Toyota Motor Corporation: Strategic Management Introduction Toyota Motors Corporation (TMC) was established in 1937 by Kiichiro Toyoda and is headquartered in Aichi, Toyota City. The vehicle manufacture leads in the production and sales of the vehicles globally and employs over seventy thousand (70,000) employees. The company has manufacturing and assembly plants in twenty-nine countries. Toyota Motors Corporation vehicles have become popular among most global consumers because the company produces vehicles that meet their needs. Toyota Motors Corporation has been known to be among the most competitive companies in the world. Its competitiveness is as a result of the company’s huge profits and revenues.
The company’s sales have increased dramatically over the past years. This is as a result of improved quality. The company uses its profits to advance vehicles styling and develop low cost structure to enable the company to increase the range of vehicle production which fits various market segments. The company was able to overtake its competitors by bringing its new models early to the market. The strategies that Toyota Motors Corporation has employed over time Toyota Motors Corporation has employed three main strategies to achieve its market leaders.
The strategies are innovation, product adaptation and expansion and cost leadership. First, the company has embraced innovation in its manufacturing processes and produced better vehicles. According to Wanda (2005 pg. 49)Toyota Corona ST10 model (995- cc, 35- horsepower) was first developed in Japan in 1957 and upgraded to model PT20 in 1961 (1453- cc, 60- horsepower). Some of the latest models are the Prius hybrid cars. Innovation has been sustained and Toyota Motors Corporation has produced better vehicles each year.
Innovation in the company has always improved resource utilization and improved production processes of the company. Toyota focuses on becoming a Total Mobility Services Provider. The company aims at creating a long lasting innovative partnership with its own clients, in order to provide varied services beyond the automobile. Hence Toyota is striving to bring greater comfort and convenience to it own customers in order to create strong connection with its own customers. This process enhances its corporate value chain. The Secondly, the company has always adapted its vehicles and expanded its market to meet the needs of the consumers.
In early 1960s, the company Americanized its cars and produced Toyota Corona PT20 in 1964. Toyota Company using its current R&D activities has put much effort to bring up healthy relation between people and their cars as well as with the society. In addition, the Toyota Company applied its Intelligent Transport System (ITS) technologies. In the fiscal year 2002, the company was successful in applying its own Intelligent Multimode Transit System (IMTS). The system enables the vehicles to be driven automatically.
Moreover, the company introduced fuel cell hybrid vehicle, FCHV-5(2003), Estima Hybrid (2001), Pirus (1997) in the recent past. These newly develop models are more rewarding because it is friendly to the ecosystem as it consumes less fuel and emit less bad gas to the atmosphere. Toyota Motors Corporation has opened assembly and manufacturing plants in more than twenty nine countries with a view to reduce the cost of producing the vehicles and tailor the output to meet the needs of the consumers in the host countries.
Unlike their competitors Toyota Company has well structured regional marketing network. Adaptation of vehicles to meet the consumers’ needs has made Toyota vehicles highly marketable. Finally, the third strategy is cost leadership. The company has improved its production lines to cut on cost of production costs. Cost reduction has been made possible through modernization of its production process by implementing a global manufacturing network (global body line) to increase cost efficiency and flexibility. Toyota uses various strategies of cost reduction in manufacturing steps which include development production, development and purchasing.
Example of one of the cost reduction drive is CCC21 (Construction of Cost Competitiveness for the 21st century) used by the company. This programme was begun in July 2000 and it runs for three years. Its aim is to be able to achieve large scale cost reduction approximated as 170 components which will explain 90% of Toyota’s overall component purchasing costs. In addition Toyota adopted a unique plan in purchasing, which is refereed to a’ four in one’ Concurrent Frontloading Concept. Through this the company is aiming at attaining its long-term mission of purchasing.
As a result, the buying price of most Toyota vehicles is lower and affordable to most people who wish to own a car. Lower cost of production enables the company to make more profits and invest in cost effective and advanced production lines. Companies in the automobile industry are currently facing stiff competition. Toyota’s strategy to face the competition put up by its competitors is to lower cost and improve on the quality of their vehicles. Conclusion The three strategies of innovation, product adaptation and expansion, and cost leadership have helped the company to achieve leadership in the production and sales of automotives.
Toyota Motors Corporation will continue leading as long as they improve on the three strategic moves. References Jones, G & Hill, C (2009). Strategic Management Theory: An Integrated Approach. New York: Cengage Learning. Schreier, K. (2010). Toyota history: Corporate and Automotive: ToyoLand. Retrieved August 12, 2010, from http: //www. toyoland. com/history. html Wanda, J. (2005). Driving from Japan: Japanese cars in America.