A Case Study of Toyota: HRM Challenges and Recommendations

HUMAN RESOURCE MANAGEMENT
A case study of Toyota
STUDENT NAME
Student id
University Affiliation

Table of Contents
Table of Contents............................................................................................................................................................2
Introduction.....................................................................................................................................................................2
External Environment Analysis.......................................................................................................................................2
Nature of the Industry.................................................................................................................................................2
Level of competitiveness.............................................................................................................................................4
Key external stakeholders...........................................................................................................................................4
Current trends in the industry.....................................................................................................................................4
Internal Analysis.............................................................................................................................................................5
Describe the organization...........................................................................................................................................5
Nature of the work undertaken...................................................................................................................................5
Products and services created....................................................................................................................................5
The current strategy being pursued............................................................................................................................6
The current level of organizational performance.......................................................................................................6
HRM Challenges at Toyota.............................................................................................................................................7
Five key problems facing the practice of HRM in the organization...........................................................................7
HRM challenges and the link between HRM performance.........................................................................................8
Recommendation to improve the effect of HRM on organizational performance......................................................9
Conclusion....................................................................................................................................................................10
References.....................................................................................................................................................................10
1

Introduction
Incorporated in August 1937, Toyota Motor Corporation has been conducting business in the
automotive industry for over eighty years. Toyota distributes its vehicles in over two hundred
countries and regions. In the recent past, Toyota faced financial loss and criticism from its
customers because of poor quality vehicles and unprofessional services. This report is an attempt
to study Toyota’s internal and external environment and to understand HRM practices and
challenges within the company. The last section will recommend strategies for HRM issues at
Toyota.
External Environment Analysis
Nature of the Industry
Toyota Motor Corporation functions under the automotive industry. Past ten years have
been very tumultuous for manufactures of automobile products, given the growing
environmental concerns and skyrocketing fuel prices, saysBratton and Gold (2017). Both
of these factors have changed customer’s preferences and now there is an increasing
demand for fuel-efficient vehicles. Where some automobile manufacturers embraced this
change by diversifying their products into the manufacturing of hybrid electric motor
cars, some others are expanding their portfolio of fuel-efficient cars. Other automakers
are more reluctant about shifting their focus from big to small sized cards, hoping that the
fuel prices will eventually drop, and customers will start opting for the big cars again,
saysBratton and Gold (2017).
Level of competitiveness
Market share concentration of automobile industry is very low. There is a low level of
concentration, and the top four manufacturers account for one-third of the international
2

revenue. Toyota has a 10.2% share, General Motors has 6.9%, Volkswagen and Ford
stand for 9.6% and 5.6%. While other companies score under 67%. As per Ferell and
Speh (2017) The key players in this 67% segment are Hyundai, Kia, Opel, and Renault.
Key external stakeholders
Onkvisit and Shaw (2004) introduced that as a global company, companies in the
automotive industry have several external stakeholders with disparate demands and
needs. Though the following are the significant groups of external stakeholders, written
according to their significance in affecting the company:
1. Employees: Most significant stakeholder
2. Customers: second-priority stakeholders
3. Investors: Third major stakeholder group
4. Environment: Major stakeholder group
5. Communities: Major stakeholder group
Current trends in the industry
Globally, automobile demand depends upon per capita disposable income, vehicle prices,
product innovation, fuel prices, vehicle material and equipment cost, the supply end, and
retail prices. Since it’s the period of high fuel prices, the fuel-efficient cars are in demand,
and the hybrid models are the favourite. That’s why the Japanese carmakers producing fuel-
efficient vehicles replaced market share from the large vehicle manufacturers
(Wheelen,Hunger, & Bamford, 2017).
For the next five years, the automobile industry will witness demand for fuel-efficient motor
vehicles in the Western world and the emerging economies will grow. Automobile industry
revenue is forecasted to grow with an average of 3.5%. Another factor is product innovation
which can spur the demand, especially if it also offers fuel-saving benefits (Onkvisit and
Shaw2004 pp. 70-72).
Internal Analysis
3