Internal structureProvision 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).