Is having a single vendor more efficient than having multiple vendors in supply chain management?

This study aims to analyze whether having a single vendor or multiple vendors is more efficient in supply chain management. It explores the advantages and disadvantages of both approaches and discusses the impact on working capital and inventory management. The case study of Toyota is used to illustrate the benefits of multiple vendors in achieving success.

Running head: MANAGEMENT THEORY AND PRACTICE
“Is having a single vendor more efficient than having
multiple vendor towards quality process in supply chain
management? Does it have an impact on the working
capital and inventory management?”

2MANAGEMENT THEORY AND PRACTICE
Table of Contents
Introduction................................................................................................................................3
Background of Toyota...............................................................................................................3
Aim.............................................................................................................................................4
Objectives...................................................................................................................................4
Single supplier............................................................................................................................4
Advantages and disadvantages of Single suppliers................................................................4
Advantages.........................................................................................................................4
Disadvantages....................................................................................................................4
Multiple supplier........................................................................................................................5
Advantages and disadvantages of multiple suppliers............................................................5
Advantages.........................................................................................................................5
Disadvantages....................................................................................................................5
Supply chain management.........................................................................................................6
Importance of supply chain management..............................................................................7
Factors in management of supply chain.................................................................................7
Toyota supply chain management..............................................................................................8
Suppliers...............................................................................................................................11
Inbound logistics..................................................................................................................11
Operations............................................................................................................................12
Outbound logistics...............................................................................................................12

3MANAGEMENT THEORY AND PRACTICE
Marketing and sales.............................................................................................................13
Service..................................................................................................................................13
Technological development.................................................................................................14
Human resource management..............................................................................................14
Procurement.........................................................................................................................14
Firm Infrastructure...............................................................................................................15
Just in Time theory...................................................................................................................15
Resource based view theory.....................................................................................................17
Conclusion...............................................................................................................................19
Reference List..........................................................................................................................20

4MANAGEMENT THEORY AND PRACTICE
Introduction
In manufacturing industries to produce the product there is a need of different material hence
they depend on the suppliers to manufacture the products. Suppliers play a major role in the
organization without these people manufacturing a product is very difficult and this impact
on the performance of organization. Supplier is also called as vendor he is the person who
supplies goods or services to the organizations. Supplier furnishes the goods and services to
the businesses and in return for agreed compensation. Suppliers would not be engaged in
direct communication with the consumers, rather they leave the task to the organizations or
vendors. Suppliers are more important for the growth of the business, they are mostly found
in all types of business but in few organizations or businesses depend on single supplier and
few organizations depend on multiple suppliers. Specifically, large organizations such as
manufacturing companies depend on the multiple suppliers. This study focused on
understanding whether single supplier is more efficient or multiple suppliers are efficient
towards quality process in supply chain for this a case study of Toyota has chosen. In this
study it will be proved that multiple supplier is more efficient compared to single supplier as
multiple supplier helps in reducing dependency on single source and it helps in balancing the
risk. Hence in this study multiple suppliers and advantages with multiple suppliers will be
discussed and theories like Just in time and Resource based view will be used along with this
back ground of Toyota and supply chain will be critically analysed.
Background of Toyota
Toyota is the company which manufacture vehicles it is the largest and the leading
automobile company in the world. This company is established in the year 1937 by “Kiichiro
in Japan. Toyota Industries Corporation which was founded by Sakichi Toyoda in 1926. This
is the largest company who mainly manufactures vehicles. It operations are all over the world

5MANAGEMENT THEORY AND PRACTICE
and the company products are sold in nearly 170 countries and it has employed 320,808
employees. It has 40 factories in japan overseas it has 50 companies and 60 plant sites
(Toyota, 2017). A hybrid technology have been used by this company especially in Prius and
Hybrid Camry with his it became a leading company in the world. The main strategy of
Toyota is lean management this helped in achieving success. The company has multiple
suppliers this helped them in achieving competitive advantage and helped in achieving
success.
Aim
The aim of this report is to identify whether single vendor is efficient or multiple vendor
towards quality process in supply chain management and to understand whether it impact on
working capital and inventory management.
Objectives
- To explain multiple vendors are more efficient than single vendor
- To understand whether supplier impact on working capital and inventory management
or not
- To understand supply chain management and theories relating to management
Single supplier
A method of purchasing the material from one supplier is called single supplier that is the
company depends 100% on single person for raw material even though there are many
suppliers in the market.
Advantages and disadvantages of Single suppliers
Advantages

6MANAGEMENT THEORY AND PRACTICE
- By means of single suppliers, close relationship can be developed by the company and
it foster reliability, quality, co-operative action and short lead times.
- Single supplier saves time, can mitigate VAT and he can understand the business
closely and helps in the development of campaigns, they look after the organization
reputation and reduces the risk
- Cost cutting is possible if the orders are placed with one supplier
- Can improve inventory control, can negotiate the deliveries and will be easily able to
integrate the systems.
Disadvantages
- Sometimes the potential customers are mainly may concerned more about the risk to
their supplies
- Ensuring that the Toyota remain competitive it will become difficult for the company
if they depends on single supplier for the multiple products.
- Small issues in the organization will lead to the bigger issue
- There is a risk that over time, the balance of dependence will become lopsided.
- There will be high indirect costs
Multiple supplier
Purchasing the required material from two or more suppliers is called multiple supplier
Advantages and disadvantages of multiple suppliers
Advantages
- If one the supplier is facing problem with financial or business difficulties the the
company will be having at least one suppler with the company to fall back on hence

7MANAGEMENT THEORY AND PRACTICE
multiple supplies is always advantages. If one got problem the other can save the
company in completing their production.
- When the company don’t have leverage with all the suppliers then the company gets
the opportunity and can take the advantage of competition that exist between the
suppliers. This mainly depends on the extent of the company important as a customer
to the supplier.
- Demand fluctuation can be managed easily if there is a choice of suppliers with whom
the company must adjust and order the volumes.
- Having multiple suppliers increases the ability to avoid supply disruptions.
- Low indirect cost,
- Having multiple suppliers is more flexible and it helps in having competitive bidding
Disadvantages
- With multiple suppliers the Information sharing will be less straightforward
-
- Less bargaining power and the competition between the suppliers will not be
sufficient to generate the similar cost saving as the company saves the volume
leverage
- In business if the suppliers interest is lower than the responsiveness will also be lower
this impact on the company
- When dealing with the multiple suppliers more overheads will be involved in the
supplier contract, management, negotiation and the process execution.

8MANAGEMENT THEORY AND PRACTICE
Based on the above advantages relating to multiple supplier I feel that multiple suppliers are
better than single supplier. As Multiple supplier protect the buyer during shortage of time,
strikes and during other emergencies, Multiple suppliers maintain the backup source and
competition, it avoids complacency on the part of single user and it is more flexible hence
multiple suppliers.
Toyota is the company which deals with the multiple suppliers, they are having nearly 200
suppliers all over the world and they follow lean manufacturing system and Toyota
production system. Due to having more number of supplier’s company can manage their
production on time and they are supplying quality products to the consumers. Due to multiple
supplier company did not had any work break down if one suppler is not available the
company is approaching the other supplier and completing the task on time. Due to effective
supply chain management and having multiple suppliers helped the company in achieving
success and helped in becoming a market leader. Today Toyota is a market leader and
because of the multiple suppliers they are able to compete with the competitors and able to
achieve success.
Supply chain management
Supply chain management refers to the movement of various materials, goods, inventory,
services and movement of final product from production place to the consumption and
managing them from time to time is called supply chain management. The activities relating
to supply chain are managed and monitored by the supply chain management, it mainly
focusses on “designing the supply chain activities, planning of activities, executing them and
controlling them. Supply chain management creates a net value, supply the raw material
based on demand, evolving competitive infrastructure and using and controlling the logistics

9MANAGEMENT THEORY AND PRACTICE
in an effective way (David, 2010). Ganeshan and Harrison (1995) in their research they
defined supply chain management as “network of facilities and distribution options” that
procure various raw material and transforming the raw material to intermediate product then
producing final product and finally distributing this final product to the consumers.
According to Mentzer et al (2001) supply chain management coordinates various functions
relating to traditional business and various tactics within the organization and across the
organizations within the organizations supply chain so that to improve the performance of the
organization and the supply chain for long time.
Movement of material and the information which is associated to material in an effective way
within and outside the organizations that is inter and intra is called supply chain management.
To complete this task in a chosen method applying online-business method is highly
important. Management of supply chain helps in coordination of the organization which is
involved towards the activities of supply side and with the consumers (Chaffeey, 2009, pp
331). Management of supply chain initially starts with identification of various resources next
associating them with raw material and delivery of the product to the consumer. Supply chain
activity will be differing from one company to other but they offer benefits of process and
economy of scale (Trkman et al, 2007). Management of supply chain play a vital role in the
organization it helps in improving the performance of the organization and helps in the
success of the organization. In this research Toyota has achieved success because of its
effective supply chain management.
Importance of supply chain management

10MANAGEMENT THEORY AND PRACTICE
Supply chain management is important to do the operations effectively, in the organization if
there is an improved supply chain then this helps in having superior value to the operations of
the organization this leads to provide value to the end users for this there is a need of efficient
response from the customer because it deals with demand management that is important to
satisfy the customer demand through applying the product strategies, through the process of
bringing up of innovative product as well as marketing communication through decreasing
the stocks along with time to deliver the product in an effective way (Chaffeey, 2009, pp
335).
Factors in management of supply chain
The method of flow of knowledge and information is processed, and the outcome received by
protecting the intellectual property are the part of strategic supply chain management.
Knowledge in the sense the data which the organization has gathered by means of their
experience and applying the same to implement the strategy and planning. Improvement in
technology, advent of new software’s helps in arranging the discrete information that too
logically and also in a valuable manner, these all abilities will lead to further develop
knowledge as well as information management these all are important to manage the supply
chain effectively. If the organization is moved greatly by the needs of the customers and their
expectations for such organizational data management play a significant role in intelligence
of the customer and innovation of new product as while supplying the product to the
customer there will be many touch points which need to be focused by the organization
specifically where ever the customer interacts. Hence the organization ability is to reap the
information relating to behavior of the customers and choices on the touch points are the
important information which helps the organization in retaining the customer and increased
customer value. In innovation of new products the knowledge which moves across the

11MANAGEMENT THEORY AND PRACTICE
customers, market factors as well as suppliers through manoeuvring it across organizations’
supply network will lead to the innovation and helps in increasing the inclusion of the
suppliers in the development process of innovation (Croom, 2005).
Toyota supply chain management
Supply chain in automotive industry is extensive and it include various elements of
production which is based on the forecasting techniques. Toyota has invested large amount in
supply chain and its key trend in automobile industry is increasing different individual
models and standardising the components which are in supply chain. That is the models
which are used by Toyota are adjusted according to the taste of the individual customers and
to meet the demand of the market new models were developed and produced. To compete
with the market and to be competitive the uncertainty that is existed in the market are
translated to the mix and volume flexibility (Toyota, 2017). Toyota developed a supply chain
management it is one of the best supply chain in low cost supply chains. The entire supply
chain which was proposed was developed to reduce the costs and making it to the nominal
possible values. But Toyota has never compromised with relate to customer satisfaction, on
time delivery and quality. The prime motive of the supply chain motive of Toyota was to
place right product at right place that too in right quantities and distributing to right customer
at accurate price and at accurate time. Supply chain which was created by automotive
company Toyota was extremely integrated that is from raw material providers to the tier 1
and tier 2 vendors with dealers, manufacturing plants, warehouses and final consumers.
International collaborators are the part of this supply chain which made the supply chain
more healthy and inclusive (Toyota, 2017)

12MANAGEMENT THEORY AND PRACTICE
The supply chain management of Toyota is the factor relating to operations management
which is completely based on the production system of Toyota that is “Toyota production
System” (TPS) of lean manufacturing. Supply chain of Toyota helped the company in
meeting the competitors and helped in gaining more customers. According to Liker (2005,
p.16) “mutual understanding and trust, interlocking structures, control systems, compatible
capabilities, information sharing, joint improvement activities, and Kaizen and learning” are
the important components which are related to the Toyota supplier which is of a connecting
Hierarchy. Just in time system is the production system which helps the organization in
making decision rules, resources and information flow these all helps in understanding about
the benefits that are related to Just in Time principles (Krajewski et al, 2006). The elements
relating to Just in Time helps in exposing the organization problems, helps in eliminating the
waste, pull the production that is based on the Kanban, maintains total quality management
by involving various suppliers, reduces the inventory, helps in improving the machinery, co-
operation and continuous improvement (Krajewski et al, 2006). Lean manufacturing system,
Kanban and the capacity planning are included in supply chain management and helping
Toyota in their growth, profitability and helping in becoming a market leader.

13MANAGEMENT THEORY AND PRACTICE
Supplier Parts
Customers
Assembly Parts
Inspection
Dealers
Inbound Logistics
Outbound
Logistics
Production
Supply Chain Overview of Toyota

14MANAGEMENT THEORY AND PRACTICE
Figure 1: Toyota Supply Chain
(Source: Toyota Management System, 2009)
Suppliers
Suppliers provide the raw material, parts and components to the company so that they
manufacture vehicle. Toyota receives the required material through the inbound logistics.
Toyota organized their suppliers into two functional tiers. Tier one suppliers work with the
product development team whereas the tier two supplier makes the individual parts. Tier one
suppliers are always co-operative, and they exchange information with the team. Due to this
the lead time that is required to new product development will be reduced and there is no
need of “Re-inventing the wheel”. Toyota believes that there is a need of having technology
development in their supplier chain so that it compensates the working load. Toyota
designates the senior managers as the suppliers and provides a top position so that they
manage the suppliers and co-ordinate with them. This makes the suppliers more efficient and
helps them in practicing the Toyota management system that is “Lean production practice”
which is introduced by Toyota. The supplier chain of Toyota is of two level tier-1 and tier-2
and company mainly depends on Just-in-Time because of this they have fewer supplier that
too more reliable one like Denso and Bridgestone. Toyota has nearly 200 suppliers who
supply components, it has multiple suppliers such as Toyota Boshoku, Samsung electronics,
Denso, Cypress Microsoft, Fuji, Tesla, Trim master Inc etc. (Toyota, 2017).

15MANAGEMENT THEORY AND PRACTICE
Inbound logistics
Toyota inbound logistics involves with two types of operations such as transportation of parts
that are required for manufacturing from the suppliers who are at local level to the local
manufacturing unit. The other operations is at global level that is transporting the parts from
one country to other that is japan supplier to European plant and North American plant etc.
(Iyer et al, 2009). Toyota core strategy is to produce the products locally but in 2012 75.4%
of sales and in 2013 76.3% of sales that are related to non-domestic were manufactured out of
japan (Iyer et al, 2009, p.103). Toyota mainly follows localization to produce the products
and to match the production lead they follow both revenue and expenses in local currency
only. Just in Time system was developed by Toyota to manufacture vehicles in an effective
way as it helps in reducing waste, eliminating inventory due to this the management can save
cost. Due to manufacturing of vehicles locally, by applying Just in Time the value of Toyota
has increased.
Operations
Operations include various activities such as manufacturing of vehicles and assembling them.
In the operation other than manufacturing and assembling many activities are existed they are
motor tuning, engine tuning and configuring motor parts. The process of operations were
designed effectively at Toyota and the operations that took place were at moderate level this
helps the company in providing quality products and can produce reliable vehicles which last
for the long period and it also helps in increase their image in the market and helps in
maintaining it (Iyer et al, 2009). Toyota is implementing the operations system which is of
planned and effective one that is the reason Toyota is achieving success in having more sales.
At Toyota the Toyota Production System is followed for operations, which also involves lean

16MANAGEMENT THEORY AND PRACTICE
production system and just in time system, these will control the process of production as per
the requirement of the customers. Toyota in their operations they follow Jidoka’ system so
that they can stop the production if any problem arises during the operations or if there are
any production defects. To distribute the work equally at production place of Toyota they
follows Heijunka concept (Toyota Management System, 2009). This system helps the
management in distributing the work equally and accurately in perfect order and explanation.
Toyota is using total productive maintenance system to check whether the tools used and the
equipment used are effective or not. Marketing, branding, advertising of Toyota products at
the global level are taken care by the Lexus. Toyota has two units the first unit is the in
charge for Europe, North America and Japan whereas the second unit takes care of the
emerging markets such as Asia, Latin America, Africa, Middle east, China, East Asia, the
Caribbean and Oceania. The unit cellar mainly deals with the unit related technologies and
their development, development of production and manufacturing technology. Toyota mainly
focus on quality and reliable manufacturing and the lean manufacturing system which was
introduced by Toyota is the main competitive advantage for automotive industry Toyota (Iyer
et al, 2009; Toyota Management System, 2009)
Outbound logistics
Once the operations are completed the finished product will come out and the same will be
transferred to the distributors, wholesalers, retailers and end users. The vehicle distribution is
mainly controlled by the Toyota so that they can send the final product to the right place at
the right time. From the place of production till it reaches to the branches of Toyota all over
the world they focus on controlling the distribution of vehicles. Even the dealers are also
controlled by the Toyota. All the outbound logistics that are related to final vehicles are
controlled by Toyota and they take the responsibility of sales. The parts distribution

17MANAGEMENT THEORY AND PRACTICE
department at Toyota manages all the service parts and helps in the production of the service
parts and does the shipping preparation. It is also responsible for the overseas logistics,
customs, quality, and the technical support. Toyota is dealing with 170 distributors and it has
more than 8,900 dealers all over the world. Toyota uses road ways, railway, car haulers and
truck to distribute the vehicles form production plant to the distributor (Toyota Management
System, 2009)
Marketing and sales
Toyota is having both marketing and the sales departments these departments focus on the
product allocation to the customers. The main activities which are taken care by Toyota and
the sales department were sales promotion, promotion mix, product advertising and preparing
ground work to set the offers which helps the company in meeting customer expectations and
the company. Both media as well as print advertising is used by Toyota, along with this they
also use sales promotion, events, direct marketing, public relations and experiences.
Specifically the company focus on the television advertising as it helps in attracting large
group of population and helps in improving the sales (Toyota Management System, 2009)
Service
Services increases the value of the Toyota and its products; effective services ensure
successful distribution of products and it also helps in obtaining the effective feedback from
the customers. Services at Toyota include final vehicle checking, repair, maintenance, after
sales service, training and complaint handling etc. Toyota generally emphasises on
customers, they realized that they play a major role in the company and they helps in
achieving success hence Toyota focused on customers and provided effective service to the

18MANAGEMENT THEORY AND PRACTICE
customers. Toyota provided effective service to the customers as it satisfies the customers
and helps in achieving the competitive advantage (Toyota Management System, 2009).
Technological development
Technological development is more important for the automobile industries as it helps the
company in sustaining competitive advantage. Toyota developed the technology in each
and every department of Toyota so that they can supply quality and the safety vehicle to the
consumer. Toyota has its own collaborative safety research centre this centre helps the
company in checking the safety of the vehicles and it is also having the test drives these are
helping the company in improving product performance. These two systems have helped in
the improvement of the vehicle safety and driver safety. Pre-Crash Safety was introduced by
Toyota as this helps in reducing the risk and damage that cause to identity crash. Pop-Up
Bonnet technology is used by the Toyota so that they can avoid the damages that arise by the
vehicles. To control the beam they used “Adaptive Driving Beam system” (Toyota
Management System, 2009).
Human resource management
Human resource is the asset for the organization, they play a major role in the organization in
developing company performance hence various tactics were used at Toyota to satisfy the
employees and to sustain them in the organization for longer period. To use the employees in
an effective way and to increase the productivity Toyota has used the lean production system.
In the organization the human resource was managed effectively so that they can expand the
capability of the employee and their capacity through training, skill development program,
motivation, encouraging, rewards and encouraging them towards extra work etc. These all
will create a friendly environment in the organization this leads to increased productivity

19MANAGEMENT THEORY AND PRACTICE
along with this the product quality can be improved and finally helps in gaining the
competitive advantage and success (Toyota Management System, 2009).
Procurement
Toyota will not have any partnership with their suppliers, they are just the integral element of
the company. Suppliers are geographically located that to in 56 miles radius and security
relating to the guaranteed order will be given this helps them in producing effective and the
best quality raw materials that too at cheapest cost and helps in achieving economies of scale.
Toyota helps the suppliers and they believe in the mutual improvement and they believe in
the creation of vendor and development. Toyota trains the suppliers according to the
requirement. Toyota gave importance to the packing also along with the transportation
efficiency. Packing is done effectively in the small and the medium boxes and they are
having a dedicated transportation system in the organization. At Toyota the procurement
activities are linked with purchasing of the raw material such as goods, equipment raw
material, services, reducing purchasing cost, on time receiving of material. To manage all
these procurement activities, they use outsourcing method and the e-buying method. It also
focuses on controlling the pollution while delivering the supplies (Toyota Management
System, 2009).
Firm Infrastructure
Infrastructure is more important to produce the product with high quality and supply them to
the customers. Hence at Toyota the infrastructure is connected with the strategic plan of the
organization. The infrastructure need to be managed in the organization for this Toyota has
created management information system this helps Toyota in designing, organizing, and

20MANAGEMENT THEORY AND PRACTICE
controlling the plan, it is also used to control the finances and Toyota corporate strategy.
Toyota uses the robotic system as it helps in completing the products quickly and effectively
(Toyota Management System, 2009).
Just in Time theory
Just in time is the production method of the Toyota this theory views the inventory as the
waste. It is a very complex method implementing it is very difficult. This tool is mainly used
to improve the organizational process. This system helps the organization in increasing the
profitability of the Toyota, increases the value stream, quality, and it is more cost effective
(Rosemary, 2001). Just in time is the philosophy through which there will be a continuous
improvement in the organization and its production. It helps in identifying the both value
adding activities and the non-value adding activities and can remove it to reduce the cost,
increase the performance of the organization, it helps in making the process of manufacturing
more flexible, it helps in improving the quality of the product, delivery and motivates the
innovation at the work place (Bonney, 1994; De Hann, 1999). The successful implementation
of the just in time principle in the organization and its effectiveness helps Toyota in achieving
the competitive advantage. This principles helps in enhancing the operations, reduces the
waste, enhances the effectiveness in the distribution, enhances the sales, and accounting
efficiency (Brox, 1997; Green, 1991). During operations Toyota need to identify the waste
and need to focus on eliminating the waste, idle time, transportation waste, processing waste,
waste of motion and product defects waste (Cheng, 1993; Heiko, 1990)
Just in time is a production system here the raw material will be converted into the finished
goods that is the manufacturing will take place to meet the customer demand here the
inventory will become zero or some time it will become low and the product quality will
become high. This theory mainly focuses on removing the waste by holding the cost of input

21MANAGEMENT THEORY AND PRACTICE
and the output. Hence whatever the material is required for the production that will get the
demand and the production or manufacturing of the vehicle will be done to satisfy the
customers who are existed (Lucey, 2002).
Lucey (2002) and Liker (2004) they stated that implementation of just in time in an effective
way in the organization helps in achieving the desired results. This theory requires high
automation as it pulls the demand mostly the manufacturing takes place mainly to meet the
demand (Lucey, 2002). This system reduces the cost, uses the employees in an effective way,
maintains good relation with the suppliers and helps in changing the production schedule and
helps in achieving success. (Liker, 2004).
Figure 2: Model for most effective model of change management and flexible leadership
adaptation

22MANAGEMENT THEORY AND PRACTICE
(Source: Mentzer et al. 2001, p.19)
Resource based view theory
Resource based view theory is mainly used to determine the organizations strategic resources
and helps in delivering comparative advantage to the firm. To achieve the competitive
advantage organization will exploit the resources. According to Barney (2001) defines
Resource based view as “all assets, capabilities, information, organizational processes, firm
attributes, knowledge etc., controlled by a firm that enable the firm to conceive of and
implement strategies that improve its efficiency and effectiveness”. Resource based view
mainly focuses on organizational internal factors which contribute towards the growth of the
firm and their performance. This theory highlights how important the resources and
capabilities to the firms. Both resources and the capabilities will develop competency in
order to foster competitive advantage. Achieving “sustainable competitive advantage” is
more important for the firms and this mainly lies in organizations strategic management and
marketing (Fahy and Smithee, 1999). In resource-based view the resources are classified into
both tangible and intangible resources. The company’s capabilities are more important in
utilisation of various resources and it impact on the company and helps to stand and compete
with the competitors.
Competitive advantage ascends when the cost structure, firm’s niche market and product
differentiation of the firm is low (Hill and Jones, 2007, p.77). To compete with the
competitors and other organizations value creation is more important hence RBV is
concerned about value creation. Firms to survive in the competitive world having superior
performance for a longer period compared to other competitors is must and they need to

23MANAGEMENT THEORY AND PRACTICE
prepare themselves to achieve “sustainable competitive advantage”. According to Barney
(1991) firms to gain “sustainable competitive advantage” the resources which are available
need to be imperfectly mobile, rare, non-sustainable and more valuable. In Resource based
view the strategists focus on the internal resources and capabilities and selects the
competitive position which exploits these resources and capabilities which are related to the
external opportunities. Strategic resources signify the inter-related assets and various
capabilities through these organizations can accept the competitive positions. According to
the scholars debate the resource based view is more flexible compared to the Porter’s
approach towards formulation of strategy (Day and Wensley, 1988; Day, 1994; Hooley et al,
2001)
Researchers criticized the resource-based view they pointed that it is tautological (Collis,
1994), the product role in the market is underdeveloped (Priem and Butler, 2001), there are
limited narrow implications in the theory (Priem and Butler, 2001), this theory has failed to
consider the factors that are surrounded by resources like how the important capabilities need
to be acquired (Stinchcombe, 2000 ). Researchers criticized the resource-based view as a
development of the firm’s strategy and stated that RBV is insufficient as firm specifically
focusses on achieving “Sustainable competitive advantage” and suggested that to balance the
insufficient Porter’s analysis and activity-based view can be used as they concentrate on the
external factors and helps in achieving competitive advantage (Rumelt, 1991).
The main basis for the firms to choose resource-based view as their strategy and developing it
are due to organizational culture, entrepreneurship and leadership. Each organization will
have different culture and the leaders, entrepreneurs are having their own views. RBV has
few merits like high performance and profitability which helps in developing the firm that is
the reason this strategy is selected. RBV explains between the firms there will be a
performance difference and this is possible through more resources through which they are in

24MANAGEMENT THEORY AND PRACTICE
advantage in market place (Barney and Arikan, 2001). It gives high profitability within the
firm but not externally. Hence this theory is advantage for the growth of the firm internally.
Toyota is the company which performed effectively compared to other automotive industry
and it is maintaining its competitive advantage. Toyota became the world’s largest
automotive company in automobile industry. Company utilizes various resources as well as
capabilities and creating their own competency which is superior compared to the other
competitors. It has separated itself from the competitors like General Motors through their
high quality and productivity this helped in increasing the product utility. High quality has
developed the confidence in customers and convinced them, this helped them in gaining
value creation among the customers. Through this price of the product can be increased and
can gain high profits. Toyota has followed “lean production system” which is difficult to be
assimilated and imitated hence it will achieve superior quality and efficiency, products with
consistent high-quality leads to differentiation in product development and lowering of costs.
“Lean production system” consists of various manufacturing techniques like just-in-time,
reduced set-up time and self-managing teams. Toyota to compete with competitors they use
the features of high-tech performance and upscale quality along with supply chain
management and capabilities through Lexus model. Pricing advantage helped Toyota in
attracting customers and imitating product differentiation and low manufacturing cost is
difficult for rivals” (Thompson, Strickland and Gamble, 2010, p.156). Toyota continuously
upgrades the “resources and capabilities” and focus on continuous learning so that to stay as a
leader and ahead of its imitators (Hill and Jones, 2007, p.100). Toyota has introduced hybrid
car into the market and created new market and value for customers and the rivals are
focusing on competing Toyota and they are putting their efforts to catch the company.
Effective resources and capabilities helped Toyota in achieving success in the market.

25MANAGEMENT THEORY AND PRACTICE
Conclusion
As mentioned in this business report that multiple suppliers are more efficient than the single
suppliers as shown in this report Toyota has almost 200 suppliers all over the words so that it
can shows that having multiple suppliers have more benefit to company than single suppliers
that’s the reason Toyota UK is number one in UK for manufacturing business. As mentions
in my advantages that multiple suppliers always back bone for the company productions and
services specially when one of the suppliers can run in to financial or business difficulties
where if we have multiple suppliers so that one of the suppliers can fall back on. In
manufacturing companies, as the worlds is changing so technology too so its oblivious that
the people demands and wants changes so in this case having multiple suppliers can be more
effective as we can have choice of suppliers with we can manage and adjust the order
volumes. Moreover, it avoids complacency on the part of single user and it is more flexible
hence having multiple suppliers are more effective and profitable in manufacturing industries.

26MANAGEMENT THEORY AND PRACTICE
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