Risk Management and Operations Improvement Strategy for Toyota

UGB165
INTRODUCTION TO
BUSINESS
OPERATIONS AND
SERVICES/

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Implementation of risk management strategy at Toyota to minimize and face shock in future
................................................................................................................................................1
Explanation of a companywide operations improvement strategy.........................................5
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
International corporations affect various risks which affects global competitiveness and
positioning of the company (Poljansek and et. al., 2017). In addition to this, this managing and
improving business operations to ensure delivery of high quality products and services in every
situation is essential for gaining long-term success. This report is based on the Japanese
Automaker Toyota and the fallout faced by the company which lead to the company recalling 9
million vehicles and suspending 57% of its autos sold in the United states. Toyota was formed in
the year and has gained global success because of its high quality cars. This report looks at the
recent downshift faced by Toyota and advise risk management strategy which can help the
respective company face such shock in the future. In addition to this, introduction of an
organization wide operations improvement strategy is also included in this report.
MAIN BODY
Implementation of risk management strategy at Toyota to minimize and face shock in future
Risk management is defined as the process of identification assessment and controlling
various threats faced by an organization in relation to the capital and income of the company.
The risks involved with managing an international corporation come from different sources such
as financial uncertainty, legal liabilities, technological issues, strategies management errors and
natural disaster (de Araújo Lima, Crema and Verbano, 2020). Creation and effective
implementation of risk management strategy helps business firms minimize the damage caused
by risks and face threats on an efficient manner. This enables he company to maintain strong
functioning despite the presence of various risks.
In case of Toyota, the company faces the risk of stoppage in production because of natural
calamities which affects the goth of the firm on a global scale. This risk recently affected the
global sales and production of Toyota automobiles. This incident showcases the importance of
implementing a suitable risk strategy for different risks as it ensures that business operations at
the company are not delayed. The current and future financial strategy of the company is not
affected because of threats imposed by various risks cam be ensured with the help of an effective
risk management strategy.
The risk management strategies which can be implemented by Toyota to avoid such risk and
ensure smooth production of automobiles all year round are provided below:
1

Risk Avoidance
This risk management strategy supports business firms in protecting different assets of
the company from potential losses (Abdel-Basset and Mohamed, 2020). Under the risk
avoidance strategy enterprises focusing on lowering the level of risk by avoiding engagement in
specific high risk activities. Organizational exposure to risk is not permitted to come into
existence in this risk management strategy. The advantage of using risk avoidance as the primary
risk management strategy is that it increases the confidence that the company will continue to
operate successfully because the risk is estimated and the company does not have to build plan
for the specific risk as the exposure is already eliminated. In addition to this, risk avoidance
strategy can help business firms avoid costly damages incurred because of disclosure to risk.
The main disadvantage of using risk avoidance strategy is that extensive usage of this
strategy can lead to deprivation of many business opportunities to increase profitability. This can
act as a barrier to attaining business objectives in timely manner. In this way high utilization of
risk avoidance strategy can stop enterprises from pursuing lucrative opportunities as every
opportunity has certain amount of risk and can slow the progress of the company.
In case of the risk posed by climate disasters on smooth production of Toyota, the company
can utilize the risk avoidance strategy by lowering the number of manufacturing plants in
locations which are prone to natural disasters and shifting such manufacturing plants to areas
which ae safer in comparison. This can help the company avoid risk of manufacturing stoppage
because or natural calamity. In addition to this, steps need to be taken by the respective company
to strengthen the supply chain can help the respective form deal with global demand for autos
effectively even during a natural disaster in Japan which is the domestic country of Toyota. This
action also involves implementation of risk avoidance strategy as it helps the firm lower
exposure to risk of recalling orders during natural disaster.
Risk Transfer
This risk management strategy involves shifting the pure risk from one party to another
party through contractual process (Hopkin, 2018). This is one of the most commonly adopted
risk management strategy and purchasing an insurance policy is an effective method for
transferring risk. The usage of this risk management strategy helps the company allot risk in an
equitable manner and putting the responsibility for risk on decided individuals or entity
consistent with their ability to control and insure against specific risks.
2