Strategic Management Report: Toyota's Strategy and Operations

This report offers a comprehensive analysis of Toyota's strategic management practices. It begins with an introduction to strategic management and its importance for companies like Toyota. The report then delves into a critical assessment of the procedures used by Toyota in determining its strat...Read More

STRATEGIC
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Critical Assessment of Procedure used by Toyota in strategy determination........................1
TASK 2............................................................................................................................................3
Evaluation of critical models implemented by organisation for strategy determination........3
TASK 3............................................................................................................................................5
Application of Tools within Toyota.......................................................................................5
TASK 4............................................................................................................................................8
Critical Appraisal of Change Management............................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Strategic Management refers to the process and procedure followed by the organisations
in relation to gain a strategic positioning within the marketplace. Moreover, another agenda of
the company is in the context of helping the firm in gaining higher sustainability and ensure
higher productivity and profitability (Rothaermel, 2017). The report below is based on Toyota,
which is one of the biggest car manufacturing companies in the world and has adopted a recent
strategy in relation to changing its manufacturing methods to make the firm more economical.
Hence, the assignment covers critical assessment of processes used by the organisations to
determine their strategies. Moreover, evaluation of several models in relation to determination of
the same is also involved in the process, along with its application. In addition to this, the report
covers critical appraisal of importance of change management based on certain factors like
transformation process, costs, risks and sustainability.
TASK 1
Critical Assessment of Procedure used by Toyota in strategy determination
It is highly essential that several procedures are appropriately implemented and applied
by the organisation which are needed in case to determine as to what strategy the firm is required
to follow in relation to enhancing the scope of improvement in their operations and market
positions. Moreover, critical analysis and interpretation of these information would allow the
company in context of adopting the most feasible, suitable and effective process which could
help in identification of the strategy followed (Ansoff and et. al., 2018).
In relation to Toyota, there are several processes for this purpose that are critically
assessed below:
 Internal Analysis:
This is one of the most prominent and easiest processes which could be adopted by
organisations in relation to highlighting the scope of improvement. This is associated with
determining the strengths and weaknesses of the company, along with determining the
capabilities and competencies within the company. it is a highly crucial strategy in relation to
getting an effective insight within its current operations and strategy. Another point which
reflects its importance within the strategy which are related to identifying the capabilities within
the company which also determines the competence of the areas which require improvement. In
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relation to this, it includes two effective approaches. Within one particular approach, analysis of
strengths and weaknesses of the company is performed by the organisation, whereas the external
opportunities and threats is further determined the company which are based on its merits and
demerits. This strategy is very crucial and easy in application for the firm, where the strategy
would be completely based on the areas where the company needs improvement, in context of
minimising the threats for the company and ceasing several opportunities (Moutinho and Vargas-
Sanchez, 2018).
Moreover, another appropriate method within internal analysis is related to identification
of core competencies of the company. Within this, several resources are required to be identified
by the company, on the basis of which they are evaluated based on how valuable they are in
relation to helping them gain a competitive advantage. It is yet again an effective aspect for the
company in context of identification of its capabilities in ways which reflects upon an
appropriate identification of strategy.
However, there are several disadvantages of using this method as well. For instance, the
focus on development and determining the strategy would be related to internal environment of
the organisation, where there will be limited or no focus on the external environment of the
organisation, which are required to be considered by the firm in relation to identify a core
strategy which would help the company in gaining a competitive advantage in the market as
well.
 External Analysis:
Another process which could be adopted by the company is related to external analysis,
which requires the firm to assess all the factors which belong to the outside environment of the
organisation (Ginter, Duncan and Swayne, 2018). Moreover, it is a highly essential concept
which includes analysis of all the factors that have an appropriate influence and impact on the
organisation and its operations. There are several factors which are required to be appropriately
analysed while performing external analysis. These factors are customers, suppliers, substitutes
within the market, performance of existing competitions, as well as new companies which are
entering the market. It helps a company in determining its position within the overall industry, as
well as assists them in identification of gaps within its desired and current position. This is the
most favourable aspect of this process that it takes the whole analysis in perspective of the
industry, which covers all the effective and appropriate aspects in relation to the industry which
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would be either promoting or refraining the company from gaining a firm position within the
market.
However, it does not take into account the factors which could hamper or hinder
internally within the company while the firm adheres to the industrial standards. Hence, it could
be unfavourable in determining a strategy as it might cause internal tensions within the company
if it lacks adaptability.
However, out of the two processes, a firm must adopt both the procedures in such a way
which contributes towards helping the company in analysing the overall inside out environment
surrounding the firm and its internal capabilities as well. This would further assist the firm in
determining a prominent strategy as to what could perfectly be achieved by the firm by adopting
certain modifying procedures and practices. Moreover, amalgamation of these processes is a
viable approach of the company in relation to highlighting a prominent and blended strategy with
best of both aspects (Lasserre, 2017).
TASK 2
Evaluation of critical models implemented by organisation for strategy determination
Toyoto has been recently change way of production to make the products for this apply
different tools and models such as:
Porters five forces framework: It is a model that applied by the organisation for
analysed and recognised the five competitive forces in order to provide shape in the competitive
environment. Through analysis know about the industry weaknesses as well as strengths. The
porter model mainly apply in any segment of the economy to understand the stages of
competition regarding to particular industry and increase business's long term profitability. It is
also known as five forces model that applied to identify the industry's structure to evaluate
corporate strategy. Through these models identify the attractiveness of particular industry in
terms of five competitive forces such as: The threat of entry: In this factor define about the barriers of the entry in the same
industry, for this required to overcome and compete with them. The threat of the new
entry may be high and many be low. After the entry face the different barriers such as
access to supply and distribution channel, legislation of government (Hitt and Duane
Ireland, 2017).
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 The threat of substitutes: Substitutes are those products that provides by the same
industry but have different nature. When customer not get the particular product so
switch to substitute product. The bargaining power of buyers: The bargaining power of buyer mainly based on the
market outputs. When customer have many alternatives so bargaining power increase
because it is easy to use from one business to another company. The bargaining power of suppliers: This force apply in the company to analysis the
power and control of the supplier that has over the potential to increase prices and
decrease the quality to buy products or services. To determine the supplier power
required to analysis of concentration of supplier and their substitutes supplier.
 The extent of rivalry between competitors: The rival of the company sell out similar
products and services to attract same customer group and provide direct competition to
same industry. The competition of the company mainly depended on the high fixed costs,
industry growth rate, competitors concentration and balance etc.
To analysis the internal activities apply VRIO model which is a strategic analysis tool
and mainly developed to provide support to the organization. Through this tool uncover and keep
secure all the resources as well as capabilities in order to achieve long term competitive
advantages. The particular framework used by the company after set the vision statement. This
model based on the four categories such as: Value: There are analysed provided resources as well as capabilities valued for the
customers and allow companies to react for the environmental opportunities. Rarity: Already exist resources and capabilities achieve by few companies when
considered as rare (Noe and et. al., 2017). Inimitably: Valuable and rare sources provide help to connect with the organisation
where firm do not engage without lack of relevant resources.
 Organisational support: In this category a company effectively organised their resources
as well as capabilities.
For the external analysis apply the Porter five forces model and for internal analysis
apply VRIO framework.
After the analysis of both methods of Porters five forces is essential to apply on Toyoto to
understand the forces which supports to provide good shape of competition within the
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organisation. According to that set effective strategy that suit for the competitive atmosphere and
increase potential profit. This method has weak point that it is helping for the short time
activities not for long term. Porter’s five forces has also been narrowed by rapidly evolving
external factors.
Along with VRIO analysis is important to implement in Toyoto because know about the
important resources of the company the become strength and helps to achieve all the competitive
advantages. But it is analysis only internal resources do not analysis the external factors so
business strategy do not work properly to achieve competitive advantages.
TASK 3
Application of Tools within Toyota
For external analysis, Porters five force analysis is applied by managers of Toyota so to
analyse the extent of which the forces will help in enhancing production level of the entity
making it more economical. Following are the forces: Threats of substitute: Substitute products are those product that provides similar benefits
to products of an entity by having distinct nature. When Toyota managers will use
various substitutes that are available to them with ease and low cost in order to
manufacture new cars then they can effectively make enhancement in their productions
level. It will benefit the entity in using effective substitutes that will aid in adding value
propositions that are distinctive from current productive elements resulting in more
production level (Meyer, Neck and Meeks, 2017). Threat of entry: In automotive industry, entry threat are low due to existence of various
networking effects, market penetration costs, access of distribution as well as supply
network. Low entry threat creates the industry less competitive that can be used by
Toyota managers to enhance its production potentials within the industry and can offer
wide cars that will result in achieve economic benefits. Bargaining powers of buyers: Buyers have nature of demanding more. They needs best
offering at minimum prices. As Toyota have large customer base, to satisfy their
demands company can produce more and offer then at the prices at negotiated by them
keeping low profit margins. When needs of the buyers will be satisfied then entity can
enjoy profitable outcomes (Edwards, 2018).
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 Rivalry among existing competitors: Competitive rivalry depends on industrial growth
rate, high exit barriers, low differentiations and high fixed costs. In context to automotive
industry, having intense competition motivates the pertaining companies to either
produce more and sell at reasonable prices or produce innovations. When changes in
production strategy is chosen then company have to do mass production and offer
products at reasonable prices that are low from competitors will help in achieving
objective behind such strategy.
 Suppliers bargaining power: Within automotive industry, suppliers provide raw
materials and additional information about market needs to wide companies. By making
effective relationships with multiple chain of suppliers can help Toyota managers to
collect required market information as well as addition raw materials to produce more as
per available information. Company can make contacts with powerful suppliers and
negotiate prices for materials in order to enhance productivity and stocking out cars so to
enhance overall levels of profits (David and David, 2019).
For internal analysis, VRIO model has been utilised by Authorities of Toyota so to
analyse capacity addition to capability of the business. For this, the model in context to Toyota is
as follows:
Resources Valuable Rare Imitable Organised Competitive
Advantage
Brand
Image ✓ - - -
Temporary
Competitive
Advantage
Designing
and
manufacturi
ng capacity
✓ ✓ - -
Temporary
Competitive
Advantage
Innovation ✓ ✓ ✓ -
Sustainable
Competitive
Advantage
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Manpower ✓ ✓ ✓ ✓
Potential
Competitive
Advantage
According to above analysis, the entity has various resources that are further classified
into valuable, rare, imitable addition to organised.
Valuable: The valuable resources that Toyota have are brand image, innovation,
designing as well as manufacturing capacity and manpower. Toyota's brand image is valuable as
it allows to enhance its presence in global market. The designing addition to manufacturing
capability is also valuable as with this the entity manufactures effective automobile products. In
context to innovation, the resource is valuable as with this the organisation enhances competitive
edge by providing the market something unique as compared with others. In addition, the
manpower of Toyota are also valuable as they are productive and competent to perform all the
activities through which the company manufactures, market and sells product volume at large
quantity.
Rare: The resources of Toyota that falls under rare aspect are its designing and
manufacturing capacity, manpower addition to innovation. In terms of designing and
manufacturing, these functions makes relationships with wide suppliers that supplies material
and equipment to the entity that are not available easily. The innovation resource is also rare as
the entity uses unique technologies while offering the market that are not yet provided by others
makes it rare. At same time, Toyota's manpower are also rare as it is very difficult to search skills
and dedication of people that the entity has makes the manpower in rare aspect.
Imitable: The imitable resources of Toyota are manpower and innovation. The attributes
of talents, potentiality, competence and skills of manpower that the chosen firm are cannot be
imitated by other companies which helps in working effectively in all situations to achieve
outcomes making them imitable. In terms of innovation, the company has patented its
intellectual property that helps in introducing uniqueness in market and enhancing production
level.
Organised: In this, all the components of business are arranged in well organised manner
so that workings are done to achieve objectives. Within this category, manpower of Toyota falls
in this as human resources are trained and developed as per the modern requirements and their
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activities are organised in well manner so that they can work hard to produce more by adapting
to changing market situations.
TASK 4
Critical Appraisal of Change Management
Change Management is a highly essential activity which is highly necessary for any
organisation who wishes to adapt within the dynamic business environment. Furthermore, in
terms of Toyota, the firm was facing a very big complexity in terms of formulating designs that
could sustain the current competition within the company (Ronda-Pupo and Pham, 2018). In
relation to this there was a prime need for the company to shift and transform its production
system with the ones that suits the company's new strategies and would have helped them in
gaining a higher sustainability within the market. Moreover, the new change also introduced the
company with Just In Time method in order to highlighting the scope of inventory management
and saving up cost within the organisation (5 CASE STUDIES ABOUT SUCCESSFUL CHANGE
MANAGEMENT, 2019). However, the change management is required be appraised, based on
the several factors that are evaluated below: Complexities: It is highly essential that there are several complex scenarios which are
required to be analysed in terms of analysing the viability of its implementation. Changes
in production system also requires a prominent level of restructuring, which could bring
resistance to the firm. Moreover, market research and acquisition of new technologies
could also be complex for the firm. Hence, the company must communicate its
employees regarding the benefits of the change. Moreover, internal and external market
research could be performed by assessing the technological and economical department,
along with customer preferences, which would be giving the firm several benefits and
convenience in research (Höglund and et. al., 2018). Cost: The strategy must be appraised effectively in terms of cost. Moreover, the firm
must also adhere to the benefits of their investments. In terms of just in time
manufacturing system, the whole idea was to make the firm more economical, which
required the firm to invest a prominent amount in manufacturing restructuring and then
gain effective economical benefits in long run. Therefore, the cost of restructuring is
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quite high, but the organisation has the potential to gain effective economical gains
throughout the future (Shim, Kim and Altmann, 2018). Risks: The risk level determines the probability of failure of the change within a
company. In context with Toyota, there were minimal risks involved in terms of quality
of new equipments and processes, which could be dealt with effective performance
testing. Hence, in this aspect, it could be said that the risks level has been quite low
within the same. Moreover, the change would be lowering the risks related to its future
sustainability and competitive edge, as advanced technology and Just in Time inventory
systems are in heavy demand in the current market, hence, reducing the risks of losing
competitive market edge.
 Sustainability: Change is majorly adopted by an organisation to help them in sustaining
the competition and the dynamic environmental conditions. Just In Time would allow the
company in economically managing their operations with lower cost, which would help
them in sustaining better within the market, through gaining high investment
opportunities. Moreover, transformations in production system would help them in
sustaining the competition within the industry, as effective technologies would be utilised
by the company that would enhance the productivity and operational levels within the
organisation (Lewis, 2019).
CONCLUSION
Hence, it could be concluded by the report above, that strategic management is highly
essential and required activity within a company, which helps the firm in gaining a competitive
edge, along with sustainability. Processes associated with determining the strategy must be
critically analysed to determine what procedure a firm must use. Moreover, tools are required to
assessed and implemented in context of determining the strategy. Lastly, change management
must be calculated on terms of Complexities, cost, risks as well as sustainability, which is an
essential task in context of implementing the strategy in order to positively bring change within
the company.
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REFERENCES
Books and Journals
Ansoff, H. I. And et. al., 2018. Implanting strategic management. Springer.
David, F. R. and David, F. R., 2019. Strategic management: A competitive advantage approach,
concepts and cases. Pearson.
Edwards, J., 2018. Mastering Strategic Management: 1st Canadian Edition.
Ginter, P. M., Duncan, W. J. and Swayne, L. E., 2018. The strategic management of health care
organizations. John Wiley & Sons.
Hitt, M. and Duane Ireland, R., 2017. The intersection of entrepreneurship and strategic
management research. The Blackwell handbook of entrepreneurship, pp.45-63.
Höglund, L. and et. al., 2018. Strategic management in the public sector: how tools enable and
constrain strategy making. International Public Management Journal. 21(5). pp.822-
849.
Lasserre, P., 2017. Global strategic management. Macmillan International Higher Education.
Lewis, L., 2019. Organizational change: Creating change through strategic communication. John
Wiley & Sons.
Meyer, G. D., Neck, H. M. and Meeks, M. D., 2017. The entrepreneurship‐strategic management
interface. Strategic entrepreneurship: Creating a new mindset, pp.17-44.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI
Tourism Texts. Cabi.
Noe, R. A. and et. al., 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education.
Ronda-Pupo, G. A. and Pham, T., 2018. The evolutions of the rich get richer and the fit get
richer phenomena in scholarly networks: the case of the strategic management
journal. Scientometrics. 116(1). pp.363-383.
Rothaermel, F. T., 2017. Strategic management. New York, NY: McGraw-Hill Education.
Shim, D., Kim, S. W. and Altmann, J., 2018. Strategic management of residential electric
services in the competitive market: Demand-oriented perspective. Energy &
Environment. 29(1). pp.49-66.
Online
5 CASE STUDIES ABOUT SUCCESSFUL CHANGE MANAGEMENT. 2019. [Online] Available
Through: <https://www.tinypulse.com/blog/sk-case-studies-successful-change-
management>
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