be strong with skills to,

Overcome the resistance or find other alternatives for change methods.

Win the uncertainty

Encourage the stakeholders and subordinates to get favorable response.

There are some spectrum conceivable reactions to the objective of the change programme.

Enthusiastic Corporation, acceptance or corporation under pressure from the management.

Inactive Resignation – Loss of interest, Least Contribution, Indifference

Inactive Resistance – non-learning behavior, regressive behavior

Active Resistance – working to rule, least work, protest, sabotages, obligating errors,

Organizational change always encounter certain resistance may be simple. The change can be threatened by resistance but it is not amazement. Reasons for the resistance can be summarized as follows,

Poor understanding about nature of the strategic change and what are the reason for that strategic change

Believes of stakeholders: they think that their personal goals and interest would be threatened due to strategic change.

Contradictory assessment on costs and advantages of the strategic change for the Toyota Motor Corporation.

Lack of confidence about initializing the change and their intentions

These clarifications for the resistance can be explained by concentrating on strategic change at individual level and then small group in the organization. Resistance by employees of working groups or informal group is possible to pose more troubles for the Management of the organization.

Overcome the resistance to change

Because of the poor understanding and the poor communication, resistance may be occurred. Though, if there are any serious matters for the resistance, a complex approach would be required. The management of the organization should be able to adopt with flexible approach to manage the strategic change and identify the main contingent issues in every situation. The managers should be able to identify the different types of resistance.

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Ignoring : ” I don’t have enough information to make decision”

Delay for the judgment : ” I can wait and see how it going on for the decision”

Self-justifying Stances: “Ooh… Other solutions are better than me. this will not work

Scarcity: “I can’t allow this to proceed. It is very costly”

Worry: “I am sure. I can’t work on this new system”

Disaffection: ” this is separate from my duty and from my division”

Experienced refusal: ” We tried on this before and it was failed”

Loss of Authority: “It has to give up control”

Avoidance: ” I am not interest to computers”

Resistance may be meeting with face to face conflict. Normally it will indicate that the objectives of the organization had not been explained properly. It is better to listen the complaints, let the annoyance surface and finally makes calm behavior in all circumstances of conflict.

Six Methods to overcome the resistance

Develop the Education and Communication

Improve the involvement and participating

Providing supports and Facilitation

Make better negotiation and agreement

Improve cooperation and Manipulation

Explicit and implicit coercion

(Kotter and Schlesinger -1979)

When we try to implement last two methods will raise legal and ethical problems. And also cause to make the situation worse. These methods are not mutually exclusive but managers make the decision in effective way by combining them.

TASK 04

IDENTIFYING APPROPRIATE MODELS FOR THE STRATEGIC CHANGE AND MEASURING THE EXPECTATION OF STRATEGIC CHANGE

The implementation of strategic can be valued, to make sure the ongoing change. For the implementation of strategic change we can establish monitoring and review techniques. The strategic change would be able to implement within the Toyota’s stakeholders for the purpose of achieving “Global Vision 2020”.

When we implement the strategic plan to the organization we have to implement it step by step. We can suggest a change process as follow:

Recognize the problems in the Toyota Motor Corporation

Observe the reasons for those problems and analyze the solutions to overcome them

Select and plan alternative solution

Implement the planned solutions

Communicate the learning process and allow organization to deal with ongoing change

(Senior and Fleming 2006)

The managers can state the strategic change plan by allocating employees into separate teams and instructing them. Therefore each team automatically will used to implement the strategic plan easily. Making teams within the organization is very essential to evaluate strategic changes. The outcomes should be able to monitor and evaluate the performance of team workers for the successful implementation. The management can introduce incentive scheme for the best team for the purpose of motivation through success in strategic management by monitoring and evaluating the each team.

According to my point of view, I can suggest the Concept of “Force Field” (By Kurt Lewin) is the best model for managing the change in The Toyota Motor Corporation. The Force Field Analysis is really important to identify all the forces which favourable on change and on the other hand it identify forces which are against to the change. In addition to that it helps us to consider the importance of these factors and to make the decision whether the implementation of the plan for change is worth.

As an example, when The Toyota Motor Corporation target to issue an electric version of the RAV4 by 2012.

Target to issue an electric version of the RAV4 by 2012

Driving Forces Restrictive Forces

Customer wants new product Loss of staff overtime

Improve speed of production Cost

Raise volume output Staff afraid to new technology

Control rising maintenance Cost Environmental impact

(Forces Favoured on change) (Forces restricted on change)

Current Situation

We can use action plan to review the process of implementation. In addition realize the present position in the organization after the strategic change. By using action plan we can recognize the time frame and difference between expected level and actual level of the strategic change in the organization.

By recording, keeping, monitoring and evaluating the changes we can make sure the on-going change in organization. We can check whether expected performance have achieved by stakeholders through the strategic management by measuring actual performance.

CONCLUSION

This report deeply discussed the application of the Strategic Change Management in world’s fifth biggest company, Toyota Motor Corporation. According to the Vision of the Toyota, “Good corporate citizen,” they focus on constantly winning the trust and respect of the international community. The Toyota Motor Corporation always adopt with business environment for the purpose of long term growth. In terms of achievement of the Global Vision 2020 the Toyota has to change their system according to the plan that they have drafted.

Because of the external development the change is necessary. The Toyota should be come to terms with number of external factors including global market share, environmental issues, and changes in demographically and awareness of health. Eventually, these factors will cause to triggers to change.

The all activities of The Toyota Motor Corporation are directly associated with its key holders such as shareholders, customers, employees, competitors and etc. So, it is really important to concentrate about stakeholder’s responses on change. The organizational goals and The Global Vision 2020 of Toyota is affected by performance and work return and the responses by its stake holders. Therefore it is very essential to create a positive image of the strategic change for both Toyota and its stakeholders.

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