Strategic Management and Practices of Toyota Motor Corporation

This report provides a comprehensive analysis of Toyota Motor Corporation's strategic management and leadership practices. It examines Toyota's journey since 1937, highlighting its significant impact on the automotive industry through innovative practices, such as hybrid electric vehicles and its substantial revenue generation. The report delves into the key stages of strategic management, including strategy formulation, implementation, and evaluation, emphasizing the importance of a strong managerial department in navigating the competitive market. It explores Toyota's unique leadership style, focus on stakeholder relations, and commitment to a healthy organizational environment. The analysis covers Toyota's supply chain management, innovative initiatives, organizational culture, and employee-centric policies, including lean management principles and flexible strategies. The report underscores the significance of strategic management tools, internal and external environment analysis, and the adoption of innovative technologies to sustain competitive advantage. By studying Toyota's approach, the report offers insights into how other organizations can enhance their strategic planning and leadership to achieve long-term organizational goals and maintain market leadership.

Running head: MANAGEMENT THEORY AND PRACTICES
Management Theory and Practices
Name of the Student
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Table of Contents
Introduction:...............................................................................................................................2
Analysis:.................................................................................................................................2
Recommendations:.................................................................................................................8
Conclusion:..............................................................................................................................10
Reference:................................................................................................................................12

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Introduction:
Strategic management and plays crucial role in the development of any business
organization. In this competitive era, where all the business organization is incorporating best
practices to battle against the rival companies and earn the desired target in the society,
strategic management and works as strength of the business organization that enhances the
competitive advantage of the companies (Hill, Jones, & Schilling, 2014). Toyota Motor
Corporation is one of the renowned automotive manufacturer that has put a strong impact on
the on the car industry by its innovative practices. The journey of Toyota has been started in
1937. The organization covers a huge market share. Toyota has brought revolution in the
motor vehicle industry by introducing hybrid electric vehicles. As per the report, Toyota
earns 28.40 trillion revenue per year by providing its service worldwide. The organization has
not only set an example in front of the world by its profit margin, but it has become a pioneer
in terms of strategic management and (Chiarini & Vagnoni, 2015). The organization has
adopted a unique style of leadership that has led the organization to achieve the desired
position in the local as well as global automotive industry. This innovative management style
of Toyota leaders has distinguished it from the other business organization. Toyota is
considered as one of the pioneer of strategic management. The leaders of Toyota has left no
stone unturned to maintain healthy environment within the organization. They pay close
attention to their relation with the stakeholders (toyota-global.com, 2017).
The following article has concentrated on the strategic management and managerial
skills of Toyota. It has enlightened all the practices of Toyota management that influences the
growth of the organization. The objective of the article is to provide a vivid picture of the
organizational structure of Toyota.

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Analysis:
Strategic management is considered as one of the key success factors of the business
organization. It has been argued that it consists of three major stages that plays crucial role in
the growth of any business organization, such as- strategy formulation, strategy
implementation and strategy evaluation (Rothaermel, 2015).
Strategy formulation is considered as the primary stage of strategic management. In
this stage, the management team of the business organization forms suitable strategies for the
organization. This stage plays crucial role in the development of the organization. Leaders
need to consider all the aspects of the business organization while constructing the
organizational strategies (Harrison & John, 2013). Otherwise, it may lead the organization
towards the wrong direction. Before making any strategy, it is important to analyse the
situation of the organization and conduct market research. It will be beneficial to construct a
suitable set of norms for the organization that can support organizational growth.
The second stage of the strategic management is to implement the formulated
strategies within the organizational structure. While implementing strategies, the
management of the business organization needs to make sure that all organizational members
are aware of the newly constructed strategies and they are willing to adopt these strategies. In
order to achieve the goal, the organizational management needs to maintain healthy and
interactive relation with all the internal and external stakeholders. They need to provide a
transparent idea about the organizational strategy and the objective of the management to
incorporate such strategies. It will be helpful for the members to adopt these strategies
(Morden, 2016).
The last and final stage of the strategic management is to evaluate the consequence to
implement these strategies. This stage plays crucial role in the development of the

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organization as it helps the organizational management to identify the loopholes in the
strategy and responsible areas of the management where they need to put more efforts to
strengthen their organizational structure. It helps the organizational management to monitor
the development of the organization. Management must scrutinize the profit margin, sales
rate and market demand of the organization to evaluate the impact of the strategy (Chen,
Delmas, & Lieberman, 2015).
These three key stages lead any business organization to make a strong remark in the
industry. Management department of any organization are mainly responsible to perform this
role. The success of the business organization is highly relied on the efficiency of the
managerial department of the company (Frynas & Mellahi, 2015). The competitive nature of
the market has been drastically increased since past few years due to arrival of many rival
companies. It has become difficult for any business organization to survive in this
competitive era. Hence, it is mandatory for the managerial department of the business
organization to perform their role in an appropriate manner to stimulate the function of the
organization. They need to pay close attention to the requirement of the organization while
making the organizational strategy. Strategic management focuses on the holistic growth of
the organization (Hubbard, Rice, & Galvin, 2014). Thus, it is important for the leaders of
business companies to concentrate on the overall organizational structure instead of a specific
section. They need to perform versatile role to support the growth of the organization. It has
been argued that strategic management is the set of initiative that has been mainly taken by
the management of the organization on the behalf of the authority and it provides right
direction to the organization (Kotler, Berger, & Bickhoff, 2016). Thus, it can be stated that
success of strategic management is highly dependent on the effectiveness and strengths of the
higher management of the business organization.

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As opined by Michael Porter, the managerial department needs to focus on three basic
principles, such as- creating unique and innovative strategies, managing the quality of the
organizational strategy and fit in the market trend by managing the organizational activity
(Stead & Stead, 2013). These are the key words of success in recent time for any business
organization. It is important for the business organization to adopt unique strategies that can
distinguish it from the rival companies and helpful to survive in the competition. Thus,
managerial department must be aware of these factors while making any strategy to carry out
any business venture. As claimed by Porter, business organizations must manage their
activities to fit in the market trend. The scenario of the market is transforming day by day.
Thus, it is important for the business organizations to design their structure as per the market
structure. Otherwise, it may face deadly consequence in coming future (Peppers & Rogers,
2016).
According to reports, strategic management involves the analysis of the external and
internal environment (Jenkins & Williamson, 2015). Both environment plays key role in the
success of the organization. It is management’s responsibility to gather all the relevant
information about the external and internal environment of the organization while making the
organizational strategy. Otherwise, the organization may face various issues in near future.
There are various tools that are used by the organizational management to evaluate the
internal and external analysis. It is highly beneficial for the organization to earn the desired
position in the industry. Otherwise, the high competitive nature of the market may challenge
the existence of the business organization and it may fails to achieve the desired position in
the industry (Tallman & Koza, 2016).
In this scenario, it can be stated that Toyota management has tried to follow all the
aspects of strategic management in an appropriate manner. The organization is run by a team
of skilled and experienced leaders that preserve quality experience in the respective field.

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They plays key role in the development of Toyota. They have a clear idea about the
organizational objective and they design the organizational structure accordingly. Being a
largest producer of the automobile, Toyota has set an expectation level among its consumers.
It is important for the management of Toyota to meet the expectation level of the loyal
consumers to earn the long-term organizational goal by incorporating efficient strategies.
Managerial department stay close to the requirement and preference of the target market and
they ensure that the organization and its members are performing in an appropriate manner by
adopting the strategies formulated by them. The organizational management always try to
incorporate some unique strategies within the organizational rulebook that will be helpful to
beat the rival business organizations (Smith, 2014). There are some key features of Toyota
that reflects the effectiveness of strategic management of the organization, such as-
Toyota management always maintains a strong supply chain management. They
maintain an interactive relation with all the members of the supply chain. Being a renowned
global automobile company, Toyota needs to maintain a huge supply chain, as the
management is aware of the fact that it is impossible to provide quality service to the large
number of consumers without strong and effective supply chain management. They stay close
to their raw material suppliers and distributors and provide them a transparent idea about the
requirement and demand of the consumers (Kaynak, Mockler, & Dologite, 2014).
It is often evident that the management of Toyota takes some innovative initiatives
that lead the organization to the next level of success. In 197, Toyota was the first automobile
company that has started manufacturing small and fuel-efficient cars which has drawn the
attention of the large number of target consumers. As the price of the fuel has been fuelled
since past few years, such cars have become the desired cars for the buyers. In recent time,
the organization has started producing electric cars that will be beneficial to fight against the
global warming and other forms of environmental pollution (Ruff, 2015).

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The management always maintains healthy environment within the organization.
Toyota always maintains a culture and values within the organization. The values and ethics
of Toyota are considered as the main resource of the organization that stimulates the growth
of the organization. The organizational management of Toyota follows some key principles
to run the organization, such as- unique, teamwork, respect. Toyota authority maintains
healthy and peaceful environment within the organization to ensure a bright future. Internal
stakeholders of the organization are considered as one of the weapon of the organization.
Toyota management tries to maintain healthy relation with them to support the growth of
their performance, as they are aware of the fact that efficient performance of the employees
can brighten up the brand image of the organization (Pisano, 2016).
There are some policies that are followed by the higher management of Toyota, such
as- management must take decision on the basis of the long-term goal of the organization,
problems must be highlighted by the members of the organization and must be resolved on
the priority basis, innovative and trustworthy technologies must be adopted by the
organization that will support the growth of employee’s performance, management must
focus on all the aspects of the organization while making any decision and must consider the
organizational goal, workers must be able to take up new challenges, as it will be helpful for
their performance development (Percy & Elliott, 2016).
Toyota is known for its lean management where employees are influenced and
motivated to bring changes in the system of the organization. They take active part in the
organizational decision-making process and they are being empowered to lead the
organization to the leading position (Melander, et al., 2016).
Toyota has adopted some innovative policies to maintain healthy relation with the
employees. Being one of the leading business organization, Toyota possesses a large

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workforce with 25000 employees. Although, it is not possible for the employers to address
each of their employees every time, they have made some innovative policies to provide
support to their employees. Toyota always stands by the side of their employees when they
require the support of their employers. They have included some flexible and transparent
strategies that can be helpful for the employees. It helps the organization to retain their
employee for a long period of time and it puts a great impact on the organizational
performance. This is one of the major reasons for the success of the organization (Schmidt &
Farkas, 2016).
As per the previous discussion, it can be stated that all the theoretical concepts
discussed previously are incorporated in the organizational structure. These concepts have
greatly influenced the managerial skills of the Toyota management. The management has
followed three crucial stages of the strategic management. They often conduct market
research and environmental analysis while constructing organizational strategy. It provides a
vivid idea to them about the condition of the market and highlights the areas where they need
to put extra effort to strengthen the organizational structure. By analysing the situation,
management implement some innovative strategies that can influence organizational
function, such as- lean management, electric cars and so on. While making these strategies
the management always encourage their external and internal stakeholders to participate in
the organizational decision making process. It motivates their stakeholders to adopt the
organizational strategies and policies in an appropriate manner and work as a team to earn the
desired position in the society. It is the primary reason for the success of Toyota. By such
innovative and unique practices, the organization has secured the highest position in the
automotive industry (Chowdhury, 2014).

9MANAGEMENT THEORY AND PRACTICES
Recommendations:
Although, the management of Toyota has left no stone unturned to provide quality
service to the consumers and enlighten the brand image of the organization, there are some
loopholes in the organizational structure of Toyota that can be harmful for the reputation of
the organization and may restrict the growth.
It has been evident in recent time, that the organization has faced various challenges
due to the lack of efficiency of the crisis management team of the organization (Yan, Choi,
Kim, & Yang, 2015). Being a leading name in the business world, Toyota needs to pay close
attention to the performance of the crisis management team. It is the responsibility off the
higher management of the Toyota to make sure that all the members of Crisis management is
performing appropriately and providing adequate support to the organization. The crisis
management team must be alert 24*7 to save the organization and its reputation from any
kind of crisis. The organizational management must appoint some experienced and efficient
members who can serve the organization with their quality performance. They must be aware
of their role and responsibility towards the organization and they must be committed to their
job. Otherwise, they will not be able to provide sufficient support to their organization.
In recent time, it has been evident, that the production of the car has faced several
challenges in Toyota. The motor of Toyota has recently failed in the test, which leads the
organization to face a massive crisis recently. Thus, the organization must recruit some
experienced and skilled engineers who can boost up the manufacturing process of the
organization. Engineers who preserve quality experience in the field can save the
organization to face such disasters.
As per the report, in many cases the organizational management of Toyota
refuses to take responsibility and blame their internal stakeholders (Lu, Au, Peng, & Xu,

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2013). Such practices must be avoided. The organizational management must be aware of the
fact that it is important to maintain the trust of the internal and external stakeholders. They
must take the responsibility when required.
The organizational management of Toyota must invest heavily to rectify their
loopholes on an immediate basis. Otherwise, it can be harmful for the growth of the
organization. Problems need to be resolved as early as possible. They must appoint skilled
employees and adopt efficient techniques to avoid any problems that will be harmful for the
growth of the organization.
The organizational management need to maintain healthy relation with the
suppliers. They must use modern communication tools to maintain regular interaction with
the suppliers and distributors. It will be helpful for the organization to provide clear idea
about the requirement and preference of the consumers. At the same time, it will help the
organization to provide uninterrupted service to the consumers and survive in the
competition.
Leaders of Toyota must be aware of their role and responsibility towards the
organization. They must play their role in an appropriate manner. It is their responsibility to
look after all the aspects of the organization and resolve all the issues that can destroy the
reputation among the target market of Toyota. It is often evident that organization is facing
several challenges due to the negligence of the leaders of the organization. Thus, leaders must
be committed towards their role and responsibility and they must be aware of the
organizational objective and vision mission while making any strategies for the growth of the
organization.

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Conclusion:
As per the previous discussion, it can be stated that Toyota has set an example for
other business organization by following the path of the strategic management. They follow
all the relevant concept of the organizational strategic management. The managerial
department of the organization maintains conduct various market researches to design their
organizational structure. They analyse their external and internal environment to make sure
that the strategies have been adopted by the management are suitable to support the growth of
the organization. The leaders of Toyota follow the three crucial stages while constructing
organizational strategy. Therefore, they follow the path of innovation while making any
strategy. Such practices are considered as the key success factor of the organization. It has led
the organization to adopt innovative initiatives, such as – lean management, innovation of
modern and efficient products and so on. Due to such efficient managerial skills of the
leaders, the organization has brought revolutionary changes in the world of automobile and
successfully carried out many unique business ventures. Although, the organizational
structure of Toyota has been designed in a unique manner, there are some loopholes that can
be harmful for the reputation of the organization, such as- lack of sense of responsibility
among the leaders, lack of efficiency among the crisis management team, lack of skilled and
experienced engineers, lack of investment to rectify the mistakes and lack of efficiency
among the employees and so on. These factors have become one of the major concerned of
Toyota authority. Thus, the organizational management must consider the facts while
designing their organizational structure in order to earn the desired position in the industry. In
this competitive era, it is essential for the management of the organization to enhance its
competitive advantage by adopting such practices. Otherwise, it will be difficult for them to
survive.