Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people. Through our commitment to quality, constant innovation and respect for the planet, we aim to exceed expectations and be rewarded with a smile. We will meet challenging goals by engaging the talent and passion of people, who believe there is always a better way (Ledwidge, 2012, p. 150).
The mission and vision of a company provide an avenue for communicating a company’s purpose and values to the stakeholders (Brown, 1998). This message is aimed at the company’s stakeholders. They may be employees, clients, investors, and others who may include the government. Every company will tend to display these statements at every available opportunity so that they are clearly understood, spread, and accepted. When employees comprehend an organization’s purpose, say through its mission and vision, then they are likely to comprehend, formulate and implement on a clear strategy. A company’s mission and vision form the basis of the strategy to be taken.
A company’s strategy ultimately defines its success or failure. The mission statement is normally bold while the vision is a bit narrower so that it can guide the company towards the development of clear strategies. The vision statement can be said to be the link between the mission statement and an effective strategy. At Toyota, the vision, “moving forward” requires the management at Toyota to seek more innovative and Eco friendly ways of impressing their customers. This has clearly worked for the company in the seventy five years it has been in existence as it continues to grow and serve its clients to their satisfaction (Halliday, 2005).
Porter’s five forces can be used in analyzing the competition Toyota faces. Firstly, on the threat of new entrants, the threat can be said to be low. The manufacturing industry is very costly, and the risks are enormous (Henry, 2008). The capital that one may initially need is very high. Toyota operates in an environment where peers are competitive.
On the other hand, Toyota has an advantage. The company has a strong brand name that cannot easily be shaken. The company has a very strong market presence across the globe which essentially gives it an upper hand over possible new entrants. On the threat of substitutes, the company faces an average threat here. With the economic downturn experienced in the world major markets, car users have turned to the used car market, which essentially poses a threat to the ability of Toyota to maintain its’ market. However, the company can cut costs with ease, unlike its competitors (Halliday, 2005).
The company has and will continue to narrow the gap between the price of the used cars and that of their cars. Thus, the threat of substitution is of lesser danger to the company. Thirdly, the rivalry among competitors poses a high threat to the company. Most automotive industries usually characterize an oligopoly. Competition for a sizeable share of the market is ever present, and this happens because customer’s expectations are always high and customers are ever expecting a reduction in prices. Although Toyota enjoys some major strength, it is not devoid of trouble. It is currently under pressure following the recent natural disasters in Japan where most of its plants are located. This coupled with the discounts being offered by other competitors in the US means the company may have to devise strategies that boost efforts to reduce costs.
However, Toyota is still a market leader in low cost manufacturing, even causing its competitors to change how the conduct business (Halliday, 2005). Fourthly, the buying power is moderate. With the increasing cost of fuel prices, consumers are increasing preferring fuel-efficient cars (Henry, 2008).
In an industry where the buyer has a wide field of choice in the market, the buyer will have a strong bargaining power and low switching costs. Nevertheless, the cost cutting strategies executed by Toyota minimizes the buyer power and its products are more likely to sell than those of its competitors. Fifthly, the supplied power is low. Toyota finds itself in a market that has more producers than the suppliers.
The suppliers provide materials for several manufacturers. However, manufacturing companies stipulate very high standards and quality in the signing of contacts. Failure of the supplier to meet the set threshold will make that manufacturer change supplier. Toyota Inc. has an advantage in the good relations it enjoys its suppliers. It has an efficient style of monitoring supply thus its suppliers have a low bargaining power.
Toyota’s internal factors, or rather strengths and weaknesses are several as will be discussed in this paper. Toyota enjoys some major strengths. One of them is the fact that the brand is established. Toyota is acknowledged everywhere across the globe as the leader in the manufacturer of affordable automobiles. Secondly, Toyota has a reputation for innovation. The company continues to develop technologically. The company monitors trends in the industry closely, as well as consumer behavior. The company pioneered in the mass production of gasoline-electric hybrid automobile, which sold more than two million in the year 2010 alone. Thirdly, the company continues to benefit through efficient manufacturing that has saved on caused and increased profit margins.
Fourthly, Toyota has maintained good relations with its suppliers. Fifthly, the company has an established organizational culture and prides itself of a distinctive loyalty from employees. Toyota management empowers all employees and provides an opportunity for every worker’s unremitting improvement. However, like every other company, Toyota has several weaknesses. Firstly, given its large size and the huge production in Japan, the company is the most affected by the natural tragedy in Japan. Secondly, the decrease in Toyota’s market share is a major weakness. In 2011, GM and Volkswagen outsold Toyota in global sales, each with more than two million units. The third weakness is the high number of recalls, with 8 million trucks being recalled in 2010 alone. However, Toyota has immense opportunities at its disposal. The first opportunity is the emerging and untapped market in certain geographical locations such as China.
This market gap offers an opportunity to increase sales in these markets. This enhances low-cost production. The other opportunity is the change in consumer preferences. Consumers now want fuel efficient and low cost vehicles. This niche is an opportunity for Toyota to establish itself as a market leader in this area. The company also faces threats. First of all, the continued aggressiveness in the strength of the Japanese Yen is a negative development. Such a development will increase the cost of production at the vehicle manufacturer. This will then lead to thinner profit margins. Another factor is the natural tragedy. A recurrence of a tragedy will seriously hurt Toyota’s sales.
The third factor is the escalation of fuel prices. The escalation in the price of fuel means most consumers in Toyota will turn to affordable preferences. This will possibly deny the company a good chunk of the market. One recommendation for Toyota is to be aggressive in taking advantage of its early leadership in the sale of hybrid systems and electric-vehicle technology. It is expected that all the major car manufacturers will be trying to enter this market. However, Toyota has the advantage of being a first among equals in this market.
In the near future one can expect a hybrid version of almost every car that will be in the market. Such a strategy has the effect of mitigating the threat posed by changing consumer preferences. It also enables the company to build on its strength as a market leader. Another recommendation for Toyota is to focus on the manufacture of safe cars given the bad publicity it has often received. This aspect shields the company from the threat of recalls and bad publicity. The company may also consider buying smaller companies in areas it has not ventured as this gives it a chance to reach unexploited market, as well as reinforce its brand name as the largest company.
The result of this is that the company takes advantage of the emerging markets and shields it from the weakness of low sales. The company should also separate the hybrid model, and market it as a different model. In this way, it can appeal to a new client base that will associate the brand as environmentally friendly. With the economic situation going south, a strategic move for the company may be to launch a new brand. Such a model would be cheap, very Eco-friendly and efficient in terms of safety and speed.
This strategy would shield the company posed by the used cars, it would also shield from the threat that the economic crisis has posed to the company. The company should consider a pricing strategy that will give it a lead over its competitors. Although the production of one Toyota car is quite high, the company continues to enjoy massive sales. This will lead to limited large scale production. As such, the company can cut prices and make profits where its customers are making losses. The other strategy is product differentiation. Toyota should differentiate its products buy building environmentally friendly, low cost, and efficient cars. This is the major attribute that can best differentiate Toyota products. The other strategy is the distinctive competency. This is when a company can do that which its customers are unable to produce. Toyota can produce low cost hybrid cars more than any other vehicle manufacturing cars.
The future with the hybrid cars looks promising. Therefore, adopting the distinctive competency as a strategy will help Toyota gain competitive advantage in the auto-mobile manufacturing industry. Communication of information plays a key role within the corporate world. To come up with an effective strategy, several issues emerge. The first question concerns whom your stakeholders are, why you need to communicate with them, what you wish to communicate, when you should communicate, what mechanisms best enhances your communication, and what challenges you face to communicate to your stakeholders effectively.
On the first question, a stakeholder may be said to be an individual or group that can affect or be affected by a company’s engagements. For Toyota, among the stakeholders are the employees, the media, customers, and suppliers. After identifying the stakeholders, you then segment the stakeholders so that you take care of each stakeholder considerations separately. For example, you could segment them depending on the urgency. The most important and urgent stakeholders to know these strategies is the management and employees, the suppliers come in second followed by the advertisers, press, and customers in that order. The second question is about why we need to communicate. For each stakeholder, there is an answer for them.
Given that Toyota is announcing plans to adopt new market strategies, the company will need to inform suppliers of the new product. In this case, the manufacture of a new brand that is hybrid and relatively cheap. Thus, the company will need different supplies from the ones that they make. Even before announcing such a plan, the first people to be informed should be the supplies so that they can confirm the cost of supplying the needed raw materials, and the volume in which they can produce the raw materials. For employees, employees should always be informed of the engagements of the company. The company will need these employees to manufacture the new product.
Therefore, employees should be aware of what is expected of them, the time and purpose of launching the new product. The purpose of communicating to employees is to prepare them of the new strategies, its use to the company, and what will be expected from them. Failure to engage employees often leads to low morale. This may even lead to misinformation leading to strikes and go-slows. For the advertisers, you need to prepare them early enough so that they can establish clear advertising strategies in time. The press is always the link between the company and the consumers. As such, the company should allow the press to know about its plan to launch the new products. This complements the advertising and informs the consumer to expect the product. The consumer is also informed on what the features of the product will be.
Consumers, needless to mention will need to be informed of the company’s new product and what its advantages are going to be. The third question is about what we wish to inform our stakeholders. In this case, Toyota is launching a new strategy by launching a new car brand. The answer to the question of when to communicate with the stakeholders is immediate. Thus, the company should be proactive in communicating its ideas. On the most appropriate mechanism to communicate, the answer should depend on whom you are reaching. After segmenting the stakeholders, then you can employ the different mechanisms. The mechanisms include advertising, face to face communication, memos, and newsletter among others (Brown, 1998).
As a company with Japanese values, Toyota’s corporate governance is concerned with a broad group of stakeholders. They include employees, shareholders, suppliers and customers. However, unlike most other companies, Toyota is known to be very responsible and does not limit its focus to the interest of shareholders. At Toyota, the rights of the shareholders are theoretically greater than in most other companies (Demise, 2006). The shareholders are given powers to nominate and elect directors. The remuneration given to the management is decided at the general meeting of the company’s shareholders. Nevertheless, the shareholder does not have much influence on the decisions of the board of directors. Another important corporate governance mechanism is the work culture.
Again, the company has Japanese roots, and the possibility of dismissal is usually high. Given that a dismissed employee or manager will have a hard task getting a job, employees are much more hard working at Toyota. This has led to a good organizational culture at Toyota and increased production hence leading to the expansion of the company. Thus, it is prudent for the company to continue with the work culture that is mainly borrowed from its Japanese roots. However, it is recommendable that the company changes its corporate governance structure by balancing the Japanese values with modern corporate governance practices suit the global company it has become (Brown, 1998).
From its inception, the Toyota Company has sought to enrich the society it operates in by doing its corporate social responsibility. Toyota has a cardinal rule of ingenuousness and promotes the practice of fair play in the running of the company. An example would be an initiative by the company to make cars that are clean and safe for the customer. Further, the company has high values. One of its values, as the company puts it, is an endeavor to become a global leader in terms of renewal. The company also aspires to be a manufacture of vehicles that enhance the safety of the users and that of the rest of the world. In an effort to earn the respect from humanity, Toyota established its own regulations in 1992. They were intended to make the company more cognizant of the values and customs of all citizens in the world. This was to be done by ensuring corporate responsibilities were met in all the areas that the company would operate.
Toyota went further and created an environmental department that was well empowered with the company president been charged with the role of supervising the new department. The company has seen an improvement in its environmental activities. The company has also launched a campaign to train its employees on environmental awareness (James, 2011). Furthermore, the companies also award employees who have done well towards the conservation of the environment. Toyota has also sought the cooperation and partnership with different organizations in some Asian countries such as Thailand. In this case, the company has helped in the provision of equipment intended to detect landmines. In Britain, the company partners with the British Red Cross in raising awareness on road accidents (Halliday, 2005).
However, the company has not escaped criticism after the Revered Jesse Jackson threatened to lead a boycott in 2001 over what was seen as aspects of racism in a post card the company had issued. The management will later apologize for the incident. It is quite clear that the company has set high standards in terms of ethics and corporate responsibility. This bold effort has led to the acceptance of the company in all corners of the globe and earned the respect as a good employer and a responsible corporate.
References
Brown, M. (1998). Improving your organization’s vision. Journal for Quality & Participation, 1 (2), 18.
Demise, N. (2006). Corporate governance in Japan: From the viewpoints of management, accounting, and the market. Tokyo: Springer.
Halliday, J. (2005). Relentless Toyota thrives on crisis. Advertising Age, 76 (8), 33.
Henry, A. (2008). Understanding strategic management. Oxford: Oxford University Press.
James, T. T. (2011). Reaping the reward of green confection. Engineering & Technology (17509637), 6 (9), 69-71.
Ledwidge, J. (2012). Clearing the bull: The financial crisis and why banks need a human transformation. S.l.: Universe Inc.