Toyota Motor Corporation (TMC)

Executive Summary

This report focuses on the input that Toyota Motor Corporation (TMC) can have on our economy. The rational for looking at the company is to analyze its work ethics as well as corporate culture and try to replicate them in our local conditions to gauge its overall impact on the economy. Indeed, the company has been successful because it undertakes a thorough analysis of the market before making any move to enter. By entering our market, TMC will greatly improve the economy of our country on various fronts. The company will create employment on three areas: the direct employment, intermediate employment as well as spin-off employment. Besides, the company provides an example of the best management practices that can be emulated by other firms in their operations within the country and beyond. In fulfilling its mandate, it is recommended that the company respects and adheres to set laws sand regulations. In addition, the government should lower tariffs to help the company produce cars that will results in lower cost.

Company Description

Toyota Motor Corporation is an automobile manufacturer with headquarters in Japan¹. The company was incorporated in 1937 in Japan and has an estimated total workforce of about 320, 000. According to Toyota-global.com, TMC’s net worth in 2012 was a slightly over $1 billion dollars². From its inception, the company has successfully grown to become the leading automaker in the world. The company’s first product was the AA sedan car. After two decade, TMC started exporting its cars to the US. Toyota’s success in the global market has been pegged on a wise execution of marketing strategy. For instance, in 1984, the company changed from direct exports to joint ventures in the US and other parts of the world. In the recent past, TMC has entered into the hybrid segment to keep in pace with market needs and trends³. The company’s strategy is to venture into other markets by continuously producing high quality cars that resonate with the needs of the customers all over the world.

Toyota’s International Strategy

            Toyota is one of the leading automobile manufactures in the world with a presence in over 180 countries across the globe. However, its main activities are concentrated in Japan, the US, Europe and Asia. The main competitors of Toyota include the Ford Motor Company, General Motors Company, and Honda Motor Co., Ltd. TMC has a strong financial performance, which is pegged on its ability to produce quality cars that appeal to its targeted groups³. Toyota believes in the philosophy of the right car at the right time. Behind this philosophy is the production process that is rooted on the notion of kaizen⁴. Kaizen is a Japanese term that refers to continuous improvement though R&D. The focus on continuous improvement is mooted on the desire to fulfill client needs and aspirations.

In 2002, Toyota introduced its global strategy that was aimed at achieving a 15% market share in 2010⁵. This 15% goal encapsulates the company’s global strategy of being the market leader in the automobile industry. The global vision articulated in 2011 is a distillation of what the company pursues as it seeks to be the first choice for consumers.6 To achieve this feat, the company embarked on improving its production processes, R&D as well as gathering market intelligence. This would be realized by heavy investments in technological innovations, proper human resource management, and new production systems⁷. Indeed, Toyota carefully selects its R&D centers carefully. For instance, R&D efforts for Asian markets are carried out in Thailand. The other centers include the US, Belgium, Japan, and Australia. The choice of R&D center is based on the presence of infrastructure, skilled labor, and favorable geographic location. Another significant consideration is political stability as well as the existence of manufacturing and sales affiliates⁸.

Toyota’s Marketing Strategy

Toyota Motor Corporations’ philosophy is to have the right car at the right place in its push to meet the needs of the customers as well as overcome competition⁹. The company’s belief in having the right car in the right place is achieved by conducting a thorough segmentation to identify the markets that have the potential to meet the company’s short term and long term goals. Toyota segments its global market on two fronts. These include the geographic and the psychographic segmentation¹⁰. In the first case, the company looks that whole world as its market. However, Toyota has identified unique geographic segments that play a critical role in reaching or accessing other market. The most notable of these are the US, China, UK, Indonesia, India, and Canada. The US is the main market as it takes about 30% of the company’s total output¹⁰. On the other hand, psychographic segmentation focuses on the personality traits that influence the buying behavior among consumers. In this regard, Toyota evaluates the distinct social classes in each society, the lifestyles, and statuses in developing its products. Indeed, the company’s cars are manufactured with customers in mind¹¹. For instance, because of the increased consciousness of the environment, the company has decided to produce cars that are eco-friendly. Another significant component of the marketing strategy is the use of personal selling across all the countries. The reason for this strategy is that customers look at various aspects before making the purchase decision. Therefore, more conviction can be achieved through personal selling

TMC can create employment on three areas: the direct employment, intermediate employment as well as spin-off employment. Direct employment refers to people who are directly employed by the company. Intermediate employment category carries the number of people who are employed by suppliers. Spin-off employment relates to those employment opportunities created because of expenditures related to direct and intermediate employees who get their pay from Toyota-related activities.

The process of erecting a motor vehicle plant requires also a large number of workers who will be directly responsible in the manufacturing process¹². In addition to the employees required by the company, there are those who are required by suppliers. Moreover, Toyota needs goods and services that have a direct as well as indirect role in activities of the company. It is in these activities that the company creates intermediate employment. Besides the company workers, Toyota Motor Corporation requires experts who must engage in research activities to determine the needs of the market¹³. As highlighted above, Toyota segments its market using several parameters. These segments comprise unique attributes that make it paramount for the company to produce cars that meet their expectations.

Company’s Logistics Approach

As highlighted above, Toyota’s choice of a locality of country is based on several factors including political stability, and good local infrastructures. In addition, Toyota looks at the market potential as well as growth prospects in a country before making its entry into the market. Management of the supply chain is one core competency of Toyota¹⁴. Indeed, to goal of the right car at the right place requires efficient management of the supply chain. Supply chain deals with efficient management of the processes from the supplies to the manufactures to retailers and eventually to the buyers. Toyota ensures efficient information and production through well-coordinated efforts. Besides, the company must contend with technological factors while dealing with competition. Through its research and development efforts, Toyota has kept ahead to its rivals in designing new cars such as the Prius¹⁶. In addition, technology goes hand-in-hand in meeting the needs of customers. Without product features that meet the needs of the market, Toyota would easily lose its market share to competitors like Ford.

Company’s Human Resource Approach

Toyota has established centers for training its employees on several aspects including quality and the company’s lifeline. The training focuses on instilling employees with the right attitudes in meeting the needs of the customers¹⁷. It also focuses on the need to maintain quality of the company products as well as addressing location-specific challenges. Based on the company’s philosophy of the Toyota way, human resources are continuously equipped with new techniques that make it possible for them to excel in the marketplace¹⁵. Indeed, the focus of location-specific challenges is critical as it goes to the core of the international marketing strategy. Each market has its unique attributes. It is impossible to duplicate a marketing strategy across many locations and expect the same results. Therefore, since each region has its own unique challenges, the training of the human capital on these aspects becomes an important facet in achieving success in the global market arena¹⁸. This approach ensures proper adaptation to a unique corporate culture as well as the mastery of local conditions. In this manner, the company strives to contribute to sustainable development through leadership and provision of innovative products¹⁹.

Summary

From this discussion, it is clear that Toyota has grown form being a national enterprise to a global player with outlets all over the world. If the company is allowed to open shop in this country, it will provide invaluable benefits to the economy. The fact that more people will gain meaningful employment cannot be gainsaid. Of critical importance is the valuable expertise and knowledge that even local manufacturers can glean from the Toyota way. In addition, local companies will most likely shift their focus to global market, instead of focusing on local and regional markets. These benefits will greatly boost the country’s economic fortunes. It is recommended that the company must adhere to government laws and regulations, including those related to the environment. Toyota must maintain the emission levels required by the laws besides minimizing noise as well as pollution. In addition, the government should lower tariffs so that Toyota can provide cars that match the needs of the citizen. This is based on the current tough economic conditions that emanate from the global financial crisis of 2007.

Conclusions

Toyota is a good example of how a company can use strategy to succeed in the competitive marketplace. Since its inception, the company has experienced exponential growth to become the world’s largest automaker. At the heart of development is the economic input of any given sector to the country’s economic development. Indeed, the creation of well-paying jobs, which end up improving the lives of the people, is an important facet in the socio-economic development of a country. More importantly, the motor vehicle sector requires an elaborate network of suppliers, dealers, and service providers. These networks spread across the country in a way that affects every aspect of national development. Toyota‘s exponential growth in many parts of the world show that it is an indispensable company in the socio-economic development. This report has highlighted the impact of the company in the creation of employment as well as it contribution to the reduction of carbon emission. Job creation and retention occurs because of the company’s investments. Therefore, it is critical to note that the company plays an important role in the economy of a country. In fulfilling its mandate, Toyota must adhere to set laws and regulations. In addition, the government can help in lowering the cost of the company cars to meet the needs of the citizens. This can be realized through reduced tariffs.

 

Notes

[1] Yasuhiro, Monden. Toyota Production System: An Integrated Approach to Just-In-Time. New York: CRC Press, 2012), 78

²  Toyota-global.com. Toyota Motor Corporation Annual Report 2012. http://www.toyota-global.com/investors/ir_library/annual/pdf/2012/ar12_e.pdf (accessed March 26, 2013)

³Epts2012. (2012). “Toyota Global Vision and Strategy.” http://epts2012.ktenet.hu/Toyota_European_Sustainability.pdf (accessed March 26, 2013)

⁴Kurtz, L. Davia and Boone, E. Louise. Contemporary Business: 2009. (New York: Cengage Learning, 2009), 265.

⁵Kurtz and Boone, 34

⁶Epts2012. (2012). “Toyota Global Vision and Strategy.” http://epts2012.ktenet.hu/Toyota_European_Sustainability.pdf (accessed March 26, 2013)

⁷Monden. 257

⁸Andrew, Kumiega, &  Benjamin, Vliet, Quality Management: process engineering and best practices, (New York: Academic Press, 2011), 282

⁹ United Nations Conference on Trade and Development.. Transnational Corporations and the Internalization (United Nations Publications, 2005)145

¹⁰Monie, Lee and Carla, Johnson. Principles of Advertising: a global perspective. (New York: Routledge, 2012), 91

¹¹Lee and Johnson, p. 92

¹²Lee and Johnson, p. 103

¹³Lee and Johnson, p. 118

¹⁴ Lee and Johnson, p. 136

¹⁵Toyota. (2007). “The Quality Issue: Background and Future Prospects-Seeing the Quality Issue as an Opportunity for Renewal and Improvement/Firm Action Throughout its operations in each field”. http://www.toyotaglobal.com/sustainability/sustainability_report/special_story/the_quality_issue_background_and_future_prospects.html (accessed March 26, 2013)

¹⁶Victor, M. Catano, Recruitment and Selection in Canada. (New York: Cengage Learning, 2011), 18.

¹⁷Catano, 19

¹⁸Toyota. (2007). “The Quality Issue: Background and Future Prospects-Seeing the Quality Issue as an Opportunity for Renewal and Improvement/Firm Action Throughout its operations in each field”. http://www.toyotaglobal.com/sustainability/sustainability_report/special_story/the_quality_issue_background_and_future_prospects.html (accessed March 26, 2013)

¹⁹Kurtz and Boone, 34

Bibliography

Catano, M. Victor.  Recruitment and Selection in Canada. New York: Cengage Learning, 2011.

Epts2012. (2012). “Toyota Global Vision and Strategy.” http://epts2012.ktenet.hu/Toyota_European_Sustainability.pdf (accessed March 26, 2013)

Kumiega, Andrew and  Vliet, Benjamin.  Quality Management: process engineering and best practices. New York: Academic Press, 2011.

Kurtz, L. Davia and Boone, E. Louise. Contemporary Business: 2009. New York: Cengage Learning, 2009.

Lee, Monie and Johnson, Carla. Principles of Advertising: a global perspective. New York: Routledge, 2012.

Monden, Yasuhiro. Toyota Production System: An Integrated Approach to Just-In-Time. New York: CRC Press, 2012.

Toyota. (2007). “The Quality Issue: Background and Future Prospects-Seeing the Quality Issue as an Opportunity for Renewal and Improvement/Firm Action Throughout its operations in each field”. http://www.toyotaglobal.com/sustainability/sustainability_report/special_story/the_quality_issue_background_and_future_prospects.html (accessed March 26, 2013).

Toyota-global.com. Toyota Motor Corporation Annual Report 2012. http://www.toyota-global.com/investors/ir_library/annual/pdf/2012/ar12_e.pdf (accessed March 26, 2013).

United Nations Conference on Trade and Development. Transnational Corporations and the Internalization New York: United Nations Publications, 2005.

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