Toyota Motor Corporation’s Sustainable Growth

Introduction

In the modern world of highly competitive economics and globalization trends, any enterprise needs to ensure its performance excellence. Regardless of the direction of the economy to which a firm adheres, businesses aim at succeeding in the quality of goods or services, as well as customer satisfaction with the aim of making a profit and lead the market. The sector chosen for this research is manufacturing because it is thought to demonstrate the importance of crucial business excellence factors vividly. For the sake of research consistency, Toyota Motor Corporation is selected for analysis. The importance of such performance excellence determinants as leadership and strategic planning, customer excellence, operations, measurement, analysis, and knowledge management, people, and business results will be discussed separately. Each of the factors will then be applied to the company under analysis, and challenges and recommendations will be discussed.

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Company Overview

Toyota Motor Corporation is a Japanese company with a rich business history and a well-developed system of values that contribute to its successful presence in the global market of automobiles. Kiichiro Toyoda founded the firm in 1937 “as a spinoff from his father’s company Toyota Industries, to create automobiles” (Jindal, Laveena, & Aggarwal, 2015, p. 2). Having been present in the motor industry for more than 75 years, the enterprise has created and strengthened its vision and mission (“Toyota global vision,” 2019). Toyota values its customers, whose satisfaction and success in life are the priorities that drive the company. The manufacturing is claimed to be environment-friendly with a philosophy that respects innovation and change that improves the world (“Toyota global vision,” 2019). The company’s vision entails leading a “future mobility society, enriching lives around the world with the safest and most responsible ways of moving people” (“Toyota global vision,” 2019, para. 1). Thus, Toyota is a global corporation that challenges the goals to provide quality products for diverse populations.

Toyota Motor Corporation occupies an economic sector of automobile manufacturing. The firm was incepted by the Toyoda family at the end of the nineteenth century when the founder created and sold wooden vehicles (Tome & Naruo, 2017). Such a long history of manufacturing that emerged into a big manufacturing corporation has made its contribution to the quality and competitiveness of the products. The company now produces “more than 10 million vehicles annually” (Jindal et al., 2015, p. 2). Today, it is one of the leading enterprises in the global market; as the data collected from the sales rates of 2015, Toyota is a leader. Its main competitors are Volkswagen, General Motors, Renault-Nissan, Ford Motor, and Hyundai Motor (Tome & Naruo, 2017). Despite such a strong position in the global motor industry market, Toyota Motor Corporation faces significant challenges in terms of competitor’s endeavors and should facilitate its performance within the main business excellence factors.

Business Excellence Factors

Business excellence is regarded to be a guiding issue for most big companies because it ensures their ability to withstand rough competition under the influence of rapidly evolving economic globalization. It means that global corporations face international competitive challenges on their way to worldwide dominance in their respective markets. The sector of manufacturing strives to “sustain high levels of improvements in their performance for the survival and success of organizations” (Randhawa & Ahuja, 2017, p. 191). In general, to achieve business excellence, a manufacturing organization should prioritize its successful performance within such dimensions as leadership and strategic planning, customer excellence, operations, knowledge management, people, and business results. In this section, the endeavors of Toyota to achieve business excellence from the perspective of the above-listed factors will be analyzed.

Leadership and Strategic Planning

Importance

Leadership and strategic planning are crucial elements in achieving business excellence because they predetermine the style of management within the company and its growth perspectives. A failure to apply a relevant leadership style might lead to a business crisis and impose a decline in both profit-making and competitiveness. Leadership as a set of managerial approaches based on particular ideologies comprises the core of all the operations and relationships inside a company and with customers and competitors or partners (Savolainen, 2000). Clearly and constructively applied leadership style facilitates all the processes inside the company and ensures the achievement of its goals. As for strategic planning, it is closely related to the concept of leadership and correlates with the main ideology of an enterprise. The strategy of development that is guided by the priority of product quality will ensure the company’s business excellence.

Challenges

As the analysis of the company’s leadership and strategic planning shows, the concentration of responsibility in the hands of one owner imposes significant threats to the company’s sustainability. In the time of the global financial crisis of 2008, Toyota was impacted by the difficulties, as well as many other global enterprises. According to Jindal et al. (2015), the quality of the automobiles produced by Toyota during the time of crises was impeded due to the usage of the same details across all car models. The reaction of the company’s president, Akio Toyoda, was the reason for customer dissatisfaction and diminished trust toward the manufacturer. The CEO of Toyota “took a long time to confess to its customers that they were in crisis,” and such a delay damaged the reputation of the corporation (Jindal et al., 2015, p. 6). As the case shows, the strategic planning in the time of crisis was insufficient and caused poor-quality product distribution. Therefore, it is necessary to incorporate the experience gained through challenging times to improve performance quality through leadership and strategic planning.

Solutions

In order to address the identified challenges, Toyota management might consider shifting to alternative leadership tactics so that the corporation is protected from inconsistent actions. As claimed by Savolainen (2000), the adoption of the ideology of total quality management (TQM) might be a significant contributor to company management excellence. Quality is viewed as “an instrument, a means to exert influence in management,” which is achieved through the constant transformation of a company (Savolainen, 2000, p. 213). Toyota Motor Corporation should adhere to quality-driven strategic planning at all times to remain a competitive constituent of the global automotive manufacturing market.

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Customer Excellence

Importance

Any enterprise, especially if it works within the manufacturing industry, prioritizes customer satisfaction because the customers are the target population for whom the goods are produced. In other words, the success of a company drastically depends on the customer’s response to a product. Meeting the needs of the clients is the obligatory element in the vision and mission statements of the majority of successful companies. This assumption implies the crucial importance of customer excellence in business progress. The level of an organization’s openness and readiness to collect feedback from the clients and provide them with sufficient support determines its successful presence in the market (Jindal et al., 2015). For Toyota Motor Corporation, the connection with the customers is also a crucial element of business management.

Challenges

In general, the analysis of Toyota’s customer relations indicates the company’s overall satisfactory level of meeting customers’ needs. As stated on the company’s website, the representatives of Toyota “anticipate the needs of those we serve, and deliver products and services that meet and exceed the needs and expectations of our customers” (“Toyota global vision,” 2019, para. 11). Also, the slogan created by the founder of the company states the following: “customer first, dealer second, manufacturer third” (Tome & Naruo, 2017, p. 571). However, the difficulties in establishment sufficient customer support in the time of crisis constitute an area for improvement. Also, the company facilitates the activities aimed at cost reduction, which might impede the quality of products; and the quality ensures customer satisfaction (Aoki & Wilhelm, 2017). Therefore, it is vital to apply particular techniques to ensure customer excellence for Toyota.

Solutions

To resolve the challenges with customer excellence and facilitate a better brand reputation, Toyota Motor Corporation should apply several techniques. Firstly, it is important to ensure customer feedback, which will help to continuously identify the changes in the target population’s needs and preferences. Extensive exploitation of such an approach to customer relations will amplify the innovation in automobile production and will establish trusting relationships between loyal customers and a reliable manufacturer.

In addition, another tool for achieving customer excellence is the improvement of the qualification of the customer service team members through educational initiatives (Aoki & Wilhelm, 2017). Quality control (QC) activities through interaction with customers should be implemented for the staff to identify possible flaws and report them to the appropriate departments inside the company (Aoki & Wilhelm, 2017). The above-mentioned solutions need to be applied at all times, including crisis, when customers are as fragile as a company is. However, it is the obligation of a company to ensure product quality regardless of the circumstance. It is even more relevant for Toyota because the lives and health of the customers depend on the quality of the cars it produces.

Operations

Importance

For a manufacturing company, operations are one of the most decisive elements in business development since it determines the priority of product quality and the enterprise’s reliability. The development of a well-structured system of suppliers, facilities, and dealers determines the overall capacity of a manufacturer, as well as the volume of its production. For a manufacturing company, the application of 5S practices is crucial to achieving operational excellence (Randhawa & Ahuja, 2017). In fact, the 5S strategy was initiated by the Toyota fonder and has been applied in many organizations. The elements of 5S include sorting, setting in order, shining, standardizing, and sustainability. The application of this technique ensures strict order in the organization of internal production processes with regard to time management and quality prioritizing (Randhawa & Ahuja, 2017). Therefore, operational excellence is crucial for achieving business excellence since it is a core element of any production endeavor.

Challenges

Since Toyota is one of the pioneers in adopting a concise 5S technique of operation management, it has developed a strong tradition in production procedures. However, there are some challenges that need to be addressed by the corporation to ensure its sustainable growth and ability to remain a competitive constituent of the market. As claimed by Aoki and Wilhelm (2017), the current strategy of Toyota is aimed at cost reduction through altering cooperation with suppliers. Under such circumstances, the activities are at risk of becoming “mere exploitative, short-term profit-seeking” schemes that night undermine the financial stability of the company (Aoki & Wilhelm, 2017, p. 12). Thus, the management of Toyota Motor Company needs to avoid such a risky strategy of change in operations to enable continuous financial stability.

Solutions

One of the ways to resolve the identified issue is to establish long-term relationships with suppliers without risking financial losses. The general overview of Japanese automotive manufacturers demonstrates that “long-term buyer/supplier relationships contribute to competitive advantages by lowering transaction costs” (Aoki & Wilhelm, 2017, p. 2). On the other hand, when seeking a cost-reduction solution, Toyota might initiate extensive research to find alternative opportunities for more cost-effective production without any damage to quality. Such an approach will ensure financial stability and developmental sustainability by means of operational excellence.

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Measurement, Analysis, and Knowledge Management

Importance

Continuous development of business is only possible through analysis of achievements, measurement of outcomes, and application of new knowledge to facilitate business presence in the market. Therefore, these factors are very important for a company that seeks to perfect its performance. Indeed, readiness to critically analyze the organization’s advantages and face its flaws is the way to organizational change and business excellence (Savolainen, 2000). Continuous work on improvements, the attraction of innovation to the corporation, and the initiation of educational procedures for skills and knowledge improvement constitute a framework of competitiveness and performance perfection. It is possible to achieve through adhering to modern standards of quality and meeting customers’ needs.

Challenges

Knowledge is defined as one of the competitive tools in the modern world of economic globalization. When analyzing Toyota’s measurement, analysis, and knowledge management, it has been identified that the company prioritizes innovation and talent in its employees (“Toyota global vision,” 2019). The challenges, in this respect, are related to the sustainability of competitive advantage. It is important to outrun the competitors and strengthen the knowledge management strategy.

Solutions

The relatively stable position of the corporation in the global automobile manufacturing market implies its masterful application of measurement and analysis to operations’ improvement (Tome & Naruo, 2017). However, to sustain a competitive advantage in the conditions of constant rivalry with other global enterprises, Toyota needs to accumulate intellectual capital by distributing knowledge management through the multiple departments of the company. By intensifying the measures of innovation and talent attraction, the corporation will be able to withstand emerging competition.

People

Importance

Similarly to the importance of knowledge management, people, as the main resource of any company, play a decisive role in business performance. The extent to which the employees and partners devote their talent, knowledge, and sill to the company is predetermined by the leadership style and the ability of a leader to adequately communicate business goals and create a qualified team (Savolainen, 2000). Since people are the main contributors to the success of any organization, including manufacture, the importance of this factor to business excellence cannot be overestimated.

Challenges

it is indicated on Toyota’s website, the advantage of the organization “comes from the skill and diversity of our team members and business partners” (“Toyota global vision,” 2019, para. 14). However, the human resource management of the company faces difficulties in understaffing due to the growing demand for Toyota automobiles and the need to expand operations. Also, there is a challenge of attracting talented employees to work in the organization that might hinder the competitive opportunities of the corporation.

Solutions

In order to resolve the difficulties related to human resources, Toyota Motor Corporation might initiate international programs to attract talented people across the globe to work for the company entities in different countries. Such a distribution of promising employees will ensure the sustainable development of Toyota companies in all countries and will facilitate the exchange of knowledge to ensure a competitive advantage. In addition, it might be useful to prioritize long-term cooperation with employees rather than temporary employment to ensure adequate staffing. It might be accomplished by initiating corporate promotional programs, educational activities, and beneficial opportunities.

Business Results

Importance

Lastly, another factor that generally determines the scope of business excellence is business results. The achievements of a manufacturer are attributed to its market presence, competitive advantage, profit, customer satisfaction, and employee retention. Therefore, this final factor is closely linked to all the previously discussed determinants and is of crucial significance to the performance excellence of an enterprise. According to Randhawa and Ahuja (2017), the long-term commitment of top management of a company ensures overall continuous positive results of a business. Accordingly, the ultimate goal of an organization is to ensure its perfect results that correspond to the vision, mission, and values of a given entity.

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Challenges

In the case of Toyota, quality and customer satisfaction are the dominant determinants of the achievement of business results. However, with the emerging rise in competitiveness in the sector and the possibility of an entry of a new competitor into the market, the corporation faces challenges in sustaining its results. Setting high benchmarks for itself, Toyota is forced to exceed the efforts of its competitors by attracting innovation and compromising relationships with suppliers (Aoki & Wilhelm, 2017). It is necessary to address these challenges to ensure continuous business results achievement.

Solutions

One of the main opportunities to maintain competitive business results for Toyota is to continue its adherence to 5S practices. Since the last S, which refers to sustainability, was found to be the most crucial one, Toyota Motor Corporation needs to preserve its utilization of these practices and introduce innovation with devotion to 5S (Randhawa & Ahuja, 2017). Also, as stated by Aoki and Wilhelm (2017), the company should build long-term relations with its partners and suppliers to ensure their cooperation with Toyota and not with the competitors, at the same time prioritizing quality.

Conclusion

Despite its global dominance in the automobile manufacturing market and its overall successful performance, Toyota Motor Corporation needs to ensure sustainable growth through continuous improvement. It is possible to do when addressing the identified challenges within the most crucial factors of business excellence. For Toyota to remain a global leader in the market of automobile manufacture, it has to attribute TQM to its leadership tactics, adhere to quality-driven strategic planning even in crises. Also, it is recommended that the corporation initiates improved QC and educational activities for the customer service team, establish long-term buyer/supplier relationships, facilitates intellectual capital and human resource management, and adheres to quality standards. All these solutions will provide Toyota with a solid opportunity for continuous business excellence and global market dominance.

References

Aoki, K., & Wilhelm, M. (2017). The role of ambidexterity in managing buyer-supplier relationships: The Toyota case. Organization Science, 28(6), 1080-1097.

Jindal, S., Laveena, & Aggarwal, A. (2015). A comparative study of crisis management- Toyota v/s General Motors. Scholedge International Journal of Management & Development, 2(6), 1-13.

Toyota global vision. (2019). Web.

Randhawa, J. S., & Ahuja, I. S. (2017). Examining the role of 5S practices as a facilitator of business excellence in manufacturing organizations. Measuring Business Excellence, 21(2), 191-206.

Savolainen, T. (2000). Leadership strategies for gaining business excellence through total quality management: A Finnish case study. Total Quality Management, 11(2), 211-226.

Toma, S. G., Naruo, S. (2017). Total quality management and business excellence: The best practices at Toyota Motor Corporation. Amfiteatru Economic Journal, 19(45), 566-580.

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