Toyota - Competitive Advantage Today - Example

Toyota: Competitive Advantage Today By Introduction The Toyota Company is the world leading car manufacturer and distributor. Toyota exhibits an efficient style of management, and this is what might be reason for its continued success in the automobile industry. Since Toyota is dominates the market of car exportation, it might be considered a monopoly. However, there are other players in the market, which compete with Toyota. Nonetheless, the unique differentiation strategy of Toyota, among other factors has enabled the company to retain market leadership. Companies in various industries are faced with great competition. Therefore, in order to compete healthily in the market, companies seek to achieve a competitive advantage in the market. This mainly involves gaining an advantage over competitors using different strategies including lower prices, or higher prices that are justified by great quality services and benefits (Porter, 1985). By being a market leader in the automobile industry, Toyota has managed to gain a competitive advantage in the market. However, there is need to sustain this competitive advantage in order to remain a market leader. Nonetheless, this paper explores the competitive advantage of Toyota and ways through which the company can sustain it. Additionally, focus is on what additional strategies that Toyota could adopt in order to increase its competitiveness in the market. Objectives The project seeks to explore the operations of Toyota Company, and how these have helped the company to have a competitive advantage in the market. Most importantly, this aims at proposing additional strategies that Toyota can adopt in order to remain competitive. Nonetheless, the following are the objectives of the project: To explore the competitive advantage of Toyota Company To measure the performance of Toyota in the market To identify strategies that can enable Toyota to maintain its competitiveness in the market Overview of the visionary of the organization There are various aspects of the corporate strategy of Toyota Company, which have been adopted to increase company competitiveness and productivity. These are: Mission Statement of the Company Toyota aims at creating a highly prosperous society through the manufacture of automotive. To achieve this, the company attempts to ensure that its growth is in alignment with the global economy, significant environment, the local communities, and its stakeholders (Toyota, 2013). Goals of the Company A major goal of Toyota is to ensure the manufacture of hybrid alternatives for all the models in the market. This is in order to ensure the sale of 1 million hybrid vehicles each year. The company aims at ensuring environmental sustainability. Its 2011 Environmental Plan is committed in various areas including environmental management, changes in energy and climate, concerned substances, quality of air, recycling and improved resource utilization, and societal cooperation. Toyota shows a high commitment level of reducing emission of carbon dioxide, and it adheres to the values of fuel economy (Toyota, 2013). Operations and Services Toyota Motor Corporation engages in different operations, and offers a variety of services to its customers. This is mainly involved in the designing, manufacturing, and selling of diverse automotive products. This includes the manufacture of subcompacts, luxury and sports cars, SUVs, minivans, buses, and tracks, among others. Production of Toyota vehicles is either with combustion or with hybrid engines. Toyota also manufactures automotive parts for itself and for sale to other companies. Toyota offers customer service to its customer including delivering their ordered automotive products, among others. In order to ensure that the services and operations of the company are efficient, Toyota has a well-developed and well-equipped network of expertise for each single operation and service. Additionally, Toyota conducts regular research and development on important aspects in the company. The distribution network of Toyota is also wide and worldwide, in order to ensure product and service delivery to the company’s global market. Nonetheless, all this has boosted the company to higher levels. Evaluation of the Decision-making Strategy The capability of Toyota to maintain its top position in the automotive industry has been influenced by the company’s decision-making strategy. The internal environment of the company involves how different processes in production are managed. Nonetheless, Toyota has highly competent management and production individuals, who work effectively to ensure that there is efficiency and effectiveness in the production process. Nonetheless, this has contributed to the company’s competitive advantage. Market & Competitive Analysis Toyota Company has different strengths and opportunities in the market. Therefore, the company can base on these to maintain its competitive edge. For example, Toyota is known for its widely differentiated product line, which can enable the company to have a great global presence. For this reason, Toyota Company should consider gaining entrance into new markets such as Europe and China. Although Toyota is successful, it has only drawn its attention to America and Japan. Nonetheless, Toyota needs to develop new strategies on how to gain entry into new unexplored markets. Toyota is also known for its commitment to sustainable development. Today, there are fears that the fossil fuel might be depleted soon. However, Toyota is well prepared, as the company also manufactures hybrid cars, which will not lack market. There are various factors, which prove that Toyota has achieved a competitive advantage in the past and present times. Toyota is a company that has proudly achieved its mission of being the world leading car exporter and manufacturer of quality automotives. Toyota also manufactures quality automotive, and this gives best value to customers’ money. Unlike its competitors, Toyota offers the best price to customers, without compromising the quality of its automotives. This is a major reason for Toyota’s increased sales in developing countries. Finally, Toyota embraces corporate social responsibility, and this is known as a major source of competitive advantage for any company (Kirrane, 1990). Technological Assessment and Evaluation In the present technology age, Toyota Company does not lag behind in the adoption of technology. This company utilizes technology in various dimensions to increase its productivity. Toyota, like other global companies, has incorporated technology into its business strategy. This therefore, increases the company’s organizational strength and competitive advantage. Toyota uses customized and semi-customized package software. The company has developed its system to automate its traditional ““just-in-time” (JIT) ordering from suppliers, its new intelligent transportation system (ITS), and its new smart cars (Rapp, 2000). Nonetheless, it is clear that the IT strategy of Toyota is in alignment with the company’s business strategy. Financial/Cost Benefit Analysis Toyota has performed well and registered great profits in the past years. This is except 2009, as the company was affected by the financial meltdown, as well as recalls. The figures below illustrate the performance of Toyota between the years 2005 to 2009. Figure 1 (Johnson, 2009) Even after 2009, Toyota continued to invent more efficiency in its production technologies. The company also delved into new markets. Nonetheless, this was in a bid to increase profits. In the following years, Toyota reported increased profits. In the fiscal year ending March 2013, Toyota recorded the following figures: Key numbers for fiscal year ending March, 2013 (Toyota, USA News room, 2013) Sales: $234,101.1M One year growth: 3.7% Net income: $10,208.5M Income growth: 196.2% Risk Assessment and Mitigation Toyota Company faces a considerable number of threats in the market, and these, if not well mitigated have the capability of lowering the standards of the company. First, Toyota produces quality products, which it sells at the best price to its customers. This strategy might pose a considerable risk, as low priced products in the market are considered to be of a low quality. Therefore, in order to avoid negative outcomes from this pricing strategy, Toyota should intensify its marketing and advertising in order to make customers aware that its products are of a high quality (Lancaster & Reynolds, 2005). The second risk comes in the form of competitors. Although Toyota is known to adopt high technology in its operations, its competitors have started to introduce products of equally high technology into the market. Therefore, to avoid negative outcomes, Toyota should invest more in technology, in order to maintain its competitive advantage. Performance Measurement Methods In order to propose strategies that Toyota should adopt in order to remain competitive, it is important to analyze the performance of the company. Through performance analysis, it is possible to identify gaps in performance, and these will be used to develop strategies that would ensure a balanced and high performance. Nonetheless, a situation analysis of Toyota is important in order to determine different factors, which influence the performance of the company. First, conducting a SWOT analysis on Toyota is paramount, as this would identify the strengths, weaknesses, opportunities, and threats of Toyota, and these important factors help to shape the performance of a company. Additionally, the marketing activities of a company highly influence its performance (Mullins & Boyd, 2010). Therefore, it is important that the marketing activities of Toyota are identified. Furthermore, customer analysis is an important method of measuring company performance. Different aspects about the company customers will reveal important information about the performance of the company. For instance, the level of customer base is an indicator of company performance. Additionally, financial analysis of a company is core to performance measurement. However, since Toyota is a world leader in the automotive industry, its performance will be analyzed in order to find out how the company can maintain its competitive edge. Conclusions & Recommendations Although Toyota is presently successful in the automotive industry, there remains a lot that it can do in order to retain its top position in the market. This is mainly because of competitors such as General Motors, Ford Motor, and Honda, who can easily take the top position, if Toyota does not strategize to improve its operations. This paper therefore, has explored Toyota Company, including its competitive advantage, and proposed various ways through which Toyota can retain its competitive advantage and top position in the market. In order to remain competitive, Toyota should expand its presence to include other regions, where it has not gained entry yet. In the new markets, Toyota should establish factories and open new franchises. The company should also add more products into its product line, in order to beat competition from General Motors and Ford Motors. Another important recommendation is for Toyota to improve its human resources. Employees are core to an organization; therefore, keeping employees motivated and satisfied will increase their performance and help Toyota to increase its productivity and competitive advantage. Finally, Toyota should base on the corporate social responsibility as a source of its competitive advantage, as many customers will be drawn to a company that upholds CSR (Porter & Kramer, 2004). Nonetheless, if all these are put into perspective, Toyota will maintain its top position in the market. References Johnson, J. M. (2009). Five pillars of sustaining exceptional service. Chicago: 3 Palms Publishing Group, LLC. Kirrane, D. E. (1990). Managing values: A systematic approach to business ethics. Training and development journal, 53-60. Lancaster, G., & Reynolds, P. (2005). Management of marketing. Oxford: Elsevier. < http://books.google.co.ke/books?id=REEtEsP6ufYC&printsec=frontcover&dq=Lancaster,+%26+Reynolds,+Management+of+marketing&hl=en&sa=X&ei=8lgzUpmUN8TPsgayy4GYAw&redir_esc=y#v=onepage&q=Lancaster%2C%20%26%20Reynolds%2C%20Management%20of%20marketing&f=false > Mullins, J., Walker, J. O., & Boyd, H. W. (2010). Marketing management: a strategic decision making approach. Boston: A McGraw-Hill Irwin. Toyota (2013). Retrieved from http://www.toyota-global.com/ Toyota, USA News room (February 2013).Toyota Motor Corporation Announces Financial Results for the Nine-month Period Ended December 31, 2012. Retrieved from http://pressroom.toyota.com/releases/toyota+motor+corporation+announces+financial+results+nine-month+period+ended+december+31+2012.htm Porter, M. (1985). Competitive advantage. New York: The Free Press. Porter, M. & Kramer, M. (2004). Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility. Harvard Business Review. Rapp, W. (2000). Automobiles: Toyota Motor Corporation Gaining and Sustaining Long-term Advantage through Information Technology. The College of International Relations. Kyoto: Ritsumeikan University Kyoto. < http://web.njit.edu/~rappw/C-022.pdf> Read More