This paper seeks to outline various aspects of Toyota Motor Company. These include the role of technology and globalization in its success, how the company can earn above average returns using resource-based model or industrial organization model, the role of company’s vision and mission in its success, and also the role of company’s stakeholders in propelling success of the company. The advent and rise of new technologies have led to stiff competition in the automotive industry thus propelling Toyota’s innovation. The rise of new communication technologies due to globalization has also enabled Toyota to use uniform information systems across the world. In order to earn above average returns, Toyota needs to use both external and internal approaches, which include Industrial Organization model and resource-based model respectively. With regard to the latter, Toyota should consider using its internal resources and capabilities, while regarding the former, the company should use external opportunities. There is no doubt that the vision and mission of the company is the nucleus upon which company’s success is built. Lastly, stakeholders like shareholders and investors push the management to work hard to increase revenues and profits, while employees and customers always require better service from the company, thereby propelling it to higher levels of financial success.
- Impacts of Globalization and Technology on Toyota Motor Company
Globalization is perhaps one of the most critical forces of change in the business world. It entails global presence of companies, uniform products across all parts of the world as well as doing things in the same way in all places of establishment. Due to challenges of geography, human beings have come up with technology that helps in the process of globalization. One of the key aspects is information sharing that has been created due to developments in information technology. In the context of Toyota, globalization has led to the uniform management structure of the company in all countries, creation of uniform cars that are sold across the world, and brand development.
Toyota seeks to be the vanguard for car manufacture across the world. This manufacturing, according to Toyota (2013), will be supported by advanced technologies. In fact, Toyota seeks to be a pioneer in technological innovation. In its website, there is a directory on Toyota's technologies as well as a description of mission and vision for technology entrenchment in Toyota products. This is seen in company’s efforts, for instance, to produce electric cars as well as environmentally friendly cars. Toyota’s vision for technology is stated thus: “Through improvements of conventional technology, as well as pioneering efforts in the application of new technologies, Toyota is taking great steps to develop eco-cars which will help us become a low carbon society” (Toyota, 2013). The commitment of the company to carry out technological development is also evident in the amount of money that the company sets aside for research and development. Furthermore, the global rise in competition among auto makers has greatly impacted the company: it has increased its research of new technologies that are able to produce globally accepted brands.
- How Toyota Could Earn Above Average Returns: Industrial Organization Model and Resource-based Model
There exist different models that are used by economists to analyze a business environment. In general terms, in the Industrial Organization Model (IO), a company’s overall strategy is determined by the opportunities that are available in the external environment (Boccard, 2010). IO model is based on basic structure, conduct, and performance. This means that earning above average depends on demand for products and technology. The latter depends on how the firms in the industry conduct their business. Further more, conduct of firms determines the performance of the industry. Since some of the external factors are political, economic, social, and technological, Toyota can earn above average profits by creating barriers to entry in the market by other players. In other words, the model can help Toyota control the market thus increasing its revenues and profits. In addition, the company is able to easily predict the market, thereby making necessary financial alignments.
Unlike the IO model that makes use of external opportunities, the Resource-Based Model uses internal resources in order for a firm to gain competitive advantage over competitors (Boccard, 2010). These resources are either tangible or intangible and include capital equipment, patents, workforce, brand names and the like. In this regard, Toyota’s strategies of earning above average returns should solely be based on its capabilities. Specifically, Toyota should take stock of its resources as well as capabilities. Next, Toyota should effectively evaluate its actual ability to outperform its competitors based on the analysis of its assets and revenues. Next, the company should align itself with the segment of the industry, which can be effectively sustained by its resources. Finally, the strategy for earning above-average returns should be well sustained.
- How the Mission and Vision Statement Influences Toyota’s Success
In any company, the vision is a central driver of business. Therefore, the goal, objectives, and mission are formulated. Toyota has one of the most ambitious visions in the industry. According to Toyota (2013), the vision of the company is long-term and stable growth that will be in tandem with global economy, environment, local communities, and shareholders. The mission of the company is simply to be the leading producer of cars. The mission also entails aspiration to be the auto-maker of choice among customers, building trust and confidence among customers by producing quality products and respecting the ideas of shareholders, employees, and suppliers.
The above vision and mission form the centre of Toyota’s success. With regard to being the global leader, Toyota continues to be the leading producer and seller of cars in the world. As the famous saying goes, ‘the car in front is always a Toyota’. In a bid to fulfill this vision, all efforts are geared towards effective Supply Chain Management (SCM) as well as operations and manufacturing management that culminates in what is popularly known as the Toyota Way (Hino, 2006). In the same manner, the efforts to implement the mission of the company have led to the creation of the Toyota Production System that is globally acclaimed for its result-oriented approach.
- How Stakeholders Impact Toyota’s Success
Any company has responsibility before its stakeholders. In the business history, there have been many cases of internal wrangles in companies, especially if some stakeholders are overlooked. To ensure that this does not happen, Toyota entrenches respect for stakeholders in its mission. Stakeholders include customers, suppliers, employees, shareholders, other investors, local communities and the like. In general, the constant push by the shareholders and investors makes the management and the board to work tirelessly to make profits. On the other hand, customers always call for cheaper vehicles. In the case of Toyota, this has led to a unique organizational culture that seeks to entrench and meet interests of each stakeholder.
One of the most overt ways in which Toyota suppliers lead to success is through the opportunity exchange. According to Toyota (2013), “Through this event, lasting business relationships are built between our Tier I suppliers and Minority and Women Business Enterprises (MWBE)… Since the inaugural Opportunity Exchange in 1990, millions of dollars worth of contracts have been awarded as a direct result of this event. Opportunity Exchange has become one of the largest events of its kind and a benchmark for the industry”. In addition, the teamwork amongst employees is strong, which propels business to a higher level. These include, for instance, Toyota Organization for the Development of Latinos (TODOS), Toyota Asian American Society in Alliance (TAASIA), and Toyota Veterans Association (TVA).