Understanding and Leading Change: Toyota's Organizational Dynamics

This report provides a comprehensive analysis of change management within Toyota, examining the impact of change on the company's strategy and operations. It explores the internal and external drivers of change, including technological advancements, political factors, and shifts in consumer behavior, and how these factors affect leadership, team dynamics, and individual behaviors. The report delves into measures to minimize the negative impacts of change on organizational behavior, emphasizing the importance of employee engagement and effective communication. Furthermore, it assesses organizational change barriers and their influence on leadership decision-making, while also explaining various leadership approaches and their influence on organizational change. Through a detailed examination of Toyota's case, the report offers valuable insights into the complexities of change management and provides practical strategies for successful implementation.

UNDERSTANDING AND
LEADING CHANGE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
P1 Impact of change on an organisations' strategy and operations.............................................1
LO 2.................................................................................................................................................3
P2 Internal and external drivers of change that affects leadership, team and individual
behaviours within an organisation..............................................................................................3
P3 Measures to minimise negative impacts of change on organisational behaviour..................5
LO 3 ................................................................................................................................................7
P4 Assessment of organisational change barriers and their influence on leadership decision
making.........................................................................................................................................7
LO 4................................................................................................................................................9
P5 Explain the main leadership approaches and how they affect the change in organisation....9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Change management refers to the changes that an organisation adopts to deal with the
dynamic environment that influences the operating activity of an organisation. The changes in
the company influences due to technological environment, process of operating activity in the
company, due to consumer behaviour towards the product, etc. many more changes in the
business environment affects to the organisation to make changes according to the demand for
successful working and stand with the competitor in the market. Toyota company is an auto
mobile company situated in japan. The company produces over 10 million vehicle in year 2012
and the production level of the company increases by the 2014 up to 200 million vehicle per
year. The company earning revenue is ranked at sixth largest company in the world and listed on
japan 2nd ranked company in earning revenue from auto mobile. The company became the seller
of hybrid electronic vehicle and encouraged the mass market to adopt the hybrid electronic
vehicle. In this report we will discuss about the changes that are taking place in the organisation
with the help of taking example of other company and comparing the changes. Then the study
will be done on the evaluation of the internal and external changes affect the behaviour of
company. Study will give measure to reduce the negative impact on the company due to changes.
Further the study will light on the barrier faced by the changes and its impact on decision
making. Last but not least the leadership approaches dealing with change will be discussed.
LO 1
P1 Impact of change on an organisations' strategy and operations
In this fast growing environment, changes plays a vital role in an organisations' growth.
A change is not only important for a company but it is also necessary for its stakeholders. It
allows the employees to learn new skills, exercise their creativity and explore new opportunities
which will ultimately lead to benefit to the organisation through increased commitment and new
ideas.
The growth of an organisation is totally depended upon the changes that are being
implemented, success and failure are depended on the changes which are being made. In the
changing global economy, it can effect organisation in positive and negative manner too. When it
is seen in positive manner, a strong economy can generate more demand of the goods and
services which result in more production that needs expansion of the organisation by increasing
resources and workforce, this offers new opportunities for staff but as well it is a challenge for
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the company(Espedal, 2017). Whereas a weak economy will lead to more problems as
organisation may find themselves making difficult decisions which will impact employees salary
and incentives with the job security. To manage this kind of situation an organisation must
maintain a strong brand in the market and strong relationships with customers as well as
employees.
Toyota and Unilever are fast growing companies where changes are being made on a
regular basis for the growth and survival of the organisation. A change is so significant through
which a company should take into consideration about the changes that an addition to a new
product and service(Glass and Cook, 2016).
Every day there are major innovations taking place that change the world of technology
and those affected by it forever. Toyota made management changes for creation of the best
possible product for the customer satisfaction, in order to achieve this objective a separate
division was developed for customer services. This results in customer satisfaction and increase
in sales.
When it is about technology, Toyota is an organisation where technological changes can
be seen on a regular basis. It has recently introduced its new range of cars of hybrid technology
which leads the way in harnessing the latest hybrid technologies which is combining of the
strengths of conventional petrol engines with special benefits of electric power. This made a
great impact on Toyota's increasing sales and productivity. It was a major change implemented
in the market which can be said to be successful. These cars made a great impact on economy
too as plug in electric vehicles helps to increase energy security, reduce emissions, improved fuel
economy by lowering fuel costs. It attracts the customer as it is cost friendly and environment
friendly which result in more sales and increasing productivity in Toyota (Wylie and et.al.,
2017).
Another change which Toyota implemented was introduction of customer satisfaction
department that resolves the queries and problems being faced by the existing customer which
results in good after sales services. This change was a little costly but was effective in a way
because it increases the sales ratio of Toyota which resulted in increased profitability.
In today's changing environment, consumer preferences are changed with the technology
and environmental factors. Unilever is known for the innovation and changes implementing by
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them. In a generation where consumer are so much focused on environmental issues, Unilever
has brought in environmental friendly products. These changes made the product recyclable and
environment friendly(Wylie and et.al., 2017). This change will directly impact the marketing
strategy of Unilever. The drivers of marketing are to be focused with the environment changes
that attracts the consumers.
Unilever has implemented changes in terms of technology. It introduced environmental
friendly technology which works with the environmental factors. It is being good for the
company as it fulfils Corporate social responsibility of Unilever, but likewise it will affect the
workforce of the organisation. The new technology needs to be operated by skilled workers
which will lead to removal of unskilled workers. This may impact negatively on other workforce
of the company as they feel unsecure towards their job. Whereas positively it is being effecting
the profit margin of the product as it uses environment friendly material which is a bit cheaper
than other material used that leads to decrease in production cost(Doppelt, 2017).
A good leadership leads to good implementation of changes. Environmental and
technological changes are being done by the leaders. There was a change in leadership of
Unilever which allowed the organisation as it continues its transformation into a faster, leaner
and more agile company. It made changes in its three divisions of market which were beauty,
food and home care departments. These changes were implemented by the organisation for the
for further strengthening the execution of strategies in the justified markets. These new leader
will be responsible for the organisation's strategy and operations. Their leadership will take the
organisation towards success or failure as it plays a major role in impact of change on
organisations strategies and operations(Watts, 2019).
LO 2
P2 Internal and external drivers of change that affects leadership, team and individual behaviours
within an organisation
Toyota is a fast growing organisation because of implementation of changes on a regular
basis. The changes made by Toyota effects directly to its business operations which may be a
failure or a success. Leadership, team management and individual behaviours are responsible for
the effect of change whether is it a positive result or a negative one. There are several internal
and external drivers of change that affects leadership, team and individual behaviour directly in
3

Toyota. Internal factors include factors such as leadership, mission, culture and structure of an
organisation. External factors consist majorly of political, economic, social and technological
factors. These internal and external factors can impact the ability of a business or investment to
achieve its objectives and strategic goals (Lopez and Wise, 2015). Internal and external factors of
change that affects Leadership, team and individual behaviours of Toyota are as followed:
Internal Factors
It basically includes the inner strengths and inner weaknesses. These affect the company
in meeting its objectives as it haves a favourable impact on the business. Weaknesses can have
harmful effects on the organisation. Internal factors that are faced by Toyota are structural
change and Cultural change.
 Culture : In past few years, there was a cultural change in Toyota which consist of
interlocking set of goals, communication practices, processes, values, roles, assumptions
and attitudes. Leadership will be affected by communication practices and attitude of
managers and supervisors. Leaders influences the organisation's culture and in turn the
long term of effectiveness of organisation. The change of culture will directly impact the
team because it influences conflicts, communication and creativity. It can effect
individuals behaviour by influencing the manner that the individual learn, live and
behave that shows the culture is an important shaper of personality (Iles, 2017).
 Structure : Structural change refers to the changes made to organisation's structure that
directly impact how the company run. It involves changing the overall goals and
objectives of the organisation for its interest. Toyota implemented a structural change in
past few years for the organisation's interest. It brings different changes in Toyota's
operations which affected the leadership directly, as with the structural change there was
a change in objectives of the organisation which make leaders to make understood the
new organisational structure to employees so that employees can implement that
comfortably. Team working can be affected as with new objective the teams might get
change, which may take time for settle down by the employees. An individuals'
behaviour will depend upon the environment of the team and nature of new objectives
and goals of Toyota.
External Factors
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It includes technological, social, economical, political, legal and social factors. These
factors can effect Toyota as this can impact the ability of a business to achieve its objectives and
strategic goals(Thornton, Usinger and Sanchez, 2019). The external factors which affect Toyota
is as followed:
 Political : It can effect Toyota's leadership and individual behaviour. It is a positive
aspect for the organisation, as Toyota haves political stability in its major markets which
is an opportunity for the company to grow with minimal political tension. Toyota is being
supported by government as its products are eco-friendly which is a positive point for the
organisation. Overall the main political factors provides opportunities for the business, so
it is necessary for the leader to grab the opportunity.
 Technological : Toyota is a business which haves involvement of technology majorly, so
the technological factors plays a great impact on the organisation. Because of high
competition in the market, Toyota has to innovate its products on a regular basis. While,
it has the opportunity of developing its mobile apps to increase customer engagement and
loyalty. Whereas company should address the threat of cybercrime including corporate
cyber espionage. Leadership should be done in such a manner that threats of the
organisations are prevented and opportunities can be achieved (Wilson and Lai, 2019).
 Social : Social factor plays a major impact on leadership of Toyota. The organisation has
the opportunity to provide more products which satisfy customers increasing interests in
electric and hybrid vehicles. The leader must grab the opportunity with the help of team
and employees. Whereas company should take into consideration about the widening
wealth gap which results in declining of products by middle class, so a leader must take
everything in consideration and take corrective actions.
P3 Measures to minimise negative impacts of change on organisational behaviour
Changes are implemented for the growth of the organisation but it haves some negative
effects which can affect the company's stakeholders. The most important asset for an
organisation are its employees (Byers, 2017). They play a vital role behind the success of an
organisation. Employees are the one who are being affected the most because of a change. It is
costly for an organisation to lose its employees, as again repeating the process of recruitment,
selection and training is costly and time consuming. For minimising negative impacts of change
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on organisational behaviour some measures are to be considered such as motivating employees,
training and development and communication.
Training and development : The most important part in reducing negative impact of
change is training and development. Toyota should provide training to their employees that will
expand the knowledge of them, it is a expensive process but it is worth when there is a change in
an organisation. Training of managing the change is being provided by the company to
understand and implement the change in it. Training improves employees performance which
will result in effective working of employees that increases productivity. Training in new
technologies and strategies results in increasing innovation of products and increase in
productivity with quality of work(Rodd, 2015).
Motivating Employees : The best way to reduce negative impact of change on
organisational behaviour is motivation to employees. It is necessary for Toyota to motivate its
employees so that the employees can accept the change as early as possible. Organisation needs
to help employees insetting the clear goals and expectation by making employees comfortable
with the change implementation and information should be shared to employees for the
betterment in decision making by employees. Employees feel interested and they easily accept
change when they are provided with the power of decision making which empower them to
manage change accordingly. They can be motivated by giving rewards and incentives so that
they can easily implement the change and work effectively. The success of employees can be
celebrated by Toyota by giving them recognition and appreciation for the good work. It increases
there engagement and generates interest in accepting change to achieve objectives and goals of
the company(Strayer, 2016).
Communication : The best way to reduce negative impact of change is communication.
A manager can communicate change is to explicitly tell employees what is going on. Formal and
informal usage of communication allows ensuring that all the employees receive the news about
the change in some way or another. Employing several ways in which Toyota to communicate
change helps in explaining the vision and objective behind the change. By communicating,
employees can express the problems faced in change implementation so that Toyota can
overcome the issues that are being faced in change. It gives confident to employees that they are
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being involved in the procedure of change which encourages them to work effectively and
efficiently that will increase the productivity of the organisation(Lam, 2017).
LO 3
P4 Assessment of organisational change barriers and their influence on leadership decision
making.
In Toyota company the barriers that organisation has to face due to the changes that are
taking place in the company to increase the sales and production. The leaders are involved to
deal with the changes in the company and take decision according to the dynamic environment.
With the help of force field analysis the company can define its objective to achieve success. The
barriers are discussed as followed
 INEFFECTIVENESS IN LEADERS: by making changes in the Toyota company the
leaders are the most influential part of the company as the company leaders have to
develop the employee to work in the changing organisation as smoothly and flexible in
organisational culture. The ineffective leaders are not able to deal with the changes in the
organisation which may lead the employee on wrong path from achieving the Toyota
goal to increases their sales and revenue in the company. The leader faces the sense of
fear and not able to understand the sensitivity in of the worker which lead to create the
barrier in the Toyota company(Espedal, 2017). Leaders can provide proper guidance to
the employee to deal the changes and training is beneficial for the employee.
 POOR COMMUNICATION LEVEL: the most responsible and important part in the
Toyota company is to communication it is required at all the level of the company as the
stakeholder are also required to communicate about the company financial report which
will make understand the investors to invest in the Toyota company. When the
organisation deals with the changes the broken communication will expect to reduce the
saved cost target. The leadership decision will be influenced to create confusion and lack
of understanding in the employees which will decrease the enthusiasms in employee to
deals with the changes.
 COMPLEXITY IN OPERATING PROCESS:If Toyota company follows the complex
process structure in the operating activity of the company then it will lead to create
another complex behaviour for change management in the company(Glass and Cook,
2016). Toyota is the large organisation and to manage it the effective and efficient
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planning is required for the company. For the leadership decision making influences the
to keep the company operating process as simple with the help of keeping desired change
in the mind. The leaders plan to keep less policy for changes made by the company. For
the success of the Toyota, the company can make changes in the operating process of
company and can reduce the failure to meet the demand of its customer because due to
increasing trends and demands in the market the company has to deal with the dynamic
environment (Wylie and et.al., 2017).
 EXPECTED RESULT: In any company the minute changes due to change management
are possible. The company focuses to revenue and sales with the help of change
management system. The company has to deal with insignificant changes in the resulted
productivity in the company. Leaders decision influence by introducing new idea in the
product which was different from the any company the has entered with such innovative
trend in the market. When Toyota company introduced the hybrid electronic auto-mobile
vehicle in the market the company was not aware for its success in the market and risked
taking decision on bringing new trend in the market. When company launched its vehicle
the people widely accepted the new product and it was mass market in japan and around
the world.
 FEAR AND UNFAMILIARITY: Toyota company face the fear of many threats in the
market because of its large organisation structure the company has to face the fear of
competitors in the market (Doppelt, 2017). Fear on introduction of new trend in the
market, adoption of advance technology by the rival company in the market. The leaders
face difficulties to deal with the changes that happen in the change management. The
decisions taken by the leaders influences to adopt new technology employees are given
training to handle the new technology.
The force field analysis is done to increase the efficiency of the Toyota company and increase
the productivity of the company with sale and revenue increment year by year. With the help of
force field analysis the company can follow certain steps to improve its efficiency and deal with
the changes in the company. Firstly to know the problem that company is facing and then to
understand and identify the objective of the company to the employee so that they can know
about the changes taking place in the organisation. Next step is to identify the forces that are
making pressure on the interrelationship among the company (Watts, 2019). After identification
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of the forces the company evaluates the present situation in the company which highlights the
pressure on the company.
LO 4
P5 Explain the main leadership approaches and how they affect the change in organisation
Leadership approaches refer to the style in which the leaders follows to guide, motivate
and handle the group of the people in the organisation. By understanding the leader in which
way they manage and give guidance to the team is been studied by applying different
approaches.
AUTOCRATIC LEADERSHIP APPROACH: In this type of the leader ship approach in which
the leader follows to give command to the team member and keep control on the team members.
In this kind of leadership style the leader does not involve the team members to participate in the
decision making. The leader control on the various operating activities and the decision making
power are with the leaders. It is a kind of centralisation of the power to take the decision. In this
approach the creativity and the innovative ideas for the leaders are limited. The style usually
demotivate the employee because the leader is not friendly with the employee and becomes
bossy for employee (Lopez and Wise, 2015). This type of leadership approach can be also
termed as dictatorial leadership approach.
With this type of leadership approach if Toyota company follows then the organisation will not
be able to get the creative idea from the employee and cannot produce changed trend market in
the company. The organisational culture in the company changes and becomes complicated to
communicate with the higher authority.
DEMOCRATIC LEADERSHIP APPROACH: in this approach the leaders creates such type of
environment for the team members to participate in the decision making of the company. This
leadership approach can also be termed as participative approach. While following this type of
leadership approach by the company the leaders is get varieties of ideas from the team members.
The members get encouraged to share their views and thoughts with the leader. With this
approach the employee are motivated to work and give innovative ideas to the company which in
return develops the capability in the employee. The company increases its efficiency and quality
which increase the production in the company with the help of team work. The organisational
culture in the company becomes flexible for employee and follows smooth communication
system in the company(Iles, 2017).
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Toyota company follows democratic leadership style in which the company follows the flexible
organisational framework in which the employee are free to convey their idea to the higher
authority. Company involve its members like stakeholder to participate in the decision making
authority in the company. With the lots of advice given by the member to take decision the
company leaders fails to take a correct decision for the company and due to this the conflicts
may arise between the members of the company. With the help of team work the company
reached the heights in the corporate world. Hybrid electronic vehicle is the example for the
democratic leadership style in the company (Byers, 2017). The beneficial points for following
democratic leadership style are more than as compared to the autocratic leadership style.
SITUATIONAL LEADERSHIP APPROACH: In this type of leadership approach the leaders
changes their style according to the situation in the company. The gaol of the company decides
which kind of leadership approach will be suitable for the company to achieve its goal. This kind
of leadership style is the flexible. As the name defines its meaning the situational means the
leader change style according to the demand of the company aims. In this kind of approach the
leaders need to have skills to adapt the changes with the situation in the company(Leadership
Approaches, 2019). In this kind of leadership the leaders motivates the employee to change
according to the situation demands and develop their skill while changes taking place in the
organisation. The leaders needed to active at each and every step of organisational changes. The
situation in the company should be favourable to deal with the factors that influence the decision
making in the company.
Toyota company follows the situational leadership then the company will meet the requirement
for the delegation of the authority(Rodd, 2015). According to the situation the employee may or
may not take part in the decision making process of the company. In selling the leaders can get
suggestion from employee or can get opinion on increasing the sells of the company. In
situational leadership the leaders communicate with the employee to make the work towards the
objective of the company and create the responsibilities for the employee to work accordingly.
The use of situational leadership is effective when the company wants the same result.
CONCLUSION
From the above report it can be concluded that the Toyota company is able to adapt the
changes made in the management system. Change management is the ability of the organisation
to deal with the changes made by the company. The employee gets affected by the changes
10

because they are required to adapt the changes with the help of training and development, handle
new technology etc. organisational barriers faced by the company implements negative impact
on the company. In internal change the company culture and structure affects the leadership
behaviour. In external the political, social, etc. factors affects the decision making for the leaders
in the company. The Toyota company follows the democratic leadership style which helps the
company to work in team achieve group objective.
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Lam, S.J., 2017. The Challenge of Leading Change: How Sources of Authority and Change
Management Models Intersect to Promote School Improvement.
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