Organizational Strategy of Toyota: A Comprehensive Analysis

This report provides a comprehensive analysis of Toyota's organizational strategy. It begins by examining the macro-environmental factors influencing Toyota's business, including political, economic, social, technological, environmental, and legal factors. The report then uses Porter's Five Forces model to analyze Toyota's industry position, assessing supplier power, consumer power, threats of substitution, new entry, and competitive rivalry. Furthermore, it delves into Toyota's internal resources and capabilities using the VRIO framework, evaluating its brand equity, technological capabilities, focus on research and innovation, large product portfolio, and global presence. Finally, the report considers the stakeholder perspective, highlighting how Toyota's strategies impact various stakeholders. The analysis underscores Toyota's robust position in the global automotive market and its strategic approaches to maintain and enhance its competitive advantage.

ORGANISATIONAL
STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Macro environment factors of Toyota................................................................................1
2.Industry position of Toyota.................................................................................................2
3. Internal resources and capabilities......................................................................................4
4. Stakeholder perspective......................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Organisational strategy is combination of actions performed by company to achieve its
long term goals. Toyota is a car manufacturing company which was founded in 1937 and
currently performing its business activity globally. The study includes brief analysis of macro-
environment factors, internal resources of Toyota. It also includes discussion about its industrial
position and its shareholders' perspectives.
MAIN BODY
1. Macro environment factors of Toyota
Macro environment factors are those which are beyond the control of business, but these
have a major influence over the normal course of operations of business. Key macro
environment factors influencing business of Toyota are:
 Political factors: Toyota has its business at global level. In this regard, political factors
majorly influence company's business (Sydow, Schüßler and Müller-Seitz, 2015).
Sustainable development of business depends upon Political policies of country. If it is in
favor of company's policies, it can run its business smoothly in that country. In case of
any unfavorable policy, company may need to change its business policy for business of
that country.
 Economic factors: Economic factors includes those which effects spending power of
population of the country like inflation rate, saving rate, foreign exchange rate, etc.
Toyota needs to consider these factors to analyse economic factor's influence over the
business:
▪ Inflation rate of the country, as it effects the amount to be spent by population on
automobiles.
▪ Efficiency of market, as it has great influence over its shareholders' value.
▪ Economic growth rate of the country, as it has great influence over consumer's
interest in purchasing automobiles.
 Social factors: Social factors include socio-cultural factors of the country. This factor
has great influence over every business as it decides consumer's interest towards any
industry. For analyzing these factors, following points need to be consider:
▪ Leisure interest of population, as if population likes to travel in leisure, it will
enhance the sale of Toyota.
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▪ Education level of population, as it decides the interest and attitude of country's
population towards products of Toyota.
▪ Income of population also affects the buying attitude of population.
 Technological factors: Being an automobile company, Toyota has to compete with
technological changes in global market, as it directly effects the consumer's attraction
towards company's product. Toyota has to research the latest technology in the global
market and develop its products accordingly. If company do not have frequent innovation
as per the technological changes, it may lose its customers which directly have influence
over profitability of company (Kumar and Maqbool, 2018).
 Environmental factors: t includes weather, climate, law relating to environment
pollution, etc. country provides environmental responsibility to each company, which
have to be fulfilled by every business. Responsibility like developing Eco-friendly
products, innovating its manufacturing process as to reduce the pollution in the country,
etc. helps in maintaining pollution in the country. If Toyota follows all environmental
rules, it will also help it in attracting customers towards company's product, as nowadays
people like to buy Eco-friendly products more (Ambrosini, Jenkins and Collier, 2007).
 Legal factors: Every country has its own legal frameworks. Toyota is having its business
globally, therefore, it has to take into account each country's laws like Anti-trust law,
employment law, health and safety law, etc. in which it has its business. All these laws
have been made to provide safety to the company. But, if company fails to follow any
law it may lead to increase number of proceedings over the business, which will directly
affect the image of company at global market.
2.Industry position of Toyota
Industry postion can be effectively analysed with help of porter's five forces model.
Porter's five forces model and analysis of TOYOTA's position
Supplier's power of increasing cost
It means power of suppliers to increase cost of raw materials. It can be reduced by
availability of number of suppliers of installing plants and reducing need of suppliers. Recently,
Toyota made high investment in a new plant, which increased its production capacity at large
scale. This step helped the company in enhancing its capacity of selling products globally and
profitability as well. This step also created new jobs in the market which resulted in enhancing
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its brand image as well (Business Network Positioning Analysis of Toyota, 2018). It has helped
the company in reducing need of suppliers which directly effected the suppliers power of the
business. In this regard, supplier's bargain power is low in case of Toyot.
.
Consumer's bargain power
It refers to providing unique products as to reduce the power consumers for bargaining.
Toyota has developed unique cars to sale in the global market. It has helped the company in
becoming one of the largest selling company in the world. In addition to develop the largest
selling network, company also has a strategy to strengthen its root in all over the world. With this
strategy, company abide culture, trends and customs of all countries and sell its product
accordingly in the countries. Through this strategy it has developed a strong market in all over
the world (Fukatsu and Takenaka, Toyota Industries Corp, 2016). Hence, Toyota has reduced the
consumer's bargain power by providing them, unique cars at effective price range.
Threats of substitution
It refers to threat for the company to shift towards other company's product. Toyota has
its customers of all level. Because, it manufactures cars for customers of each level. It
manufactures low cost models and high cost model as well. This breakdown of its products has
helped the company in attracting customers of each level, through which it has gained the largest
market share in the automobile industry globally (Matsuda, Toyota Motor Corp, 2017).
It has effectively competed with company of each level. It manufactures cars of all
categories. Company have strategy to give different brand name to cars of different level. Which
has helped the company in competing at each level of market and enhance its positioning in the
global market. It attracts the customers towards company.
Toyota has manufactured Eco-friendly products through which it has attracted maximum
number of customers towards its cars, as people nowadays attracts more towards the Eco-
friendly products. It also has influenced the company's brand positioning in the market and
becoming the largest automobile company in global market. These strategies help company in
maintaining customers for long time and eliminating substitutions for them. In this regard,
substitutions have a less power to attract shift the loyal customers of Toyota towards their
product.
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Threats of new entry
Every profitable market has threat of entering new busineses. It results in reduction of
profitability and market share of existing business. Toyota has small number of competitors in
automobile industry like Volkswagen, BMW, Honda, etc. It increases the possibility of new
entry in the market, to compete effectively, company needs to make strategies majorly relating to
fuel efficiency, globalization, product development and innovation, marketing, etc. Company has
developed effective strategies to face strong competition in market. In this way, new entries have
very less power to gain the market share of Toyota and reduce its profitability in business.
Competitive revelry:
It refers to analyzing the competition in the market and developing strategies accordingly
to increase the positioning of business. Today, Toyota is the largest car selling and
manufacturing company in all over the world. Company frequently innovates its cars, which
helps the company in attracting large number of customers towards the company's cars. It helps
company in enhancing its position in global competitive market (Miyakawa, 2017).
It is analysed that Toyota has a strong position in auto mobile industry. It has developed
strong strategies to sustain in the global market along with strengthening its roots in the global
market. In order to this, company has become a largest auto mobile selling company in all over
the world. In this regard, Toyota ahas a strong power to face high competition in the market.
3. Internal resources and capabilities
Internal resources and capabilities of Toyota company is analysed with its strength
opportunities. Therefore, strength of Toyota which represent its internal capabilities it will be
analysed through VRIO model of strategic management. This is the business analysis framework
model which is used by wide range of organisations by which what is good for business will get
measured (Johnson and et.al., 2011). There are four ways by which resources will get measured
that is value, rarity, imitability and organisation. Therefore, internal resources and capabilities of
Toyota through this model is as follows-
Is valuable? Is rare? Is difficult to
imitate?
Is
organization
organized
around?
What is the
result?
Result
YES YES YES YES Brand Equity Competitive
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advantage
YES NO Yes NO Technological
capabilities
Unused
competitive
advantage
YES NO NO YES Focus on
research and
innovation
Competitive
equality
YES YES YES YES Large product
portfolio
Long term
competitive
advantage
YES NO NO YES It has global
presence.
Competitive
equality
Brand Equity: For large and global businesses, brand equity is considered as the critical
strength (Azevedo and et.al., 2015). Therefore, with passage of years, Toyota has been able to
build strong brand equity by which its reputation in business market has increased. Because of
this factor, company has won trust of customers and became one of the most trusted brand in
economy of the world. With the continuous innovative strategies, company have developed the
best product quality, customer loyalty and strong goodwill in business market. Overall result of
this brand equity is that company has translated itself in strong financial performance among the
vehicle brand of the world.
Technological capabilities: with context to technological capability, Toyota is one the
leading company in auto mobile market. It almost has 69 manufacturing facility out of which 16
are only in Japan and 40 in Asia. One of the effective capability of this company is that it has 16
research and development sites around the world which makes it more strong in auto mobile
market (Anheier, 2014). With this continuous technological advancement, company has achieved
the highest efficiency in production activity of this sector.
Focus on research and innovation: research and innovation is the main focus point for
Toyota company because of that company will have achieved competitive advantage around the
world. Main perspective of company is to provide better quality and innovative product in
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market. Therefore, this brand is heavily investing in providing electrified vehicles to its users
(Ketata, Sofka and Grimpe, 2015). Therefore, company have high capabilities to provide vehicle
with appropriate research and innovation. In this sector, every year company makes a huge
financial statement.
Large product portfolio: as this company is one of the leading brand in world because of
that Toyota has large and diverse portfolio. With this large portfolio, financial position of
company is also strong in business market. It makes sedans, sports vehicles, minivans etc. This
company also owns Lexus which is known for premium vehicle brand (Cunningham and Harney,
2012).
It has global presence: It is a true global brand and across the world it sells products in
more than 170 countries. This global presence is the strength of Toyota which overall leads to
higher sales and revenue. Toyota is one of the main competitor for another auto mobile industries
around the world.
These are the internal resources and capabilities of Toyota which makes it financial
strong in auto mobile sector of world (Del Río and et.al., 2016).
4. Stakeholder perspective
Toyota has wide corporate social responsibility strategies which cover concern for
stakeholder views (Rowland, 2017). This perspective of stakeholder influence brand image of
company, its human resource capabilities and financial soundness. By measuring the interest,
firm maintains its social responsibility which address stakeholders interest. Company has
developed an effective contribution in CSR so that stakeholder's views get satisfied.
As a global firm around the world, its CRS activity deals with demand and interest of its
various stakeholder. Therefore, its group if stakeholders are as follows-
 Employees- Employees are the most significant stakeholders for Toyota company.
Interest of these stakeholders is for job security, career development and fair employment
practises. Therefore, CSR strategies of Toyota develop to address interest in terms
salaries and wages of employees. To satisfy the interest of this group, Toyota have
effective training and development programs which includes Toyota Way development
and Management development (Liao and Phan, 2016). Company also provides financial
support to these groups so that they will be able to continue their formal education. Thus,
its CRS policy programs satisfy interest of this group of stakeholders.
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 Customers- For Toyota, customers are its second priority in its CSR strategies. Main
interest of customers is regarding high quality services and auto mobiles in fair range.
Therefore, to satisfy these groups company addresses interest of customer with proper
innovative products by developing aim of maximising efficiency and quality of products
(Madueño and et.al., 2016). Thus, company will able to cover interest of these group of
stakeholder.
 Investor- For Toyota another group of major stakeholder is its investor. Main interest of
this stakeholder is regarding profitability of company. Therefore, to address issues of this
stakeholder, main emphasis of Toyota is on expansion of global business. Through
innovation and rapid expansion, Toyota's CSR strategies able to address interest of these
group of stakeholders.
 Environment- For targeting environmental goals, Toyota has effective CSR strategies.
Main interest of this stakeholder as environment includes sustainability and
environmental conservation. To address this issues company addresses through Toyota
Environmental Activities Grant Program. Through CSR program, firm is donating auto
mobiles and funds which used for the development of environment. In 2008, Toyota has
donated five hybrid cars and more than $1 million to provide support to Everglades
National Park.
 Communities- As a stakeholder, concern of this group is regarding socio-economic
development (Corten, Steijvers and Lybaert, 2018). Toyota has developed CSR strategies
which address these group through various community development and with support
programs. For example: company has effective education outreach program which
promote literacy. Toyota also have Go Safely initiative program in which they provide
safe driving education for families of society. Company also work with other
organisations for the development of society. Therefore, these policies of organisation
satisfy interest of community stakeholders (Grant, 2016).
CONCLUSION
From the above report it is concluded that to achieve success of business, organisational
strategy needs to be developed by every entity. In this report, pestle analysis of company in
which political, economic, social, legal and technological factors are analysed which influenced
normal course of business operations. Further, industry position of company is measured by
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which it is concluded that company has strong strategies which established to achieve growth in
auto mobile market. Through the use of VRIO model, internal resources and capabilities of
Toyota company analysed in this report which concluded that it has some unique features which
is helping it in capturing business market across the world. Therefore, it can be summarised that
organisational strategies plays an important role to meet organisational objectives.
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REFERENCES
Books and Journals
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Management. A Multi-Perspective Approach. Palgrave Macmillan, Basingstoke,
Hampshire, New York. pp.1-7.
Anheier, H.K., 2014. Nonprofit organizations: Theory, management, policy. Routledge.
Azevedo, C.L and et.al., 2015. Modeling resources and capabilities in enterprise architecture: A
well-founded ontology-based proposal for ArchiMate. Information Systems. 54. pp.235-
262.
Corten, M., Steijvers, T. and Lybaert, N., 2018. Auditor choice in private firms: a stakeholders
perspective. Managerial Auditing Journal. 33(2). pp.146-170.
Cunningham, J. and Harney, B., 2012. Strategy and strategists. Oxford University Press.
Del Río, P and et.al., 2016. Resources, capabilities and competences for eco-
innovation. Technological and Economic Development of Economy. 22(2). pp.274-292.
Fukatsu, F. and Takenaka, T., Toyota Industries Corp, 2016. Industrial vehicle. U.S. Patent
Application 15/014,650.
Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.
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Ketata, I., Sofka, W. and Grimpe, C., 2015. The role of internal capabilities and firms'
environment for sustainable innovation: evidence for G ermany. R&d Management. 45(1).
pp.60-75.
Kumar, G. and Maqbool, J., 2018. Financial technology in the automobile industry.
Liao, Y.C. and Phan, P.H., 2016. Internal capabilities, external structural holes network
positions, and knowledge creation. The Journal of Technology Transfer. 41(5). pp.1148-
1167.
Madueño, J.H and et.al., 2016. Relationship between corporate social responsibility and
competitive performance in Spanish SMEs: Empirical evidence from a Stakeholders’
perspective. BRQ Business Research Quarterly. 19(1). pp.55-72.
Matsuda, Y., Toyota Motor Corp, 2017. Arm for a robot. U.S. Patent Application 29/547,945.
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Miyakawa, Y., 2017. The transformation of the Japanese motor vehicle industry and its role in
the world: industrial restructuring and technical evolution. In Restructuring the Global
Automobile Industry (pp. 88-113). Routledge.
Sydow, J., Schüßler, E. and Müller-Seitz, G., 2015. Managing inter-organizational relations:
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Online
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<https://file.scirp.org/pdf/AJIBM_2018071214113018.pdf>
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<http://panmore.com/toyota-stakeholders-csr-analysis>
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