Toyota Strategic Analysis

Toyota is a multinational automobile organization that has its headquarters in Japan. The success of the organization has been its ability to develop lean production and manufacturing philosophy that focuses on creating organizational and workforce capabilities. The success of Toyota is because of its core philosophy which is to focus on enhancing its competitive advantage. The organization has sought to focus on continuous innovation and creativity as strategic tools that help in accomplishing the key targets. Toyota has the expertise, capabilities, and capital to dominate the global automotive industry. The efficient distribution and production network of the organization has been responsible for achieving critical targets. Moreover, the organization has sought to focus on achieving dynamic capabilities that can be employed for attaining strategic competitive advantage. The development of a comprehensive strategy has been considered to be important for the success of global firms like Toyota. The firms must be able to apply the business strategies that can lead to long term success and innovation within short time period. The competitive position of Toyota is that it has been facing threats in the current environment. The company needs to develop effective and appropriate strategies that can be used to counter such problems. Moreover, the organization needs to focus on achieving its critical objectives by using innovation and creativity at multiple levels.

Comparative Analysis of Toyota’s Competitive Position

Porter’s Five Forces

Toyota operates in a highly competitive market that is characterized by the presence of organizations that are striving to dominate it through their strategic positioning and marketing strategies. The threat of new entrants in the industry is still low because of the huge capital that is needed to compete with leading companies like Toyota. Porter’s five forces analysis for Toyota is discussed as follows:

Threat of New Entrants

New entrants might be able to bring innovative products and ideas but the major companies are able to dominate the market through their capital and market control (Bennett, 2003: p. 44). Theoretical framework argues that companies that are dominant in any market are able to achieve success because of their brand image and reputation. The automobile industry is characterized by the success of companies that are able to focus on design and engineering quality. Large companies are able to attain economies of scale that helps to ensure their domination in an efficient and effective manner.

Bargaining Power of Suppliers

The power of suppliers in the automobile industry is weak because of the huge presence of suppliers. Toyota retains control over the behaviors of suppliers that are keen to do business with it because it represents a huge portion of profitability for the suppliers (Chris, 2005: p. 92).The procurement of raw materials is easy given the fact that outsourcing has now become a major trend because of the advent of globalization. Automobile companies like Toyota are now able to establish offshore manufacturing plants in countries that have low labor costs.

Bargaining Power of Buyers

The power of buyers in the automobile industry is large because individuals are continuing to focus on cars that meet their needs and requirements. Toyota has a strong and loyal customer base because its products are known for versatility, robustness, quality, power, endurance, and fuel efficiency. Toyota offers products for different customer segments based on their lifestyle and incomes. This helps to increase the power of buyers that have high levels of choice with respect to the purchase of automobiles (Chris, 2005: p. 92). In addition, they are able to focus on achieving critical success through the use of integrated and innovative strategies.

Threat of Substitute Products

The threat of substitutes in the automobile industry is relatively small because bicycles, motorcycles, trains, and buses have limited efficacy in meeting the needs of the customer segments. The convenience offered by automobiles cannot be replicated by other substitutes which mean that Toyota has been able to focus on achieving its critical goals within a short time period.

Competitive Rivalry

Competitive rivalry in the industry is very strong as Toyota has to face competitors from the United States like General Motors and Ford. It has to compete with Japanese manufacturers like Honda in different markets. The state of the automobile industry is very huge which means that customers are loyal to their brands (Chris, 2005: p. 92). Pricing and other factors need to be taken into account as competitors can change the dynamics of the market in an efficient manner.

Bowman’s Strategy Clock

Toyota’s competitive advantage has been because of the fact that it has been using a flexible production and management strategy. It uses capital equipment that is managed through the use of well-trained and well-qualified workers in order to achieve critical success. The presence of a talented workforce helps to achieve the goals of the organization because there is an emphasis on employee empowerment and engagement (Graham, 2005: p. 85).The organization strives to create a collaborative environment that focuses on attaining the critical goals within a short time period. Work teams are divided on the basis of operational, administrative, and strategic entrepreneurial actions that leads to long term success. Another competitive advantage for Toyota is that it has a 360 tier supplier network that is integrated with accurate scheduling and coordination. The firm is able to achieve success so that it can be used to create a flexible, lean, and agile supply chain management system. The goal of the strategic alliances is to ensure that the supply chain partners can be reliable and flexible in meeting the needs of the organization. Toyota’s competitive advantage is based on its equity ownership and technical exchange that helps to create reliable supply chain partners (McDonalds, 2002: p. 52).A symbiotic relationship between Toyota and its suppliers is based on knowledge sharing and developing strategic partnerships for long term growth and development.

Porter’s Generic Strategies

Empirical studies argue that corporate innovation is based on ensuring the economic growth of organizations. Innovation is a broad concept that goes beyond the notion of simply creating new products and services. On the contrary, it is concerned with the development of processes, systems, ideas, and competencies that can be used to resolve problems in the work environment while enhancing the strategic competitive advantage of the organization (Jobber, 2001: p. 56).

New production methods and functions have been identified as a core competitive advantage for Toyota which has been able to focus on achieving its critical goals through the use of long term approaches. Toyota’s manufacturing philosophy has been based on innovation which seeks to focus on flexible batch production. Just-in-time inventory system is utilized together with the goal of removing waste. The use of an integrated strategy has been considered to be an important step towards achieving efficiency and effectiveness (Jobber, 2001: p. 56).Moreover, the empowerment of front line workers ensures that assembly line problems can be analyzed in an efficient manner. Toyota’s efficiency has been based on creating centralized design and decision making that has helped to achieve the critical goals. The application of smart and innovative strategies has been Toyota’s competitive advantage.

Toyota’s Competitive Position

Core Competencies

Toyota’s core competency has been its ability to develop automobiles that have superior quality. The competitive prices of the company’s products mean that it has loyal customer base. The core competency has been because of its innovative production methods and processes. Toyota has created strategic management and philosophy as the core element of its growth strategy. Moreover, the company has sought to create a collaborative structure for success that is based on implementing cost leadership strategy (McDonald, 2002: p. 83).The Toyota Production System (TPS) has been considered to be instrumental in enhancing the innovative practices like Six Sigma and Just in Time in the production facilities of the organization.

Toyota’s Market Share

Toyota has a strong market position in different markets as evident in the fact that it has 45% share in Japan while 12% share in the North American market. Strong market position has resulted in the organization striving to expand into international markets. A strong product portfolio helps the organization to achieve competitive advantage. Research and development has been identified as being critical for success of organizations. R&D helps to enhance the product quality and functionality. Toyota’s strategic drive has been to offer safe and efficient products with an emphasis on environmental compatibility. Strong emphasis on R&D ensures that Toyota is able to become a technological leader in the automobile industry. Another critical success factor for Toyota has been its ability to have a massive distribution and production network that enables it to produce 7,400,781 vehicles in the year 2011 (Andrews et al, 2011: p. 1064). The geographically dispersed production base shields the company from global business risks while an extensive distribution network helps to enhance the global reach of the organization.

Product Diversification

Toyota’s strategic competitive advantage has been reduced because of high number of product recalls in recent years. For example, the company had to recall some vehicles that had problems with their hybrid systems in the year 2011. Some 180,000 vehicles were recalled in Japan after complains of oil leakage and abnormal noise (Kakuro, 2004: p. 3691).There have been some problems with the safety mechanisms of the company that has created negative reputation for the organization. Another critical weakness is that there have been declining sales in some geographical areas due to stiff competition. North America and Middle East were the regions that have seen a decline in demand for the products of the company. Another significant weakness for Toyota has been the fact that it has poor allocation of resources when compared with its competitors. Honda and Nissan have been able to have higher return on equity (ROE) as compared with the company that has resulted in weaknesses for the company.

Toyota group has faced a severe negative feedback on their quality and safety matter. This has led to a shrinking of loyal customer base while creating declining revenues and profits. It is essential for the Toyota management to amend their existing strategies and introduce a new method of production setup (Amasaka, 2004: p. 10).This can be done by enhancing leadership capabilities that focus on retaining customer loyalty and satisfaction. Toyota’s management needs to implement transformational changes into the situations. They have introduced the Toyota Production System (TPS) which can be used for identifying the quality of the product and mainly to eliminate the waste.

Re-engineering of the finished products has created robust and durable products. This leadership style has captured back the customers’ loyalty towards the product. Hiroshi Okuda has used the power to make necessary changes during the time of crisis in business. The workers were forced to accept certain changes in the company. Here Toyota group has efficiently utilized the situational leadership style (Amasaka, 2004: p.10). Okuda states that changes are threatening, but at certain situations there is no alternative but to accept change in order to maintain the competitive edge of the organization. Political power will be used in any organization when there are different opinions during tough situations. Toyoda has used such power when the U.S government has blamed the Toyota Company for the bad quality in production. There occurred a lot of accidents due to brake complaints. This has forced Toyoda to accept certain changes in the organization, and which was also neglected by some of the executives. But Toyota has pushed too hard, violates too many interests for achieving the success. Toyota will be able to focus on the recent growth of the global automotive industry that is recovering from the global economic downturn. The profitability of the global automotive industry has been $1,600 billion in the year 2013. This means that there is enough demand for the company which can fulfill the increased customer demand.

A strategic partnership with BMW will bring benefits for the company as it can achieve joint ventures. The collaboration on sports vehicles and power train electrification are projects that can increase the capabilities of Toyota. Strategic marketing and development of organizations is based on their ability to have clear and precise goals for success (Amasaka, 2004: p. 10).Companies must be able to conduct a complete analysis of the external and internal environments in order to succeed in an efficient manner. Moreover, the goal should be to create a collaborative environment through the use of cost leadership and product differentiation strategies that are successful elements of surviving in a highly competitive market.

Toyota’s Globalization Strategy

Global environmental factors play a critical role in the development of marketing strategies. These factors help the organization to develop a robust and reliable response to business problems. Toyota’s marketing department needs to take into account the various global environmental factors in order to make smart business decisions. Globalization has created opportunities and challenges for large organizations. An effective marketing campaign should seek to conduct extensive research and analysis of the external environment. Some global environmental factors like technology have revolutionized business processes. The Internet has become a powerful medium for conducting business transactions. Customers can purchase goods using online portals at any time (Aaker, 2008: p. 92).Toyota has sought to use this medium by devising efficient and effective internet ads. Websites can have content in native languages for specific countries. This approach helps to improve the revenues and sales of the organization. Similarly other technological advances like communications enable the rapid coordination between the head office and branches. RFID is a powerful and versatile technology that allows the organization to keep track of its inventory. Similarly there are other factors like corporate governance and responsibility. Multinational organizations have come under the limelight due to a series of high profile corporate scandals.

Corporate Social Responsibility

Toyota has sought to focus on corporate social responsibility as a means of creating positive image and reputation. Marketers need to demonstrate that the organization is offering safe and secure products and services (Rothaermel, 2012: p. 82).An advertising campaign must also focus on the corporate social responsibility of the organization. Organizations like Toyota need to take into account the economic fluctuations in the global market. Marketers must be able to devise cost effective strategies that can enable them to survive in times of economic recession. This means lowering operational and administrative costs. Marketing procedures should seek to evaluate cost effective products for new target segments. Marketers must be able to identity and recognize new business opportunities and threats. The global nature of business has created diverse source of suppliers and distributors for organizations.

Competitors seek to purchase goods that are produced at low costs. Marketers must evaluate the cost effective way of obtaining raw materials and finished products. This can be achieved only through a logical and practical manner. It requires the pursuit of dynamic and prudent business strategies (Rothaermel, 2012: p. 81).The organization must be able to achieve excellence and quality. Toyota uses strategies to become acquainted with the political regulations in the global market. Government regulation for instance has become a standard practice following the sharp economic recession. This means that marketers will need to revise and restructure their business strategies in coordination with global fluctuations.

Strong and Robust Marketing Strategy

Toyota’s management knows that targeting international consumers requires the presence of customized and specified marketing strategies. Marketers need to conduct an extensive analysis of local requirements and preferences. An effective strategy for a specific consumer segment might not work for another segment. Diversification, innovation, and creativity are the key to success when operating in a global environment. Toyota has sought to have flexible, reliable, and agile business structures. Marketing activities must develop unique conceptual frameworks that can be utilized for efficiency and effectiveness. Global environmental factors have become crucial for marketing processes and strategies. This is due to the global nature of corporate business in the twenty first century. Factors like technology, corporate governance, local preferences and industry trends need to be taken into account by marketing departments. Robust and logical strategies help to ensure optimum results.

The organization must conduct an extensive appraisal of new business markets (Rothaermel, 2012: p. 80).Appropriate strategies should be devised in order to achieve excellence and quality. Cost effective solutions need to be devised by marketers in order to maximize investments. These various factors need to be analyzed and assessed in a smart manner. The organization should be able to conduct an extensive audit and appraisal of the global market. Appropriate strategies should be in place in order to achieve superior results. Contingency plans should be in place in order to response to problems in marketing strategies and plans. A comprehensive approach towards marketing in the global environment will produce positive outcomes for the business organization (Rothaermel, 2012: p. 80).

Leadership and Management Styles

Toyota’s work culture emphasizes on efficiency but the management has awareness that this is insufficient to meet the needs of global workforce. The company perceived employees as knowledge workers that can apply their wisdom for the benefit of the work environment. There is heavy investment with respect to people and organizational capabilities. The work environment focuses on taking ideas from individuals so that success can be attained within a short time period. The senior executives of the company remain Japanese men that have played a crucial role in the development and evolution of the company. The concept of workplace diversity is still foreign in the environment as expatriate managers are also hired from Japan. The concept of Japanese management philosophy is that managers have the expertise and work ethic to drive success in an efficient manner (Hines, 2011: p. 34). However, this can be problematic as globalization encourages workplace diversity.

The concept of diversity is that individuals with different knowledge and expertise will be able to enhance the overall competitive advantage of the organization (Hines, 2011: p. 34). The hierarchy remains strong in the company culture as managers and top executives rise above the ranks in a slow manner. This means that there is an element of considering managers to be individuals that must be obeyed and respected in accordance with Eastern cultural notions about business.

Organizational Structure

Toyota’s organizational structure does have hierarchies but it does have concept of employee empowerment and engagement. The workforce is given freedom to successfully resolve complex business situations. Moreover, the organization strives to create a collaborative environment in which the workforce can perform at optimum levels. The goal of the management is to create a collaborative environment that can nurture and grow the competencies of the workforce. Safe and healthy environment has been identified as being vital for the success of Toyota as it leads to long term efficiency and effectiveness (Humphrey, 2011: p. 94).The workforce is encouraged to work as teams so that they can support each other and divide the work activities. The goal is to enhance the capabilities of individuals and organizations while striving to gain respect among the different members.

The duties must be performed in an efficient manner so that long term efficiency can be attained. Team work is based on creating cohesive and disciplined workforce. The goal of the organization has been to focus on achieving the critical targets through the use of innovation and creativity. The company places an emphasis on customer opinions as being vital because the information obtained can be employed to create superior and safe products (Schmitt, 2011: p. 74).

Global Business Strategies

Toyota uses different marketing strategies when it strives to expand into different markets. Diversified business strategies have been identified as playing a critical role in the success of business organizations. This is because of the fact that organizations strive to create integrated and coordinated approaches for success (Johnson, 2008: p. 62).The organization strives to create integrated and innovative approaches that can be employed for long term success. For instance, Toyota’s expansion in North America was to adopt a sequential strategy when it sought to introduce environment friendly automobiles in the market. Successful global marketing strategies occur when companies are able to conduct a comprehensive analysis of the external and internal environments. The goal of organizations must be to create an integrated strategy that will be able to achieve strategic focus. This helps the organization to successfully develop an integrated strategy in which the organization is able to focus on long term goals. The organization must be able to complete a comprehensive analysis of the internal and external environment.

Each market in the global industry works in different ways (Johnson, 2008: p. 61). The company must have knowledge regarding the dynamics of the market by studying the political, social, economic, and legislative variables. Toyota’s global business strategy has been based on steady expansion. The company for instance has training centers that helps in the training of the local workforce. The core concepts of lean production are introduced so that the workforce can implement quality and reduce wastage. Such a strategy helps in the development of the organization as it leads to long term efficiency and effectiveness. Toyota ensures that it is able to apply its global strategy at all its production facilities. The standardization approach is beneficial because Toyota is able to implement consistency and reliability in the multiple business units. This approach is also beneficial since it facilitates the process of enhancing the core competencies of the organization (Johnson, 2008: p. 66).

However, globalization can have disadvantages for Toyota because each market operates in a different way. This can create problems for the organization in terms of adapting to the risk and disruptions that are present in the local markets. Localization is also beneficial because the workforce in each country has different attitudes and notions. The workforce must be able to create an integrated strategy that will help it to achieve the critical goals within a short time period.

Critical Evaluations and Analysis: Toyota’s Improvement Strategy

Hiroshi Okuda, CEO of Toyota, has taken drastic measures in recent years to ensure the profitability of the organization. He has focused on transformational changes which can assist in winning back the loyalty of customers. There has been a focus on action centered leadership as a means of ensuring high levels of efficiency and effectiveness. Furthermore, annual growth plans have been created and forwarded to supervisors. An integrated approach towards meeting objectives and devising strategies has been implemented within the organization. Managing resistance to change can occur through the adoption of innovative and creative approaches. The leaders should have a complete knowledge about the apprehensions and concerns about the employees (Johnson et al, 2006: p. 71).They need to address employees’ needs by opening communication channels. Employee suggestions or opinions should be welcomed because it can be a fantastic way to address concerns in a smart manner.

Realistic expectations should come from the leadership. This can be addressed by analyzing employee reactions and interpretations with respect to the change process. Obtaining feedback from the workforce is critical for success in the environment. Identifying areas of change is essential for critical success in the environment. Empirical studies demonstrate that the need for change should be explained to the workforce. This helps the workforce in understanding the corporate objectives behind the change process (Prahalad & Hamel, 2005: p. 93).Information should be disclosed rather than hiding it because workers will feel a sense of responsibility as they will be able to align their personal goals with the organizational targets. Consulting and negotiating with the employees can also lead to positive outcomes for the organization. It helps to develop a sense of security and trust which can lead to effectiveness in the short term and long term. Toyota’s outdated management philosophy and corporate culture need radical changes. This can be achieved by taking employees into confidence. A gradual process for change can lead to superior outcomes. It is through the use of integrated approaches that the organization can attain success in a competitive environment.

Healthy organizational cultures are characterized by the presence of accountability and transparency. The management seeks to ensure that personal responsibility is embedded inside the minds of the workforce. This helps to create positive relationships and minimizes the chances of denials and conflicts. Furthermore, the organizational culture should promote change by ensuring that risk-taking is rewarded within the limits created by the management (Prahalad & Hamel, 2005: p. 83). Employees work at optimum levels if they are delegated work duties and have the freedom to implement new ideas within the limits created by the firm. Empirical studies have found evidence that an organizational culture should facilitate the process of change through the constant search for excellence. Superior quality of work by the employees can pay off dividends at the organizational level while mediocrity tends to inhibit the change process. Healthy organizational cultures should also focus on learning from mistakes by transforming negative outcomes into positive expectations. The change process is often retarded when employees engage in turf wars and promote negative thinking.

Creating a congenial environment is possible if the organizational culture is able to enhance the strength by creating cohesive and talented employees into work teams. This helps in distributing work activities and creating mutual respect among the workforce (Prahalad & Hamel, 2005: p. 88).Toyota needs to restructure its organizational culture so that it can be healthy and vibrant. Fostering the workforce through constant support and encouragement helps to create a productive workforce (Prahalad & Hamel, 2005: p. 93). Toyota’s managers should encourage employees to act on what they know to try to make the company better, even if their knowledge is imperfect or incomplete. Making mistakes and encountering obstacles should become acceptable factors in Toyota’s culture. For example, starting in 2002, Toyota’s operation in Thailand produced the International Multipurpose Vehicle (IMV), which used a single platform for a sports utility vehicle, minivan or truck. The plan to sell the IMV in 140 markets hit a snag: Meeting each nation’s governmental regulations and driving challenges (from sandstorms to floods) bogged down the IMV team and made delay seem inevitable. Rather than avoiding accountability or blaming someone else, Toyota’s executive vice president, Akio Toyoda, took responsibility. He allowed the IMV team to continue working without pressure. Toyoda said that even if the effort failed, it offered an opportunity for a great deal of learning. Toyota’s management allows failure because it wants people to experiment boldly. If leaders punish failure, people won’t take the risks that could move them to new levels of performance. Toyota’s leaders encourage employees to experiment and to learn from their mistakes. When staff members want to communicate “the essential information needed to solve a problem,” they use the “A3 reporting process,” named after the 11-by-17-inch sheet of paper on which they must clearly condense their information. Managers picked the A3 size because it was the biggest sheet that fit the fax machines available at the time.

The process of change is facilitated through many variables like organizational power, politics, and leadership. The leadership in essence should sponsor elements of the change management process through active participation and communication with employees. This should be supplemented by a desire to transform managerial behaviors by creating new business models. The appropriate organizational politics also impacts the process of change. This is because the goal of the leadership should be to ensure that the change process can be managed in a sound and viable manner (Prahalad & Hamel, 2005: p. 93). Proper evaluation systems can be used in order to achieve high levels of efficiency and effectiveness. Taking proper feedback can be a smart strategy to achieve success in order to produce superior outcomes. For being a global competitor, change is very much essential to any organization. Toyota needs to realize the fact that they will not survive in the competitive market with old techniques and strategies. Thus they need to freeze the old strategies by learning from the past experiences and by foreseeing the future through appropriate changes (Prahalad & Hamel, 2005: p. 93).

Conclusion

Diversification, innovation, and creativity are the key to success when operating in a global environment. Toyota has sought to have flexible, reliable, and agile business structures. Marketing activities must develop unique conceptual frameworks that can be utilized for efficiency and effectiveness. Global environmental factors have become crucial for marketing processes and strategies. This is due to the global nature of corporate business in the twenty first century. Factors like technology, corporate governance, local preferences and industry trends need to be taken into account by marketing departments. Robust and logical strategies help to ensure optimum results. The organization must conduct an extensive appraisal of new business markets. Toyota’s core competency has been its ability to develop automobiles that have superior quality. The competitive prices of the company’s products mean that it has loyal customer base. The core competency has been because of its innovative production methods and processes. Toyota has created strategic management and philosophy as the core element of its growth strategy. Moreover, the company has sought to create a collaborative structure for success that is based on implementing cost leadership strategy. The Toyota Production System (TPS) has been considered to be instrumental in enhancing the innovative practices like Six Sigma and Just in Time in the production facilities of the organization. Toyota has a strong market position in different markets as evident in the fact that it has 45% share in Japan while 12% share in the North American market. Strong market position has resulted in the organization striving to expand into international markets.

References

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Chris Phillips, I. D. a. R. L. (2005). International Marketing Strategic Analysis, Development and Implementation. London and New York: Routledge.

Graham, P. R. C. J. L. (2005). International Marketing (twelfth ed.). New York

Jobber, David. (2001), Principles & Practice of Marketing, 3rd ed. London: McGraw-Hill.

McDonald, Malcolm. (2002), Strategic Analysis Marketing Plans: How to Prepare Them. How to Use Them, 5th ed. Oxford: Butterworth-Heinemann.

Kakuro, A. (2004). Development of ‘science TQM’, a new principle of quality management: effectiveness of strategic stratified task team at Toyota. International Journal of Production Research, 42(17), 3691-3706.

Andrews, A. P., Simon, J., Tian, F., & Zhao, J. (2011). The Toyota crisis: an economic, operational and strategic analysis of the massive recall. Management Research Review, 34(10), 1064-1077.

Amasaka, K. (2004). Applying New JIT— A management technology strategy model at Toyota-Strategic QCD studies with affiliated and non-affiliated suppliers. Proceedings of the Production and Operations Management Society, 1-11.

Aaker, D. A. (2008). Strategic market management – Strategic Analysis. John Wiley & Sons.

Rothaermel, F. (2012). Strategic Analysis Management. McGraw-Hill.

Hines P (2011) Creating World Class Suppliers: Unlocking Mutual Competitive Advantage, London: Pitman Publishing.

Hoffman K and Kaplinsky R (2010) Driving Force: The Global Restructuring of Technology, Labor and Investment in the Automobile and Components Industries, Boulder, Colorado: Westview Press.

Humphrey J et al (2011) Globalisation, Foreign Direct Investment and the Restructuring of Supplier Networks: Strategic Analysis The Motor Industry in Brazil and India, in Kagami M, Humphrey J and Piore M (eds) Learning, Liberalisation and Economic Adjustment, IDE: Japan.

Schmitt, B (2011). International Automobile Industry: Strategic Report. Research Markets

Johnson, G. (2008) Exploring Corporate Strategy. Pearson Education India

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Strategic Management at Toyota

Strategic management is a technique used by managers to give a firm a long-term direction and involves a systematic analysis of decisions, actions that create a competitive advantage. It involves the analysis of strategic goals, vision, and mission and the internal and external environmental factors in a firm. SWOT is an acronym standing for strengths, weaknesses, opportunities and threats. SWOT analysis involves the assessment of a firm’s internal strengths, weaknesses and the external opportunities and threats (Henry, 2008). This analysis helps to identify the strengths and capabilities to minimize weaknesses, along with identifying opportunities to overcome threats. In reference to Toyota Company, leading automobile firm, a SWOT analysis on the Companies Strengths, weaknesses, threats and opportunities are as follows.

The Toyota Corporation has a strong production process that is effective and efficient in saving costs, this creates a competitive advantage. Cost savings helps to set affordable prices of their products to end users, over the competitors. The firm utilizes resources and eliminates unwanted costs in the production process. This strategy creates a competitive edge for Toyota, by reducing costs and increasing the production capabilities and efficiency.

Toyota has strong horizontal integration merge verses the competitors who have vertical integration relationships. Strong relationship with supplier creates a competitive advantage, and it informs of updates or any developing changes (Henry, 2008) Horizontal merge proves to be cost effective, reduce risks and increase benefits. Merging helps to pool together resources of the combining companies, creating a favorable business environment. Synergy is one of the benefits of combining companies, and sharing of resources e.g. distribution channels. Toyota opts for best suppliers in Japan.

Toyota has a strong culture advantage, employees’ devotion in their jobs, performance and desire to improvement. It treats it employees with legitimate sense of respect and loyalty. The Japanese value work differently from competitors for instance the Americans this is reflected in their quality products they offer to the market. Toyota in invests more its employees empowers them to be creative and innovative (Hino, 2012). A strong sense of respect of hierarchal authority enables fast decision-making and implementing Strategic plan.

A weakness is something or a condition that hinders a firm from achieving it objectives. It is a competitive deficiency (Henry, 2008) Toyota offers financial services such as insurance, credit cards. These services report low profits to the firm than other segments. Such financial services can render a competitive edge as well as a deficiency in for firms the financial strength.

Toyota use the just in time system which gives Toyota a competitive advantage, but too much dependency of this system can lead to malfunction if the supplier provision does not meet the requirements of the firm. Failure to meet these requirements affects the products quality in addition, to the manufacturing system.

Toyota capitalizes on the strengths to meet its threat and take advantage of the external opportunities. Toyota has a strong cultural advantage that enhances the organization structure, focuses on teamwork rather than individual efforts. It inspires creativity and innovativeness to employees to improve the quality of its products. Top managers make decisions, the employees respect their high figures, and this enables quick decision-making. It internal leadership and management helps Toyota to dominate the automobile industry. Toyota depends too much on its suppliers, this leads to a strong reliable relationship with it suppliers (Hino, (2012). Although this could be a weakness but it gives Toyota a competitive advantage over the competitors such as General Motors

Toyota is a dominating automobile firm, its produces affordable cars and other automobile related products. A SWOT analysis identifies Toyotas strengths, weaknesses, threats and opportunities. Internal analysis involves the assessment of the firm’s internal environment factors such as the organization structure, leadership and management among others. Toyota has a stable structure and principled leadership design (Hino, 2012). The quality of the products and employees loyalty dictates the strengths of the firm. Toyota is loyal to employees and produces quality products.

However, Toyota faces threats such as competition from existing and emerging firm in the automobile industry. It takes advantage of the internal strengths to take advantage of opportunities and minimize threats. Toyota Company has a strong relationship with its suppliers. This helps to fight the upcoming firms and the existing firms in the industry. A complex distribution channel discourages competitor’s efforts. Toyota uses it strengths to take advantage of opportunities, it has high producing capacity at minimum costs. They produce quality and affordable cars in the market (Hino, 2012). They differentiate their products to meet the consumers emerging desires. Toyota has incentives and discount programs that help improve the profitability of its financial services segment.

Conclusion

Strategic management at Toyota needs inspires its employees to continuously think of strategic management changes that enhance improvement in quality of products in the future. It requires strong strategic management plans difficult to duplicate, corrective actions to maintainable a competitive position of a leading automobile in the world.

References

Henry, A. (2008). Understanding strategic management. Oxford: Oxford University Press.

Hino, S. (2012). Inside the mind of Toyota: Strategic Management principles for enduring growth. New York, N.Y: Productivity Press.

Pearce, J. A., & Robinson, R. B. (2004). Strategic management: Formulation, implementation, and control. Boston, Mass: McGraw-Hill.

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