Toyota Organizational Context and Structure - Case Study Example

Toyota Organizational Context and Structure Name Course Name and Code Instructor’s Name Date Internal structure Provision of services by either people or information systems occurs in the context of current and potential customers; current and potential technologies; current and potential competitors; existing services or systems; existing user or application interfaces; and legal, regulatory, cultural systems and constraints (Kleindorfer, Wind and Gunther, 2009). Toyota has customers around the globe and the advent of information technology and sophisticated transport systems influences the provision of its products around the globe. Moreover, Toyota has many competitors in the motor industry and as such, it requires a structure that can enable it remains competitive (March, 2008). Many of organizational contexts are shaped by the structure of the firm (Liker and Hoseus, 2007). Organization structure is characterized by centralization verses decentralization; the number and types of roles played by people; the span of control for managers; and the organizational discipline and core competencies (Noe, Hollenbeck and Gerhart, 2007). Organization contexts are important because they determine the influence and priority of stakeholder roles and individuals. They also determine how readily change can be adopted. Moreover, organizational contexts are important because customers come from various contexts and this might shape the goals of and requirements of customers. Organizational structure refers to the formal reporting relationships, controls, procedures, authority and decision-making process that exist in a firm. It is usually difficulty to develop an organizational structure that supports the strategy of a firm (Sanchez and Heene, 2010). When the elements of a structure are aligned properly with each other, the structure facilitates effective implementation of the strategies of the firm. The structure of a firm specifies the work to be done and how to do it based on the strategies of the firm (Kleindorfer, Wind and Gunther, 2009). Thus, the structure of a firm influences how managers work and the decisions that result from that work. An effective organization structure ensures stability within a firm and enables it to implement its strategies and maintain its present competitive advantages. It also ensures flexibility within a firm that allows it to develop competitive advantage that will be required for future strategies. Toyota has a matrix organization structure (March, 2008). This structure supports teamwork at Toyota. The firm follows the power coordinated team structures. The firm aims at establishing the ideal organization structure (Toyota, 2012). The matrix structure enables Toyota to clearly understand the purpose and objectives of the firm by everyone. (Liker and Hoseus, 2007) The firm has divided its jobs and responsibilities into functions, divisions, departments and groups. For instance, Toyota industries have divisional organizational structure with each business division having significant authority. Matrix structure involves division of authorities of product and function structures. The success of Toyota depends mainly on its leaders. The firm has few layers of management at the bottom of the firm. The firm has adopted a philosophy of separating responsibility to lower level (Kleindorfer, Wind and Gunther, 2009). This allows faster decision-making process and faster flow of information in order to attain its objectives (Toyota, 2012). At Toyota, each team leader and group leader has three main responsibilities. These are: to support operations, to promote the system and to lead change. The structure of Toyota is strongly augmented by group leaders (March, 2008). External environment External environment of a firm is influenced by various factors such as political, economic, social, technology, environment and legal factors. Political Political factors that can impact on a business include current and future taxation policies; current and future political support; trade bodies, grants, initiatives and funding; and the effect of worsening relations or wars with certain countries (Liker and Hoseus, 2007). Toyota is a global brand and operates in various political environments (Toyota, 2012). Being a global brand the sales of Toyota products are likely to be impacted negatively by the recent political unrest in Arab nations. Economic Economic factors entail the general economic situation; consumer spending strength, current and future government spending levels; the ease by which people can obtain loans; the current and future level of inflation, unemployment and interest rates; specific taxation policies and trends and exchange rates (Kleindorfer, Wind and Gunther, 2009). In addition, the recent economic downturn implies that people have less to spend on some of Toyota’s costly cars. Most people prefer to buy cars which are cost efficiency and less costly to acquire (Liker and Hoseus, 2007). The diversifications of Toyota products such as production of both hybrid and non-hybrid cars may make the firm have stable financial statement (Toyota, 2012). Social Social factors which affect business include demographic factors; lifestyle patterns and changes in attitudes towards issues such as corporate responsibility, education and the environment; social mobility; ethnic and religious differences and media views and perceptions. In recent past governments and environmentalists have been pushing for reduction in carbon emission (March, 2008). Many people are embracing green ideas (Liker and Hoseus, 2007). Given that, Toyota is involved in production of hybrid cars such as Toyota Prius, which offers consumers the ability to reduce carbon emission, and at the same time safe on fuel consumption the firm is likely to continue having a strong customer base (Toyota, 2012). Technology Technological factors that affect businesses include relevant current and future innovations in technology; the level of funding of research; the way in which consumers make purchases; intellectual property rights and copyright infringements and global communication technological advances (March, 2008). Toyota embraces technology and this has enabled it to produce some of sophisticated hybrid cars such as Toyota Prius, which is based on latest technological advances. Thus, Toyota is also capable of meeting the needs of technology lovers (Liker and Hoseus, 2007). Legal Legal factors that affect businesses include legislations guiding areas such as competition, employment and health and safety; future changes in legislation; changes in European laws; regulatory bodies and trading policies (Kleindorfer, Wind and Gunther, 2009). Toyota engages and believes in fair competition. In addition, Toyota is famed for producing some of the safest hybrid cars in the market. Thus, the firm is unlikely to face major legal tussles in the promotion and marketing of its products. Environment Environmental factors which impact on businesses include the level of pollution created by the utilization of the product or service; recycling considerations; current and future environmental legislative changes and attitudes from the media, consumers and government (March, 2008). Toyota produces hybrid cars, which are known to be safe to the environment in two ways. First, it ensures low carbon emission to the environment (Kreitner and Kinicki, 2009). Second, most body parts of the car are made from bioplastics, which are degradable unlike plastics made from petroleum products. How the structure is suited to the current and future environment The matrix organization structure adopted at Toyota creates a dual hierarchy in which projects and functions have equal prominence. Since automobile environment is dynamic with ever changing technological advances, the structure is suitable for Toyota. Toyota is involved in research and development of many projects that requires proper project management and functional efficiency. The matrix structure emphasizes project management and functional efficiency and as such, matrix structure is suitable for Toyota, operations to enable it remain competitive by delivering on its multiple projects. Toyota has various functional units (Kleindorfer, Wind and Gunther, 2009). For effectiveness and efficiency in the firm, there is need for cross-functional coordination. Since matrix structure promotes cross-functional units coordination, it is the most suitable organizational structure for Toyota. In the current business environment, resources are scarce (Dowling, Festing and Engle, 2008). This implies that any organizational structure employed by a firm need to maximize on the available resources. This can be attained via matrix organization structure. Thus, the matrix structure adopted by Toyota is suitable for the firm in order to aid in maximizing on the available scarce resources. In spite matrix organization structure being suitable for Toyota, it has some limitations that might impact on the firm’s future. One of these limitations is that matrix structure has dual hierarchies implying that there are two bosses involved at every layer. This might result in conflicts of interests, which might derail the process of decision-making (Kleindorfer, Wind and Gunther, 2009). Given that timely decision making is important for implementing strategies in motor industry, this might impact negatively on the firm’s ability to make timely decisions (Dowling, Festing and Engle, 2008). Given the scarcity of resources and the dual nature of the matrix structure, the structure is limited by the fact that negotiations are needed in order to share resources (March, 2008). The time taken to negotiate may also impact negatively on the delivery of products. Moreover, some projects might not be accomplished in time due to competing interests of the functional and project management divisions. The dual hierarchies in matrix structures compete for the same labour force in the firm. This implies that workers may be caught in between the competing functional and project demands at the firm (Dowling, Festing and Engle, 2008). This is likely to impact negatively on the performance and efficiency of workers at the firm in future. How this could be changed The limitations associated with matrix structures at Toyota might be overcome through creation of fully dedicated project organization. This will expand the authority of project manager and functional alignment will be abandoned in favour of market opportunism. This will also allow Toyota to focus on external customer whose needs are ever changing. References Dowling, P., Festing, M., and Engle, A. 2008. International Human Resource Management: Managing People in a Multinational Context, 5th Ed. London: Cengage Learning Kleindorfer, P., Wind, Y., and Gunther, R. 2009. The Network Challenge: Strategy, Profit, and Risk in an Interlinked World. London: Pearson Prentice Hall Kreitner, R., and Kinicki, A. 2009. Organizational Behavior, 9th Ed. London: McGraw-Hill/Irwin Liker, J., and Hoseus, M. 2007. Toyota Culture. New York: McGraw-Hill Professional March, J. 2008. Explorations in Organizations. Stanford: Stanford University Press Noe, R., Hollenbeck, J., and Gerhart, B. 2007. Human Resource Management, 6th Ed. London: McGraw-Hill Publishers Sanchez, R., and Heene, A. 2010. Enhancing Competences for Competitive Advantage. London: Emerald Group Publishing Toyota. 2012. Home. Available at http://www.toyota.com/ Read More