Toyota’s Corporate Strategy
Corporate strategy has to do with knowing the aim and scope of the organizations activities and the nature of the business it is in, taking the environment in which it operates, its position in the marketplace, and the competition it faces into consideration. Corporate planning and business plans are used to implement corporate strategy. Strategy is all about competing and surviving as a firm in the business environment. The products of an organization are developed by the business units, which are managed by the corporate level. The process helps in contributions from each level of strategic hierarchy to the corporate level.
Toyota management and business model is said to be one of the best in business strategy and strategy management. Toyota management culture steadily transformed its business to world leadership.
Toyota corporate strategy is based on cutting waste that is cutting down on the distance that things move between plants. Toyota strategic management is based on using the talent of workers to the fullest. The leadership model as Seise Kato speaks: ‘Never fail to reward merit, but never let a fault go unremarked’.
Toyota management in the US raised quality standards by systematic approaches. They have the capacity to learn and adapt to changes. The pioneering hero was W. Edwards Deming. He later passed this on to the management of Toyota Japan. Toyota Japan management uses collaborative, collegiate, people-based management that extends beyond the borders of the corporation and aims at long-term pay-offs.
Toyotas’ simple problem-solving rules involves identifying the task that needs to be done, working out systematically better ways of doing it and then employing rigorous methods for checking that the task is better designed and executed. Taiichi Ohno developed the Toyota Production System and his philosophy is based on the word ‘work’ which according to him refers to the production of perfect goods only. He believes that if a machine is not producing perfect goods then it is not ‘working’. Built-in sensors were made to stop machines whenever they began to malfunction: the machines were operated by human beings who could likewise stop the line when imperfections occurred.
Toyota business strategies include the production of hybrid cars like the Toyota Prius.
Toyota’s success was achieved through the implementation of ‘Jidoka’ and ‘Just in time production’. ‘Jidoka’ is about preventing defects from going from one machine to the next. This is the ability to detect unacceptable quality during the process of production rather than waiting until the end, when it may be not be obvious. ‘Just-in-time production’ is the principle of having parts ready just as they are needed.
Toyota company managers also use a tool called the A3. A3s are mechanisms for managers to mentor others in root-cause analysis and scientific thinking, while also aligning the interests of individuals and departments throughout the organization by encouraging productive dialogue and helping people learn from one another. A3 management is a system based on building structured opportunities for people to learn in the manner that comes most naturally to them, through experience, by learning from mistakes and through plan-based trial and error.
SUMMARY OF TOYOTA’S CORPORATE STRATEGY
MACRO ENVIRONMENT ANALYSIS FOR TOYOTA
The macro environment analysis for Toyota will be based on PESTEL, Key drivers for change and scenario planning.
There is no organization or industry that is immune from the various decisions made by the government. Consistent policies of the government, frequent change in duty tariff and smuggling are usually the reasons of unstable market conduction. Toyota is also affected by the current changing policies of the government.
For instance it was reported that the Government in Venezuela and Nigeria are hostile to the development of the hybrid cars as they know it will reduce the dependence on oil which is their major export. This prevents the Toyota hybrid market from expanding to that region.
Economic policies of the government at the federal level also influence the ability of the industries to survive and progress. Inflation is a major economic factor that affects automobile industry including Toyota. Increase in sale tax also increases prices of Toyota cars. Also, if Toyota decides to build up to 100,000 Camry’s or Highlanders each year at the plant, it will mean like 1,000 jobs for the youths. This will really boost the Local economy.
Again, in Washington for instance the governmental tax have increased,tax credits on gasoline will increase the desirability of hybrid cars.
Toyota regards the importance of culture and customs of every nation and community. Toyota contributes to the economic and sociological development through corporate activities in the communities. Toyota believes in respecting the language and spirit of the law of every nation and undertakes open and fair corporate activities to be a good corporate citizen of the world. This is the reason why Toyota vehicles are perceived to be a symbol of reliability, comfort, luxury and thus trusted. Toyota’s ability to bring to market world-class vehicles depends, in large part, on the craftsmanship and hard work of the tens of thousands of Americans who manufacture parts for our automobiles and trucks. That’s why Toyota believes it’s important to support the communities where its suppliers are located.
In 1999, the company established the Community Connection Program as a way to say thank you to its suppliers for their hard work, dedication and support. The program links Toyota with selected suppliers to benefit a local community organization. To date, through Community Connection, Toyota and its suppliers have donated over $1,000,000 to 63 nonprofit organizations in supplier cities across the United States.
Toyota also employs millions of people both directly and indirectly. Toyota has helped to develop mobility in different countries.
Technology is very important because it is the main source of increases in productivity. For instance in the process of making a car more durable,“Pitospaate Primer” is a total immersion in a catholic Electro-deposit primer process , which assures long term anti corrosion and an extra thick colour coat that is better than all others, ensuring that “New Car” look “New” for years to come. This has really attracted customers to Toyota.
Aside Toyota vehicles, the fuel and the roads, the business are also tied to manufacture of various components and the extraction of precious raw materials. This indirectly very often causes road congestion, fatalities and environmental troubles.
Environmental benefits of plug in Toyota hybrids become more significant which has boosted sales of Toyota Hybrids and given it public awareness.
Government initiatives to encourage low emission/high fuel economy and incentives will serve as attractors for Plug in Hybrid customers.
TOYOTA KEY DRIVERS FOR CHANGE
The key drivers for change are likely to be:
- Environmental protection laws of the region
- Taxation policy of the governments
- Foreign trade regulations
- Employment law
- Government stability
- Important political events
- Critical global markets
- Newly industrialized countries
SCENARIO PLANNING FOR TOYOTA
Two fundamental but uncertain drivers for change: Technological advance and public acceptance for Toyota hybrids e.g Toyota Prius
Technology fails, Public acceptance
Technology succeeds, Public acceptance
Technology fails, public rejection
Technology succeeds, Public rejection
TOYOTA’S CULTURE AND ITS IMPACT ON THE CURRENT SITUATION
From the research carried out, it is observed that Toyota’s corporate culture is about:
1) Managers are not bosses they are process improvers
This simply means their managers assist in every way to do work better. They do not ‘boss’.
2) The business is not about the product but about the process producing it
Toyota’s management believes in making better cars, not just making cars. They are process-focused which has really helped in their overall total quality management. Toyota levels out the workload, builds a culture of stopping to fix problems, to get quality right the first time. Standardized tasks and processes are the foundation for continuous improvement and employee empowerment.
3) Competition is not about competing with others,it is about improving oneself
Toyota’s competitiveness is internal and self critical. Toyota strongly believes in improving self and taking responsibility for whatever situation. Toyota believes in continuously solving its root problems to drive organizational learning. It enables its workers to see for themselves and thoroughly understand the situation thereby decisions are slowly made by consensus with all options considered and implemented rapidly.
4) Toyota organizes training and developments for workers
Toyota believes in building quality people as it believes that quality people produce quality products. The Toyota institute in Japan organizes managerial training classes for its managers. They are been taught workplace ethics and social responsibility, value creation through human development, leadership system, managing daily results and top management thinking. This in turns help in the development of the organization and managing of resources within the community.
Kaizen means striving for continuous improvement. This is part of Toyota way and culture that believes no process can ever be declared perfect, there is always room for improvement.
6) Toyota also believes in hiring the right person in the right amount. This is part of its corporate culture.
To be the global leader in the automobile industry.
Our mission is to produce low cost but high quality vehicles for the comfort and mobility of our esteemed customers worldwide.
OBJECTIVES FOR TOYOTA
Toyota Culture: The Heart and Soul of the Toyota Way By Jeffrey K. Liker, Michael Hoseus, Center for Quality People and Organizations