Strategic Concpets and applocation

Strategic Concepts and

Applications Strategic assistance for Toyota

4/24/2012

100199589

Sara Aslam Khan

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Table of Contents

Background……………………………………………………………………………….…..2

Preface....................................................................................................................................3

Toyota’s Strategic Position…………………………………………………………………..4

Porters Five Forces and External Environment Analysis……………………………………..4

Analyzing the capabilities and resources of Toyota…………………………………………6

Toyota’s Strategic Issues………………………………………………………………………7

Toyota’s Strategic Choices………………………………………………….……………..8

Recommendation………………………………………………………………………..9

Conclusion……………………………………………………………………………....10

Bibliography……………………………………………………………………….……11

Appendix……………………………………………………………………..………….12

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Background:

Car industry has been one of the fastest growing industries in the world wide for the last two

decades and it is still showing an uphill trend. As it is growing rapidly, the industry

environment keeps incessantly held in a change mode and it is considered now the highly

gung ho and spirited as well as the combined united. The industry globalization has been

speeding up dramatically.

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Preface

The contemporary global automotive vehicle industry only includes the developers such as

Ford, GM Toyota and many others etc. Out of all that run and function in a global

competitive bazaar. It put forward that the globalization of the manufacturing has immensely

already gathered speed since the 1990s because of the edifice of major international amenities

and services alongside the development of acquisition flanked by huge global auto

developers.

Due to the expansion of international business has allowed the enlargement in the wide-

reaching profitable and saleable allocation organization that also increased the international

rivalry between the automobiles developers. Importantly seen are Japanese automobile

manufacturers have laid the foundation of ground breaking and inventive construction and

production techniques alongside acclimatizing the use of technology to increase the

manufacturer rivalry.

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I. Toyota’s Strategic Position:

Strategic position deals with the influence on the approach or mode of the external

environment, competence and internal resources as well as the prospects of stakeholders.

Collectively, keeping in view the strategic practice, environment, competence along with the

probability and the rationale within the political and cultural structure of the organization

offers a basis for consideration of the strategic position of an organization. (Johnson and

Scholes, 2005)

However, there are three major characteristics of strategic position which have a direct

effect on the organization’s strategy:

1. Porters Five Forces and External Environment Analysis.

2. The organization’s strategic capabilities in provision of its competence and resources.

3. Ethical values and culture of the organization and influence of stakeholder.

The Porter’s five forces framework will enlighten the issues outside business affecting the

temperament of competition within and along with the issues of micro environment that

apparently influence the way in which Toyota battle.

1. PORTER’S FIVE FORCES FOR TOYOTA MOTORS

AND EXTERNAL ENVIRONMENAL ANALYSIS:

The degree of competition is very “high” because the Toyota’s direct rivals are Peugeot,

Fiat, Citroen and Mercedes as these competitors are conventionally and customarily set up

trademarks stressing on the excellence include aspects of responsiveness among the

consumers not only their host countries but also all over Europe. Furthermore, their

dimension, magnitude and productivity significantly reflects the proportion of overall

European currency which is one of the major cause of huge supporting political influence

being used for them and likewise, in Europe the brand Toyota is interpreted to major rivalry

because it function in highly congested market of Europe.

Threat of substitutes is average as it is important to stress that major difference between

ordinary and steady surpassing companies positioned within the aptitude and skills spinning

the foremost market intimidation and threat into prospects and opportunities along with the

capability of not permitting the threat to obtain from within the company instead from

externally. Similarly, these entire propositions reflect not only of the immense potency of

Toyota as well as the lower the threat of obstacle to entry for products of Toyota.

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Bargaining power of consumers is very high along with this different and sophisticated

social trends and culture connected to the market of Europe obstruct sellers in an ambiguous

not only the summary of consumers also with the sufficient marketing practices to manage

the edge of competition in the European market. The bargaining power of suppliers is low.

Barriers of entry are very high because the workforce and employment demanding nature of

the industry makes it extremely tough for the new organizations to enter.

Toyota needs to focus on recognizing the possible ways to improve its strategic position and

to acquire the superior edge of strategic advantage over its rivals.

Understanding the External Environment:

The recognition of external environment for organization deals with the:

1. Macro Influences

2. And Micro Influences

However , Toyota exist and function in mature market globally next to it colossal rivals

which on the other hand requires Toyota to distinguish itself from the competitor’s market to

get the better perceptive of strategic position more precisely.

Toyota completely neglected the Western European market due to the obstruction in trade

which led to negative impact of failure to understand the vibrant environment of Europe.

Existing rivals with the production company in Europe assumed this as a major opportunity

to take the best use out of it. In terms of country like North America, the Toyota has leaded

the way in use of strategies which proved to achieve the immense edge of competition of

their competitors. Apparently, the rivals are more likely to adopt the strategic aspects for

accomplishments of automotive industry. Apart from North America and Western Europe,

Japan on the contrary recognizes the market with a proper knowledge due to its leading good

will. Toyota seemingly proved to be time consuming acknowledging the budding market

where else it is keep on appealing the FDI which is Foreign Direct Investment.

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2. ANALYZING THE CAPABILITIES AND

RESOURCES OF TOYOTA

The capabilities of Toyota lies in the efficiency and the value of the powerful system such as

‘Just in time’ which deals with the involvement of secure connection with the trader advising

them to minimize the price of warehouse goods delivery. Where else the second

groundbreaking mode consists of manufacturing which assist Toyota to produce cars with

more effectiveness thus resulting in trustworthy and consistent productivity. When throwing

lights on the resources of Toyota it has a both amalgamation of tangible and intangible assets

represents the production factories in Japan through which Toyota sell overseas cars but

major need requires the set of contacts and associations with the next to markets. Technology

plays a vital role as a part of tangible resources where as the good will falls under the

intangible resources where quality plays major role. The competitive and strategic advantage

of Toyota is the “Kaizen, Kaban” resource systems which cannot be easily imitate by the

competitors acting as a fundamental competency for the organization.

Strategy

Industry Keyfactors

Organizational Capabilities

(Tnagible and Intengible)

Competitive Advantage

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II. Toyota’s Strategic Issues:

1. 1.Toyota achieve share in the automobile industry by concentrating and meeting on

the quality of the product as well this acted as a part of the major competitive

advantage. This competitive advantage of Toyota helped them to develop healthy

relation with their targeted customers on global basis. But it has been assuming

Toyota losing its convergence on this competitive advantage which is leading to low

quality products which in results lowering the relationship with the customers.

2. Toyota’s another type of issue deals with the lack of providing the information based

on the security measures to the people or its customers, further stating that if a

problem rises up in the Europe do not addressed to the consumers of America.

3. There is an interruption and postponement in the global growth which reflects that

penetration of market of Europe made it very tough for the company to race with the

competitors who possess benefit of coagulate a healthy existence accomplishing the

associations or deal with the producers of Europe market.

4. Production of vehicles on global basis will not help the organization of Toyota to only

go for European market because Toyota needs to subdivision the market by

classifying and categorizing the consumers to make choices.

Toyota in order to improve its above mentioned issues needs to focus on the evaluating the

complaints of the buyers and give immediate response onto the evaluation. When Toyota set

its objectives to occupy the distinctive place into the mind of the consumers globally, it

eventually lost its vision of the chief values that provided the organization with the good

image. However, Toyota must hire dynamic workforce, check and control the transfers of

major information to the consumers when requires, must positioned and segment its product

according to customer needs which will help to boost the growth and development of Toyota

and makes it leader worldwide.

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III. Toyota’s Strategic Choices:

1. Focus on the emerging Market and build emergent strategies.

2. Differentiate its core competence and strategic advantage from rivals.

3. Build strategic alliance with other automobile manufacturers.

If taken into an account, it is observed that the environment in which Toyota exist is highly

competitive, full of competitors and dynamic challenges. The company has to tighten up its

grip more firmly in order to gain more access to the desired objectives. If consider measure of

degree of turbulence it is came under consideration that it is high which suggest, the

environment is changing rapidly- the needs and demands are rising– change for technologies

are required to enhance the production capabilities alongside prediction is likely clear to

achieve these goals as most of the companies are striving to attain these targets. Toyota

instead of adopting short run strategy which is joint ventures with the other corporations must

undergo and assume acquisition which is merging with other reputed car manufacturer.

However, contending independently in the huge competitive environment among so many

rivals in the world, acquiring this option the Toyota will gain access to the huge market share

which is an endeavor for the company, Fast entrance to a new market and moreover, it will

contribute to construct strategy alliance where less than this business their resources, ability

and core competence will combine to accomplish mutual interest in designing, manufacturing

or allocating new cars. Toyota can also develop emergent strategy and focus on

differentiation as well to enhance the technology to develop more environment friendly cars-

this way cost can also be reduce, quality will increase and also Research and Development

investment can be controlled. The firms can also undergo horizontal complementary strategic

which offers to combine their resources and proficiency to create value in the same stage of

the assessment procession as it mainly focuses on long-run products and services.

The real vision of Toyota lies in transferring its main competitive advantage “production

system into the other region of the value chain” .Toyota’s production system consists of

teamwork, healthy social interaction and just in time system, self-discipline and unique

values and norms. So in this case Toyota must enter into the other region which is similar to

its culture, ethnicity and philosophy through merging and prove its ground breaking abilities

outside the boundaries of Japan. This will surely facilitate them to be recognized more

globally and stand next to other rivals.

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Recommendations for Toyota’s Motors:

1. The first recommendation for Toyota is to chase a differentiation and segregation

strategy in technology because apart from the major threats of achieving this type of

strategy, if Toyota has an capability to manage uniformity in its approach and practice

and is able to greatly transfer the core competence in a unique form of business, than

this type of mode will be very useful to obtain.

2. Analysis and study suggest that the consumer’s affection to the Toyota cars is small

and average as compared with its rivals. It strategy stresses into more science fiction

rather than appealing in natural way, more computerized effected advertisements. On

the contrary, its competitors have more appealing and ground breaking strategies than

Toyota understanding the customer’s emotions and needs towards the brand. Toyota

must focus on this strategy to make itself better understandable organization who

recognizes its customer needs and requirements.

3. Third is linked with the constructing a major sustainable manufacturing capability and

also intensification and growth of the distribution in fewer established regions of the

Europe markets.

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Conclusion:

For Toyota to strive in more competitive and aggressive environment it must focus on the

implementation to the changes and challenges and accept the better and proper strategy. The

investigation and study in this report further reflects better path way for Toyota to adopt and

to take efficient decision in terms of improving its issues and strategies to better stage.

Diversity is a gateway to build Toyota a top among. Victory of diversity will endow Toyota

with an opportunity to be the intense among the rest of the competitors. Moreover, it will also

help to generate prospects for other associates as well. Diversity will also bestow Toyota with

the capability to partake and contribute in the upcoming dynamic and challenging market. It

will give added values and a chance to create distinction. It will prove to be an innovative

road to attain objectives and to become most esteemed car company worldwide.

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Bibliography:

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Derfu, P. et al (2008) The red queen effect: competitive actions and firm performance. Academy of

Management Journal, 51 (1), P. 61-80

Takeuchi, H. (2008) The contradictions that drive Toyota’s success. Harvard Business Review 86 (6),

p. 96-104.

Miller, D. et al (2007) The use of knowledge for technological innovation within diversified firms.

Academy of Management Journal 2007 (50), p. 307-326

Michael A.Hitt, R. D. (2007). Management of Strategy concepts and case studies. In Cooperative

Strategic Management . Thomoson/South-Western.

National Council for Voluntary Organisations. (n.d.). Retrieved 3 3, 2012 from Third Sector

foresight: http://www.3s4.org.uk/looking-out/what-is-strategic-analysis

Neilison G. et al (2008) The secrets to successful strategy execution. Harvard Business Review, 86

(6), p. 60-70

Lynch, R. ((13 Nov 2008)). In strategic Management (5th ed.). Financial Times/ Prentice Hall.

Lynch, R. ((13 Nov 2008)). In strategic Management (5th ed.). Financial Times/ Prentice Hall.

Lynch, R. ((13 Nov,2008)). In Strategic Managment (5th ed.). Financial Times/ Prentice Hall.

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ed., p. 102). Financial Times/ Prentice Hall.

Williamson, P. (2005) Strategies for Asia’s new competitive game. Journal of Business Strategy, 26

(2), p. 37-43.

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Appendix:

SWOT Analysis:

Strengths:

1. Toyota has a strong market base in Japan

2. Consist of effective operational system

3. Excellent brand image and production quality

Weakness:

1. Remains unsuccessful in European market

Opportunities

1. Possess ability to create emergent strategies

Threats:

1. Faced dramatic increase in the currency

2. Exist in highly dynamic and challenging competing environment