Strategic Management: Strategic Choices TOYOTA TOYOTA Introduction The well established organization or more to say an automobile enterprise with well known name “Toyota” has taken audacious efforts to build up its worldwide recognition. Toyota emerged as a great automobile company after its birth. Although there was not a rapid growth at initial stage, the company has proved its market strength in recent decades. Detailed study is required to identify the thrilling power behind such great milestones conquered by the organization. Although the active participation of each and every member of the company is unforgettable, victory is specifically attributed to its intentional and wise management.
After facing some setbacks at initial stage, an era of rapid expansion and development began in 1945 after Second World War. As the statics illustrate, “By 1955, Toyota was making 8,400 cars per year; by 1965, 600,000 cars per year” (Toyota Corporate History). Thus, Toyota was on its move during mid twentieth century and started its international sale in 1958. Strategies Toyota, in its historic moves toward success, implemented considerable strategies that eventually turned the firm into a powerhouse as we say.
One of the main strategies followed by Toyota early in 1959, when it started its first plant outside Japan - in Brazil, with the point of view to localize both production and design of its products was manufacturing vehicles at the places were they would be used (Toyota Corporate History). This builds long-term relationships with local suppliers and local labor. Part of this also means that Toyota does not merely build vehicles overseas, but also designs them there, with a network of both design and R&D facilities in North America and Europe.
The strategy really worked out well because despite its small beginning in the late 1950s, by 1963 it emerged to be the 93rd largest non-American corporation in the world and later on the tenth largest auto manufacturer in the world (Toyota Corporate History). The strongest strategy tool that Toyota has used over the years involves the integration of inbound logistics in the form of excellent material and inventory control systems which made its manufacturing system one of the most admirable one.
This ensures that inventory levels are sufficient to meet customers demand by having parts delivered prior to their assembly. Recent Moves Along with basic long term plans Toyota has its recent strategic moves; one of them is dependence on diesel engines. With Toyota so focused on cutting costs in every possible area of business, this move can only be viewed as an indicator of strategic thought. Another more recent strategy is that Toyota has recently partnered with one social media to unleash the magic of social media marketing for their business as a means to ‘jump towards online marketing and reach out to an entirely new segment of the population’ (Toyota of Des Mones).
In addition, under the leadership of Fujio Cho and Katsuaki Watanabe, Toyota has transformed its principle of using only reliable, thoroughly tested technology. They both steered Toyota in new directions while trying to maintain the corporate culture that underpinned its success. Porter’s Strategies Basically Porter described his four generic strategies in a classified format; Cost leadership strategy, Differentiation strategy, Focus strategy and Combination of these (Porter’s Generic Strategies).
The cost leadership strategy declares that a firm sells its product on average market cost or below average to gain market share. Whereas the differentiation strategy demands for the quality product or service that offers unique attributes that are valued by customers. This allows the firm to charge a premium price from the customers. Focus strategy focus on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. On contrary to these strategies porter argued for the last one; combination of the three, he suggests to follow a single strategy rather than combination so as not to be ‘stuck in the middle’ (Porter’s Generic Strategies).
Strategy with internal and external phases Hence, as per concern of Porter’s strategies, Toyota very willingly adopted differentiation strategy in order to maintain the quality and uniqueness of the product and to fetch maximum profit. This strategy is adopted through value chain internally in the firm. This is backed up by marketing and sales through advertising and dealership networks. Toyota’s value chain activities, its linkages across them, and its linkages with the value chain of its suppliers are configured in such a way that they provide the Japanese competitor with a core competence or distinctive capability.
It is this capability which provides it with competitive advantage and the competitors fail to match this. It creates a position less vulnerable to attack from opponents; and Toyota very well maintains it. Thus smoothening the internal phase of the organization obviously retains much comfort ability in the external environment of the firm. Conclusion To conclude, Toyota has risen as a world leading automobile company only because of the above discussed strategies which it followed over the years of its successful journey.
Enough to say that in coming future Toyota would overturn its competitors due to strategic strength and competitive advantages that it possesses. References Toyota Corporate History. (n. d.). ToyoLand. Web. Retrieved 14 Nov 2010 from http: //www. toyoland. com/history. html Porter’s Generic Strategies. (n. d.). Strategic Management. QuickMBA. Web. Retrieved 14 Nov 2010 from http: //www. quickmba. com/strategy/generic. shtml Toyota of Des Mones: A Strategic Move into Social Media. (8 July 2010). Web.
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